USC Subchapter D

in effect

26 U.S.C. § 7651 Administration and collection of taxes in possessions

Except as otherwise provided in this subchapter, and except as otherwise provided in section 28(a) of the Revised Organic Act of the Virgin Islands and section 30 of the Organic Act of Guam (relating to the covering of the proceeds of certain taxes into the treasuries of the Virgin Islands and Guam, respectively)— (1) Applicability of administrative provisionsAll provisions of the laws of the United States applicable to the assessment and collection of any tax imposed by this title or of any other liability arising under this title (including penalties) shall, in respect of such tax or liability, extend to and be applicable in any possession of the United States in the same manner and to the same extent as if such possession were a State, and as if the term “United States” when used in a geographical sense included such possession. (2) Tax imposed in possessionIn the case of any tax which is imposed by this title in any possession of the United States—(A) Internal revenue collectionsSuch tax shall be collected under the direction of the Secretary, and shall be paid into the Treasury of the United States as internal revenue collections; and (B) Applicable lawsAll provisions of the laws of the United States applicable to the administration, collection, and enforcement of such tax (including penalties) shall, in respect of such tax, extend to and be applicable in such possession of the United States in the same manner and to the same extent as if such possession were a State, and as if the term “United States” when used in a geographical sense included such possession. (3) Other laws relating to possessionsThis section shall apply notwithstanding any other provision of law relating to any possession of the United States. (4) Virgin Islands(A) For purposes of this section, the reference in section 28(a) of the Revised Organic Act of the Virgin Islands to “any tax specified in section 3811 of the Internal Revenue Code” shall be deemed to refer to any tax imposed by chapter 2 or by chapter 21. (B) For purposes of this title, section 28(a) of the Revised Organic Act of the Virgin Islands shall be effective as if such section 28(a) had been enacted before the enactment of this title and such section 28(a) shall have no effect on the amount of income tax liability required to be paid by any person to the United States.

