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103D CONGRESS

1ST SESSION H. R. 113

To amend the Internal Revenue Code of 1986 to allow individuals a temporary

refundable credit for the purchase of a new domestic passenger vehicle.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. BURTON of Indiana introduced the following bill; which was referred to

the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to allow individuals a temporary refundable credit for the purchase

of a new domestic passenger vehicle.

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 ‘‘Buy American Motor

5 Vehicles Act of 1993’’.

6 SEC. 2. STATEMENT OF PURPOSE.

7 It is the purpose of this Act to stimulate economic

8 growth by encouraging the purchase of new domestic pas9 senger vehicles through the provision of a temporary tax

10 credit, which a purchaser may assign in exchange for an
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1 equal reduction in the purchase price of the vehicle from

2 the amount such price would have been if this Act had

3 not been enacted.

4 SEC. 3. TEMPORARY REFUNDABLE CREDIT FOR PURCHASE

5 OF NEW DOMESTIC PASSENGER VEHICLES.

6 (a) IN GENERAL.—Subpart C of part IV of sub7 chapter A of chapter 1 of the Internal Revenue Code of

8 1986 (relating to refundable credits) is amended by redes9 ignating section 35 as section 36 and by inserting after

10 section 34 the following new section:

11 ‘‘SEC. 35. PURCHASE OF NEW DOMESTIC PASSENGER VEHI12 CLE.

13 ‘‘(a) ALLOWANCE OF CREDIT.—

14 ‘‘(1) IN GENERAL.—In the case of an individual

15 who purchases a new domestic passenger vehicle,

16 there shall be allowed as a credit against the tax im17 posed by this chapter for the taxable year in which

18 the purchase is made an amount equal to the appli19 cable percentage of the purchase price of the vehicle.

20 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes

21 of paragraph (1), the applicable percentage is—

22 ‘‘(A) 15 percent, in the case of a vehicle

23 purchased in calendar year 1993, and

24 ‘‘(B) 7.5 percent, in the case of a vehicle pur25 chased in calendar year 1994.
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1 ‘‘(3) LIMITATION.—The credit allowed by para2 graph (1) for any taxpayer shall not exceed—

3 ‘‘(A) $2,000, in the case of taxable years

4 ending on or before December 31, 1993, and

5 ‘‘(B) $1,000, in the case of taxable years

6 ending after such date.

7 ‘‘(b) ASSIGNMENT OF CREDIT.—Under regulations

8 prescribed by the Secretary—

9 ‘‘(1) an individual qualifying for a credit under

10 subsection (a) may, at the time of purchase of the

11 vehicle, assign the right to the credit to the retail

12 dealer from whom the vehicle is purchased in ex13 change for a purchase price reduction of equal value,

14 ‘‘(2) such retail dealer may assign such right to

15 the manufacturer of the vehicle, and

16 ‘‘(3) such manufacturer shall be allowed to use

17 such credit against the tax imposed by this chapter

18 on such manufacturer.

19 ‘‘(c) NEW DOMESTIC PASSENGER VEHICLE.—For

20 purposes of this section—

21 ‘‘(1) IN GENERAL.—The term ‘new domestic

22 passenger vehicle’ means any domestic vehicle

23 which—

24 ‘‘(A) is a passenger vehicle (within the

25 meaning of section 4001(b)), and
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1 ‘‘(B) is purchased by the taxpayer in the

2 1st retail sale of the vehicle (within the mean3 ing of section 4001(a)).

4 ‘‘(2) DOMESTIC VEHICLE.—The term ‘domestic

5 vehicle’ means any vehicle if—

6 ‘‘(A) the vehicle is produced by a domestic

7 vehicle manufacturer at a manufacturing facil8 ity located within the United States or Canada,

9 and

10 ‘‘(B) such manufacturer includes on the

11 label required by section 3 of the Automobile

12 Information Disclosure Act (15 U.S.C. 1232)

13 information concerning—

14 ‘‘(i) whether the vehicle is a domestic

15 vehicle eligible for the credit allowed by

16 this section, and

17 ‘‘(ii) the percentage of the value of all

18 parts used in the production of the vehicle

19 which is attributable to parts produced by

20 domestic parts manufacturers.

21 ‘‘(3) DOMESTIC MANUFACTURERS.—

22 ‘‘(A) DOMESTIC VEHICLE MANUFAC23 TURER.—The term ‘domestic vehicle manufac24 turer’ means a manufacturer (whether or not a

25 related source) of motor vehicles which—
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1 ‘‘(i) has 1 or more motor vehicle man2 ufacturing facilities located within the

3 United States which produce motor vehi4 cles for interstate sale or export, or both,

5 and

6 (ii) with respect to its production of

7 motor vehicles in the facilities referred to

8 in clause (i) during the most recently com9 pleted calendar year, utilized motor vehicle

10 parts produced by domestic manufacturers

11 which constituted 60 percent or more of

12 the total value of all motor vehicle parts

13 used in such production.

