I

105TH CONGRESS

1ST SESSION H. R. 823

To amend the Internal Revenue Code of 1986 to reinstate the Airport and

Airway Trust Fund excise taxes and to suspend the 4.3-cent general

revenue portion of such taxes during the reinstatement period.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 25, 1997

Mr. HILLEARY 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 reinstate

the Airport and Airway Trust Fund excise taxes and

to suspend the 4.3-cent general revenue portion of such

taxes during the reinstatement period.

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; AMENDMENT OF 1986 CODE.

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

5 ‘‘Airport and Airway Trust Fund Tax Reinstatement Act

6 of 1997’’.
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1 (b) AMENDMENT OF 1986 CODE.—Except as other2 wise expressly provided, whenever in this Act an amend3 ment or repeal is expressed in terms of an amendment

4 to, or repeal of, a section or other provision, the reference

5 shall be considered to be made to a section or other provi6 sion of the Internal Revenue Code of 1986.

7 SEC. 2. REINSTATEMENT OF AIRPORT AND AIRWAY TRUST

8 FUND EXCISE TAXES.

9 (a) FUEL TAXES.—

10 (1) AVIATION FUEL.—Subparagraph (A) of sec11 tion 4091(b)(3) is amended to read as follows:

12 ‘‘(A) The rate of tax specified in para13 graph (1) shall be 4.3 cents per gallon—

14 ‘‘(i) after December 31, 1996, and be15 fore the date which is 7 days after the date

16 of the enactment of the Airport and Air17 way Trust Fund Tax Reinstatement Act of

18 1997, and

19 ‘‘(ii) after September 30, 1997.’’

20 (2) AVIATION GASOLINE.—Subsection (d) of

21 section 4081 is amended by striking the paragraph

22 (3) added by section 1609(a) of the Small Business

23 Job Protection Act of 1996 and by striking para24 graphs (1) and (2) and inserting the following new

25 paragraphs:
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1 ‘‘(1) IN GENERAL.—The rates of tax specified

2 in clauses (i) and (iii) of subsection (a)(2)(A) shall

3 be 4.3 cents per gallon after September 30, 1999.

4 ‘‘(2) AVIATION GASOLINE.—The rate of tax

5 specified in subsection (a)(2)(A)(ii) shall be 4.3

6 cents per gallon—

7 ‘‘(A) after December 31, 1996, and before

8 the date which is 7 days after the date of the

9 enactment of the Airport and Airway Trust

10 Fund Tax Reinstatement Act of 1997, and

11 ‘‘(B) after September 30, 1997.’’

12 (3) NONCOMMERCIAL AVIATION.—Paragraph

13 (3) of section 4041(c) is amended to read as follows:

14 ‘‘(3) TERMINATION.—The rate of the taxes im15 posed by paragraph (1) shall be 4.3 cents per gal16 lon—

17 ‘‘(A) after December 31, 1996, and before

18 the date which is 7 days after the date of the

19 enactment of the Airport and Airway Trust

20 Fund Tax Reinstatement Act of 1997, and

21 ‘‘(B) after September 30, 1997.’’

22 (b) TICKET TAXES.—

23 (1) PERSONS.—Subsection (g) of section 4261

24 is amended to read as follows:

25 ‘‘(g) APPLICATION OF TAXES.—
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1 ‘‘(1) IN GENERAL.—The taxes imposed by this

2 section shall apply to—

3 ‘‘(A) transportation beginning during the

4 period—

5 ‘‘(i) beginning on the 7th day after

6 the date of the enactment of the Airport

7 and Airway Trust Fund Tax Reinstate8 ment Act of 1997, and

9 ‘‘(ii) ending on September 30, 1997,

10 and

11 ‘‘(B) amounts paid during such period for

12 transportation beginning after such period.

13 ‘‘(2) REFUNDS.—If, as of the date any trans14 portation begins, the taxes imposed by this section

15 would not have applied to such transportation if

16 paid for on such date, any tax paid under paragraph

17 (1)(B) with respect to such transportation shall be

18 treated as an overpayment.’’

