II 

109TH CONGRESS 

1ST SESSION S. 1022 

To amend the Internal Revenue Code of 1986 to allow for an energy efficient 

appliance credit. 

IN THE SENATE OF THE UNITED STATES 

MAY 12, 2005 

Mr. SMITH (for himself, Mrs. LINCOLN, and Mr. GRASSLEY) 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 allow for 

an energy efficient appliance credit.

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Resource Efficient Ap5 pliance Incentives Act of 2005.’’. 

6 SEC. 2. CREDIT FOR ENERGY EFFICIENT APPLIANCES. 

7 (a) IN GENERAL.—Subpart D of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of 

9 1986 (relating to business-related credits) is amended by 

10 adding at the end the following new section: 
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1 ‘‘SEC. 45J. ENERGY EFFICIENT APPLIANCE CREDIT. 

2 ‘‘(a) GENERAL RULE.— 

3 ‘‘(1) IN GENERAL.—For purposes of section 38, 

4 the energy efficient appliance credit determined 

5 under this section for any taxable year is an amount 

6 equal to the sum of the credit amounts determined 

7 under paragraph (2) for each type of qualified en8 ergy efficient appliance produced by the taxpayer 

9 during the calendar year ending with or within the 

10 taxable year. 

11 ‘‘(2) CREDIT AMOUNTS.—The credit amount 

12 determined for any type of qualified energy efficient 

13 appliance is— 

14 ‘‘(A) the applicable amount determined 

15 under subsection (b) with respect to such type, 

16 multiplied by 

17 ‘‘(B) the eligible production for such type. 

18 ‘‘(b) APPLICABLE AMOUNT.— 

19 ‘‘(1) IN GENERAL.—For purposes of subsection 

20 (a)— 

21 ‘‘(A) DISHWASHERS.—The applicable 

22 amount is the energy savings amount in the 

23 case of a dishwasher which— 

24 ‘‘(i) is manufactured in calendar year 

25 2006 or 2007, and 
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1 ‘‘(ii) meets the requirements of the 

2 Energy Star program which are in effect 

3 for dishwashers in 2007. 

4 ‘‘(B) CLOTHES WASHERS.—The applicable 

5 amount is— 

6 ‘‘(i) $50, in the case of a clothes 

7 washer which— 

8 ‘‘(I) is manufactured in calendar 

9 year 2005, and 

10 ‘‘(II) has an MEF of at least 

11 1.42, 

12 ‘‘(ii) $100, in the case of a clothes 

13 washer which— 

14 ‘‘(I) is manufactured in calendar 

15 year 2005, 2006, or 2007, and 

16 ‘‘(II) meets the requirements of 

17 the Energy Star program which are in 

18 effect for clothes washers in 2007, 

19 and 

20 ‘‘(iii) the energy and water savings 

21 amount, in the case of a clothes washer 

22 which— 

23 ‘‘(I) is manufactured in calendar 

24 year 2008, 2009, or 2010, and 
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1 ‘‘(II) meets the requirements of 

2 the Energy Star program which are in 

3 effect for clothes washers in 2010. 

4 ‘‘(C) REFRIGERATORS.— 

5 ‘‘(i) 15 PERCENT SAVINGS.—The ap6 plicable amount is $75 in the case of a re7 frigerator which— 

8 ‘‘(I) is manufactured in calendar 

9 year 2005 or 2006, and 

10 ‘‘(II) consumes at least 15 per11 cent less kilowatt hours per year than 

12 the 2001 energy conservation stand13 ard. 

14 ‘‘(ii) 20 PERCENT SAVINGS.—In the 

15 case of a refrigerator which consumes at 

16 least 20 percent less kilowatt hours per 

17 year than the 2001 energy conservation 

18 standards, the applicable amount is— 

19 ‘‘(I) $125 for a refrigerator 

20 which is manufactured in calendar 

21 year 2005, 2006, or 2007, and 

22 ‘‘(II) $100 for a refrigerator 

23 which is manufactured in calendar 

24 year 2008. 
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1 ‘‘(iii) 25 PERCENT SAVINGS.—In the 

2 case of a refrigerator which consumes at 

3 least 25 percent less kilowatt hours per 

4 year than the 2001 energy conservation 

5 standards, the applicable amount is— 

6 ‘‘(I) $175 for a refrigerator 

7 which is manufactured in calendar 

8 year 2005, 2006, or 2007, and 

9 ‘‘(II) $150 for a refrigerator 

10 which is manufactured in calendar 

11 year 2008, 2009, or 2010. 

