634
(3) Paragraph (6) of section 881(c) (as redesig-
nated by subsection (a)) is amended by striking
‘‘section 871(h)(5)’’ each place it appears and in-
serting ‘‘section 871(h)(6)’’.
(4) Paragraph (9) of section 1441(c) is amend-
ed by striking ‘‘section 871(h)(3)’’ and inserting
‘‘section 871(h)(3) or (4)’’.
(5) Subsection (a) of section 1442 is amend-
ed—
(A) by striking ‘‘871(h)(3)’’ and inserting
‘‘871(h)(3) or (4)’’, and
(B) by striking ‘‘881(c)(3)’’ and inserting
‘‘881(c)(3) or (4)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to interest received after December
31, 1993.
SEC. 14238. REGULATIONS DEALING WITH CONDUIT AR-
RANGEMENTS.
Section 7701 is amended by redesignating subsection
(l) as subsection (m) and by inserting after subsection (k)
the following new subsection:
‘‘(l) REGULATIONS RELATING
TO CONDUIT AR-
RANGEMENTS.—The Secretary may prescribe regulations
recharacterizing any multiple-party financing transaction
as a transaction directly among any 2 or more of such
635
parties where the Secretary determines that such
recharacterization is appropriate to prevent avoidance of
any tax imposed by this title.’’
PART IV—ENERGY TAX PROVISIONS
Subpart A—Energy Tax Based on Btu Content
SEC. 14241. IMPOSITION OF ENERGY TAX BASED ON BTU
CONTENT.
(a) IN GENERAL.—Chapter 36 (relating to other ex-
cise taxes) is amended by redesignating subchapters A and
B as subchapters B and C, respectively, and by inserting
before subchapter B (as so redesignated) the following
new subchapter:
‘‘SUBCHAPTER A—ENERGY TAXES
‘‘Part I. Imposition of tax on refined petroleum products.
‘‘Part II. Imposition of taxes on natural gas, coal, and electricity.
‘‘Part III. Tax rates.
‘‘Part IV. Use taxes; floor stocks taxes; administrative provisions;
definitions and special rules.
‘‘Part V. Tax on imported products with high embedded energy
costs.
‘‘PART I—IMPOSITION OF TAX ON REFINED
PETROLEUM PRODUCTS
‘‘Sec. 4441. Taxable refined petroleum products.
‘‘Sec. 4442. Tax-free transfers and uses; refunds for certain sales
and uses.
‘‘SEC. 4441. TAXABLE REFINED PETROLEUM PRODUCTS.
‘‘(a) IMPOSITION OF TAX.—
‘‘(1) IN GENERAL.—There is hereby imposed a
tax on any taxable refined petroleum product—
636
‘‘(A) removed from any refinery in the
United States,
‘‘(B) removed from any terminal in the
United States,
‘‘(C) entered into the United States for
consumption, use, or warehousing, and
‘‘(D) sold to any person who is not reg-
istered under section 4453(d).
No tax shall be imposed by subparagraph (D) if
there was a prior taxable removal or entry under
subparagraph (A), (B), or (C).
‘‘(2) EXCEPTION
FOR
BULK
TRANSFERS
TO
REGISTERED REFINERIES OR TERMINALS.—The tax
imposed by paragraph (1) shall not apply to any re-
moval or entry of any taxable refined petroleum
product transferred in bulk to a refinery or terminal
if the person removing or entering such product and
the operator of such refinery or terminal are reg-
istered under section 4453(d).
‘‘(b) RATE OF TAX.—
‘‘(1) IN GENERAL.—The amount of the tax im-
posed by subsection (a) on each barrel of any tax-
able refined petroleum product shall be the sum of—
‘‘(A) the base rate, and
‘‘(B) the supplemental rate,
637
multiplied by the applicable per unit Btu factor for
such product.
‘‘(2) ONLY BASE RATE APPLIES TO QUALIFIED
HEATING OIL, DIESEL FUEL USED ON FARMS, AND
LIQUEFIED PETROLEUM GASES.—
‘‘(A) IN GENERAL.—Subparagraph (B) of
paragraph (1) shall not apply to—
‘‘(i) qualified heating oil,
‘‘(ii) qualified farm diesel fuel, and
‘‘(iii) any liquefied petroleum gas.
‘‘(B) QUALIFIED HEATING OIL.—For pur-
poses of subparagraph (A), the term ‘qualified
heating oil’ means No. 2 distillate fuel oil (in-
cluding any kerosene in a mixture with such oil)
which—
‘‘(i) is indelibly dyed (or dyed and
marked) in accordance with regulations
that the Secretary shall prescribe, and
‘‘(ii) is delivered (or is to be delivered)
to any building to heat the building.
‘‘(C) QUALIFIED
FARM
DIESEL
FUEL.—
For purposes of subparagraph (A), the term
‘qualified farm diesel fuel’ means any diesel fuel
which—
638
‘‘(i) is indelibly dyed (or dyed and
marked) in accordance with regulations
that the Secretary shall prescribe, and
‘‘(ii) is used (or to be used) on a farm
for farming purposes (determined under
section 6420(c)).
‘‘(c) LIABILITY FOR TAX.—The determination of who
is liable for the tax imposed by subsection (a) shall be
made under the rules applicable in determining liability
for the tax imposed by section 4081. Section 4103 shall
apply to the tax imposed by subsection (a) in the same
manner as it applies to the tax imposed by section 4081.
‘‘(d) TAXABLE REFINED PETROLEUM PRODUCT.—
For purposes of this subchapter, the term ‘taxable refined
petroleum product’ means—
‘‘(1) aviation gasoline,
‘‘(2) motor gasoline (including blending compo-
nents of gasoline),
‘‘(3) kerosene-type jet fuel,
‘‘(4) naphtha-type jet fuel,
‘‘(5) distillate fuel oil,
‘‘(6) kerosene,
‘‘(7) residual fuel oil,
‘‘(8) petroleum coke,
‘‘(9) butane,
639
‘‘(10) propane,
‘‘(11) ethanol,
‘‘(12) methanol, and
‘‘(13) to the extent provided in regulations pre-
scribed by the Secretary, any other refined petro-
leum product.
‘‘(e) APPLICABLE PER UNIT BTU FACTOR.—For
purposes of this subchapter—
‘‘(1) IN GENERAL.—
The applicable per unit
Btu factor is the follow-
‘‘In the case of:
ing amount per barrel:
Aviation gasoline ............................................
5.048
Motor gasoline (including blending compo-
nents of gasoline) ...........................................
5.267
Kerosene-type jet fuel ....................................
5.670
Naphtha-type jet fuel .....................................
5.355
Distillate fuel oil ............................................
5.852
Kerosene ........................................................
5.670
Residual fuel oil .............................................
6.486
Petroleum coke ..............................................
6.024
Ethanol ..........................................................
3.500
Methanol ........................................................
3.500
Butane ...........................................................
4.326
Propane ..........................................................
3.836.
‘‘(2) MIXTURES.—Any mixture which includes a
taxable refined petroleum product shall be treated as
specified in paragraph (1) and—
‘‘(A) if more than 1 such product is in-
cluded in such mixture, the applicable per unit
Btu factor shall be the weighted average of the
applicable per unit Btu factors for the taxable
refined petroleum products included in the mix-
ture, and
640
‘‘(B) if any substance is included in the
mixture which is not a taxable refined petro-
leum product, the applicable per unit Btu factor
for the portion of such mixture’s volume which
is attributable to such substance shall be zero.
‘‘(3) CROSS REFERENCE.—
‘‘For authority to adjust per unit Btu amounts, see
section 4453(e).
‘‘(f) OTHER DEFINITIONS.—For purposes of this
subchapter—
‘‘(1) REFINERY.—The term ‘refinery’ means
any facility—
‘‘(A) at which crude oil or any petroleum
product is refined,
‘‘(B) which is a natural gas processing or
fractionation plant, or
‘‘(C) at which ethanol or methanol is pro-
duced for use as a fuel.
‘‘(2) 
BLENDING
COMPONENTS.—The 
term
‘blending components’ does not include ethanol or
methanol.
‘‘(3) ETHANOL
AND
METHANOL.—The terms
‘ethanol’ and ‘methanol’ include ether derivatives of
ethanol and methanol, respectively.
‘‘(4) BARREL.—The term ‘barrel’ means 42
United States gallons determined with such tem-
641
perature adjustments as the Secretary may pre-
scribe. In the case of a taxable refined petroleum
product which is not a liquid, the term ‘barrel’
means a volume determined under regulations pre-
scribed by the Secretary on the basis of an equiva-
lence to a barrel of oil.
‘‘(g) REFUNDS IN CERTAIN CASES.—Under regula-
tions prescribed by the Secretary, if any person who paid
the tax imposed by this section with respect to any taxable
refined petroleum product establishes to the satisfaction
of the Secretary that a prior tax was paid (and not cred-
ited or refunded) with respect to such product, then an
amount equal to the tax paid by such person shall be al-
lowed as a refund (without interest) to such person in the
same manner as if it were an overpayment of tax imposed
by this section.
‘‘SEC. 4442. TAX-FREE TRANSFERS AND USES; REFUNDS
FOR CERTAIN SALES AND USES.
‘‘(a) TAX-FREE SALES, ETC.—
‘‘(1) IN GENERAL.—No tax shall be imposed by
section 4441—
‘‘(A) on any taxable refined petroleum
product which is used in an exempt use by the
person otherwise liable for such tax, or
642
‘‘(B) by reason of a removal, entry, or sale
of such product for an exempt use by the per-
son receiving the product.
