II

106TH CONGRESS

2D SESSION S. 2591

To amend the Internal Revenue Code of 1986 to allow tax credits for alternative fuel vehicles and retail sale of alternative fuels, and for other

purposes.

IN THE SENATE OF THE UNITED STATES

MAY 18, 2000

Mr. JEFFORDS (for himself, Mr. HATCH, Mr. ROCKEFELLER, Mr. ROBB, Mr.

L. CHAFEE, Mr. BRYAN, and Mr. KERRY) 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 tax

credits for alternative fuel vehicles and retail sale of

alternative fuels, 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. SHORT TITLE.

4 This Act may be cited as the ‘‘Alternative Fuels Tax

5 Incentives Act’’.

6 SEC. 2. FINDINGS.

7 Congress finds the following:

8 (1)(A) Since 1994, the United States has im9 ported over half its oil.
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1 (B) Without efforts to mitigate this dependence

2 on foreign oil, the percentage of oil imported is ex3 pected to grow to all-time highs.

4 (C) This reliance on foreign oil presents a na5 tional security risk, which Congress should address

6 through policy changes designed to increase the use

7 of domestically-available alternative transportation

8 fuels.

9 (2)(A) The importing of a majority of the oil

10 used in the United States contributes negatively to

11 the balance of trade of the United States.

12 (B) Assuring the Nation’s economic security de13 mands the development and promotion of domesti14 cally-available alternative transportation fuels.

15 (3) More widespread use of alternative-fuels ve16 hicles will help alleviate any adverse environmental

17 consequences that may result from the Nation’s de18 pendence on oil as a transportation fuel.

19 (4) In order to encourage the purchase of alter20 native fuel vehicles by individuals and businesses,

21 the installation of alternative fueling infrastructure

22 by fuel suppliers, and the use of alternative fuels in

23 business and personal transportation, tax credits are

24 temporarily needed to make buying and operating al-
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1 ternative fuels vehicles economically viable compared

2 with conventional fuel vehicles.

3 (5)(A) In the short-term, United States alter4 native fuel policy must be made fuel neutral.

5 (B) Fuel neutrality will foster private innova6 tion and commercialization using the most techno7 logically feasible and economic fuels available.

8 (C) This will allow market forces to decide the

9 alternative fuel winners and losers.

10 SEC. 3. CREDIT FOR ALTERNATIVE FUEL VEHICLES.

11 (a) IN GENERAL.—Subpart B of part IV of sub12 chapter A of chapter 1 of the Internal Revenue Code of

13 1986 (relating to foreign tax credit, etc.) is amended by

14 inserting after section 30A the following:

15 ‘‘SEC. 30B. CREDIT FOR ALTERNATIVE FUEL VEHICLES.

16 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al17 lowed as a credit against the tax imposed by this chapter

18 an amount equal to the applicable percentage of the incre19 mental cost of any qualified alternative fuel motor vehicle

20 placed in service by the taxpayer during the taxable year.

21 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of

22 subsection (a), the applicable percentage with respect to

23 any qualified alternative fuel motor vehicle is—

24 ‘‘(1) 50 percent, plus

25 ‘‘(2) 35 percent, if such vehicle—
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1 ‘‘(A) has a gross weight vehicle rating of

2 less than 14,000 pounds, and

3 ‘‘(i) has received a certificate of con4 formity under the Clean Air Act and meets

5 or exceeds the most stringent standard

6 available for certification under the Clean

7 Air Act for that make and model year vehi8 cle (other than a zero emission standard),

9 or

10 ‘‘(ii) has received an order certifying

11 the vehicle for sale in California and meets

12 or exceeds the most stringent standard

13 available for certification under the laws of

14 the State of California for that make and

15 model year vehicle (other than a zero emis16 sion standard), or

17 ‘‘(B) has a gross weight vehicle rating of

18 14,000 or more pounds, and

19 ‘‘(i) has received a certificate of con20 formity under the Clean Air Act at emis21 sions levels that are not more than 50 per22 cent of the standard applicable to a vehicle

23 of that make and model year, or

24 ‘‘(ii) has received an order certifying

25 the vehicle for sale in California at emis-
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1 sions levels that are not more than 50 per2 cent of the standard applicable under the

3 laws of the State of California to a vehicle

4 of that make and model year.

