I 

108TH CONGRESS 

2D SESSION H. R. 5078 

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

alternative fuels and alternative fuel vehicles. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 14, 2004 

Mr. RUPPERSBERGER 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: 
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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 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

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 
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1 ‘‘(ii) a certificate that such vehicle 

2 meets or exceeds the Bin 5 Tier II emis3 sion standard established in regulations 

4 prescribed by the Administrator of the En5 vironmental Protection Agency under sec6 tion 202(i) of the Clean Air Act for that 

7 make and model year vehicle, 

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

9 with the taxpayer, 

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

11 the taxpayer and not for resale, and 

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

13 ‘‘(c) NEW ADVANCED LEAN BURN TECHNOLOGY

14 MOTOR VEHICLE CREDIT.— 

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

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

17 vehicle credit determined under this subsection with 

18 respect to a new advanced lean burn technology 

19 motor vehicle placed in service by the taxpayer dur20 ing the taxable year is the credit amount determined 

21 under paragraph (2). 

22 ‘‘(2) CREDIT AMOUNT.— 

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

24 determined under this paragraph shall be deter25 mined in accordance with the following table: 
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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 125 percent but less than 150 percent ...................... $400

At least 150 percent but less than 175 percent ...................... $800

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— 
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1 ‘‘(i) is designed to operate primarily 

2 using more air than is necessary for com3 plete combustion of the fuel, 

4 ‘‘(ii) incorporates direct injection, 

5 ‘‘(iii) achieves at least 125 percent of 

6 the 2002 model year city fuel economy, 

7 ‘‘(iv) for 2004 and later model vehi8 cles, has received a certificate that such ve9 hicle meets or exceeds— 

10 ‘‘(I) in the case of a vehicle hav11 ing a gross vehicle weight rating of 

12 6,000 pounds or less, the Bin 5 Tier 

13 II emission standard established in 

14 regulations prescribed by the Adminis15 trator of the Environmental Protec16 tion Agency under section 202(i) of 

17 the Clean Air Act for that make and 

18 model year vehicle, and 

19 ‘‘(II) in the case of a vehicle hav20 ing a gross vehicle weight rating of 

21 more than 6,000 pounds but not more 

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

23 emission standard which is so estab24 lished, 
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1 ‘‘(B) the original use of which commences 

2 with the taxpayer, 

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

4 the taxpayer and not for resale, and 

5 ‘‘(D) which is made by a manufacturer. 

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

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

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

9 technology motor vehicle, an amount equal to the ex10 cess (if any) of— 

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

12 year city fuel economy for the vehicle inertia 

13 weight class, over 

14 ‘‘(B) 120,000 divided by the city fuel econ15 omy for such vehicle. 

16 ‘‘(d) NEW QUALIFIED HYBRID MOTOR VEHICLE

17 CREDIT.— 

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

19 (a), the new qualified hybrid motor vehicle credit de20 termined under this subsection with respect to a new 

21 qualified hybrid motor vehicle placed in service by 

22 the taxpayer during the taxable year is the credit 

23 amount determined under paragraph (2). 

24 ‘‘(2) CREDIT AMOUNT.— 
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1 ‘‘(A) CREDIT AMOUNT FOR PASSENGER

2 AUTOMOBILES AND LIGHT TRUCKS.—In the 

3 case of a new qualified hybrid motor vehicle 

4 which is a passenger automobile or light truck 

5 and which has a gross vehicle weight rating of 

6 not more than 8,500 pounds, the amount deter7 mined under this paragraph is the sum of the 

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

9 ‘‘(i) FUEL ECONOMY.—The amount 

10 determined under this clause is the amount 

11 which would be determined under sub12 section (c)(2)(A) if such vehicle were a ve13 hicle referred to in such subsection. 

14 ‘‘(ii) CONSERVATION CREDIT.—The 

15 amount determined under this clause is the 

16 amount which would be determined under 

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

18 vehicle referred to in such subsection. 

19 ‘‘(B) CREDIT AMOUNT FOR OTHER MOTOR

20 VEHICLES.— 

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

22 new qualified hybrid motor vehicle to which 

23 subparagraph (A) does not apply, the 

24 amount determined under this paragraph 

25 is the amount equal to the applicable per-
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1 centage of the qualified incremental hybrid 

2 cost of the vehicle as certified under clause 

3 (v). 

4 ‘‘(ii) APPLICABLE PERCENTAGE.—For 

5 purposes of clause (i), the applicable per6 centage is— 

7 ‘‘(I) 20 percent if the vehicle 

8 achieves an increase in city fuel econ9 omy relative to a comparable vehicle 

10 of at least 30 percent but less than 40 

11 percent, 

12 ‘‘(II) 30 percent if the vehicle 

13 achieves such an increase of at least 

14 40 percent but less than 50 percent, 

15 and 

16 ‘‘(III) 40 percent if the vehicle 

17 achieves such an increase of at least 

18 50 percent. 

