S. 1919

119 S1919 IS: Buying American Cotton Act of 2025
 U.S. Senate
 2025-05-22
 text/xml
 EN
 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
  II
  119th CONGRESS
  1st Session
  S. 1919
  IN THE SENATE OF THE UNITED STATES
  May 22, 2025
  Mrs. Hyde-Smith  (for herself,  Mrs. Britt ,  Mr.
  Marshall , and  Mr. Boozman )
  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 establish a domestic cotton
  consumption credit.
1.
Short title
This Act may be cited as the   Buying American Cotton Act of 2025  .
2.
Domestic cotton consumption credit
(a)
Purpose
The purposes of this section are—
(1)
to encourage the consumption of cotton which originated in the United States, and products which are made from such cotton, and
(2)
to document the processing of such cotton through a trustworthy supply chain tracing system.
(b)
Allowance of credit
Subpart D of part IV of subchapter A of  chapter 1  of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
45BB.
Domestic cotton consumption credit
(a)
Credit allowed
For purposes of section 38, the domestic cotton consumption credit determined under this section for any taxable year is an amount equal to the product of—
(1)
the documented volume of qualified cotton in an eligible article sold by the taxpayer in a qualifying sale during the taxable year,
(2)
the applicable percentage, and
(3)
the applicable cotton market price.
(b)
Qualifying sale; applicable percentage; applicable cotton market
  price
(1)
Qualifying sale
For purposes of this section—
(A)
In general
The term  qualifying sale  means, with respect to any eligible article, the first sale of such eligible article to an unrelated person.
(B)
Exception
Such term shall not include any sale for use or consumption of an eligible article outside of the United States unless such sale results in income which is effectively connected with a trade or business in the United States.
(C)
Related persons
Persons shall be treated as related to each other if such persons would be treated as a single employer under the regulations prescribed under section 52(b).
(2)
Applicable percentage
For purposes of subsection (a)(2), the applicable percentage is—
(A)
in the case of an eligible article consisting of qualified cotton that—
(i)
was only subject to processing in the United States, or
(ii)
in addition to any processing that may have occurred within the United States, was subject to additional processing only in a country or countries with which the United States has entered into a free trade agreement or for which the United States has extended benefits through a unilateral preference program, 24 percent, and
(B)
in the case of an eligible article consisting of qualified cotton that was subject to additional processing at any stage of its processing in a country with which the United States has not entered into a free trade agreement or for which the United States has not extended benefits through a unilateral preference program, 18 percent.
(3)
Applicable cotton market price
For purposes of this section, the term  applicable cotton market price  means, with respect to any eligible article, the average market price for qualified cotton in a recognized international market (as determined by the Secretary, in consultation with the Secretary of Agriculture) for the 3-calendar year period ending with or within the taxable year immediately preceding the taxable year in which the eligible article is sold.
(c)
Other definitions
For purposes of this section—
(1)
Eligible article
(A)
In general
The term  eligible article  means any product which—
(i)
is comprised in whole or in part of qualified cotton which is certified, under such regulations established by the Secretary in consultation with the Secretary of Agriculture, as meeting the requirements of paragraph (2)(B)(ii),
(ii)
is in its final condition, and
(iii)
is ready for retail sale to a consumer.
(B)
Exception
Such term shall not include any product if—
(i)
any component of such product is an eligible article for which a credit has been allowed, or
(ii)
the taxpayer selling such product has been notified by the person from whom such a component was acquired that such person intended to claim such credit.
(C)
Final condition
(i)
In general
For purposes of subparagraph (A)(ii), the term  final condition  means, with respect to any article, the physical state in which such article is presented for sale or sold for immediate resale to a consumer, determined—
(I)
without regard to any de minimis augmentation that could be performed on it by or on behalf of a retailer of the eligible article, and
(II)
without regard to packaging.
(ii)
De minimis augmentation
For purposes of clause (i)(I), the term  de minimis augmentation  means any graphics or other adornment imposed on or attached to the article.
(2)
Qualified cotton
(A)
In general
The term  qualified cotton  means extra long staple cotton (as defined in section 1111 of the Agricultural Act of 2014) or upland cotton (within the meaning of section 1207(c) of such Act) which—
(i)
is grown in the United States, and
(ii)
meets the proof of origin requirements of subparagraph (B).
(B)
Proof of origin requirements
Cotton meets the proof of origin requirements of this subparagraph if—
(i)
such cotton was—
(I)
assigned a permanent bale identification number, or
(II)
meets such other requirements as the Secretary, in consultation with the Secretary of Agriculture, determines is sufficient to prove that the cotton originated in the United States, and
(ii)
the movement and volume of such cotton is digitally traced, under such regulations established by the Secretary in consultation with the Secretary of Agriculture, through the supply chain from its United States origin through to the last stage of processing into an eligible article.
(C)
Permanent bale identification number
The term  permanent bale identification number  means the autogenerated identification number assigned by the Secretary of Agriculture to a bale of qualified cotton that was grown and ginned in the United States.
