,,ii #aaith ,,congress #b;d ,session ,s4 #diid ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,july #ae1 #bjbf,mrs4 ,blackburn 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 provide for credits against tax for domestic manufacturing of critical medical supplies and drugs4 #a4 ,short title ,this ,act may be cited as the ,our ,nation's ,supply chain for ,healthcare has ,over ,reliance ,elsewhere ,act or the ,,onshore ,manufacturing ,act4 #b4 ,domestic medical and drug manufacturing credit 7a7 ,in general ,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 medical and drug manufacturing credit 7a7 ,in general ,for purposes of section #ch1 the domestic medical and drug manufacturing credit determined under this section for any taxable year is an amount equal to #aj4e percent of the lesser of-- 7#a7 the qualified medical and drug manufacturing income of the taxpayer for the taxable year1 or 7#b7 taxable income of the taxpayer for the taxable year4 7b7 ,credit limited to wages paid 7#a7 ,in general ,the amount of the credit allowable under subsection 7a7 for any taxable year shall not exceed #ej percent of the ,w-#b wages of the taxpayer for the taxable year4 7#b7 ,w-#b wages ,for purposes of this section-- 7,a7 ,in general ,the term ,w-#b wages means1 with respect to any person for any taxable year of such person1 the sum of the amounts described in paragraphs 7#c7 and 7#h7 of section #fjea7;a7 paid by such person with respect to employment of employees by such person during the calendar year ending during such taxable year4 7,b7 ,limitation to wages attributable to domestic production ,such term shall not include any amount which is not properly allocable to domestic medical and drug manufacturing gross receipts for purposes of subsection 7c77#a74 7,c7 ,return requirement ,such term shall not include any amount which is not properly included in a return filed with the ,social ,security ,administration on or before the #fjth day after the due date 7including extensions7 for such return4 7#c7 ,acquisitions1 dispositions1 and short taxable years ,the ,secretary shall provide for the application of this subsection in cases of a short taxable year or where the taxpayer acquires1 or disposes of1 the major portion of a trade or business or the major portion of a separate unit of a trade or business during the taxable year4 7c7 ,qualified medical and drug manufacturing income ,for purposes of this section-- 7#a7 ,in general ,the term qualified medical and drug manufacturing income for any taxable year means an amount equal to the excess 7if any7 of-- 7,a7 the taxpayer's domestic medical and drug manufacturing gross receipts for the taxable year1 over 7,b7 the sum of-- 7i7 the cost of goods sold that are allocable to such receipts1 and 7ii7 other expenses1 losses1 or deductions which are properly allocable to such receipts4 7#b7 ,allocation method ,the ,secretary shall prescribe rules for the proper allocation of items described in paragraph 7#a77;,b7 for purposes of determining qualified medical and drug manufacturing income4 ,such rules shall provide for the proper allocation of items whether or not such items are directly allocable to domestic medical and drug manufacturing gross receipts4 7#c7 ,special rules for determining costs 7,a7 ,in general ,for purposes of determining costs under clause 7i7 of paragraph 7#a77;,b71 any item or service brought into the ,united ,states shall be treated as acquired by purchase1 and its cost shall be treated as not less than its value immediately after it entered the ,united ,states4 7,b7 ,exports for further manufacture ,in the case of any property described in subparagraph 7,a7 that had been exported by the taxpayer for further manufacture1 the increase in cost or adjusted basis under subparagraph 7,a7 shall not exceed the difference between the value of the property when exported and the value of the property when brought back into the ,united ,states after the further manufacture4 7#d7 ,domestic medical and drug manufacturing gross receipts 7,a7 ,in general ,the term domestic medical and drug manufacturing gross receipts means the gross receipts of