117 HR 5033 IH: Rare Earth Magnet Manufacturing Production Tax Credit Act of 2021 U.S. House of Representatives 2021-08-13 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I117th CONGRESS1st SessionH. R. 5033IN THE HOUSE OF REPRESENTATIVESAugust 13, 2021Mr. Swalwell (for himself and Mr. Reschenthaler) introduced the following bill; which was referred to the Committee on Ways and MeansA BILLTo amend the Internal Revenue Code of 1986 to establish a credit for the domestic production of rare earth magnets, and for other purposes.

1.

Short title

This Act may be cited as the Rare Earth Magnet Manufacturing Production Tax Credit Act of 2021.

2.

Credit for production of rare earth magnets

(a)

In general

The Internal Revenue Code of 1986 is amended by inserting the following new section after section 45T:

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, or(2)$30 per kilogram of rare earth magnets manufactured in the United States by the taxpayer during the taxable year if all of the component rare earth material of such magnets are produced within the United States.(b)

Phase-Out

(1)

In general

In the case of any rare earth magnet produced 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 produced in calendar year 2031, 70 percent, (B)in the case of any rare earth magnet produced in calendar year 2032, 35 percent, or(C)in the case of any rare earth magnet produced after December 31, 2033, 0 percent.(c)

Restriction on component sourcing

A taxpayer is not eligible for the credit determined under subsection (a) with respect to a rare earth magnet if any component rare earth material used to produce such magnet was produced 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, praseodymium, iron, boron, terbium, or dysprosium, or(B)an alloy of samarium, gadolinium, and cobalt.(2)

Component rare earth material

The term component rare earth material means neodymium, praseodymium, dysprosium, terbium, samarium, gadolinium, and 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 2533c(d) 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)

Elective payment for production of rare earth magnets

(1)

In general

In the case of a taxpayer making an election (at such time and in such manner as the Secretary may provide) under this section with respect to any portion of the credit under subsection (a), such taxpayer shall be treated as making a payment against the tax imposed by this subtitle for the taxable year equal to the amount of such portion.(2)

Timing

The payment described in paragraph (1) shall be treated as made on the later of the due date of the return of tax for such taxable year or the date on which such return is filed.(3)

Exclusion from gross income

Gross income of the taxpayer shall be determined without regard to this subsection.

.(b)

Credit To be part of general business credit

Section 38(b) 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 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 such Code is amended by inserting after the item relating to section 45T 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.