‘‘(2) EXEMPT USE.—For purposes of this sub-
section, the term ‘exempt use’ means—
‘‘(A) export,
‘‘(B) any use in the generation of elec-
tricity,
‘‘(C) any qualified feedstock use, and
‘‘(D) any use in the manufacture or pro-
duction of synthetic natural gas or any other
synthetic fuel specified in regulations prescribed
by the Secretary.
‘‘(3) QUALIFIED
FEEDSTOCK
USE.—For pur-
poses of this subsection—
‘‘(A) IN
GENERAL.—In the case of any
qualified feedstock use, only the exempt per-
centage of any taxable refined petroleum prod-
uct shall be exempt from tax under paragraph
(1).
‘‘(B) QUALIFIED
FEEDSTOCK
USE.—The
term ‘qualified feedstock use’ means use of any
taxable refined petroleum product in the manu-
facture or production of any substance.
643
‘‘(C) EXEMPT
PERCENTAGE.—For pur-
poses of subparagraph (A), the term ‘exempt
percentage’ means the percentage (determined
on the basis of chemical structure) of the tax-
able refined petroleum product which is incor-
porated into the substance manufactured or
produced.
‘‘(4) REGISTRATION
REQUIREMENTS.—To the
extent provided by the Secretary, paragraph (1)
shall not apply to any taxable event unless—
‘‘(A) such persons with respect to such
event as the Secretary may specify are reg-
istered under section 4453(d), and
‘‘(B) in the case of a sale, the purchaser’s
name and address, and the purchaser’s reg-
istration number for purposes of this sub-
chapter, are provided to the seller.
‘‘(5) REFUNDS OF PRODUCTS PURCHASED TAX-
PAID.—If tax was imposed under section 4441 with
respect to any taxable refined petroleum product and
such product is used by any person in an exempt
use, the Secretary shall pay to such person an
amount equal to the tax so imposed (or, in the case
of a qualified feedstock use, the exempt percentage
of the tax so imposed).
644
‘‘(6) CROSS REFERENCE.—
‘‘For tax on fuel used to produce steam at facility
which also generates electricity, see section 4451(e).
‘‘(b) REFUNDS TO ULTIMATE VENDORS IN CERTAIN
CASES.—Under regulations prescribed by the Secretary—
‘‘(1) HEATING OIL.—If the supplemental rate
of tax was imposed under section 4441 with respect
to any No. 2 distillate fuel oil (including any ker-
osene in a mixture with such oil) and such fuel oil
is delivered to any building to heat the building, the
Secretary shall pay to the ultimate vendor of such
fuel oil an amount equal to the product of the sup-
plemental rate and the applicable per unit Btu fac-
tor per barrel of the fuel oil (and kerosene) so deliv-
ered.
‘‘(2) INTERNATIONAL COMMERCIAL TRANSPOR-
TATION.—
‘‘(A) IN
GENERAL.—If tax was imposed
under section 4441 with respect to any taxable
refined petroleum product and such product is
sold for use or used by the purchaser for inter-
national commercial transportation, the Sec-
retary shall pay to the ultimate vendor of such
product an amount equal to the tax so imposed.
‘‘(B) 
INTERNATIONAL
COMMERCIAL
TRANSPORTATION.—For purposes of subpara-
645
graph (A), the term ‘international commercial
transportation’ means transportation in the
trade or business of transporting persons or
property for hire—
‘‘(i) by any vessel actually engaged in
foreign trade or trade between the United
States and any of its possessions, or
‘‘(ii) by aircraft from a point within
the United States to a point outside the
United States and outside the 225-mile
zone (as defined in section 4262(c)(2)).
‘‘(3) VENDOR
REQUIREMENTS.—A payment
may be made under this subsection to a vendor only
if the vendor establishes that such vendor—
‘‘(A)(i) has not included the tax in the
price of the product, and
‘‘(ii) has not collected the tax from the
purchaser of such product, or
‘‘(B) has agreed to repay the tax to the
purchaser.
‘‘(c) PRODUCTION OF CALCINED COKE.—If tax was
imposed under section 4441 with respect to any petroleum
product and such product is used by any person to
produce calcined coke, the Secretary shall pay to such per-
son an amount equal to the sum of the base rate and the
646
supplemental rate for each million Btu’s of the actual Btu
content of the coke produced.
‘‘(d) CROSS REFERENCE.—
‘‘For refunds of gasoline and diesel fuel used on
farms, see sections 6420(a) and 6427(m).
‘‘PART II—IMPOSITION OF TAXES ON NATURAL
GAS, COAL, AND ELECTRICITY
‘‘Sec. 4444. Natural gas.
‘‘Sec. 4445. Coal.
‘‘Sec. 4446. Electricity.
‘‘SEC. 4444. NATURAL GAS.
‘‘(a) IMPOSITION OF TAX.—
‘‘(1) IN GENERAL.—There is hereby imposed a
tax on natural gas—
‘‘(A) removed from any pipeline in the
United States,
‘‘(B) entered into the United States for
consumption, use, or warehousing, and
‘‘(C) entered into any pipeline the operator
of which is not registered under section
4453(d).
‘‘(2) EXCEPTION
FOR
TRANSFERS
TO
REG-
ISTERED PIPELINES.—
‘‘(A) PIPELINE
TO
PIPELINE
TRANS-
FERS.—The tax imposed by paragraph (1) shall
not apply to any removal from a pipeline to an-
647
other pipeline if the operators of both pipelines
are registered under section 4453(d).
‘‘(B) ENTRY
INTO
UNITED
STATES
TO
PIPELINE
TRANSFERS.—The tax imposed by
paragraph (1) shall not apply to any entry into
the United States if—
‘‘(i) pursuant to such entry the natu-
ral gas is entered into any pipeline, and
‘‘(ii) the operator of such pipeline is
registered under section 4453(d).
‘‘(b) RATE OF TAX.—
‘‘(1) IN GENERAL.—The amount of the tax im-
posed by subsection (a) on each MCF of natural gas
shall be the base rate multiplied by the applicable
per unit Btu factor.
‘‘(2) AUTHORITY
TO
USE
ACTUAL
BTU
CON-
TENT.—To the extent provided in regulations pre-
scribed by the Secretary, the amount of the tax im-
posed by subsection (a) shall be the base rate for
each million Btu’s of the actual Btu content of the
natural gas.
‘‘(c) LIABILITY FOR, AND COLLECTION OF, TAX.—
‘‘(1) IN GENERAL.—The tax imposed by sub-
section (a)(1)(A)—
648
‘‘(A) shall be paid by the person receiving
the natural gas, and
‘‘(B) shall be collected by the operator of
the pipeline.
‘‘(2) IMPORTATION.—The tax imposed by sub-
section (a)(1)(B) shall be paid by the person enter-
ing the natural gas into the United States for con-
sumption, use, or warehousing.
‘‘(3) ENTRY INTO UNREGISTERED PIPELINES.—
The tax imposed by subsection (a)(1)(C) shall be
paid by the person entering the natural gas.
‘‘(4) COLLECTION OF TAX.—
‘‘(A) IN GENERAL.—In the case of natural
gas removed from a local distribution system,
the operator shall also be liable for any tax im-
posed by subsection (a) which is not collected
from the person receiving the natural gas.
‘‘(B) EXCEPTION FOR LARGE USERS FROM
LOCAL DISTRIBUTION SYSTEMS.—Subparagraph
(A) shall not apply to natural gas received by
any person during any month from a local dis-
tribution system if the value (exclusive of taxes)
of the natural gas received by such person from
such system during the 12-month period ending
before such month exceeded $3,500,000.
649
‘‘(d) DEFINITIONS.—For purposes of this sub-
chapter—
‘‘(1) APPLICABLE PER UNIT BTU FACTOR.—
‘‘(A) IN
GENERAL.—The applicable per
unit Btu factor with respect to natural gas is
1.031 per MCF.
‘‘(B) CROSS REFERENCE.—
‘‘For authority to adjust per unit Btu amounts, see
section 4453(e).
‘‘(2) PIPELINE.—The term ‘pipeline’ includes a
local distribution system. To the extent provided in
regulations prescribed by the Secretary, such term
includes a gathering system.
‘‘(3) NATURAL GAS.—The term ‘natural gas’
includes synthetic natural gas produced from coal or
from any petroleum product.
‘‘(4) MCF.—The term ‘MCF’ means 1,000
cubic feet of natural gas measured at a pressure of
14.73 pounds per square inch (absolute) and a tem-
perature of 60 degrees Fahrenheit.
‘‘(e) EXEMPTION FROM TAX FOR CERTAIN USES.—
‘‘(1) IN GENERAL.—No tax shall be imposed by
subparagraph (A) or (B) of subsection (a)(1)—
‘‘(A) on any natural gas which is used in
an exempt natural gas use by the person other-
wise liable for such tax, or
650
‘‘(B) by reason of a removal or entry of
natural gas for an exempt natural gas use by
the person receiving the natural gas.
‘‘(2) EXEMPT
NATURAL
GAS
USE.—For pur-
poses of this subsection, the term ‘exempt natural
gas use’ means—
‘‘(A) use in the generation of electricity,
‘‘(B) any qualified feedstock use, or
‘‘(C) use in enhanced heavy oil recovery.
