,,ii #aaith ,,congress #ast ,session ,s4 #aiai ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,may #bb1 #bjbe ,mrs4 ,hyde-,smith 7for herself1 ,mrs4 ,britt1 ,mr4 ,marshall1 and ,mr4 ,boozman7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to establish a domestic cotton consumption credit4 #a4 ,short title ,this ,act may be cited as the ,buying ,american ,cotton ,act of #bjbe4 #b4 ,domestic cotton consumption credit 7a7 ,purpose ,the purposes of this section are-- 7#a7 to encourage the consumption of cotton which originated in the ,united ,states1 and products which are made from such cotton1 and 7#b7 to document the processing of such cotton through a trustworthy supply chain tracing system4 7b7 ,allowance of credit ,subpart ,d of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #de;,,bb4 ,domestic cotton consumption credit 7a7 ,credit allowed ,for purposes of section #ch1 the domestic cotton consumption credit determined under this section for any taxable year is an amount equal to the product of-- 7#a7 the documented volume of qualified cotton in an eligible article sold by the taxpayer in a qualifying sale during the taxable year1 7#b7 the applicable percentage1 and 7#c7 the applicable cotton market price4 7b7 ,qualifying sale2 applicable percentage2 applicable cotton market price 7#a7 ,qualifying sale ,for purposes of this section-- 7,a7 ,in general ,the term qualifying sale means1 with respect to any eligible article1 the first sale of such eligible article to an unrelated person4 7,b7 ,exception ,such term shall not include any sale for use or consumption of an eligible article outside of the ,united ,states unless such sale results in income which is effectively connected with a trade or business in the ,united ,states4 7,c7 ,related persons ,persons shall be treated as related to each other if such persons would be treated as a single employer under the regulations prescribed under section #eb7;b74 7#b7 ,applicable percentage ,for purposes of subsection 7a77#b71 the applicable percentage is-- 7,a7 in the case of an eligible article consisting of qualified cotton that-- 7i7 was only subject to processing in the ,united ,states1 or 7ii7 in addition to any processing that may have occurred within the ,united ,states1 was subject to additional processing only in a country or countries with which the ,united ,states has entered into a free trade agreement or for which the ,united ,states has extended benefits through a unilateral preference program1 #bd percent1 and 7,b7 in the case of an eligible article consisting of qualified cotton that was subject to additional processing at any stage of its processing in a country with which the ,united ,states has not entered into a free trade agreement or for which the ,united ,states has not extended benefits through a unilateral preference program1 #ah percent4 7#c7 ,applicable cotton market price ,for purposes of this section1 the term applicable cotton market price means1 with respect to any eligible article1 the average market price for qualified cotton in a recognized international market 7as determined by the ,secretary1 in consultation with the ,secretary of ,agriculture7 for the #c-;calendar year period ending with or within the taxable year immediately preceding the taxable year in which the eligible article is sold4 7c7 ,other definitions ,for purposes of this section-- 7#a7 ,eligible article 7,a7 ,in general ,the term eligible article means any product which-- 7i7 is comprised in whole or in part of qualified cotton which is certified1 under such regulations established by the ,secretary in consultation with the ,secretary of ,agriculture1 as meeting the requirements of paragraph 7#b77;,b77ii71 7ii7 is in its final condition1 and 7iii7 is ready for retail sale to a consumer4 7,b7 ,exception ,such term shall not include any product if-- 7i7 any component of such product is an eligible article for which a credit has been allowed1 or 7ii7 the taxpayer selling such product has been notified by the person from whom such a component was acquired that such person intended to claim such credit4 7,c7 ,final condition 7i7 ,in general ,for purposes of subparagraph 7,a77ii71 the term final condition means1 with respect to any article1 the physical state in which such article is presented for sale or sold for immediate resale to a consumer1 determined-- 7,i7 without regard to any de minimis augmentation that could be performed on it by or on behalf of a retailer of the eligible article1 and 7,,ii7 without regard to packaging4 7ii7 ,de minimis augmentation ,for purposes of clause 7i77,i71 the term de minimis augmentation means any graphics or other adornment imposed on or attached to the article4 7#b7 ,qualified cotton 7,a7 ,in general ,the term qualified cotton means extra long staple cotton 7as defined in section #aaaa of the ,agricultural ,act of #bjad7 or upland cotton 7within the meaning of section #abjg7;c7 of such ,act7 which-- 7i7 is grown in the ,united ,states1 and 7ii7 meets the proof of origin requirements of subparagraph 7,b74 7,b7 ,proof of origin requirements ,cotton meets the proof of origin requirements of this subparagraph if-- 7i7 such cotton was-- 7,i7 assigned a permanent bale identification number1 or 7,,ii7 meets such other requirements as the ,secretary1 in consultation with the ,secretary of ,agriculture1 determines is sufficient to prove that the cotton originated in the ,united ,states1 and 7ii7 the movement and volume of such cotton is digitally traced1 under such regulations established by the ,secretary in consultation with the ,secretary of ,agriculture1 through the supply chain from its ,united ,states origin through to the last stage of processing into an eligible article4 7,c7 ,permanent bale identification number ,the term permanent bale identification number means the autogenerated identification number assigned by the ,secretary of ,agriculture to a bale of qualified cotton that was grown and ginned in the ,united ,states4 7#c7 ,free trade agreement 