49–010 

Calendar No. 46 

114TH CONGRESS REPORT " ! SENATE 1st Session 114–23 

A BILL TO PROVIDE AN INVESTMENT TAX CREDIT FOR 

WASTE HEAT TO POWER TECHNOLOGY 

APRIL 14, 2015.—Ordered to be printed 

Mr. HATCH, from the Committee on Finance, 

submitted the following 

R E P O R T 

[To accompany S. 913] 

The Committee on Finance, having considered an original bill, S. 

913, to amend the Internal Revenue Code of 1986 to provide an investment tax credit for waste heat to power technology, having considered the same, reports favorably thereon without amendment 

and recommends that the bill do pass. 

CONTENTS 

Page 

I. LEGISLATIVE BACKGROUND .................................................................. 1 

II. EXPLANATION OF THE BILL ................................................................... 2 

A. Waste-Heat-to-Power Investment Tax Credit (sec. 1 of the bill 

and sec. 48 of the Code) ..................................................................... 2 

B. Increase Continuous Levy Authority on Payments to Medicare 

Providers and Suppliers (sec. 2 of the bill and sec. 6331 of 

the Code) ............................................................................................. 4 

III. BUDGET EFFECTS OF THE BILL ............................................................ 5 

IV. VOTES OF THE COMMITTEE .................................................................... 7 

V. REGULATORY IMPACT AND OTHER MATTERS ................................... 7 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED 8 

I. LEGISLATIVE BACKGROUND 

The Committee on Finance, having considered S. 913, a bill to 

amend the Internal Revenue Code of 1986 to provide an investment 

tax credit for waste heat to power technology, reports favorably 

thereon without amendment and recommends that the bill do pass. 


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1Sec. 48. Unless otherwise stated, all section references are to the Internal Revenue Code of 

1986, as amended (the ‘‘Code’’). 

Background and need for legislative action 

Background.—Based on a proposal recommended by Senators 

Carper and Heller, the Committee on Finance marked up original 

legislation (a bill to amend the Internal Revenue Code of 1986 to 

provide an investment tax credit for waste heat to power technology) on February 11, 2015, and, with a majority present, ordered the bill favorably reported. 

Need for legislative action.—Waste heat is an industrial energy 

byproduct generated at factories across the country. Similar to combined heat and power (CHP) systems, waste heat to power (WHP) 

systems can convert otherwise wasted thermal energy into electricity, limiting the environmental consequences of continued reliance on power generated from fossil fuels. While both technologies 

involve the use of otherwise wasted heat, combined heat and power 

systems are currently eligible for a 10 percent business investment 

tax credit. Both CHP and WHP systems reduce the need for additional energy and fuel consumption by reducing the amount of 

wasted thermal energy, but they are treated differently for tax purposes. 

In addition, it has been reported that many thousands of Medicare providers and suppliers have outstanding Federal employment 

and income tax liability, which contribute to the tax gap. The permissible percentage of payments to a Medicare provider subject to 

levy should be increased. 

II. EXPLANATION OF THE BILL 

A. WASTE-HEAT-TO-POWER INVESTMENT TAX CREDIT (SEC. 1 OF THE

BILL AND SEC. 48 OF THE CODE) 

PRESENT LAW

A nonrefundable, 10-percent business investment credit is allowed for the cost of new combined heat and power (‘‘CHP’’) property placed in service prior to January 1, 2017.1 CHP property is 

property: (1) that uses the same energy source for the simultaneous 

or sequential generation of electrical power, mechanical shaft 

power, or both, in combination with the generation of steam or 

other forms of useful thermal energy (including heating and cooling 

applications); (2) that has an electrical capacity of not more than 

50 megawatts or a mechanical energy capacity of not more than 

67,000 horsepower or an equivalent combination of electrical and 

mechanical energy capacities; (3) that produces at least 20 percent 

of its total useful energy in the form of thermal energy that is not 

used to produce electrical or mechanical power, and produces at 

least 20 percent of its total useful energy in the form of electrical 

or mechanical power (or a combination thereof); and (4) the energy 

efficiency percentage of which exceeds 60 percent. CHP property 

does not include property used to transport the energy source to 

the generating facility or to distribute energy produced by the facility. 

The otherwise allowable credit with respect to CHP property is 

reduced to the extent the property has an electrical capacity or meVerDate Sep 11 2014 05:28 Apr 18, 2015 Jkt 049010 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\SR023.XXX SR023

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chanical capacity in excess of any applicable limits. Property in excess of the applicable limit (15 megawatts or a mechanical energy 

capacity of more than 20,000 horsepower or an equivalent combination of electrical and mechanical energy capacities) is permitted to 

claim a fraction of the otherwise allowable credit. The fraction is 

equal to the applicable limit divided by the capacity of the property. For example, a 45 megawatt property would be eligible to 

claim 15/45ths, or one third, of the otherwise allowable credit. 

Again, no credit is allowed if the property exceeds the 50 megawatt 

or 67,000 horsepower limitations described above. 

