[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 2844 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
1st Session
S. 2844
To amend the Internal Revenue Code of 1986 to establish an excise tax
on plastics.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
September 19, 2023
Mr. Whitehouse (for himself, Mr. Wyden, Mr. Van Hollen, Mr. Menendez,
and Mr. Blumenthal) introduced the following bill; which was read twice
and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to establish an excise tax
on plastics.
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 ``Rewarding Efforts to Decrease
Unrecycled Contaminants in Ecosystems Act of 2023'' or the ``REDUCE Act
of 2023''.
SEC. 2. EXCISE TAX ON PLASTICS.
(a) In General.--Chapter 38 of the Internal Revenue Code of 1986 is
amended by adding at the end thereof the following new subchapter:
``Subchapter E--Tax on Plastics
``Sec. 4691. Imposition of tax.
``Sec. 4692. Definitions and special rules.
``SEC. 4691. IMPOSITION OF TAX.
``(a) General Rule.--There is hereby imposed--
``(1) a tax on--
``(A) the entry into the United States of any
taxable virgin plastic resin for consumption, use, or
warehousing, and
``(B) the sale of any taxable virgin plastic resin
sold by an applicable entity unless there was a prior
taxable entry of such resin under subparagraph (A), and
``(2) a tax on the entry into the United States of any
imported covered item.
``(b) Amount of Tax.--
``(1) Taxable virgin plastic resin.--
``(A) In general.--The amount of the tax imposed
under subsection (a)(1) shall be determined in
accordance with the following table:
------------------------------------------------------------------------
The tax is the
following amount
``For any entry or sale during calendar year: per pound of
taxable virgin
plastic resin:
------------------------------------------------------------------------
2024................................................. 10 cents
2025................................................. 15 cents
2026................................................. 20 cents
2027 or thereafter................................... Adjusted amount.
------------------------------------------------------------------------
``(B) Adjusted amount.--
``(i) In general.--For purposes of
subparagraph (A), the adjusted amount for any
entry or sale during any calendar year
beginning after December 31, 2026, shall be
equal to the sum of--
``(I) 20 cents, plus
``(II) an amount equal to--
``(aa) 20 cents, multiplied
by
``(bb) the cost-of-living
adjustment determined under
section 1(f)(3) for the
calendar year, determined by
substituting `calendar year
2025' for `calendar year 2016'
in subparagraph (A)(ii)
thereof.
``(ii) Rounding.--If any amount determined
under clause (i) is not a multiple of 1 cent,
such amount shall be rounded to the nearest
multiple of 1 cent.
``(2) Imported covered items.--
``(A) In general.--Except as provided in
subparagraph (B), the amount of the tax imposed under
paragraph (2) of subsection (a) on any imported covered
item shall be an amount equal the product of--
``(i) the weight of such covered item
(expressed in pounds), multiplied by
``(ii) 20 cents.
``(B) Authority to prescribe alternate rate.--With
respect to any imported covered item for which the
importer demonstrates to the satisfaction of the
Secretary that such item is not entirely comprised of
taxable virgin plastic resin, the Secretary may
prescribe, in lieu of the rate of tax specified under
subparagraph (A), an alternative rate of tax with
respect to such item for purposes of subsection (a)(2).
``(c) Applicable Entity.--
``(1) In general.--For purposes of this section, the term
`applicable entity' means any manufacturer, producer, or
importer of taxable virgin plastic resin.
``(2) Exemption.--
``(A) In general.--The term `applicable entity'
shall not include any manufacturer, producer, or
importer of taxable virgin plastic resin which, with
respect to any taxable year--
``(i)(I) in the case of a manufacturer or
producer, for the taxable year preceding such
taxable year, manufactured or produced not
greater than 10 tons of taxable virgin plastic
resin, or
``(II) in the case of an importer, for the
taxable year preceding such taxable year,
imported not greater than 10 tons of taxable
virgin plastic resin, and
``(ii) meets the gross receipts test of
section 448(c) for such taxable year.
``(B) Aggregation rule.--For purposes of this
paragraph, all persons treated as a single employer
under subsection (a) or (b) of section 52 or subsection
(m) or (o) of section 414 shall be treated as a single
manufacturer, producer, or importer.
``(C) Administration.--The Secretary shall
prescribe such regulations or other guidance as may be
necessary to administer this paragraph, and may require
information reporting from any manufacturer, producer,
or importer seeking application of subparagraph (A).
