Rare Earth Magnet Manufacturing Production Tax Credit Act of 2023
This bill allows a new tax credit for the domestic production of rare earth magnets. The magnets must be manufactured or produced in the ordinary course of the taxpayer's trade or business. The credit is disallowed if any component rare earth material used to produce such magnets is produced in a non-allied foreign nation.
The bill defines rare earth magnet as a permanent magnet comprised of an alloy of neodymium, iron, and boron, or an alloy of samarium and cobalt, which may also include other material.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2849 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 2849
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
April 25, 2023
Mr. Reschenthaler (for himself and Mr. Swalwell) 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 2023''.
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 45AA:
``SEC. 45BB. CREDIT FOR PRODUCTION OF RARE EARTH MAGNETS.
``(a) In General.--
``(1) Allowance of credit.--For 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 the credit amounts determined under subsection (b) with
respect to rare earth magnets which are--
``(A) manufactured or produced by the taxpayer, and
``(B) sold by such taxpayer to an unrelated person
during the taxable year.
``(2) Unrelated person.--
``(A) In general.--For purposes of this subsection,
a taxpayer shall be treated as selling rare earth
magnets to an unrelated person if such magnet is sold
to such person by a person related to the taxpayer.
``(B) Election.--
``(i) In general.--At the election of the
taxpayer (in such form and manner as the
Secretary may prescribe), a sale of rare earth
magnets by such taxpayer to a related person
shall be deemed to have been made to an
unrelated person.
``(ii) Requirement.--As a condition of, and
prior to, any election described in clause (i),
the Secretary may require such information or
registration as the Secretary deems necessary
for purposes of preventing duplication, fraud,
or any improper or excessive amount determined
under paragraph (1).
``(b) Credit Amount.--
``(1) In general.--The amount determined under this
subsection is--
``(A) $20 per kilogram of rare earth magnets
manufactured or produced in the United States by the
taxpayer during the taxable year, and
``(B) $30 per kilogram of rare earth magnets
manufactured or produced in the United States by the
taxpayer during the taxable year if not less than 90
percent of the component rare earth materials of such
magnets are produced within the United States.
``(2) Phase-out.--
``(A) In general.--In the case of any rare earth
magnet manufactured or produced after December 31,
2032, the amount determined under this section with
respect to such rare earth magnet shall be equal to the
product of--
``(i) the amount determined under paragraph
(1) with respect to such rare earth magnet, as
determined without regard to this subsection,
multiplied by
``(ii) the phase-out percentage described
in subparagraph (B).
``(B) Phase-out percentage.--The phase-out
percentage described in this paragraph is--
``(i) in the case of any rare earth magnet
manufactured or produced in calendar year 2033,
70 percent,
``(ii) in the case of any rare earth magnet
manufactured or produced in calendar year 2034
or 2035, 35 percent, or
``(iii) in the case of any rare earth
magnet manufactured or produced after December
31, 2035, 0 percent.
``(c) 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, iron, and boron, which
may also include praseodymium, terbium, or dysprosium,
or
``(B) an alloy of samarium and cobalt, which may
also include gadolinium or any associated host mineral
of a component rare earth material.
``(2) Component rare earth material.--The term `component
rare earth material' means neodymium, praseodymium, dysprosium,
terbium, samarium, gadolinium, and cobalt.
``(3) Manufactured.--The term `manufactured' means the
manufacturing of a rare earth magnet, including the alloying,
reduction, strip casting, milling, sintering, recycling,
pressing, and metallization of component rare earth material.
``(4) Non-allied foreign nation.--The term `non-allied
foreign nation' has the meaning given to the term `covered
nation' in section 4872(d) of title 10, United States Code.
``(5) 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.
``(d) Special Rules.--
``(1) Restriction on component sourcing.--No credit shall
be allowed under this section with respect to a rare earth
magnet if any component rare earth material used to manufacture
or produce such magnet is produced in a non-allied foreign
nation.
``(2) Trade or business requirement.--No credit shall be
allowed under this section with respect to a rare earth magnet
unless such magnet is manufactured or produced in the ordinary
course of a trade or business of the taxpayer.
``(e) 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 allowed 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.''.
(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 (40),
by striking the period at the end of paragraph (41) and inserting ``,
plus'', and by adding at the end the following new paragraph:
``(42) the credit for production of rare earth magnets
determined under section 45BB(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 45AA the following new
item:
``Sec. 45BB. 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, 2023.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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