5 ‘‘(c) INCREMENTAL COST.—For purposes of this sec6 tion, the incremental cost of any qualified alternative fuel

7 motor vehicle is equal to the amount of the excess of the

8 manufacturer’s suggested retail price for such vehicle over

9 such price for a gasoline or diesel fuel motor vehicle of

10 the same model, to the extent such amount does not

11 exceed—

12 ‘‘(1) $5,000, if such vehicle has a gross vehicle

13 weight rating of not more than 8,500 pounds,

14 ‘‘(2) $10,000, if such vehicle has a gross vehicle

15 weight rating of more than 8,500 pounds but not

16 more than 14,000 pounds,

17 ‘‘(3) $25,000, if such vehicle has a gross vehicle

18 weight rating of more than 14,000 pounds but not

19 more than 26,000 pounds, and

20 ‘‘(4) $50,000, if such vehicle has a gross vehicle

21 weight rating of more than 26,000 pounds.

22 ‘‘(d) QUALIFIED ALTERNATIVE FUEL MOTOR VEHI23 CLE DEFINED.—For purposes of this section, the term

24 ‘qualified alternative fuel motor vehicle’ means any motor

25 vehicle—
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1 ‘‘(1) which is only capable of operating on an

2 alternative fuel,

3 ‘‘(2) the original use of which commences with

4 the taxpayer, and

5 ‘‘(3) which is acquired by the taxpayer for use

6 or to lease, but not for resale.

7 ‘‘(e) APPLICATION WITH OTHER CREDITS.—The

8 credit allowed under subsection (a) for any taxable year

9 shall not exceed the excess (if any) of—

10 ‘‘(1) the regular tax for the taxable year re11 duced by the sum of the credits allowable under sub12 part A and sections 27, 29, and 30, over

13 ‘‘(2) the tentative minimum tax for the taxable

14 year.

15 ‘‘(f) OTHER DEFINITIONS AND SPECIAL RULES.—

16 For purposes of this section—

17 ‘‘(1) ALTERNATIVE FUEL.—The term ‘alter18 native fuel’ means compressed natural gas, liquefied

19 natural gas, liquefied petroleum gas, hydrogen, and

20 any liquid at least 85 percent of the volume of which

21 consists of methanol.

22 ‘‘(2) MOTOR VEHICLE.—The term ‘motor vehi23 cle’ has the meaning given such term by section

24 30(c)(2).
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1 ‘‘(3) REDUCTION IN BASIS.—For purposes of

2 this subtitle, the basis of any property for which a

3 credit is allowable under subsection (a) shall be re4 duced by the amount of such credit so allowed (de5 termined without regard to subsection (e).

6 ‘‘(4) NO DOUBLE BENEFIT.—The amount of

7 any deduction or credit allowable under this chapter

8 for any incremental cost taken into account in com9 puting the amount of the credit determined under

10 subsection (a) shall be reduced by the amount of

11 such credit attributable to such cost.

12 ‘‘(5) LEASED VEHICLES.—No credit shall be al13 lowed under subsection (a) with respect to a leased

14 motor vehicle unless the lease documents clearly dis15 close to the lessee the specific amount of any credit

16 otherwise allowable to the lessor under subsection

17 (a).

18 ‘‘(6) RECAPTURE.—The Secretary shall, by reg19 ulations, provide for recapturing the benefit of any

20 credit allowable under subsection (a) with respect to

21 any property which ceases to be property eligible for

22 such credit.

23 ‘‘(7) PROPERTY USED OUTSIDE UNITED

24 STATES, ETC., NOT QUALIFIED.—No credit shall be

25 allowed under subsection (a) with respect to any
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1 property referred to in section 50(b) or with respect

2 to the portion of the cost of any property taken into

3 account under section 179.

4 ‘‘(8) ELECTION TO NOT TAKE CREDIT.—No

5 credit shall be allowed under subsection (a) for any

6 vehicle if the taxpayer elects to not have this section

7 apply to such vehicle.

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

9 any property placed in service after December 31, 2007.’’.

10 (b) CONFORMING AMENDMENTS.—

11 (1) Section 1016(a) of the Internal Revenue

12 Code of 1986 is amended by striking ‘‘and’’ at the

13 end of paragraph (26), by striking the period at the

14 end of paragraph (27) and inserting ‘‘, and’’, and by

15 adding at the end the following:

16 ‘‘(28) to the extent provided in section

17 30B(f)(3).’’.

18 (2) Section 53(d)(1)(B)(iii) of such Code is

19 amended by inserting ‘‘, or not allowed under section

20 30B solely by reason of the application of section

21 30B(e)(2)’’ before the period.

22 (3) Section 55(c)(2) of such Code is amended

23 by inserting ‘‘30B(e),’’ after ‘‘30(b)(3)’’.

24 (4) Section 6501(m) is amended by inserting

25 ‘‘30B(f)(8),’’ after ‘‘30(d)(4),’’.
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1 (5) The table of sections for subpart B of part

2 IV of subchapter A of chapter 1 of such Code is

3 amended by inserting after the item relating to sec4 tion 30A the following:

‘‘Sec. 30B. Credit for alternative fuel vehicles.’’.

