I
107TH CONGRESS
1ST SESSION
H. R. 3114
To amend the Internal Revenue Code of 1986 to make permanent the increase
in the cover over of tax on distilled spirits to Puerto Rico and the
Virgin Islands.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 12, 2001
Mr. ACEVEDO-VILA´ introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to make
permanent the increase in the cover over of tax on dis-
tilled spirits to Puerto Rico and the Virgin Islands.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. INCREASED COVER OVER OF TAX ON DIS-
TILLED SPIRITS TO PUERTO RICO AND VIR-
GIN ISLANDS MADE PERMANENT.
(a) IN GENERAL.—Section 7652 of the Internal Rev-
enue Code of 1986 (relating to limitation on cover over
of tax on distilled spirits) is amended by striking sub-
section (f) and by redesignating subsections (g) and (h)
as subsections (f) and (g), respectively.
(b) CONFORMING AMENDMENT.—Section 7652(f) of
such Code (as so redesignated) is amended by striking
‘‘subsection (f) of this section’’ in paragraph (1)(B) and
inserting ‘‘section 5001(a)(1)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 2002.
(d) SPECIAL RULE.—
(1) IN GENERAL.—For the 5-year period begin-
ning after January 1, 2002, the treasury of Puerto
Rico shall make a Conservation Trust Fund transfer
within 30 days from the date of each cover over pay-
ment made during such period to such treasury
under section 7652(e) of the Internal Revenue Code
of 1986.
(2) CONSERVATION TRUST FUND TRANSFER.—
(A) IN GENERAL.—For purposes of this
subsection, the term ‘‘Conservation Trust Fund
transfer’’ means a transfer to the Puerto Rico
Conservation Trust Fund of an amount equal
to 50 cents per proof gallon of the taxes im-
posed under section 5001 or section 7652 of
such Code on distilled spirits that are covered
over to the treasury of Puerto Rico under sec-
tion 7652(e) of such Code.
(B) TREATMENT
OF
TRANSFER.—Each
Conservation Trust Fund transfer shall be
treated as principal for an endowment, the in-
come from which to be available for use by the
Puerto Rico Conservation Trust Fund for the
purposes for which the Trust Fund was estab-
lished.
(C) RESULT OF NONTRANSFER.—
(i) IN
GENERAL.—Upon notification
by the Secretary of the Interior that a
Conservation Trust Fund transfer has not
been made by the treasury of Puerto Rico
during the period described in paragraph
(1), the Secretary of the Treasury shall,
except as provided in clause (ii), deduct
and withhold from the next cover over pay-
ment to be made to the treasury of Puerto
Rico under section 7652(e) of such Code
an amount equal to the appropriate Con-
servation Trust Fund transfer and interest
thereon at the underpayment rate estab-
lished under section 6621 of such Code as
of the due date of such transfer. The Sec-
retary of the Treasury shall transfer such
amount deducted and withheld, and the in-
terest thereon, directly to the Puerto Rico
Conservation Trust Fund.
(ii) GOOD CAUSE EXCEPTION.—If the
Secretary of the Interior finds, after con-
sultation with the Governor of Puerto
Rico, that the failure by the treasury of
Puerto Rico to make a required transfer
was for good cause, and notifies the Sec-
retary of the Treasury of the finding of
such good cause before the due date of the
next cover over payment following the noti-
fication of nontransfer, then the Secretary
of the Treasury shall not deduct the
amount of such nontransfer from any
cover over payment.
(3) 
PUERTO
RICO
CONSERVATION
TRUST
FUND.—For purposes of this subsection, the term
‘‘Puerto Rico Conservation Trust Fund’’ means the
fund established pursuant to a Memorandum of Un-
derstanding between the United States Department
of the Interior and the Commonwealth of Puerto
Rico, dated December 24, 1968.
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