II 

108TH CONGRESS 

1ST SESSION S. 1962

To amend the Internal Revenue Code of 1986 to provide for excise tax 

reform and simplification, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 25, 2003

Mr. GRASSLEY (for himself, Mr. BAUCUS, Mr. BUNNING, and Mr. BREAUX) 

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 

for excise tax reform and simplification, 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; ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Excise Tax Reform and Simplification Act’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment 

9 to, or repeal of, a section or other provision, the reference 
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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986. 

3 (c) TABLE OF CONTENTS.—The table of contents for 

4 this Act is as follows:

Sec. 1. Short title; etc. 

TITLE I—HIGHWAY EXCISE TAXES 

Sec. 101. Dedication of gas guzzler tax to Highway Trust Fund. 

Sec. 102. Nonapplication of export exemption to delivery of fuel to motor vehicles removed from United States. 

Sec. 103. Repeal of 4.3-cent motor fuel excise taxes on railroads and inland waterway transportation which remain in general fund. 

TITLE II—AQUATIC EXCISE TAXES 

Sec. 201. Aquatic Resources Trust Fund excise taxes. 

Sec. 202. LED devices exempted from sonar devices suitable for finding fish. 

Sec. 203. Repeal of harbor maintenance tax on exports. 

Sec. 204. Cap on excise tax on certain fishing equipment. 

TITLE III—AERIAL EXCISE TAXES 

Sec. 301. Clarification of excise tax exemptions for agricultural aerial applicators. 

Sec. 302. Modification of rural airport definition. 

Sec. 303. Exemption from ticket taxes for transportation provided by seaplanes. 

Sec. 304. Certain sightseeing flights exempt from taxes on air transportation. 

TITLE IV—ALCOHOLIC BEVERAGE EXCISE TAXES 

Sec. 401. Repeal of occupational taxes relating to distilled spirits, wine, and 

beer. 

Sec. 402. Repeal of limitation on cover over of tax to Puerto Rico and Virgin 

Islands on distilled spirits. 

TITLE V—SPORT EXCISE TAXES 

Sec. 501. Custom gunsmiths. 

Sec. 502. Modified taxation of imported archery products. 

Sec. 503. Treatment of tribal governments for purposes of Federal wagering 

excise and occupational taxes. 

TITLE VI—OTHER PROVISIONS 

Sec. 601. Income tax credit for distilled spirits wholesalers and for distilled 

spirits in control state bailment warehouses for costs of carrying Federal excise taxes on bottled distilled spirits. 

Sec. 602. Credit for taxpayers owning commercial power takeoff vehicles.
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•S 1962 IS 

1 TITLE I—HIGHWAY EXCISE 

2 TAXES

3 SEC. 101. DEDICATION OF GAS GUZZLER TAX TO HIGHWAY 

4 TRUST FUND. 

5 (a) IN GENERAL.—Section 9503(b) (relating to 

6 transfer to Highway Trust Fund of amounts equivalent 

7 to certain taxes) is amended by redesignating subpara8 graphs (C), (D), and (E) as subparagraphs (D), (E), and 

9 (F), respectively, and by inserting after subparagraph (B) 

10 the following new subparagraph: 

11 ‘‘(C) section 4064 (relating to gas guzzler 

12 tax),’’. 

13 (b) UNIFORM APPLICATION OF TAX.—Subparagraph 

14 (A) of section 4064(b)(1) (defining automobile) is amend15 ed—

16 (1) by striking ‘‘6,000 pounds’’ and inserting 

17 ‘‘8,500 pounds’’, and 

18 (2) by striking the second sentence. 

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

20 this section shall take effect on the date of the enactment 

21 of this Act.
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1 SEC. 102. NONAPPLICATION OF EXPORT EXEMPTION TO DE2 LIVERY OF FUEL TO MOTOR VEHICLES RE3 MOVED FROM UNITED STATES. 

4 (a) IN GENERAL.—Section 4221(d)(2) (defining ex5 port) is amended by adding at the end the following new 

6 sentence: ‘‘Such term does not include the delivery of a 

7 taxable fuel (as defined in section 4083(a)(1)) into a fuel 

8 tank of a motor vehicle which is shipped or driven out 

9 of the United States.’’. 

10 (b) CONFORMING AMENDMENTS.—

11 (1) Section 4041(g) (relating to other exemp12 tions) is amended by adding at the end the following 

13 new sentence: ‘‘Paragraph (3) shall not apply to the 

14 sale for delivery of a liquid into a fuel tank of a 

15 motor vehicle which is shipped or driven out of the 

16 United States.’’. 

17 (2) Clause (iv) of section 4081(a)(1)(A) (relat18 ing to tax on removal, entry, or sale) is amended by 

19 inserting ‘‘or at a duty-free sales enterprise (as de20 fined in section 555(b)(8) of the Tariff Act of 

21 1930)’’ after ‘‘section 4101’’. 

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

23 this section shall apply to sales or deliveries made after 

24 the date of the enactment of this Act. 
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1 SEC. 103. REPEAL OF 4.3-CENT MOTOR FUEL EXCISE TAXES 

2 ON RAILROADS AND INLAND WATERWAY 

3 TRANSPORTATION WHICH REMAIN IN GEN4 ERAL FUND. 

5 (a) TAXES ON TRAINS.—

6 (1) IN GENERAL.—Subparagraph (A) of section 

7 4041(a)(1) is amended by striking ‘‘or a diesel-pow8 ered train’’ each place it appears and by striking ‘‘or 

9 train’’. 

10 (2) CONFORMING AMENDMENTS.—

11 (A) Subparagraph (C) of section 

12 4041(a)(1) is amended by striking clause (ii) 

13 and by redesignating clause (iii) as clause (ii). 

14 (B) Subparagraph (C) of section 

15 4041(b)(1) is amended by striking all that fol16 lows ‘‘section 6421(e)(2)’’ and inserting a pe17 riod. 

18 (C) Subsection (d) of section 4041 is 

19 amended by redesignating paragraph (3) as 

20 paragraph (4) and by inserting after paragraph 

21 (2) the following new paragraph: 

22 ‘‘(3) DIESEL FUEL USED IN TRAINS.—There is 

23 hereby imposed a tax of 0.1 cent per gallon on any 

24 liquid other than gasoline (as defined in section 

25 4083)—
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1 ‘‘(A) sold by any person to an owner, les2 see, or other operator of a diesel-powered train 

3 for use as a fuel in such train, or 

4 ‘‘(B) used by any person as a fuel in a die5 sel-powered train unless there was a taxable 

6 sale of such fuel under subparagraph (A). 