the taxpayer which are derived from any sale1 exchange1 or other disposition of a specified medical product4 7,b7 ,specified medical product ,the term specified medical product means any of the following which is manufactured or produced by the taxpayer in whole or in significant part within the ,united ,states3 7i7 ,any drug 7as defined in section #bja7;g7 of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cba7;g7771 including any biological product 7as defined in section #cea7;i7 of the ,public ,health ,service ,act 7#db ,u4,s4,c4 #bfb7;i7771 which is included in-- 7,i7 the list of essential medicines1 medical countermeasures1 and critical inputs maintained by the ,commissioner of ,food and ,drugs pursuant to ,executive ,order #acidd 7#he ,fed4 ,reg4 #diibi 7,august #ad1 #bjbj771 7,,ii7 the list of defense-specific essential medicines1 medical countermeasures1 and critical inputs maintained by the ,secretary of ,defense pursuant to ,executive ,order #acidd 7#he ,fed4 ,reg4 #diibi 7,august #ad1 #bjbj771 7,,iii7 the ,department of ,defense ,joint ,deployment ,formulary1 or 7,,iv7 a list prepared by the ,defense ,logistics ,agency of drugs required for military readiness4 7ii7 ,any device 7as defined in section #bja7;h7 of the ,federal ,food1 ,drug1 and ,cosmetic ,act 7#ba ,u4,s4,c4 #cba7;h777 which is included in-- 7,i7 the list of critical medical devices maintained by the ,secretary of ,health and ,human ,services pursuant to ,executive ,order #adjja 7#hf ,fed4 ,reg4 #gbai 7,january #bf1 #bjba771 or 7,,ii7 the ,department of ,defense ,joint ,deployment ,formulary4 7iii7 ,any active pharmaceutical ingredient 7as defined in section #bjg4a of title #ba1 ,code of ,federal ,regulations 7or successor regulations77 which is used in the manufacture of a drug or device described in clause 7i7 or 7ii71 respectively4 7iv7 ,any covered countermeasure 7as defined in section #cai;,f-#c7;i77#a7 of the ,public ,health ,service ,act 7#db ,u4,s4,c4 #bdg;d-#f;d7i77#a777 which is included in a list described in subclause 7,i71 7,,ii71 or 7,,iii7 of clause 7i7 or subclause 7,i7 or 7,,ii7 of clause 7ii74 7,c7 ,partnerships owned by expanded affiliated groups ,for purposes of this paragraph1 if all of the interests in the capital and profits of a partnership are owned by members of a single expanded affiliated group at all times during the taxable year of such partnership1 the partnership and all members of such group shall be treated as a single taxpayer during such period4 7d7 ,definitions and ,special ,rules ,for purposes of this section-- 7#a7 ,application of section to pass-thru entities 7,a7 ,partnerships and s corporations ,in the case of a partnership or ,s corporation-- 7i7 this section shall be applied at the partner or shareholder level1 7ii7 each partner or shareholder shall take into account such person's allocable share of each item described in subparagraph 7,a7 or 7,b7 of subsection 7c77#a7 7determined without regard to whether the items described in such subparagraph 7,a7 exceed the items described in such subparagraph 7,b771 and 7iii7 each partner or shareholder shall be treated for purposes of subsection 7b7 as having ,w-#b wages for the taxable year in an amount equal to such person's allocable share of the ,w-#b wages of the partnership or ,s corporation for the taxable year 7as determined under regulations prescribed by the ,secretary74 7,b7 ,trusts and estates ,in the case of a trust or estate-- 7i7 the items referred to in subparagraph 7,a77ii7 7as determined therein7 and the ,w-#b wages of the trust or estate for the taxable year1 shall be apportioned between the beneficiaries and the fiduciary 7and among the beneficiaries7 under regulations prescribed by the ,secretary1 and 7ii7 for purposes of paragraph 7#b71 adjusted gross income of the trust or estate shall be determined as provided in section #fg7;e7 with the adjustments described in such paragraph4 7,c7 ,regulations ,the ,secretary may prescribe rules requiring or restricting the allocation of items and wages under this paragraph and may prescribe such reporting requirements as the ,secretary determines appropriate4 7#b7 ,application