Excise tax on artificial intelligence services; worker adaptation trust fund

(a) Excise tax Subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter: 50B Artificial intelligence services Sec. 5000E. Tax on artificial intelligence services. 5000E. Tax on artificial intelligence services (a) Imposition of tax In the case of a covered person, there is imposed a tax for each calendar year in an amount equal to the sum of— (1) 4 percent of so much of the United States AI receipts of such person for such calendar year as exceeds $50,000,000 but does not exceed $500,000,000, (2) 6 percent of so much of such receipts as exceeds $500,000,000 but does not exceed $5,000,000,000, plus (3) 8 percent of so much of such receipts as exceeds $5,000,000,000. (b) Phase-In In the case of the first calendar year beginning after the date of the enactment of this section, subsection (a) shall be applied by substituting 2 percent, 3 percent, and 4 percent for 4 percent, 6 percent, and 8 percent, respectively. (c) Definitions For purposes of this section— (1) Covered artificial intelligence model The term covered artificial intelligence model means a model developed through artificial intelligence (as defined in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401)) and trained using a quantity of computing power greater than or equal to 10²⁵ integer or floating-point operations, as adjusted annually by the Secretary, in coordination with the Secretary of Commerce, to reflect changes in the efficiency of training methods. Such term includes any model the Secretary determines demonstrates capabilities substantially equivalent to models otherwise described in this paragraph. (2) Covered person The term covered person means any person engaged in a trade or business of providing qualifying artificial intelligence services to United States customers, determined without regard to the place of organization, incorporation, residence, or management of such person. All persons treated as a single employer under subsection (a) or (b) of section 52 shall be treated as 1 person for purposes of this section. (3) Qualifying artificial intelligence services The term qualifying artificial intelligence services means— (A) providing access to a covered artificial intelligence model, including through an application programming interface or a paid subscription, (B) licensing, deploying, hosting, integrating, or operating a covered artificial intelligence model for, or on behalf of, another person, and (C) any other service the commercial value of which is substantially attributable to a covered artificial intelligence model, as determined by the Secretary, except that such term shall not include any service with respect to which functionality attributable to a covered artificial intelligence model is incidental to the primary value of the offering. (4) United States AI receipts (A) In general The term United States AI receipts means gross receipts derived from qualifying artificial intelligence services provided to United States customers, reduced by amounts paid or incurred to another covered person with United States AI receipts in excess of $50,000,000 for qualifying artificial intelligence services resold, or incorporated into qualifying artificial intelligence services provided, to United States customers. (B) Exception The term United States AI receipts shall not include amounts received under a contract with the Federal Government for the provision of qualifying artificial intelligence services to the Federal Government. (5) United States customer The term United States customer means any person with respect to which the service involved is primarily used or consumed in the United States, as determined under regulations or other guidance prescribed by the Secretary. (d) Exemption No tax shall be imposed under this section on— (1) any organization exempt from tax under section 501(a), or (2) any institution of higher education (as defined in section 101 or 102 of the Higher Education Act of 1965 (20 U.S.C. 1001, 1002)). (e) Payment; returns The tax imposed by subsection (a) shall be paid in quarterly installments at such times, and reported on such returns and in such manner, as the Secretary shall prescribe. No return shall be required of any covered person with no liability under subsection (a) for the calendar year. (f) Regulations The Secretary shall prescribe such regulations and other guidance as may be necessary to carry out this section, including regulations providing for— (1) the allocation of the tax imposed by subsection (a) among persons treated as 1 person under subsection (c)(2), (2) the attribution of gross receipts in the case of offerings with both qualifying and non-qualifying components, and (3) the prevention of avoidance of this section through the fragmentation of activities, the restructuring of customer arrangements, or the mischaracterization of receipts.. (b) Denial of deduction Section 275(a) of the Internal Revenue Code of 1986 is amended by inserting after paragraph (6) the following new paragraph: (7) Taxes imposed by chapter 50B.. (c) Worker adaptation trust fund Subchapter A of chapter 98 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 9512. Worker adaptation trust fund (a) Creation of trust fund There is established in the Treasury of the United States a trust fund to be known as the Worker Adaptation Trust Fund, consisting of such amounts as may be appropriated or credited to such Trust Fund as provided in this section or section 9602(b). (b) Transfers to trust fund There are hereby appropriated to the Worker Adaptation Trust Fund amounts equivalent to the taxes received in the Treasury under section 5000E. (c) Expenditures Amounts in the Worker Adaptation Trust Fund shall be available, as provided in appropriation Acts— (1) to carry out the Worker Adaptation and Training Program established under section 4 of the FUTURE of Workers Act, and (2) to the extent amounts in the Trust Fund for a fiscal year exceed the amounts necessary for the purpose described in paragraph (1) for such fiscal year, for supplemental child care, elder care, and workforce development programs serving populations affected by automation technologies or artificial intelligence.. (d) Clerical amendments (1) The table of chapters for subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new item: Chapter 50B—Artificial intelligence services. (2) The table of sections for subchapter A of chapter 98 of such Code is amended by adding at the end the following new item: Sec. 9512. Worker adaptation trust fund. (e) Effective date The amendments made by this section shall apply to calendar years beginning after the date of the enactment of this Act.