7 No tax shall be imposed by this paragraph on the 

8 sale or use of any liquid if tax was imposed on such 

9 liquid under section 4081.’’. 

10 (D) Subsection (f) of section 4082 is 

11 amended by striking ‘‘section 4041(a)(1)’’ and 

12 inserting ‘‘subsections (d)(3) and (a)(1) of sec13 tion 4041, respectively’’. 

14 (E) Paragraph (3) of section 4083(a) is 

15 amended by striking ‘‘or a diesel-powered 

16 train’’. 

17 (F) Paragraph (3) of section 6421(f) is 

18 amended to read as follows: 

19 ‘‘(3) GASOLINE USED IN TRAINS.—In the case 

20 of gasoline used as a fuel in a train, this section 

21 shall not apply with respect to the Leaking Under22 ground Storage Tank Trust Fund financing rate 

23 under section 4081.’’. 

24 (G) Paragraph (3) of section 6427(l) is 

25 amended to read as follows: 
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1 ‘‘(3) REFUND OF CERTAIN TAXES ON FUEL

2 USED IN DIESEL-POWERED TRAINS.—For purposes 

3 of this subsection, the term ‘nontaxable use’ includes 

4 fuel used in a diesel-powered train. The preceding 

5 sentence shall not apply to the tax imposed by sec6 tion 4041(d) and the Leaking Underground Storage 

7 Tank Trust Fund financing rate under section 4081 

8 except with respect to fuel sold for exclusive use by 

9 a State or any political subdivision thereof.’’. 

10 (b) FUEL USED ON INLAND WATERWAYS.—

11 (1) IN GENERAL.—Paragraph (1) of section 

12 4042(b) is amended by adding ‘‘and’’ at the end of 

13 subparagraph (A), by striking ‘‘, and’’ at the end of 

14 subparagraph (B) and inserting a period, and by 

15 striking subparagraph (C). 

16 (2) CONFORMING AMENDMENT.—Paragraph (2) 

17 of section 4042(b) is amended by striking subpara18 graph (C). 

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

20 this section shall take effect on January 1, 2004.
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1 TITLE II—AQUATIC EXCISE 

2 TAXES

3 SEC. 201. AQUATIC RESOURCES TRUST FUND EXCISE 

4 TAXES. 

5 (a) SIMPLIFICATION OF FUNDING FOR BOAT SAFETY

6 ACCOUNT.—

7 (1) IN GENERAL.—Section 9503(c)(4) (relating 

8 to transfers from Trust Fund for motorboat fuel 

9 taxes) is amended—

10 (A) by striking ‘‘Fund—’’ and all that fol11 lows through ‘‘transferred’’ in subparagraph 

12 (B) and inserting ‘‘Fund which is attributable 

13 to motorboat fuel taxes shall be transferred’’, 

14 and 

15 (B) by striking subparagraph (A), and 

16 (C) by redesignating subparagraphs (B) 

17 through (E) as subparagraphs (A) through (D), 

18 respectively. 

19 (2) CONFORMING AMENDMENTS.—

20 (A) Section 9503(b)(4), as amended by 

21 this title, is amended—

22 (i) by adding ‘‘or’’ at the end of sub23 paragraph (B), 
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•S 1962 IS 

1 (ii) by striking the comma at the end 

2 of subparagraph (C) and inserting a pe3 riod, and 

4 (iii) by striking subparagraph (D). 

5 (B) Subparagraph (B) of section 

6 9503(c)(4), as redesignated by subsection 

7 (a)(3), is amended—

8 (i) by striking ‘‘ACCOUNT’’ in the 

9 heading and inserting ‘‘TRUST FUND’’, 

10 (ii) by striking ‘‘or (B)’’ in clause (ii), 

11 and 

12 (iii) by striking ‘‘Account in the 

13 Aquatic Resources’’. 

14 (C) Subparagraph (C) of section 

15 9503(c)(4), as redesignated by subsection 

16 (a)(3), is amended by striking ‘‘, but only to the 

17 extent such taxes are deposited into the High18 way Trust Fund’’. 

19 (D) Paragraph (5) of section 9503(c) is 

20 amended—

21 (i) by striking ‘‘Account in the Aquat22 ic Resources’’ in subparagraph (A), and 

23 (ii) by striking ‘‘, but only to the ex24 tent such taxes are deposited into the 
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1 Highway Trust Fund’’ in subparagraph 

2 (B). 

3 (b) MERGING OF ACCOUNTS.—

4 (1) IN GENERAL.—Subsection (a) of section 

5 9504 is amended to read as follows: 

6 ‘‘(a) CREATION OF TRUST FUND.—There is hereby 

7 established in the Treasury of the United States a trust 

8 fund to be known as the ‘Sport Fish Restoration Trust 

9 Fund’. Such Trust Fund shall consist of such amounts 

10 as may be appropriated, credited, or paid to it as provided 

11 in this section, section 9503(c)(4), section 9503(c)(5), or 

12 section 9602(b).’’. 

13 (2) CONFORMING AMENDMENTS.—

14 (A) Subsection (b) of section 9504 is 

15 amended—

16 (i) by striking ‘‘ACCOUNT’’ in the 

17 heading and inserting ‘‘TRUST FUND’’, 

18 (ii) by striking ‘‘Account’’ both places 

19 it appears in paragraphs (1) and (2) and 

20 inserting ‘‘Trust Fund’’, and 

21 (iii) by striking ‘‘ACCOUNT’’ both 

22 places it appears in the headings for para23 graphs (1) and (2) and inserting ‘‘TRUST

24 FUND’’.
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•S 1962 IS 

1 (B) Subsection (d) of section 9504 is 

2 amended—

3 (i) by striking ‘‘AQUATIC RE4 SOURCES’’ in the heading, 

5 (ii) by striking ‘‘any Account in the 

6 Aquatic Resources’’ in paragraph (1) and 

7 inserting ‘‘the Sports Fish Restoration’’, 

8 and 

9 (iii) by striking ‘‘any such Account’’ 

10 in paragraph (1) and inserting ‘‘such 

11 Trust Fund’’. 

12 (C) Subsection (e) of section 9504 is 

13 amended by striking ‘‘Boat Safety Account and 

14 Sport Fish Restoration Account’’ and inserting 

15 ‘‘Sport Fish Restoration Trust Fund’’. 