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

6 this section shall apply to property placed in service after

7 December 31, 2000, in taxable years ending after such

8 date.

9 SEC. 4. MODIFICATION OF CREDIT FOR QUALIFIED ELEC10 TRIC VEHICLES.

11 (a) AMOUNT OF CREDIT.—

12 (1) IN GENERAL.—Section 30(a) of the Internal

13 Revenue Code of 1986 (relating to allowance of

14 credit) is amended by striking ‘‘10 percent of’’.

15 (2) LIMITATION OF CREDIT ACCORDING TO

16 TYPE OF VEHICLE.—Section 30(b) of such Code (re17 lating to limitations) is amended—

18 (A) by striking paragraphs (1) and (2) and

19 inserting the following new paragraph:

20 ‘‘(1) LIMITATION ACCORDING TO TYPE OF VE21 HICLE.—The amount of the credit allowed under

22 subsection (a) for any vehicle shall not exceed the

23 greatest of the following amounts applicable to such

24 vehicle:
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1 ‘‘(A) In the case of a vehicle with a rated

2 top speed not exceeding 50 miles per hour, the

3 lesser of—

4 ‘‘(i) 10 percent of the cost of the vehi5 cle, or

6 ‘‘(ii) $4,250.

7 ‘‘(B) In the case of a vehicle with a gross

8 vehicle weight rating not exceeding 8,500

9 pounds and a rated top speed exceeding 50

10 miles per hour, $4,250.

11 ‘‘(C) In the case of a vehicle capable of a

12 driving range of at least 100 miles on a single

13 charge of the vehicle’s rechargeable batteries

14 and measured pursuant to the urban dynamom15 eter schedules under appendix I to part 86 of

16 title 40, Code of Federal Regulations, $6,375.

17 ‘‘(D) In the case of a vehicle capable of a

18 payload capacity of at least 1000 pounds,

19 $6,375.

20 ‘‘(E) In the case of a vehicle with a gross

21 vehicle weight rating exceeding 8,500 but not

22 exceeding 14,000 pounds, $8,500.

23 ‘‘(F) In the case of a vehicle with a gross

24 vehicle weight rating exceeding 14,000 but not

25 exceeding 26,000 pounds, $21,250.
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1 ‘‘(G) In the case of a vehicle with a gross

2 vehicle weight rating exceeding 26,000 pounds,

3 $42,500.’’, and

4 (B) by redesignating paragraph (3) as

5 paragraph (2).

6 (3) CONFORMING AMENDMENTS.—

7 (A) Section 53(d)(1)(B)(iii) of such Code

8 is amended by striking ‘‘section 30(b)(3)(B)’’

9 and inserting ‘‘section 30(b)(2)(B)’’.

10 (3) Section 55(c)(2) of such Code is amended

11 by striking ‘‘30(b)(3)’’ and inserting ‘‘30(b)(2)’’.

12 (b) QUALIFIED ELECTRIC VEHICLE.—Section

13 30(c)(1)(A) of the Internal Revenue Code of 1986 (defin14 ing qualified electric vehicle) is amended to read as fol15 lows:

16 ‘‘(A) which is powered primarily by an

17 electric motor drawing current from recharge18 able batteries, fuel cells which generate elec19 trical current from an alternative fuel (as de20 fined in section 30B(f)(1)), or other portable

21 sources of electrical current generated on board

22 the vehicle from an alternative fuel (as so de23 fined),’’.

24 (c) ADDITIONAL SPECIAL RULES.—Section 30(d) of

25 the Internal Revenue Code of 1986 (relating to special
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1 rules) is amended by adding at the end the following new

2 paragraphs:

3 ‘‘(5) NO DOUBLE BENEFIT.—The amount of

4 any deduction or credit allowable under this chapter

5 for any cost taken into account in computing the

6 amount of the credit determined under subsection

7 (a) shall be reduced by the amount of such credit at8 tributable to such cost.

9 ‘‘(6) LEASED VEHICLES.—No credit shall be al10 lowed under subsection (a) with respect to a leased

11 motor vehicle unless the lease documents clearly dis12 close to the lessee the specific amount of any credit

13 otherwise allowable to the lessor under subsection

14 (a).’’.

15 (d) EXTENSION.—Section 30(e) of the Internal Rev16 enue Code of 1986 (relating to termination) is amended

17 by striking ‘‘2004’’ and inserting ‘‘2007’’.

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

19 this section shall apply to property placed in service after

20 December 31, 2000, in taxable years ending after such

21 date.