19 ‘‘(iii) QUALIFIED INCREMENTAL HY20 BRID COST.—For purposes of this subpara21 graph, the qualified incremental hybrid 

22 cost of any vehicle is equal to the amount 

23 of the excess of the manufacturer’s sug24 gested retail price for such vehicle over 
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1 such price for a comparable vehicle, to the 

2 extent such amount does not exceed— 

3 ‘‘(I) $7,500, if such vehicle has a 

4 gross vehicle weight rating of not 

5 more than 14,000 pounds, 

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

7 a gross vehicle weight rating of more 

8 than 14,000 pounds but not more 

9 than 26,000 pounds, and 

10 ‘‘(III) $30,000, if such vehicle 

11 has a gross vehicle weight rating of 

12 more than 26,000 pounds. 

13 ‘‘(iv) COMPARABLE VEHICLE.—For 

14 purposes of this subparagraph, the term 

15 ‘comparable vehicle’ means, with respect to 

16 any new qualified hybrid motor vehicle, 

17 any vehicle which is powered solely by a 

18 gasoline or diesel internal combustion en19 gine and which is comparable in weight, 

20 size, and use to such vehicle. 

21 ‘‘(v) CERTIFICATION.—A certification 

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

23 manufacturer and shall be determined in 

24 accordance with guidance prescribed by the 

25 Secretary. Such guidance shall specify pro-
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1 cedures and methods for calculating fuel 

2 economy savings and incremental hybrid 

3 costs. 

4 ‘‘(3) NEW QUALIFIED HYBRID MOTOR VEHI5 CLE.—For purposes of this subsection— 

6 ‘‘(A) IN GENERAL.—The term ‘new quali7 fied hybrid motor vehicle’ means a motor vehi8 cle— 

9 ‘‘(i) which draws propulsion energy 

10 from onboard sources of stored energy 

11 which are both— 

12 ‘‘(I) an internal combustion or 

13 heat engine using consumable fuel, 

14 and 

15 ‘‘(II) a rechargeable energy stor16 age system; 

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

18 which paragraph (2)(A) applies, has re19 ceived a certificate of conformity under the 

20 Clean Air Act and meets or exceeds the 

21 equivalent qualifying California low emis22 sion vehicle standard under section 

23 243(e)(2) of the Clean Air Act for that 

24 make and model year, and— 
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1 ‘‘(I) in the case of a vehicle hav2 ing a gross vehicle weight rating of 

3 6,000 pounds or less, the Bin 5 Tier 

4 II emission standard established in 

5 regulations prescribed by the Adminis6 trator of the Environmental Protec7 tion Agency under section 202(i) of 

8 the Clean Air Act for that make and 

9 model year vehicle, and 

10 ‘‘(II) in the case of a vehicle hav11 ing a gross vehicle weight rating of 

12 more than 6,000 pounds but not more 

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

14 emission standard which is so estab15 lished; 

16 ‘‘(iii) which has a maximum available 

17 power of at least— 

18 ‘‘(I) 4 percent in the case of a ve19 hicle to which paragraph (2)(A) ap20 plies, 

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

22 vehicle which has a gross vehicle 

23 weight rating or more than 8,500 

24 pounds and not than 14,000 pounds, 

25 and 
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1 ‘‘(III) 15 percent in the case of a 

2 vehicle in excess of 14,000 pounds; 

3 ‘‘(iv) which, in the case of a vehicle to 

4 which paragraph (2)(B) applies, has an in5 ternal combustion or heat engine which 

6 has received a certificate of conformity 

7 under the Clean Air Act as meeting the 

8 emission standards set in the regulations 

9 prescribed by the Administrator of the En10 vironmental Protection Agency for 2004 

11 through 2007 model year diesel heavy duty 

12 engines or ottocycle heavy duty engines, as 

13 applicable; 

14 ‘‘(v) the original use of which com15 mences with the taxpayer; 

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

17 lease by the taxpayer and not for resale; 

18 and 

19 ‘‘(vii) which is made by a manufac20 turer. 

21 Such term shall not include any vehicle which 

22 is not a passenger automobile or light truck if 

23 such vehicle has a gross vehicle weight rating of 

24 less than 8,500 pounds. 
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1 ‘‘(B) CONSUMABLE FUEL.—For purposes 

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

3 fuel’ means any solid, liquid, or gaseous matter 

4 which releases energy when consumed by an 

5 auxiliary power unit. 

6 ‘‘(C) MAXIMUM AVAILABLE POWER.— 

7 ‘‘(i) CERTAIN PASSENGER AUTO8 MOBILES AND LIGHT TRUCKS.—In the case 

9 of a vehicle to which paragraph (2)(A) ap10 plies, the term ‘maximum available power’ 

11 means the maximum power available from 

12 the rechargeable energy storage system, 

13 during a standard 10 second pulse power 

14 or equivalent test, divided by such max15 imum power and the SAE net power of the 

16 heat engine. 