7,a7 ,in general ,except as provided by subparagraph 7,b71 the term free trade agreement means a comprehensive bilateral or regional agreement-- 7i7 that covers substantially all trade between the parties to the agreement1 and 7ii7 with respect to which an implementing bill 7as defined in section #aea of the ,trade ,act of #aigd 7#ai ,u4,s4,c4 #baia77 is enacted into law4 7,b7 ,exclusions ,the term free trade agreement does not include-- 7i7 the ,,wto ,agreement1 as defined in section #b of the ,uruguay ,round ,agreements ,act 7#ai ,u4,s4,c4 #ceja71 7ii7 the agreements specified in #aja7;d7 of that ,act 7#ai ,u4,s4,c4 #ceaa7;d771 or 7iii7 any other multilateral agreement of the ,world ,trade ,organization or any successor entity4 7#d7 ,unilateral preference program 7,a7 ,in general ,except as provided by subparagraph 7,b71 the term unilateral preference program-- 7i7 means a program of the ,united ,states that provides preferential duty treatment to textile or apparel articles imported from a foreign country that is designated as a beneficiary of the program1 and 7ii7 includes-- 7,i7 the ,african ,growth and ,opportunity ,act 7#ai ,u4,s4,c4 #cgja et seq47 and section #ejf;,a of the ,trade ,act of #aigd 7#ai ,u4,s4,c4 #bdff;a71 7,,ii7 the ,caribbean ,basin ,economic ,recovery ,act 7#ai ,u4,s4,c4 #bgja et seq471 7,,iii7 section #iae of the ,trade ,facilitation and ,trade ,enforcement ,act of #bjae 7#ai ,u4,s4,c4 #dded71 and 7,,iv7 any other provision of law-- 7aa7 establishing a program that provides preferential duty treatment to textile or apparel articles imported from a foreign country that is designated as a beneficiary of the program1 and 7bb7 that is enacted after the date of the enactment of this section4 7,b7 ,exclusion ,the term unilateral preference program does not include the ,generalized ,system of ,preferences under title ,v of the ,trade ,act of #aigd 7#ai ,u4,s4,c4 #bdfa et seq474 7#e7 ,processing 7,a7 ,in general ,the term processing means any physical process1 or any stage in such process1 that contributes to the conversion of an item comprised in whole or in part of qualified cotton into an eligible article4 7,b7 ,exception ,such term shall not include the mere physical possession1 storage1 movement1 or packaging of cotton or any eligible article4 7#f7 ,united ,states ,the term ,united ,states includes any possessions of the ,united ,states4 7#g7 ,volume ,the term volume means1 with respect to any eligible article1 the amount of qualified cotton in such article1 as measured in pounds4 7d7 ,increased credit for qualified cotton yarn and qualified cotton fabric 7#a7 ,qualified cotton yarn 7,a7 ,in general ,at the election of the taxpayer1 in the case of any eligible article which is composed in whole or in part of qualified cotton yarn-- 7i7 this section shall be applied separately with respect to such cotton yarn1 and 7ii7 the amount determined under subsection 7a7 with respect to such cotton yarn shall be equal to such amount 7determined without regard to this subsection7 multiplied by #a4f4 7,b7 ,qualified cotton yarn ,for purposes of this subsection1 the term qualified cotton yarn means a strand of fiber made in the ,united ,states from qualified cotton into a form suitable for weaving1 knitting1 braiding1 felting1 webbing1 or otherwise fabricating into a fabric4 7#b7 ,qualified cotton fabric 7,a7 ,in general ,at the election of the taxpayer1 in the case of any eligible article which is composed in whole or in part of qualified cotton fabric-- 7i7 this section shall be applied separately with respect to such cotton fabric1 and 7ii7 the amount determined under subsection 7a7 with respect to such cotton fabric shall be equal to such amount 7determined without regard to this subsection7 multiplied by #f4e4 7,b7 ,qualified cotton fabric ,for purposes of this subsection1 the term qualified cotton fabric means any material woven1 knitted1 felted1 or otherwise produced in the ,united ,states from1 or in combination with1 any fiber1 yarn1 or substitute thereof that was made in the ,united ,states from qualified cotton4 7#c7 ,election ,an election under this subsection shall be made at such time and in such form as the ,secretary may be regulations provide4 7e7 ,regulations ,the ,secretary shall prescribe such regulations and other guidance as may be necessary or appropriate to carry out this section1 including regulations or guidance-- 7#a7 to establish a system for preventing the credit allowed under this subsection more than once with respect to any amount of qualified cotton1 which may include establishing a requirement to notify purchasers of eligible articles of the intent to claim the credit allowed under this section1 7#b7 with respect to the digital tracing of cotton under subsection 7c77#b77;,b77ii71 which may include requirements to identify the taxpayers within the supply chain1 and 7#c7 with respect to the certification of qualified cotton under subsection 7c77#a77;,a77i71 which may require reporting of the specific volume of qualified cotton in the eligible article4 4 7c7 ,credit allowed as part of general business credit ,section #ch7;b7 of such ,code is amended by striking plus at the end of paragraph 7#dj71 by striking the period at the end of paragraph 7#da71 and by adding at the end the following new paragraph3 7#db7 the domestic cotton consumption credit determined under section #de;,,bb4 4 7d7 ,transfer of credit ,section #fdah7;f77#a77;,a7 of such ,code is amended by adding at the end the following3 7xii7 ,the domestic cotton consumption credit determined under section #de;,,bb7a74 4 7e7 ,clerical amendment ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a of such ,code is amended by adding at the end the following item3 ,sec4 #de;,,bb4 ,domestic cotton consumption credit4 4 7f7 ,effective date ,the amendments made by this section shall apply to eligible articles 7as defined in section #de;,,bb of the ,internal ,revenue ,code of #aihf1 as added by subsection 7b77 that are sold on or after ,january #bj1 #bjbe4