to individuals ,in the case of an individual1 subsection 7a77#b7 shall be applied by substituting adjusted gross income for taxable income4 ,for purposes of the preceding sentence1 adjusted gross income shall be determined after application of sections #hf1 #ace1 #acg1 #bai1 #bba1 #bbb1 and #dfi4 7#c7 ,special rule for affiliated groups 7,a7 ,in general ,all members of an expanded affiliated group shall be treated as a single corporation for purposes of this section4 7,b7 ,expanded affiliated group ,for purposes of this section1 the term expanded affiliated group means an affiliated group as defined in section #aejd7;a71 determined-- 7i7 by substituting more than #ej percent for at least #hj percent each place it appears1 and 7ii7 without regard to paragraphs 7#b7 and 7#d7 of section #aejd7;b74 7,c7 ,allocation of credit ,except as provided in regulations1 the credit under subsection 7a7 shall be allocated among the members of the expanded affiliated group in proportion to each member's respective amount 7if any7 of qualified medical and drug manufacturing income4 7#d7 ,trade or business requirement ,this section shall be applied by only taking into account items which are attributable to the actual conduct of a trade or business4 7#e7 ,coordination with minimum tax ,for purposes of determining alternative minimum taxable income under section #ee1 qualified medical and drug manufacturing income shall be determined without regard to any adjustments under sections #ef through #ei4 7#f7 ,unrelated business taxable income ,for purposes of determining the tax imposed by section #eaa1 subsection 7a77#a77;,b7 shall be applied by substituting unrelated business taxable income for taxable income4 7#g7 ,regulations ,the ,secretary shall prescribe such regulations as are necessary to carry out the purposes of this section1 including regulations which prevent more than #a taxpayer from being allowed a credit under this section with respect to any activity described in subsection 7c77#d77;,a74 4 7b7 ,treatment under base erosion tax ,section #ei;,a7b77#a77;,b77ii7 of such ,code is amended by striking plus at the end of subclause 7,i71 by redesignating subclause 7,,ii7 as subclause 7,,iii71 and by inserting after subclause 7,i7 the following new subclause3 7,,ii7 the credit allowed under section #ch for the taxable year which is properly allocable to the domestic medical and drug manufacturing credit determined under section #de;,,bb7a71 plus 4 7c7 ,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#da7 and inserting 1 plus1 and by adding at the end the following new paragraph3 7#db7 the domestic medical and drug manufacturing credit determined under section #de;,,bb7a74 4 7d7 ,credit allowed against alternative minimum tax ,section #ch7;c77#d77;,b7 of such ,code is amended by redesignating clauses 7x7 through 7xii7 as clauses 7xi7 through 7xiii71 respectively1 and by inserting after clause 7ix7 the following new clause3 7x7 the credit determined under section #de;,,bb1 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 new item3 ,sec4 #de;,,bb4 ,domestic medical and drug manufacturing credit4 4 7f7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjbf4 #c4 ,qualifying ,advanced ,medical ,manufacturing ,equipment ,credit 7a7 ,in general ,subpart ,e 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 #dh;,f4 ,qualifying ,advanced ,medical ,manufacturing ,equipment ,credit 7a7 ,in general ,for purposes of section #df1 the qualifying advanced medical manufacturing equipment credit determined under this section for any taxable year is the applicable percentage of the basis of any qualifying advanced medical manufacturing equipment placed in service during such taxable year4 7b7 ,applicable percentage ,for purposes of this section1 the term applicable percentage means-- 7#a7 #cj percent in the case of qualifying advanced medical manufacturing equipment which is placed in service before ,january #a1 #bjca1 7#b7 #bj percent in the case of qualifying advanced medical manufacturing equipment which is placed in service during calendar year #bjca1 7#c7 #aj percent in the case of qualifying advanced medical