I
103D CONGRESS
2D SESSION
H. R. 5299
To amend the Internal Revenue Code of 1986 to phase out the tax subsidies
for alcohol fuels involving alcohol produced from feedstocks eligible to
receive Federal agricultural subsidies.
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 29, 1994
Mr. FRANKS of New Jersey (for himself, Mr. FRANK of Massachusetts, Mr.
ZIMMER, Mr. TORRICELLI, Mr. PAYNE of New Jersey, Mr. SAXTON, and
Mr. PALLONE) 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 phase
out the tax subsidies for alcohol fuels involving alcohol
produced from feedstocks eligible to receive Federal agri-
cultural subsidies.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. PHASE-OUT OF TAX SUBSIDIES FOR ALCOHOL
FUELS PRODUCED FROM FEEDSTOCKS ELIGI-
BLE TO RECEIVE FEDERAL AGRICULTURAL
SUBSIDIES.
(a) ALCOHOL FUELS CREDIT.—Section 40 of the In-
ternal Revenue Code of 1986 (relating to credit for alcohol
used as a fuel) is amended by adding at the end the follow-
ing new subsection:
‘‘(g) PHASE-OUT OF CREDIT FOR ALCOHOL PRO-
DUCED FROM FEEDSTOCKS ELIGIBLE TO RECEIVE FED-
ERAL AGRICULTURAL SUBSIDIES.—
‘‘(1) IN GENERAL.—No credit shall be allowed
under this section with respect to any alcohol, or
fuel containing alcohol, which is produced from any
feedstock which is a subsidized agricultural commod-
ity.
‘‘(2) PHASE-IN
OF
DISALLOWANCE.—In the
case of taxable years beginning in 1995 and 1996,
paragraph (1) shall not apply and the credit deter-
mined under this section with respect to alcohol or
fuels described in paragraph (1) shall be equal to 67
percent (33 percent in the case of taxable years be-
ginning in 1996) of the credit determined without
regard to this subsection.
‘‘(3) SUBSIDIZED
AGRICULTURAL
COMMOD-
ITY.—For purposes of this subsection, the term
‘subsidized agricultural commodity’ means any agri-
cultural commodity which is supported, or is eligible
to be supported, by a price support or production
adjustment program carried out by the Secretary of
Agriculture.’’.
(b) EXCISE TAX REDUCTION.—
(1) PETROLEUM PRODUCTS.—Section 4081(c)
of the Internal Revenue Code of 1986 (relating to
taxable fuels mixed with alcohol) is amended by re-
designating paragraph (8) as paragraph (9) and by
adding after paragraph (7) the following new para-
graph:
‘‘(8) PHASE-OUT
OF
SUBSIDY
FOR
ALCOHOL
PRODUCED
FROM
FEEDSTOCKS
ELIGIBLE
TO
RE-
CEIVE FEDERAL AGRICULTURAL SUBSIDIES.—
‘‘(A) IN GENERAL.—This subsection shall
not apply to any qualified alcohol mixture con-
taining alcohol which is produced from any
feedstock which is a subsidized agricultural
commodity.
‘‘(B) PHASE-IN
OF
DISALLOWANCE.—In
the case of calendar years 1995 and 1996, the
rate of tax under subsection (a) with respect to
any qualified alcohol mixture described in sub-
paragraph (A) shall be equal to the sum of—
‘‘(i) the rate of tax determined under
this subsection (without regard to this
paragraph), plus
‘‘(ii) 33 percent (67 percent in the
case of 1996) of the difference between the
rate of tax under subsection (a) deter-
mined with and without regard to this sub-
section.
‘‘(C) SUBSIDIZED
AGRICULTURAL
COM-
MODITY.—For purposes of this paragraph, the
term ‘subsidized agricultural commodity’ means
any agricultural commodity which is supported,
or is eligible to be supported, by a price support
or production adjustment program carried out
by the Secretary of Agriculture.’’.
(2) SPECIAL
FUELS.—Section 4041 of such
Code (relating to tax on special fuels) is amended by
adding at the end the following new subsection:
‘‘(n) PHASE-OUT OF SUBSIDY FOR ALCOHOL PRO-
DUCED FROM FEEDSTOCKS ELIGIBLE TO RECEIVE FED-
ERAL AGRICULTURAL SUBSIDIES.—
‘‘(1) IN
GENERAL.—Subsections (b)(2), (k),
and (m) shall not apply to any alcohol fuel contain-
ing alcohol which is produced from any feedstock
which is a subsidized agricultural commodity.
‘‘(2) PHASE-IN
OF
DISALLOWANCE.—In the
case of calendar years 1995 and 1996, the rate of
tax determined under subsection (b)(2), (k), or (m)
with respect to any alcohol fuel described in para-
graph (1) shall be equal to the sum of—
‘‘(A) the rate of tax determined under such
subsection (without regard to this subsection),
plus
‘‘(B) 33 percent (67 percent in the case of
1996) of the difference between the rate of tax
under this section determined with and without
regard to subsection (b)(2), (k), or (m), which-
ever is applicable.
‘‘(3) SUBSIDIZED
AGRICULTURAL
COMMOD-
ITY.—For purposes of this subsection, the term
‘subsidized agricultural commodity’ means any agri-
cultural commodity which is supported, or is eligible
to be supported, by a price support or production
adjustment program carried out by the Secretary of
Agriculture.’’.
