[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8473 Introduced in House (IH)]
<DOC>
117th CONGRESS
2d Session
H. R. 8473
To amend the Fair Labor Standards Act of 1938 to prohibit employers
from paying employees in the garment industry by piece rate, to require
manufacturers and contractors in the garment industry to register with
the Department of Labor, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 21, 2022
Mrs. Carolyn B. Maloney of New York (for herself, Ms. Ross, Mrs.
Dingell, Mr. Carson, Mr. Nadler, and Mr. Khanna) introduced the
following bill; which was referred to the Committee on Education and
Labor, and in addition to the Committee on Ways and Means, for a period
to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To amend the Fair Labor Standards Act of 1938 to prohibit employers
from paying employees in the garment industry by piece rate, to require
manufacturers and contractors in the garment industry to register with
the Department of Labor, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fashioning Accountability and
Building Real Institutional Change Act'' or the ``FABRIC Act''.
SEC. 2. PAYMENT AND LIABILITY REQUIREMENTS IN THE GARMENT INDUSTRY.
(a) In General.--The Fair Labor Standards Act of 1938 (29 U.S.C.
201 et seq.) is amended--
(1) by inserting after section 7 (29 U.S.C. 207) the
following:
``SEC. 8. REQUIREMENTS FOR THE GARMENT INDUSTRY.
``(a) Prohibition Against Payment by Piece Rate.--No employer shall
pay an employee employed in the garment industry, who in any workweek
is engaged in commerce or in the production of goods for commerce, or
is employed in an enterprise engaged in commerce or in the production
of goods for commerce, by the piece or unit, or by piece rate.
``(b) Hourly Rates.--
``(1) In general.--An employer shall pay each employee
employed in the garment industry, who in any workweek is
engaged in commerce or in the production of goods for commerce,
or is employed in an enterprise engaged in commerce or in the
production of goods for commerce, at an hourly rate that is not
less than the rate in effect under section 6(a)(1).
``(2) Incentive bonuses.--Nothing in this section shall be
construed to prohibit incentive-based bonuses for employees
employed in the garment industry.
``(c) Joint and Several Liability of Brand Guarantors.--
``(1) In general.--A brand guarantor who contracts with an
employer of an employee described in paragraph (2) for the
performance of services in the garment industry shall share
joint and several liability with such employer for any
violations of the employer under this Act involving such
employee.
``(2) Employees.--An employee described in this paragraph
is any employee employed in the garment industry who in any
workweek is engaged in commerce or in the production of goods
for commerce, or is employed in an enterprise engaged in
commerce or in the production of goods for commerce.
``(3) Subcontracts.--For purposes of paragraph (1), an
employer of an employee described in paragraph (2) includes any
other person who, through 1 or more subcontracts, subcontracts
with the employer of such an employee for the performance of
services in the garment industry.
``(4) Rule of construction.--Nothing in this subsection
shall be construed to preclude a determination of joint
employment, in the garment industry or otherwise, for entities
other than brand guarantors.
``(d) Nonapplicability.--Subsections (a) and (b) shall not apply
for purposes of an employee employed in the garment industry who is
covered by a bona fide collective bargaining agreement that expressly
provides for--
``(1) wages, hours of work, and working conditions of the
employee;
``(2)(A) a wage rate for all hours worked by the employee
in excess of 40 hours in a week that is greater than one and
one-half times the regular rate at which such employee is
employed; and
``(B) a minimum hourly rate of pay for the employee that is
not less than 10 percent more than the higher of--
``(i) the minimum wage rate under an applicable
State law; or
``(ii) the minimum wage rate in effect under
section 6(a)(1); and
``(3) a process to resolve disputes concerning nonpayment
of wages.
``(e) Regulations.--The Secretary may prescribe such regulations or
other guidance as may be necessary to carry out this section.
``(f) Definitions.--In this section:
``(1) Brand guarantor.--The term `brand guarantor' means
any person contracting for the performance of garment
manufacturing, including through licensing of a brand or name,
regardless of whether the party with whom the person contracts
performs the manufacturing operations or hires garment
contractors to perform the manufacturing operations.
``(2) Garment.--The term `garment' includes any article of
wearing apparel or accessory designed or intended to be worn by
an individual, including clothing, hats, gloves, handbags,
hosiery, ties, scarfs, and belts.