Additionally, systems whose fuel source is at least 90 percent 

open-loop biomass and that would qualify for the credit but for the 

failure to meet the efficiency standard are eligible for a credit that 

is reduced in proportion to the degree to which the system fails to 

meet the efficiency standard. For example, a system that would 

otherwise be required to meet the 60-percent efficiency standard, 

but which only achieves 30-percent efficiency, would be permitted 

a credit equal to one-half of the otherwise allowable credit (i.e., a 

5-percent credit). 

Waste-heat-to-power systems, including systems that generate 

electricity through the recovery of exhaust heat from industrial 

processes that do not have as a primary purpose the production of 

electricity, do not qualify for tax incentives. 

REASONS FOR CHANGE

Waste heat is an industrial energy byproduct generated at factories across the country. Companies can invest in technology that 

converts this wasted heat—that would otherwise be released into 

the atmosphere—into usable electricity, but often these investments are very costly. Tax credits are one way to reduce costs and 

encourage the deployment of this clean technology. 

EXPLANATION OF PROVISION

The provision provides a 10-percent investment credit for qualified waste-heat-to-power property placed in service before January 

1, 2017. Qualified waste-heat-to-power property is defined as property comprising a system that generates electricity through the recovery of a qualified waste heat resource. Qualified waste heat resources consists of exhaust heat from any industrial process that 

does not have as its primary purpose the production of electricity, 

and a pressure drop in any gas for an industrial or commercial 

process. Where waste-heat-to-power property is fully integrated 

into other industrial property, the amount eligible for credit is the 

incremental difference in cost between the property that has the 

ability to capture and convert waste heat to electricity and similar 

property that lacks such functionality. Waste-heat-to-power capacity cannot be in excess of 50 megawatts. 

EFFECTIVE DATE

The provision is effective for property placed in service after the 

date of enactment. 


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2Sec. 6331(a). Levy specifically refers to the legal process by which the IRS orders a third 

party to turn over property in its possession that belongs to the delinquent taxpayer named in 

a notice of levy. 3 Ibid. 

4Sec. 6334. 

5Sec. 6331(d). 

6Sec. 6330. The notice and the hearing are referred to collectively as the CDP requirements. 

7Secs. 6331(e) and 6343. 

8 Sec. 6321. 9Secs. 6331(d)(3) and 6861. 

10Sec. 6330(f). 11Pub. L. No. 105–34. 

B. INCREASE CONTINUOUS LEVY AUTHORITY ON PAYMENTS TO MEDI- CARE PROVIDERS AND SUPPLIERS (SEC. 2 OF THE BILL AND SEC. 6331 OF THE CODE) 

PRESENT LAW

In general 

Levy is the administrative authority of the IRS to seize a taxpayer’s property, or rights to property, to pay the taxpayer’s tax liability.2 Generally, the IRS is entitled to seize a taxpayer’s property by levy if a Federal tax lien has attached to such property,3

the property is not exempt from levy,4 and the IRS has provided 

both notice of intention to levy 5 and notice of the right to an administrative hearing (the notice is referred to as a ‘‘collections due 

process notice’’ or ‘‘CDP notice’’ and the hearing is referred to as 

the ‘‘CDP hearing’’) 6 at least 30 days before the levy is made. A 

levy on salary or wages generally is continuously in effect until released.7 A Federal tax lien arises automatically when: (1) a tax assessment has been made; (2) the taxpayer has been given notice of 

the assessment stating the amount and demanding payment; and 

(3) the taxpayer has failed to pay the amount assessed within 10 

days after the notice and demand.8

The notice of intent to levy is not required if the Secretary finds 

that collection would be jeopardized by delay. The standard for determining whether jeopardy exists is similar to the standard applicable when determining whether assessment of tax without following the normal deficiency procedures is permitted.9

The CDP notice (and pre-levy CDP hearing) is not required if: (1) 

the Secretary finds that collection would be jeopardized by delay; 

(2) the Secretary has served a levy on a State to collect a Federal 

tax liability from a State tax refund; (3) the taxpayer subject to the 

levy requested a CDP hearing with respect to unpaid employment 

taxes arising in the two-year period before the beginning of the taxable period with respect to which the employment tax levy is 

served; or (4) the Secretary has served a Federal contractor levy. 

In each of these four cases, however, the taxpayer is provided an 

opportunity for a hearing within a reasonable period of time after 

the levy.10

Federal payment levy program 

To help the IRS collect taxes more effectively, the Taxpayer Relief Act of 1997 11 authorized the establishment of the Federal Payment Levy Program (‘‘FPLP’’), which allows the IRS to continuously 

levy up to 15 percent of certain ‘‘specified payments’’ by the Federal 

government if the payees are delinquent on their tax obligations. 