‘‘(3) QUALIFIED
FEEDSTOCK
USE.—For pur-
poses of this subsection—
‘‘(A) IN
GENERAL.—In the case of any
qualified feedstock use, only the exempt per-
centage of the natural gas shall be exempt from
tax under paragraph (1).
‘‘(B) QUALIFIED
FEEDSTOCK
USE; EX-
EMPT PERCENTAGE.—The terms ‘qualified feed-
stock use’ and ‘exempt percentage’ have the re-
spective meanings given such terms by section
4442(a)(3) determined by substituting ‘natural
gas’ for ‘taxable refined petroleum product’
each place it appears.
‘‘(4) ENHANCED HEAVY OIL RECOVERY.—For
purposes of this subsection—
651
‘‘(A) IN GENERAL.—Natural gas shall be
treated as used in enhanced heavy oil recovery
if such gas is used in an enhanced oil recovery
project in the United States for the recovery of
oil having a weighted average gravity of 20 de-
grees API or less (corrected to 60 degrees
Fahrenheit).
‘‘(B) 
ENHANCED
OIL
RECOVERY
PROJECT.—For purposes of subparagraph (A),
the term ‘enhanced oil recovery project’ means
any project which involves the application (in
accordance with sound engineering principles)
of 1 or more tertiary recovery methods (as de-
fined in section 193(b)(3)) which can reason-
ably be expected to result in more than an in-
significant increase in the amount of crude oil
which will ultimately be recovered.
‘‘(5) REGISTRATION
REQUIREMENTS.—To the
extent provided by the Secretary, paragraph (1)
shall not apply to any taxable event unless the re-
quirements of section 4442(a)(4) are met with re-
spect to such event.
‘‘(6) REFUNDS OF NATURAL GAS PURCHASED
TAX-PAID.—If tax was imposed by this section with
respect to any natural gas and such gas is used by
652
any person in an exempt natural gas use, the Sec-
retary shall pay to such person an amount equal to
the tax so imposed (or, in the case of a qualified
feedstock use, the exempt percentage of the tax so
imposed).
‘‘(7) CROSS REFERENCE.—
‘‘For tax on fuel used to produce steam at facility
which also generates electricity, see section 4451(e).
‘‘(f) METHANE RECOVERED FROM BIOMASS
OR
COAL MINING.—
‘‘(1) IN GENERAL.—If—
‘‘(A) methane is recovered from biomass or
in conjunction with room and pillar or long wall
coal mining operations, and
‘‘(B) such methane is entered into any nat-
ural gas pipeline,
the Secretary shall pay to the person so entering
such methane an amount equal to the amount of tax
which would be imposed under this section on such
methane if such entry were a taxable event under
such section.
‘‘(2) RECAPTURE
OF
CREDIT
FOR
METHANE
RECOVERED
FROM
COAL
MINING
IN
CERTAIN
CASES.—
‘‘(A) IN GENERAL.—If—
653
‘‘(i) the Secretary has made a pay-
ment under paragraph (1) to any person
with respect to methane recovered from
coal mining operations before the date the
actual mining commences, and
‘‘(ii)(I) such person disposes of his in-
terest in such coal mining operations, or
‘‘(II) the actual mining commences
more than 10 years after the date such
methane was first recovered,
then the tax under chapter 1 of such person for
the taxable year in which such disposition oc-
curs (or, in a case to which clause (ii)(II) ap-
plies, such 10th year ends) shall be increased
by the aggregate of such payments to such per-
son plus interest at the underpayment rate
under section 6621 for the periods beginning on
the dates such payments were made.
‘‘(B) NO FURTHER PAYMENTS UNTIL MIN-
ING COMMENCES.—If there is an increase in tax
under subparagraph (A) with respect to any
payments for methane recovered from any site,
no further payments shall be made under this
subsection with respect to methane recovered
654
from such site until actual mining commences
at such site.
‘‘(C) NO CREDITS AGAINST TAX, ETC.—
Any increase in tax under this paragraph shall
not be taken into account in determining the
amount of any credit allowable under part IV of
subchapter A of chapter 1 or in determining the
amount of the tax imposed by section 55.
‘‘(D) CHANGES IN FORM OF BUSINESS DIS-
REGARDED.—A person shall not be treated as
disposing of an interest in coal mining oper-
ations by reason of a mere change in the form
of conducting the trade or business so long as
the coal mining operations are retained in such
trade or business and the taxpayer retains a
substantial interest in such trade or business.
‘‘(g) REFUNDS IN CERTAIN CASES.—A rule similar
to the rule of section 4441(g) shall apply to the tax im-
posed by this section.
‘‘SEC. 4445. COAL.
‘‘(a) GENERAL RULE.—There is hereby imposed a
tax on coal received at any facility in the United States
for use as a fuel at such facility.
‘‘(b) RATE OF TAX.—The amount of the tax imposed
by subsection (a) shall be the base rate for each million
655
Btu’s of the actual Btu content of the coal. For purposes
of the preceding sentence, the actual Btu content of any
coal shall be determined under procedures prescribed by
the Secretary.
‘‘(c) LIABILITY FOR TAX.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the tax imposed by sub-
section (a) shall be paid by the operator of the facil-
ity.
‘‘(2) COAL RECEIVED AT SMALL FACILITIES.—
If the ultimate vendor of coal received at a facility
receives a certificate from the operator of such facil-
ity (or otherwise determines) that such facility re-
ceived less than 1,000 tons of coal during the pre-
ceding calendar year, the tax imposed by subsection
(a) shall be paid by the ultimate vendor.
‘‘(3) RESIDENTIAL PROPERTY.—
‘‘(A) IN GENERAL.—In the case of coal re-
ceived at a residential property, the tax imposed
by subsection (a) shall be paid by the ultimate
vendor.
‘‘(B) RESIDENTIAL PROPERTY.—For pur-
poses of this paragraph, the term ‘residential
property’ means any building which contains 1
656
or more dwelling units used for residential pur-
poses other than on a transient basis.
‘‘(d) EXEMPTION FROM TAX FOR CERTAIN USES.—
‘‘(1) IN GENERAL.—No tax shall be imposed by
subsection (a) on coal received for—
‘‘(A) use in the generation of electricity,
‘‘(B) any qualified feedstock use,
‘‘(C) use in enhanced heavy oil recovery
(as determined under section 4444(e)(4) by
substituting ‘coal’ for ‘natural gas’),
‘‘(D) use in the manufacture or production
of synthetic natural gas or any other synthetic
fuel specified in regulations prescribed by the
Secretary, or
‘‘(E) any use in a vessel used in inter-
national commercial transportation (as defined
in section 4442(b)(2)(B)(i)).
‘‘(2) QUALIFIED
FEEDSTOCK
USE.—For pur-
poses of this subsection—
‘‘(A) IN
GENERAL.—In the case of any
qualified feedstock use, only the exempt per-
centage of the coal shall be exempt from tax
under paragraph (1).
‘‘(B) QUALIFIED
FEEDSTOCK
USE; EX-
EMPT PERCENTAGE.—The terms ‘qualified feed-
657
stock use’ and ‘exempt percentage’ have the re-
spective meanings given such terms by section
4442(a)(3) determined by substituting ‘coal’ for
‘taxable refined petroleum product’ each place it
appears.
‘‘(3) CROSS REFERENCE.—
‘‘For tax on fuel used to produce steam at facility
which also generates electricity, see section 4451(e).
‘‘(e) PRODUCTION OF COKE FOR STEEL.—If tax was
imposed under this subchapter with respect to any coal
and such coal is used by any person to produce coke for
use in the reduction of iron-bearing ores in the iron and
steel process, the Secretary shall pay to such person an
amount equal to the base rate for each million Btu’s of
the actual Btu content of the coke produced.
‘‘SEC. 4446. ELECTRICITY.
‘‘(a) GENERAL RULE.—There is hereby imposed a
tax on—
‘‘(1) the sale of electricity to ultimate users in
the United States, and
‘‘(2) the use of electricity in the United States
which was not subject to tax under paragraph (1).
‘‘(b) RATE OF TAX.—The amount of the tax imposed
by subsection (a) on each kilowatt hour of electricity sold
or used during any month shall be the deemed Btu tax
per kilowatt hour applicable for such month—
658
‘‘(1) to the seller in the case of the tax imposed
by subsection (a)(1), and
‘‘(2) to the user in the case of the tax imposed
by subsection (a)(2).
‘‘(c) LIABILITY FOR, AND COLLECTION OF, TAX.—
‘‘(1) SALES.—The tax imposed by subsection
(a)(1)—
‘‘(A) shall be paid by the person to whom
the electricity is sold, and
‘‘(B) shall be collected by the seller.
‘‘(2) USES.—The tax imposed by subsection
(a)(2) shall be paid by the person using the elec-
tricity.
‘‘(3) COLLECTION OF TAX.—
‘‘(A) IN GENERAL.—The seller shall also
be liable for the tax imposed by subsection
(a)(1) which is not collected from the person to
whom the electricity is sold.
‘‘(B) EXCEPTION
FOR
LARGE
USERS.—
Subparagraph (A) shall not apply to electricity
sold to any person during any month by the
seller if the amount paid by such person for
electricity (exclusive of taxes) sold by such sell-
er during the 12-month period ending before
such month exceeded $3,500,000.