19 (2) PROPERTY.—Subsection (d) of section 4271

20 is amended to read as follows:

21 ‘‘(d) APPLICATION OF TAX.—

22 ‘‘(1) IN GENERAL.—The tax imposed by sub23 section (a) shall apply to—

24 ‘‘(A) transportation beginning during the

25 period—
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1 ‘‘(i) beginning on the 7th day after

2 the date of the enactment of the Airport

3 and Airway Trust Fund Tax Reinstate4 ment Act of 1997, and

5 ‘‘(ii) ending on September 30, 1997,

6 and

7 ‘‘(B) amounts paid during such period for

8 transportation beginning after such period.

9 ‘‘(2) REFUNDS.—If, as of the date any trans10 portation begins, the taxes imposed by this section

11 would not have applied to such transportation if

12 paid for on such date, any tax paid under paragraph

13 (1)(B) with respect to such transportation shall be

14 treated as an overpayment.’’

15 (c) TRANSFERS TO AIRPORT AND AIRWAY TRUST

16 FUND.—

17 (1) IN GENERAL.—Subsection (b) of section

18 9502 is amended to read as follows:

19 ‘‘(b) TRANSFERS TO AIRPORT AND AIRWAY TRUST

20 FUND.—There are hereby appropriated to the Airport and

21 Airway Trust Fund amounts equivalent to—

22 ‘‘(1) the taxes received in the Treasury under—

23 ‘‘(A) subsections (c) and (e) of section

24 4041 (relating to aviation fuels),
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1 ‘‘(B) sections 4261 and 4271 (relating to

2 transportation by air),

3 ‘‘(C) section 4081 (relating to gasoline)

4 with respect to aviation gasoline (to the extent

5 that the rate of the tax on such gasoline ex6 ceeds 4.3 cents per gallon), and

7 ‘‘(D) section 4091 (relating to aviation

8 fuel) to the extent attributable to the Airport

9 and Airway Trust Fund financing rate, and

10 ‘‘(2) the amounts determined by the Secretary

11 of the Treasury to be equivalent to the amounts of

12 civil penalties collected under section 47107(n) of

13 title 49, United States Code.’’

14 (2) TERMINATION OF FINANCING RATE.—Para15 graph (3) of section 9502(f) is amended to read as

16 follows:

17 ‘‘(3) TERMINATION.—Notwithstanding the pre18 ceding provisions of this subsection, the Airport and

19 Airway Trust Fund financing rate shall be zero with

20 respect to taxes imposed during any period that the

21 rate of the tax imposed by section 4091(b)(1) is 4.3

22 cents per gallon.’’

23 (d) FLOOR STOCKS TAXES ON AVIATION GASOLINE

24 AND AVIATION FUEL.—
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1 (1) IMPOSITION OF TAX.—In the case of any

2 aviation liquid on which tax was imposed under sec3 tion 4081 or 4091 of the Internal Revenue Code of

4 1986 before the tax effective date and which is held

5 on such date by any person, there is hereby imposed

6 a floor stocks tax of—

7 (A) 15 cents per gallon in the case of avia8 tion gasoline, and

9 (B) 17.5 cents per gallon in the case of

10 aviation fuel.

11 (2) LIABILITY FOR TAX AND METHOD OF PAY12 MENT.—

13 (A) LIABILITY FOR TAX.—A person hold14 ing, on the tax effective date, any aviation liq15 uid to which the tax imposed by paragraph (1)

16 applies shall be liable for such tax.

17 (B) METHOD OF PAYMENT.—The tax im18 posed by paragraph (1) shall be paid in such

19 manner as the Secretary shall prescribe.

20 (C) TIME FOR PAYMENT.—The tax im21 posed by paragraph (1) shall be paid on or be22 fore the first day of the 5th month beginning

23 after the tax effective date.

24 (3) DEFINITIONS.—For purposes of this sub25 section—
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1 (A) TAX EFFECTIVE DATE.—The term

2 ‘‘tax effective date’’ means the date which is 7

3 days after the date of the enactment of this

4 Act.

5 (B) AVIATION LIQUID.—The term ‘‘avia6 tion liquid’’ means aviation gasoline and avia7 tion fuel.