``(3) Garment contractor.--The term `garment contractor'--
``(A) means any person who, with the assistance of
an employee or any other individual, is primarily
engaged in garment manufacturing for another person,
including for another garment contractor, a garment
manufacturer, or a brand guarantor; and
``(B) includes a subcontractor that is primarily
engaged in garment manufacturing.
``(4) Garment industry.--The term `garment industry' means
the industry of garment manufacturing.
``(5) Garment manufacturer.--The term `garment
manufacturer' means any person who is engaged in garment
manufacturing who is not a garment contractor.
``(6) Garment manufacturing.--
``(A) In general.--The term `garment manufacturing'
means--
``(i) sewing, cutting, making, processing,
repairing, finishing, assembling, pressing, or
dyeing a garment, including a section or
component of a garment, designed for or
intended to be worn by an individual, which is
to be sold or offered for sale or resale;
``(ii) altering the design, or causing
another person to alter the design, of a
garment described in clause (i):
``(iii) affixing a label to a garment
described in clause (i);
``(iv) any other form of preparation of a
garment described in clause (i) by any person
contracting for such preparation; and
``(v) any other operation or practice as
may be identified in regulations issued by the
Secretary consistent with the purposes of this
section.
``(B) Exclusions.--The term `garment manufacturing'
does not include--
``(i) manufacturing of garments by an
individual who manufactures the garments by his
or her self without the assistance of a garment
contractor, employee, or any other individual;
``(ii) cleaning, altering, or tailoring any
garment, including a section or component of a
garment, after the garment has been sold at
retail; or
``(iii) any other form of manufacturing as
may be identified in regulations issued by the
Secretary consistent with the purposes of this
section.'';
(2) in section 15 (29 U.S.C. 215(a))--
(A) in subsection (a)--
(i) in paragraph (5), by striking the
period and inserting ``; or''; and
(ii) by adding at the end the following:
``(6) to violate section 8.''; and
(B) by adding at the end the following new
subsection:
``(c) For the purposes of subsection (a)(6), it shall be an
affirmative defense to an action under such subsection against a brand
guarantor (as defined in section 8(f)) if such brand guarantor shows no
knowledge of the violation of section 8 alleged in such action.''; and
(3) in section 16 (29 U.S.C. 216)--
(A) in subsection (b)--
(i) by inserting after the third sentence
the following: ``Any person who violates
section 8 shall be liable for such legal or
equitable relief as may be appropriate to
effectuate the purposes of such section,
including the payment of wages lost and an
additional equal amount as liquidated
damages.''; and
(ii) in the last sentence, by inserting
before the period at the end ``or 8''; and
(B) in subsection (c), by adding at the end the
following: ``The authority and requirements described
in this subsection shall apply with respect to a
violation of section 8, as appropriate, and the person
in such violation shall be liable for such legal or
equitable relief as may be appropriate to effectuate
the purposes of such section, including the payment of
wages lost and an additional equal amount as liquidated
damages.''.
(b) Conforming Amendment.--Section 10 of the Fair Labor Standards
Act of 1938 (29 U.S.C. 210) is repealed.
(c) Effective Date.--The amendments made by this section shall take
effect on the date that is 6 months after the date of enactment of this
Act.
SEC. 3. REGISTRATION OF GARMENT MANUFACTURERS AND CONTRACTORS.
(a) Definitions.--In this section:
(1) Employee.--The term ``employee'' has the meaning given
the term in section 3 of the Fair Labor Standards Act of 1938
(29 U.S.C. 203).
(2) Garment contractor; garment industry; garment
manufacturer; garment manufacturing.--The terms ``garment
contractor'', ``garment industry'', ``garment manufacturer'',
and ``garment manufacturing'' have the meanings given such
terms in section 8(f) of the Fair Labor Standards Act of 1938
(29 U.S.C. 208(f)).
(3) Production employee.--The term ``production employee'',
with respect to a garment manufacturer or garment contractor,
means any employee of the manufacturer or contractor who is
engaged in the garment industry.
(4) Secretary.--The term ``Secretary'' means the Secretary
of Labor, acting through the Undersecretary of the Garment
Industry appointed under section 4(b).