659
‘‘(d) DEEMED BTU TAXES.—For purposes of this
section—
‘‘(1) IN GENERAL.—The deemed Btu taxes per
kilowatt hour of electricity applicable to any person
for any month shall be the weighted average of—
‘‘(A) the deemed Btu taxes per kilowatt
hour of electricity generated at each facility of
the person during the base period, and
‘‘(B) the deemed Btu taxes per kilowatt
hour of electricity purchased by such person
during the base period.
For purposes of this paragraph, the term ‘base pe-
riod’ means, with respect to any month, the 2d
month preceding such month.
‘‘(2) DEEMED BTU TAXES PER FACILITY.—The
deemed Btu taxes per kilowatt hour of electricity
generated at any facility during any month shall be
determined by dividing—
‘‘(A) the deemed Btu taxes on fuels used
at such facility to generate electricity during
such month by
‘‘(B) the aggregate kilowatt hours of elec-
tricity generated at such facility during such
month.
‘‘(3) DEEMED BTU TAXES.—
660
‘‘(A) IN GENERAL.—Except as otherwise
provided in this paragraph, the term ‘deemed
Btu taxes’ means, with respect to electricity,
the aggregate taxes which would have been im-
posed by this subchapter on the fuels used to
generate such electricity—
‘‘(i) but for the exemption of such
fuels from such taxes, and
‘‘(ii) determined as of the month for
which the rate of the tax imposed by sub-
section (a) is being determined.
‘‘(B) ELECTRICITY
GENERATED
BY
HY-
DROPOWER OR NUCLEAR POWER.—The deemed
Btu taxes per kilowatt hour of electricity gen-
erated by hydropower or nuclear power shall be
equal to the base rate multiplied by a fraction
the numerator of which is 10,335 and the de-
nominator of which is 1,000,000.
‘‘(C) IMPORTED ELECTRICITY.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the deemed Btu taxes
per kilowatt hour of electricity transmitted
into the United States shall be determined
as if such electricity were generated by hy-
dropower.
661
‘‘(ii) LOWER DEEMED BTU TAX MAY
BE ESTABLISHED.—If the importer estab-
lishes to the satisfaction of the Secretary
the amount which would be the deemed
Btu taxes per kilowatt hour of the elec-
tricity if the electricity were generated in
the United States, such amount shall be
used in lieu of the amount under clause (i).
‘‘(D) ELECTRICITY
GENERATED
BY
RE-
NEWABLE
SOURCES.—The deemed Btu taxes
per kilowatt hour of electricity generated from
any renewable source shall be zero. For pur-
poses of the preceding sentence, the term ‘re-
newable source’ means solar energy, wind en-
ergy, any geothermal deposit, biomass, munici-
pal solid waste, and tires.
‘‘(4) SELLERS
TO
SPECIFY
DEEMED
BTU
TAXES.—
‘‘(A) IN GENERAL.—In the case of elec-
tricity which is sold other than to the ultimate
user, the seller shall certify to the purchaser the
deemed Btu taxes per kilowatt hour of the elec-
tricity sold.
‘‘(B) FAILURE TO CERTIFY.—If the seller
fails to so certify—
662
‘‘(i) the tax imposed by subsection (a)
shall apply to such sale at the rate speci-
fied in subparagraph (C),
‘‘(ii) the tax imposed by subsection (a)
shall apply to any subsequent sale or use
without regard to clause (i), and
‘‘(iii) the rate specified in subpara-
graph (C) shall be the deemed Btu taxes
per kilowatt hour of such electricity for
purposes of determining the tax imposed
by subsection (a) on any subsequent sale
or use of such electricity.
‘‘(C) RATE.—The rate specified in this
subparagraph is, for each kilowatt hour, the
product of—
‘‘(i) the sum of the base rate and the
supplemental rate, multiplied by
‘‘(ii) a fraction the numerator of
which is 10,335 and the denominator of
which is 1,000,000.
‘‘(5) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or ap-
propriate to carry out this subsection, including reg-
ulations—
663
‘‘(A) prescribing a base period to be used
by any person not in existence during the base
period, and
‘‘(B) prescribing such other modifications
to the application of this subsection as are nec-
essary to carry out the purposes of this sub-
section.
‘‘(e) EXCEPTIONS.—
‘‘(1) ELECTRICITY USED IN CERTAIN ELECTRO-
LYTIC PROCESSES.—
‘‘(A) IN GENERAL.—In the case of elec-
tricity used in any electrolytic process, the tax
imposed by this section shall not apply to the
feedstock portion of such electricity.
‘‘(B) FEEDSTOCK PORTION.—For purposes
of subparagraph (A), the feedstock portion of
electricity is the portion of the electrical energy
which is incorporated into the manufactured
product.
‘‘(2) 
ELECTRICITY
USED
TO
GENERATE
PUMPED STORAGE, ETC.—The tax imposed by this
section shall not apply to electricity used in the
United States to create any hydropower source to
generate electricity. The electricity generated by
664
such hydropower source shall be disregarded in de-
termining the deemed Btu taxes of the electricity.
‘‘(3) USE TAX EXCEPTION.—The Secretary may
provide by regulations that the tax imposed by sub-
section (a)(2) shall not apply in cases where the Sec-
retary determines that such an exception is war-
ranted, after taking into account the protection of
revenues to the United States from this subchapter
and the ease of administration for both taxpayers
and the Secretary.
‘‘PART III—TAX RATES
‘‘Sec. 4448. Tax rates.
‘‘SEC. 4448. TAX RATES.
‘‘(a) BASE
RATE.—For purposes of this sub-
chapter—
‘‘(1) PHASE-IN RATES.—Effective during—
‘‘(A) the 1-year period beginning on July
1, 1994, the base rate is 8.9 cents, and
‘‘(B) the 1-year period beginning on July
1, 1995, the base rate is 17.9 cents.
‘‘(2) PERMANENT
UNINDEXED
RATE.—Effec-
tive on and after July 1, 1996, the base rate is 26.8
cents.
‘‘(3) INDEXED RATES.—
665
‘‘(A) IN GENERAL.—Effective during any
calendar year after 1997, the base rate under
paragraph (2) shall be increased by an amount
equal to—
‘‘(i) 26.8 cents, multiplied by
‘‘(ii) the inflation adjustment for such
calendar year.
‘‘(B) INFLATION ADJUSTMENT.—For pur-
poses of subparagraph (A), the inflation adjust-
ment for any calendar year is the percentage (if
any) by which—
‘‘(i) the GDP deflator for the preced-
ing calendar year, exceeds
‘‘(ii) the GDP deflator for 1996.
‘‘(C) GDP 
DEFLATOR
FOR
CALENDAR
YEAR.—For purposes of subparagraph (B), the
GDP deflator for any calendar year is the GDP
deflator for the second calendar quarter of such
year.
‘‘(D) GDP DEFLATOR.—For purposes of
subparagraph (C), the term ‘GDP deflator’
means the most recent revision of the implicit
price deflator for the gross domestic product as
computed and published by the Department of
666
Commerce before November 15 of the calendar
year referred to in subparagraph (B)(i).
‘‘(b) SUPPLEMENTAL RATE.—For purposes of this
subchapter—
‘‘(1) PHASE-IN RATES.—Effective during—
‘‘(A) the 1-year period beginning on July
1, 1994, the supplemental rate is 11.4 cents,
and
‘‘(B) the 1-year period beginning on July
1, 1995, the supplemental rate is 22.8 cents.
‘‘(2) PERMANENT
UNINDEXED
RATE.—Effec-
tive on and after July 1, 1996, the supplemental
rate is 34.2 cents.
‘‘(3) INDEXED
RATES.—Effective during any
calendar year after 1997, the supplemental rate
under paragraph (2) shall be increased by an
amount equal to—
‘‘(A) 34.2 cents, multiplied by
‘‘(B) the inflation adjustment for such cal-
endar 
year 
determined 
under 
subsection
(a)(3)(B).
‘‘(c) ROUNDING.—If any increase determined under
subsection (a)(3) or (b)(3) is not a multiple of 0.1 cent,
such increase shall be rounded to the nearest multiple of
0.1 cent.
667
‘‘PART IV—USE TAXES; FLOOR STOCKS TAXES;
ADMINISTRATIVE PROVISIONS; DEFINITIONS
AND SPECIAL RULES
‘‘Sec. 4451. Tax on certain uses.
‘‘Sec. 4452. Floor stocks taxes.
‘‘Sec. 4453. Administrative provisions.
‘‘Sec. 4454. Definitions and special rules.
‘‘SEC. 4451. TAX ON CERTAIN USES.
‘‘(a) GENERAL RULE.—There is hereby imposed a
tax on the use of any fossil fuel—
‘‘(1) in the manufacture or production in the
United States of a fuel other than at a refinery, or
‘‘(2) as a fuel.
The preceding sentence shall not apply if tax was imposed
under this subchapter before such use and such tax is not
credited or refunded.
‘‘(b) RATE OF TAX.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the amount of tax imposed
by subsection (a) shall be the amount which would
be imposed under the appropriate section of part I
or II if such use were a taxable event under such
section.
‘‘(2) CRUDE OIL AND OTHER PRODUCTS NOT
TAXED
ON
REMOVAL
OR
IMPORTATION.—The
amount of the tax imposed by subsection (a) on
crude oil or other product not subject to tax under
668
part I or II shall be the base rate (increased by the
supplemental rate in the case of crude oil or any pe-
troleum product other than any liquefied petroleum
gas, isopentane, and natural gasoline) for each mil-
lion Btu’s of the Btu content of such oil or product.