12 ‘‘(2) ENERGY SAVINGS AMOUNT.—For purposes 

13 of paragraph (1)(A)— 

14 ‘‘(A) IN GENERAL.—The energy savings 

15 amount is the lesser of— 

16 ‘‘(i) the product of— 

17 ‘‘(I) $3, and 

18 ‘‘(II) 100 multiplied by the en19 ergy savings percentage, or 

20 ‘‘(ii) $100. 

21 ‘‘(B) ENERGY SAVINGS PERCENTAGE.—

22 For purposes of subparagraph (A), the energy 

23 savings percentage is the ratio of— 

24 ‘‘(i) the EF required by the Energy 

25 Star program for dishwashers in 2007 
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1 minus the EF required by the Energy Star 

2 program for dishwashers in 2005, to 

3 ‘‘(ii) the EF required by the Energy 

4 Star program for dishwashers in 2007. 

5 ‘‘(3) ENERGY AND WATER SAVINGS AMOUNT.—

6 For purposes of paragraph (1)(B)(iii)— 

7 ‘‘(A) IN GENERAL.—The energy and water 

8 savings amount is the lesser of— 

9 ‘‘(i) the product of— 

10 ‘‘(I) $10, and 

11 ‘‘(II) 100 multiplied by the en12 ergy and water savings percentage, or 

13 ‘‘(ii) $200. 

14 ‘‘(B) ENERGY AND WATER SAVINGS PER15 CENTAGE.—For purposes of subparagraph (A), 

16 the energy and water savings percentage is the 

17 average of the MEF savings percentage and the 

18 WF savings percentage. 

19 ‘‘(C) MEF SAVINGS PERCENTAGE.—For 

20 purposes of this subparagraph, the MEF sav21 ings percentage is the ratio of— 

22 ‘‘(i) the MEF required by the Energy 

23 Star program for clothes washers in 2010 

24 minus the MEF required by the Energy 
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1 Star program for clothes washers in 2007, 

2 to 

3 ‘‘(ii) the MEF required by the Energy 

4 Star program for clothes washers in 2010. 

5 ‘‘(D) WF SAVINGS PERCENTAGE.—For 

6 purposes of this subparagraph, the WF savings 

7 percentage is the ratio of— 

8 ‘‘(i) the WF required by the Energy 

9 Star program for clothes washers in 2010 

10 minus the WF required by the Energy 

11 Star program for clothes washers in 2007, 

12 to 

13 ‘‘(ii) the WF required by the Energy 

14 Star program for clothes washers in 2010. 

15 ‘‘(c) ELIGIBLE PRODUCTION.— 

16 ‘‘(1) IN GENERAL.—Except as provided in para17 graphs (2) and (3), the eligible production in a cal18 endar year with respect to each type of energy effi19 cient appliance is the excess of— 

20 ‘‘(A) the number of appliances of such type 

21 which are produced by the taxpayer in the 

22 United States during such calendar year, over 

23 ‘‘(B) the average number of appliances of 

24 such type which were produced by the taxpayer 
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1 (or any predecessor) in the United States dur2 ing the preceding 3-calendar year period. 

3 ‘‘(2) SPECIAL RULE FOR REFRIGERATORS.—

4 The eligible production in a calendar year with re5 spect to each type of refrigerator described in sub6 section (b)(1)(C) is the excess of— 

7 ‘‘(A) the number of appliances of such type 

8 which are produced by the taxpayer in the 

9 United States during such calendar year, over 

10 ‘‘(B) 110 percent of the average number of 

11 appliances of such type which were produced by 

12 the taxpayer (or any predecessor) in the United 

13 States during the preceding 3-calendar year pe14 riod. 

15 ‘‘(3) SPECIAL RULE FOR 2005 PRODUCTION.—

16 For purposes of determining eligible production for 

17 calendar year 2005— 

18 ‘‘(A) only production after the date of en19 actment of this section shall be taken into ac20 count under paragraphs (1)(A) and (2)(A), and 

21 ‘‘(B) the amount taken into account under 

22 paragraphs (1)(B) and (2)(B) shall be an 

23 amount which bears the same ratio to the 

24 amount which would (but for this paragraph) 
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1 be taken into account under such paragraph 

2 as— 

3 ‘‘(i) the number of days in calendar 

4 year 2005 after the date of enactment of 

5 this section, bears to 

6 ‘‘(ii) 365. 