16 (D) Section 9504 is amended—

17 (i) by striking subsection (c), 

18 (ii) by redesignating subsections (d) 

19 and (e) as subsections (c) and (d), respec20 tively, and 

21 (iii) by striking ‘‘AQUATIC RE22 SOURCES’’ in the heading and inserting 

23 ‘‘SPORT FISH RESTORATION’’. 

24 (E) The item relating to section 9504 in 

25 the table of sections for subchapter A of chap-
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•S 1962 IS 

1 ter 98 is amended by striking ‘‘aquatic re2 sources’’ and inserting ‘‘sport fish restoration’’. 

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

4 this section shall take effect on October 1, 2004.

5 SEC. 202. LED DEVICES EXEMPTED FROM SONAR DEVICES 

6 SUITABLE FOR FINDING FISH. 

7 (a) IN GENERAL.—Section 4162(b) (defining sonar 

8 device suitable for finding fish) is amended by striking 

9 ‘‘or’’ at the end of paragraph (3), by striking the period 

10 at the end of paragraph (4) and inserting ‘‘, or’’, and by 

11 adding at the end the following new paragraph: 

12 ‘‘(5) an LED display.’’. 

13 (b) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to articles sold by the manufac15 turer, producer, or importer after the date of the enact16 ment of this Act.

17 SEC. 203. REPEAL OF HARBOR MAINTENANCE TAX ON EX18 PORTS. 

19 (a) IN GENERAL.—Subsection (d) of section 4462 

20 (relating to definitions and special rules) is amended to 

21 read as follows: 

22 ‘‘(d) NONAPPLICABILITY OF TAX TO EXPORTS.—The 

23 tax imposed by section 4461(a) shall not apply to any port 

24 use with respect to any commercial cargo to be exported 

25 from the United States.’’. 
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•S 1962 IS 

1 (b) CONFORMING AMENDMENTS.—

2 (1) Section 4461(c)(1) is amended by adding 

3 ‘‘or’’ at the end of subparagraph (A), by striking 

4 subparagraph (B), and by redesignating subpara5 graph (C) as subparagraph (B). 

6 (2) Section 4461(c)(2) is amended by striking 

7 ‘‘imposed—’’ and all that follows through ‘‘in any 

8 other case,’’ and inserting ‘‘imposed’’. 

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

10 this section shall take effect before, on, and after the date 

11 of the enactment of this Act. 

12 SEC. 204. CAP ON EXCISE TAX ON CERTAIN FISHING EQUIP13 MENT. 

14 (a) IN GENERAL.—Paragraph (1) of section 4161(a) 

15 (relating to sport fishing equipment) is amended to read 

16 as follows: 

17 ‘‘(1) IMPOSITION OF TAX.—

18 ‘‘(A) IN GENERAL.—There is hereby im19 posed on the sale of any article of sport fishing 

20 equipment by the manufacturer, producer, or 

21 importer a tax equal to 10 percent of the price 

22 for which so sold. 

23 ‘‘(B) LIMITATION ON TAX IMPOSED ON

24 FISHING RODS AND POLES.—The tax imposed 
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•S 1962 IS 

1 by subparagraph (A) on any fishing rod or pole 

2 shall not exceed $10.’’. 

3 (b) CONFORMING AMENDMENTS.—Section 

4 4161(a)(2) is amended by striking ‘‘paragraph (1)’’ both 

5 places it appears and inserting ‘‘paragraph (1)(A)’’. 

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

7 this section shall apply to sales made after the date of 

8 the enactment of this Act.

9 TITLE III—AERIAL EXCISE 

10 TAXES

11 SEC. 301. CLARIFICATION OF EXCISE TAX EXEMPTIONS FOR 

12 AGRICULTURAL AERIAL APPLICATORS. 

13 (a) NO WAIVER BY FARM OWNER, TENANT, OR OP14 ERATOR NECESSARY.—Subparagraph (B) of section 

15 6420(c)(4) (relating to certain farming use other than by 

16 owner, etc.) is amended to read as follows: 

17 ‘‘(B) if the person so using the gasoline is 

18 an aerial or other applicator of fertilizers or 

19 other substances and is the ultimate purchaser 

20 of the gasoline, then subparagraph (A) of this 

21 paragraph shall not apply and the aerial or 

22 other applicator shall be treated as having used 

23 such gasoline on a farm for farming purposes.’’. 

24 (b) EXEMPTION INCLUDES FUEL USED BETWEEN

25 AIRFIELD AND FARM.—Section 6420(c)(4), as amended 
15

•S 1962 IS 

1 by subsection (a), is amended by adding at the end the 

2 following new flush sentence: 

3 ‘‘For purposes of this paragraph, in the case of an 

4 aerial applicator, gasoline shall be treated as used on 

5 a farm for farming purposes if the gasoline is used 

6 for the direct flight between the airfield and 1 or 

7 more farms.’’. 

8 (c) EXEMPTION FROM TAX ON AIR TRANSPOR9 TATION OF PERSONS FOR FORESTRY PURPOSES EX10 TENDED TO FIXED-WING AIRCRAFT.—Subsection (f) of 

11 section 4261 (relating to tax on air transportation of per12 sons) is amended to read as follows: 

13 ‘‘(f) EXEMPTION FOR CERTAIN USES.—No tax shall 

14 be imposed under subsection (a) or (b) on air transpor15 tation—

16 ‘‘(1) by helicopter for the purpose of trans17 porting individuals, equipment, or supplies in the ex18 ploration for, or the development or removal of, hard 

19 minerals, oil, or gas, or 

20 ‘‘(2) by helicopter or by fixed-wing aircraft for 

21 the purpose of the planting, cultivation, cutting, or 

22 transportation of, or caring for, trees (including log23 ging operations), 

24 but only if the helicopter or fixed-wing aircraft does not 

25 take off from, or land at, a facility eligible for assistance
16

•S 1962 IS 

1 under the Airport and Airway Development Act of 1970, 

2 or otherwise use services provided pursuant to section 

3 44509 or 44913(b) or subchapter I of chapter 471 of title 

4 49, United States Code, during such use. In the case of 

5 helicopter transportation described in paragraph (1), this 

6 subsection shall be applied by treating each flight segment 

7 as a distinct flight.’’. 

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

9 this section shall apply to fuel use or air transportation 

10 after the date of the enactment of this Act.