``(d) Exportation.--
``(1) In general.--No tax shall be imposed under this
section upon the sale of any taxable virgin plastic resin or
imported covered item for export, and in due course so
exported.
``(2) Credit or refund where tax paid.--
``(A) In general.--Except as provided in
subparagraph (B), if--
``(i) tax under subsection (a) was paid
with respect to any taxable virgin plastic
resin or any imported covered item, and
``(ii) such resin or item was exported by
any person,
credit or refund (without interest) of such tax shall
be allowed or made to the person who paid such tax.
``(B) Condition to allowance.--No credit or refund
shall be allowed or made under subparagraph (A) unless
the person who paid the tax establishes that such
person--
``(i) has repaid or agreed to repay the
amount of the tax to the person who exported
the taxable virgin plastic resin or imported
covered item, or
``(ii) has obtained the written consent of
such exporter to the allowance of the credit or
the making of the refund.
``(3) Refunds directly to exporter.--The Secretary shall
provide, in regulations, the circumstances under which a credit
or refund (without interest) of the tax under subsection (a)
shall be allowed or made to the person who exported the taxable
virgin plastic resin or imported covered item, where--
``(A) the person who paid the tax waives their
claim to the amount of such credit or refund, and
``(B) the person exporting the taxable virgin
plastic resin or imported covered item provides such
information as the Secretary may require in such
regulations.
``SEC. 4692. DEFINITIONS AND SPECIAL RULES.
``(a) Definitions.--For purposes of this subchapter--
``(1) Covered item.--
``(A) In general.--The term `covered item' means a
single-use product which contains taxable virgin
plastic resin, including any packaging, food service
product, beverage container, or bag.
``(B) Exclusion.--The term `covered item' shall not
include--
``(i) a medical product which--
``(I) is regulated under--
``(aa) the Federal Food,
Drug, and Cosmetic Act, or
``(bb) the Public Health
Service Act, and
``(II) the Secretary of Health and
Human Services declares needs to be
made of virgin plastic for public
health or the health of the user,
``(ii) a container for--
``(I) a drug,
``(II) infant formula,
``(III) a meal replacement liquid,
``(IV) a biologic, or
``(V) a medical device,
``(iii) a personal or feminine hygiene
product that could be unsafe or unsanitary to
recycle,
``(iv) a sexual health product, or
``(v) packaging--
``(I) for a product described in
clauses (i) through (iv), or
``(II) used for the shipment of
hazardous materials that is prohibited
from being composed of used materials
under section 178.509 or 178.522 of
title 49, Code of Federal Regulations
(as in effect on the date of enactment
of this subchapter).
``(C) Other terms.--
``(i) Bag.--The term `bag' means a
container which is--
``(I) a single-use product which
contains taxable virgin plastic resin,
and
``(II) made of flexible material
with an opening and used for carrying
items.
``(ii) Beverage container.--The term
`beverage container' means a vessel for
beverages--
``(I) which is a single-use product
which contains taxable virgin plastic
resin, and
``(II) the volume of which is not
greater than 3 liters.
``(iii) Food service product.--The term
`food service product' means an item--
``(I) which is a single-use product
which contains taxable virgin plastic
resin, and
``(II) designed to deliver a food
product, including a utensil, straw,
drink cup, drink lid, food package,
food container, plate, bowl, meat tray,
or food wrap.
``(iv) Packaging.--
``(I) In general.--The term
`packaging' means a package, container,
packing materials, or other material--
``(aa) which is a single-
use product which contains
taxable virgin plastic resin,
and
``(bb) used for the
containment, protection,
handling, delivery, or
presentation of goods.
``(II) Products included as
packaging.--The term `packaging' shall
include any item described in subclause
(I) which is--
``(aa) intended for the
consumer market,
``(bb) service packaging
designed and intended to be
used or filled at the point of
sale, such as carry-out bags,
bulk good bags, take-out bags,
and home delivery food service
packaging,
``(cc) secondary packaging
used to group products for
multiunit sale,
``(dd) tertiary packaging
used for transportation or
distribution directly to a
consumer, or
``(ee) an ancillary element
hung or attached to a product
and performing a packaging
function.
``(v) Single-use product.--The term
`single-use product' means a product which is--
``(I) routinely disposed of after a
single use or after its contents have
been used or unpackaged, and typically
not refilled, and
``(II) not durable, washable, or
routinely used for one of the purposes
for which it was designed multiple
times before disposal.
