A bill to amend the Internal Revenue Code of 1986 to modify the cover over of certain distilled spirits taxes.

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1938 Introduced in Senate (IS)]

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119th CONGRESS
  1st Session
                                S. 1938

To amend the Internal Revenue Code of 1986 to modify the cover over of 
                    certain distilled spirits taxes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              June 4, 2025

 Mr. Cassidy (for himself, Mrs. Gillibrand, Mr. Wicker, and Mr. Lujan) 
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 modify the cover over of 
                    certain distilled spirits taxes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. COVER OVER OF CERTAIN DISTILLED SPIRITS TAXES.

    (a) Repeal of Limitation on Cover Over of Distilled Spirits Taxes 
to Puerto Rico and Virgin Islands.--
            (1) In general.--Section 7652 of the Internal Revenue Code 
        of 1986 is amended by striking subsection (f).
            (2) Conforming amendment.--Section 7652(g)(1) of such Code 
        is amended--
                    (A) by striking subparagraph (B), and
                    (B) by striking ``as if--'' and all that follows 
                through ``the use and tax'' and inserting ``as if the 
                use and tax''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to articles brought into the United States after 
        December 31, 2021.
    (b) Required Transfer to Puerto Rico Conservation Trust Fund of 
Portion of Puerto Rico Rum Cover Over.--
            (1) In general.--Section 7652(a) of the Internal Revenue 
        Code of 1986 is amended by adding at the end the following new 
        paragraph:
            ``(4) Required transfer to puerto rico conservation trust 
        fund of portion of rum taxes covered over.--
                    ``(A) In general.--From any taxes collected on rum 
                transported to the United States that are covered into 
                the treasury of Puerto Rico under paragraph (3) at a 
                rate equal to or greater than $10.50 per proof gallon, 
                Puerto Rico shall transfer to the Puerto Rico 
                Conservation Trust Fund an amount per proof gallon 
                equal to or greater than \1/6\ of the difference 
                between $10.50 and the rate, not to exceed $13.25, at 
                which such taxes are covered into such treasury. Puerto 
                Rico's obligations under this paragraph shall not 
                modify or impair payment priorities established under 
                Puerto Rico law and in effect on December 31, 2022 .
                    ``(B) Puerto rico conservation trust fund.--For 
                purposes of this section, the term `Puerto Rico 
                Conservation Trust Fund' means the fund which--
                            ``(i) was established pursuant to a 
                        Memorandum of Understanding between the United 
                        States Department of the Interior and the 
                        Commonwealth of Puerto Rico, dated December 24, 
                        1968, and
                            ``(ii) provides for the conservation of 
                        natural areas in Puerto Rico, including through 
                        sustainable agriculture efforts and the 
                        reforestation and restoration of Puerto Rico's 
                        natural habitats.''.
            (2) Cover over determined without regard to certain rate 
        reductions.--Section 7652(i) of such Code, as amended by 
        subsection (c), is amended by inserting ``(a)(4),'' after 
        ``(a)(3),''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to distilled spirits brought into the United States 
        after December 31, 2021.
    (c) Retroactive Application of Rules Relating to Determination of 
Cover Over.--Notwithstanding section 107(a)(3) of division EE of Public 
Law 116-260--
            (1) the amendments made by section 107(a)(2)(A) thereof 
        shall take effect as if included in section 13807 of Public Law 
        115-97, and
            (2) the amendments made by section 107(a)(2)(B) thereof 
        shall take effect as if included in section 41102 of Public Law 
        115-123.
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