11 SEC. 302. MODIFICATION OF RURAL AIRPORT DEFINITION. 

12 (a) IN GENERAL.—Section 4261(e)(1)(B) (defining 

13 rural airport) is amended—

14 (1) by inserting ‘‘(in the case of any airport de15 scribed in clause (ii)(III), on flight segments of at 

16 least 100 miles)’’ after ‘‘by air’’ in clause (i), and 

17 (2) by striking the period at the end of sub18 clause (II) of clause (ii) and inserting ‘‘, or’’, and by 

19 adding at the end of clause (ii) the following new 

20 subclause: 

21 ‘‘(III) is not connected by paved 

22 roads to another airport.’’. 

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

24 this section shall apply to calendar years beginning after 

25 2003.
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1 SEC. 303. EXEMPTION FROM TICKET TAXES FOR TRANS2 PORTATION PROVIDED BY SEAPLANES. 

3 (a) IN GENERAL.—Section 4261 (relating to imposi4 tion of tax) is amended by redesignating subsection (i) as 

5 subsection (j) and by inserting after subsection (h) the fol6 lowing new subsection: 

7 ‘‘(i) EXEMPTION FOR SEAPLANES.—No tax shall be 

8 imposed by this section or section 4271 on any air trans9 portation by a seaplane with respect to any segment con10 sisting of a takeoff from, and a landing on, water, but 

11 only if the places at which such takeoff and landing occur 

12 have not received and are not receiving financial assist13 ance from the Airport and Airways Trust Fund.’’. 

14 (b) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to calendar years beginning after 

16 2003.

17 SEC. 304. CERTAIN SIGHTSEEING FLIGHTS EXEMPT FROM 

18 TAXES ON AIR TRANSPORTATION. 

19 (a) IN GENERAL.—Section 4281 (relating to small 

20 aircraft on nonestablished lines) is amended by adding at 

21 the end the following new sentence: ‘‘For purposes of this 

22 section, an aircraft shall not be considered as operated on 

23 an established line if such aircraft is operated on a flight 

24 the sole purpose of which is sightseeing.’’. 

25 (b) EFFECTIVE DATE.—The amendment made by 

26 this section shall apply with respect to transportation be-
18

•S 1962 IS 

1 ginning on or after the date of the enactment of this Act, 

2 but shall not apply to any amount paid before such date.

3 TITLE IV—ALCOHOLIC 

4 BEVERAGE EXCISE TAXES

5 SEC. 401. REPEAL OF OCCUPATIONAL TAXES RELATING TO 

6 DISTILLED SPIRITS, WINE, AND BEER. 

7 (a) REPEAL OF OCCUPATIONAL TAXES.—

8 (1) IN GENERAL.—The following provisions of 

9 part II of subchapter A of chapter 51 (relating to 

10 occupational taxes) are hereby repealed: 

11 (A) Subpart A (relating to proprietors of 

12 distilled spirits plants, bonded wine cellars, 

13 etc.). 

14 (B) Subpart B (relating to brewer). 

15 (C) Subpart D (relating to wholesale deal16 ers) (other than sections 5114 and 5116). 

17 (D) Subpart E (relating to retail dealers) 

18 (other than section 5124). 

19 (E) Subpart G (relating to general provi20 sions) (other than sections 5142, 5143, 5145, 

21 and 5146). 

22 (2) NONBEVERAGE DOMESTIC DRAWBACK.—

23 Section 5131 is amended by striking ‘‘, on payment 

24 of a special tax per annum,’’. 
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•S 1962 IS 

1 (3) INDUSTRIAL USE OF DISTILLED SPIRITS.—

2 Section 5276 is hereby repealed. 

3 (b) CONFORMING AMENDMENTS.—

4 (1)(A) The heading for part II of subchapter A 

5 of chapter 51 and the table of subparts for such 

6 part are amended to read as follows: 

7 ‘‘PART II—MISCELLANEOUS PROVISIONS

‘‘Subpart A. Manufacturers of stills. 

‘‘Subpart B. Nonbeverage domestic drawback claimants. 

‘‘Subpart C. Recordkeeping by dealers. 

‘‘Subpart D. Other provisions.’’.

8 (B) The table of parts for such subchapter A 

9 is amended by striking the item relating to part II 

10 and inserting the following new item:

‘‘Part II. Miscellaneous provisions.’’.

11 (2) Subpart C of part II of such subchapter 

12 (relating to manufacturers of stills) is redesignated 

13 as subpart A. 

14 (3)(A) Subpart F of such part II (relating to 

15 nonbeverage domestic drawback claimants) is redes16 ignated as subpart B and sections 5131 through 

17 5134 are redesignated as sections 5111 through 

18 5114, respectively. 

19 (B) The table of sections for such subpart B, 

20 as so redesignated, is amended—
20

•S 1962 IS 

1 (i) by redesignating the items relating to 

2 sections 5131 through 5134 as relating to sec3 tions 5111 through 5114, respectively, and 

4 (ii) by striking ‘‘and rate of tax’’ in the 

5 item relating to section 5111, as so redesig6 nated. 

7 (C) Section 5111, as redesignated by subpara8 graph (A), is amended—

9 (i) by striking ‘‘AND RATE OF TAX’’ in 

10 the section heading, 

11 (ii) by striking the subsection heading for 

12 subsection (a), and 

13 (iii) by striking subsection (b). 

14 (4) Part II of subchapter A of chapter 51 is 

15 amended by adding after subpart B, as redesignated 

16 by paragraph (3), the following new subpart: 

17 ‘‘Subpart C—Recordkeeping by Dealers

‘‘Sec. 5121. Recordkeeping by wholesale dealers. 

‘‘Sec. 5122. Recordkeeping by retail dealers. 

‘‘Sec. 5123. Preservation and inspection of records, and entry of 

premises for inspection.’’.

18 (5)(A) Section 5114 (relating to records) is 

19 moved to subpart C of such part II and inserted 

20 after the table of sections for such subpart. 

21 (B) Section 5114 is amended— 

22 (i) by striking the section heading and in23 serting the following new heading:
21

•S 1962 IS 

1 ‘‘SEC. 5121. RECORDKEEPING BY WHOLESALE DEALERS.’’, 

2 and 

3 (ii) by redesignating subsection (c) as sub4 section (d) and by inserting after subsection (b) 

5 the following new subsection: 

6 ‘‘(c) WHOLESALE DEALERS.—For purposes of this 

7 part—

8 ‘‘(1) WHOLESALE DEALER IN LIQUORS.—The 

9 term ‘wholesale dealer in liquors’ means any dealer 

10 (other than a wholesale dealer in beer) who sells, or 

11 offers for sale, distilled spirits, wines, or beer, to an12 other dealer. 