17 ‘‘(ii) OTHER MOTOR VEHICLES.—In 

18 the case of a vehicle to which paragraph 

19 (2)(B) applies, the term ‘maximum avail20 able power’ means the maximum power 

21 available from the rechargeable energy 

22 storage system, during a standard 10 sec23 ond pulse power or equivalent test, divided 

24 by the vehicle’s total traction power. For 

25 purposes of the preceding sentence, the 
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1 term ‘total traction power’ means the sum 

2 of the peak power from the rechargeable 

3 energy storage system and the heat engine 

4 peak power of the vehicle, except that if 

5 such storage system is the sole means by 

6 which the vehicle can be driven, the total 

7 traction power is the peak power of such 

8 storage system. 

9 ‘‘(e) NEW QUALIFIED ALTERNATIVE FUEL MOTOR

10 VEHICLE CREDIT.— 

11 ‘‘(1) ALLOWANCE OF CREDIT.—Except as pro12 vided in paragraph (5), the new qualified alternative 

13 fuel motor vehicle credit determined under this sub14 section is an amount equal to the applicable percent15 age of the incremental cost of any new qualified al16 ternative fuel motor vehicle placed in service by the 

17 taxpayer during the taxable year. 

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

19 of paragraph (1), the applicable percentage with re20 spect to any new qualified alternative fuel motor ve21 hicle is— 

22 ‘‘(A) 40 percent, plus 

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

24 ‘‘(i) has received a certificate of con25 formity under the Clean Air Act and meets 
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1 or exceeds the most stringent standard 

2 available for certification under the Clean 

3 Air Act for that make and model year vehi4 cle (other than a zero emission standard), 

5 or 

6 ‘‘(ii) has received an order certifying 

7 the vehicle as meeting the same require8 ments as vehicles which may be sold or 

9 leased in California and meets or exceeds 

10 the most stringent standard available for 

11 certification under the State laws of Cali12 fornia (enacted in accordance with a waiv13 er granted under section 209(b) of the 

14 Clean Air Act) for that make and model 

15 year vehicle (other than a zero emission 

16 standard). 

17 For purposes of the preceding sentence, in the case 

18 of any new qualified alternative fuel motor vehicle 

19 which has a gross vehicle weight rating of more than 

20 14,000 pounds, the most stringent standard avail21 able shall be such standard available for certification 

22 on the date of the enactment of the Energy Tax Pol23 icy Act of 2003. 

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

25 this subsection, the incremental cost of any new 
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1 qualified alternative fuel motor vehicle is equal to 

2 the amount of the excess of the manufacturer’s sug3 gested retail price for such vehicle over such price 

4 for a gasoline or diesel fuel motor vehicle of the 

5 same model, to the extent such amount does not ex6 ceed— 

7 ‘‘(A) $5,000, if such vehicle has a gross ve8 hicle weight rating of not more than 8,500 

9 pounds, 

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

11 vehicle weight rating of more than 8,500 

12 pounds but not more than 14,000 pounds, 

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

14 vehicle weight rating of more than 14,000 

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

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

17 vehicle weight rating of more than 26,000 

18 pounds. 

19 ‘‘(4) NEW QUALIFIED ALTERNATIVE FUEL

20 MOTOR VEHICLE.—For purposes of this sub21 section— 

22 ‘‘(A) IN GENERAL.—The term ‘new quali23 fied alternative fuel motor vehicle’ means any 

24 motor vehicle— 
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1 ‘‘(i) which is only capable of operating 

2 on an alternative fuel, 

3 ‘‘(ii) the original use of which com4 mences with the taxpayer, 

5 ‘‘(iii) which is acquired by the tax6 payer for use or lease, but not for resale, 

7 and 

8 ‘‘(iv) which is made by a manufac9 turer. 

10 ‘‘(B) ALTERNATIVE FUEL.—The term ‘al11 ternative fuel’ means compressed natural gas, 

12 liquefied natural gas, liquefied petroleum gas, 

13 hydrogen, and any liquid at least 85 percent of 

14 the volume of which consists of methanol. 

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

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

17 mixed-fuel vehicle placed in service by the tax18 payer during the taxable year, the credit deter19 mined under this subsection is an amount equal 

20 to— 

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

22 vehicle, 70 percent of the credit which 

23 would have been allowed under this sub24 section if such vehicle was a qualified alter25 native fuel motor vehicle, and 
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1 ‘‘(ii) in the case of a 90/10 mixed-fuel 

2 vehicle, 90 percent of the credit which 

3 would have been allowed under this sub4 section if such vehicle was a qualified alter5 native fuel motor vehicle. 

