II 

109TH CONGRESS 

1ST SESSION S. 1077 

To amend the Internal Revenue Code of 1986 to provide a renewable liquid 

fuels tax credit, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 19, 2005 

Mrs. LINCOLN introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL

To amend the Internal Revenue Code of 1986 to provide 

a renewable liquid fuels tax credit, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. RENEWABLE LIQUID FUELS EXCISE TAX CRED4 IT. 

5 (a) IN GENERAL.—Subchapter B of chapter 65 of the 

6 Internal Revenue Code of 1986 (relating to rules of special 

7 application) is amended by inserting after section 6426 

8 the following new section: 
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1 ‘‘SEC. 6426A. CREDIT FOR RENEWABLE LIQUID FUELS. 

2 ‘‘(a) ALLOWANCE OF CREDITS.—There shall be al3 lowed as a credit against the tax imposed by section 4081 

4 an amount equal to the renewable liquid mixture credit. 

5 ‘‘(b) RENEWABLE LIQUID MIXTURE CREDIT.— 

6 ‘‘(1) IN GENERAL.—For purposes of this sec7 tion, the renewable liquid mixture credit is the prod8 uct of the applicable amount and the number of gal9 lons of renewable liquid used by the taxpayer in pro10 ducing any renewable liquid mixture for sale or use 

11 in a trade or business of the taxpayer. 

12 ‘‘(2) APPLICABLE AMOUNT.—For purposes of 

13 this section, the applicable amount is $1.00. 

14 ‘‘(3) RENEWABLE LIQUID MIXTURE.—For pur15 poses of this section, the term ‘renewable liquid mix16 ture’ means a mixture of renewable liquid and tax17 able fuel which— 

18 ‘‘(A) is sold by the taxpayer producing 

19 such mixture to any person for use as a fuel or 

20 feedstock, or 

21 ‘‘(B) is used as a fuel or feedstock by the 

22 taxpayer producing such mixture. 

23 For purposes of subparagraph (A), a mixture pro24 duced by any person at a refinery prior to a taxable 

25 event which includes renewable liquid shall be treat26 ed as sold at the time of its removal from the refin-
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1 ery (and only at such time) or sold to another per2 son for use as a fuel or feedstock. 

3 ‘‘(c) OTHER DEFINITIONS.—For purposes of this 

4 subsection: 

5 ‘‘(1) RENEWABLE LIQUID.—The term ‘renew6 able liquid’ means liquid hydrocarbons derived from 

7 waste and byproduct streams including: agricultural 

8 byproducts and wastes, aqua-culture products pro9 duced from waste streams, food processing plant by10 products, municipal solid and semi-solid waste 

11 streams, industrial waste streams, automotive scrap 

12 waste streams, and as further provided by regula13 tions. 

14 ‘‘(2) TAXABLE FUEL.—The term ‘taxable fuel’ 

15 has the meaning given such term by section 

16 4083(a)(1). 

17 ‘‘(3) FEEDSTOCK.—The term ‘feedstock’ means 

18 any precursor material subject to further processing 

19 to make a petrochemical, solvent, or other hydro20 carbon which has the effect of displacing conven21 tional crude oil, or products produced from conven22 tional crude oil. 

23 ‘‘(4) ADDITIONAL DEFINITIONS.—Any term 

24 used in this section which is also used in section 
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1 40B shall have the meaning given such term by sec2 tion 40B. 

3 ‘‘(d) CERTIFICATION FOR RENEWABLE LIQUID

4 FUEL.—No credit shall be allowed under this section un5 less the taxpayer obtains a certification (in such form and 

6 manner as prescribed by the Secretary) from the producer 

7 of the renewable liquid fuel, which identifies the product 

8 produced. 

9 ‘‘(e) MIXTURE NOT USED AS FUEL, ETC.— 

10 ‘‘(1) IMPOSITION OF TAX.—If— 

11 ‘‘(A) any credit was determined under this 

12 section with respect to renewable liquid used in 

13 the production of any renewable liquid mixture, 

14 and 

15 ‘‘(B) any person— 

16 ‘‘(i) separates the renewable liquid 

17 from the mixture, or 

18 ‘‘(ii) without separation, uses the mix19 ture other than as a fuel, 

20 then there is hereby imposed on such person a 

21 tax equal to the product of the applicable 

22 amount and the number of gallons of such re23 newable liquid. 

24 ‘‘(2) APPLICABLE LAWS.—All provisions of law, 

25 including penalties, shall, insofar as applicable and 
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1 not inconsistent with this section, apply in respect of 

2 any tax imposed under paragraph (1) as if such tax 

3 were imposed by section 4081 and not by this sec4 tion. 

5 ‘‘(f) COORDINATION WITH EXEMPTION FROM EX6 CISE TAX.—Rules similar to the rules under section 40(c) 

7 shall apply for purposes of this section. 

