I 

108TH CONGRESS 

2D SESSION H. R. 5146 

To amend the Internal Revenue Code of 1986 to provide incentives for 

alternative fuels and alternative fuel vehicles. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 23, 2004 

Mr. RUPPERSBERGER (for himself and Mr. GILCHREST) 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 provide 

incentives for alternative fuels and alternative fuel vehicles. 

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

5 ‘‘Common Sense Automobile Efficiency Act of 2004’’. 

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 SEC. 2. REPEAL OF PHASEOUTS FOR QUALIFIED ELECTRIC 

4 VEHICLE CREDIT AND DEDUCTION FOR 

5 CLEAN-FUEL VEHICLES. 

6 (a) CREDIT FOR QUALIFIED ELECTRIC VEHICLES.— 

7 Subsection (b) of section 30 (relating to limitations) is 

8 amended by striking paragraph (2) and redesignating 

9 paragraph (3) as paragraph (2). 

10 (b) DEDUCTION FOR CLEAN-FUEL VEHICLES AND

11 CERTAIN REFUELING PROPERTY.—Paragraph (1) of sec12 tion 179A(b) (relating to qualified clean-fuel vehicle prop13 erty) is amended to read as follows: 

14 ‘‘(1) QUALIFIED CLEAN-FUEL VEHICLE PROP15 ERTY.—The cost which may be taken into account 

16 under subsection (a)(1)(A) with respect to any 

17 motor vehicle shall not exceed— 

18 ‘‘(A) in the case of a motor vehicle not de19 scribed in subparagraph (B) or (C), $2,000, 

20 ‘‘(B) in the case of any truck or van with 

21 a gross vehicle weight rating greater than 

22 10,000 pounds but not greater than 26,000 

23 pounds, $5,000, or 

24 ‘‘(C) $50,000 in the case of— 
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1 ‘‘(i) a truck or van with a gross vehi2 cle weight rating greater than 26,000 

3 pounds, or 

4 ‘‘(ii) any bus which has a seating ca5 pacity of at least 20 adults (not including 

6 the driver).’’. 

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

8 this section shall apply to property placed in service after 

9 the date of the enactment of this Act. 

10 SEC. 3. ALTERNATIVE MOTOR VEHICLE CREDIT. 

11 (a) IN GENERAL.—Subpart B of part IV of sub12 chapter A of chapter 1 (relating to foreign tax credit, etc.) 

13 is amended by adding at the end the following: 

14 ‘‘SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT. 

15 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al16 lowed as a credit against the tax imposed by this chapter 

17 for the taxable year an amount equal to the sum of— 

18 ‘‘(1) the new qualified fuel cell motor vehicle 

19 credit determined under subsection (b), 

20 ‘‘(2) the new advanced lean burn technology 

21 motor vehicle credit determined under subsection (c), 

22 ‘‘(3) the new qualified hybrid motor vehicle 

23 credit determined under subsection (d), and 

24 ‘‘(4) the new qualified alternative fuel motor ve25 hicle credit determined under subsection (e). 
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1 ‘‘(b) NEW QUALIFIED FUEL CELL MOTOR VEHICLE

2 CREDIT.— 

3 ‘‘(1) IN GENERAL.—For purposes of subsection 

4 (a), the new qualified fuel cell motor vehicle credit 

5 determined under this subsection with respect to a 

6 new qualified fuel cell motor vehicle placed in service 

7 by the taxpayer during the taxable year shall be de8 termined in accordance with the following table: 

‘‘In the case of a vehicle which 

has a gross vehicle weight rating of—

The new qualified 

fuel cell motor 

vehicle credit is—

Not more than 8,500 lbs ......................................................... $4,000

More than 8,500 lbs but not more than 14,000 lbs ................ $10,000

More than 14,000 lbs but not more than 26,000 lbs .............. $20,000

More than 26,000 lbs ............................................................... $40,000. 

9 ‘‘(2) INCREASE FOR FUEL EFFICIENCY.— 

10 ‘‘(A) IN GENERAL.—The amount deter11 mined under paragraph (1) with respect to a 

12 new qualified fuel cell motor vehicle which is a 

13 passenger automobile or light truck shall be in14 creased by the additional credit amount. 

15 ‘‘(B) ADDITIONAL CREDIT AMOUNT.—For 

16 purposes of subparagraph (A), the additional 

17 credit amount shall be determined in accord18 ance with the following table: 

‘‘In the case of a vehicle which 

achieves a fuel economy (expressed as a percentage of the 

2002 model year city fuel economy) of—

The additional 

credit amount 

is—

At least 150 percent but less than 175 percent ...................... $1,000

At least 175 percent but less than 200 percent ...................... $1,500

At least 200 percent but less than 225 percent ...................... $2,000
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‘‘In the case of a vehicle which 

achieves a fuel economy (expressed as a percentage of the 

2002 model year city fuel economy) of—

The additional 

credit amount 

is—

At least 225 percent but less than 250 percent ...................... $2,500

At least 250 percent but less than 275 percent ...................... $3,000

At least 275 percent but less than 300 percent ...................... $3,500

At least 300 percent ................................................................ $4,000. 

1 ‘‘(3) NEW QUALIFIED FUEL CELL MOTOR VEHI2 CLE.—For purposes of this subsection, the term 

3 ‘new qualified fuel cell motor vehicle’ means a motor 

4 vehicle— 

5 ‘‘(A) which is propelled by power derived 

6 from one or more cells which convert chemical 

7 energy directly into electricity by combining ox8 ygen with hydrogen fuel which is stored on 

9 board the vehicle in any form and may or may 

10 not require reformation prior to use, 

11 ‘‘(B) which, in the case of a passenger 

12 automobile or light truck, has received— 

13 ‘‘(i) a certificate of conformity under 

14 the Clean Air Act and meets or exceeds the 

15 equivalent qualifying California low emis16 sion vehicle standard under section 

17 243(e)(2) of the Clean Air Act for that 

18 make and model year, and 

19 ‘‘(ii) a certificate that such vehicle 

20 meets or exceeds the Bin 5 Tier II emis21 sion standard established in regulations 
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1 prescribed by the Administrator of the En2 vironmental Protection Agency under sec3 tion 202(i) of the Clean Air Act for that 

4 make and model year vehicle, 

5 ‘‘(C) the original use of which commences 

6 with the taxpayer, 

7 ‘‘(D) which is acquired for use or lease by 

8 the taxpayer and not for resale, and 

9 ‘‘(E) which is made by a manufacturer. 

10 ‘‘(c) NEW ADVANCED LEAN BURN TECHNOLOGY

11 MOTOR VEHICLE CREDIT.— 

12 ‘‘(1) IN GENERAL.—For purposes of subsection 

13 (a), the new advanced lean burn technology motor 

14 vehicle credit determined under this subsection with 

15 respect to a new advanced lean burn technology 

16 motor vehicle placed in service by the taxpayer dur17 ing the taxable year is the credit amount determined 

18 under paragraph (2). 

19 ‘‘(2) CREDIT AMOUNT.— 

20 ‘‘(A) FUEL ECONOMY.—The credit amount 

21 determined under this paragraph shall be deter22 mined in accordance with the following table: 

‘‘In the case of a vehicle which 

achieves a fuel economy (expressed as a percentage of the 

2002 model year city fuel economy) of—The credit 

amount is—

At least 125 percent but less than 150 percent ...................... $400

At least 150 percent but less than 175 percent ...................... $800
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‘‘In the case of a vehicle which 

achieves a fuel economy (expressed as a percentage of the 

2002 model year city fuel economy) of—The credit 

amount is—

At least 175 percent but less than 200 percent ...................... $1,200

At least 200 percent but less than 225 percent ...................... $1,600

At least 225 percent but less than 250 percent ...................... $2,000

At least 250 percent ................................................................ $2,400. 