6 ‘‘(B) MIXED-FUEL VEHICLE.—For pur7 poses of this subsection, the term ‘mixed-fuel 

8 vehicle’ means any motor vehicle described in 

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

10 which— 

11 ‘‘(i) is certified by the manufacturer 

12 as being able to perform efficiently in nor13 mal operation on a combination of an al14 ternative fuel and a petroleum-based fuel, 

15 ‘‘(ii) either— 

16 ‘‘(I) has received a certificate of 

17 conformity under the Clean Air Act, 

18 or 

19 ‘‘(II) has received an order certi20 fying the vehicle as meeting the same 

21 requirements as vehicles which may be 

22 sold or leased in California and meets 

23 or exceeds the low emission vehicle 

24 standard under section 88.105–94 of 
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1 title 40, Code of Federal Regulations, 

2 for that make and model year vehicle, 

3 ‘‘(iii) the original use of which com4 mences with the taxpayer, 

5 ‘‘(iv) which is acquired by the tax6 payer for use or lease, but not for resale, 

7 and 

8 ‘‘(v) which is made by a manufac9 turer. 

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

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

12 mixed-fuel vehicle’ means a mixed-fuel vehicle 

13 which operates using at least 75 percent alter14 native fuel and not more than 25 percent petro15 leum-based fuel. 

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

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

18 mixed-fuel vehicle’ means a mixed-fuel vehicle 

19 which operates using at least 90 percent alter20 native fuel and not more than 10 percent petro21 leum-based fuel. 

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

23 HYBRID AND ADVANCED LEAN-BURN TECHNOLOGY VE24 HICLES ELIGIBLE FOR CREDIT.— 
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1 ‘‘(1) IN GENERAL.—In the case of a qualified 

2 vehicle sold during the phaseout period, only the ap3 plicable percentage of the credit otherwise allowable 

4 under subsection (c) or (d) shall be allowed. 

5 ‘‘(2) PHASEOUT PERIOD.—For purposes of this 

6 subsection, the phaseout period is the period begin7 ning with the second calendar quarter following the 

8 calendar quarter which includes the first date on 

9 which the number of qualified vehicles manufactured 

10 by the manufacturer of the vehicle referred to in 

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

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

13 80,000. 

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

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

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

17 quarters of the phaseout period, 

18 ‘‘(B) 25 percent for the 3d and 4th cal19 endar quarters of the phaseout period, and 

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

21 thereafter. 

22 ‘‘(4) CONTROLLED GROUPS.— 

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

24 subsection, all persons treated as a single em25 ployer under subsection (a) or (b) of section 52 
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1 or subsection (m) or (o) of section 414 shall be 

2 treated as a single manufacturer. 

3 ‘‘(B) INCLUSION OF FOREIGN CORPORA4 TIONS.—For purposes of subparagraph (A), in 

5 applying subsections (a) and (b) of section 52 

6 to this section, section 1563 shall be applied 

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

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

9 this subsection, the term ‘qualified vehicle’ means 

10 any new qualified hybrid motor vehicle and any new 

11 advanced lean burn technology motor vehicle. 

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

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

14 shall not exceed the excess of— 

15 ‘‘(1) the sum of the regular tax liability (as de16 fined in section 26(b)) plus the tax imposed by sec17 tion 55, over 

18 ‘‘(2) the sum of the credits allowable under sub19 part A and sections 27 and 30 for the taxable year. 

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

21 For purposes of this section— 

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

24 30(c)(2). 
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1 ‘‘(2) OTHER TERMS.—The terms ‘automobile’, 

2 ‘passenger automobile’, ‘light truck’, and ‘manufac3 turer’ have the meanings given such terms in regula4 tions prescribed by the Administrator of the Envi5 ronmental Protection Agency for purposes of the ad6 ministration of title II of the Clean Air Act (42 

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

8 ‘‘(3) 2002 MODEL YEAR CITY FUEL ECON9 OMY.— 

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

11 city fuel economy with respect to a vehicle shall 

12 be determined in accordance with the following 

13 tables: 

14 ‘‘(i) In the case of a passenger auto15 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. 

16 ‘‘(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
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The 2002 model year city 

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

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

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

2 any deduction or credit allowable under this chapter 

3 (other than the credits allowable under this section 

4 and section 30) shall be reduced by the amount of 

5 credit allowed under subsection (a) for such vehicle 

6 for the taxable year. 

7 ‘‘(7) RECAPTURE.—The Secretary shall, by reg8 ulations, provide for recapturing the benefit of any 

9 credit allowable under subsection (a) with respect to 

10 any property which ceases to be property eligible for 

11 such credit (including recapture in the case of a 

12 lease period of less than the economic life of a vehi13 cle). 

14 ‘‘(8) PROPERTY USED OUTSIDE UNITED

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

16 allowed under subsection (a) with respect to any 

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

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

19 account under section 179. 

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

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

22 vehicle if the taxpayer elects to not have this section 

23 apply to such vehicle. 

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

25 the credit allowable under subsection (a) for a tax-
28 

•HR 5078 IH 

1 able year exceeds the limitation under subsection (g) 

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

3 the credit allowable with respect to property subject 

4 to the allowance for depreciation) shall be allowed as 

5 a credit carryback and carryforward under rules 

6 similar to the rules of section 39. 

