Alternative Fuels Tax Incentives Act

Summary: Increases the credit for qualified electric vehicles.
Provides that, for purposes of the general business credit, the alternative fuel retail sales credit of any taxpayer for any taxable year is 25 cents for each gasoline gallon equivalent of alternative fuel sold at retail by the taxpayer during such year as a fuel to propel any qualified motor vehicle.
Extends, for three years, the deduction for clean-fuel vehicles and certain refueling property.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Alternative Fuels Tax Incentives 
Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1)(A) Since 1994, the United States has imported over half 
        its oil.
            (B) Without efforts to mitigate this dependence on foreign 
        oil, the percentage of oil imported is expected to grow to all-
        time highs.
            (C) This reliance on foreign oil presents a national 
        security risk, which Congress should address through policy 
        changes designed to increase the use of domestically-available 
        alternative transportation fuels.
            (2)(A) The importing of a majority of the oil used in the 
        United States contributes negatively to the balance of trade of 
        the United States.
            (B) Assuring the Nation's economic security demands the 
        development and promotion of domestically-available alternative 
        transportation fuels.
            (3) More widespread use of alternative-fuels vehicles will 
        help alleviate any adverse environmental consequences that may 
        result from the Nation's dependence on oil as a transportation 
        fuel.
            (4) In order to encourage the purchase of alternative fuel 
        vehicles by individuals and businesses, the installation of 
        alternative fueling infrastructure by fuel suppliers, and the 
        use of alternative fuels in business and personal 
        transportation, tax credits are temporarily needed to make 
        buying and operating alternative fuels vehicles economically 
        viable compared with conventional fuel vehicles.
            (5)(A) In the short-term, United States alternative fuel 
        policy must be made fuel neutral.
            (B) Fuel neutrality will foster private innovation and 
        commercialization using the most technologically feasible and 
        economic fuels available.
            (C) This will allow market forces to decide the alternative 
        fuel winners and losers.

SEC. 3. CREDIT FOR ALTERNATIVE FUEL VEHICLES.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to foreign tax credit, 
etc.) is amended by inserting after section 30A the following:

``SEC. 30B. CREDIT FOR ALTERNATIVE FUEL VEHICLES.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter an amount equal to the 
applicable percentage of the incremental cost of any qualified 
alternative fuel motor vehicle placed in service by the taxpayer during 
the taxable year.
    ``(b) Applicable Percentage.--For purposes of subsection (a), the 
applicable percentage with respect to any qualified alternative fuel 
motor vehicle is--
            ``(1) 50 percent, plus
            ``(2) 35 percent, if such vehicle--
                    ``(A) has a gross weight vehicle rating of less 
                than 14,000 pounds, and
                            ``(i) has received a certificate of 
                        conformity under the Clean Air Act and meets or 
                        exceeds the most stringent standard available 
                        for certification under the Clean Air Act for 
                        that make and model year vehicle (other than a 
                        zero emission standard), or
                            ``(ii) has received an order certifying the 
                        vehicle for sale in California and meets or 
                        exceeds the most stringent standard available 
                        for certification under the laws of the State 
                        of California for that make and model year 
                        vehicle (other than a zero emission standard), 
                        or
                    ``(B) has a gross weight vehicle rating of 14,000 
                or more pounds, and
                            ``(i) has received a certificate of 
                        conformity under the Clean Air Act at emissions 
                        levels that are not more than 50 percent of the 
                        standard applicable to a vehicle of that make 
                        and model year, or
                            ``(ii) has received an order certifying the 
                        vehicle for sale in California at emissions 
                        levels that are not more than 50 percent of the 
                        standard applicable under the laws of the State 
                        of California to a vehicle of that make and 
                        model year.
    ``(c) Incremental Cost.--For purposes of this section, the 
incremental cost of any qualified alternative fuel motor vehicle is 
equal to the amount of the excess of the manufacturer's suggested 
retail price for such vehicle over such price for a gasoline or diesel 
fuel motor vehicle of the same model, to the extent such amount does 
not exceed--
            ``(1) $5,000, if such vehicle has a gross vehicle weight 
        rating of not more than 8,500 pounds,
            ``(2) $10,000, if such vehicle has a gross vehicle weight 
        rating of more than 8,500 pounds but not more than 14,000 
        pounds,
            ``(3) $25,000, if such vehicle has a gross vehicle weight 
        rating of more than 14,000 pounds but not more than 26,000 
        pounds, and
            ``(4) $50,000, if such vehicle has a gross vehicle weight 
        rating of more than 26,000 pounds.
    ``(d) Qualified Alternative Fuel Motor Vehicle Defined.--For 
purposes of this section, the term `qualified alternative fuel motor 
vehicle' means any motor vehicle--
            ``(1) which is only capable of operating on an alternative 
        fuel,
            ``(2) the original use of which commences with the 
        taxpayer, and
            ``(3) which is acquired by the taxpayer for use or to 
        lease, but not for resale.
    ``(e) Application With Other Credits.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess (if 
any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and sections 27, 
        29, and 30, over
            ``(2) the tentative minimum tax for the taxable year.
    ``(f) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Alternative fuel.--The term `alternative fuel' means 
        compressed natural gas, liquefied natural gas, liquefied 
        petroleum gas, hydrogen, and any liquid at least 85 percent of 
        the volume of which consists of methanol.
            ``(2) Motor vehicle.--The term `motor vehicle' has the 
        meaning given such term by section 30(c)(2).
            ``(3)  Reduction in basis.--For purposes of this subtitle, 
        the basis of any property for which a credit is allowable under 
        subsection (a) shall be reduced by the amount of such credit so 
        allowed (determined without regard to subsection (e).
            ``(4) No double benefit.--The amount of any deduction or 
        credit allowable under this chapter for any incremental cost 
        taken into account in computing the amount of the credit 
        determined under subsection (a) shall be reduced by the amount 
        of such credit attributable to such cost.
            ``(5) Leased vehicles.--No credit shall be allowed under 
        subsection (a) with respect to a leased motor vehicle unless 
        the lease documents clearly disclose to the lessee the specific 
        amount of any credit otherwise allowable to the lessor under 
        subsection (a).
            ``(6) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any property which ceases 
        to be property eligible for such credit.
            ``(7) Property used outside united states, etc., not 
        qualified.--No credit shall be allowed under subsection (a) 
        with respect to any property referred to in section 50(b) or 
        with respect to the portion of the cost of any property taken 
        into account under section 179.
            ``(8) Election to not take credit.--No credit shall be 
        allowed under subsection (a) for any vehicle if the taxpayer 
        elects to not have this section apply to such vehicle.
    ``(g) Termination.--This section shall not apply to any property 
placed in service after December 31, 2007.''.
    (b) Conforming Amendments.--
            (1) Section 1016(a) of the Internal Revenue Code of 1986 is 
        amended by striking ``and'' at the end of paragraph (26), by 
        striking the period at the end of paragraph (27) and inserting 
        ``, and'', and by adding at the end the following:
            ``(28) to the extent provided in section 30B(f)(3).''.
            (2) Section 53(d)(1)(B)(iii) of such Code is amended by 
        inserting ``, or not allowed under section 30B solely by reason 
        of the application of section 30B(e)(2)'' before the period.
            (3) Section 55(c)(2) of such Code is amended by inserting 
        ``30B(e),'' after ``30(b)(3)''.
            (4) Section 6501(m) is amended by inserting ``30B(f)(8),'' 
        after ``30(d)(4),''.
            (5) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 30A the following:

        ``Sec. 30B. Credit for alternative fuel vehicles.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2000, in taxable 
years ending after such date.

SEC. 4. MODIFICATION OF CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

    (a) Amount of Credit.--
            (1) In general.--Section 30(a) of the Internal Revenue Code 
        of 1986 (relating to allowance of credit) is amended by 
        striking ``10 percent of''.
            (2) Limitation of credit according to type of vehicle.--
        Section 30(b) of such Code (relating to limitations) is 
        amended--
                    (A) by striking paragraphs (1) and (2) and 
                inserting the following new paragraph:
            ``(1) Limitation according to type of vehicle.--The amount 
        of the credit allowed under subsection (a) for any vehicle 
        shall not exceed the greatest of the following amounts 
        applicable to such vehicle:
                    ``(A) In the case of a vehicle with a rated top 
                speed not exceeding 50 miles per hour, the lesser of--
                            ``(i) 10 percent of the cost of the 
                        vehicle, or
                            ``(ii) $4,250.
                    ``(B) In the case of a vehicle with a gross vehicle 
                weight rating not exceeding 8,500 pounds and a rated 
                top speed exceeding 50 miles per hour, $4,250.
                    ``(C) In the case of a vehicle capable of a driving 
                range of at least 100 miles on a single charge of the 
                vehicle's rechargeable batteries and measured pursuant 
                to the urban dynamometer schedules under appendix I to 
                part 86 of title 40, Code of Federal Regulations, 
                $6,375.
                    ``(D) In the case of a vehicle capable of a payload 
                capacity of at least 1000 pounds, $6,375.
                    ``(E) In the case of a vehicle with a gross vehicle 
                weight rating exceeding 8,500 but not exceeding 14,000 
                pounds, $8,500.
                    ``(F) In the case of a vehicle with a gross vehicle 
                weight rating exceeding 14,000 but not exceeding 26,000 
                pounds, $21,250.
                    ``(G) In the case of a vehicle with a gross vehicle 
                weight rating exceeding 26,000 pounds, $42,500.'', and
                    (B) by redesignating paragraph (3) as paragraph 
                (2).
            (3) Conforming amendments.--
                    (A) Section 53(d)(1)(B)(iii) of such Code is 
                amended by striking ``section 30(b)(3)(B)'' and 
                inserting ``section 30(b)(2)(B)''.
            (3) Section 55(c)(2) of such Code is amended by striking 
        ``30(b)(3)'' and inserting ``30(b)(2)''.
    (b) Qualified Electric Vehicle.--Section 30(c)(1)(A) of the 
Internal Revenue Code of 1986 (defining qualified electric vehicle) is 
amended to read as follows:
                    ``(A) which is powered primarily by an electric 
                motor drawing current from rechargeable batteries, fuel 
                cells which generate electrical current from an 
                alternative fuel (as defined in section 30B(f)(1)), or 
                other portable sources of electrical current generated 
                on board the vehicle from an alternative fuel (as so 
                defined),''.
    (c) Additional Special Rules.--Section 30(d) of the Internal 
Revenue Code of 1986 (relating to special rules) is amended by adding 
at the end the following new paragraphs:
            ``(5) No double benefit.--The amount of any deduction or 
        credit allowable under this chapter for any cost taken into 
        account in computing the amount of the credit determined under 
        subsection (a) shall be reduced by the amount of such credit 
        attributable to such cost.
            ``(6) Leased vehicles.--No credit shall be allowed under 
        subsection (a) with respect to a leased motor vehicle unless 
        the lease documents clearly disclose to the lessee the specific 
        amount of any credit otherwise allowable to the lessor under 
        subsection (a).''.
    (d) Extension.--Section 30(e) of the Internal Revenue Code of 1986 
(relating to termination) is amended by striking ``2004'' and inserting 
``2007''.
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2000, in taxable 
years ending after such date.