8 (C) AVIATION GASOLINE.—The term

9 ‘‘aviation gasoline’’ has the meaning given such

10 term in section 4081 of such Code.

11 (D) AVIATION FUEL.—The term ‘‘aviation

12 fuel’’ has the meaning given such term by sec13 tion 4093 of such Code.

14 (E) HELD BY A PERSON.—Aviation liquid

15 shall be considered as ‘‘held by a person’’ if

16 title thereto has passed to such person (whether

17 or not delivery to the person has been made).

18 (F) SECRETARY.—The term ‘‘Secretary’’

19 means the Secretary of the Treasury or the

20 Secretary’s delegate.

21 (4) EXCEPTION FOR EXEMPT USES.—The tax

22 imposed by paragraph (1) shall not apply to—

23 (A) aviation liquid held by any person on

24 the tax effective date exclusively for any use for
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1 which a credit or refund of the entire tax im2 posed by section 4081 or 4091 of such Code (as

3 the case may be) is allowable for such liquid

4 purchased on or after such tax effective date for

5 such use, or

6 (B) aviation fuel held by any person on the

7 tax effective date exclusively for any use de8 scribed in section 4092(b) of such Code.

9 (5) EXCEPTION FOR CERTAIN AMOUNTS OF

10 FUEL.—

11 (A) IN GENERAL.—No tax shall be im12 posed by paragraph (1) on any aviation liquid

13 held on the tax effective date by any person if

14 the aggregate amount of such liquid (deter15 mined separately for aviation gasoline and avia16 tion fuel) held by such person on such date does

17 not exceed 2,000 gallons. The preceding sen18 tence shall apply only if such person submits to

19 the Secretary (at the time and in the manner

20 required by the Secretary) such information as

21 the Secretary shall require for purposes of this

22 paragraph.

23 (B) EXEMPT FUEL.—Any liquid to which

24 the tax imposed by paragraph (1) does not
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1 apply by reason of paragraph (4) shall not be

2 taken into account under subparagraph (A).

3 (C) CONTROLLED GROUPS.—For purposes

4 of this paragraph—

5 (i) CORPORATIONS.—

6 (I) IN GENERAL.—All persons

7 treated as a controlled group shall be

8 treated as 1 person.

9 (II) CONTROLLED GROUP.—The

10 term ‘‘controlled group’’ has the

11 meaning given such term by sub12 section (a) of section 1563 of such

13 Code; except that for such purposes,

14 the phrase ‘‘more than 50 percent’’

15 shall be substituted for the phrase ‘‘at

16 least 80 percent’’ each place it ap17 pears in such subsection.

18 (ii) NONINCORPORATED PERSONS

19 UNDER COMMON CONTROL.—Under regula20 tions prescribed by the Secretary, prin21 ciples similar to the principles of clause (i)

22 shall apply to a group of persons under

23 common control where 1 or more of such

24 persons is not a corporation.
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1 (6) OTHER LAWS APPLICABLE.—All provisions

2 of law, including penalties, applicable with respect to

3 the taxes imposed by section 4081 or 4091 of such

4 Code shall, insofar as applicable and not inconsistent

5 with the provisions of this subsection, apply with re6 spect to the floor stocks taxes imposed by paragraph

7 (1) to the same extent as if such taxes were imposed

8 by such section 4081 or 4091, as the case may be.

9 (e) EFFECTIVE DATES.—

10 (1) FUEL TAXES.—The amendments made by

11 subsection (a) shall apply to periods beginning on or

12 after the 7th day after the date of the enactment of

13 this Act.

14 (2) TICKET TAXES.—

15 (A) IN GENERAL.—The amendments made

16 by subsection (b) shall apply to transportation

17 beginning on or after such 7th day.

18 (B) EXCEPTION FOR CERTAIN PAY19 MENTS.—Except as provided in subparagraph

20 (C), the amendments made by subsection (b)

21 shall not apply to any amount paid before such

22 7th day.