7 ‘‘(d) TYPES OF ENERGY EFFICIENT APPLIANCE.—

8 For purposes of this section, the types of energy efficient 

9 appliances are— 

10 ‘‘(1) dishwashers described in subsection 

11 (b)(1)(A), 

12 ‘‘(2) clothes washers described in subsection 

13 (b)(1)(B)(i), 

14 ‘‘(3) clothes washers described in subsection 

15 (b)(1)(B)(ii), 

16 ‘‘(4) clothes washers described in subsection 

17 (b)(1)(B)(iii), 

18 ‘‘(5) refrigerators described in subsection 

19 (b)(1)(C)(i), 

20 ‘‘(6) refrigerators described in subsection 

21 (b)(1)(C)(ii)(I), 

22 ‘‘(7) refrigerators described in subsection 

23 (b)(1)(C)(ii)(II), 

24 ‘‘(8) refrigerators described in subsection 

25 (b)(1)(C)(iii)(I), and 
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1 ‘‘(9) refrigerators described in subsection 

2 (b)(1)(C)(iii)(II). 

3 ‘‘(e) LIMITATIONS.— 

4 ‘‘(1) AGGREGATE CREDIT AMOUNT ALLOWED.—

5 The aggregate amount of credit allowed under sub6 section (a) with respect to a taxpayer for any tax7 able year shall not exceed $75,000,000 reduced by 

8 the amount of the credit allowed under subsection 

9 (a) to the taxpayer (or any predecessor) for all prior 

10 taxable years. 

11 ‘‘(2) AMOUNT ALLOWED FOR CERTAIN APPLI12 ANCES.— 

13 ‘‘(A) IN GENERAL.—In the case of appli14 ances described in subparagraph (C), the aggre15 gate amount of the credit allowed under sub16 section (a) with respect to a taxpayer for any 

17 taxable year shall not exceed $20,000,000 re18 duced by the amount of the credit allowed 

19 under subsection (a) to the taxpayer (or any 

20 predecessor) for all prior taxable years with re21 spect to such appliances. 

22 ‘‘(B) ELECTION TO INCREASE ALLOWABLE

23 CREDIT.—In the case of any taxpayer who 

24 makes an election under this subparagraph— 
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1 ‘‘(i) subparagraph (A) shall be applied 

2 by substituting ‘$25,000,000’ for 

3 ‘$20,000,000’, and 

4 ‘‘(ii) the aggregate amount of the 

5 credit allowed under subsection (a) with re6 spect to such taxpayer for any taxable year 

7 for appliances described in subparagraph 

8 (C) and the additional appliances described 

9 in subparagraph (D) shall not exceed 

10 $50,000,000 reduced by the amount of the 

11 credit allowed under subsection (a) to the 

12 taxpayer (or any predecessor) for all prior 

13 taxable years with respect to such appli14 ances. 

15 ‘‘(C) APPLIANCES DESCRIBED.—The appli16 ances described in this subparagraph are— 

17 ‘‘(i) clothes washers described in sub18 section (b)(1)(B)(i), and 

19 ‘‘(ii) refrigerators described in sub20 section (b)(1)(C)(i). 

21 ‘‘(D) ADDITIONAL APPLIANCES.—The ad22 ditional appliances described in this subpara23 graph are— 

24 ‘‘(i) refrigerators described in sub25 section (b)(1)(C)(ii)(I), and 
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1 ‘‘(ii) refrigerators described in sub2 section (b)(1)(C)(ii)(II). 

3 ‘‘(3) LIMITATION BASED ON GROSS RE4 CEIPTS.—The credit allowed under subsection (a) 

5 with respect to a taxpayer for the taxable year shall 

6 not exceed an amount equal to 2 percent of the aver7 age annual gross receipts of the taxpayer for the 3 

8 taxable years preceding the taxable year in which 

9 the credit is determined. 