7 ‘‘(11) INTERACTION WITH MOTOR VEHICLE

8 SAFETY STANDARDS.—Unless otherwise provided in 

9 this section, a motor vehicle shall not be considered 

10 eligible for a credit under this section unless such 

11 vehicle is in compliance with the motor vehicle safety 

12 provisions of sections 30101 through 30169 of title 

13 49, United States Code. 

14 ‘‘(i) REGULATIONS.— 

15 ‘‘(1) IN GENERAL.—The Secretary shall pro16 mulgate such regulations as necessary to carry out 

17 the provisions of this section. 

18 ‘‘(2) DETERMINATION OF MOTOR VEHICLE ELI19 GIBILITY.—The Secretary, after coordination with 

20 the Secretary of Transportation and the Adminis21 trator of the Environmental Protection Agency, shall 

22 prescribe such regulations as necessary to determine 

23 whether a motor vehicle meets the requirements to 

24 be eligible for a credit under this section. 
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1 ‘‘(j) TERMINATION.—This section shall not apply to 

2 any property placed in service after— 

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

4 fuel motor vehicle, December 31, 2006, 

5 ‘‘(2) in the case of a new advanced lean burn 

6 technology motor vehicle or a new qualified hybrid 

7 motor vehicle, December 31, 2008, and 

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

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

10 (b) CONFORMING AMENDMENTS.— 

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

12 amended by adding at the end the following new 

13 paragraphs: 

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

15 allowed under this section for any motor vehicle for 

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

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

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

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

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

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

22 30B(h)(5).’’. 

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

24 ‘‘30B(h)(9),’’ after ‘‘30(d)(4),’’. 
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1 (4) The table of sections for subpart B of part 

2 IV of subchapter A of chapter 1 is amended by in3 serting after the item relating to section 30A the fol4 lowing: 

‘‘Sec. 30B. Alternative motor vehicle credit.’’. 

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

6 this section shall apply to property placed in service after 

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

8 ending after such date. 

9 (d) STICKER INFORMATION REQUIRED AT RETAIL

10 SALE.— 

11 (1) IN GENERAL.—The Secretary of the Treas12 ury shall issue regulations under which each quali13 fied vehicle sold at retail shall display a notice— 

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

15 and 

16 (B) that the buyer may not benefit from 

17 the credit allowed under section 30B of the In18 ternal Revenue Code of 1986 if such buyer has 

19 insufficient tax liability. 

20 (2) QUALIFIED VEHICLE.—For purposes of 

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

22 vehicle with respect to which a credit is allowed 

23 under section 30B of the Internal Revenue Code of 

24 1986. 
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1 SEC. 4. SMALL ETHANOL PRODUCER CREDIT. 

2 (a) ALLOCATION OF ALCOHOL FUELS CREDIT TO

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

4 definitions and special rules for eligible small ethanol pro5 ducer credit) is amended by adding at the end the fol6 lowing new paragraph: 

7 ‘‘(6) ALLOCATION OF SMALL ETHANOL PRO8 DUCER CREDIT TO PATRONS OF COOPERATIVE.— 

9 ‘‘(A) ELECTION TO ALLOCATE.— 

10 ‘‘(i) IN GENERAL.—In the case of a 

11 cooperative organization described in sec12 tion 1381(a), any portion of the credit de13 termined under subsection (a)(3) for the 

14 taxable year may, at the election of the or15 ganization, be apportioned pro rata among 

16 patrons of the organization on the basis of 

17 the quantity or value of business done with 

18 or for such patrons for the taxable year. 

19 ‘‘(ii) FORM AND EFFECT OF ELEC20 TION.—An election under clause (i) for any 

21 taxable year shall be made on a timely 

22 filed return for such year. Such election, 

23 once made, shall be irrevocable for such 

24 taxable year. 
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1 ‘‘(B) TREATMENT OF ORGANIZATIONS AND

2 PATRONS.—The amount of the credit appor3 tioned to patrons under subparagraph (A)— 

4 ‘‘(i) shall not be included in the 

5 amount determined under subsection (a) 

6 with respect to the organization for the 

7 taxable year, and 

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

9 determined under subsection (a) for the 

10 taxable year of each patron for which the 

11 patronage dividends for the taxable year 

12 described in subparagraph (A) are included 

13 in gross income. 

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

15 credit which has been apportioned to any pa16 tron under this paragraph is decreased for any 

17 reason— 

18 ‘‘(i) such amount shall not increase 

19 the tax imposed on such patron, and 

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

21 on such organization shall be increased by 

22 such amount. 

23 The increase under clause (ii) shall not be 

24 treated as tax imposed by this chapter for pur25 poses of determining the amount of any credit 
33 

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1 under this chapter or for purposes of section 

2 55.’’. 

3 (b) DEFINITION OF SMALL ETHANOL PRODUCER.— 

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

5 eligible small ethanol producer credit) is amended by strik6 ing ‘‘30,000,000’’ each place it appears and inserting 

7 ‘‘60,000,000’’. 

8 (c) CONFORMING AMENDMENT.—Section 1388 (re9 lating to definitions and special rules for cooperative orga10 nizations) is amended by adding at the end the following 

11 new subsection: 

12 ‘‘(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).’’. 