13 ‘‘(2) WHOLESALE DEALER IN BEER.—The term 

14 ‘wholesale dealer in beer’ means any dealer who 

15 sells, or offers for sale, beer, but not distilled spirits 

16 or wines, to another dealer. 

17 ‘‘(3) DEALER.—The term ‘dealer’ means any 

18 person who sells, or offers for sale, any distilled spir19 its, wines, or beer. 

20 ‘‘(4) PRESUMPTION IN CASE OF SALE OF 20

21 WINE GALLONS OR MORE.—The sale, or offer for 

22 sale, of distilled spirits, wines, or beer, in quantities 

23 of 20 wine gallons or more to the same person at 

24 the same time, shall be presumptive evidence that 

25 the person making such sale, or offer for sale, is en26 gaged in or carrying on the business of a wholesale 
22

•S 1962 IS 

1 dealer in liquors or a wholesale dealer in beer, as the 

2 case may be. Such presumption may be overcome by 

3 evidence satisfactorily showing that such sale, or 

4 offer for sale, was made to a person other than a 

5 dealer.’’.

6 (C) Paragraph (3) of section 5121(d), as so re7 designated, is amended by striking ‘‘section 5146’’ 

8 and inserting ‘‘section 5123’’.

9 (6)(A) Section 5124 (relating to records) is 

10 moved to subpart C of part II of subchapter A of 

11 chapter 51 and inserted after section 5121. 

12 (B) Section 5124 is amended—

13 (i) by striking the section heading and in14 serting the following new heading: 

15 ‘‘SEC. 5122. RECORDKEEPING BY RETAIL DEALERS.’’, 

16 (ii) by striking ‘‘section 5146’’ in sub17 section (c) and inserting ‘‘section 5123’’, and 

18 (iii) by redesignating subsection (c) as sub19 section (d) and inserting after subsection (b) 

20 the following new subsection: 

21 ‘‘(c) RETAIL DEALERS.—For purposes of this sec22 tion—

23 ‘‘(1) RETAIL DEALER IN LIQUORS.—The term 

24 ‘retail dealer in liquors’ means any dealer (other 

25 than a retail dealer in beer) who sells, or offers for 
23

•S 1962 IS 

1 sale, distilled spirits, wines, or beer, to any person 

2 other than a dealer. 

3 ‘‘(2) RETAIL DEALER IN BEER.—The term ‘re4 tail dealer in beer’ means any dealer who sells, or of5 fers for sale, beer, but not distilled spirits or wines, 

6 to any person other than a dealer. 

7 ‘‘(3) DEALER.—The term ‘dealer’ has the 

8 meaning given such term by section 5121(c)(3).’’. 

9 (7) Section 5146 is moved to subpart C of part 

10 II of subchapter A of chapter 51, inserted after sec11 tion 5122, and redesignated as section 5123. 

12 (8) Part II of subchapter A of chapter 51 is 

13 amended by inserting after subpart C the following 

14 new subpart: 

15 ‘‘Subpart D—Other Provisions

‘‘Sec. 5131. Packaging distilled spirits for industrial uses. 

‘‘Sec. 5132. Prohibited purchases by dealers.’’.

16 (9) Section 5116 is moved to subpart D of part 

17 II of subchapter A of chapter 51, inserted after the 

18 table of sections, redesignated as section 5131, and 

19 amended by inserting ‘‘(as defined in section 

20 5121(c))’’ after ‘‘dealer’’ in subsection (a). 

21 (10) Subpart D of part II of subchapter A of 

22 chapter 51 is amended by adding at the end thereof 

23 the following new section: 
24

•S 1962 IS 

1 ‘‘SEC. 5132. PROHIBITED PURCHASES BY DEALERS. 

2 ‘‘(a) IN GENERAL.—Except as provided in regula3 tions prescribed by the Secretary, it shall be unlawful for 

4 a dealer to purchase distilled spirits for resale from any 

5 person other than a wholesale dealer in liquors who is re6 quired to keep the records prescribed by section 5121. 

7 ‘‘(b) PENALTY AND FORFEITURE.—

‘‘For penalty and forfeiture provisions applicable 

to violations of subsection (a), see sections 5687 and 

7302.’’. 

8 (11) Subsection (b) of section 5002 is amend9 ed—

10 (A) by striking ‘‘section 5112(a)’’ and in11 serting ‘‘section 5121(c)(3)’’, 

12 (B) by striking ‘‘section 5112’’ and insert13 ing ‘‘section 5121(c)’’, 

14 (C) by striking ‘‘section 5122’’ and insert15 ing ‘‘section 5122(c)’’. 

16 (12) Subparagraph (A) of section 5010(c)(2) is 

17 amended by striking ‘‘section 5134’’ and inserting 

18 ‘‘section 5114’’. 

19 (13) Subsection (d) of section 5052 is amended 

20 to read as follows: 

21 ‘‘(d) BREWER.—For purposes of this chapter, the 

22 term ‘brewer’ means any person who brews beer or pro23 duces beer for sale. Such term shall not include any person 
25

•S 1962 IS 

1 who produces only beer exempt from tax under section 

2 5053(e).’’. 

3 (14) The text of section 5182 is amended to 

4 read as follows: 

5 ‘‘For provisions requiring recordkeeping by 

6 wholesale liquor dealers, see section 5121, and by re7 tail liquor dealers, see section 5122.’’. 

8 (15) Subsection (b) of section 5402 is amended 

9 by striking ‘‘section 5092’’ and inserting ‘‘section 

10 5052(d)’’. 

11 (16) Section 5671 is amended by striking ‘‘or 

12 5091’’. 

13 (17)(A) Part V of subchapter J of chapter 51 

14 is hereby repealed. 

15 (B) The table of parts for such subchapter J is 

16 amended by striking the item relating to part V. 

17 (18)(A) Sections 5142, 5143, and 5145 are 

18 moved to subchapter D of chapter 52, inserted after 

19 section 5731, redesignated as sections 5732, 5733, 

20 and 5734, respectively, and amended by striking 

21 ‘‘this part’’ each place it appears and inserting ‘‘this 

22 subchapter’’. 

