S. 1938

119 S1938 IS: To amend the Internal Revenue Code of 1986 to modify the cover over of certain distilled spirits taxes.
 U.S. Senate
 2025-06-04
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  II
  119th CONGRESS
  1st Session
  S. 1938
  IN THE SENATE OF THE UNITED STATES
  June 4, 2025
  Mr. Cassidy  (for himself,  Mrs. Gillibrand ,  Mr.
  Wicker , and  Mr. Luján )
  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.
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 .