‘‘(3) AUTHORITY
TO
PRESCRIBE
APPLICABLE
PER UNIT BTU FACTORS.—In the case of crude oil
or any other product for which an applicable per
unit Btu factor is not prescribed for purposes of
part I or II, the Secretary may prescribe such a fac-
tor, and, if so prescribed, such factor shall apply for
purposes of paragraph (2).
‘‘(c) LIABILITY FOR TAX.—The taxes imposed by
subsection (a) shall be paid by the person using the fuel.
‘‘(d) EXCEPTIONS.—
‘‘(1) IN GENERAL.—Except as provided in sub-
section (e), the tax imposed by this section shall not
apply to—
‘‘(A) any use to which section 4442, sec-
tion 4444(e), or subsection (d) or (e) of section
4445 applies, or
‘‘(B) any use of methane described in sec-
tion 4444(f)(1)(A).
‘‘(2) USE ON PRODUCTION PREMISES.—The tax
imposed by this section shall not apply to any use
669
of crude oil or natural gas for producing crude oil
or natural gas if—
‘‘(A) in the case of crude oil, it is used be-
fore entry at the lease automatic custody trans-
fer point (or its manual equivalent), and
‘‘(B) in the case of natural gas, it is used
before entry into an interstate or intrastate
transmission pipeline.
‘‘(3) CRUDE OIL USED AT REFINERY, ETC.—
The tax imposed by this section shall not apply to—
‘‘(A) any use of crude oil at a facility at
which crude oil is refined or any use at such fa-
cility of any product produced at such facility,
‘‘(B) any use of natural gas at a natural
gas processing or fractionation plant or any use
at such plant of any product produced at such
plant, or
‘‘(C) any use of ethanol at a facility at
which ethanol is produced for use as a fuel.
‘‘(4) OTHERWISE TAXABLE EVENT OCCURRING
BEFORE
EFFECTIVE
DATE.—The tax imposed by
this section shall not apply to any use if no tax
would be imposed by this section on such use were
this subchapter in effect for all periods before July
1, 1994.
670
‘‘(e) GENERATION OF STEAM AND ELECTRICITY.—
‘‘(1) IN GENERAL.—In the case of a facility
which uses any taxable refined petroleum product,
natural gas, or coal—
‘‘(A) to generate electricity, and
‘‘(B) to produce steam which is used or
which is furnished or sold in the trade or busi-
ness of the furnishing or sale of steam,
the tax imposed by subsection (a) shall apply to the
use of such product, gas, or coal at such facility to
the extent such use is attributable (determined on
the basis of the proportionate Btu content of the
electricity and the steam) to the production of steam
which is so used, furnished, or sold.
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not
apply to steam used for any purpose if tax would not
be imposed under this subchapter on the fuel used
to produce the steam had such fuel been used di-
rectly for such purpose.
‘‘(f) TREATMENT OF NATURAL GAS LOST IN TRANS-
MISSION.—For purposes of this section, natural gas lost
in transmission by a pipeline shall be treated as used as
a fuel for such pipeline.
671
‘‘SEC. 4452. FLOOR STOCKS TAXES.
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed
a tax on any taxable fuel which on any tax-increase date
is held in the United States by any person.
‘‘(b) AMOUNT OF TAX.—The amount of the tax im-
posed by subsection (a) on any taxable fuel with respect
to any tax-increase date shall be equal to the excess (if
any) of—
‘‘(1) the amount of tax which would be imposed
under part I or II if a taxable event with respect to
such fuel had occurred on such date, over
‘‘(2) the prior tax (if any) imposed by this sub-
chapter on such fuel.
‘‘(c) LIABILITY FOR TAX.—The person holding the
taxable fuel on any tax-increase date shall pay the tax im-
posed by subsection (a).
‘‘(d) EXCEPTIONS.—The tax imposed by subsection
(a) shall not apply to—
‘‘(1) any taxable fuel held before the point
where it would otherwise be subject to tax under
part I or II, or
‘‘(2) any taxable fuel held by any person exclu-
sively for any use by such person to the extent a
credit or refund (or other payment) of the tax im-
posed by this section would be allowable or payable
if such tax were imposed by part I or II.
672
‘‘(e) CREDIT AGAINST TAX.—
‘‘(1) IN GENERAL.—Each person shall be al-
lowed $200 as a credit against the taxes imposed by
subsection (a) with respect to each tax-increase date.
Such credit shall not exceed the amount of taxes im-
posed by subsection (a) for which such person is lia-
ble with respect to such date.
‘‘(2) CONTROLLED GROUPS.—For purposes of
paragraph (1)—
‘‘(A) all persons who are treated as a sin-
gle employer under subsection (a) or (b) of sec-
tion 52 shall be treated as 1 taxpayer, and
‘‘(B) the $200 amount specified in para-
graph (1) shall be apportioned among such per-
sons under regulations prescribed by the Sec-
retary.
‘‘(f) DEFINITIONS.—For purposes of this section—
‘‘(1) TAXABLE FUEL.—The term ‘taxable fuel’
means any taxable refined petroleum product, natu-
ral gas, or coal.
‘‘(2) TAX-INCREASE DATE.—The term ‘tax-in-
crease date’ means—
‘‘(A) July 1, 1994,
‘‘(B) July 1, 1995,
‘‘(C) July 1, 1996, and
673
‘‘(D) January 1 of each calendar year for
which there is an increase in a rate of tax by
reason of subsection (a)(3) or (b)(3) of section
4448 (relating to inflation adjustment).
‘‘(g) DUE DATE.—The tax imposed by subsection (a)
shall be paid on or before the close of the 7-month period
beginning on the tax-increase date.
‘‘SEC. 4453. ADMINISTRATIVE PROVISIONS.
‘‘(a) RULES RELATING TO REFUNDS FOR EXEMPT
AND OTHER USES.—
‘‘(1) PERIOD
FOR
FILING
CLAIMS.—No pay-
ment shall be made under section 4442, 4444(f), or
4445(e) unless, within 2 years after the date that
the event occurs giving rise to a right to such pay-
ment, a claim therefor is filed by the person entitled
to such payment.
‘‘(2) DENIAL
OF
INTEREST.—Except as pro-
vided in paragraph (3), no interest shall be paid on
claims for payments under section 4442, 4444(f), or
4445(e).
‘‘(3) MINIMUM
AMOUNTS
AND
PERIODS.—In
the case of persons who meet such requirements as
the Secretary may prescribe, if—
‘‘(A) a claim for payment is filed under
section 4442, 4444(f), or 4445(e) for any pe-
674
riod for which more than $1,000 is payable and
which is not less than 1 week, and
‘‘(B) the Secretary has not paid such claim
within 20 days after the date the claim was
filed,
such claim shall be paid with interest from such date
using the overpayment rate and method under sec-
tion 6621. The preceding sentence shall not apply to
a claim filed under section 4442(b)(1). Nothing in
section 6611(e) shall bar interest payable under this
paragraph.
‘‘(4) HEATING OIL.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), not more than 1 claim may
be filed under section 4442(b)(1) by any person
with respect to fuel oil sold by such person dur-
ing any calendar year.
‘‘(B) EXCEPTION.—If $1,000 or more is
payable under section 4442(b)(1) to any person
with respect to fuel oil sold during any of the
1st 3 quarters of the calendar year, a claim
may be filed under section 4442(b)(1) with re-
spect to fuel oil sold during such quarter. No
claim filed under this subparagraph shall be al-
lowed unless filed on or before the last day of
675
the 1st quarter following the quarter for which
the claim is filed.
‘‘(5) APPLICABLE LAWS.—
‘‘(A) IN GENERAL.—All provisions of law,
including penalties, applicable in respect of the
tax imposed by this subchapter shall, insofar as
applicable and not inconsistent with this sub-
section and section 4442, 4444(f), or 4445(e),
apply in respect of payments provided for in
such section to the same extent as if such pay-
ments constituted refunds of overpayments of
the tax so imposed.
‘‘(B) EXAMINATION OF BOOKS AND WIT-
NESSES.—For the purpose of ascertaining the
correctness of any claim made under section
4442, 4444(f), or 4445(e), or the correctness of
any payment made in respect of such claim, the
Secretary shall have the authority granted by
paragraphs (1), (2), and (3) of section 7602(a)
(relating to examination of books and wit-
nesses) as if the claimant were the person liable
for tax.
‘‘(b) PAYMENT OF TAX TO PERSONS REQUIRED TO
COLLECT TAX.—
676
‘‘(1) PAYMENT WITHIN 30 DAYS.—In the case
of the taxes imposed by sections 4444 and 4446
which are required to be collected by another person,
the person liable for such tax shall remit the tax to
such other person within 30 days after the date of
the taxable event.
‘‘(2) RELIEF
FROM
PENALTY
FOR
CERTAIN
FAILURES TO COLLECT TAX.—No penalty shall be
imposed under this title on the failure of any person
to collect the taxes referred to in paragraph (1) if—
‘‘(A) during the 30-day period referred to
in paragraph (1), such person exercises due dili-
gence in attempting to collect such tax, and
‘‘(B) such person notifies the Secretary,
within 15 days after the close of the month in
which such 30-day period ends, of the failure to
collect such tax and provides such other infor-
mation as the Secretary may require.
‘‘(3) EXCEPTION FOR PERSONS WITH SECOND-
ARY LIABILITY.—Paragraphs (1) and (2) shall not
apply if the person required to collect the tax is re-
quired to pay any portion of such tax which is not
paid by the person primarily liable for such tax.