manufacturing equipment which is placed in service during calendar year #bjcb1 and 7#d7 #j percent in the case of qualifying advanced medical manufacturing equipment which is placed in service after ,december #ca1 #bjcb4 7c7 ,qualifying advanced medical manufacturing equipment ,for purposes of this section1 the term qualifying advanced medical manufacturing equipment means property-- 7#a7 which is machinery or equipment that is designed and used to manufacture a specified medical product 7as defined in section #de;,,bb7c77#d77;,b771 7#b7 which has been identified by the ,secretary 7after consultation with the ,secretary of ,health and ,human ,services7 as machinery or equipment that-- 7,a7 incorporates novel technology or uses an established technique or technology in a new or innovative way1 or 7,b7 that can improve medical product quality1 address shortages of medicines1 and speed time-to-market1 7#c7 which is placed in service in the ,united ,states by the taxpayer1 and 7#d7 with respect to which depreciation is allowable4 7d7 ,certain qualified progress expenditures rules made applicable ,rules similar to the rules of subsections 7c77#d7 and 7d7 of section #df 7as in effect on the day before the enactment of the ,revenue ,reconciliation ,act of #aiij7 shall apply for purposes of this section4 7e7 ,regulations ,the ,secretary shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section1 including regulations which prevent abuse or fraud4 4 7b7 ,treatment under base erosion tax ,section #ei;,a7b77#a77;,b77ii7 of such ,code1 as amended by the preceding provisions of this ,act1 is amended by striking plus at the end of subclause 7,,ii71 by redesignating subclause 7,,iii7 as subclause 7,,iv71 and by inserting after subclause 7,,ii7 the following new subclause3 7,,iii7 the credit allowed under section #df for the taxable year which is properly allocable to the qualifying advanced medical manufacturing equipment credit determined under section #dh;,f7a71 plus 4 7c7 ,part of investment credit ,section #df of such ,code is amended by striking and at the end of paragraph 7#f71 by striking the period at the end of paragraph 7#g7 and inserting 1 and1 and by adding at the end the following new paragraph3 7#h7 the qualifying advanced medical manufacturing equipment credit4 4 7d7 ,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 new item3 ,sec4 #dh;,f4 ,qualifying advanced medical manufacturing equipment credit4 4 7e7 ,effective date ,the amendments made by this section shall apply to periods after the date of the enactment of this section under rules similar to the rules of section #dh7m7 of the ,internal ,revenue ,code of #aihf 7as in effect on the date of the enactment of the ,revenue ,reconciliation ,act of #aiij74 #d4 ,medical ,manufacturing ,,epa ,compliance ,credit 7a7 ,in general ,subpart ,e of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf1 as amended by the preceding provisions of this ,act1 is amended by adding at the end the following new section3 #dh;,g4 ,medical ,manufacturing ,,epa ,compliance ,credit 7a7 ,in general ,for purposes of section #df1 the medical manufacturing ,,epa compliance credit determined under this section for any taxable year is the applicable percentage of the basis of any qualifying medical manufacturing ,,epa compliance property placed in service during such taxable year4 7b7 ,applicable percentage ,for purposes of this section1 the term applicable percentage means-- 7#a7 #cj percent in the case of qualifying medical manufacturing ,,epa compliance property which is placed in service before ,january #a1 #bjca1 7#b7 #bj percent in the case of qualifying medical manufacturing ,,epa compliance property which is placed in service during calendar year #bjca1 7#c7 #aj percent in the case of qualifying medical manufacturing ,,epa compliance property which is placed in service during calendar year #bjcb1 and 7#d7 #j percent in the case of qualifying medical manufacturing ,,epa compliance property which is placed in service after ,december #ca1 #bjcb4 7c7 ,qualifying medical manufacturing ,,epa compliance property ,for purposes of this section1 the term qualifying medical