``(2) Imported covered item.--The term `imported covered
item' means any covered item--
``(A) entered into the United States for
consumption, use, or warehousing, and
``(B) which is--
``(i) intended for subsequent sale or use,
and
``(ii) at the time such item is entered
into the United States, not used as a container
or packaging for a different product which is
not itself a covered item.
``(3) Taxable virgin plastic resin.--
``(A) In general.--The term `taxable virgin plastic
resin' means any resin--
``(i) which is derived from petroleum or
gas (including ethylene, propylene,
polyethylene, polypropylene, polystyrene, and
polyvinyl chloride), and
``(ii) which is manufactured or produced in
the United States or entered into the United
States for consumption, use, or warehousing.
``(B) Exclusion of post-consumer recycled resin.--
The term `taxable virgin plastic resin' shall not
include any resin which is established to the
satisfaction of the Secretary to be reprocessed from
recovered material so that it can be used in place of
resin described in clause (i) of subparagraph (A).
``(4) United states.--The term `United States' has the
meaning given such term by section 4612(a)(4).
``(5) Importer.--The term `importer' means the person
entering the taxable virgin plastic resin or covered item into
the United States for consumption, use, or warehousing.
``(b) Fraction of a Pound.--In the case of a fraction of a pound,
the tax imposed by section 4691 shall be the same fraction of the
amount of such tax imposed on a whole pound.
``(c) Use Treated as Sale.--If any applicable entity manufactures,
produces, or imports any taxable virgin plastic resin and uses such
resin, then such person shall be liable for tax under section 4691 in
the same manner as if such resin were sold by such entity.
``(d) Exception for Certain Uses.--
``(1) In general.--Under regulations prescribed by the
Secretary, in the case of any taxable virgin plastic resin for
which the manufacturer, producer, or importer of such resin--
``(A) certifies that such resin will only be used
in the manufacture or production within the United
States of any product which is not a covered item, and
``(B) satisfies the registration requirements under
paragraph (2),
no tax shall be imposed under section 4691(a)(1).
``(2) Registration.--
``(A) In general.--With respect to any taxable
year, the Secretary shall require any person seeking an
exemption under paragraph (1) to register with the
Secretary at such time, in such form and manner, and
subject to such terms and conditions, as the Secretary
may by regulations prescribe. A registration under this
paragraph may be used only in accordance with
regulations prescribed under this paragraph.
``(B) Registration in event of change in
ownership.--Under regulations prescribed by the
Secretary, a person (other than a corporation the stock
of which is regularly traded on an established
securities market) shall be required to re-register
under this paragraph if after a transaction (or series
of related transactions) more than 50 percent of
ownership interests in, or assets of, such person are
held by persons other than persons (or persons related
thereto) who held more than 50 percent of such
interests or assets before the transaction (or series
of related transactions).
``(C) Denial, revocation, or suspension of
registration.--Rules similar to the rules of section
4222(c) shall apply to registration under this
paragraph.
``(D) Information reporting.--The Secretary may
require--
``(i) information reporting by any person
registered under this paragraph, and
``(ii) information reporting by such other
persons as the Secretary deems necessary to
carry out this paragraph.
``(3) Sales to certain small buyers.--
``(A) In general.--Under regulations prescribed by
the Secretary, in the case of any taxable virgin
plastic resin which is sold by the manufacturer,
producer, or importer of such resin to a person who--
``(i) meets the gross receipts test of
section 448(c) for the taxable year in which
such resin is sold, and
``(ii) provides such manufacturer,
producer, or importer with a certificate which
includes--
``(I) the name and address of such
person,
``(II) the applicable period (not
to exceed 4 calendar quarters) for
which the certificate applies, and
``(III) a statement that--
``(aa) such person
satisfies the requirement under
clause (i), and
``(bb) such resin will only
be used in the manufacture or
production within the United
States of any product which is
not a covered item,
no tax shall be imposed under section 4691(a)(1).
``(4) Taxation of nonqualified use.--For purposes of
section 4691(a)(1), if no tax was imposed by such section on
the sale of any taxable virgin plastic resin by reason of
paragraph (1) or paragraph (3), the first person who uses such
resin in a manner other than a use described in such paragraph
shall be treated as the manufacturer of such resin.
``(e) Refund or Credit for Certain Uses.--Under regulations
prescribed by the Secretary, if--
``(1) a tax under section 4691(a)(1) was paid with respect
to any taxable virgin plastic resin, and
``(2) such resin was used by any person in the manufacture
or production within the United States of any product which is
not a covered item,
then an amount equal to the tax so paid shall be allowed as a credit or
refund (without interest) to such person in the same manner as if it
were an overpayment of tax imposed by such section.
