[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 4680 Introduced in Senate (IS)]
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117th CONGRESS
2d Session
S. 4680
To amend the Internal Revenue Code of 1986 to establish a credit for
the domestic production of rare earth magnets, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 28, 2022
Ms. Cortez Masto introduced the following bill; which was read twice
and referred to the Committee on Finance
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A BILL
To amend the Internal Revenue Code of 1986 to establish a credit for
the domestic production of rare earth magnets, 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 ``Rare Earth Magnet Manufacturing
Production Tax Credit Act of 2022''.
SEC. 2. CREDIT FOR PRODUCTION OF RARE EARTH MAGNETS.
(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 PRODUCTION OF RARE EARTH MAGNETS.
``(a) In General.--For the purposes of section 38, the credit for
production of rare earth magnets determined under this section for any
taxable year is an amount equal to the sum of--
``(1) $20 per kilogram of rare earth magnets manufactured
in the United States by the taxpayer during the taxable year
which are not described in paragraph (2), plus
``(2) $30 per kilogram of rare earth magnets manufactured
in the United States by the taxpayer during the taxable year if
not less than 90 percent of the component rare earth material
of such magnets are manufactured within the United States.
``(b) Phase-Out.--
``(1) In general.--In the case of any rare earth magnet
manufactured after December 31, 2030, the amount determined
under this section with respect to such rare earth magnet shall
be equal to the product of--
``(A) the amount determined under subsection (a)
with respect to such rare earth magnet, as determined
without regard to this subsection, multiplied by
``(B) the phase-out percentage described in
paragraph (2).
``(2) Phase-out percentage.--The phase-out percentage
described in this paragraph is--
``(A) in the case of any rare earth magnet
manufactured in calendar year 2031, 70 percent,
``(B) in the case of any rare earth magnet
manufactured in calendar year 2032, 35 percent, and
``(C) in the case of any rare earth magnet
manufactured after December 31, 2033, 0 percent.
``(c) Restriction on Component Sourcing.--The credit determined
under subsection (a) shall not apply with respect to any rare earth
magnet if any component rare earth material used to manufacture such
magnet was manufactured in a non-allied foreign nation.
``(d) Definitions.--For the purposes of this section--
``(1) Rare earth magnet.--The term `rare earth magnet'
means a permanent magnet comprised of--
``(A) an alloy of neodymium, iron, and boron, which
may also include praseodymium, terbium, or dysprosium,
or
``(B) an alloy of samarium and cobalt, which may
also include gadolinium or any associated host mineral
of a component rare earth material.
``(2) Component rare earth material.--The term `component
rare earth material' means neodymium, praseodymium, dysprosium,
terbium, samarium, gadolinium, or cobalt.
``(3) United states and possession of the united states.--
The terms `United States' and `possession of the United States'
have the meaning given such terms in section 638.
``(4) Manufactured.--The term `manufactured' means the
manufacturing of a rare earth magnet, including the alloying,
reduction, strip casting, and metallization of component rare
earth material.
``(5) Non-allied foreign nation.--The term `non-allied
foreign nation' has the meaning given to the term `covered
nation' in section 4872(d)(2) of title 10, United States Code.
``(e) Trade or Business Requirement.--No credit shall be allowed
under this section with respect to any property unless such property is
manufactured in the ordinary course of a trade or business of the
taxpayer.
``(f) Election for Direct Payment.--
``(1) In general.--In the case of any rare earth magnets
manufactured in the United States by the taxpayer during the
taxable year, the amount of any credit determined under
subsection (a) with respect to such property for such taxable
year shall, at the election of the taxpayer, be treated as a
payment equal to such amount which is made by the taxpayer
against the tax imposed by chapter 1 for such taxable year
(regardless of whether such tax would have been on such
taxpayer).
``(2) Form and effect of election.--An election under
paragraph (1) shall be made at such time and in such manner as
the Secretary may prescribe. Such election, once made, shall--
``(A) be irrevocable with respect to the property
to which such election applies, and
``(B) reduce the amount of the credit which would
(but for this subsection) be allowable under this
section with respect to such property for the taxable
year in which such property is manufactured to zero.
``(3) Application to partnerships and s corporations.--In
the case of a partnership or S corporation which makes an
election under paragraph (1)--
``(A) such paragraph shall apply with respect to
such partnership or corporation without regard to the
fact that no tax is imposed by chapter 1 on such
partnership or corporation, and
``(B)(i) in the case of a partnership, each
partner's distributive share of the credit determined
under subsection (a) with respect to the rare earth
magnets shall be deemed to be zero, and
``(ii) in the case of an S corporation, each
shareholder's pro rata share of the credit determined
under subsection (a) with respect to such property
shall be deemed to be zero.''.
(b) Credit To Be Part of General Business Credit.--Section 38(b) of
the Internal Revenue Code of 1986 is amended--
(1) by striking ``plus'' at the end of paragraph (32),
(2) by striking the period at the end of paragraph (33) and
inserting ``, plus'', and
(3) by adding at the end the following new paragraph:
``(34) the credit for production of rare earth magnets
determined under section 45U(a).''.
(c) Conforming Amendment.--The table of sections for 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 item:
``Sec. 45U. Credit for production of rare earth magnets.''.
(d) Effective Date.--The amendments made by this Act shall apply to
taxable years beginning after December 31, 2021.
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