1 ‘‘(B) CONSERVATION CREDIT.—The 

2 amount determined under subparagraph (A) 

3 with respect to a new advanced lean burn tech4 nology motor vehicle shall be increased by the 

5 conservation credit amount determined in ac6 cordance with the following table: 

‘‘In the case of a vehicle which 

achieves a lifetime fuel savings 

(expressed in gallons of gasoline) of—

The conservation 

credit amount 

is—

At least 1,200 but less than 1,800 .......................................... $250

At least 1,800 but less than 2,400 .......................................... $500

At least 2,400 but less than 3,000 .......................................... $750

At least 3,000 .......................................................................... $1,000. 

7 ‘‘(3) NEW ADVANCED LEAN BURN TECHNOLOGY

8 MOTOR VEHICLE.—For purposes of this subsection, 

9 the term ‘new advanced lean burn technology motor 

10 vehicle’ means a passenger automobile or a light 

11 truck— 

12 ‘‘(A) with an internal combustion engine 

13 which— 

14 ‘‘(i) is designed to operate primarily 

15 using more air than is necessary for com16 plete combustion of the fuel, 

17 ‘‘(ii) incorporates direct injection, 
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1 ‘‘(iii) achieves at least 125 percent of 

2 the 2002 model year city fuel economy, 

3 and 

4 ‘‘(iv) for 2004 and later model vehi5 cles, has received a certificate that such ve6 hicle meets or exceeds— 

7 ‘‘(I) in the case of a vehicle hav8 ing a gross vehicle weight rating of 

9 6,000 pounds or less, the Bin 5 Tier 

10 II emission standard established in 

11 regulations prescribed by the Adminis12 trator of the Environmental Protec13 tion Agency under section 202(i) of 

14 the Clean Air Act for that make and 

15 model year vehicle, and 

16 ‘‘(II) in the case of a vehicle hav17 ing a gross vehicle weight rating of 

18 more than 6,000 pounds but not more 

19 than 8,500 pounds, the Bin 8 Tier II 

20 emission standard which is so estab21 lished, 

22 ‘‘(B) the original use of which commences 

23 with the taxpayer, 

24 ‘‘(C) which is acquired for use or lease by 

25 the taxpayer and not for resale, and 
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1 ‘‘(D) which is made by a manufacturer. 

2 ‘‘(4) LIFETIME FUEL SAVINGS.—For purposes 

3 of this subsection, the term ‘lifetime fuel savings’ 

4 means, in the case of any new advanced lean burn 

5 technology motor vehicle, an amount equal to the ex6 cess (if any) of— 

7 ‘‘(A) 120,000 divided by the 2002 model 

8 year city fuel economy for the vehicle inertia 

9 weight class, over 

10 ‘‘(B) 120,000 divided by the city fuel econ11 omy for such vehicle. 

12 ‘‘(d) NEW QUALIFIED HYBRID MOTOR VEHICLE

13 CREDIT.— 

14 ‘‘(1) IN GENERAL.—For purposes of subsection 

15 (a), the new qualified hybrid motor vehicle credit de16 termined under this subsection with respect to a new 

17 qualified hybrid motor vehicle placed in service by 

18 the taxpayer during the taxable year is the credit 

19 amount determined under paragraph (2). 

20 ‘‘(2) CREDIT AMOUNT.— 

21 ‘‘(A) CREDIT AMOUNT FOR PASSENGER

22 AUTOMOBILES AND LIGHT TRUCKS.—In the 

23 case of a new qualified hybrid motor vehicle 

24 which is a passenger automobile or light truck 

25 and which has a gross vehicle weight rating of 
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1 not more than 8,500 pounds, the amount deter2 mined under this paragraph is the sum of the 

3 amounts determined under clauses (i) and (ii). 

4 ‘‘(i) FUEL ECONOMY.—The amount 

5 determined under this clause is the amount 

6 which would be determined under sub7 section (c)(2)(A) if such vehicle were a ve8 hicle referred to in such subsection. 

9 ‘‘(ii) CONSERVATION CREDIT.—The 

10 amount determined under this clause is the 

11 amount which would be determined under 

12 subsection (c)(2)(B) if such vehicle were a 

13 vehicle referred to in such subsection. 

14 ‘‘(B) CREDIT AMOUNT FOR OTHER MOTOR

15 VEHICLES.— 

16 ‘‘(i) IN GENERAL.—In the case of any 

17 new qualified hybrid motor vehicle to which 

18 subparagraph (A) does not apply, the 

19 amount determined under this paragraph 

20 is the amount equal to the applicable per21 centage of the qualified incremental hybrid 

22 cost of the vehicle as certified under clause 

23 (v). 
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1 ‘‘(ii) APPLICABLE PERCENTAGE.—For 

2 purposes of clause (i), the applicable per3 centage is— 

4 ‘‘(I) 20 percent if the vehicle 

5 achieves an increase in city fuel econ6 omy relative to a comparable vehicle 

7 of at least 30 percent but less than 40 

8 percent, 

9 ‘‘(II) 30 percent if the vehicle 

10 achieves such an increase of at least 

11 40 percent but less than 50 percent, 

12 and 

13 ‘‘(III) 40 percent if the vehicle 

14 achieves such an increase of at least 

15 50 percent. 

16 ‘‘(iii) QUALIFIED INCREMENTAL HY17 BRID COST.—For purposes of this subpara18 graph, the qualified incremental hybrid 

19 cost of any vehicle is equal to the amount 

20 of the excess of the manufacturer’s sug21 gested retail price for such vehicle over 

22 such price for a comparable vehicle, to the 

23 extent such amount does not exceed— 
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1 ‘‘(I) $7,500, if such vehicle has a 

2 gross vehicle weight rating of not 

3 more than 14,000 pounds, 

4 ‘‘(II) $15,000, if such vehicle has 

5 a gross vehicle weight rating of more 

6 than 14,000 pounds but not more 

7 than 26,000 pounds, and 

8 ‘‘(III) $30,000, if such vehicle 

9 has a gross vehicle weight rating of 

10 more than 26,000 pounds. 

11 ‘‘(iv) COMPARABLE VEHICLE.—For 

12 purposes of this subparagraph, the term 

13 ‘comparable vehicle’ means, with respect to 

14 any new qualified hybrid motor vehicle, 

15 any vehicle which is powered solely by a 

16 gasoline or diesel internal combustion en17 gine and which is comparable in weight, 

18 size, and use to such vehicle. 

19 ‘‘(v) CERTIFICATION.—A certification 

20 described in clause (i) shall be made by the 

21 manufacturer and shall be determined in 

22 accordance with guidance prescribed by the 

23 Secretary. Such guidance shall specify pro24 cedures and methods for calculating fuel 
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1 economy savings and incremental hybrid 

2 costs. 

