[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 3521 Introduced in Senate (IS)]

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118th CONGRESS
  1st Session
                                S. 3521

 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

                           December 14, 2023

Ms. Cortez Masto (for herself and Mr. Mullin) 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 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 2023''.

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 after section 
45AA the following:

``SEC. 45BB. CREDIT FOR PRODUCTION OF RARE EARTH MAGNETS.

    ``(a) In General.--
            ``(1) Allowance of credit.--For 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 the credit amounts determined under subsection (b) with 
        respect to rare earth magnets which are--
                    ``(A) manufactured or produced by the taxpayer, and
                    ``(B) sold by such taxpayer to an unrelated person 
                during the taxable year.
            ``(2) Unrelated person.--
                    ``(A) In general.--For purposes of this subsection, 
                a taxpayer shall be treated as selling rare earth 
                magnets to an unrelated person if such magnet is sold 
                to such person by a person related to the taxpayer.
                    ``(B) Election.--
                            ``(i) In general.--At the election of the 
                        taxpayer (in such form and manner as the 
                        Secretary may prescribe), a sale of rare earth 
                        magnets by such taxpayer to a related person 
                        shall be deemed to have been made to an 
                        unrelated person.
                            ``(ii) Requirement.--As a condition of, and 
                        prior to, any election described in clause (i), 
                        the Secretary may require such information or 
                        registration as the Secretary deems necessary 
                        for purposes of preventing duplication, fraud, 
                        or any improper or excessive amount determined 
                        under paragraph (1).
    ``(b) Credit Amount.--
            ``(1) In general.--The amount determined under this 
        subsection is--
                    ``(A) $20 per kilogram of rare earth magnets 
                manufactured or produced in the United States by the 
                taxpayer during the taxable year which are not 
                described in subparagraph (B), and
                    ``(B) $30 per kilogram of rare earth magnets 
                manufactured or produced in the United States by the 
                taxpayer during the taxable year if not less than 90 
                percent of the component rare earth materials of such 
                magnets are produced within the United States.
            ``(2) Phase-out.--
                    ``(A) In general.--In the case of any rare earth 
                magnet manufactured or produced after December 31, 
                2032, the amount determined under this subsection with 
                respect to such rare earth magnet shall be equal to the 
                product of--
                            ``(i) the amount determined under paragraph 
                        (1) with respect to such rare earth magnet, as 
                        determined without regard to this subsection, 
                        multiplied by
                            ``(ii) the phase-out percentage described 
                        in subparagraph (B).
                    ``(B) Phase-out percentage.--The phase-out 
                percentage described in this paragraph is--
                            ``(i) in the case of any rare earth magnet 
                        manufactured or produced in calendar year 2033, 
                        70 percent,
                            ``(ii) in the case of any rare earth magnet 
                        manufactured or produced in calendar year 2034 
                        or 2035, 35 percent, or
                            ``(iii) in the case of any rare earth 
                        magnet manufactured or produced after December 
                        31, 2035, 0 percent.
    ``(c) 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, and cobalt.
            ``(3) Manufactured.--The term `manufactured' means the 
        manufacturing of a rare earth magnet, including the alloying, 
        reduction, strip casting, milling, sintering, recycling, 
        pressing, and metallization of component rare earth material.
            ``(4) Non-allied foreign nation.--The term `non-allied 
        foreign nation' has the meaning given to the term `covered 
        nation' in section 4872(d) of title 10, United States Code.
            ``(5) 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.
    ``(d) Special Rules.--
            ``(1) Restriction on component sourcing.--No credit shall 
        be allowed under this section with respect to a rare earth 
        magnet if any component rare earth material used to manufacture 
        or produce such magnet is produced in a non-allied foreign 
        nation.
            ``(2) Trade or business requirement.--No credit shall be 
        allowed under this section with respect to a rare earth magnet 
        unless such magnet is manufactured or produced in the ordinary 
        course of a trade or business of the taxpayer.
    ``(e) 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 subsection with respect to any portion of 
        the credit allowed 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 of the credit.
            ``(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 the taxable year or the date on which such return is 
        filed.''.
    (b) Credit To Be Part of General Business Credit.--Section 38(b) of 
the Internal Revenue Code of 1986 is amended by striking ``plus'' at 
the end of paragraph (40), by striking the period at the end of 
paragraph (41) and inserting ``, plus'', and by adding at the end the 
following new paragraph:
            ``(42) the credit for production of rare earth magnets 
        determined under section 45BB(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 inserting after the item relating to section 45AA 
the following new item:

``Sec. 45BB. 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, 2023.
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