22 SEC. 5. CREDIT FOR RETAIL SALE OF ALTERNATIVE FUELS

23 AS MOTOR VEHICLE FUEL.

24 (a) IN GENERAL.—Subpart D of part IV of sub25 chapter A of chapter 1 of the Internal Revenue Code of
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1 1986 (relating to business related credits) is amended by

2 inserting after section 40 the following:

3 ‘‘SEC. 40A. CREDIT FOR RETAIL SALE OF ALTERNATIVE

4 FUELS AS MOTOR VEHICLE FUEL.

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

6 the alternative fuel retail sales credit of any taxpayer for

7 any taxable year is 25 cents for each gasoline gallon equiv8 alent of alternative fuel sold at retail by the taxpayer dur9 ing such year as a fuel to propel any qualified motor vehi10 cle.

11 ‘‘(b) DEFINITIONS.—For purposes of this section—

12 ‘‘(1) ALTERNATIVE FUEL.—The term ‘alter13 native fuel’ means compressed natural gas, liquefied

14 natural gas, liquefied petroleum gas, hydrogen, and

15 any liquid at least 85 percent of the volume of which

16 consists of methanol.

17 ‘‘(2) GASOLINE GALLON EQUIVALENT.—The

18 term ‘gasoline gallon equivalent’ means, with respect

19 to any alternative fuel, the amount (determined by

20 the Secretary) of such fuel having a Btu content of

21 114,000.

22 ‘‘(3) QUALIFIED MOTOR VEHICLE.—The term

23 ‘qualified motor vehicle’ means any motor vehicle (as

24 defined in section 179A(e)(2)) which meets any ap25 plicable Federal or State emissions standards with
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1 respect to each fuel by which such vehicle is de2 signed to be propelled.

3 ‘‘(4) SOLD AT RETAIL.—

4 ‘‘(A) IN GENERAL.—The term ‘sold at re5 tail’ means the sale, for a purpose other than

6 resale, after manufacture, production, or impor7 tation.

8 ‘‘(B) USE TREATED AS SALE.—If any per9 son uses alternative fuel as a fuel to propel any

10 qualified motor vehicle (including any use after

11 importation) before such fuel is sold at retail,

12 then such use shall be treated in the same man13 ner as if such fuel were sold at retail as a fuel

14 to propel such a vehicle by such person.

15 ‘‘(c) NO DOUBLE BENEFIT.—The amount of any de16 duction or credit allowable under this chapter for any fuel

17 taken into account in computing the amount of the credit

18 determined under subsection (a) shall be reduced by the

19 amount of such credit attributable to such fuel.

20 ‘‘(d) PASS-THRU IN THE CASE OF ESTATES AND

21 TRUSTS.—Under regulations prescribed by the Secretary,

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

23 shall apply.

24 ‘‘(e) TERMINATION.—This section shall not apply to

25 any fuel sold at retail after December 31, 2007.’’.
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1 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec2 tion 38(b) of the Internal Revenue Code of 1986 (relating

3 to current year business credit) is amended by striking

4 ‘‘plus’’ at the end of paragraph (11), by striking the period

5 at the end of paragraph (12) and inserting ‘‘, plus’’, and

6 by adding at the end the following:

7 ‘‘(13) the alternative fuel retail sales credit de8 termined under section 40A(a).’’.

9 (c) TRANSITIONAL RULE.—Section 39(d) of the In10 ternal Revenue Code of 1986 (relating to transitional

11 rules) is amended by adding at the end the following:

12 ‘‘(9) NO CARRYBACK OF SECTION 40A CREDIT

13 BEFORE EFFECTIVE DATE.—No portion of the un14 used business credit for any taxable year which is

15 attributable to the alternative fuel retail sales credit

16 determined under section 40A(a) may be carried

17 back to a taxable year ending before January 1,

18 2001.’’.

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

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

21 of the Internal Revenue Code of 1986 is amended by in22 serting after the item relating to section 40 the following:

‘‘Sec. 40A. Credit for retail sale of alternative fuels as motor vehicle fuel.’’.

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

24 this section shall apply to fuel sold at retail after Decem25 ber 31, 2000, in taxable years ending after such date.
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1 SEC. 6. EXTENSION OF DEDUCTION FOR CERTAIN REFUEL2 ING PROPERTY.

3 (a) IN GENERAL.—Section 179A(f) of the Internal

4 Revenue Code of 1986 (relating to termination) is amend5 ed by striking ‘‘2004’’ and inserting ‘‘2007’’.

6 (b) CONFORMING AMENDMENT.—Section 179A(c) of

7 the Internal Revenue Code of 1986 (relating to qualified

8 clean-fuel vehicle property defined) is amended by striking

9 paragraph (3).

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

11 this section shall apply to property placed in service after

12 December 31, 2000, in taxable years ending after such

13 date.

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