S 986

112th CONGRESS
1st Session

S. 986

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.

IN THE SENATE OF THE UNITED STATES

May 12, 2011

Mr. MENENDEZ introduced the following bill; which was read twice and referred to the Committee on Finance


A BILL

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.

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

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 Island'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.

END