I
105TH CONGRESS
1ST SESSION
H. R. 2028
To amend the Internal Revenue Code of 1986 to increase the taxes on
certain alcoholic beverages and to provide additional funds for alcohol
abuse prevention programs.
IN THE HOUSE OF REPRESENTATIVES
JUNE 24, 1997
Ms. NORTON introduced the following bill; which was referred to the Commit-
tee on Ways and Means, and in addition to the Committee on Commerce,
for a period to be subsequently determined by the Speaker, in each case
for consideration of such provisions as fall within the jurisdiction of the
committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to increase
the taxes on certain alcoholic beverages and to provide
additional funds for alcohol abuse prevention programs.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Alcohol Tax Equali-
zation Act of 1997’’.
SEC. 2. INCREASE IN EXCISE TAXES ON WINE AND BEER TO
ALCOHOLIC EQUIVALENT OF TAXES ON DIS-
TILLED SPIRITS.
(a) WINE.—
(1) WINES
CONTAINING
NOT
MORE
THAN
PERCENT
ALCOHOL.—Paragraph (1) of section
5041(b) of the Internal Revenue Code of 1986 (re-
lating to rates of tax on wines) is amended by strik-
ing ‘‘$1.07’’ and inserting ‘‘$2.97’’.
(2) WINES CONTAINING MORE THAN 14 (BUT
NOT
MORE
THAN
21)
PERCENT
ALCOHOL.—Para-
graph (2) of section 5041(b) of such Code is amend-
ed by striking ‘‘$1.57’’ and inserting ‘‘$4.86’’.
(3) WINES CONTAINING MORE THAN 21 (BUT
NOT
MORE
THAN
24)
PERCENT
ALCOHOL.—Para-
graph (3) of section 5041(b) of such Code is amend-
ed by striking ‘‘$3.15’’ and inserting ‘‘$6.08’’.
(b) BEER.—
(1) IN
GENERAL.—Paragraph (1) of section
5051(a) of such Code (relating to imposition and
rate of tax on beer) is amended by striking ‘‘$18’’
and inserting ‘‘$37.67’’.
(2) SMALL
BREWERS.—Subparagraph (A) of
section 5051(a)(2) of such Code (relating to reduced
rate for certain domestic production) is amended by
striking ‘‘$7’’ each place it appears and inserting
‘‘$26.67’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 1998.
(d) FLOOR STOCKS TAXES.—
(1) IMPOSITION OF TAX.—
(A) IN GENERAL.—In the case of any tax-
increased article—
(i) on which tax was determined
under part I of subchapter A of chapter 51
of the Internal Revenue Code of 1986 or
section 7652 of such Code before January
1, 1998, and
(ii) which is held on such date for sale
by any person,
there shall be imposed a tax at the applicable
rate on each such article.
(B) APPLICABLE RATE.—For purposes of
clause (i), the applicable rate is—
(i) $1.90 per wine gallon in the case
of wine described in paragraph (1) of sec-
tion 5041(b) of such Code,
(ii) $3.29 per wine gallon in the case
of wine described in paragraph (2) of sec-
tion 5041(b) of such Code,
(iii) $2.93 per wine gallon in the case
of wine described in paragraph (3) of sec-
tion 5041(b) of such Code, and
(iv) $19.67 per barrel in the case of
beer.
In the case of a fraction of a gallon or barrel,
the tax imposed by subparagraph (A) shall be
the same fraction of the amount of such tax im-
posed on a whole gallon or barrel.
(C) TAX-INCREASED
ARTICLE.—For pur-
poses of this subsection, the term ‘‘tax-in-
creased article’’ means wine described in para-
graph (1), (2), or (3) of section 5041(b) of such
Code and beer.
(2) EXCEPTION FOR CERTAIN SMALL WHOLE-
SALE OR RETAIL DEALERS.—No tax shall be im-
posed by paragraph (1) on tax-increased articles
held on January 1, 1998, by any dealer if—
(A) the aggregate liquid volume of tax-in-
creased articles held by such dealer on such
date does not exceed 500 wine gallons, and
(B) such dealer submits to the Secretary
(at the time and in the manner required by the
Secretary) such information as the Secretary
shall require for purposes of this subparagraph.
(3) LIABILITY FOR TAX AND METHOD OF PAY-
MENT.—
(A) LIABILITY FOR TAX.—A person hold-
ing any tax-increased article on January 1,
1998, to which the tax imposed by paragraph
(1) applies shall be liable for such tax.