26 U.S.C. § 7652 Shipments to the United States

(a) Puerto Rico(1) Rate of taxExcept as provided in section 5314, articles of merchandise of Puerto Rican manufacture coming into the United States and withdrawn for consumption or sale shall be subject to a tax equal to the internal revenue tax imposed in the United States upon the like articles of merchandise of domestic manufacture. (2) Payment of taxThe Secretary shall by regulations prescribe the mode and time for payment and collection of the tax described in paragraph (1), including any discretionary method described in section 6302(b) and (c). Such regulations shall authorize the payment of such tax before shipment from Puerto Rico, and the provisions of section 7651(2)(B) shall be applicable to the payment and collection of such tax in Puerto Rico. (3) Deposit of internal revenue collectionsAll taxes collected under the internal revenue laws of the United States on articles produced in Puerto Rico and transported to the United States (less the estimated amount necessary for payment of refunds and drawbacks), or consumed in the island, shall be covered into the treasury of Puerto Rico. (b) Virgin Islands(1) Taxes imposed in the United StatesExcept as provided in section 5314, there shall be imposed in the United States, upon articles coming into the United States from the Virgin Islands, a tax equal to the internal revenue tax imposed in the United States upon like articles of domestic manufacture. (2) Exemption from tax imposed in the Virgin IslandsSuch articles shipped from such islands to the United States shall be exempt from the payment of any tax imposed by the internal revenue laws of such islands. (3) Disposition of internal revenue collectionsThe Secretary shall determine the amount of all taxes imposed by, and collected under the internal revenue laws of the United States on articles produced in the Virgin Islands and transported to the United States. The amount so determined less 1 percent and less the estimated amount of refunds or credits shall be subject to disposition as follows:(A) The payment of an estimated amount shall be made to the government of the Virgin Islands before the commencement of each fiscal year as set forth in section 4(c)(2) of the Act entitled “An Act to authorize appropriations for certain insular areas of the United States, and for other purposes”, approved August 18, 1978 (48 U.S.C. 1645), as in effect on the date of the enactment of the Trade and Development Act of 2000. The payment so made shall constitute a separate fund in the treasury of the Virgin Islands and may be expended as the legislature may determine. (B) Any amounts remaining shall be deposited in the Treasury of the United States as miscellaneous receipts. If at the end of any fiscal year the total of the Federal contribution made under subparagraph (A) with respect to the four calendar quarters immediately preceding the beginning of that fiscal year has not been obligated or expended for an approved purpose, the balance shall continue available for expenditure during any succeeding fiscal year, but only for emergency relief purposes and essential public projects. The aggregate amount of moneys available for expenditure for emergency relief purposes and essential public projects only shall not exceed the sum of $5,000,000 at the end of any fiscal year. Any unobligated or unexpended balance of the Federal contribution remaining at the end of a fiscal year which would cause the moneys available for emergency relief purposes and essential public projects only to exceed the sum of $5,000,000 shall thereupon be transferred and paid over to the Treasury of the United States as miscellaneous receipts. (c) Articles containing distilled spiritsFor purposes of subsections (a)(3) and (b)(3), any article containing distilled spirits shall in no event be treated as produced in Puerto Rico or the Virgin Islands unless at least 92 percent of the alcoholic content in such article is attributable to rum. (d) Articles other than articles containing distilled spiritsFor purposes of subsections (a)(3) and (b)(3)—(1) Value added requirement for Puerto RicoAny article, other than an article containing distilled spirits, shall in no event be treated as produced in Puerto Rico unless the sum of—(A) the cost or value of the materials produced in Puerto Rico, plus (B) the direct costs of processing operations performed in Puerto Rico, equals or exceeds 50 percent of the value of such article as of the time it is brought into the United States. (2) Prohibition of Federal excise tax subsidies(A) In generalNo amount shall be transferred under subsection (a)(3) or (b)(3) in respect of taxes imposed on any article, other than an article containing distilled spirits, if the Secretary determines that a Federal excise tax subsidy was provided by Puerto Rico or the Virgin Islands (as the case may be) with respect to such article. (B) Federal excise tax subsidyFor purposes of this paragraph, the term “Federal excise tax subsidy” means any subsidy—(i) of a kind different from, or (ii) in an amount per value or volume of production greater than, the subsidy which Puerto Rico or the Virgin Islands offers generally to industries producing articles not subject to Federal excise taxes. (3) Direct costs of processing operationsFor purposes of this subsection, the term “direct cost of processing operations” has the same meaning as when used in section 213 of the Caribbean Basin Economic Recovery Act. (e) Shipments of rum to the United States(1) Excise taxes on rum covered into treasuries of Puerto Rico and Virgin IslandsAll taxes collected under section 5001(a)(1) on rum imported into the United States (less the estimated amount necessary for payment of refunds and drawbacks) shall be covered into the treasuries of Puerto Rico and the Virgin Islands. (2) Secretary prescribes formulaThe Secretary shall, from time to time, prescribe by regulation a formula for the division of such tax collections between Puerto Rico and the Virgin Islands and the timing and methods for transferring such tax collections. (3) Rum definedFor purposes of this subsection, the term “rum” means any article classified under subheading 2208.40.00 of the Harmonized Tariff Schedule of the United States (19 U.S.C. 1202). (4) Coordination with subsections (a) and (b)Paragraph (1) shall not apply with respect to any rum subject to tax under subsection (a) or (b). (f) Limitation on cover over of tax on distilled spiritsFor purposes of this section, with respect to taxes imposed under section 5001 or this section on distilled spirits, the amount covered into the treasuries of Puerto Rico and the Virgin Islands shall not exceed the lesser of the rate of—(1) $13.25, or (2) the tax imposed under subsection (a)(1) of section 5001, determined as if subsection (c)(1) of such section did not apply, on each proof gallon. (g) Drawback for medicinal alcohol, etc.In the case of medicines, medicinal preparations, food products, flavors, flavoring extracts, or perfume containing distilled spirits, which are unfit for beverage purposes and which are brought into the United States from Puerto Rico or the Virgin Islands—(1) subpart B of part II of subchapter A of chapter 51 shall be applied as if—(A) the use and tax determination described in section 5111 had occurred in the United States by a United States person at the time the article is brought into the United States, and (B) the rate of tax were the rate applicable under subsection (f) of this section, and (2) no amount shall be covered into the treasuries of Puerto Rico or the Virgin Islands. (h) Manner of cover over of tax must be derived from this titleNo amount shall be covered into the treasury of Puerto Rico or the Virgin Islands with respect to taxes for which cover over is provided under this section unless made in the manner specified in this section without regard to—(1) any provision of law which is not contained in this title or in a revenue Act; and (2) whether such provision of law is a subsequently enacted provision or directly or indirectly seeks to waive the application of this subsection. (i) Determination of taxes collectedFor purposes of subsections (a)(3), (b)(3), and (e)(1), refunds under section 5001(c)(4) shall not be taken into account as a refund, and the amount of taxes imposed by and collected under section 5001(a)(1) shall be determined without regard to section 5001(c).

