II

103D CONGRESS

1ST SESSION S. 1060

To amend the Internal Revenue Code of 1986 to provide a tax credit to

businesses which mine metallurgical coal and are required to make contributions to the UMWA Combined Benefit Fund created by the Energy

Policy Act of 1992.

IN THE SENATE OF THE UNITED STATES

MAY 28 (legislative day, APRIL 19), 1993

Mr. ROBB (for himself and Mr. WARNER) 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 tax credit to businesses which mine metallurgical coal

and are required to make contributions to the UMWA

Combined Benefit Fund created by the Energy Policy

Act of 1992.

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

3 SECTION 1. METALLURGICAL COAL MINING CREDIT.

4 (a) GENERAL RULE.—Subpart D of part IV of sub5 chapter A of chapter 1 of the Internal Revenue Code of

6 1986 (relating to business related credits) is amended by

7 adding at the end thereof the following new section:
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1 ‘‘SEC. 45A. METALLURGICAL COAL MINING CREDIT.

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

3 the metallurgical coal mining credit determined under this

4 section for the taxable year is the lesser of—

5 ‘‘(1) the applicable percentage of the aggregate

6 amount of the premiums paid or accrued by the tax7 payer during the taxable year pursuant to chapter

8 99 of this title (relating to coal industry health bene9 fits), or

10 ‘‘(2) 7.5 percent of the aggregate gross revenue

11 from the sale of qualified metallurgical coal sold by

12 the taxpayer during the taxable year to an unrelated

13 person.

14 ‘‘(b) QUALIFICATION.—No credit shall be determined

15 under subsection (a) with respect to any taxpayer unless

16 at least 20 percent of the total tons of qualified coal sold

17 by the taxpayer during each of the 4 preceding taxable

18 years was qualified metallurgical coal. For purposes of the

19 preceding sentence, only coal produced from an economic

20 interest held by the taxpayer shall be taken into account.

21 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur22 poses of this section—

23 ‘‘(1) APPLICABLE PERCENTAGE.—The applica24 ble percentage is the percentage of the aggregate

25 tons of qualified coal sold by the taxpayer during the

26 taxable year to unrelated persons which consists of
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1 qualified metallurgical coal. In no event shall the ap2 plicable percentage exceed 75 percent.

3 ‘‘(2) QUALIFIED METALLURGICAL COAL.—The

4 term ‘qualified metallurgical coal’ means any bitu5 minous coal which—

6 ‘‘(A) is used in the production of iron and

7 steel, and

8 ‘‘(B) is processed by, or produced from an

9 economic interest held by, a signatory operator.

10 ‘‘(3) UNRELATED PERSON.—The term ‘unre11 lated person’ has the same meaning as when used in

12 section 29.

13 ‘‘(4) AFFILIATED GROUPS.—All members of the

14 same affiliated group (as defined in section 1504)

15 shall be treated as one taxpayer for purposes of this

16 section and the credit determined under subsection

17 (a) with respect to such one taxpayer shall be allo18 cated among such members in such manner as the

19 Secretary may prescribe.

20 ‘‘(5) ECONOMIC INTEREST.—The term ‘eco21 nomic interest’ means an interest with respect to

22 which an allowance for depletion is allowable.

23 ‘‘(6) BITUMINOUS COAL.—The term ‘bitu24 minous coal’ means coal classified as bituminous

25 coal according to the publication of the American
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1 Society for Testing and Materials under the title

2 ‘Standard Classification of Coals by Rank’ (ASTM

3 D 338–91A), as in effect on the date of the enact4 ment of chapter 99.

5 ‘‘(7) QUALIFIED COAL.—The term ‘qualified

6 coal’ means any bituminous coal which is produced

7 and processed by a signatory operator from an eco8 nomic interest held by a signatory operator.

9 ‘‘(8) SIGNATORY OPERATOR.—The term ‘signa10 tory operator’ has the meaning given such term by

11 section 9701(c)(1), and shall include all members of

12 the affiliated group of which such signatory operator

13 is a member that are also signatory operators.

14 ‘‘(9) TON—.The term ‘ton’ means 2,000

15 pounds.’’.

16 (b) CREDIT MADE PART OF GENERAL BUSINESS

17 CREDIT.—Subsection (b) of section 38 is amended by

18 striking ‘‘plus’’ at the end of paragraph (7), by striking

19 the period at the end of paragraph (8) and inserting ‘‘,

20 plus’’, and by adding at the end thereof the following new

21 paragraph:

22 ‘‘(9) the metallurgical coal credit determined

23 under section 45A.’’.

24 (c) CREDIT MAY OFFSET 90 PERCENT OF MINIMUM

25 TAX.—Subsection (c) of section 38 of such Code is amend-
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1 ed by redesignating paragraph (2) as paragraph (3) and

2 by inserting after paragraph (1) the following new para3 graph:

4 ‘‘(2) METALLURGICAL COAL CREDIT MAY OFF5 SET 90 PERCENT OF MINIMUM TAX.—

6 ‘‘(A) IN GENERAL.—In the case of a tax7 payer entitled to a credit determined under sec8 tion 45A, the amount determined under para9 graph (1)(A) shall be reduced by the lesser of—

10 ‘‘(i) the portion of the metallurgical

11 coal credit not used against the normal

12 limitation, or

13 ‘‘(ii) 90 percent of the taxpayer’s ten14 tative minimum tax for the taxable year.

15 ‘‘(B) PORTION OF METALLURGICAL COAL

16 CREDIT NOT USED AGAINST NORMAL LIMITA17 TION.—For purposes of subparagraph (A), the

18 portion of the metallurgical coal credit not used

19 against the normal limitation is the excess (if

20 any) of—

21 ‘‘(i) the portion of the credit under

22 subsection (a) which is attributable to the

23 metallurgical coal credit determined under

24 section 45A, over
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1 ‘‘(ii) the limitation of paragraph (1)

2 (determined without regard to this para3 graph) reduced by the portion of the credit

4 under subsection (a) which is not so attrib5 utable.’’

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

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

8 of such Code is amended by adding at the end thereof

9 the following new item:

‘‘Sec. 45A. Metallurgical coal mining credit.’’.

10 (e) EFFECTIVE DATE.—The amendments made by

11 this section shall take effect on January 1, 1993.

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