23 (B) Section 5732, as redesignated by subpara24 graph (A), is amended by striking ‘‘(except the tax 

25 imposed by section 5131)’’ each place it appears.
26

•S 1962 IS 

1 (C) Paragraph (2) of section 5733(c), as redes2 ignated by subparagraph (A), is amended by striking 

3 ‘‘liquors’’ both places it appears and inserting ‘‘to4 bacco products and cigarette papers and tubes’’. 

5 (D) The table of sections for subchapter D of 

6 chapter 52 is amended by adding at the end thereof 

7 the following:

‘‘Sec. 5732. Payment of tax. 

‘‘Sec. 5733. Provisions relating to liability for occupational taxes. 

‘‘Sec. 5734. Application of State laws.’’.

8 (E) Section 5731 is amended by striking sub9 section (c) and by redesignating subsection (d) as 

10 subsection (c). 

11 (19) Subsection (c) of section 6071 is amended 

12 by striking ‘‘section 5142’’ and inserting ‘‘section 

13 5732’’. 

14 (20) Paragraph (1) of section 7652(g) is 

15 amended—

16 (A) by striking ‘‘subpart F’’ and inserting 

17 ‘‘subpart B’’, and 

18 (B) by striking ‘‘section 5131(a)’’ and in19 serting ‘‘section 5111’’. 

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

21 this section shall take effect on July 1, 2004, but shall 

22 not apply to taxes imposed for periods before such date.
27

•S 1962 IS 

1 SEC. 402. REPEAL OF LIMITATION ON COVER OVER OF TAX 

2 TO PUERTO RICO AND VIRGIN ISLANDS ON 

3 DISTILLED SPIRITS. 

4 (a) IN GENERAL.—Subsection (f) of section 7652 (re5 lating to limitation on cover over of tax on distilled spirits) 

6 is repealed. 

7 (b) EFFECTIVE DATE.—

8 (1) IN GENERAL.—The repeal made by sub9 section (a) shall apply to articles containing distilled 

10 spirits brought into the United States after Decem11 ber 31, 2003. 

12 (2) SPECIAL RULE.—

13 (A) IN GENERAL.—After December 31, 

14 2003, the treasury of Puerto Rico shall make a 

15 Conservation Trust Fund transfer within 30 

16 days from the date of each cover over payment 

17 made during such period to such treasury under 

18 section 7652(e) of the Internal Revenue Code of 

19 1986. 

20 (B) CONSERVATION TRUST FUND TRANS21 FER.—

22 (i) IN GENERAL.—For purposes of 

23 this paragraph, the term ‘‘Conservation 

24 Trust Fund transfer’’ means a transfer to 

25 the Puerto Rico Conservation Trust Fund 

26 of an amount equal to 50 cents per proof 
28

•S 1962 IS 

1 gallon of the taxes imposed under section 

2 5001 or section 7652 of such Code on dis3 tilled spirits that are covered over to the 

4 treasury of Puerto Rico under section 

5 7652(e) of such Code. 

6 (ii) TREATMENT OF TRANSFER.—

7 Each Conservation Trust Fund transfer 

8 shall be treated as principal for an endow9 ment, the income from which to be avail10 able for use by the Puerto Rico Conserva11 tion Trust Fund for the purposes for 

12 which the Trust Fund was established. 

13 (iii) RESULT OF NONTRANSFER.—

14 (I) IN GENERAL.—Upon notifica15 tion by the Secretary of the Interior 

16 that a Conservation Trust Fund 

17 transfer has not been made by the 

18 treasury of Puerto Rico during the pe19 riod described in subparagraph (A), 

20 the Secretary of the Treasury shall, 

21 except as provided in subclause (II), 

22 deduct and withhold from the next 

23 cover over payment to be made to the 

24 treasury of Puerto Rico under section 

25 7652(e) of such Code an amount 
29

•S 1962 IS 

1 equal to the appropriate Conservation 

2 Trust Fund transfer and interest 

3 thereon at the underpayment rate es4 tablished under section 6621 of such 

5 Code as of the due date of such trans6 fer. The Secretary of the Treasury 

7 shall transfer such amount deducted 

8 and withheld, and the interest there9 on, directly to the Puerto Rico Con10 servation Trust Fund. 

11 (II) GOOD CAUSE EXCEPTION.—

12 If the Secretary of the Interior finds, 

13 after consultation with the Governor 

14 of Puerto Rico, that the failure by the 

15 treasury of Puerto Rico to make a re16 quired transfer was for good cause, 

17 and notifies the Secretary of the 

18 Treasury of the finding of such good 

19 cause before the due date of the next 

20 cover over payment following the noti21 fication of nontransfer, then the Sec22 retary of the Treasury shall not de23 duct the amount of such nontransfer 

24 from any cover over payment. 
30

•S 1962 IS 

1 (C) PUERTO RICO CONSERVATION TRUST

2 FUND.—For purposes of this paragraph, the 

3 term ‘‘Puerto Rico Conservation Trust Fund’’ 

4 means the fund established pursuant to a 

5 Memorandum of Understanding between the 

6 United States Department of the Interior and 

7 the Commonwealth of Puerto Rico, dated De8 cember 24, 1968.

9 TITLE V—SPORT EXCISE TAXES

10 SEC. 501. CUSTOM GUNSMITHS. 

11 (a) SMALL MANUFACTURERS EXEMPT FROM FIRE12 ARMS EXCISE TAX.—Section 4182 (relating to exemp13 tions) is amended by redesignating subsection (c) as sub14 section (d) and by inserting after subsection (b) the fol15 lowing new subsection: 

16 ‘‘(c) SMALL MANUFACTURERS, ETC.—

17 ‘‘(1) IN GENERAL.—The tax imposed by section 

18 4181 shall not apply to any article described in such 

19 section if manufactured, produced, or imported by a 

20 person who manufactures, produces, and imports 

21 less than 50 of such articles during the calendar 

22 year. 

23 ‘‘(2) CONTROLLED GROUPS.—All persons treat24 ed as a single employer for purposes of subsection
31

•S 1962 IS 

1 (a) or (b) of section 52 shall be treated as one per2 son for purposes of paragraph (1).’’. 

3 (b) EFFECTIVE DATE.—

4 (1) IN GENERAL.—The amendments made by 

5 this section shall apply to articles sold by the manu6 facturer, producer, or importer on or after the date 

7 which is the first day of the month beginning at 

8 least 2 weeks after the date of the enactment of this 

9 Act. 

10 (2) NO INFERENCE.—Nothing in the amend11 ments made by this section shall be construed to 

12 create any inference with respect to the proper tax 

13 treatment of any sales before the effective date of 

14 such amendments. 