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

14 this section shall apply to taxable years beginning after 

15 December 31, 2003. 

16 SEC. 5. INCENTIVES FOR BIODIESEL. 

17 (a) IN GENERAL.—Subpart D of part IV of sub18 chapter A of chapter 1 (relating to business related cred19 its) is amended by inserting after section 40 the following 

20 new section: 

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

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

23 the biodiesel fuels credit determined under this section for 

24 the taxable year is an amount equal to the sum of— 
34 

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

2 ‘‘(2) the biodiesel credit. 

3 ‘‘(b) DEFINITION OF BIODIESEL MIXTURE CREDIT

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

5 ‘‘(1) BIODIESEL MIXTURE CREDIT.— 

6 ‘‘(A) IN GENERAL.—The biodiesel mixture 

7 credit of any taxpayer for any taxable year is 

8 50 cents for each gallon of biodiesel used by the 

9 taxpayer in the production of a qualified bio10 diesel mixture. 

11 ‘‘(B) QUALIFIED BIODIESEL MIXTURE.— 

12 The term ‘qualified biodiesel mixture’ means a 

13 mixture of biodiesel and a taxable fuel (within 

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

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

16 such mixture to any person for use as a 

17 fuel, or 

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

19 producing such mixture. 

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

21 BUSINESS, ETC.—Biodiesel used in the produc22 tion of a qualified biodiesel mixture shall be 

23 taken into account— 
35 

•HR 5078 IH 

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

2 in subparagraph (B) is in a trade or busi3 ness of the taxpayer, and 

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

5 such sale or use occurs. 

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

7 ELIGIBLE.—No credit shall be allowed under 

8 this section with respect to any casual off-farm 

9 production of a qualified biodiesel mixture. 

10 ‘‘(2) BIODIESEL CREDIT.— 

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

12 any taxpayer for any taxable year is 50 cents 

13 for each gallon of biodiesel which is not in a 

14 mixture and which during the taxable year— 

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

16 in a trade or business, or 

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

18 to a person and placed in the fuel tank of 

19 such person’s vehicle. 

20 ‘‘(B) USER CREDIT NOT TO APPLY TO BIO21 DIESEL SOLD AT RETAIL.—No credit shall be 

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

23 to any biodiesel which was sold in a retail sale 

24 described in subparagraph (A)(ii). 
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•HR 5078 IH 

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

2 case of any biodiesel which is agri-biodiesel, para3 graphs (1)(A) and (2)(A) shall be applied by sub4 stituting ‘$1.00’ for ‘50 cents’. 

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

6 credit shall be allowed under this section unless the 

7 taxpayer obtains a certification (in such form and 

8 manner as prescribed by the Secretary) from the 

9 producer of the biodiesel which identifies the product 

10 produced and the percentage of biodiesel and agri11 biodiesel in the product. 

12 ‘‘(c) COORDINATION WITH CREDIT AGAINST EXCISE

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

14 section with respect to any biodiesel shall be properly re15 duced to take into account any benefit provided with re16 spect to such biodiesel solely by reason of the application 

17 of section 6426. 

18 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur19 poses of this section— 

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

21 the monoalkyl esters of long chain fatty acids de22 rived from plant or animal matter which meet— 

23 ‘‘(A) the registration requirements for 

24 fuels and fuel additives established by the Envi-
37 

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1 ronmental Protection Agency under section 211 

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

3 ‘‘(B) the requirements of the American So4 ciety of Testing and Materials D6751. 

5 ‘‘(2) AGRI-BIODIESEL.—The term ‘agri-bio6 diesel’ means biodiesel derived solely from virgin oils, 

7 including esters derived from virgin vegetable oils 

8 from corn, soybeans, sunflower seeds, cottonseeds, 

9 canola, crambe, rapeseeds, safflowers, flaxseeds, rice 

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

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

12 FUEL, ETC.— 

13 ‘‘(A) MIXTURES.—If— 

14 ‘‘(i) any credit was determined under 

15 this section with respect to biodiesel used 

16 in the production of any qualified biodiesel 

17 mixture, and 

18 ‘‘(ii) any person— 

19 ‘‘(I) separates the biodiesel from 

20 the mixture, or 

21 ‘‘(II) without separation, uses the 

22 mixture other than as a fuel, 

23 then there is hereby imposed on such person a 

24 tax equal to the product of the rate applicable 
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•HR 5078 IH 

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

2 gallons of such biodiesel in such mixture. 

3 ‘‘(B) BIODIESEL.—If— 

4 ‘‘(i) any credit was determined under 

5 this section with respect to the retail sale 

6 of any biodiesel, and 

7 ‘‘(ii) any person mixes such biodiesel 

8 or uses such biodiesel other than as a fuel, 

9 then there is hereby imposed on such person a 

10 tax equal to the product of the rate applicable 

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

12 gallons of such biodiesel. 

