To amend the Internal Revenue Code of 1986 to cover into the treasury of the Virgin Islands revenue from tax on fuel produced in the Virgin Islands and entered into the United States.

Bill Number

H.R. 366

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-01-13: Referred to the House Committee on Ways and Means.

Last Updated

2025-05-27T14:12:52Z

AI-Generated Summary

Purpose

This bill (H.R. 366) aims to direct federal tax revenue collected on fuel produced in the U.S. Virgin Islands (VI) and imported into the mainland United States to the VI's treasury, rather than keeping it in the federal treasury. The goal is to provide the VI with funds from these taxes to support local needs.

Key Provisions

• Amendment to Tax Code: Adds a new subsection (j) to Section 7652 of the Internal Revenue Code of 1986 (IRC), which handles tax treatments for U.S. possessions like the VI.
• Specific Tax Coverage: Requires that all taxes collected under IRC Section 4081(a)—which imposes excise taxes on gasoline, diesel, and similar fuels—on fuel produced in the VI and entered (imported) into the U.S. mainland be transferred ("covered over") to the VI treasury.
• Effective Date: The change applies to fuel entered into the U.S. after December 31, 2024.

Significant Changes to Existing Law

• Under current law (prior to this amendment), federal excise taxes on such fuel shipments likely flow to the U.S. Treasury, similar to taxes on domestic fuel.
• This bill shifts those revenues directly to the VI treasury, treating the VI more like a state in how it receives fuel tax proceeds, rather than as a U.S. possession where federal taxes are retained centrally.

Potential Impacts

• On Government Agencies: The U.S. Treasury would lose this revenue stream (potentially modest, depending on VI fuel production volumes), while the VI government gains direct access to funds for local infrastructure, education, or disaster recovery—key needs in a territory prone to hurricanes.
• On Citizens: VI residents could benefit from improved local services funded by these taxes; mainland U.S. consumers might see no direct change, as fuel taxes are passed on in prices, but it could encourage VI-based fuel production.
• On International Relations: No direct impact, as this is an internal U.S. fiscal matter involving a territory.

Main Stakeholders Affected

• U.S. Virgin Islands Government and Residents: Primary beneficiaries, gaining revenue for territorial operations.
• Federal Government (U.S. Treasury and IRS): Loses revenue but simplifies administration by directing taxes locally.
• Fuel Producers and Importers in the VI: Could see economic incentives to increase production, knowing taxes support local economy.
• U.S. Mainland Fuel Consumers and Businesses: Indirectly affected through stable or potentially lower administrative costs on imported VI fuel.

Notable Legal, Constitutional, or Political Implications

• Legal: Aligns with IRC provisions for U.S. possessions (e.g., mirror tax systems in Section 7651), but extends "cover over" benefits (a term meaning revenue transfer to local treasuries) previously limited to alcohol and tobacco taxes in the VI. No apparent conflicts with federal taxing authority.
• Constitutional: Reinforces the territorial status of the VI under Article IV of the U.S. Constitution, which allows Congress to govern territories; promotes fiscal self-determination without granting full statehood.
• Political: Supports advocacy for greater autonomy for U.S. territories (e.g., by Delegate Stacey Plaskett, who introduced the bill), potentially setting a precedent for similar revenue-sharing in other possessions like Puerto Rico. It reflects bipartisan interest in equitable treatment but could spark debate over federal revenue allocation.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Del. Plaskett, Stacey E. [D-VI]

Recent Actions

• 2025-01-13: Referred to the House Committee on Ways and Means.
• 2025-01-13: Introduced in House
• 2025-01-13: Introduced in House

Bill Versions

• To amend the Internal Revenue Code of 1986 to cover into the treasury of the Virgin Islands revenue from tax on fuel produced in the Virgin Islands and entered into the United States. — issued 2025-01-13 — PDF (2 pages)