3 ‘‘(3) NEW QUALIFIED HYBRID MOTOR VEHI4 CLE.—For purposes of this subsection— 

5 ‘‘(A) IN GENERAL.—The term ‘new quali6 fied hybrid motor vehicle’ means a motor vehi7 cle— 

8 ‘‘(i) which draws propulsion energy 

9 from onboard sources of stored energy 

10 which are both— 

11 ‘‘(I) an internal combustion or 

12 heat engine using consumable fuel, 

13 and 

14 ‘‘(II) a rechargeable energy stor15 age system, 

16 ‘‘(ii) which, in the case of a vehicle to 

17 which paragraph (2)(A) applies, has re18 ceived a certificate of conformity under the 

19 Clean Air Act and meets or exceeds the 

20 equivalent qualifying California low emis21 sion vehicle standard under section 

22 243(e)(2) of the Clean Air Act for that 

23 make and model year, and 

24 ‘‘(I) in the case of a vehicle hav25 ing a gross vehicle weight rating of 
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1 6,000 pounds or less, the Bin 5 Tier 

2 II emission standard established in 

3 regulations prescribed by the Adminis4 trator of the Environmental Protec5 tion Agency under section 202(i) of 

6 the Clean Air Act for that make and 

7 model year vehicle, and 

8 ‘‘(II) in the case of a vehicle hav9 ing a gross vehicle weight rating of 

10 more than 6,000 pounds but not more 

11 than 8,500 pounds, the Bin 8 Tier II 

12 emission standard which is so estab13 lished, 

14 ‘‘(iii) which has a maximum available 

15 power of at least— 

16 ‘‘(I) 4 percent in the case of a ve17 hicle to which paragraph (2)(A) ap18 plies, 

19 ‘‘(II) 10 percent in the case of a 

20 vehicle which has a gross vehicle 

21 weight rating or more than 8,500 

22 pounds and not than 14,000 pounds, 

23 and 

24 ‘‘(III) 15 percent in the case of a 

25 vehicle in excess of 14,000 pounds, 
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1 ‘‘(iv) which, in the case of a vehicle to 

2 which paragraph (2)(B) applies, has an in3 ternal combustion or heat engine which 

4 has received a certificate of conformity 

5 under the Clean Air Act as meeting the 

6 emission standards set in the regulations 

7 prescribed by the Administrator of the En8 vironmental Protection Agency for 2004 

9 through 2007 model year diesel heavy duty 

10 engines or ottocycle heavy duty engines, as 

11 applicable, 

12 ‘‘(v) the original use of which com13 mences with the taxpayer, 

14 ‘‘(vi) which is acquired for use or 

15 lease by the taxpayer and not for resale, 

16 and 

17 ‘‘(vii) which is made by a manufac18 turer. 

19 Such term shall not include any vehicle which 

20 is not a passenger automobile or light truck if 

21 such vehicle has a gross vehicle weight rating of 

22 less than 8,500 pounds. 

23 ‘‘(B) CONSUMABLE FUEL.—For purposes 

24 of subparagraph (A)(i)(I), the term ‘consumable 

25 fuel’ means any solid, liquid, or gaseous matter 
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1 which releases energy when consumed by an 

2 auxiliary power unit. 

3 ‘‘(C) MAXIMUM AVAILABLE POWER.— 

4 ‘‘(i) CERTAIN PASSENGER AUTO5 MOBILES AND LIGHT TRUCKS.—In the case 

6 of a vehicle to which paragraph (2)(A) ap7 plies, the term ‘maximum available power’ 

8 means the maximum power available from 

9 the rechargeable energy storage system, 

10 during a standard 10 second pulse power 

11 or equivalent test, divided by such max12 imum power and the SAE net power of the 

13 heat engine. 

14 ‘‘(ii) OTHER MOTOR VEHICLES.—In 

15 the case of a vehicle to which paragraph 

16 (2)(B) applies, the term ‘maximum avail17 able power’ means the maximum power 

18 available from the rechargeable energy 

19 storage system, during a standard 10 sec20 ond pulse power or equivalent test, divided 

21 by the vehicle’s total traction power. For 

22 purposes of the preceding sentence, the 

23 term ‘total traction power’ means the sum 

24 of the peak power from the rechargeable 

25 energy storage system and the heat engine 
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1 peak power of the vehicle, except that if 

2 such storage system is the sole means by 

3 which the vehicle can be driven, the total 

4 traction power is the peak power of such 

5 storage system. 

6 ‘‘(e) NEW QUALIFIED ALTERNATIVE FUEL MOTOR

7 VEHICLE CREDIT.— 

8 ‘‘(1) ALLOWANCE OF CREDIT.—Except as pro9 vided in paragraph (5), the new qualified alternative 

10 fuel motor vehicle credit determined under this sub11 section is an amount equal to the applicable percent12 age of the incremental cost of any new qualified al13 ternative fuel motor vehicle placed in service by the 

14 taxpayer during the taxable year. 

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

16 of paragraph (1), the applicable percentage with re17 spect to any new qualified alternative fuel motor ve18 hicle is— 

19 ‘‘(A) 40 percent, plus 

20 ‘‘(B) 30 percent, if such vehicle— 

21 ‘‘(i) has received a certificate of con22 formity under the Clean Air Act and meets 

23 or exceeds the most stringent standard 

24 available for certification under the Clean 

25 Air Act for that make and model year vehi-
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1 cle (other than a zero emission standard), 

2 or 

3 ‘‘(ii) has received an order certifying 

4 the vehicle as meeting the same require5 ments as vehicles which may be sold or 

6 leased in California and meets or exceeds 

7 the most stringent standard available for 

8 certification under the State laws of Cali9 fornia (enacted in accordance with a waiv10 er granted under section 209(b) of the 

11 Clean Air Act) for that make and model 

12 year vehicle (other than a zero emission 

13 standard). 

14 For purposes of the preceding sentence, in the case 

15 of any new qualified alternative fuel motor vehicle 

16 which has a gross vehicle weight rating of more than 

17 14,000 pounds, the most stringent standard avail18 able shall be such standard available for certification 

19 on the date of the enactment of the Energy Tax Pol20 icy Act of 2003. 

21 ‘‘(3) INCREMENTAL COST.—For purposes of 

22 this subsection, the incremental cost of any new 

23 qualified alternative fuel motor vehicle is equal to 

24 the amount of the excess of the manufacturer’s sug25 gested retail price for such vehicle over such price 
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1 for a gasoline or diesel fuel motor vehicle of the 

2 same model, to the extent such amount does not ex3 ceed— 

4 ‘‘(A) $5,000, if such vehicle has a gross ve5 hicle weight rating of not more than 8,500 

6 pounds, 

7 ‘‘(B) $10,000, if such vehicle has a gross 

8 vehicle weight rating of more than 8,500 

9 pounds but not more than 14,000 pounds, 

10 ‘‘(C) $25,000, if such vehicle has a gross 

11 vehicle weight rating of more than 14,000 

12 pounds but not more than 26,000 pounds, and 

13 ‘‘(D) $40,000, if such vehicle has a gross 

14 vehicle weight rating of more than 26,000 

15 pounds. 

16 ‘‘(4) NEW QUALIFIED ALTERNATIVE FUEL

17 MOTOR VEHICLE.—For purposes of this sub18 section— 

19 ‘‘(A) IN GENERAL.—The term ‘new quali20 fied alternative fuel motor vehicle’ means any 

21 motor vehicle— 

22 ‘‘(i) which is only capable of operating 

23 on an alternative fuel, 

24 ‘‘(ii) the original use of which com25 mences with the taxpayer, 
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1 ‘‘(iii) which is acquired by the tax2 payer for use or lease, but not for resale, 

3 and 

4 ‘‘(iv) which is made by a manufac5 turer. 