‘‘(c) INFORMATION REPORTING.—The Secretary may
require—
677
‘‘(1) information reporting by each remitter of
tax imposed by this subchapter, and
‘‘(2) information reporting by, and registration
of, such other persons as the Secretary deems nec-
essary to carry out this subchapter.
‘‘(d) REGISTRATION.—
‘‘(1) IN GENERAL.—Every person required by
the Secretary to register under this subsection with
respect to any tax imposed by this subchapter shall
register with the Secretary at such time, in such
form and manner, and subject to such terms and
conditions, as the Secretary may by regulations pre-
scribe. A registration under this subsection may be
used only in accordance with regulations prescribed
under this section.
‘‘(2) OTHER RULES.—Rules similar to the rules
of section 4101(b) and 4222(c) shall apply for pur-
poses of this subsection.
‘‘(e) ADJUSTMENTS TO PER UNIT BTU FACTORS.—
‘‘(1) IN GENERAL.—If the Secretary determines
that the applicable per unit Btu factor then in effect
for any taxable refined petroleum product or natural
gas does not, when multiplied by 1,000,000, properly
reflect the Btu content per unit for such substance
(in the circumstances where taxable events under
678
this subchapter occur with respect to such sub-
stance), the Secretary may modify the applicable per
unit Btu factor for such substance. Any such modi-
fication shall be effective as of the date prescribed
by the Secretary.
‘‘(2) MODIFICATION OF LIST OF REFINED PE-
TROLEUM PRODUCTS.—The Secretary may modify,
as appropriate, the list of refined petroleum products
in section 4441 for which applicable per unit Btu
factors are separately determined.
‘‘SEC. 4454. DEFINITIONS AND SPECIAL RULES.
‘‘(a) DEFINITIONS.—For purposes of this sub-
chapter—
‘‘(1) FOSSIL
FUEL.—The term ‘fossil fuel’
means crude oil, any petroleum product, natural gas,
any natural gas product, and coal.
‘‘(2) CRUDE OIL.—The term ‘crude oil’ includes
condensates from crude oil.
‘‘(3) COAL.—The term ‘coal’ includes lignite.
‘‘(4) UNITED
STATES.—The term ‘United
States’ means the 50 States, the District of Colum-
bia, and the foreign trade zones of the United
States.
‘‘(5) PERSON.—The term ‘person’ includes the
United States, any State or political subdivision
679
thereof, the District of Columbia, and any agency or
instrumentality of any of the foregoing.
‘‘(c) FRACTIONAL PART OF UNIT.—In the case of a
fraction of a unit, the tax imposed by this subchapter shall
be the same fraction of the amount of such tax imposed
on a whole unit.
‘‘(d) SPECIAL RULES RELATING TO PUERTO RICO
AND THE VIRGIN ISLANDS.—
‘‘(1) LIKE TAX ON ARTICLES BROUGHT INTO
THE UNITED STATES FROM PUERTO RICO OR THE
VIRGIN ISLANDS.—For purposes of this subchapter,
articles brought into the United States from the
Commonwealth of Puerto Rico or the Virgin Islands
shall be treated as entered into the United States at
the time brought into the United States.
‘‘(2) DISPOSITION OF REVENUES.—The provi-
sions of subsections (a)(3) and (b)(3) of section
7652 shall not apply to any tax imposed by this sub-
chapter.
‘‘(e) NO EXEMPTION FROM TAX.—No person shall
be exempt from any tax imposed by this subchapter except
to the extent provided in this subchapter or in any provi-
sion of law enacted after the date of the enactment of this
subchapter which grants a specific exemption, by reference
to this subchapter, from a tax imposed by this subchapter.
680
‘‘PART V—TAX ON IMPORTED HIGH-ENERGY
PRODUCTS
‘‘Sec. 4456. Imposition of tax.
‘‘Sec. 4457. Definitions and special rules.
‘‘SEC. 4456. IMPOSITION OF TAX.
‘‘(a) GENERAL RULE.—There is hereby imposed a
tax on any taxable high-energy product entered into the
United States for consumption, use, or warehousing.
‘‘(b) AMOUNT OF TAX.—The amount of the tax im-
posed by subsection (a) on any taxable high-energy prod-
uct shall be the imputed Btu tax with respect to such
product.
‘‘(c) LIABILITY FOR TAX.—The tax imposed by sub-
section (a) shall be paid by the person entering the prod-
uct for consumption, use, or warehousing.
‘‘SEC. 4457. DEFINITIONS AND SPECIAL RULES.
‘‘(a) TAXABLE HIGH-ENERGY PRODUCT.—For pur-
poses of this part—
‘‘(1) IN GENERAL.—The term ‘taxable high-en-
ergy product’ means any product which, at the time
entered into the United States for consumption, use,
or warehousing, is listed as a taxable high-energy
product by the Secretary.
‘‘(2) 
DETERMINATION
OF
PRODUCTS
ON
LIST.—A product shall be listed under paragraph
(1) if the product is produced in an industry identi-
681
fied (using 4-digit SIC codes) in the most recent
census of manufacturing as producing products
which on average have more than 2 percent of their
value attributable to direct energy inputs (exclusive
of the tax imposed by parts I and II) of taxable en-
ergy sources.
‘‘(3) TAXABLE
ENERGY
SOURCE.—The term
‘taxable energy source’ means any taxable refined
petroleum product, natural gas, coal, and electricity.
‘‘(b) IMPUTED BTU TAX.—For purposes of this
part—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the term ‘imputed Btu tax’
means, with respect to any taxable high-energy prod-
uct, the amount of tax which would have been im-
posed by parts I and II on taxable energy sources
directly used in the manufacture or production of
the product if—
‘‘(A) such product were manufactured or
produced using the predominant method of
manufacture or production of such product in
the United States, and
‘‘(B) such taxable energy sources had been
subject to tax under such parts on the date of
682
the entry of the product into the United States
for consumption, use, or warehousing.
‘‘(2) TAX WHERE INFORMATION FURNISHED.—
If the person liable for the tax imposed by section
4456 with respect to any product furnishes to the
Secretary (at such time and in such manner as the
Secretary shall prescribe) sufficient information to
determine the imputed Btu tax with respect to such
product, the imputed Btu tax determined using such
information shall apply in lieu of the amount deter-
mined under paragraph (1).
‘‘(c) REQUESTS TO CHANGE LIST.—If any importer
or producer of any product requests that the Secretary
determine whether—
‘‘(1) such product should be listed as a taxable
high-energy product under subsection (a)(1) or be
removed from such listing, or
‘‘(2) the imputed Btu tax for such product
under subsection (b)(1),
the Secretary shall make such determination within 180
days after the date the request was filed.’’
(b) REFUNDS FOR FARM USE OF GASOLINE AND
DIESEL FUEL.—
(1) GASOLINE.—
683
(A) Subsection (a) of section 6420 is
amended by adding at the end thereof the fol-
lowing new flush sentence:
‘‘If the supplemental rate of the tax imposed by section
4441 was imposed on such gasoline, the Secretary shall
also pay (without interest) to such ultimate purchaser an
amount equal to the product of such supplemental rate
and the applicable per unit Btu factor per barrel (deter-
mined under section 4441) of the gasoline so used.’’
(B) Subsection (h) of section 6420 is
amended by inserting ‘‘and taxes imposed by
section 4441’’ after ‘‘financing rate’’.
(2) DIESEL FUEL.—
(A) Section 6427 is amended by redesig-
nating subsections (m) through (r) as sub-
sections (n) through (s), respectively, and by in-
serting after subsection (l) the following new
subsection:
‘‘(m) REFUNDS OF SUPPLEMENTAL RATE OF BTU
TAX ON FARM USE OF DIESEL FUEL.—Except as pro-
vided in subsection (k), if the supplemental rate of the
tax imposed by section 4441 was imposed on diesel fuel
used on a farm for farming purposes (within the meaning
of section 6420(c)), the Secretary shall pay (without inter-
est) to the ultimate purchaser of such fuel an amount
684
equal to the product of such supplemental rate and the
applicable per unit Btu factor per barrel (determined
under section 4441) of the diesel fuel so used.’’
(B) Paragraph (1) of section 6427(i) is
amended by inserting ‘‘(m),’’ after ‘‘(l),’’.
(C) Paragraph (4) of section 6427(i), as
amended by subpart B, is amended—
(i) by striking ‘‘OR 4091’’ in the para-
graph heading and inserting ‘‘, 4091, OR
4441’’, and
(ii) by striking ‘‘subsection (l)’’ each
place it appears and inserting ‘‘subsections
(l) and (m)’’.
(c) CIVIL PENALTY FOR USING REDUCED-RATE
FUEL FOR TAXABLE USE.—
(1) IN GENERAL.—Part I of subchapter B of
chapter 68 (relating to assessable penalties) is
amended by adding at the end thereof the following
new section:
‘‘SEC. 6714. DYED FUEL SOLD FOR USE OR USED IN TAX-
ABLE USE.
‘‘(a) IMPOSITION OF PENALTY.—If any dyed fuel—
‘‘(1) is sold by any person for any use which
such person knows or has reason to know is not a
reduced-tax use of such fuel, or
685
‘‘(2) is used by any person for a use other than
a reduced-tax use and such person knew, or had rea-
son to know, that such fuel was so dyed,
then, in addition to the tax, such person shall pay a pen-
alty on such sale or use.
