Artificial intelligence usage tax

(a) In general Chapter 50B of subtitle D of the Internal Revenue Code of 1986, as added by this Act, is amended by adding at the end the following new section: 5000E–2. Artificial intelligence services (a) Imposition of tax (1) In general There is hereby imposed a tax on any covered artificial intelligence processing service which is utilized by a covered user for the generation of content. (2) Rate of tax The rate of tax imposed by this subsection with respect to any content generated by a covered artificial intelligence processing service shall be $1.10 per 1,000,000 units of computational processing with respect to such content. (3) Exemption With respect to each covered user, this subsection shall not apply to the first 1,000,000 units of computational processing for any content generated by a covered artificial intelligence processing service which is utilized by such covered user during a calendar year. (b) Liability and collection (1) Liability Subject to paragraph (3), the tax imposed by subsection (a) shall be paid by the covered user. (2) Collection The provider of the covered artificial intelligence processing service for which a tax is imposed under subsection (a) shall— (A) subject to paragraph (3), collect the amount of the tax from the covered user, and (B) remit such tax quarterly to the Secretary at such time and in such manner as provided by the Secretary. (3) Election to pay tax on behalf of covered users At the election of the provider (in such form and such manner as the Secretary may provide), the tax imposed by subsection (a) with respect to any content generated by a covered artificial intelligence processing service shall be paid by such provider. (c) Credit against tax (1) In general In the case of a provider that makes an election under subsection (b)(3) with respect to any content generated by a covered artificial intelligence processing service which is utilized by a qualified covered user for non-commercial purposes, there shall be allowed as a credit against any of the taxes imposed by this chapter an amount equal to the tax paid by such provider pursuant to the election under such subsection, with such credit to be allocated by the taxpayer against such taxes— (A) in such respective amount as is determined appropriate by the taxpayer, and (B) in compliance with paragraph (3). (2) Qualified covered user For purposes of this subsection, the term qualified covered user means— (A) an institution of higher education (as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a))), and (B) a research organization described in section 501(c)(3) and exempt from tax under section 501(a). (3) Limitation on credit (A) Taxes on digital advertising revenue and excess profits from artificial intelligence development With respect to the tax imposed under section 5000E–1 or section 5000E–3, the amount of the credit allowable to a taxpayer under paragraph (1) against the tax imposed under either such section for any taxable year shall not exceed an amount equal to 10 percent of the tax imposed under such section for such taxable year. (B) Tax on artificial intelligence services With respect to the tax imposed under subsection (a), the amount of the credit allowable to a taxpayer under paragraph (1) against such tax for any calendar year shall not exceed 10 percent of the tax imposed under such subsection during such calendar year. (d) Definitions In this section— (1) Covered artificial intelligence processing service The term covered artificial intelligence processing service means any service that— (A) utilizes a machine learning model capable of generating, transforming, or analyzing content, and (B) processes user-provided inputs to produce an output. (2) Covered user The term covered user means any person who utilizes a covered artificial intelligence processing service. (3) Provider The term provider means the person providing access to covered users for utilization of the covered artificial intelligence processing service. (4) Unit of computational processing The term unit of computational processing means a unit of digital information defined as 10 kilobytes of binary data. (e) Regulations and guidance Not later than 12 months after the date of enactment of this section, the Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including any regulations or guidance as may be necessary to— (1) standardize measurement of computational processing units across types of artificial intelligence models, (2) prevent avoidance through pricing structures or technical definitions, (3) ensure administrability and compliance, and (4) define non-commercial purposes with respect to subsection (c).. (b) Penalties Section 6672 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (f) Special rule for failure To collect and pay excise tax on content generated by artificial intelligence In the case of any failure described in subsection (a) which relates to the tax imposed under section 5000E–2(a), the penalty under subsection (a) shall be increased by an amount equal to 200 percent of the amount of such tax.. (c) Clerical amendment The table of sections for chapter 50B of subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new item: Sec. 5000E–2. Content generated by artificial intelligence.. (d) Effective date The amendments made by this section shall apply to any covered artificial intelligence processing service (as defined in section 5000E–2(d) of the Internal Revenue Code of 1986) utilized after December 31, 2026.