6 ‘‘(B) ALTERNATIVE FUEL.—The term ‘al7 ternative fuel’ means compressed natural gas, 

8 liquefied natural gas, liquefied petroleum gas, 

9 hydrogen, and any liquid at least 85 percent of 

10 the volume of which consists of methanol. 

11 ‘‘(5) CREDIT FOR MIXED-FUEL VEHICLES.— 

12 ‘‘(A) IN GENERAL.—In the case of a 

13 mixed-fuel vehicle placed in service by the tax14 payer during the taxable year, the credit deter15 mined under this subsection is an amount equal 

16 to— 

17 ‘‘(i) in the case of a 75/25 mixed-fuel 

18 vehicle, 70 percent of the credit which 

19 would have been allowed under this sub20 section if such vehicle was a qualified alter21 native fuel motor vehicle, and 

22 ‘‘(ii) in the case of a 90/10 mixed-fuel 

23 vehicle, 90 percent of the credit which 

24 would have been allowed under this sub-
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1 section if such vehicle was a qualified alter2 native fuel motor vehicle. 

3 ‘‘(B) MIXED-FUEL VEHICLE.—For pur4 poses of this subsection, the term ‘mixed-fuel 

5 vehicle’ means any motor vehicle described in 

6 subparagraph (C) or (D) of paragraph (3), 

7 which— 

8 ‘‘(i) is certified by the manufacturer 

9 as being able to perform efficiently in nor10 mal operation on a combination of an al11 ternative fuel and a petroleum-based fuel, 

12 ‘‘(ii) either— 

13 ‘‘(I) has received a certificate of 

14 conformity under the Clean Air Act, 

15 or 

16 ‘‘(II) has received an order certi17 fying the vehicle as meeting the same 

18 requirements as vehicles which may be 

19 sold or leased in California and meets 

20 or exceeds the low emission vehicle 

21 standard under section 88.105–94 of 

22 title 40, Code of Federal Regulations, 

23 for that make and model year vehicle, 

24 ‘‘(iii) the original use of which com25 mences with the taxpayer, 
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1 ‘‘(iv) which is acquired by the tax2 payer for use or lease, but not for resale, 

3 and 

4 ‘‘(v) which is made by a manufac5 turer. 

6 ‘‘(C) 75/25 MIXED-FUEL VEHICLE.—For 

7 purposes of this subsection, the term ‘75/25 

8 mixed-fuel vehicle’ means a mixed-fuel vehicle 

9 which operates using at least 75 percent alter10 native fuel and not more than 25 percent petro11 leum-based fuel. 

12 ‘‘(D) 90/10 MIXED-FUEL VEHICLE.—For 

13 purposes of this subsection, the term ‘90/10 

14 mixed-fuel vehicle’ means a mixed-fuel vehicle 

15 which operates using at least 90 percent alter16 native fuel and not more than 10 percent petro17 leum-based fuel. 

18 ‘‘(f) LIMITATION ON NUMBER OF NEW QUALIFIED

19 HYBRID AND ADVANCED LEAN-BURN TECHNOLOGY VE20 HICLES ELIGIBLE FOR CREDIT.— 

21 ‘‘(1) IN GENERAL.—In the case of a qualified 

22 vehicle sold during the phaseout period, only the ap23 plicable percentage of the credit otherwise allowable 

24 under subsection (c) or (d) shall be allowed. 
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1 ‘‘(2) PHASEOUT PERIOD.—For purposes of this 

2 subsection, the phaseout period is the period begin3 ning with the second calendar quarter following the 

4 calendar quarter which includes the first date on 

5 which the number of qualified vehicles manufactured 

6 by the manufacturer of the vehicle referred to in 

7 paragraph (1) sold for use in the United States after 

8 the date of the enactment of this section is at least 

9 80,000. 

10 ‘‘(3) APPLICABLE PERCENTAGE.—For purposes 

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

12 ‘‘(A) 50 percent for the first 2 calendar 

13 quarters of the phaseout period, 

14 ‘‘(B) 25 percent for the 3d and 4th cal15 endar quarters of the phaseout period, and 

16 ‘‘(C) 0 percent for each calendar quarter 

17 thereafter. 

18 ‘‘(4) CONTROLLED GROUPS.— 

19 ‘‘(A) IN GENERAL.—For purposes of this 

20 subsection, all persons treated as a single em21 ployer under subsection (a) or (b) of section 52 

22 or subsection (m) or (o) of section 414 shall be 

23 treated as a single manufacturer. 

24 ‘‘(B) INCLUSION OF FOREIGN CORPORA25 TIONS.—For purposes of subparagraph (A), in 
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1 applying subsections (a) and (b) of section 52 

2 to this section, section 1563 shall be applied 

3 without regard to subsection (b)(2)(C) thereof. 

4 ‘‘(5) QUALIFIED VEHICLE.—For purposes of 

5 this subsection, the term ‘qualified vehicle’ means 

6 any new qualified hybrid motor vehicle and any new 

7 advanced lean burn technology motor vehicle. 

8 ‘‘(g) LIMITATION BASED ON AMOUNT OF TAX.—The 

9 credit allowed under subsection (a) for the taxable year 

10 shall not exceed the excess of— 

11 ‘‘(1) the sum of the regular tax liability (as de12 fined in section 26(b)) plus the tax imposed by sec13 tion 55, over 

14 ‘‘(2) the sum of the credits allowable under sub15 part A and sections 27 and 30 for the taxable year. 

16 ‘‘(h) OTHER DEFINITIONS AND SPECIAL RULES.— 

17 For purposes of this section— 

18 ‘‘(1) MOTOR VEHICLE.—The term ‘motor vehi19 cle’ has the meaning given such term by section 

20 30(c)(2). 

21 ‘‘(2) OTHER TERMS.—The terms ‘automobile’, 

22 ‘passenger automobile’, ‘light truck’, and ‘manufac23 turer’ have the meanings given such terms in regula24 tions prescribed by the Administrator of the Envi25 ronmental Protection Agency for purposes of the ad-
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1 ministration of title II of the Clean Air Act (42 

2 U.S.C. 7521 et seq.). 

3 ‘‘(3) 2002 MODEL YEAR CITY FUEL ECON4 OMY.— 

5 ‘‘(A) IN GENERAL.—The 2002 model year 

6 city fuel economy with respect to a vehicle shall 

7 be determined in accordance with the following 

8 tables: 

9 ‘‘(i) In the case of a passenger auto10 mobile: 

The 2002 model year city 

‘‘If vehicle inertia weight class is: fuel economy is: 

1,500 or 1,750 lbs .................................................................... 45.2 mpg

2,000 lbs .................................................................................. 39.6 mpg

2,250 lbs .................................................................................. 35.2 mpg

2,500 lbs .................................................................................. 31.7 mpg

2,750 lbs .................................................................................. 28.8 mpg

3,000 lbs .................................................................................. 26.4 mpg

3,500 lbs .................................................................................. 22.6 mpg

4,000 lbs .................................................................................. 19.8 mpg

4,500 lbs .................................................................................. 17.6 mpg

5,000 lbs .................................................................................. 15.9 mpg

5,500 lbs .................................................................................. 14.4 mpg

6,000 lbs .................................................................................. 13.2 mpg

6,500 lbs .................................................................................. 12.2 mpg

7,000 to 8,500 lbs .................................................................... 11.3 mpg. 

