Domestic Spirits Tax Equity Act of 2005

Domestic Spirits Tax Equity Act of 2005 - Amends the Internal Revenue Code to allow wholesalers of distilled spirits a business tax credit for the financing costs of the Federal excise tax on such spirits.

[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 646 Introduced in Senate (IS)]







109th CONGRESS
  1st Session
                                 S. 646

 To amend the Internal Revenue Code of 1986 to allow distilled spirits 
  wholesalers a credit against income tax for their cost of carrying 
 Federal excise taxes prior to the sale of the product bearing the tax.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 17, 2005

  Mr. Bunning (for himself, Mrs. Lincoln, Mr. Lott, Mr. Bond, and Mr. 
  Chambliss) 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 allow distilled spirits 
  wholesalers a credit against income tax for their cost of carrying 
 Federal excise taxes prior to the sale of the product bearing the tax.

    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 ``Domestic Spirits Tax Equity Act of 
2005''.

SEC. 2. INCOME TAX CREDIT FOR DISTILLED SPIRITS WHOLESALERS AND FOR 
              DISTILLED SPIRITS IN CONTROL STATE BAILMENT WAREHOUSES 
              FOR COSTS OF CARRYING FEDERAL EXCISE TAXES ON BOTTLED 
              DISTILLED SPIRITS.

    (a) In General.--Subpart A of part I of subchapter A of chapter 51 
of the Internal Revenue Code of 1986 (relating to gallonage and 
occupational taxes) is amended by adding at the end the following new 
section:

``SEC. 5011. INCOME TAX CREDIT FOR AVERAGE COST OF CARRYING EXCISE TAX.

    ``(a) In General.--For purposes of section 38, the amount of the 
distilled spirits credit for any taxable year is the amount equal to 
the product of--
            ``(1) in the case of--
                    ``(A) any eligible wholesaler--
                            ``(i) the number of cases of bottled 
                        distilled spirits--
                                    ``(I) which were bottled in the 
                                United States, and
                                    ``(II) which are purchased by such 
                                wholesaler during the taxable year 
                                directly from the bottler of such 
                                spirits, or
                    ``(B) any person which is subject to section 5005 
                and which is not an eligible wholesaler, the number of 
                cases of bottled distilled spirits which are stored in 
                a warehouse operated by, or on behalf of, a State, or 
                agency or political subdivision thereof, on which title 
                has not passed on an unconditional sale basis, and
            ``(2) the average tax-financing cost per case for the most 
        recent calendar year ending before the beginning of such 
        taxable year.
    ``(b) Eligible Wholesaler.--For purposes of this section, the term 
`eligible wholesaler' means any person which holds a permit under the 
Federal Alcohol Administration Act as a wholesaler of distilled spirits 
which is not a State, or agency or political subdivision thereof.
    ``(c) Average Tax-Financing Cost.--
            ``(1) In general.--For purposes of this section, the 
        average tax-financing cost per case for any calendar year is 
        the amount of interest which would accrue at the deemed 
        financing rate during a 60-day period on an amount equal to the 
        deemed Federal excise tax per case.
            ``(2) Deemed financing rate.--For purposes of paragraph 
        (1), the deemed financing rate for any calendar year is the 
        average of the corporate overpayment rates under paragraph (1) 
        of section 6621(a) (determined without regard to the last 
        sentence of such paragraph) for calendar quarters of such year.
            ``(3) Deemed federal excise tax per case.--For purposes of 
        paragraph (1), the deemed Federal excise tax per case is 
        $25.68.
    ``(d) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Case.--The term `case' means 12 80-proof 750 
        milliliter bottles.
            ``(2) Number of cases in lot.--The number of cases in any 
        lot of distilled spirits shall be determined by dividing the 
        number of liters in such lot by 9.''.
    (b) Conforming Amendments.--
            (1) Subsection (b) of section 38 of the Internal Revenue 
        Code of 1986 is amended by striking ``plus'' at the end of 
        paragraph (18), by striking the period at the end of paragraph 
        (19) and inserting ``, plus'', and by adding at the end the 
        following new paragraph:
            ``(20) the distilled spirits credit determined under 
        section 5011(a).''.
            (2) The table of sections for subpart A of part I of 
        subchapter A of chapter 51 of such Code is amended by adding at 
        the end the following new item:

``Sec. 5011. Income tax credit for average cost of carrying excise 
                            tax.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
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