A bill to amend the Internal Revenue Code of 1986 to modify the cover over of certain distilled spirits taxes.
Bill: S.3383 | Sponsor: Sen. Menendez, Robert (D-NJ)
Policy area: Taxation

Summary:
This bill repeals the limitation on the cover over (i.e., payment) of taxes on certain distilled spirits into the treasuries of Puerto Rico and the U.S. Virgin Islands. It also requires that certain amounts collected on rum transported to the United States that are covered over be transferred to the Puerto Rico Conservation Trust Fund.

To amend the Internal Revenue Code of 1986 to modify the cover over of 
                    certain distilled spirits taxes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. COVER OVER OF CERTAIN DISTILLED SPIRITS TAXES.

    (a) Repeal of Limitation on Cover Over of Distilled Spirits Taxes 
to Puerto Rico and Virgin Islands.--
            (1) In general.--Section 7652 of the Internal Revenue Code 
        of 1986 is amended by striking subsection (f) and by 
        redesignating subsections (g), (h) and (i) as subsections (f), 
        (g), and (h) respectively.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to distilled spirits brought into the United States 
        after December 31, 2021.
    (b) Required Transfer to Puerto Rico Conservation Trust Fund of 
Portion of Puerto Rico Rum Cover Over.--
            (1) In general.--Section 7652(a) of the Internal Revenue 
        Code of 1986 is amended by adding at the end the following new 
        paragraph:
            ``(4) Required transfer to puerto rico conservation trust 
        fund of portion of rum taxes covered over.--
                    ``(A) In general.--From any taxes collected on rum 
                transported to the United States that are covered into 
                the treasury of Puerto Rico under paragraph (3) at a 
                rate equal to or greater than $10.50 per proof gallon, 
                Puerto Rico shall transfer to the Puerto Rico 
                Conservation Trust Fund an amount per proof gallon 
                equal to or greater than \1/6\ of the difference 
                between $10.50 and the rate, not to exceed $13.25, at 
                which such taxes are covered into such treasury. Puerto 
                Rico's obligations under this paragraph shall not 
                modify or impair payment priorities established under 
                Puerto Rico law and in effect on May 21, 2021.
                    ``(B) Puerto rico conservation trust fund.--For 
                purposes of this section, the term `Puerto Rico 
                Conservation Trust Fund' means the fund established 
                pursuant to a Memorandum of Understanding between the 
                United States Department of the Interior and the 
                Commonwealth of Puerto Rico, dated December 24, 
                1968.''.
            (2) Cover over determined without regard to certain rate 
        reductions.--Section 7652(h) of such Code, as redesignated by 
        subsections (a), is amended by inserting ``(a)(4),'' after 
        ``(a)(3),''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to distilled spirits brought into the United States 
        after December 31, 2021.
    (c) Cover Over Determined Without Regard to Certain Rate 
Reductions.--Notwithstanding section 107(a)(3) of division EE of Public 
Law 116-260, the amendments made by section 107(a)(2) of division EE 
such Public Law shall apply to distilled spirits brought into the 
United States and removed after December 31, 2017.
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