This Act may be cited as the “Territorial Economic Growth and Recovery Act of 2017”.

(a) In general.—Section 7652(f) of the Internal Revenue Code of 1986 is repealed.

(b) Effective date.—The amendment made by this section shall apply to distilled spirits brought into the United States after December 31, 2016.

(a) Earned income credit.—Section 32 of the Internal Revenue Code of 1986 is amended by adding at the end the following:

“(n) Treatment of possessions.—

“(1) PAYMENTS TO POSSESSIONS.—

“(A) MIRROR CODE POSSESSION.—The Secretary of the Treasury shall periodically (but not less frequently than annually) pay to each possession of the United States with a mirror code tax system amounts equal to the loss to that possession by reason of the application of this section (determined without regard to paragraph (2)) with respect to taxable years beginning after December 31, 2016. Such amounts shall be determined by the Secretary of the Treasury based on information provided by the government of the respective possession.

“(B) OTHER POSSESSIONS.—The Secretary of the Treasury shall periodically (but no less frequently than annually) pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary of the Treasury as being equal to the aggregate benefits that would have been provided to residents of such possession by reason of the application of this section for taxable years beginning after December 31, 2016, if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply with respect to any possession of the United States unless such possession has a plan, which has been approved by the Secretary of the Treasury, under which such possession will promptly distribute such payments to the residents of such possession.

“(2) COORDINATION WITH CREDIT ALLOWED AGAINST UNITED STATES INCOME TAXES.—No credit shall be allowed under this section for any taxable year to any person—

“(A) to whom a credit is allowed against taxes imposed by the possession by reason of this section (determined without regard to this paragraph) for such taxable year, or

“(B) who is eligible for a payment under a plan described in paragraph (1)(B) with respect to such taxable year.

“(3) DEFINITIONS AND SPECIAL RULES.—

“(A) POSSESSION OF THE UNITED STATES.—For purposes of this subsection, the term ‘possession of the United States’ includes the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands.

“(B) MIRROR CODE TAX SYSTEM.—For purposes of this subsection, the term ‘mirror code tax system’ means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States, and such system includes a tax credit substantially identical to the credit allowed under this section.

“(C) TREATMENT OF PAYMENTS.—For purposes of section 1324(b)(2) of title 31, United States Code, or any similar rule of law, any payment made under this subsection shall be treated in the same manner as a refund due from the credit allowed under this section.”.

(b) Child tax credit.—Section 24 of such Code is amended by adding at the end the following:

“(h) Payments to Virgin Islands and Guam for lost revenue.—The Secretary shall make annual payments to the Virgin Islands and to Guam in amounts equal to the aggregate loss to the Virgin Islands or Guam, as the case may be, by reason of the application of this section with respect to taxable years beginning after 2016. Such amounts shall be determined by the Secretary based on information provided by the Virgin Islands and Guam. For purposes of section 1324(b)(2) of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from the credit allowed under this section.”.

(c) Effective date.—The amendments made by this section shall apply with respect to taxable years beginning after December 31, 2016.

Not later than 6 months after the date of the enactment of this Act, the Joint Board for the Enrollment of Actuaries established under section 3041 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1241) shall report to the Office of Domestic Finance of the Department of the Treasury on recommendations on actions that would be necessary to ensure that the public pension plans of the Virgin Islands can be sustainably maintained and funded by the government of the Virgin Islands for the next 20 years.