8 ‘‘(g) TERMINATION.—This section shall not apply to 

9 any sale, use, or removal for any period after December 

10 31, 2010.’’. 

11 (b) REGISTRATION REQUIREMENT.—Section 

12 4101(a)(1) of the Internal Revenue Code of 1986 (relating 

13 to registration) is amended by inserting ‘‘and every person 

14 producing or importing renewable liquid as defined in sec15 tion 6426A(c)(1)’’ before ‘‘shall register with the Sec16 retary’’. 

17 (c) PAYMENTS.—Section 6427 of the Internal Rev18 enue Code of 1986 is amended by inserting after sub19 section (f) the following new subsection: 

20 ‘‘(g) RENEWABLE LIQUID USED TO PRODUCE MIX21 TURE.— 

22 ‘‘(1) USED TO PRODUCE A MIXTURE.—If any 

23 person produces a mixture described in section 

24 6426A in such person’s trade or business, the Sec25 retary shall pay (without interest) to such person an 
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1 amount equal to the renewable liquid mixture credit 

2 with respect to such mixture. 

3 ‘‘(2) COORDINATION WITH OTHER REPAYMENT

4 PROVISIONS.—No amount shall be payable under 

5 paragraph (1) with respect to any mixture with re6 spect to which an amount is allowed as a credit 

7 under section 6426A. 

8 ‘‘(3) TERMINATION.—This subsection shall not 

9 apply with respect to any renewable liquid fuel mix10 ture (as defined in section 6426A(b)(3) sold or used 

11 after December 31, 2010).’’. 

12 (d) CONFORMING AMENDMENT.—The last sentence 

13 of section 9503(b)(1) is amended by striking ‘‘section 

14 6426’’ and inserting ‘‘sections 6426 and 6426A’’. 

15 (e) CLERICAL AMENDMENT.—The table of sections 

16 for subchapter B of chapter 65 of the Internal Revenue 

17 Code of 1986 is amended by inserting after the item relat18 ing to section 6426 the following new item:

‘‘Sec. 6426A. Credit for renewable liquid fuels.’’.

19 (f) EFFECTIVE DATES.— 

20 (1) IN GENERAL.—Except as otherwise pro21 vided in this subsection, the amendments made by 

22 this section shall apply to fuel sold or used after De23 cember 31, 2005. 
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1 (2) REGISTRATION REQUIREMENT.—The 

2 amendment made by subsection (b) shall take effect 

3 on January 1, 2006. 

4 SEC. 2. RENEWABLE LIQUID INCOME TAX CREDIT. 

5 (a) IN GENERAL.—Subpart D of part IV of sub6 chapter A of chapter 1 of the Internal Revenue Code of 

7 1986 (relating to business related credits) is amended by 

8 inserting after section 40A the following new section: 

9 ‘‘SEC. 40B. RENEWABLE LIQUID USED AS FUEL. 

10 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

11 the renewable liquid credit determined under this section 

12 for the taxable year is an amount equal to the sum of— 

13 ‘‘(1) the renewable liquid mixture credit, plus 

14 ‘‘(2) the renewable liquid credit. 

15 ‘‘(b) DEFINITION OF RENEWABLE LIQUID MIXTURE

16 CREDIT AND RENEWABLE LIQUID CREDIT.—For pur17 poses of this section— 

18 ‘‘(1) RENEWABLE LIQUID MIXTURE CREDIT.— 

19 ‘‘(A) IN GENERAL.—The renewable liquid 

20 mixture credit of any taxpayer for any taxable 

21 year is $1.00 for each gallon of renewable liquid 

22 fuel used by the taxpayer in the production of 

23 a qualified renewable liquid fuel mixture. 

24 ‘‘(B) QUALIFIED RENEWABLE LIQUID MIX25 TURE.—The term ‘qualified renewable liquid 
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1 mixture’ means a mixture of renewable liquid 

2 and taxable fuel (as defined in section 

3 4083(a)(1)), which— 

4 ‘‘(i) is sold by the taxpayer producing 

5 such a mixture to any person for use as a 

6 fuel or feedstock, or 

7 ‘‘(ii) is used as a fuel or feedstock by 

8 the taxpayer producing such mixture. 

9 ‘‘(C) SALE OR USE MUST BE IN TRADE OR

10 BUSINESS, ETC.—Renewable liquid used in the 

11 production of a qualified renewable liquid fuel 

12 mixture shall be taken into account— 

13 ‘‘(i) only if the sale or use described 

14 in subparagraph (B) is in a trade or busi15 ness of the taxpayer, and 

16 ‘‘(ii) for the taxable year in which 

17 such sale or use occurs. 