11 ‘‘(ii) In the case of a light truck: 

The 2002 model year city 

‘‘If vehicle inertia weight class is: fuel economy is: 

1,500 or 1,750 lbs .................................................................... 39.4 mpg

2,000 lbs .................................................................................. 35.2 mpg

2,250 lbs .................................................................................. 31.8 mpg

2,500 lbs .................................................................................. 29.0 mpg

2,750 lbs .................................................................................. 26.8 mpg

3,000 lbs .................................................................................. 24.9 mpg

3,500 lbs .................................................................................. 21.8 mpg

4,000 lbs .................................................................................. 19.4 mpg

4,500 lbs .................................................................................. 17.6 mpg

5,000 lbs .................................................................................. 16.1 mpg

5,500 lbs .................................................................................. 14.8 mpg

6,000 lbs .................................................................................. 13.7 mpg
26 

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The 2002 model year city 

‘‘If vehicle inertia weight class is: fuel economy is: 

6,500 lbs .................................................................................. 12.8 mpg

7,000 to 8,500 lbs .................................................................... 12.1 mpg. 

1 ‘‘(B) VEHICLE INERTIA WEIGHT CLASS.— 

2 For purposes of subparagraph (A), the term 

3 ‘vehicle inertia weight class’ has the same 

4 meaning as when defined in regulations pre5 scribed by the Administrator of the Environ6 mental Protection Agency for purposes of the 

7 administration of title II of the Clean Air Act 

8 (42 U.S.C. 7521 et seq.). 

9 ‘‘(4) FUEL ECONOMY.—Fuel economy with re10 spect to any vehicle shall be measured under rules 

11 similar to the rules under section 4064(c). 

12 ‘‘(5) REDUCTION IN BASIS.—For purposes of 

13 this subtitle, if a credit is allowed under this section 

14 for any expenditure with respect to any property, the 

15 increase in the basis of such property which would 

16 (but for this paragraph) result from such expendi17 ture shall be reduced by the amount of the credit so 

18 allowed. 

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

20 any deduction or credit allowable under this chapter 

21 (other than the credits allowable under this section 

22 and section 30) shall be reduced by the amount of 
27 

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1 credit allowed under subsection (a) for such vehicle 

2 for the taxable year. 

3 ‘‘(7) RECAPTURE.—The Secretary shall, by reg4 ulations, provide for recapturing the benefit of any 

5 credit allowable under subsection (a) with respect to 

6 any property which ceases to be property eligible for 

7 such credit (including recapture in the case of a 

8 lease period of less than the economic life of a vehi9 cle). 

10 ‘‘(8) PROPERTY USED OUTSIDE UNITED

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

12 allowed under subsection (a) with respect to any 

13 property referred to in section 50(b) or with respect 

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

15 account under section 179. 

16 ‘‘(9) ELECTION NOT TO TAKE CREDIT.—No 

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

18 vehicle if the taxpayer elects to not have this section 

19 apply to such vehicle. 

20 ‘‘(10) BUSINESS CARRYOVERS ALLOWED.—If 

21 the credit allowable under subsection (a) for a tax22 able year exceeds the limitation under subsection (g) 

23 for such taxable year, such excess (to the extent of 

24 the credit allowable with respect to property subject 

25 to the allowance for depreciation) shall be allowed as 
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1 a credit carryback and carryforward under rules 

2 similar to the rules of section 39. 

3 ‘‘(11) INTERACTION WITH MOTOR VEHICLE

4 SAFETY STANDARDS.—Unless otherwise provided in 

5 this section, a motor vehicle shall not be considered 

6 eligible for a credit under this section unless such 

7 vehicle is in compliance with the motor vehicle safety 

8 provisions of sections 30101 through 30169 of title 

9 49, United States Code. 

10 ‘‘(i) REGULATIONS.— 

11 ‘‘(1) IN GENERAL.—The Secretary shall pro12 mulgate such regulations as necessary to carry out 

13 the provisions of this section. 

14 ‘‘(2) DETERMINATION OF MOTOR VEHICLE ELI15 GIBILITY.—The Secretary, after coordination with 

16 the Secretary of Transportation and the Adminis17 trator of the Environmental Protection Agency, shall 

18 prescribe such regulations as necessary to determine 

19 whether a motor vehicle meets the requirements to 

20 be eligible for a credit under this section. 

21 ‘‘(j) TERMINATION.—This section shall not apply to 

22 any property placed in service after— 

23 ‘‘(1) in the case of a new qualified alternative 

24 fuel motor vehicle, December 31, 2006, 
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1 ‘‘(2) in the case of a new advanced lean burn 

2 technology motor vehicle or a new qualified hybrid 

3 motor vehicle, December 31, 2008, and 

4 ‘‘(3) in the case of a new qualified fuel cell 

5 motor vehicle, December 31, 2012.’’. 

6 (b) CONFORMING AMENDMENTS.— 

7 (1) Section 30(d) (relating to special rules) is 

8 amended by adding at the end the following new 

9 paragraphs: 

10 ‘‘(5) NO DOUBLE BENEFIT.—No credit shall be 

11 allowed under this section for any motor vehicle for 

12 which a credit is also allowed under section 30B.’’. 

13 (2) Section 1016(a) is amended by striking 

14 ‘‘and’’ at the end of paragraph (27), by striking the 

15 period at the end of paragraph (28) and inserting ‘‘, 

16 and’’, and by adding at the end the following: 

17 ‘‘(29) to the extent provided in section 

18 30B(h)(5).’’. 

19 (3) Section 6501(m) is amended by inserting 

20 ‘‘30B(h)(9),’’ after ‘‘30(d)(4),’’. 

21 (4) The table of sections for subpart B of part 

22 IV of subchapter A of chapter 1 is amended by in23 serting after the item relating to section 30A the fol24 lowing: 

‘‘Sec. 30B. Alternative motor vehicle credit.’’. 
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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to property placed in service after 

3 the date of the enactment of this Act, in taxable years 

4 ending after such date. 

5 (d) STICKER INFORMATION REQUIRED AT RETAIL

6 SALE.— 

7 (1) IN GENERAL.—The Secretary of the Treas8 ury shall issue regulations under which each quali9 fied vehicle sold at retail shall display a notice— 

10 (A) that such vehicle is a qualified vehicle, 

11 and 

12 (B) that the buyer may not benefit from 

13 the credit allowed under section 30B of the In14 ternal Revenue Code of 1986 if such buyer has 

15 insufficient tax liability. 

16 (2) QUALIFIED VEHICLE.—For purposes of 

17 paragraph (1), the term ‘‘qualified vehicle’’ means a 

18 vehicle with respect to which a credit is allowed 

19 under section 30B of the Internal Revenue Code of 

20 1986. 

21 SEC. 4. SMALL ETHANOL PRODUCER CREDIT. 

22 (a) ALLOCATION OF ALCOHOL FUELS CREDIT TO

23 PATRONS OF A COOPERATIVE.—Section 40(g) (relating to 

24 definitions and special rules for eligible small ethanol pro-
31 

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1 ducer credit) is amended by adding at the end the fol2 lowing new paragraph: 

3 ‘‘(6) ALLOCATION OF SMALL ETHANOL PRO4 DUCER CREDIT TO PATRONS OF COOPERATIVE.— 

5 ‘‘(A) ELECTION TO ALLOCATE.— 

6 ‘‘(i) IN GENERAL.—In the case of a 

7 cooperative organization described in sec8 tion 1381(a), any portion of the credit de9 termined under subsection (a)(3) for the 

10 taxable year may, at the election of the or11 ganization, be apportioned pro rata among 

12 patrons of the organization on the basis of 

13 the quantity or value of business done with 

14 or for such patrons for the taxable year. 