10 ‘‘(4) GROSS RECEIPTS.—For purposes of this 

11 subsection, the rules of paragraphs (2) and (3) of 

12 section 448(c) shall apply. 

13 ‘‘(f) DEFINITIONS.—For purposes of this section— 

14 ‘‘(1) QUALIFIED ENERGY EFFICIENT APPLI15 ANCE.—The term ‘qualified energy efficient appli16 ance’ means— 

17 ‘‘(A) any dishwasher described in sub18 section (b)(1)(A), 

19 ‘‘(B) any clothes washer described in sub20 section (b)(1)(B), and 

21 ‘‘(C) any refrigerator described in sub22 section (b)(1)(C). 

23 ‘‘(2) DISHWASHER.—The term ‘dishwasher’ 

24 means a residential dishwasher subject to the energy 
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1 conservation standards established by the Depart2 ment of Energy. 

3 ‘‘(3) CLOTHES WASHER.—The term ‘clothes 

4 washer’ means a residential model clothes washer, 

5 including a residential style coin operated washer. 

6 ‘‘(4) REFRIGERATOR.—The term ‘refrigerator’ 

7 means a residential model automatic defrost refrig8 erator-freezer which has an internal volume of at 

9 least 16.5 cubic feet. 

10 ‘‘(5) MEF.—The term ‘MEF’ means the modi11 fied energy factor established by the Department of 

12 Energy for compliance with the Federal energy con13 servation standards. 

14 ‘‘(6) EF.—The term ‘EF’ means the energy 

15 factor established by the Department of Energy for 

16 compliance with the Federal energy conservation 

17 standards. 

18 ‘‘(7) WF.—The term ‘WF’ means Water Fac19 tor (as determined by the Secretary of Energy). 

20 ‘‘(8) PRODUCED.—The term ‘produced’ in21 cludes manufactured. 

22 ‘‘(9) 2001 ENERGY CONSERVATION STAND23 ARD.—The term ‘2001 energy conservation stand24 ard’ means the energy conservation standards pro-
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1 mulgated by the Department of Energy and effective 

2 July 1, 2001. 

3 ‘‘(g) SPECIAL RULES.—For purposes of this sec4 tion— 

5 ‘‘(1) IN GENERAL.—Rules similar to the rules 

6 of subsections (c), (d), and (e) of section 52 shall 

7 apply. 

8 ‘‘(2) CONTROLLED GROUP.— 

9 ‘‘(A) IN GENERAL.—All persons treated as 

10 a single employer under subsection (a) or (b) of 

11 section 52 or subsection (m) or (o) of section 

12 414 shall be treated as a single producer. 

13 ‘‘(B) INCLUSION OF FOREIGN CORPORA14 TIONS.—For purposes of subparagraph (A), in 

15 applying subsections (a) and (b) of section 52 

16 to this section, section 1563 shall be applied 

17 without regard to subsection (b)(2)(C) thereof. 

18 ‘‘(3) VERIFICATION.—No amount shall be al19 lowed as a credit under subsection (a) with respect 

20 to which the taxpayer has not submitted such infor21 mation or certification as the Secretary, in consulta22 tion with the Secretary of Energy, determines nec23 essary.’’. 

24 (b) CONFORMING AMENDMENT.—Section 38(b) of 

25 the Internal Revenue Code of 1986 (relating to general 
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1 business credit) is amended by striking ‘‘plus’’ at the end 

2 of paragraph (18), by striking the period at the end of 

3 paragraph (19) and inserting ‘‘, plus’’, and by adding at 

4 the end the following new paragraph: 

5 ‘‘(20) the energy efficient appliance credit de6 termined under section 45J(a).’’. 

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

8 for subpart D of part IV of subchapter A of chapter 1 

9 of the Internal Revenue Code of 1986 is amended by add10 ing at the end the following new item:

‘‘Sec. 45J. Energy efficient appliance credit’’.

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

12 this section shall apply to appliances produced after the 

13 date of the enactment of this Act, in taxable years ending 

14 after such date.

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