To amend the Internal Revenue Code of 1986 to extend the temporary increase in limitation on the cover over of distilled spirits taxes to Puerto Rico and the Virgin Islands.
Summary
HB 1378 would amend the Internal Revenue Code to extend a temporary increase in the amount of federal excise taxes on distilled spirits that are “covered over” to Puerto Rico and the U.S. Virgin Islands. Under current law, a portion of the federal tax collected on rum and other distilled spirits imported into the United States is transferred back to those territories; this bill would move the expiration date for the higher cover-over limit from January 1, 2022, to January 1, 2032.
The measure is a targeted tax provision focused on territorial revenue from alcohol production and importation. By extending the higher cover-over cap, it would continue directing additional federal excise tax revenue to Puerto Rico and the Virgin Islands for another decade, affecting territorial governments, distilleries, and related economic interests tied to rum production and spirits taxation.
Impact
The bill would amend section 7652(f)(1) of the Internal Revenue Code of 1986 and extend the temporary increased cover-over limitation for distilled spirits taxes through January 1, 2032. Its practical effect would be to preserve a larger transfer of federal alcohol excise tax revenues to Puerto Rico and the U.S. Virgin Islands for spirits brought into the United States after December 31, 2021, thereby supporting territorial budgets and the spirits industry connected to those jurisdictions.
Sentiment
There is no recorded committee transcript or vote history in the provided materials, so no formal debate or roll-call sentiment is available. Based on the bill’s introduction by Representatives from Puerto Rico and the Virgin Islands and its narrow, revenue-focused purpose, the measure appears to be a supportive territorial tax extension rather than a broadly controversial policy change.
Contention
No specific points of contention are documented in the provided record. In general, bills extending alcohol tax cover-over provisions can raise questions about federal revenue effects, the appropriate level of support for territorial governments, and the economic benefits to rum producers versus the cost to the federal treasury, but none of those issues are shown in the available discussion or votes for HB 1378.
A bill to amend the Internal Revenue Code of 1986 to extend the temporary increase in limitation on the cover over of distilled spirits taxes to Puerto Rico and the Virgin Islands.
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