Rare Earth Magnet Manufacturing Production Tax Credit Act of 2021
This bill allows a new tax credit for the domestic production of rare earth magnets manufactured in the ordinary course of a taxpayer's trade or business. The bill defines rare earth magnet as a permanent magnet comprised of (1) an alloy of neodymium, praseodymium, iron, boron, terbium, or dysprosium; or (2) an alloy of samarium, gadolinium, and cobalt.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5033 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 5033
To amend the Internal Revenue Code of 1986 to establish a credit for
the domestic production of rare earth magnets, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
August 13, 2021
Mr. Swalwell (for himself and Mr. Reschenthaler) introduced the
following bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to establish a credit for
the domestic production of rare earth magnets, 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 ``Rare Earth Magnet Manufacturing
Production Tax Credit Act of 2021''.
SEC. 2. CREDIT FOR PRODUCTION OF RARE EARTH MAGNETS.
(a) In General.--The Internal Revenue Code of 1986 is amended by
inserting the following new section after section 45T:
``SEC. 45U. CREDIT FOR PRODUCTION OF RARE EARTH MAGNETS.
``(a) In General.--For the purposes of section 38, the credit for
production of rare earth magnets determined under this section for any
taxable year is an amount equal to the sum of--
``(1) $20 per kilogram of rare earth magnets manufactured
in the United States by the taxpayer during the taxable year,
or
``(2) $30 per kilogram of rare earth magnets manufactured
in the United States by the taxpayer during the taxable year if
all of the component rare earth material of such magnets are
produced within the United States.
``(b) Phase-Out.--
``(1) In general.--In the case of any rare earth magnet
produced after December 31, 2030, the amount determined under
this section with respect to such rare earth magnet shall be
equal to the product of--
``(A) the amount determined under subsection (a)
with respect to such rare earth magnet, as determined
without regard to this subsection, multiplied by
``(B) the phase-out percentage described in
paragraph (2).
``(2) Phase-out percentage.--The phase-out percentage
described in this paragraph is--
``(A) in the case of any rare earth magnet produced
in calendar year 2031, 70 percent,
``(B) in the case of any rare earth magnet produced
in calendar year 2032, 35 percent, or
``(C) in the case of any rare earth magnet produced
after December 31, 2033, 0 percent.
``(c) Restriction on Component Sourcing.--A taxpayer is not
eligible for the credit determined under subsection (a) with respect to
a rare earth magnet if any component rare earth material used to
produce such magnet was produced in a non-allied foreign nation.
``(d) Definitions.--For the purposes of this section--
``(1) Rare earth magnet.--The term `rare earth magnet'
means a permanent magnet comprised of--
``(A) an alloy of neodymium, praseodymium, iron,
boron, terbium, or dysprosium, or
``(B) an alloy of samarium, gadolinium, and cobalt.
``(2) Component rare earth material.--The term `component
rare earth material' means neodymium, praseodymium, dysprosium,
terbium, samarium, gadolinium, and cobalt.
``(3) United states and possession of the united states.--
The terms `United States' and `possession of the United States'
have the meaning given such terms in section 638.
``(4) Manufactured.--The term `manufactured' means the
manufacturing of a rare earth magnet, including the alloying,
reduction, strip casting, and metallization of component rare
earth material.
``(5) Non-allied foreign nation.--The term `non-allied
foreign nation' has the meaning given to the term `covered
nation' in section 2533c(d) of title 10, United States Code.
``(e) Trade or Business Requirement.--No credit shall be allowed
under this section with respect to any property unless such property is
manufactured in the ordinary course of a trade or business of the
taxpayer.
``(f) Elective Payment for Production of Rare Earth Magnets.--
``(1) In general.--In the case of a taxpayer making an
election (at such time and in such manner as the Secretary may
provide) under this section with respect to any portion of the
credit under subsection (a), such taxpayer shall be treated as
making a payment against the tax imposed by this subtitle for
the taxable year equal to the amount of such portion.
``(2) Timing.--The payment described in paragraph (1) shall
be treated as made on the later of the due date of the return
of tax for such taxable year or the date on which such return
is filed.
``(3) Exclusion from gross income.--Gross income of the
taxpayer shall be determined without regard to this
subsection.''.
(b) Credit To Be Part of General Business Credit.--Section 38(b) of
such Code is amended by striking ``plus'' at the end of paragraph (32),
by striking the period at the end of paragraph (33) and inserting ``,
plus'', and by adding at the end the following new paragraph:
``(34) the credit for production of rare earth magnets
determined under section 45U(a).''.
(c) Conforming Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such Code is amended by
inserting after the item relating to section 45T the following new
item:
``Sec. 45U. Credit for production of rare earth magnets.''.
(d) Effective Date.--The amendments made by this Act shall apply to
taxable years beginning after December 31, 2021.
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Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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