II 

108TH CONGRESS 

2D SESSION S. 2655 

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

production of water and energy efficient appliances. 

IN THE SENATE OF THE UNITED STATES 

JULY 14, 2004 

Mr. SMITH 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 credit for the production of water and energy efficient 

appliances. 

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 ‘‘Water and Energy Ef5 ficient Appliances Act of 2004’’. 

6 SEC. 2. CREDIT FOR WATER AND ENERGY EFFICIENT AP7 PLIANCES. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 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 adding at the end the following new section: 

3 ‘‘SEC. 45G. WATER AND ENERGY EFFICIENT APPLIANCE 

4 CREDIT. 

5 ‘‘(a) ALLOWANCE OF CREDIT.— 

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

7 the water and energy efficient appliance credit deter8 mined under this section for the taxable year is an 

9 amount equal to the sum of the amounts determined 

10 under paragraph (2) for qualified water and energy 

11 efficient appliances produced by the taxpayer during 

12 the calendar year ending with or within the taxable 

13 year. 

14 ‘‘(2) AMOUNT.—The amount determined under 

15 this paragraph for any category described in sub16 section (b)(2)(B) shall be the product of the applica17 ble amount for appliances in the category and the el18 igible production for the category. 

19 ‘‘(b) APPLICABLE AMOUNT; ELIGIBLE PRODUC20 TION.—For purposes of subsection (a)— 

21 ‘‘(1) APPLICABLE AMOUNT.—The applicable 

22 amount is— 

23 ‘‘(A) $25, in the case of a dishwasher man24 ufactured with an EF of at least 0.65, 
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1 ‘‘(B) $50, in the case of a dishwasher 

2 manufactured with an EF of at least 0.69, 

3 ‘‘(C) $75, in the case of a clothes washer 

4 which is manufactured with an MEF of at least 

5 a 1.80 and a WF of no more than 7.5, 

6 ‘‘(D) $100, in the case of a refrigerator 

7 which consumes at least 30 percent less kilo8 watt hours per year than the energy conserva9 tion standards for refrigerators promulgated by 

10 the Department of Energy and effective on July 

11 1, 2001, and 

12 ‘‘(E) $150, in the case of a clothes washer 

13 which is manufactured with an MEF of at least 

14 a 1.80 and a WF of no more than 5.5. 

15 ‘‘(2) ELIGIBLE PRODUCTION.— 

16 ‘‘(A) IN GENERAL.—The eligible produc17 tion of each category of qualified water and en18 ergy efficient appliances is the excess of— 

19 ‘‘(i) the number of appliances in such 

20 category which are produced by the tax21 payer during such calendar year, over 

22 ‘‘(ii) the average number of appliances 

23 in such category which were produced by 

24 the taxpayer during calendar years 2002, 

25 2003, and 2004. 
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1 ‘‘(B) CATEGORIES.—For purposes of sub2 paragraph (A), the categories are— 

3 ‘‘(i) dishwashers described in para4 graph (1)(A), 

5 ‘‘(ii) dishwashers described in para6 graph (1)(B), 

7 ‘‘(iii) clothes washers described in 

8 paragraph (1)(C), 

9 ‘‘(iv) clothes washers described in 

10 paragraph (1)(E), and 

11 ‘‘(v) refrigerators described in para12 graph (1)(D). 

13 ‘‘(c) LIMITATION ON MAXIMUM CREDIT.— 

14 ‘‘(1) IN GENERAL.—The amount of credit al15 lowed under subsection (a) with respect to a tax16 payer for all taxable years shall not exceed 

17 $65,000,000, of which not more than $15,000,000 

18 may be allowed with respect to the credit determined 

19 by using the applicable amount under subsections 

20 (b)(1)(A) and (b)(1)(B). 

21 ‘‘(2) LIMITATION BASED ON GROSS RE22 CEIPTS.—The credit allowed under subsection (a) 

23 with respect to a taxpayer for the taxable year shall 

24 not exceed an amount equal to 2 percent of the aver25 age annual gross receipts of the taxpayer for the 3 
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1 taxable years preceding the taxable year in which 

2 the credit is determined. 

3 ‘‘(3) GROSS RECEIPTS.—For purposes of this 

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

5 section 448(c) shall apply. 

6 ‘‘(d) DEFINITIONS.—For purposes of this section— 

7 ‘‘(1) QUALIFIED WATER AND ENERGY EFFI8 CIENT APPLIANCE.—The term ‘qualified water and 

9 energy efficient appliance’ means— 

10 ‘‘(A) a dishwasher described in subpara11 graph (A) or (B) or subsection (b)(1), 

12 ‘‘(B) a clothes washer described in sub13 paragraph (C) or (E) of subsection (b)(1), or 

14 ‘‘(C) a refrigerator described in subpara15 graph (D) of subsection (b)(1). 

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

17 means a standard residential dishwasher with a ca18 pacity of 8 or more place settings plus 6 serving 

19 pieces. 

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

21 washer’ means a residential clothes washer, includ22 ing a residential style coin operated washer. 

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

24 means an automatic defrost refrigerator-freezer 
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1 which has an internal volume of at least 16.5 cubic 

2 feet. 

3 ‘‘(5) EF.—The term ‘EF’ means Energy Fac4 tor (as determined by the Secretary of Energy). 

5 ‘‘(6) MEF.—The term ‘MEF’ means Modified 

6 Energy Factor (as determined by the Secretary of 

7 Energy). 

8 ‘‘(7) WF.—The term ‘WF’ means Water Fac9 tor (as determined by the Secretary of Energy). 

10 ‘‘(e) SPECIAL RULES.— 

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

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

13 apply for purposes of this section. 

14 ‘‘(2) AGGREGATION RULES.—All persons treat15 ed as a single employer under subsection (a) or (b) 

16 of section 52 or subsection (m) or (o) of section 414 

17 shall be treated as 1 person for purposes of sub18 section (a). 

19 ‘‘(f) VERIFICATION.—The taxpayer shall submit such 

20 information or certification as the Secretary, in consulta21 tion with the Secretary of Energy, determines necessary 

22 to claim the credit amount under subsection (a). 

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

24 water and energy efficient appliances produced after De25 cember 31, 2010.’’. 
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1 (b) CREDIT MADE PART OF GENERAL BUSINESS

2 CREDIT.—Section 38(b) of such Code (relating to current 

3 year business credit) is amended by striking ‘‘plus’’ at the 

4 end of paragraph (14), by striking the period at the end 

5 of paragraph (15) and inserting ‘‘, plus’’, and by adding 

6 at the end the following new paragraph: 

7 ‘‘(16) the water and energy efficient appliance 

8 credit determined under section 45G(a).’’. 

9 (c) LIMITATION ON CARRYBACK.—Section 39(d) of 

10 such Code (relating to transition rules) is amended by 

11 adding at the end the following new paragraph: 

12 ‘‘(11) NO CARRYBACK OF WATER AND ENERGY

13 EFFICIENT APPLIANCE CREDIT BEFORE EFFECTIVE

14 DATE.—No portion of the unused business credit for 

15 any taxable year which is attributable to the water 

16 and energy efficient appliance credit determined 

17 under section 45G may be carried to a taxable year 

18 ending before January 1, 2008.’’. 

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

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

21 of such Code is amended by adding at the end the fol22 lowing new item: 

‘‘Sec. 45G. Water and energy efficient appliance credit.’’. 
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1 (e) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to appliances produced after De3 cember 31, 2007, in taxable years ending after such date. 

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