‘‘(b) AMOUNT OF PENALTY.—The amount of the
penalty under subsection (a) on any sale or use shall be
the greater of—
‘‘(1) $1,000, or
‘‘(2) an amount equal to twice the excess of the
aggregate taxes which should have been imposed
under section 4441 on the fuel so sold or used over
the prior taxes (if any) imposed on such fuel under
such section which have not been credited or re-
funded.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) DYED
FUEL.—The term ‘dyed fuel’
means—
‘‘(A) qualified heating oil (as defined in
section 4441(b)(2)(B)), and
‘‘(B) diesel fuel dyed in accordance with
section 4441(b)(2)(C).
‘‘(2) REDUCED-TAX USE.—The term ‘reduced-
tax use’ means, with respect to any fuel, the use for
which such fuel was dyed.’’
686
(2) CLERICAL AMENDMENT.—The table of sec-
tions for such part I is amended by adding at the
end thereof the following new item:
‘‘Sec. 6714. Dyed fuel sold for use or used in taxable use.’’
(d) TECHNICAL AMENDMENTS.—
(1)(A) Subsection (a) of section 6675 is amend-
ed by inserting ‘‘section 4442 (relating to refunds of
petroleum tax for certain sales and uses), section
4444(f) (relating to methane recovered from biomass
or coal mining), section 4445(e) (relating to coal
used in production of coke for steel),’’ before ‘‘sec-
tion 6420’’.
(B) Subsection (b) of section 6675 is amended
by inserting ‘‘4442, 4444(f), 4445(e),’’ before
‘‘6420’’.
(2) Section 6206 is amended—
(A) by inserting ‘‘(a) FUEL TAXES.—’’ be-
fore ‘‘Any portion of’’, and
(B) by adding at the end thereof the fol-
lowing new subsection:
‘‘(b) BTU TAXES.—Any portion of a payment made
under section 4442, 4444(f), or 4445(e) which constitutes
an excessive amount (as defined in section 6675(b)), and
any civil penalty provided by section 6675, may be as-
sessed and collected as if it were a tax imposed by sub-
chapter A of chapter 36 and as if the person who made
687
the claim were liable for such tax. The period for assessing
any such portion, and for assessing any such penalty, shall
be 3 years from the last day prescribed for filing a claim
under section 4442, 4444(f), or 4445(e).’’
(3)(A) The section heading for section 6206 is
amended by striking ‘‘UNDER SECTIONS 6420, 6421,
AND 6427’’ and inserting ‘‘FOR CERTAIN FUELS TAX
REFUNDS AND ENERGY TAX REFUNDS’’.
(B) The item relating to section 6206 in the
table of sections for subchapter A of chapter 63 is
amended by striking ‘‘under sections 6420, 6421,
and 6427’’ and inserting ‘‘for certain fuels tax re-
funds and energy tax refunds’’.
(4) Subparagraph (B) of section 6724(d)(1) is
amended—
(A) by striking ‘‘or’’ at the end of clause
(xi),
(B) by striking the period at the end of the
clause (xii) relating to section 4101(d) and in-
serting a comma,
(C) by redesignating the clause (xii) relat-
ing to section 338(h)(10)(C) as clause (xiii) and
by striking the period at the end thereof and in-
serting ‘‘, or’’, and
688
(D) by inserting after clause (xiii), as so
redesignated, the following new clause:
‘‘(xiv) section 4453(c) (relating to in-
formation reporting with respect to energy
taxes).’’
(5) Sections 7210, section 7603, subsections (b)
and (c)(2) of section 7604, section 7605, and
7610(c) 
are 
each 
amended 
by 
inserting
‘‘4453(a)(5)(B),’’ before ‘‘6420(e)(2)’’ each place it
appears.
(6) Subparagraph (A) of section 9505(c)(3) is
amended by striking ‘‘subchapter A’’ and inserting
‘‘subchapter B’’.
(7) The table of subchapters for chapter 36 is
amended by striking the items relating to sub-
chapters A and B and inserting the following:
‘‘Subchapter A. Energy taxes.
‘‘Subchapter B. Harbor maintenance tax.
‘‘Subchapter C. Transportation by water.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect on July 1, 1994.
Subpart B—Modifications to Tax on Diesel Fuel
SEC. 14242. MODIFICATIONS TO TAX ON DIESEL FUEL.
(a) IN GENERAL.—Subparts A and B of part III of
subchapter A of chapter 32 (relating to manufacturers ex-
cise taxes) are amended to read as follows:
689
‘‘Subpart A—Gasoline and Diesel Fuel
‘‘Sec. 4081. Imposition of tax.
‘‘Sec. 4082. Exemptions for diesel fuel.
‘‘Sec. 4083. Definitions and special rule.
‘‘Sec. 4084. Cross references.
‘‘SEC. 4081. IMPOSITION OF TAX.
‘‘(a) TAX IMPOSED.—
‘‘(1) TAX ON REMOVAL, ENTRY, OR SALE.—
‘‘(A) IN GENERAL.—There is hereby im-
posed a tax at the rate specified in paragraph
(2) on—
‘‘(i) the removal of a taxable fuel from
any refinery,
‘‘(ii) the removal of a taxable fuel
from any terminal,
‘‘(iii) the entry into the United States
of any taxable fuel for consumption, use,
or warehousing, and
‘‘(iv) the sale of a taxable fuel to any
person who is not registered under section
4101 unless there was a prior taxable re-
moval or entry of such fuel under clause
(i), (ii), or (iii).
‘‘(B) EXEMPTION FOR BULK TRANSFERS
TO REGISTERED TERMINALS.—The tax imposed
by this paragraph shall not apply to any re-
moval or entry of a taxable fuel transferred in
690
bulk to a terminal if the person removing or en-
tering the taxable fuel and the operator of such
terminal are registered under section 4101.
‘‘(2) RATES OF TAX.—
‘‘(A) IN GENERAL.—The rate of the tax
imposed by this section is the sum of—
‘‘(i) the Highway Trust Fund financ-
ing rate,
‘‘(ii) the Leaking Underground Stor-
age Tank Trust Fund financing rate, and
‘‘(iii) the deficit reduction rate.
‘‘(B) RATES.—For purposes of subpara-
graph (A)—
‘‘(i) the Highway Trust Fund financ-
ing rate is—
‘‘(I) 11.5 cents per gallon in the
case of gasoline, and
‘‘(II) 17.5 cents per gallon in the
case of diesel fuel,
‘‘(ii) the Leaking Underground Stor-
age Tank Trust Fund financing rate is 0.1
cent per gallon, and
‘‘(iii) the deficit reduction rate is 2.5
cents per gallon.
691
‘‘(b) TREATMENT
OF REMOVAL
OR SUBSEQUENT
SALE BY BLENDER.—
‘‘(1) IN GENERAL.—There is hereby imposed a
tax at the rate specified in subsection (a) on taxable
fuel removed or sold by the blender thereof.
‘‘(2) CREDIT FOR TAX PREVIOUSLY PAID.—If—
‘‘(A) tax is imposed on the removal or sale
of a taxable fuel by reason of paragraph (1),
and
‘‘(B) the blender establishes the amount of
the tax paid with respect to such fuel by reason
of subsection (a),
the amount of the tax so paid shall be allowed as a
credit against the tax imposed by reason of para-
graph (1).
‘‘(c) TAXABLE FUELS MIXED WITH ALCOHOL AT
REFINERY, ETC.—
‘‘(1) REDUCED RATES.—
‘‘(A) IN
GENERAL.—Under regulations
prescribed by the Secretary, subsection (a) shall
be applied by substituting rates which are the
applicable fraction of the otherwise applicable
rates in the case of the removal or entry of any
taxable fuel for use in producing at the time of
such removal or entry a qualified alcohol mix-
692
ture. Subject to such terms and conditions as
the Secretary may prescribe (including the ap-
plication of section 4101), the treatment under
the preceding sentence also shall apply to use in
producing such a mixture after the time of such
removal or entry.
‘‘(B) APPLICABLE
FRACTION.—For pur-
poses of subparagraph (A), the applicable frac-
tion is—
‘‘(i) in the case of a qualified alcohol
mixture which contains gasoline, the frac-
tion the numerator of which is 10 and the
denominator of which is—
‘‘(I) 9 in the case of 10 percent
gasohol,
‘‘(II) 9.23 in the case of 7.7 per-
cent gasohol, and
‘‘(II) 9.43 in the case of 5.7 per-
cent gasohol, and
‘‘(ii) in the case of a qualified alcohol
mixture which does not contain gasoline,
10⁄9.
‘‘(2) LATER
SEPARATION
OF
FUEL
FROM
QUALIFIED ALCOHOL MIXTURE.—If any person sep-
arates the taxable fuel from a qualified alcohol mix-
693
ture on which tax was imposed under subsection (a)
at the otherwise applicable Highway Trust Fund fi-
nancing rate (or its equivalent) by reason of this
subsection (or with respect to which a credit or pay-
ment was allowed or made by reason of section
6427(f)(1)), such person shall be treated as the re-
finer of such taxable fuel. The amount of tax im-
posed on any removal of such fuel by such person
shall be reduced by the amount of tax imposed (and
not credited or refunded) on any prior removal or
entry of such fuel.
‘‘(3) ALCOHOL; 
QUALIFIED
ALCOHOL
MIX-
TURE.—For purposes of this subsection—
‘‘(A) ALCOHOL.—The term ‘alcohol’ in-
cludes methanol and ethanol but does not in-
clude alcohol produced from petroleum, natural
gas, or coal (including peat). Such term does
not include alcohol with a proof of less than
190 (determined without regard to any added
denaturants).