SEC. 5. CREDIT FOR RETAIL SALE OF ALTERNATIVE FUELS AS MOTOR VEHICLE 
              FUEL.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by inserting after section 40 the following:

``SEC. 40A. CREDIT FOR RETAIL SALE OF ALTERNATIVE FUELS AS MOTOR 
              VEHICLE FUEL.

    ``(a) General Rule.--For purposes of section 38, the alternative 
fuel retail sales credit of any taxpayer for any taxable year is 25 
cents for each gasoline gallon equivalent of alternative fuel sold at 
retail by the taxpayer during such year as a fuel to propel any 
qualified motor vehicle.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Alternative fuel.--The term `alternative fuel' means 
        compressed natural gas, liquefied natural gas, liquefied 
        petroleum gas, hydrogen, and any liquid at least 85 percent of 
        the volume of which consists of methanol.
            ``(2) Gasoline gallon equivalent.--The term `gasoline 
        gallon equivalent' means, with respect to any alternative fuel, 
        the amount (determined by the Secretary) of such fuel having a 
        Btu content of 114,000.
            ``(3) Qualified motor vehicle.--The term `qualified motor 
        vehicle' means any motor vehicle (as defined in section 
        179A(e)(2)) which meets any applicable Federal or State 
        emissions standards with respect to each fuel by which such 
        vehicle is designed to be propelled.
            ``(4) Sold at retail.--
                    ``(A) In general.--The term `sold at retail' means 
                the sale, for a purpose other than resale, after 
                manufacture, production, or importation.
                    ``(B) Use treated as sale.--If any person uses 
                alternative fuel as a fuel to propel any qualified 
                motor vehicle (including any use after importation) 
                before such fuel is sold at retail, then such use shall 
                be treated in the same manner as if such fuel were sold 
                at retail as a fuel to propel such a vehicle by such 
                person.
    ``(c) No Double Benefit.--The amount of any deduction or credit 
allowable under this chapter for any fuel taken into account in 
computing the amount of the credit determined under subsection (a) 
shall be reduced by the amount of such credit attributable to such 
fuel.
    ``(d) Pass-Thru in the Case of Estates and Trusts.--Under 
regulations prescribed by the Secretary, rules similar to the rules of 
subsection (d) of section 52 shall apply.
    ``(e) Termination.--This section shall not apply to any fuel sold 
at retail after December 31, 2007.''.
    (b) Credit Treated as Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 (relating to current year business 
credit) is amended by striking ``plus'' at the end of paragraph (11), 
by striking the period at the end of paragraph (12) and inserting ``, 
plus'', and by adding at the end the following:
            ``(13) the alternative fuel retail sales credit determined 
        under section 40A(a).''.
    (c) Transitional Rule.--Section 39(d) of the Internal Revenue Code 
of 1986 (relating to transitional rules) is amended by adding at the 
end the following:
            ``(9) No carryback of section 40a credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the alternative fuel retail sales 
        credit determined under section 40A(a) may be carried back to a 
        taxable year ending before January 1, 2001.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 40 the 
following:

        ``Sec. 40A. Credit for retail sale of alternative fuels as 
                            motor vehicle fuel.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to fuel sold at retail after December 31, 2000, in taxable years 
ending after such date.

SEC. 6. EXTENSION OF DEDUCTION FOR CERTAIN REFUELING PROPERTY.

    (a) In General.--Section 179A(f) of the Internal Revenue Code of 
1986 (relating to termination) is amended by striking ``2004'' and 
inserting ``2007''.
    (b) Conforming Amendment.--Section 179A(c) of the Internal Revenue 
Code of 1986 (relating to qualified clean-fuel vehicle property 
defined) is amended by striking paragraph (3).
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2000, in taxable 
years ending after such date.