15 ‘‘(ii) FORM AND EFFECT OF ELEC16 TION.—An election under clause (i) for any 

17 taxable year shall be made on a timely 

18 filed return for such year. Such election, 

19 once made, shall be irrevocable for such 

20 taxable year. 

21 ‘‘(B) TREATMENT OF ORGANIZATIONS AND

22 PATRONS.—The amount of the credit appor23 tioned to patrons under subparagraph (A)— 

24 ‘‘(i) shall not be included in the 

25 amount determined under subsection (a) 
32 

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1 with respect to the organization for the 

2 taxable year, and 

3 ‘‘(ii) shall be included in the amount 

4 determined under subsection (a) for the 

5 taxable year of each patron for which the 

6 patronage dividends for the taxable year 

7 described in subparagraph (A) are included 

8 in gross income. 

9 ‘‘(C) SPECIAL RULE.—If the amount of a 

10 credit which has been apportioned to any pa11 tron under this paragraph is decreased for any 

12 reason— 

13 ‘‘(i) such amount shall not increase 

14 the tax imposed on such patron, and 

15 ‘‘(ii) the tax imposed by this chapter 

16 on such organization shall be increased by 

17 such amount. 

18 The increase under clause (ii) shall not be 

19 treated as tax imposed by this chapter for pur20 poses of determining the amount of any credit 

21 under this chapter or for purposes of section 

22 55.’’. 

23 (b) DEFINITION OF SMALL ETHANOL PRODUCER.— 

24 Section 40(g) (relating to definitions and special rules for 

25 eligible small ethanol producer credit) is amended by strik-
33 

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1 ing ‘‘30,000,000’’ each place it appears and inserting 

2 ‘‘60,000,000’’. 

3 (c) CONFORMING AMENDMENT.—Section 1388 (re4 lating to definitions and special rules for cooperative orga5 nizations) is amended by adding at the end the following 

6 new subsection: 

7 ‘‘(k) CROSS REFERENCE.— 

‘‘For provisions relating to the apportionment of 

the alcohol fuels credit between cooperative organizations and their patrons, see section 40(g)(6).’’. 

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

9 this section shall apply to taxable years beginning after 

10 December 31, 2003. 

11 SEC. 5. INCENTIVES FOR BIODIESEL. 

12 (a) IN GENERAL.—Subpart D of part IV of sub13 chapter A of chapter 1 (relating to business related cred14 its) is amended by inserting after section 40 the following 

15 new section: 

16 ‘‘SEC. 40A. BIODIESEL USED AS FUEL. 

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

18 the biodiesel fuels credit determined under this section for 

19 the taxable year is an amount equal to the sum of— 

20 ‘‘(1) the biodiesel mixture credit, plus 

21 ‘‘(2) the biodiesel credit. 

22 ‘‘(b) DEFINITION OF BIODIESEL MIXTURE CREDIT

23 AND BIODIESEL CREDIT.—For purposes of this section— 

24 ‘‘(1) BIODIESEL MIXTURE CREDIT.— 
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1 ‘‘(A) IN GENERAL.—The biodiesel mixture 

2 credit of any taxpayer for any taxable year is 

3 50 cents for each gallon of biodiesel used by the 

4 taxpayer in the production of a qualified bio5 diesel mixture. 

6 ‘‘(B) QUALIFIED BIODIESEL MIXTURE.— 

7 The term ‘qualified biodiesel mixture’ means a 

8 mixture of biodiesel and a taxable fuel (within 

9 the meaning of section 4083(a)(1)) which— 

10 ‘‘(i) is sold by the taxpayer producing 

11 such mixture to any person for use as a 

12 fuel, or 

13 ‘‘(ii) is used as a fuel by the taxpayer 

14 producing such mixture. 

15 ‘‘(C) SALE OR USE MUST BE IN TRADE OR

16 BUSINESS, ETC.—Biodiesel used in the produc17 tion of a qualified biodiesel mixture shall be 

18 taken into account— 

19 ‘‘(i) only if the sale or use described 

20 in subparagraph (B) is in a trade or busi21 ness of the taxpayer, and 

22 ‘‘(ii) for the taxable year in which 

23 such sale or use occurs. 

24 ‘‘(D) CASUAL OFF-FARM PRODUCTION NOT

25 ELIGIBLE.—No credit shall be allowed under 
35 

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1 this section with respect to any casual off-farm 

2 production of a qualified biodiesel mixture. 

3 ‘‘(2) BIODIESEL CREDIT.— 

4 ‘‘(A) IN GENERAL.—The biodiesel credit of 

5 any taxpayer for any taxable year is 50 cents 

6 for each gallon of biodiesel which is not in a 

7 mixture and which during the taxable year— 

8 ‘‘(i) is used by the taxpayer as a fuel 

9 in a trade or business, or 

10 ‘‘(ii) is sold by the taxpayer at retail 

11 to a person and placed in the fuel tank of 

12 such person’s vehicle. 

13 ‘‘(B) USER CREDIT NOT TO APPLY TO BIO14 DIESEL SOLD AT RETAIL.—No credit shall be 

15 allowed under subparagraph (A)(i) with respect 

16 to any biodiesel which was sold in a retail sale 

17 described in subparagraph (A)(ii). 

18 ‘‘(3) CREDIT FOR AGRI-BIODIESEL.—In the 

19 case of any biodiesel which is agri-biodiesel, para20 graphs (1)(A) and (2)(A) shall be applied by sub21 stituting ‘$1.00’ for ‘50 cents’. 

22 ‘‘(4) CERTIFICATION FOR BIODIESEL.—No 

23 credit shall be allowed under this section unless the 

24 taxpayer obtains a certification (in such form and 

25 manner as prescribed by the Secretary) from the 
36 

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1 producer of the biodiesel which identifies the product 

2 produced and the percentage of biodiesel and agri3 biodiesel in the product. 

4 ‘‘(c) COORDINATION WITH CREDIT AGAINST EXCISE

5 TAX.—The amount of the credit determined under this 

6 section with respect to any biodiesel shall be properly re7 duced to take into account any benefit provided with re8 spect to such biodiesel solely by reason of the application 

9 of section 6426. 

10 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur11 poses of this section— 

12 ‘‘(1) BIODIESEL.—The term ‘biodiesel’ means 

13 the monoalkyl esters of long chain fatty acids de14 rived from plant or animal matter which meet— 

15 ‘‘(A) the registration requirements for 

16 fuels and fuel additives established by the Envi17 ronmental Protection Agency under section 211 

18 of the Clean Air Act (42 U.S.C. 7545), and 

19 ‘‘(B) the requirements of the American So20 ciety of Testing and Materials D6751. 

21 ‘‘(2) AGRI-BIODIESEL.—The term ‘agri-bio22 diesel’ means biodiesel derived solely from virgin oils, 

23 including esters derived from virgin vegetable oils 

24 from corn, soybeans, sunflower seeds, cottonseeds, 
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1 canola, crambe, rapeseeds, safflowers, flaxseeds, rice 

2 bran, and mustard seeds, and from animal fats. 

3 ‘‘(3) MIXTURE OR BIODIESEL NOT USED AS A

4 FUEL, ETC.— 

5 ‘‘(A) MIXTURES.—If— 

6 ‘‘(i) any credit was determined under 

7 this section with respect to biodiesel used 

8 in the production of any qualified biodiesel 

9 mixture, and 

10 ‘‘(ii) any person— 

11 ‘‘(I) separates the biodiesel from 

12 the mixture, or 

13 ‘‘(II) without separation, uses the 

14 mixture other than as a fuel, 

15 then there is hereby imposed on such person a 

16 tax equal to the product of the rate applicable 

17 under subsection (b)(1)(A) and the number of 

18 gallons of such biodiesel in such mixture. 