18 ‘‘(2) RENEWABLE LIQUID CREDIT.— 

19 ‘‘(A) IN GENERAL.—The renewable liquid 

20 credit of any taxpayer for any taxable year is 

21 $1.00 for each gallon of renewable liquid which 

22 is not in a mixture with taxable fuel and which 

23 during the taxable year— 

24 ‘‘(i) is used by the taxpayer as a fuel 

25 or feedstock in a trade or business, or 
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1 ‘‘(ii) is sold by the taxpayer at retail 

2 to a person and placed in the fuel tank of 

3 such person’s vehicle. 

4 ‘‘(B) USER CREDIT NOT TO APPLY TO RE5 NEWABLE LIQUID SOLD AT RETAIL.—No credit 

6 shall be allowed under subparagraph (A)(i) with 

7 respect to any renewable liquid which was sold 

8 in a retail sale described in subparagraph 

9 (A)(ii). 

10 ‘‘(c) CERTIFICATION FOR RENEWABLE LIQUID.—No 

11 credit shall be allowed under this section unless the tax12 payer obtains a certification (in such form and manner 

13 as prescribed by the Secretary) from the producer or im14 porter of the renewable liquid fuel which identifies the 

15 product produced and percentage of renewable liquid fuel 

16 in the product. 

17 ‘‘(d) COORDINATION WITH CREDIT AGAINST EXCISE

18 TAX.—The amount of the credit determined under this 

19 section with respect to any renewable liquid fuel shall be 

20 properly reduced to take into account any benefit provided 

21 with respect to such renewable liquid fuel solely by reason 

22 of the application of section 6426A or 6427(g). 

23 ‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur24 poses of this section, the term ‘renewable liquid’ means 

25 liquid hydrocarbons derived from waste and byproduct 
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1 streams including: agricultural byproducts and wastes, ag2 riculture materials produced from waste streams, food 

3 processing plant byproducts, municipal solid and semi4 solid waste streams, industrial waste streams, automotive 

5 scrap waste streams, as further provided by regulations. 

6 ‘‘(f) MIXTURE OR RENEWABLE LIQUID NOT USED

7 AS A FUEL, ETC.— 

8 ‘‘(1) MIXTURES.—If— 

9 ‘‘(A) any credit was determined under this 

10 section with respect to renewable liquid used in 

11 the production of any qualified renewable liquid 

12 mixture, and 

13 ‘‘(B) any person— 

14 ‘‘(i) separates the renewable liquid 

15 from the mixture, or 

16 ‘‘(ii) without separation, uses the mix17 ture other than as a fuel, 

18 then there is hereby imposed on such per19 son a tax equal to the product of the rate 

20 applicable under subsection (b)(1)(A) and 

21 the number of gallons of such renewable 

22 liquid in such mixture. 

23 ‘‘(2) RENEWABLE LIQUID.—If— 
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1 ‘‘(A) any credit was determined under this 

2 section with respect to the retail sale of any re3 newable liquid, and 

4 ‘‘(B) any person mixes such renewable liq5 uid or uses such renewable liquid other than as 

6 a fuel, then there is hereby imposed on such 

7 person a tax equal to the product of the rate 

8 applicable under subsection (b)(2)(A) and the 

9 number of gallons of such renewable liquid. 

10 ‘‘(3) APPLICABLE LAWS.—All provisions of law, 

11 including penalties, shall, insofar as applicable and 

12 not inconsistent with this section, apply in respect of 

13 any tax imposed under subparagraph (A) or (B) as 

14 if such tax were imposed by section 4081 and not 

15 by this chapter. 

16 ‘‘(g) PASS-THRU IN THE CASE OF ESTATES AND

17 TRUSTS.—Under regulations prescribed by the Secretary, 

18 rules similar to the rules of subsection (d) of section 52 

19 shall apply. 

20 ‘‘(h) TERMINATION.—This section shall not apply to 

21 any sale or use after December 31, 2010.’’. 

22 (b) CREDIT TREATED AS PART OF GENERAL BUSI23 NESS CREDIT.—Section 38(b) of the Internal Revenue 

24 Code of 1986 (relating to current year business credit), 

25 is amended by striking ‘‘plus’’ at the end of paragraph 
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1 (18), by striking the period at the end of paragraph (17), 

2 and inserting ‘‘, plus’’, and by inserting after paragraph 

3 (19) the following new paragraph: 

4 ‘‘(20) The renewable liquid credit determined 

5 under section 40B.’’. 

6 (c) CLERICAL AMENDMENT.—The table of sections 

7 for subpart D of part IV of subchapter A of chapter I 

8 of the Internal Revenue Code of 1986 is amended by in9 serting after the item relating to section 40A the following 

10 new item:

‘‘Sec. 40B. Renewable liquid used as fuel.’’.

11 (d) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to fuel produced, and sold as used, 

13 after December 31, 2005.

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