15 SEC. 502. MODIFIED TAXATION OF IMPORTED ARCHERY 

16 PRODUCTS. 

17 (a) BOWS.—Paragraph (1) of section 4161(b) (relat18 ing to bows) is amended to read as follows: 

19 ‘‘(1) BOWS.—

20 ‘‘(A) IN GENERAL.—There is hereby im21 posed on the sale by the manufacturer, pro22 ducer, or importer of any bow which has a peak 

23 draw weight of 30 pounds or more, a tax equal 

24 to 11 percent of the price for which so sold. 
32

•S 1962 IS 

1 ‘‘(B) ARCHERY EQUIPMENT.—There is 

2 hereby imposed on the sale by the manufac3 turer, producer, or importer—

4 ‘‘(i) of any part or accessory suitable 

5 for inclusion in or attachment to a bow de6 scribed in subparagraph (A), and 

7 ‘‘(ii) of any quiver or broadhead suit8 able for use with an arrow described in 

9 paragraph (2), 

10 a tax equal to 11 percent of the price for which 

11 so sold.’’. 

12 (b) ARROWS.—Subsection (b) of section 4161 (relat13 ing to bows and arrows, etc.) is amended by redesignating 

14 paragraph (3) as paragraph (4) and inserting after para15 graph (2) the following: 

16 ‘‘(3) ARROWS.—

17 ‘‘(A) IN GENERAL.—There is hereby im18 posed on the sale by the manufacturer, pro19 ducer, or importer of any arrow, a tax equal to 

20 12 percent of the price for which so sold. 

21 ‘‘(B) EXCEPTION.—In the case of any 

22 arrow of which the shaft or any other compo23 nent has been previously taxed under paragraph 

24 (1) or (2)—
33

•S 1962 IS 

1 ‘‘(i) section 6416(b)(3) shall not 

2 apply, and 

3 ‘‘(ii) the tax imposed by subparagraph 

4 (A) shall be an amount equal to the excess 

5 (if any) of—

6 ‘‘(I) the amount of tax imposed 

7 by this paragraph (determined with8 out regard to this subparagraph), over 

9 ‘‘(II) the amount of tax paid with 

10 respect to the tax imposed under 

11 paragraph (1) or (2) on such shaft or 

12 component. 

13 ‘‘(C) ARROW.—For purposes of this para14 graph, the term ‘arrow’ means any shaft de15 scribed in paragraph (2) to which additional 

16 components are attached.’’. 

17 (c) CONFORMING AMENDMENTS.—Section 

18 4161(b)(2) is amended—

19 (1) by inserting ‘‘(other than broadheads)’’ 

20 after ‘‘point’’, and 

21 (2) by striking ‘‘ARROWS.—’’ in the heading 

22 and inserting ‘‘ARROW COMPONENTS.—’’. 

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

24 this section shall apply to articles sold by the manufac-
34

•S 1962 IS 

1 turer, producer, or importer after the date of the enact2 ment of this Act. 

3 SEC. 503. TREATMENT OF TRIBAL GOVERNMENTS FOR PUR4 POSES OF FEDERAL WAGERING EXCISE AND 

5 OCCUPATIONAL TAXES. 

6 (a) IN GENERAL.—Subsection (a) of section 7871 

7 (relating to Indian tribal governments treated as States 

8 for certain purposes) is amended by striking ‘‘and’’ at the 

9 end of paragraph (6), by striking the period at the end 

10 of paragraph (7) and inserting ‘‘; and’’, and by adding 

11 at the end the following new paragraph: 

12 ‘‘(8) for purposes of chapter 35 (relating to 

13 taxes on wagering).’’. 

14 (b) EFFECTIVE DATE.—The amendments made by 

15 this section shall take effect on July 1, 2004, but shall 

16 not apply to taxes imposed for periods before such date. 

17 TITLE VI—OTHER PROVISIONS 

18 SEC. 601. INCOME TAX CREDIT FOR DISTILLED SPIRITS 

19 WHOLESALERS AND FOR DISTILLED SPIRITS 

20 IN CONTROL STATE BAILMENT WAREHOUSES 

21 FOR COSTS OF CARRYING FEDERAL EXCISE 

22 TAXES ON BOTTLED DISTILLED SPIRITS. 

23 (a) IN GENERAL.—Subpart A of part I of subchapter 

24 A of chapter 51 (relating to gallonage and occupational 
35

•S 1962 IS 

1 taxes) is amended by adding at the end the following new 

2 section: 

3 ‘‘SEC. 5011. INCOME TAX CREDIT FOR AVERAGE COST OF 

4 CARRYING EXCISE TAX. 

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

6 amount of the distilled spirits credit for any taxable year 

7 is the amount equal to the product of—

8 ‘‘(1) in the case of—

9 ‘‘(A) any eligible wholesaler—

10 ‘‘(i) the number of cases of bottled 

11 distilled spirits—

12 ‘‘(I) which were bottled in the 

13 United States, and 

14 ‘‘(II) which are purchased by 

15 such wholesaler during the taxable 

16 year directly from the bottler of such 

17 spirits, or 

18 ‘‘(B) any person which is subject to section 

19 5005 and which is not an eligible wholesaler, 

20 the number of cases of bottled distilled spirits 

21 which are stored in a warehouse operated by, or 

22 on behalf of, a State, or agency or political sub23 division thereof, on which title has not passed 

24 on an unconditional sale basis, and
36

•S 1962 IS 

1 ‘‘(2) the average tax-financing cost per case for 

2 the most recent calendar year ending before the be3 ginning of such taxable year. 

4 ‘‘(b) ELIGIBLE WHOLESALER.—For purposes of this 

5 section, the term ‘eligible wholesaler’ means any person 

6 which holds a permit under the Federal Alcohol Adminis7 tration Act as a wholesaler of distilled spirits which is not 

8 a State, or agency or political subdivision thereof. 

9 ‘‘(c) AVERAGE TAX-FINANCING COST.—

10 ‘‘(1) IN GENERAL.—For purposes of this sec11 tion, the average tax-financing cost per case for any 

12 calendar year is the amount of interest which would 

13 accrue at the deemed financing rate during a 60-day 

14 period on an amount equal to the deemed Federal 

15 excise tax per case. 