23 (C) PAYMENTS OF PROPERTY TRANSPOR24 TATION TAX WITHIN CONTROLLED GROUP.—In

25 the case of the tax imposed by section 4271 of
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1 the Internal Revenue Code of 1986, subpara2 graph (B) shall not apply to any amount paid

3 by 1 member of a controlled group for transpor4 tation furnished by another member of such

5 group. For purposes of the preceding sentence,

6 all persons treated as a single employer under

7 subsection (a) or (b) of section 52 of the Inter8 nal Revenue Code of 1986 shall be treated as

9 members of a controlled group.

10 (f) APPLICATION OF LOOK-BACK SAFE HARBOR FOR

11 DEPOSITS.—Nothing in the look-back safe harbor pre12 scribed in Treasury Regulation section 40.6302(c)–1(c)(2)

13 shall be construed to permit such safe harbor to be used

14 with respect to any tax unless such tax was imposed

15 throughout the look-back period.

16 SEC. 3. REPEAL OF 4.3-CENT INCREASE IN FUEL TAX RATES

17 ENACTED BY THE OMNIBUS BUDGET REC18 ONCILIATION ACT OF 1993 AND DEDICATED

19 TO GENERAL FUND OF THE TREASURY DUR20 ING PERIOD TICKET TAXES IN EFFECT.

21 (a) IN GENERAL.—Section 4081 (relating to imposi22 tion of tax on gasoline and diesel fuel) is amended by add23 ing at the end the following new subsection:
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1 ‘‘(f) REPEAL OF 4.3-CENT INCREASE IN FUEL TAX

2 RATES ENACTED BY THE OMNIBUS BUDGET RECONCILI3 ATION ACT OF 1993 AND DEDICATED TO GENERAL FUND

4 OF THE TREASURY.—

5 ‘‘(1) IN GENERAL.—During the applicable pe6 riod, each rate of tax referred to in paragraph (2)

7 shall be reduced by 4.3 cents per gallon.

8 ‘‘(2) RATES OF TAX.—The rates of tax referred

9 to in this paragraph are the rates of tax otherwise

10 applicable under—

11 ‘‘(A) subsection (a)(2)(A) (relating to gas12 oline and diesel fuel),

13 ‘‘(B) sections 4091(b)(3)(A) and

14 4092(b)(2) (relating to aviation fuel),

15 ‘‘(C) section 4042(b)(2)(C) (relating to

16 fuel used on inland waterways),

17 ‘‘(D) paragraph (1) or (2) of section

18 4041(a) (relating to diesel fuel and special

19 fuels), and

20 ‘‘(E) section 4041(m)(1)(A)(i) (relating to

21 certain methanol or ethanol fuels).

22 ‘‘(3) COMPARABLE TREATMENT FOR COM23 PRESSED NATURAL GAS.—No tax shall be imposed

24 by section 4041(a)(3) on any sale or use during the

25 applicable period.
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1 ‘‘(4) COMPARABLE TREATMENT UNDER CER2 TAIN REFUND RULES.—In the case of fuel on which

3 tax is imposed during the applicable period, each of

4 the rates specified in sections 6421(f)(2)(B),

5 6421(f)(3)(B)(ii), 6427(b)(2)(A), 6427(l)(3)(B)(ii),

6 and 6427(l)(4)(B) shall be reduced by 4.3 cents per

7 gallon.

8 ‘‘(5) COORDINATION WITH HIGHWAY TRUST

9 FUND DEPOSITS.—In the case of fuel on which tax

10 is imposed during the applicable period, each of the

11 rates specified in subparagraphs (A)(i) and (C)(i) of

12 section 9503(f)(3) shall be reduced by 4.3 cents per

13 gallon.

14 ‘‘(6) APPLICABLE PERIOD.—For purposes of

15 this subsection, the term ‘applicable period’ means

16 the period after the 6th day after the date of the en17 actment of this subsection and before October 1,

18 1997.’’

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

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

21 of this Act.

