[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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