16 ‘‘(2) DEEMED FINANCING RATE.—For purposes 

17 of paragraph (1), the deemed financing rate for any 

18 calendar year is the average of the corporate over19 payment rates under paragraph (1) of section 

20 6621(a) (determined without regard to the last sen21 tence of such paragraph) for calendar quarters of 

22 such year. 

23 ‘‘(3) DEEMED FEDERAL EXCISE TAX PER

24 CASE.—For purposes of paragraph (1), the deemed 

25 Federal excise tax per case is $25.68. 
37

•S 1962 IS 

1 ‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—

2 For purposes of this section—

3 ‘‘(1) CASE.—The term ‘case’ means 12 80-

4 proof 750 milliliter bottles. 

5 ‘‘(2) NUMBER OF CASES IN LOT.—The number 

6 of cases in any lot of distilled spirits shall be deter7 mined by dividing the number of liters in such lot 

8 by 9.’’. 

9 (b) CONFORMING AMENDMENTS.—

10 (1) Subsection (b) of section 38 is amended by 

11 striking ‘‘plus’’ at the end of paragraph (14), by 

12 striking the period at the end of paragraph (15) and 

13 inserting ‘‘, plus’’, and by adding at the end the fol14 lowing new paragraph: 

15 ‘‘(16) the distilled spirits credit determined 

16 under section 5011(a).’’. 

17 (2) Subsection (d) of section 39 is amended by 

18 adding at the end the following new paragraph: 

19 ‘‘(11) NO CARRYBACK OF SECTION 5011 CREDIT

20 BEFORE JANUARY 1, 2004.—No portion of the un21 used business credit for any taxable year which is 

22 attributable to the credit determined under section 

23 5011(a) may be carried back to a taxable year be24 ginning before January 1, 2004.’’. 
38

•S 1962 IS 

1 (3) The table of sections for subpart A of part 

2 I of subchapter A of chapter 51 is amended by add3 ing at the end the following new item:

‘‘Sec. 5011. Income tax credit for average cost of carrying excise 

tax.’’.

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

5 this section shall apply to taxable years beginning after 

6 December 31, 2003. 

7 SEC. 602. CREDIT FOR TAXPAYERS OWNING COMMERCIAL 

8 POWER TAKEOFF VEHICLES. 

9 (a) IN GENERAL.—Subpart D of part IV of sub10 chapter A of chapter 1 (relating to business-related cred11 its) is amended by adding at the end the following new 

12 section: 

13 ‘‘SEC. 45G. COMMERCIAL POWER TAKEOFF VEHICLES 

14 CREDIT. 

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

16 the amount of the commercial power takeoff vehicles credit 

17 determined under this section for the taxable year is $250 

18 for each qualified commercial power takeoff vehicle owned 

19 by the taxpayer as of the close of the calendar year in 

20 which or with which the taxable year of the taxpayer ends. 

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

22 ‘‘(1) QUALIFIED COMMERCIAL POWER TAKEOFF

23 VEHICLE.—The term ‘qualified commercial power 

24 takeoff vehicle’ means any highway vehicle described 
39

•S 1962 IS 

1 in paragraph (2) which is propelled by any fuel sub2 ject to tax under section 4041 or 4081 if such vehi3 cle is used in a trade or business or for the produc4 tion of income (and is licensed and insured for such 

5 use). 

6 ‘‘(2) HIGHWAY VEHICLE DESCRIBED.—A high7 way vehicle is described in this paragraph if such ve8 hicle is—

9 ‘‘(A) designed to engage in the daily collec10 tion of refuse or recyclables from homes or 

11 businesses and is equipped with a mechanism 

12 under which the vehicle’s propulsion engine pro13 vides the power to operate a load compactor, or 

14 ‘‘(B) designed to deliver ready mixed con15 crete on a daily basis and is equipped with a 

16 mechanism under which the vehicle’s propulsion 

17 engine provides the power to operate a mixer 

18 drum to agitate and mix the product en route 

19 to the delivery site. 

20 ‘‘(c) EXCEPTION FOR VEHICLES USED BY GOVERN21 MENTS, ETC.—No credit shall be allowed under this sec22 tion for any vehicle owned by any person at the close of 

23 a calendar year if such vehicle is used at any time during 

24 such year by—
40

•S 1962 IS 

1 ‘‘(1) the United States or an agency or instru2 mentality thereof, a State, a political subdivision of 

3 a State, or an agency or instrumentality of one or 

4 more States or political subdivisions, or 

5 ‘‘(2) an organization exempt from tax under 

6 section 501(a). 

7 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—The amount of 

8 any deduction under this subtitle for any tax imposed by 

9 subchapter B of chapter 31 or part III of subchapter A 

10 of chapter 32 for any taxable year shall be reduced (but 

11 not below zero) by the amount of the credit determined 

12 under this subsection for such taxable year. 

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

14 with respect to any calendar year after 2006.’’. 

15 (b) CONFORMING AMENDMENTS.—

16 (1) Subsection (b) of section 38, as amended by 

17 this Act, is amended by striking ‘‘plus’’ at the end 

18 of paragraph (15), by striking the period at the end 

19 of paragraph (16) and inserting ‘‘, plus’’, and by 

20 adding at the end the following new paragraph: 

21 ‘‘(17) the commercial power takeoff vehicles 

22 credit under section 45G(a).’’. 

23 (2) Subsection (d) of section 39, as amended by 

24 this Act, is amended by adding at the end the fol25 lowing new paragraph: 
41

•S 1962 IS 

1 ‘‘(12) NO CARRYBACK OF SECTION 45G CREDIT

2 BEFORE JANUARY 1, 2004.—No portion of the un3 used business credit for any taxable year which is 

4 attributable to the credit determined under section 

5 45G(a) may be carried back to a taxable year begin6 ning before January 1, 2004.’’. 

7 (3) The table of sections for subpart D of part 

8 IV of subchapter A of chapter 1 is amended by add9 ing at the end the following new item:

‘‘Sec. 45G. Commercial power takeoff vehicles credit.’’.

10 (c) REGULATIONS.—Not later than January 1, 2007, 

11 the Secretary of the Treasury, in consultation with the 

12 Secretary of Energy, shall by regulation provide for the 

13 method of determining the exemption from any excise tax 

14 imposed under section 4041 or 4081 of the Internal Rev15 enue Code of 1986 on fuel used through a mechanism to 

16 power equipment attached to a highway vehicle as de17 scribed in section 45G(b)(2) of such Code, as added by 

18 subsection (a). 

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

20 this section shall apply to taxable years beginning after 

21 December 31, 2003.

Æ