(b) Requirement To Register With the Department of Labor.--
Beginning on the date that is 6 months after the date of enactment of
this Act, no garment manufacturer or garment contractor shall engage in
the garment industry during any year unless the manufacturer or
contractor has registered for such year with the Secretary in
accordance with this section.
(c) Registration Requirements.--
(1) In general.--A garment manufacturer or garment
contractor registering under this section shall submit to the
Secretary--
(A) a form, in writing, containing the information
described in paragraph (2);
(B) photographic verification of the identify of--
(i) each owner or partner of the garment
manufacturer or garment contractor; and
(ii) in the case the garment manufacturer
or garment contractor is a corporation, each
officer of the corporation;
(C) verification that the garment manufacturer or
garment contractor has in effect a workers'
compensation insurance policy for all production
employees of the manufacturer or contractor; and
(D) payment of the applicable registration fee
described in paragraph (3).
(2) Information in form.--The information described in this
paragraph is each of the following:
(A) A statement of whether the garment manufacturer
or garment contractor is a sole proprietorship,
partnership, or corporation.
(B) The name, residential address, and phone number
of all production employees of the garment manufacturer
or garment contractor.
(C) The name, residential address, phone number,
and social security number of--
(i) each owner or partner of the garment
manufacturer or garment contractor;
(ii) if applicable, each officer of the
garment manufacturer or garment contractor; and
(iii) if applicable, each of the 10 largest
shareholders of the garment manufacturer or
garment contractor.
(D) The name, residential address, and social
security number of each person with a financial
interest in the business of the garment manufacturer in
the garment industry, and the amount of that interest
(if any).
(E) In the case in which the garment manufacturer
or garment contractor is a corporation, a statement
ensuring that no shares of the corporation are listed
on a national securities exchange or regularly quoted
in an over-the-counter market by one or more members of
a national or an affiliated securities association.
(F) A statement of how long the garment
manufacturer or garment contractor has been in business
in the garment industry.
(G) If applicable, the tax identification number of
the garment manufacturer or garment contractor.
(H) A statement of the status of the garment
manufacturer or garment contractor as a manufacturer or
contractor.
(I) A statement of whether the garment manufacturer
or garment contractor has contracted with a labor
organization, and, if so, the name and address of such
labor organization.
(J)(i) A statement as to whether, within the
preceding 3-year period, any of the following persons
or entities have been found by a court or the Secretary
to have violated the Fair Labor Standards Act of 1938
(29 U.S.C. 201 et seq.):
(I) The garment manufacturer or garment
contractor.
(II) Any owner of or any partner of the
garment manufacturer or garment contractor.
(III) In the case the garment manufacturer
or garment contractor is a corporation, any
officer of the corporation or any of the 10
largest shareholders of the corporation.
(ii) If any person or entity described in any of
subclauses (I) through (III) of clause (i) has violated
the Fair Labor Standards Act of 1938 within the period
described in such clause, a statement of the nature of
such violation and the date on which such violation
occurred.
(K) In the case of a contractor, a statement of
whether the contractor has subcontracted for the
cutting, sewing, dying, or assembling of textiles or
apparel or sections or components of apparel.
(3) Registration fee.--
(A) In general.--The registration fee required
under this subsection for each year shall be $200.
(B) Prorated fees.--The Secretary may prorate the
registration fee under subparagraph (A) for any
registration described in subsection (d)(2)(B)(i).
(C) Use.--The Secretary shall use the total amount
of each registration fee required under this subsection
for carrying out this section.
(d) Submission.--
(1) Consolidation.--Each division, subsidiary corporation,
or related company of a garment manufacturer or garment
contractor may, at the option of the manufacturer or
contractor, be named and included under 1 registration under
this section.
(2) Timing.--
(A) In general.--Except as provided under
subparagraph (B), each registration submitted under
this section shall be filed not later than the date
that is 6 months after the date of enactment of this
Act and annually thereafter on a date determined by the
Secretary.
(B) New manufacturers or contractors.--In the case
of a garment manufacturer or garment contractor that
begins garment manufacturing operations or enters into
a contract for such operations for the first time after
the date of enactment of this Act, the registration
required under this section shall be submitted--
(i) not later than 6 months after the date
on which the garment manufacturing operations
begin or the contractor enters into the
contract for such operations; and
(ii) annually thereafter on a date
determined by the Secretary.
