To amend the Internal Revenue Code of 1986 to regulate the subsidies paid to rum producers in Puerto Rico and the Virgin Islands, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Investing in U.S. Territories, Not 
Corporations Act of 2011''.

SEC. 2. LIMITATION ON GOVERNMENT ASSISTANCE TO RUM PRODUCERS.

    Subsection (e) of section 7652 of the Internal Revenue Code of 1986 
(relating to shipments of rum to the United States) is amended by 
redesignating paragraphs (3) and (4) as paragraphs (4) and (5), 
respectively, and by inserting after paragraph (2) the following new 
paragraph:
            ``(3) Limitation on government assistance to rum 
        producers.--
                    ``(A) In general.--If the amount of direct and 
                indirect government assistance paid or incurred by any 
                covered government during any calendar year to persons 
                producing rum within the jurisdiction of such 
                government exceeds the limitation under subparagraph 
                (B), the amount which would (but for this paragraph) be 
                covered into the treasury of such government under this 
                subsection shall be reduced for each of the 2 
                succeeding calendar years by the amount of such excess.
                    ``(B) Limitation.--The limitation under this 
                subparagraph is the amount equal to 15 percent of the 
                amount which would (but for this paragraph) be covered 
                into the treasury of such government under this section 
                for the calendar year.
                    ``(C) Separate application to each producer.--The 
                provisions of subparagraphs (A) and (B) shall also be 
                applied separately to each rum producer, taking into 
                account only the assistance paid or incurred by any 
                covered government to such producer and only such 
                producer's production to which subsection (a)(3) or 
                (b)(3) applies, whichever is applicable.
                    ``(D) Government assistance.--For purposes of this 
                paragraph--
                            ``(i) Direct government assistance.--The 
                        term `direct government assistance' includes 
                        any transfer of funds, grant, subsidy (other 
                        than any generally available tax subsidy), 
                        loan, equity investment, loan guarantee, 
                        production or marketing incentive, income or 
                        price support, provision of goods or services 
                        (other than generally available infrastructure 
                        and public services), and such other assistance 
                        provided by a covered government as the 
                        Secretary identifies as consistent with the 
                        purposes of this paragraph.
                            ``(ii) Indirect government assistance.--The 
                        term `indirect government assistance' includes 
                        any amounts expended by a covered government--
                                    ``(I) to promote, market, or 
                                otherwise support the rum industry 
                                within the jurisdiction of such 
                                government,
                                    ``(II) to pay principal and 
                                interest on, and expenses related to, 
                                indebtedness incurred, the proceeds of 
                                which are used to provide rum 
                                subsidies, or
                                    ``(III) for any other purpose 
                                identified by the Secretary as 
                                consistent with the purposes of this 
                                paragraph.
                            ``(iii) Certain debt-financed payments 
                        excluded.--The terms `direct government 
                        assistance' and `indirect government 
                        assistance' shall not include any payment made 
                        by a covered government to a rum producer out 
                        of funds raised through a loan (including the 
                        issuance of a debt instrument), but shall 
                        include any payment of principal and interest 
                        on the loan (or debt instrument).
                    ``(E) Annual reports.--Each covered government 
                shall, for each calendar year, submit a report to the 
                Secretary detailing the amount and type of direct and 
                indirect government assistance provided by such 
                government to each rum producer during such calendar 
                year and to rum producers in the aggregate during such 
                year. Such report shall be submitted at such time, and 
                in such form, as is prescribed by the Secretary.
                    ``(F) Covered government.--For purposes of this 
                paragraph, the term `covered government' means the 
                government of Puerto Rico and the government of the 
                Virgin Islands.''.

SEC. 3. MAXIMUM AND MINIMUM ALLOCATIONS OF RUM EXCISE TAXES BETWEEN 
              PUERTO RICO AND THE VIRGIN ISLANDS.

    Section 7652 of the Internal Revenue Code of 1986 is amended by 
inserting after subsection (h) the following new subsection:
    ``(i) Limitations on Allocation of Rum Excise Taxes Between Puerto 
Rico and the Virgin Islands.--
            ``(1) In general.--Notwithstanding subsections (a), (b), 
        and (e), if, without regard to this subsection and subsection 
        (e)(3), the Secretary determines that the respective shares of 
        Puerto Rico and the Virgin Islands of the aggregate amount to 
        be covered into their treasuries under this section for any 
        calendar year are not within the parameters of paragraph (2), 
        the Secretary shall increase or decrease such shares to the 
        extent necessary to bring them within such parameters.
            ``(2) Parameters.--The parameters of this paragraph are 
        that--
                    ``(A) Puerto Rico's share shall be at least 65 
                percent but not more than 70 percent of such aggregate 
                amount, and
                    ``(B) the Virgin Islands's share shall be at least 
                30 percent but not more than 35 percent of such 
                aggregate amount.
            ``(3) Application with subsection (e)(3).--This subsection 
        shall be applied before subsection (e)(3).''.

SEC. 4. DENIAL OF COVER OVER FOR RUM REDISTILLED INTO CANE NEUTRAL 
              SPIRITS.

    Section 7652 of the Internal Revenue Code of 1986 is amended by 
inserting after subsection (i) the following new subsection:
    ``(j) Denial of Cover Over for Rum Redistilled Into Cane Neutral 
Spirits.--No amount shall be covered over under subsection (a) or (b) 
with respect to rum which is redistilled into cane neutral spirits 
after being brought into the United States. The Secretary shall 
prescribe such information reporting as the Secretary determines 
necessary to carry out the preceding sentence.''.

SEC. 5. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b), the 
amendments made by this section shall apply to calendar years after 
2011.
    (b) Denial of Cover Over for Rum Redistilled Into Cane Neutral 
Spirits.--The amendment made by section 4 shall apply to rum brought 
into the United States after the date of the enactment of this Act.

Summary: Investing in U.S. Territories, Not Corporations Act of 2011 - Amends the Internal Revenue Code, with respect to shipments of rum to the United States from Puerto Rico and the Virgin Islands, to: (1) limit during a two-year period the amount of direct and indirect government assistance by the governments of Puerto Rico and the Virgin Islands to rum producers from rum excise taxes covered-over into the treasuries of such governments to 15% of the amounts covered-over, (2) impose limitations on the allocation of rum excise taxes between Puerto Rico and the Virgin Islands, and (3) deny any payment of rum excise taxes covered over into the treasuries of Puerto Rico and the Virgin Islands for rum redistilled into cane neutral spirits after being brought into the United States.