To amend the Internal Revenue Code of 1986 to extend the temporary increase in limitation on the cover over of distilled spirits taxes to Puerto Rico and the Virgin Islands.
- Bill Number
- H.R. 1378
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-02-14: Referred to the House Committee on Ways and Means.
- Last Updated
- 2025-12-05T22:02:45Z
AI-Generated Summary
Purpose
This bill (H.R. 1378) aims to extend a temporary increase in the amount of federal excise taxes on distilled spirits (like rum) that the U.S. government transfers, or "covers over," to Puerto Rico and the Virgin Islands. This helps these U.S. territories retain more revenue from locally produced alcohol for their own use.
Key Provisions
- Amends Section 7652(f)(1) of the Internal Revenue Code of 1986.
- Changes the expiration date of the temporary increase from January 1, 2022, to January 1, 2032.
- The changes apply to distilled spirits brought into the United States after December 31, 2021.
Significant Changes to Existing Law
- Under current law, there is a temporary cap on the amount of distilled spirits taxes that can be covered over to Puerto Rico and the Virgin Islands, set to end on January 1, 2022.
- This bill extends that higher cap by 10 years, allowing the territories to receive a larger share of the federal excise taxes (up to $13.25 per proof gallon, as previously increased) on spirits produced and bottled in those areas and shipped to the mainland U.S.
Potential Impacts
- On government agencies: The U.S. Department of the Treasury and Internal Revenue Service (IRS) will continue processing these tax transfers, potentially reducing federal revenue by forgoing a portion of excise taxes, though the exact amount depends on production volumes.
- On citizens: Residents of Puerto Rico and the Virgin Islands may benefit indirectly through increased local government funding for public services, infrastructure, or economic development, as these territories often rely on such revenues (e.g., from the rum industry).
- On international relations: No direct impact, as this is a domestic U.S. fiscal policy affecting only U.S. territories.
- Overall, it supports the local economies of these territories without broadly affecting mainland U.S. citizens or federal budgets in a major way.
Main Stakeholders Affected
- Puerto Rico and Virgin Islands governments: Primary beneficiaries, gaining extended access to higher tax revenues for local budgets.
- Distilled spirits producers: Especially rum distilleries in these territories, which benefit from the policy encouraging local production and sales to the U.S. mainland.
- U.S. federal government: Treasury and IRS handle the administrative transfer of funds, with a minor reduction in federal revenue.
- Consumers and taxpayers: Minimal direct impact, though mainland U.S. alcohol consumers may see stable or slightly lower prices on territorial spirits due to sustained production incentives.
Notable Legal, Constitutional, or Political Implications
- Legal: This is a straightforward amendment to the tax code, building on prior extensions (e.g., from the 2017 Tax Cuts and Jobs Act). It ensures continuity in tax treatment without creating new enforcement challenges for the IRS.
- Constitutional: No significant issues, as Congress has broad authority under the Territory Clause (Article IV, Section 3) to regulate fiscal policies for U.S. territories like Puerto Rico and the Virgin Islands.
- Political: Demonstrates bipartisan support for U.S. territories (introduced by Rep. Estes (R) and cosponsored by Rep. Plaskett (D)), potentially aiding economic recovery in these areas post-hurricanes and economic downturns. It avoids controversy by focusing on targeted tax relief rather than broader territorial status debates.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (25)
Del. Plaskett, Stacey E. [D-VI-At Large], Rep. Barr, Andy [R-KY-6], Rep. Malliotakis, Nicole [R-NY-11], Rep. Carter, Earl L. "Buddy" [R-GA-1], Rep. Sewell, Terri A. [D-AL-7], Rep. Steube, W. Gregory [R-FL-17], Rep. Moore, Gwen [D-WI-4], Rep. Davis, Danny K. [D-IL-7], Rep. Velázquez, Nydia M. [D-NY-7], Rescom. Hernández, Pablo [D-PR-At Large], Rep. Hurd, Jeff [R-CO-3], Rep. Wasserman Schultz, Debbie [D-FL-25], Rep. Salazar, Maria Elvira [R-FL-27], Rep. Clarke, Yvette D. [D-NY-9], Rep. Diaz-Balart, Mario [R-FL-26], Rep. Bean, Aaron [R-FL-4], Rep. Gimenez, Carlos A. [R-FL-28], Rep. Guthrie, Brett [R-KY-2], Rep. Comer, James [R-KY-1], Rep. Rogers, Harold [R-KY-5], Rep. Garbarino, Andrew R. [R-NY-2], Rep. Sánchez, Linda T. [D-CA-38], Rep. Langworthy, Nicholas A. [R-NY-23], Rep. Lawler, Michael [R-NY-17], Rep. McClain, Lisa C. [R-MI-9]
Recent Actions
- 2025-02-14: Referred to the House Committee on Ways and Means.
- 2025-02-14: Introduced in House
- 2025-02-14: Introduced in House
Bill Versions
- To amend the Internal Revenue Code of 1986 to extend the temporary increase in limitation on the cover over of distilled spirits taxes to Puerto Rico and the Virgin Islands. — issued 2025-02-14 — PDF (2 pages)