22 SEC. 4. FLOOR STOCK REFUNDS.

23 (a) IN GENERAL.—If—
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1 (1) before the tax repeal date, tax has been im2 posed under section 4081 or 4091 of the Internal

3 Revenue Code of 1986 on any liquid, and

4 (2) on such date such liquid is held by a dealer

5 and has not been used and is intended for sale,

6 there shall be credited or refunded (without interest) to

7 the person who paid such tax (hereafter in this section

8 referred to as the ‘‘taxpayer’’) an amount equal to the ex9 cess of the tax paid by the taxpayer over the amount of

10 such tax which would be imposed on such liquid had the

11 taxable event occurred on such date.

12 (b) TIME FOR FILING CLAIMS.—No credit or refund

13 shall be allowed or made under this section unless—

14 (1) claim therefor is filed with the Secretary of

15 the Treasury before the date which is 6 months

16 after the tax repeal date, and

17 (2) in any case where liquid is held by a dealer

18 (other than the taxpayer) on the tax repeal date—

19 (A) the dealer submits a request for refund

20 or credit to the taxpayer before the date which

21 is 3 months after the tax repeal date, and

22 (B) the taxpayer has repaid or agreed to

23 repay the amount so claimed to such dealer or

24 has obtained the written consent of such dealer
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1 to the allowance of the credit or the making of

2 the refund.

3 (c) EXCEPTION FOR FUEL HELD IN RETAIL

4 STOCKS.—No credit or refund shall be allowed under this

5 section with respect to any liquid in retail stocks held at

6 the place where intended to be sold at retail.

7 (d) DEFINITIONS.—For purposes of this section—

8 (1) the terms ‘‘dealer’’ and ‘‘held by a dealer’’

9 have the respective meanings given to such terms by

10 section 6412 of such Code; except that the term

11 ‘‘dealer’’ includes a producer, and

12 (2) the term ‘‘tax repeal date’’ means the 7th

13 day after the date of the enactment of this Act.

14 (e) CERTAIN RULES TO APPLY.—Rules similar to the

15 rules of subsections (b) and (c) of section 6412 of such

16 Code shall apply for purposes of this section.

17 SEC. 5. FLOOR STOCKS TAX.

18 (a) IMPOSITION OF TAX.—In the case of any liquid

19 on which tax was imposed under section 4081 or 4091

20 of the Internal Revenue Code of 1986 before October 1,

21 1997, and which is held on such date by any person, there

22 is hereby imposed a floor stocks tax of 4.3 cents per gal23 lon.

24 (b) LIABILITY FOR TAX AND METHOD OF PAY25 MENT.—
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1 (1) LIABILITY FOR TAX.—A person holding a

2 liquid on October 1, 1997, to which the tax imposed

3 by subsection (a) applies shall be liable for such tax.

4 (2) METHOD OF PAYMENT.—The tax imposed

5 by subsection (a) shall be paid in such manner as

6 the Secretary shall prescribe.

7 (3) TIME FOR PAYMENT.—The tax imposed by

8 subsection (a) shall be paid on or before March 31,

9 1998.

10 (c) DEFINITIONS.—For purposes of this section—

11 (1) HELD BY A PERSON.—A liquid shall be con12 sidered as ‘‘held by a person’’ if title thereto has

13 passed to such person (whether or not delivery to

14 the person has been made).

15 (2) GASOLINE AND DIESEL FUEL.—The terms

16 ‘‘gasoline’’ and ‘‘diesel fuel’’ have the respective

17 meanings given such terms by section 4083 of such

18 Code.

19 (3) AVIATION FUEL.—The term ‘‘aviation fuel’’

20 has the meaning given such term by section 4093 of

21 such Code.

22 (4) SECRETARY.—The term ‘‘Secretary’’ means

23 the Secretary of the Treasury or his delegate.

24 (d) EXCEPTION FOR EXEMPT USES.—The tax im25 posed by subsection (a) shall not apply to gasoline, diesel
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1 fuel, or aviation fuel held by any person exclusively for

2 any use to the extent a credit or refund of the tax imposed

3 by section 4081 or 4091 of such Code is allowable for such

4 use.