19 ‘‘(B) BIODIESEL.—If— 

20 ‘‘(i) any credit was determined under 

21 this section with respect to the retail sale 

22 of any biodiesel, and 

23 ‘‘(ii) any person mixes such biodiesel 

24 or uses such biodiesel other than as a fuel, 
38 

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1 then there is hereby imposed on such person a 

2 tax equal to the product of the rate applicable 

3 under subsection (b)(2)(A) and the number of 

4 gallons of such biodiesel. 

5 ‘‘(C) APPLICABLE LAWS.—All provisions of 

6 law, including penalties, shall, insofar as appli7 cable and not inconsistent with this section, 

8 apply in respect of any tax imposed under sub9 paragraph (A) or (B) as if such tax were im10 posed by section 4081 and not by this chapter. 

11 ‘‘(4) PASS-THRU IN THE CASE OF ESTATES AND

12 TRUSTS.—Under regulations prescribed by the Sec13 retary, rules similar to the rules of subsection (d) of 

14 section 52 shall apply. 

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

16 any sale or use after December 31, 2005.’’. 

17 (b) CREDIT TREATED AS PART OF GENERAL BUSI18 NESS CREDIT.—Section 38(b) (relating to current year 

19 business credit) is amended by striking ‘‘plus’’ at the end 

20 of paragraph (16), by striking the period at the end of 

21 paragraph (17) and inserting ‘‘, plus’’, and by adding at 

22 the end the following new paragraph: 

23 ‘‘(18) the biodiesel fuels credit determined 

24 under section 40A(a).’’. 

25 (c) CONFORMING AMENDMENTS.— 
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1 (1)(A) Section 87 is amended to read as fol2 lows: 

3 ‘‘SEC. 87. ALCOHOL AND BIODIESEL FUELS CREDITS. 

4 ‘‘Gross income includes— 

5 ‘‘(1) the amount of the alcohol fuels credit de6 termined with respect to the taxpayer for the taxable 

7 year under section 40(a), and 

8 ‘‘(2) the biodiesel fuels credit determined with 

9 respect to the taxpayer for the taxable year under 

10 section 40A(a).’’. 

11 (B) The item relating to section 87 in the table 

12 of sections for part II of subchapter B of chapter 1 

13 is amended by striking ‘‘fuel credit’’ and inserting 

14 ‘‘and biodiesel fuels credits’’. 

15 (2) Section 196(c) is amended by striking 

16 ‘‘and’’ at the end of paragraph (9), by striking the 

17 period at the end of paragraph (10) and inserting ‘‘, 

18 and’’, and by adding at the end the following new 

19 paragraph: 

20 ‘‘(11) the biodiesel fuels credit determined 

21 under section 40A(a).’’. 

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

23 IV of subchapter A of chapter 1 is amended by add24 ing after the item relating to section 40 the fol25 lowing new item: 

‘‘Sec. 40A. Biodiesel used as fuel.’’. 
40 

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

2 this section shall apply to fuel produced, and sold or used, 

3 after December 31, 2003, in taxable years ending after 

4 such date. 

5 SEC. 6. ALCOHOL FUEL AND BIODIESEL MIXTURES EXCISE 

6 TAX CREDIT. 

7 (a) IN GENERAL.—Subchapter B of chapter 65 (re8 lating to rules of special application) is amended by insert9 ing after section 6425 the following new section: 

10 ‘‘SEC. 6426. CREDIT FOR ALCOHOL FUEL AND BIODIESEL 

11 MIXTURES. 

12 ‘‘(a) ALLOWANCE OF CREDITS.—There shall be al13 lowed as a credit against the tax imposed by section 4081 

14 an amount equal to the sum of— 

15 ‘‘(1) the alcohol fuel mixture credit, plus 

16 ‘‘(2) the biodiesel mixture credit. 

17 ‘‘(b) ALCOHOL FUEL MIXTURE CREDIT.— 

18 ‘‘(1) IN GENERAL.—For purposes of this sec19 tion, the alcohol fuel mixture credit is the product 

20 of the applicable amount and the number of gallons 

21 of alcohol used by the taxpayer in producing any al22 cohol fuel mixture for sale or use in a trade or busi23 ness of the taxpayer. 

24 ‘‘(2) APPLICABLE AMOUNT.—For purposes of 

25 this subsection— 
41 

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1 ‘‘(A) IN GENERAL.—Except as provided in 

2 subparagraph (B), the applicable amount is 52 

3 cents (51 cents in the case of any sale or use 

4 after 2004). 

5 ‘‘(B) MIXTURES NOT CONTAINING ETH6 ANOL.—In the case of an alcohol fuel mixture 

7 in which none of the alcohol consists of ethanol, 

8 the applicable amount is 60 cents. 

9 ‘‘(3) ALCOHOL FUEL MIXTURE.—For purposes 

10 of this subsection, the term ‘alcohol fuel mixture’ 

11 means a mixture of alcohol and a taxable fuel 

12 which— 

13 ‘‘(A) is sold by the taxpayer producing 

14 such mixture to any person for use as a fuel, 

15 ‘‘(B) is used as a fuel by the taxpayer pro16 ducing such mixture, or 

17 ‘‘(C) is removed from the refinery by a 

18 person producing such mixture. 

19 ‘‘(4) OTHER DEFINITIONS.—For purposes of 

20 this subsection— 

21 ‘‘(A) ALCOHOL.—The term ‘alcohol’ in22 cludes methanol and ethanol but does not in23 clude— 

24 ‘‘(i) alcohol produced from petroleum, 

25 natural gas, or coal (including peat), or 
42 

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1 ‘‘(ii) alcohol with a proof of less than 

2 190 (determined without regard to any 

3 added denaturants). 

4 Such term also includes an alcohol gallon equiv5 alent of ethyl tertiary butyl ether or other 

6 ethers produced from such alcohol. 

7 ‘‘(B) TAXABLE FUEL.—The term ‘taxable 

8 fuel’ has the meaning given such term by sec9 tion 4083(a)(1). 

10 ‘‘(5) TERMINATION.—This subsection shall not 

11 apply to any sale, use, or removal for any period 

12 after December 31, 2010. 

13 ‘‘(c) BIODIESEL MIXTURE CREDIT.— 

14 ‘‘(1) IN GENERAL.—For purposes of this sec15 tion, the biodiesel mixture credit is the product of 

16 the applicable amount and the number of gallons of 

17 biodiesel used by the taxpayer in producing any bio18 diesel mixture for sale or use in a trade or business 

19 of the taxpayer. 

20 ‘‘(2) APPLICABLE AMOUNT.—For purposes of 

21 this subsection— 

22 ‘‘(A) IN GENERAL.—Except as provided in 

23 subparagraph (B), the applicable amount is 50 

24 cents. 
43 

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1 ‘‘(B) AMOUNT FOR AGRI-BIODIESEL.—In 

2 the case of any biodiesel which is agri-biodiesel, 

3 the applicable amount is $1.00. 

4 ‘‘(3) BIODIESEL MIXTURE.—For purposes of 

5 this section, the term ‘biodiesel mixture’ means a 

6 mixture of biodiesel and a taxable fuel which— 

7 ‘‘(A) is sold by the taxpayer producing 

8 such mixture to any person for use as a fuel, 

9 ‘‘(B) is used as a fuel by the taxpayer pro10 ducing such mixture, or 

11 ‘‘(C) is removed from the refinery by a 

12 person producing such mixture. 