(e) Certificates.--
(1) In general.--The Secretary shall issue a certificate of
registration to each garment manufacturer or garment contractor
that submits a registration meeting the requirements under this
section.
(2) Applicability.--
(A) In general.--Except as provided in subparagraph
(B), each certificate issued under paragraph (1) shall
be effective for a period of 12 months.
(B) New manufacturers or contractors.--A
certificate with respect to a registration submitted
under subsection (d)(2)(B)(i) shall be effective until
the following registration date as determined by the
Secretary.
(3) Posting.--Each garment manufacturer or garment
contractor receiving a certificate under paragraph (1) shall
post such certificate in a place where it may be read by any
employee of the manufacturer or contractor during the workday.
(4) Suspension or revocation.--The Secretary may suspend or
revoke a certificate of registration issued under paragraph (1)
if the garment manufacturer or garment contractor that
submitted the registration--
(A) has knowingly made any misrepresentation in the
application for such certificate; or
(B) has failed to comply with this Act or any
regulation under this Act.
(f) Recordkeeping.--The Secretary shall, through regulations,
establish requirements for recordkeeping for all garment manufacturers
and garment contractors engaging in the garment industry in order to
assist in enforcing the requirements of this section.
(g) Enforcement.--
(1) In general.--The Secretary may impose a civil money
penalty of not more than $50,000,000 against any person who
violates a requirement under this section.
(2) Considerations.--In assessing the amount of a penalty
under this subsection, the Secretary shall give consideration
to--
(A) the size of the business of the person;
(B) whether the violation of the person was
committed in good faith;
(C) the gravity of the violation;
(D) the history of any previous violations of the
person under this section; and
(E) the history of the person in complying with the
recordkeeping requirements under subsection (f).
(h) Regulations.--The Secretary may prescribe such regulations or
other guidance as may be necessary to carry out this section.
SEC. 4. UNDERSECRETARY OF THE GARMENT INDUSTRY.
(a) In General.--There is established in the Department of Labor
the Office of the Garment Industry (referred to in this section as the
``Office'').
(b) Undersecretary.--
(1) In general.--The Secretary of Labor shall appoint an
Undersecretary of the Garment Industry (referred to in this
section as the ``Undersecretary'') to head the Office.
(2) Functions.--The Undersecretary shall--
(A) carry out section 3 using sums appropriated
under subsection (c);
(B) carry out the national domestic garment
manufacturing support program under section 5; and
(C) provide assistance to the Administrator of the
Wage and Hour Division in enforcing section 8 of the
Fair Labor Standards Act of 1938 (29 U.S.C. 208).
(c) Authorization of Appropriations.--
(1) In general.--There are authorized to be appropriated to
the Secretary of Labor--
(A) $10,000,000 for fiscal year 2022, to establish
the Office and carry out the functions described in
subparagraphs (A) and (C) of subsection (b)(2); and
(B) $3,000,000 for each of fiscal years 2023
through 2027, to carry out the functions described in
subparagraphs (A) and (C) of subsection (b)(2).
(2) Availability.--Any sums appropriated under the
authorization contained in this subsection shall remain
available, without fiscal year limitation, until expended.
SEC. 5. NATIONAL DOMESTIC GARMENT MANUFACTURING SUPPORT PROGRAM.
(a) Definitions.--In this section:
(1) Eligible entity.--The term ``eligible entity'' means an
entity that is--
(A) a garment manufacturer that is incorporated in
and performs garment manufacturing within the United
States; or
(B) a nonprofit organization that provides
workforce development opportunities with respect to the
garment industry.
(2) Garment industry; garment manufacturer; garment
manufacturing.--The terms ``garment industry'', ``garment
manufacturer'', and ``garment manufacturing'' have the meanings
given such terms in section 8(f) of the Fair Labor Standards
Act of 1938 (29 U.S.C. 208(f)).
(3) Secretary.--The term ``Secretary'' means the Secretary
of Labor, acting through the Undersecretary of the Garment
Industry appointed under section 4(b).
(b) In General.--From amounts made available under subsection (g),
the Secretary shall award grants, on a competitive basis, to eligible
entities to support garment manufacturing in the United States.