With respect to payments to vendors of goods, services, or property 


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12Sec. 6331(h)(3). 13Pub. L. No. 113–295, Division B. 

sold or leased to the Federal government, the continuous levy may 

be up to 100 percent of each payment.12 For payments to Medicare 

providers and suppliers, the levy is up to 15 percent for payments 

made within 180 days after December 19, 2014. For payments 

made after that date, the levy is up to 30 percent.13

Under FPLP, the IRS matches its accounts receivable records 

with Federal payment records maintained by the Department of 

the Treasury’s Bureau of Fiscal Service (‘‘BFS’’), such as certain Social Security benefit and Federal wage records. When these records 

match, the delinquent taxpayer is provided both the notice of intention to levy and the CDP notice. If the taxpayer does not respond 

after 30 days, the IRS can instruct the BFS to levy the taxpayer’s 

Federal payments. Subsequent payments are continuously levied 

until such time that the tax debt is paid or the IRS releases the 

levy. 

REASONS FOR CHANGE

It has also been reported that many thousands of Medicare providers and suppliers have outstanding Federal employment and income tax liability, which contribute to the tax gap. Consequently, 

the Committee believes that it is appropriate to increase the permissible percentage of payments to a Medicare provider subject to 

levy. 

EXPLANATION OF PROVISION

The provision provides that the present limitation of 30 percent 

of certain specified payments be increased by an amount sufficient 

to offset the estimated revenue loss of the provision described in 

Part A, above. 

EFFECTIVE DATE

The provision is effective for payments made after 180 days after 

the date of enactment. 

III. BUDGET EFFECTS OF THE BILL 

A. COMMITTEE ESTIMATES

In compliance with paragraph 11(a) of rule XXVI of the Standing 

Rules of the Senate and section 308(a)(1) of the Congressional 

Budget and Impoundment Control Act of 1974, as amended (the 

‘‘Budget Act’’), the following statement is made concerning the estimated budget effects of the revenue provisions of the bill as reported. 

The bill is estimated to reduce Federal fiscal year budget receipts 

by the following amounts for the period 2015–2025: 


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B. BUDGET AUTHORITY AND TAX EXPENDITURES

BUDGET AUTHORITY

In compliance with section 308(a)(1) of the Budget Act, the Committee states that no provisions of the bill as reported involve new 

or increased budget authority. 

TAX EXPENDITURES

In compliance with section 308(a)(1) of the Budget Act, the Committee states that certain provisions of the bill as reported affect 

the levels of tax expenditures (see revenue table in part A., above). 

C. CONSULTATION WITH CONGRESSIONAL BUDGET OFFICE

In accordance with section 402 of the Budget Act, the Committee 

advises that the Congressional Budget Office has not submitted a 

statement on the bill. The letter from the Congressional Budget Office will be provided separately. 

IV. VOTES OF THE COMMITTEE 

In compliance with paragraph 7(b) of rule XXVI of the Standing 

Rules of the Senate, the Committee states that, with a majority 

present, the bill was ordered favorably reported by voice vote on 

February 11, 2015. Senator Toomey was separately listed as voting 

against adoption of the provision. 

V. REGULATORY IMPACT AND OTHER MATTERS 

A. REGULATORY IMPACT

Pursuant to paragraph 11(b) of rule XXVI of the Standing Rules 

of the Senate, the Committee makes the following statement concerning the regulatory impact that might be incurred in carrying 

out the provisions of the bill. 

Impact on individuals and businesses, personal privacy and paperwork 

The bill provides an investment tax credit for waste-heat-to-energy property. It also increases the IRS’s continuous levy authority 

on payments to Medicare providers and suppliers. The provisions 

of the bill are not expected to impose additional administrative requirements or regulatory burdens on individuals or businesses. 

The provisions of the bill do not impact personal privacy. 

B. UNFUNDED MANDATES STATEMENT

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104–4). 

The Committee has determined that the tax provisions of the reported bill do not contain Federal private sector mandates or Federal intergovernmental mandates on State, local, or tribal governments within the meaning of Public Law 104–4, the Unfunded 

Mandates Reform Act of 1995. 


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C. TAX COMPLEXITY ANALYSIS

Section 4022(b) of the Internal Revenue Service Reform and Restructuring Act of 1998 (‘‘IRS Reform Act’’) requires the staff of the 

Joint Committee on Taxation (in consultation with the Internal 

Revenue Service and the Treasury Department) to provide a tax 

complexity analysis. The complexity analysis is required for all legislation reported by the Senate Committee on Finance, the House 

Committee on Ways and Means, or any committee of conference if 

the legislation includes a provision that directly or indirectly 

amends the Internal Revenue Code and has widespread applicability to individuals or small businesses. The staff of the Joint 

Committee on Taxation has determined that there are no provisions that are of widespread applicability to individuals or small 

businesses. 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS 

REPORTED 

In the opinion of the Committee, it is necessary in order to expedite the business of the Senate, to dispense with the requirements 

of paragraph 12 of rule XXVI of the Standing Rules of the Senate 

(relating to the showing of changes in existing law made by the bill 

as reported by the Committee). 

Æ 


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