5 (e) EXCEPTION FOR FUEL HELD IN VEHICLE

6 TANK.—No tax shall be imposed by subsection (a) on gas7 oline or diesel fuel held in the tank of a motor vehicle or

8 motorboat.

9 (f) EXCEPTION FOR CERTAIN AMOUNTS OF FUEL.—

10 (1) IN GENERAL.—No tax shall be imposed by

11 subsection (a)—

12 (A) on gasoline held on October 1, 1997,

13 by any person if the aggregate amount of gaso14 line held by such person on such date does not

15 exceed 4,000 gallons, and

16 (B) on diesel fuel or aviation fuel held on

17 such date by any person if the aggregate

18 amount of diesel fuel or aviation fuel held by

19 such person on such date does not exceed 2,000

20 gallons.

21 The preceding sentence shall apply only if such per22 son submits to the Secretary (at the time and in the

23 manner required by the Secretary) such information

24 as the Secretary shall require for purposes of this

25 paragraph.
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1 (2) EXEMPT FUEL.—For purposes of para2 graph (1), there shall not be taken into account fuel

3 held by any person which is exempt from the tax im4 posed by subsection (a) by reason of subsection (d)

5 or (e).

6 (3) CONTROLLED GROUPS.—For purposes of

7 this subsection—

8 (A) CORPORATIONS.—

9 (i) IN GENERAL.—All persons treated

10 as a controlled group shall be treated as 1

11 person.

12 (ii) CONTROLLED GROUP.—The term

13 ‘‘controlled group’’ has the meaning given

14 to such term by subsection (a) of section

15 1563 of such Code; except that for such

16 purposes the phrase ‘‘more than 50 per17 cent’’ shall be substituted for the phrase

18 ‘‘at least 80 percent’’ each place it appears

19 in such subsection.

20 (B) NONINCORPORATED PERSONS UNDER

21 COMMON CONTROL.—Under regulations pre22 scribed by the Secretary, principles similar to

23 the principles of subparagraph (A) shall apply

24 to a group of persons under common control
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1 where 1 or more of such persons is not a cor2 poration.

3 (g) OTHER LAW APPLICABLE.—All provisions of law,

4 including penalties, applicable with respect to the taxes

5 imposed by section 4081 of such Code in the case of gaso6 line and diesel fuel and section 4091 of such Code in the

7 case of aviation fuel shall, insofar as applicable and not

8 inconsistent with the provisions of this subsection, apply

9 with respect to the floor stock taxes imposed by subsection

10 (a) to the same extent as if such taxes were imposed by

11 such section 4081 or 4091.

12 SEC. 6. BENEFITS OF TAX REPEAL SHOULD BE PASSED ON

13 TO CONSUMERS.

14 (a) PASSTHROUGH TO CONSUMERS.—

15 (1) SENSE OF CONGRESS.—It is the sense of

16 Congress that—

17 (A) consumers immediately receive the

18 benefit of the repeal of the 4.3-cent increase in

19 the transportation motor fuels excise tax rates

20 enacted by the Omnibus Budget Reconciliation

21 Act of 1993, and

22 (B) transportation motor fuels producers

23 and other dealers take such actions as nec24 essary to reduce transportation motor fuels

25 prices to reflect the repeal of such tax increase,
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1 including immediate credits to customer ac2 counts representing tax refunds allowed as

3 credits against excise tax deposit payments

4 under the floor stocks refund provisions of this

5 Act.

6 (2) STUDY.—

7 (A) IN GENERAL.—The Comptroller Gen8 eral of the United States shall conduct a study

9 of the repeal of the 4.3-cent increase in the fuel

10 tax imposed by the Omnibus Budget Reconcili11 ation of 1993 to determine whether there has

12 been a passthrough of such repeal.

13 (B) REPORT.—Not later than July 31,

14 1997, the Comptroller General of the United

15 States shall report to the Committee on Fi16 nance of the Senate and the Committee on

17 Ways and Means of the House of Representa18 tives the results of the study conducted under

19 subparagraph (A).

Æ