26 U.S.C. § 7653 Shipments from the United States

(a) Tax imposed(1) Puerto RicoAll articles of merchandise of United States manufacture coming into Puerto Rico shall be entered at the port of entry upon payment of a tax equal in rate and amount to the internal revenue tax imposed in Puerto Rico upon the like articles of Puerto Rican manufacture. (2) Virgin IslandsThere shall be imposed in the Virgin Islands upon articles imported from the United States a tax equal to the internal revenue tax imposed in such islands upon like articles there manufactured. (b) Exemption from tax imposed in the United StatesArticles, goods, wares, or merchandise going into Puerto Rico, the Virgin Islands, Guam, and American Samoa from the United States shall be exempted from the payment of any tax imposed by the internal revenue laws of the United States. (c) Drawback of tax paid in the United StatesAll provisions of law for the allowance of drawback of internal revenue tax on articles exported from the United States are, so far as applicable, extended to like articles upon which an internal revenue tax has been paid when shipped from the United States to Puerto Rico, the Virgin Islands, Guam, or American Samoa. (d) Cross referenceFor the disposition of the proceeds of all taxes collected under the internal revenue laws of the United States on articles produced in Guam and transported into the United States or its possessions, or consumed in Guam, see the Act of August 1, 1950 (48 U.S.C. 1421h).

26 U.S.C. § 7654 Coordination of United States and certain possession individual income taxes

(a) General ruleThe net collection of taxes imposed by chapter 1 for each taxable year with respect to an individual to whom section 931 or 932(c) applies shall be covered into the Treasury of the specified possession of which such individual is a bona fide resident. (b) Definition and special ruleFor purposes of this section—(1) Net collectionsIn determining net collections for a taxable year, an appropriate adjustment shall be made for credits allowed against the tax liability and refunds made of income taxes for the taxable year. (2) Specified possessionThe term “specified possession” means Guam, American Samoa, the Northern Mariana Islands, and the Virgin Islands. (c) TransfersThe transfers of funds between the United States and any specified possession required by this section shall be made not less frequently than annually. (d) Federal personnelIn addition to the amount determined under subsection (a), the United States shall pay to each specified possession at such times and in such manner as determined by the Secretary—(1) the amount of the taxes deducted and withheld by the United States under chapter 24 with respect to compensation paid to members of the Armed Forces who are stationed in such possession but who have no income tax liability to such possession with respect to such compensation by reason of the Servicemembers Civil Relief Act (50 U.S.C. 3901 et seq.), and (2) the amount of the taxes deducted and withheld under chapter 24 with respect to amounts paid for services performed as an employee of the United States (or any agency thereof) in a specified possession with respect to an individual unless section 931 or 932(c) applies. (e) RegulationsThe Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this section and sections 931 and 932, including regulations prohibiting the rebate of taxes covered over which are allocable to United States source income and prescribing the information which the individuals to whom such sections may apply shall furnish to the Secretary.

26 U.S.C. § 7655 Cross references

(a) Imposition of tax in possessionsFor provisions imposing tax in possessions, see—(1) Chapter 2, relating to self-employment tax; (2) Chapter 21, relating to the tax under the Federal Insurance Contributions Act. (b) Other provisionsFor other provisions relating to possessions of the United States, see—(1) Section 931, relating to income tax on residents of Guam, American Samoa, or the Northern Mariana Islands; (2) Section 933, relating to income tax on residents of Puerto Rico.