(3) AVIATION FUEL.—Section 4091(c) of such
Code (relating to reduced rate of tax for aviation
fuel in alcohol mixture) is amended by redesignating
paragraph (5) as paragraph (6) and by inserting
after paragraph (4) the following new paragraph:
‘‘(5) PHASE-OUT
OF
SUBSIDY
FOR
ALCOHOL
PRODUCED
FROM
FEEDSTOCKS
ELIGIBLE
TO
RE-
CEIVE FEDERAL AGRICULTURAL SUBSIDIES.—
‘‘(A) IN GENERAL.—This subsection shall
not apply to any mixture of aviation fuel con-
taining alcohol which is produced from any
feedstock which is a subsidized agricultural
commodity.
‘‘(B) PHASE-IN
OF
DISALLOWANCE.—In
the case of calendar years 1995 and 1996, the
rate of tax under subsection (a) with respect to
any mixture of aviation fuel described in sub-
paragraph (A) shall be equal to the sum of—
‘‘(i) the rate of tax determined under
this subsection (without regard to this
paragraph), plus
‘‘(ii) 33 percent (67 percent in the
case of 1996) of the difference between the
rate of tax under subsection (a) deter-
mined with and without regard to this sub-
section.
‘‘(C) SUBSIDIZED
AGRICULTURAL
COM-
MODITY.—For purposes of this paragraph, the
term ‘subsidized agricultural commodity’ means
any agricultural commodity which is supported,
or is eligible to be supported, by a price support
or production adjustment program carried out
by the Secretary of Agriculture.’’.
(c) EFFECTIVE DATES.—
(1) CREDIT.—The amendment made by sub-
section (a) shall apply to taxable years beginning
after December 31, 1994.
(2) EXCISE TAXES.—
(A) IN GENERAL.—The amendments made
by subsection (b) shall take effect on January
1, 1995.
(B) FLOOR STOCK TAX.—
(i) IN GENERAL.—In the case of any
alcohol fuel in which tax was imposed
under section 4041, 4081, or 4091 of the
Internal Revenue Code of 1986 before any
tax-increase date, and which is held on
such date by any person, then there is
hereby imposed a floor stock tax on such
fuel equal to the difference between the tax
imposed under such section on such date
and the tax so imposed.
(ii) LIABILITY FOR TAX AND METHOD
OF PAYMENT.—A person holding an alco-
hol fuel on any tax-increase date shall be
liable for such tax, shall pay such tax no
later than 90 days after such date, and
shall pay such tax in such manner as the
Secretary may prescribe.
(iii) EXCEPTIONS.—The tax imposed
by clause (i) shall not apply—
(I) to any fuel held in the tank of
a motor vehicle or motorboat, or
(II) to any fuel held by a person
if, on the tax-increase date, the aggre-
gate amount of fuel held by such per-
son and any related persons does not
exceed 2,000 gallons.
(iv) TAX-INCREASE DATE.—For pur-
poses of this subparagraph, the term ‘‘tax-
increase date’’ means January 1, 1995,
and January 1, 1996.
(v) OTHER
LAWS
APPLICABLE.—All
provisions of law, including penalties appli-
cable with respect to the taxes imposed by
sections 4041, 4081, and 4091 of such
Code shall, insofar as applicable and not
inconsistent with the provisions of this
subparagraph, apply with respect to the
floor stock taxes imposed by clause (i).
SEC. 2. PORTION OF INCREASED REVENUES DEPOSITED
INTO HARBOR MAINTENANCE TRUST FUND.
(a) DREDGING MATERIAL ACCOUNT.—Section 9505
of the Internal Revenue Code of 1986 (relating to Harbor
Maintenance Trust Fund) is amended by adding at the
end the following new subsection:
‘‘(d) DREDGING MATERIAL ACCOUNT.—
‘‘(1) CREATION OF ACCOUNT.—There is estab-
lished in the Harbor Maintenance Trust Fund a sep-
arate account to be known as the ‘Dredging Material
Account’ consisting of such amounts as may be ap-
propriated or credited to the Dredging Material Ac-
count as provided in this subsection or 9602(b).
‘‘(2) TRANSFERS TO ACCOUNT.—There is here-
by appropriated to the Dredging Material Account
amounts equivalent to 50 percent of the sum of—
‘‘(A) the aggregate increase in tax liabil-
ities under chapter 1 which is attributable to
section 40(g), and
‘‘(B) the aggregate increase in taxes re-
ceived in the Treasury which is attributable to
sections 4041(n), 4081(c)(8), and 4091(c)(5).
‘‘(3) EXPENDITURES.—Amounts in the Dredg-
ing Material Account shall be available, as provided
in appropriation Acts, for—
‘‘(A) research and development of dredged
material decontamination technologies, and
‘‘(B) research, development, and construc-
tion of facilities for dredged material contain-
ment or disposal (other than open water dis-
posal).’’
(b) NO TRANSFERS TO OTHER TRUST FUNDS.—
(1) Subsection (e) of section 9502 of such Code
(relating to special rules for transfers to Airport and
Airway Trust Fund) is amended by adding at the
end the following new paragraph:
‘‘(3) CERTAIN ADDITIONAL TAXES TO REMAIN
IN GENERAL FUND.—The amount required to be ap-
propriated by subsection (b) shall be determined
without regard to any increase in taxes by reason of
sections 4041(n), 4081(c)(8), and 4091(c)(5).’’
(2) Paragraph (4) of section 9503(b) of such
Code (relating to certain additional taxes not trans-
ferred to Highway Trust Fund) is amended by strik-
ing ‘‘and’’ at the end of subparagraph (A), by strik-
ing the period at the end of subparagraph (B) and
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new subparagraph:
‘‘(C) there shall not be taken into account
any increase in taxes by reason of sections
4041(n) and 4081(c)(8).’’
Æ