Sponsors
The bill redirects fuel tax receipts to the U.S. Virgin Islands to provide the territory predictable local revenue and potential service improvements, at the cost of lower federal receipts and modest administrative and compliance burdens.
Residents and the territorial government of the U.S. Virgin Islands will receive fuel tax revenue on island-produced fuel entered into the U.S. beginning for fuel entered after Dec 31, 2024, increasing local treasury funds, enabling improved local services and more predictable fiscal planning.
The federal government (and thus U.S. taxpayers) will collect less revenue because fuel tax receipts that would otherwise go to the U.S. Treasury are transferred to the Virgin Islands, increasing federal fiscal pressure.
The IRS will face new administrative responsibilities to implement and track the transfer of qualifying fuel tax receipts, creating implementation costs and potential short-term enforcement/processing burdens.
Businesses importing fuel from the Virgin Islands may face new reporting and remittance complexities during implementation, raising compliance costs and transitional confusion for importers and financial intermediaries.
Based on analysis of 2 sections of legislative text.
Requires federal excise taxes on fuel produced in the Virgin Islands and entered into the U.S. after Dec 31, 2024 to be transferred to the Virgin Islands treasury.
Directs that federal excise taxes collected under IRC section 4081(a) on fuel produced in the U.S. Virgin Islands and brought into the 50 states be transferred to the Virgin Islands treasury. The change applies to fuel entered into the United States after December 31, 2024. This shifts where those specific tax receipts go (from the U.S. Treasury to the Virgin Islands government). It mainly affects the Virgin Islands government’s revenue, fuel producers and shippers in the Virgin Islands, and federal tax accounting and transfers.
Introduced January 13, 2025 by Stacey E. Plaskett · Last progress January 13, 2025