manufacturing ,,epa compliance equipment means property-- 7#a7 which is used by the taxpayer in the trade or business of manufacturing a specified medical product 7as defined in section #de;,,bb7c77#d77;,b771 7#b7 which is used to meet emissions limits under the ,clean ,air ,act or wastewater standards under the ,clean ,water ,act1 7#c7 which is placed in service in the ,united ,states by the taxpayer1 7#d7 with respect to which depreciation is allowable1 and 7#e7 which is not qualifying advanced medical manufacturing equipment 7as defined in section #dh;,f74 7d7 ,certain qualified progress expenditures rules made applicable ,rules similar to the rules of subsections 7c77#d7 and 7d7 of section #df 7as in effect on the day before the enactment of the ,revenue ,reconciliation ,act of #aiij7 shall apply for purposes of this section4 7e7 ,regulations ,the ,secretary shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section1 including regulations which prevent abuse or fraud4 4 7b7 ,treatment under base erosion tax ,section #ei;,a7b77#a77;,b77ii7 of such ,code1 as amended by the preceding provisions of this ,act1 is further amended by striking plus at the end of subclause 7,,iii71 by redesignating subclause 7,,iv7 as subclause 7,v71 and by inserting after subclause 7,,iii7 the following new subclause3 7,,iv7 the credit allowed under section #df for the taxable year which is properly allocable to the medical manufacturing ,,epa compliance credit determined under section #dh;,g7a71 plus 4 7c7 ,part of investment credit ,section #df of such ,code1 as amended by the preceding provisions of this ,act1 is amended by striking and at the end of paragraph 7#g71 by striking the period at the end of paragraph 7#h7 and inserting 1 and1 and by adding at the end the following new paragraph3 7#i7 the medical manufacturing ,,epa compliance credit4 4 7d7 ,clerical amendment ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a of such ,code1 as amended by the preceding provisions of this ,act1 is amended by adding at the end the following new item3 ,sec4 #dh;,g4 ,medical manufacturing ,,epa compliance credit4 4 7e7 ,effective date ,the amendments made by this section shall apply to periods after the date of the enactment of this section under rules similar to the rules of section #dh7m7 of the ,internal ,revenue ,code of #aihf 7as in effect on the date of the enactment of the ,revenue ,reconciliation ,act of #aiij74 #e4 ,reports to ,congress regarding supply chain resiliency 7a7 ,internal ,revenue ,service ,the ,commissioner of ,internal ,revenue shall submit to ,congress an annual report 7beginning with calendar year #bjbg7 regarding the utilization of the credits allowed under sections #de;,,bb1 #dh;,f1 and #dh;,g of the ,internal ,revenue ,code of #aihf 7as added by this ,act74 7b7 ,department of ,veterans ,affairs ,the ,secretary of ,veterans ,affairs shall submit to ,congress an annual report 7beginning with calendar year #bjbg7 regarding the impact of the credits allowed under sections #de;,,bb1 #dh;,f1 and #dh;,g of the ,internal ,revenue ,code of #aihf 7as added by this ,act7 on compliance with procurement of domestically manufactured drugs1 biologics1 active pharmaceutical ingredients1 countermeasures and devices under the ,buy ,american ,act of #aicc 7#da ,u4,s4,c4 #hcja et seq474 7c7 ,department of ,defense ,the ,secretary of ,defense shall submit to ,congress an annual report 7beginning with calendar year #bjbg7 regarding the impact of the credits allowed under sections #de;,,bb1 #dh;,f1 and #dh;,g of the ,internal ,revenue ,code of #aihf 7as added by this ,act7 on compliance with procurement of domestically manufactured drugs1 biologics1 active pharmaceutical ingredients1 countermeasures and devices under the ,buy ,american ,act of #aicc 7#da ,u4,s4,c4 #hcja et seq474 7d7 ,food and ,drug ,administration ,the ,commissioner of ,food and ,drugs shall submit to ,congress an annual report 7beginning with calendar year #bjbg7 regarding the impact of the credits allowed under sections #de;,,bb1 #dh;,f1 and #dh;,g of the ,internal ,revenue ,code of #aihf 7as added by this ,act7 on drug and device shortages4