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

14 law, including penalties, shall, insofar as appli15 cable and not inconsistent with this section, 

16 apply in respect of any tax imposed under sub17 paragraph (A) or (B) as if such tax were im18 posed by section 4081 and not by this chapter. 

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

20 TRUSTS.—Under regulations prescribed by the Sec21 retary, rules similar to the rules of subsection (d) of 

22 section 52 shall apply. 

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

24 any sale or use after December 31, 2005.’’. 
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1 (b) CREDIT TREATED AS PART OF GENERAL BUSI2 NESS CREDIT.—Section 38(b) (relating to current year 

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

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

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

6 the end the following new paragraph: 

7 ‘‘(18) the biodiesel fuels credit determined 

8 under section 40A(a).’’. 

9 (c) CONFORMING AMENDMENTS.— 

10 (1)(A) Section 87 is amended to read as fol11 lows: 

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

13 ‘‘Gross income includes— 

14 ‘‘(1) the amount of the alcohol fuels credit de15 termined with respect to the taxpayer for the taxable 

16 year under section 40(a), and 

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

18 respect to the taxpayer for the taxable year under 

19 section 40A(a).’’. 

20 (B) The item relating to section 87 in the 

21 table of sections for part II of subchapter B of 

22 chapter 1 is amended by striking ‘‘fuel credit’’ 

23 and inserting ‘‘and biodiesel fuels credits’’. 

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

25 ‘‘and’’ at the end of paragraph (9), by striking the 
40 

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

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

3 paragraph: 

4 ‘‘(11) the biodiesel fuels credit determined 

5 under section 40A(a).’’. 

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

7 IV of subchapter A of chapter 1 is amended by add8 ing after the item relating to section 40 the fol9 lowing new item: 

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

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

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

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

13 such date. 

14 SEC. 6. ALCOHOL FUEL AND BIODIESEL MIXTURES EXCISE 

15 TAX CREDIT. 

16 (a) IN GENERAL.—Subchapter B of chapter 65 (re17 lating to rules of special application) is amended by insert18 ing after section 6425 the following new section: 

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

20 MIXTURES. 

21 ‘‘(a) ALLOWANCE OF CREDITS.—There shall be al22 lowed as a credit against the tax imposed by section 4081 

23 an amount equal to the sum of— 

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

25 ‘‘(2) the biodiesel mixture credit. 
41 

•HR 5078 IH 

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

2 ‘‘(1) IN GENERAL.—For purposes of this sec3 tion, the alcohol fuel mixture credit is the product 

4 of the applicable amount and the number of gallons 

5 of alcohol used by the taxpayer in producing any al6 cohol fuel mixture for sale or use in a trade or busi7 ness of the taxpayer. 

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

9 this subsection— 

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

11 subparagraph (B), the applicable amount is 52 

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

13 after 2004). 

14 ‘‘(B) MIXTURES NOT CONTAINING ETH15 ANOL.—In the case of an alcohol fuel mixture 

16 in which none of the alcohol consists of ethanol, 

17 the applicable amount is 60 cents. 

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

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

20 means a mixture of alcohol and a taxable fuel 

21 which— 

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

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

24 ‘‘(B) is used as a fuel by the taxpayer pro25 ducing such mixture, or 
42 

•HR 5078 IH 

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

2 person producing such mixture. 

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

4 this subsection— 

5 ‘‘(A) ALCOHOL.—The term ‘alcohol’ in6 cludes methanol and ethanol but does not in7 clude— 

8 ‘‘(i) alcohol produced from petroleum, 

9 natural gas, or coal (including peat), or 

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

11 190 (determined without regard to any 

12 added denaturants). 

13 Such term also includes an alcohol gallon equiv14 alent of ethyl tertiary butyl ether or other 

15 ethers produced from such alcohol. 

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

17 fuel’ has the meaning given such term by sec18 tion 4083(a)(1). 

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

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

21 after December 31, 2010. 

22 ‘‘(c) BIODIESEL MIXTURE CREDIT.— 

23 ‘‘(1) IN GENERAL.—For purposes of this sec24 tion, the biodiesel mixture credit is the product of 

25 the applicable amount and the number of gallons of 
43 

•HR 5078 IH 

1 biodiesel used by the taxpayer in producing any bio2 diesel mixture for sale or use in a trade or business 

3 of the taxpayer. 

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

5 this subsection— 

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

7 subparagraph (B), the applicable amount is 50 

8 cents. 

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

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

11 the applicable amount is $1.00. 

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

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

14 mixture of biodiesel and a taxable fuel which— 

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

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

17 ‘‘(B) is used as a fuel by the taxpayer pro18 ducing such mixture, or 

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

20 person producing such mixture. 

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

22 credit shall be allowed under this section unless the 

23 taxpayer obtains a certification (in such form and 

24 manner as prescribed by the Secretary) from the 

25 producer of the biodiesel which identifies the product 
44 

•HR 5078 IH 

1 produced and the percentage of biodiesel and agri2 biodiesel in the product. 