(3)
Free trade agreement
(A)
In general
Except as provided by subparagraph (B), the term  free trade agreement  means a comprehensive bilateral or regional agreement—
(i)
that covers substantially all trade between the parties to the agreement, and
(ii)
with respect to which an implementing bill (as defined in section 151 of the Trade Act of 1974 ( 19 U.S.C. 2191 )) is enacted into law.
(B)
Exclusions
The term  free trade agreement  does not include—
(i)
the WTO Agreement, as defined in section 2 of the Uruguay Round Agreements Act ( 19 U.S.C. 3501 ),
(ii)
the agreements specified in 101(d) of that Act ( 19 U.S.C. 3511(d) ), or
(iii)
any other multilateral agreement of the World Trade Organization or any successor entity.
(4)
Unilateral preference program
(A)
In general
Except as provided by subparagraph (B), the term  unilateral preference program —
(i)
means a program of the United States that provides preferential duty treatment to textile or apparel articles imported from a foreign country that is designated as a beneficiary of the program, and
(ii)
includes—
(I)
the African Growth and Opportunity Act ( 19 U.S.C. 3701 et seq. ) and section 506A of the Trade Act of 1974 ( 19 U.S.C. 2466a ),
(II)
the Caribbean Basin Economic Recovery Act ( 19 U.S.C. 2701 et seq. ),
(III)
section 915 of the Trade Facilitation and Trade Enforcement Act of 2015 ( 19 U.S.C. 4454 ), and
(IV)
any other provision of law—
(aa)
establishing a program that provides preferential duty treatment to textile or apparel articles imported from a foreign country that is designated as a beneficiary of the program, and
(bb)
that is enacted after the date of the enactment of this section.
(B)
Exclusion
The term  unilateral preference program  does not include the Generalized System of Preferences under title V of the Trade Act of 1974 ( 19 U.S.C. 2461 et seq. ).
(5)
Processing
(A)
In general
The term  processing  means any physical process, or any stage in such process, that contributes to the conversion of an item comprised in whole or in part of qualified cotton into an eligible article.
(B)
Exception
Such term shall not include the mere physical possession, storage, movement, or packaging of cotton or any eligible article.
(6)
United States
The term  United States  includes any possessions of the United States.
(7)
Volume
The term  volume  means, with respect to any eligible article, the amount of qualified cotton in such article, as measured in pounds.
(d)
Increased credit for qualified cotton yarn and qualified cotton
  fabric
(1)
Qualified cotton yarn
(A)
In general
At the election of the taxpayer, in the case of any eligible article which is composed in whole or in part of qualified cotton yarn—
(i)
this section shall be applied separately with respect to such cotton yarn, and
(ii)
the amount determined under subsection (a) with respect to such cotton yarn shall be equal to such amount (determined without regard to this subsection) multiplied by 1.6.
(B)
Qualified cotton yarn
For purposes of this subsection, the term  qualified cotton yarn  means a strand of fiber made in the United States from qualified cotton into a form suitable for weaving, knitting, braiding, felting, webbing, or otherwise fabricating into a fabric.
(2)
Qualified cotton fabric
(A)
In general
At the election of the taxpayer, in the case of any eligible article which is composed in whole or in part of qualified cotton fabric—
(i)
this section shall be applied separately with respect to such cotton fabric, and
(ii)
the amount determined under subsection (a) with respect to such cotton fabric shall be equal to such amount (determined without regard to this subsection) multiplied by 6.5.
(B)
Qualified cotton fabric
For purposes of this subsection, the term  qualified cotton fabric  means any material woven, knitted, felted, or otherwise produced in the United States from, or in combination with, any fiber, yarn, or substitute thereof that was made in the United States from qualified cotton.
(3)
Election
An election under this subsection shall be made at such time and in such form as the Secretary may be regulations provide.
(e)
Regulations
The Secretary shall prescribe such regulations and other guidance as may be necessary or appropriate to carry out this section, including regulations or guidance—
(1)
to establish a system for preventing the credit allowed under this subsection more than once with respect to any amount of qualified cotton, which may include establishing a requirement to notify purchasers of eligible articles of the intent to claim the credit allowed under this section,
(2)
with respect to the digital tracing of cotton under subsection (c)(2)(B)(ii), which may include requirements to identify the taxpayers within the supply chain, and
(3)
with respect to the certification of qualified cotton under subsection (c)(1)(A)(i), which may require reporting of the specific volume of qualified cotton in the eligible article.
  .
(c)
Credit allowed as 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 by adding at the end the following new paragraph:
(42)
the domestic cotton consumption credit determined under section 45BB.
  .
(d)
Transfer of credit
Section 6418(f)(1)(A) of such Code is amended by adding at the end the following:
(xii)
The domestic cotton consumption credit determined under section 45BB(a).
  .
(e)
Clerical amendment
The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following item:
Sec.
  45BB. Domestic cotton consumption credit.
  .
(f)
Effective date
The amendments made by this section shall apply to eligible articles (as defined in  section 45BB  of the Internal Revenue Code of 1986, as added by subsection (b)) that are sold on or after January 20, 2025.