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.

# S. 1986 Summary **What the Bill Would Do** This bill would extend a temporary tax benefit for Puerto Rico and the U.S. Virgin Islands related to distilled spirits (liquor) production. Specifically, it would maintain an increased limit on "cover over" taxes—federal excise taxes collected on rum and other distilled spirits produced in these territories that are returned to local governments as revenue. The bill extends a temporary provision that would otherwise expire, allowing these islands to continue receiving higher tax revenue from spirits production. **Who It Affects** The primary beneficiaries would be the governments of Puerto Rico and the U.S.

Virgin Islands, which depend on this tax revenue for their budgets. The rum and spirits industry in these territories would also benefit from the extended tax advantage. The bill may have a minor impact on federal tax revenue, though the amounts are typically modest compared to overall federal collections. **Current Status** The bill is currently in committee, meaning it has been introduced but has not yet been voted on by the full Senate. The bill was sponsored by Senator Bill Cassidy (R-LA) in the 119th Congress. No recent action has been recorded on this legislation.