``(f) Disposition of Revenues From Puerto Rico and the Virgin
Islands.--The provisions of subsections (a)(3) and (b)(3) of section
7652 shall not apply to any tax imposed by section 4691.
``(g) Imposition of Floor Stocks Taxes.--
``(1) In general.--
``(A) In general.--If, on any tax-increase date,
any taxable virgin plastic resin or imported covered
item is held by any person (other than the
manufacturer, producer, or importer thereof) for sale
or for use in further manufacture, there is hereby
imposed a floor stocks tax.
``(B) Amount of tax.--The amount of the tax imposed
by subparagraph (A) shall be the excess (if any) of--
``(i) the tax which would be imposed under
section 4691--
``(I) in the case of any taxable
virgin plastic resin, on such resin if
the sale of such resin by the
applicable entity had occurred on the
tax-increase date, or
``(II) in the case of any imported
covered item, on such item if the entry
or withdrawal of such item by the
importer thereof had occurred on the
tax-increase date, over
``(ii) the prior tax (if any) imposed by
this subchapter on such resin or item.
``(C) Tax-increase date.--For purposes of this
paragraph, the term `tax-increase date' means January 1
of any calendar year.
``(2) Due date.--The taxes imposed by this subsection on
January 1 of any calendar year shall be paid on or before June
30 of such year.
``(3) Application of other laws.--All other provisions of
law, including penalties, applicable with respect to the taxes
imposed by section 4691 shall apply to the floor stocks taxes
imposed by this subsection.
``(h) Regulations.--The Secretary shall prescribe such regulations
as may be necessary to carry out the provisions of this subchapter.''.
(b) Plastic Waste Reduction Fund.--Subchapter A of chapter 98 of
the Internal Revenue Code of 1986 is amended by adding at the end the
following new section:
``SEC. 9512. PLASTIC WASTE REDUCTION FUND.
``(a) Establishment and Funding.--There is hereby established in
the Treasury of the United States a trust fund to be referred to as the
`Plastic Waste Reduction Fund', consisting of such amounts as may be
appropriated or credited to such trust fund as provided for in this
section and section 9602(b).
``(b) Transfers to the Plastic Waste Reduction Fund.--There are
hereby appropriated to the Plastic Waste Reduction Fund amounts
equivalent to the taxes received in the Treasury under section 4691.
``(c) Expenditures From the Plastic Waste Reduction Fund.--Subject
to subsection (d), amounts in the Plastic Waste Reduction Fund shall be
available, as provided by appropriation Acts, for making expenditures--
``(1) to carry out reduction, recycling, and reuse
activities, including--
``(A) making improvements to recycling
infrastructure, or
``(B) establishing or improving infrastructure for
reuse and refill systems,
``(2) to carry out plastic waste and marine debris
reduction, detection, monitoring, and cleanup activities of--
``(A) the grant programs established under section
302 of the Save Our Seas 2.0 Act (33 U.S.C. 4282),
``(B) the Marine Debris Program established by
section 3 of the Marine Debris Act (33 U.S.C. 1952),
``(C) the Marine Debris Foundation established by
section 111 of the Save Our Seas 2.0 Act (33 U.S.C.
4211), and
``(D) other Federal programs carrying out such
activities, and
``(3) to address environmental justice and pollution
impacts from plastic production.
``(d) Prohibition on Certain Expenditures.--No amount in the
Plastic Waste Reduction Fund shall be available for making any
expenditure relating to--
``(1) the use of waste--
``(A) as a fuel or fuel substitute,
``(B) for energy production,
``(C) for alternative daily cover, or
``(D) within the footprint of a landfill, or
``(2) the conversion of waste into alternative products
(such as chemicals, feedstocks, fuels, or energy) through--
``(A) incineration,
``(B) pyrolysis,
``(C) hydropyrolysis,
``(D) methanolysis,
``(E) gasification, or
``(F) any method similar to the methods described
in subparagraphs (A) through (E), as identified by the
Secretary.''.
(c) Clerical Amendments.--
(1) The table of subchapters for chapter 38 of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new item:
``subchapter e--tax on plastics''.
(2) The table of sections for subchapter A of chapter 98 of
such Code is amended by adding at the end the following new
item:
``Sec. 9512. Plastic Waste Reduction Fund.''.
(d) Effective Date.--The amendments made by this section shall take
effect on January 1, 2024.
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