14 ‘‘(B) DOMESTIC PARTS MANUFACTURER.—

15 The term ‘domestic parts manufacturer’ means

16 a manufacturer of motor vehicle parts which—

17 ‘‘(i) has 1 or more motor vehicle parts

18 manufacturing facilities located within the

19 United States or Canada, and

20 ‘‘(ii) either—

21 ‘‘(I) is not a related source,

22 ‘‘(II) is not affiliated with a re23 lated source, or

24 ‘‘(III) is affiliated with a related

25 source, but with respect to its produc-
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1 tion of motor vehicle parts in the fa2 cilities referred to in clause (i) during

3 the most recent full calendar year,

4 utilized materials and components

5 produced by, or purchased or other6 wise obtained (directly or indirectly)

7 from, related sources to an extent not

8 exceeding 25 percent of the total value

9 of such production.

10 ‘‘(4) RELATED SOURCES, OWNERSHIP, AND AF11 FILIATION.—

12 ‘‘(A) RELATED SOURCE.—The term ‘relat13 ed source’ means—

14 ‘‘(i) a natural person who is a citizen

15 of Japan, and

16 ‘‘(ii) a corporation or other legal en17 tity, wherever located, if owned or con18 trolled by—

19 ‘‘(I) natural persons who are citi20 zens of Japan, or

21 ‘‘(II) another corporation or

22 other legal entity which is owned or

23 controlled by natural persons who are

24 citizens of Japan, unless such cor25 poration or other legal entity would
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1 qualify as a domestic parts manufac2 turer under paragraph (3)(B).

3 ‘‘(B) OWN OR CONTROL.—The term ‘own

4 or control’ means—

5 ‘‘(i) in the case of a corporation, the

6 holding of at least 50 percent (by vote or

7 value) of the capital structure of the cor8 poration, and

9 ‘‘(ii) in the case of any other kind of

10 legal entity, the holding of interests rep11 resenting at least 50 percent of the capital

12 structure of the entity.

13 ‘‘(C) AFFILIATED.—A domestic parts man14 ufacturer shall be considered to be affiliated

15 with a related source if—

16 ‘‘(i) in the case of a domestic parts

17 manufacturer which is a corporation, a re18 lated source holds at least 2.5 percent but

19 less than 50 percent (by vote or value) of

20 the capital structure of the corporation,

21 and

22 ‘‘(ii) in the case of a domestic parts

23 manufacturer which is any other kind of

24 legal entity, a related source holds inter25 ests representing at least 2.5 percent, but
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1 less than 50 percent, of the capital struc2 ture of the entity.

3 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur4 poses of this section—

5 ‘‘(1) PURCHASE PRICE.—Purchase price shall

6 be determined under rules similar to the rules of

7 section 4011(d)(1).

8 ‘‘(2) VALUE.—The term ‘value’ when applied

9 to—

10 ‘‘(A) materials and components used in

11 production of motor vehicles parts, or

12 ‘‘(B) motor vehicle parts used in the pro13 duction of motor vehicles,

14 refers to the cost of such materials, components, or

15 parts to the manufacturer of such parts or vehicles

16 as determined for purposes of applying this title (in17 cluding, in the case of purchases of materials, com18 ponents, and parts involving related sources, entities

19 owned or controlled by related sources, or entities

20 affiliated with related sources, determinations based

21 on the application of the transfer price rules).

22 ‘‘(3) UNITED STATES.—The term ‘United

23 States’ includes the Commonwealth of Puerto Rico

24 and the possessions of the United States.
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1 ‘‘(e) REGULATIONS.—Not later than 60 days after

2 the date of the enactment of this section, the Secretary

3 shall prescribe any regulations appropriate to carry out

4 the purposes of this section, including regulations to pre5 vent the avoidance of any limitation or requirement of this

6 section.

7 ‘‘(f) TERMINATION.—This section shall not apply to

8 any vehicle purchased after December 31, 1994.’’

9 (b) CLERICAL AMENDMENT.—The table of sections

10 for such subpart C is amended by striking the item relat11 ing to section 35 and inserting the following new items:

‘‘Sec. 35. Purchase of new domestic passenger vehicle.

‘‘Sec. 36. Overpayments of tax.’’

12 (c) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to vehicles purchased after Decem14 ber 31, 1992.

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