(B) METHOD OF PAYMENT.—The tax im-
posed by paragraph (1) shall be paid in such
manner as the Secretary shall prescribe by reg-
ulations.
(C) TIME
FOR
PAYMENT.—The tax im-
posed by paragraph (1) shall be paid on or be-
fore June 30, 1998.
(4) CONTROLLED GROUPS.—
(A) CORPORATIONS.—In the case of a con-
trolled group of corporations, the 500 wine gal-
lon amount specified in paragraph (2) shall be
apportioned among the dealers who are compo-
nent members of such group in such manner as
the Secretary shall by regulations prescribe.
For purposes of the preceding sentence, the
term ‘‘controlled group of corporations’’ has the
meaning given to such term by subsection (a)
of section 1563 of such Code; except that for
such purposes the phrase ‘‘more than 50 per-
cent’’ shall be substituted for the phrase ‘‘at
least 80 percent’’ each place it appears in such
subsection.
(B) NONINCORPORATED DEALERS UNDER
COMMON
CONTROL.—Under regulations pre-
scribed by the Secretary, principles similar to
the principles of subparagraph (A) shall apply
to a group of dealers under common control
where 1 or more of such dealers is not a cor-
poration.
(5) OTHER LAWS APPLICABLE.—
(A) IN GENERAL.—All provisions of law,
including penalties, applicable to the com-
parable excise tax with respect to any tax-in-
creased article shall, insofar as applicable and
not inconsistent with the provisions of this sec-
tion, apply to the floor stocks taxes imposed by
paragraph (1) to the same extent as if such
taxes were imposed by the comparable excise
tax.
(B) COMPARABLE EXCISE TAX.—For pur-
poses of subparagraph (A), the term ‘‘com-
parable excise tax’’ means—
(i) the tax imposed by section 5041 of
such Code in the case of wine, and
(ii) the tax imposed by section 5051
of such Code in the case of beer.
(6) DEFINITIONS.—For purposes of this sub-
section—
(A) IN
GENERAL.—Terms used in this
paragraph which are also used in subchapter A
of chapter 51 of such Code shall have the re-
spective meanings such terms have in such sub-
chapter.
(B) PERSON.—The term ‘‘person’’ includes
any State or political subdivision thereof, or any
agency or instrumentality of a State or political
subdivision thereof.
(C) SECRETARY.—The term ‘‘Secretary’’
means the Secretary of the Treasury or his del-
egate.
SEC. 3. INDEXATION OF TAX RATES APPLICABLE TO ALCO-
HOLIC BEVERAGES.
(a) GENERAL RULE.—Subpart E of part I of sub-
chapter A of chapter 51 of the Internal Revenue Code of
1986 is amended by inserting before section 5061 the fol-
lowing new section:
‘‘SEC. 5060. INDEXATION OF RATES.
‘‘(a) GENERAL RULE.—Effective during each cal-
endar year after 1998, each tax rate set forth in sub-
section (b) shall be increased by an amount equal to—
‘‘(1) such rate as in effect without regard to
this section, multiplied by
‘‘(2) the cost-of-living adjustment for such cal-
endar year determined under section 1(f)(3) by sub-
stituting ‘calendar year 1997’ for ‘calendar year
1992’ in subparagraph (B) thereof.
Any increase determined under the preceding sentence
shall be rounded to the nearest multiple of 1 cent.
‘‘(b) TAX RATES.—The tax rates set forth in this
subsection are the rates contained in the following provi-
sions:
‘‘(1) Paragraph (1) of section 5001(a).
‘‘(2) Paragraphs (1), (2), (3), (4), and (5) of
section 5041(b).
‘‘(3) Paragraphs (1) and (2)(A) of section
5051(a).’’
(b) TECHNICAL AMENDMENT.—Paragraphs (1)(A)
and (2) of section 5010(a) are each amended by striking
‘‘$13.50’’ and inserting ‘‘the rate in effect under section
5001(a)(1)’’.
(c) CLERICAL AMENDMENT.—The table of sections
for subpart E of part I of subchapter A of chapter 51
‘‘(1) the Substance Abuse and Mental Health
Services Administration, and
‘‘(2) the National Highway Traffic Safety Ad-
ministration,
for alcohol abuse prevention programs.’’
(b) CLERICAL AMENDMENT.—The table of sections
for subchapter A of chapter 98 is amended by adding at
the end the following new item:
‘‘Sec. 9512. Substance abuse prevention trust fund.’’
Æ