(c) Application.--An eligible entity seeking a grant under this
section shall submit to the Secretary an application at such time, in
such manner, and containing such information as the Secretary may
require, including--
(1) a description of the project that the eligible entity
proposes to carry out using such grant; and
(2) an implementation plan of such project that reflects
the expected participation of, and partnership with, applicable
labor organizations and relevant community stakeholders.
(d) Award.--
(1) Selection.--In awarding grants under this section to
eligible entities, the Secretary shall give priority to
eligible entities--
(A) with a workforce that is covered by a
collective bargaining agreement;
(B) that are certified by a State in which such
eligible entity operates as minority-owned businesses,
women-owned businesses, or veteran-owned businesses; or
(C) who have operated as a garment manufacturer
within the United States for more than 5 years.
(2) Amount.--The amount of a grant awarded under this
section may not be more than $5,000,000.
(e) Use of Funds.--An eligible entity receiving a grant under this
section shall use the grant funds to support--
(1) investments in training and workforce development for
employees within the garment industry;
(2) the acquisition of relevant tools and equipment for
garment manufacturing in the United States;
(3) the acquisition of, and capital improvements to,
facilities for garment manufacturing in the United States and
to promote the health and safety of employees in such
facilities; or
(4) efforts to assist in educating employees about rights
under this Act and other relevant Federal, State, or local
laws.
(f) Report.--Not later than 6 months after the date on which an
eligible entity receives a grant under this section, the eligible
entity shall submit to the Secretary a report that includes an account
of the use of grant funds awarded under this section.
(g) Authorization of Appropriations.--There is authorized to be
appropriated $40,000,000 to carry out this section.
SEC. 6. CREDIT FOR INSOURCING EXPENSES.
(a) In General.--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:
``SEC. 45U. CREDIT FOR INSOURCING EXPENSES.
``(a) In General.--For purposes of section 38, the insourcing
expenses credit for any taxable year is an amount equal to 30 percent
of the eligible insourcing expenses of the taxpayer which are taken
into account in such taxable year under subsection (d).
``(b) Eligible Insourcing Expenses.--For purposes of this section--
``(1) In general.--The term `eligible insourcing expenses'
means--
``(A) eligible expenses paid or incurred by the
taxpayer in connection with the elimination of any
business unit of the taxpayer (or of any member of any
expanded affiliated group in which the taxpayer is also
a member) located outside the United States, and
``(B) eligible expenses paid or incurred by the
taxpayer in connection with the establishment of any
business unit of the taxpayer (or of any member of any
expanded affiliated group in which the taxpayer is also
a member) located within--
``(i) a HUBZone (as defined in section
31(b) of the Small Business Act (15 U.S.C.
657a(b))), or
``(ii) a low-income community (as described
in section 45D(e)),
if such establishment constitutes the relocation of the
business unit so eliminated. For purposes of the
preceding sentence, a relocation shall not be treated
as failing to occur merely because such elimination
occurs in a different taxable year than such
establishment.
``(2) Eligible expenses.--The term `eligible expenses'
means--
``(A) any amount for which a deduction is allowed
to the taxpayer under section 162, and
``(B) permit and license fees, lease brokerage
fees, equipment installation costs, and, to the extent
provided by the Secretary, other similar expenses.
Such term does not include any compensation which is paid or
incurred in connection with severance from employment and, to
the extent provided by the Secretary, any similar amount.
``(3) Business unit.--The term `business unit' means--
``(A) any trade or business within the garment
industry (as defined in section 8(f) of the Fair Labor
Standards Act of 1938), and
``(B) any line of business, or functional unit,
which is part of any trade or business described in
subparagraph (A).
``(4) Expanded affiliated group.--The term `expanded
affiliated group' means an affiliated group as defined in
section 1504(a), determined without regard to section
1504(b)(3) and by substituting `more than 50 percent' for `at
least 80 percent' each place it appears in section 1504(a). A
partnership or any other entity (other than a corporation)
shall be treated as a member of an expanded affiliated group if
such entity is controlled (within the meaning of section
954(d)(3)) by members of such group (including any entity
treated as a member of such group by reason of this paragraph).
``(5) Expenses must be pursuant to insourcing plan.--
Amounts shall be taken into account under paragraph (1) only to
the extent that such amounts are paid or incurred pursuant to a
written plan to carry out the relocation described in paragraph
(1).