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

4 this subsection which is also used in section 40A 

5 shall have the meaning given such term by section 

6 40A. 

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

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

9 after December 31, 2005. 

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

11 ‘‘(1) IMPOSITION OF TAX.—If— 

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

13 section with respect to alcohol or biodiesel used 

14 in the production of any alcohol fuel mixture or 

15 biodiesel mixture, respectively, and 

16 ‘‘(B) any person— 

17 ‘‘(i) separates the alcohol or biodiesel 

18 from the mixture, or 

19 ‘‘(ii) without separation, uses the mix20 ture other than as a fuel, 

21 then there is hereby imposed on such person a 

22 tax equal to the product of the applicable 

23 amount and the number of gallons of such alco24 hol or biodiesel. 
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1 ‘‘(2) APPLICABLE LAWS.—All provisions of law, 

2 including penalties, shall, insofar as applicable and 

3 not inconsistent with this section, apply in respect of 

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

5 were imposed by section 4081 and not by this sec6 tion. 

7 ‘‘(e) COORDINATION WITH EXEMPTION FROM EX8 CISE TAX.—Rules similar to the rules under section 40(c) 

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

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

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

12 every person producing biodiesel (as defined in section 

13 40A(d)(1)) or alcohol (as defined in section 

14 6426(b)(4)(A))’’ after ‘‘4091’’. 

15 (c) ADDITIONAL AMENDMENTS.— 

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

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

18 section 6426’’. 

19 (2) Section 40(e)(1) is amended— 

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

21 (A) and inserting ‘‘2010’’, and 

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

23 (B) and inserting ‘‘2011’’. 

24 (3) Section 40(h) is amended— 
46 

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

2 and inserting ‘‘2010’’, and 

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

4 table contained in paragraph (2) and inserting 

5 ‘‘through 2010’’. 

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

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

8 following new section: 

9 ‘‘SEC. 4104. INFORMATION REPORTING FOR PERSONS 

10 CLAIMING CERTAIN TAX BENEFITS. 

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

12 person claiming tax benefits under the provisions of sec13 tion 34, 40, 40A, 4041(b)(2), 4041(k), 4081(c), 6426, or 

14 6427(f) to file a quarterly return (in such manner as the 

15 Secretary may prescribe) providing such information relat16 ing to such benefits and the coordination of such benefits 

17 as the Secretary may require to ensure the proper admin18 istration and use of such benefits. 

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

20 described in subsection (a) and subject to registration re21 quirements under this title, rules similar to rules of section 

22 4222(c) shall apply with respect to any requirement under 

23 this section.’’. 
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1 (B) The table of sections for subpart C of part 

2 III of subchapter A of chapter 32 is amended by 

3 adding at the end the following new item: 

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

4 (5) Section 6427(i)(3) is amended— 

5 (A) by adding at the end of subparagraph 

6 (A) the following new flush sentence: 

7 ‘‘In the case of an electronic claim, this sub8 paragraph shall be applied without regard to 

9 clause (i).’’, and 

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

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

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

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

14 claim)’’. 

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

16 the end the following new flush sentence: 

17 ‘‘For purposes of this paragraph, taxes received 

18 under sections 4041 and 4081 shall be determined 

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

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

21 for subchapter B of chapter 65 is amended by inserting 

22 after the item relating to section 6425 the following new 

23 item: 

‘‘Sec. 6426. Credit for alcohol fuel and biodiesel mixtures.’’. 
48 

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1 (e) EFFECTIVE DATES.— 

2 (1) IN GENERAL.—Except as provided in para3 graphs (2) and (3), the amendments made by this 

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

5 after December 31, 2003. 

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

7 made by subsection (c)(4) shall take effect on Janu8 ary 1, 2004. 

9 (3) SUBSECTION (c)(5).—The amendments 

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

11 after December 31, 2004. 

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

13 Treasury shall prescribe the electronic format for filing 

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

15 Revenue Code of 1986 (as amended by subsection 

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

17 SEC. 7. NONAPPLICATION OF EXPORT EXEMPTION TO DE18 LIVERY OF FUEL TO MOTOR VEHICLES RE19 MOVED FROM UNITED STATES. 

20 (a) IN GENERAL.—Section 4221(d)(2) (defining ex21 port) is amended by adding at the end the following new 

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

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

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

25 of the United States.’’. 
49 

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1 (b) CONFORMING AMENDMENTS.— 

2 (1) Section 4041(g) (relating to other exemp3 tions) is amended by adding at the end the following 

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

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

6 motor vehicle which is shipped or driven out of the 

7 United States.’’. 

8 (2) Clause (iv) of section 4081(a)(1)(A) (relat9 ing to tax on removal, entry, or sale) is amended by 

10 inserting ‘‘or at a duty-free sales enterprise (as de11 fined in section 555(b)(8) of the Tariff Act of 

12 1930)’’ after ‘‘section 4101’’. 

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

14 this section shall apply to sales or deliveries made after 

15 the date of the enactment of this Act. 

Æ