13 ‘‘(4) CERTIFICATION FOR BIODIESEL.—No 

14 credit shall be allowed under this section unless the 

15 taxpayer obtains a certification (in such form and 

16 manner as prescribed by the Secretary) from the 

17 producer of the biodiesel which identifies the product 

18 produced and the percentage of biodiesel and agri19 biodiesel in the product. 

20 ‘‘(5) OTHER DEFINITIONS.—Any term used in 

21 this subsection which is also used in section 40A 

22 shall have the meaning given such term by section 

23 40A. 
44 

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1 ‘‘(6) TERMINATION.—This subsection shall not 

2 apply to any sale, use, or removal for any period 

3 after December 31, 2005. 

4 ‘‘(d) MIXTURE NOT USED AS A FUEL, ETC.— 

5 ‘‘(1) IMPOSITION OF TAX.—If— 

6 ‘‘(A) any credit was determined under this 

7 section with respect to alcohol or biodiesel used 

8 in the production of any alcohol fuel mixture or 

9 biodiesel mixture, respectively, and 

10 ‘‘(B) any person— 

11 ‘‘(i) separates the alcohol or biodiesel 

12 from the mixture, or 

13 ‘‘(ii) without separation, uses the mix14 ture other than as a fuel, 

15 then there is hereby imposed on such person a 

16 tax equal to the product of the applicable 

17 amount and the number of gallons of such alco18 hol or biodiesel. 

19 ‘‘(2) APPLICABLE LAWS.—All provisions of law, 

20 including penalties, shall, insofar as applicable and 

21 not inconsistent with this section, apply in respect of 

22 any tax imposed under paragraph (1) as if such tax 

23 were imposed by section 4081 and not by this sec24 tion. 
45 

•HR 5146 IH 

1 ‘‘(e) COORDINATION WITH EXEMPTION FROM EX2 CISE TAX.—Rules similar to the rules under section 40(c) 

3 shall apply for purposes of this section.’’. 

4 (b) REGISTRATION REQUIREMENT.—Section 4101(a) 

5 (relating to registration) is amended by inserting ‘‘and 

6 every person producing biodiesel (as defined in section 

7 40A(d)(1)) or alcohol (as defined in section 

8 6426(b)(4)(A))’’ after ‘‘4091’’. 

9 (c) ADDITIONAL AMENDMENTS.— 

10 (1) Section 40(c) is amended by striking ‘‘or 

11 section 4091(c)’’ and inserting ‘‘section 4091(c), or 

12 section 6426’’. 

13 (2) Section 40(e)(1) is amended— 

14 (A) by striking ‘‘2007’’ in subparagraph 

15 (A) and inserting ‘‘2010’’, and 

16 (B) by striking ‘‘2008’’ in subparagraph 

17 (B) and inserting ‘‘2011’’. 

18 (3) Section 40(h) is amended— 

19 (A) by striking ‘‘2007’’ in paragraph (1) 

20 and inserting ‘‘2010’’, and 

21 (B) by striking ‘‘, 2006, or 2007’’ in the 

22 table contained in paragraph (2) and inserting 

23 ‘‘through 2010’’. 
46 

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1 (4)(A) Subpart C of part III of subchapter A 

2 of chapter 32 is amended by adding at the end the 

3 following new section: 

4 ‘‘SEC. 4104. INFORMATION REPORTING FOR PERSONS 

5 CLAIMING CERTAIN TAX BENEFITS. 

6 ‘‘(a) IN GENERAL.—The Secretary shall require any 

7 person claiming tax benefits under the provisions of sec8 tion 34, 40, 40A, 4041(b)(2), 4041(k), 4081(c), 6426, or 

9 6427(f) to file a quarterly return (in such manner as the 

10 Secretary may prescribe) providing such information relat11 ing to such benefits and the coordination of such benefits 

12 as the Secretary may require to ensure the proper admin13 istration and use of such benefits. 

14 ‘‘(b) ENFORCEMENT.—With respect to any person 

15 described in subsection (a) and subject to registration re16 quirements under this title, rules similar to rules of section 

17 4222(c) shall apply with respect to any requirement under 

18 this section.’’. 

19 (B) The table of sections for subpart C of part 

20 III of subchapter A of chapter 32 is amended by 

21 adding at the end the following new item: 

‘‘Sec. 4104. Information reporting for persons claiming certain tax benefits.’’. 

22 (5) Section 6427(i)(3) is amended— 

23 (A) by adding at the end of subparagraph 

24 (A) the following new flush sentence: 
47 

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1 ‘‘In the case of an electronic claim, this sub2 paragraph shall be applied without regard to 

3 clause (i).’’, and 

4 (B) by striking ‘‘20 days of the date of the 

5 filing of such claim’’ in subparagraph (B) and 

6 inserting ‘‘45 days of the date of the filing of 

7 such claim (20 days in the case of an electronic 

8 claim)’’. 

9 (6) Section 9503(b)(1) is amended by adding at 

10 the end the following new flush sentence: 

11 ‘‘For purposes of this paragraph, taxes received 

12 under sections 4041 and 4081 shall be determined 

13 without reduction for credits under section 6426.’’. 

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

15 for subchapter B of chapter 65 is amended by inserting 

16 after the item relating to section 6425 the following new 

17 item: 

‘‘Sec. 6426. Credit for alcohol fuel and biodiesel mixtures.’’. 

18 (e) EFFECTIVE DATES.— 

19 (1) IN GENERAL.—Except as provided in para20 graphs (2) and (3), the amendments made by this 

21 section shall apply to fuel sold, used, or removed 

22 after December 31, 2003. 

23 (2) SUBSECTION (c)(4).—The amendments 

24 made by subsection (c)(4) shall take effect on Janu25 ary 1, 2004. 
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1 (3) SUBSECTION (c)(5).—The amendments 

2 made by subsection (c)(5) shall apply to claims filed 

3 after December 31, 2004. 

4 (f) FORMAT FOR FILING.—The Secretary of the 

5 Treasury shall prescribe the electronic format for filing 

6 claims described in section 6427(i)(3)(B) of the Internal 

7 Revenue Code of 1986 (as amended by subsection 

8 (c)(5)(A)) not later than December 31, 2004. 

9 SEC. 7. NONAPPLICATION OF EXPORT EXEMPTION TO DE10 LIVERY OF FUEL TO MOTOR VEHICLES RE11 MOVED FROM UNITED STATES. 

12 (a) IN GENERAL.—Section 4221(d)(2) (defining ex13 port) is amended by adding at the end the following new 

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

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

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

17 of the United States.’’. 

18 (b) CONFORMING AMENDMENTS.— 

19 (1) Section 4041(g) (relating to other exemp20 tions) is amended by adding at the end the following 

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

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

23 motor vehicle which is shipped or driven out of the 

24 United States.’’. 
49 

•HR 5146 IH 

1 (2) Clause (iv) of section 4081(a)(1)(A) (relat2 ing to tax on removal, entry, or sale) is amended by 

3 inserting ‘‘or at a duty-free sales enterprise (as de4 fined in section 555(b)(8) of the Tariff Act of 

5 1930)’’ after ‘‘section 4101’’. 

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

7 this section shall apply to sales or deliveries made after 

8 the date of the enactment of this Act. 

Æ