``(6) Operating expenses not taken into account.--Any
amount paid or incurred in connection with the on-going
operation of a business unit shall not be treated as an amount
paid or incurred in connection with the establishment or
elimination of such business unit.
``(c) Increased Domestic Employment Requirement.--No credit shall
be allowed under this section unless the number of full-time equivalent
employees of the taxpayer for the taxable year for which the credit is
claimed exceeds the number of full-time equivalent employees of the
taxpayer for the last taxable year ending before the first taxable year
in which such eligible insourcing expenses were paid or incurred. For
purposes of this subsection, full-time equivalent employees has the
meaning given such term under section 45R(d) (and the applicable rules
of section 45R(e)). All employers treated as a single employer under
subsection (b), (c), (m), or (o) of section 414 shall be treated as a
single employer for purposes of this subsection.
``(d) Credit Allowed Upon Completion of Insourcing Plan.--
``(1) In general.--Except as provided in paragraph (2),
eligible insourcing expenses shall be taken into account under
subsection (a) in the taxable year during which the plan
described in subsection (b)(5) has been completed and all
eligible insourcing expenses pursuant to such plan have been
paid or incurred.
``(2) Election to apply employment test and claim credit in
first full taxable year after completion of plan.--If the
taxpayer elects the application of this paragraph, eligible
insourcing expenses shall be taken into account under
subsection (a) in the first taxable year after the taxable year
described in paragraph (1).
``(e) Possessions Treated as Part of the United States.--For
purposes of this section, the term `United States' shall be treated as
including each possession of the United States (including the
Commonwealth of Puerto Rico and the Commonwealth of the Northern
Mariana Islands).
``(f) Regulations.--The Secretary shall prescribe such regulations
or other guidance as may be necessary or appropriate to carry out the
purposes of this section.''.
(b) Credit To Be Part of General Business Credit.--Subsection (b)
of section 38 of such Code is amended by striking ``plus'' at the end
of paragraph (32), by striking the period at the end of paragraph (33)
and inserting ``, plus'', and by adding at the end the following new
paragraph:
``(34) the insourcing expenses credit determined under
section 45U(a).''.
(c) 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 new item:
``Sec. 45U. Credit for insourcing expenses.''.
(d) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred after the date of the enactment of
this Act.
(e) Application to United States Possessions.--
(1) Payments to possessions.--
(A) Mirror code possessions.--The Secretary of the
Treasury shall make periodic payments to each
possession of the United States with a mirror code tax
system in an amount equal to the loss to that
possession by reason of section 45U of the Internal
Revenue Code of 1986. Such amount shall be determined
by the Secretary of the Treasury based on information
provided by the government of the respective
possession.
(B) Other possessions.--The Secretary of the
Treasury shall make annual payments to each possession
of the United States which does not have a mirror code
tax system in an amount estimated by the Secretary of
the Treasury as being equal to the aggregate benefits
that would have been provided to residents of such
possession by reason of section 45U of such Code if a
mirror code tax system had been in effect in such
possession. The preceding sentence shall not apply with
respect to any possession of the United States unless
such possession has a plan, which has been approved by
the Secretary of the Treasury, under which such
possession will promptly distribute such payment to the
residents of such possession.
(2) Coordination with credit allowed against united states
income taxes.--No credit shall be allowed against United States
income taxes under section 45U of such Code to any person--
(A) to whom a credit is allowed against taxes
imposed by the possession by reason of such section, or
(B) who is eligible for a payment under a plan
described in paragraph (1)(B).
(3) Definitions and special rules.--
(A) Possessions of the united states.--For purposes
of this section, the term ``possession of the United
States'' includes the Commonwealth of Puerto Rico and
the Commonwealth of the Northern Mariana Islands.
(B) Mirror code tax system.--For purposes of this
section, the term ``mirror code tax system'' means,
with respect to any possession of the United States,
the income tax system of such possession if the income
tax liability of the residents of such possession under
such system is determined by reference to the income
tax laws of the United States as if such possession
were the United States.
(C) Treatment of payments.--For purposes of section
1324(b)(2) of title 31, United States Code, the
payments under this section shall be treated in the
same manner as a refund due from sections referred to
in such section 1324(b)(2).
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