‘‘(B) QUALIFIED
ALCOHOL
MIXTURE.—
The term ‘qualified alcohol mixture’ means—
‘‘(i) any mixture of gasoline with alco-
hol if at least 5.7 percent of such mixture
is alcohol, and
694
‘‘(ii) any mixture of diesel fuel with
alcohol if at least 10 percent of such mix-
ture is alcohol.
‘‘(4) OTHERWISE APPLICABLE RATES FOR GAS-
OLINE
MIXTURES.—For purposes of this sub-
section—
‘‘(A) IN
GENERAL.—In the case of the
Highway Trust Fund financing rate, the other-
wise applicable rate for gasoline in a qualified
alcohol mixture is—
‘‘(i) 6.1 cents a gallon for 10 percent
gasohol,
‘‘(ii) 7.342 cents a gallon for 7.7 per-
cent gasohol, and
‘‘(iii) 8.422 cents a gallon for 5.7 per-
cent gasohol.
In the case of a mixture none of the alcohol in
which consists of ethanol, clauses (i), (ii), and
(iii) shall be applied by substituting ‘5.5 cents’
for ‘6.1 cents’, ‘6.88 cents’ for ‘7.342 cents’,
and ‘8.08 cents’ for ‘8.422 cents’.
‘‘(B) 10 PERCENT
GASOHOL.—The term
‘10 percent gasohol’ means any mixture of gas-
oline with alcohol if at least 10 percent of such
mixture is alcohol.
695
‘‘(C) 7.7 PERCENT GASOHOL.—The term
‘7.7 percent gasohol’ means any mixture of gas-
oline with alcohol if at least 7.7 percent, but
not 10 percent or more, of such mixture is alco-
hol.
‘‘(D) 5.7 PERCENT GASOHOL.—The term
‘5.7 percent gasohol’ means any mixture of gas-
oline with alcohol if at least 5.7 percent, but
not 7.7 percent or more, of such mixture is al-
cohol.
‘‘(5) OTHERWISE APPLICABLE RATES FOR DIE-
SEL FUEL MIXTURES.—For purposes of this sub-
section, in the case of the Highway Trust Fund fi-
nancing rate, the otherwise applicable rate for diesel
fuel in a qualified alcohol mixture is 12.1 cents per
gallon (11.5 cents per gallon in the case of a quali-
fied alcohol mixture none of the alcohol in which
consists of ethanol).
‘‘(6) TERMINATION.—Paragraph (1) shall not
apply to any removal or sale after September 30,
2000.
‘‘(d) TERMINATION.—
‘‘(1) 
HIGHWAY
TRUST
FUND
FINANCING
RATE.—On and after October 1, 1999, the Highway
696
Trust Fund financing rate under subsection (a)(2)
shall not apply.
‘‘(2) LEAKING UNDERGROUND STORAGE TANK
TRUST FUND FINANCING RATE.—The Leaking Un-
derground Storage Tank Trust Fund financing rate
under subsection (a)(2) shall not apply after Decem-
ber 31, 1995.
‘‘(3) DEFICIT REDUCTION RATE.—On and after
October 1, 1995, the deficit reduction rate under
subsection (a)(2) shall not apply.
‘‘(e) REFUNDS IN CERTAIN CASES.—Under regula-
tions prescribed by the Secretary, if any person who paid
the tax imposed by this section with respect to any taxable
fuel establishes to the satisfaction of the Secretary that
a prior tax was paid (and not credited or refunded) with
respect to such taxable fuel, then an amount equal to the
tax paid by such person shall be allowed as a refund (with-
out interest) to such person in the same manner as if it
were an overpayment of tax imposed by this section.
‘‘SEC. 4082. EXEMPTIONS FOR DIESEL FUEL.
‘‘(a) IN GENERAL.—The tax imposed by section 4081
shall not apply to diesel fuel—
‘‘(1) which the Secretary determines is destined
for a nontaxable use,
697
‘‘(2) which is indelibly dyed in accordance with
regulations which the Secretary shall prescribe, and
‘‘(3) which meets such marking requirements
(if any) as may be prescribed by the Secretary in
regulations.
‘‘(b) NONTAXABLE USE.—For purposes of this sec-
tion, the term ‘nontaxable use’ means—
‘‘(1) any use which is exempt from the tax im-
posed by section 4041(a)(1) other than by reason of
the imposition of tax on any sale thereof,
‘‘(2) any use in a train, and
‘‘(3) any use described in section 6427(b)(1).
‘‘(c) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary to carry out this
section, including regulations requiring the conspicuous la-
beling of retail diesel fuel pumps and other delivery facili-
ties to assure that persons are aware of which fuel is avail-
able only for nontaxable uses.
‘‘(d) CROSS REFERENCE.—
‘‘For tax on train, motorboat, and certain bus uses
of fuel purchased tax-free, see section 4041(a)(1).
‘‘SEC. 4083. DEFINITIONS AND SPECIAL RULE.
‘‘(a) TAXABLE FUEL.—For purposes of this sub-
part—
‘‘(1) IN
GENERAL.—The term ‘taxable fuel’
means—
698
‘‘(A) gasoline, and
‘‘(B) diesel fuel.
‘‘(2) GASOLINE.—The term ‘gasoline’ includes,
to the extent prescribed in regulations—
‘‘(A) gasoline blend stocks, and
‘‘(B) products commonly used as additives
in gasoline.
For purposes of subparagraph (A), the term ‘gaso-
line blend stock’ means any petroleum product com-
ponent of gasoline.
‘‘(3) DIESEL
FUEL.—The term ‘diesel fuel’
means any liquid (other than gasoline) which is suit-
able for use as a fuel in a diesel-powered highway
vehicle, a diesel-powered train, or a diesel-powered
boat.
‘‘(b) CERTAIN USES DEFINED AS REMOVAL.—If any
person uses taxable fuel (other than in the production of
gasoline, diesel fuel, or special fuels referred to in section
4041), such use shall for the purposes of this chapter be
considered a removal.
699
‘‘SEC. 4084. CROSS REFERENCES.
‘‘(1) For provisions to relieve farmers from excise
tax in the case of gasoline used on the farm for
farming purposes, see section 6420.
‘‘(2) For provisions to relieve purchasers of gaso-
line from excise tax in the case of gasoline used for
certain nonhighway purposes, used by local transit
systems, or sold for certain exempt purposes, see
section 6421.
‘‘(3) For provisions to relieve purchasers from ex-
cise tax in the case of taxable fuel not used for tax-
able purposes, see section 6427.
‘‘Subpart B—Aviation Fuel
‘‘Sec. 4091. Imposition of tax.
‘‘Sec. 4092. Exemptions.
‘‘Sec. 4093. Definitions.
‘‘SEC. 4091. IMPOSITION OF TAX.
‘‘(a) IN GENERAL.—There is hereby imposed a tax
on the sale of aviation fuel by the producer or the importer
thereof or by any producer of aviation fuel.
‘‘(b) RATE OF TAX.—
‘‘(1) IN GENERAL.—The rate of the tax im-
posed by subsection (a) shall be the sum of—
‘‘(A) the Airport and Airway Trust Fund
financing rate, and
‘‘(B) the Leaking Underground Storage
Tank Trust Fund financing rate.
‘‘(2) AIRPORT AND AIRWAY TRUST FUND FI-
NANCING
RATE.—For purposes of paragraph (1),
the Airport and Airway Trust Fund financing rate
is 17.5 cents per gallon.
700
‘‘(3) LEAKING UNDERGROUND STORAGE TANK
TRUST
FUND
FINANCING
RATE.—For purposes of
paragraph (1), the Leaking Underground Storage
Tank Trust Fund financing rate is 0.1 cent per gal-
lon.
‘‘(4) TERMINATION OF RATES.—
‘‘(A) The Airport and Airway Trust Fund
financing rate shall not apply on and after Jan-
uary 1, 1996.
‘‘(B) The Leaking Underground Storage
Tank Fund financing rate shall not apply dur-
ing any period during which the Leaking Un-
derground Storage Tank Trust Fund financing
rate under section 4081 does not apply.
‘‘(c) REDUCED RATE OF TAX FOR AVIATION FUEL
IN ALCOHOL MIXTURE, ETC.—
‘‘(1) IN
GENERAL.—The Airport and Airway
Trust Fund financing rate shall be—
‘‘(A) 4.1 cents per gallon in the case of the
sale of any mixture of aviation fuel if—
‘‘(i) at least 10 percent of such mix-
ture consists of alcohol (as defined in sec-
tion 4081(c)(3)), and
701
‘‘(ii) the aviation fuel in such mixture
was not taxed under subparagraph (B),
and
‘‘(B) 4.56 cents per gallon in the case of
the sale of aviation fuel for use (at the time of
such sale) in producing a mixture described in
subparagraph (A).
In the case of a sale described in subparagraph (B),
the Leaking Underground Storage Tank Trust Fund
financing rate shall be 1⁄9 cent per gallon.
‘‘(2) LATER SEPARATION.—If any person sepa-
rates the aviation fuel from a mixture of the aviation
fuel and alcohol on which tax was imposed under
subsection (a) at the Airport and Airway Trust
Fund financing rate equivalent to 4.1 cents per gal-
lon by reason of this subsection (or with respect to
which a credit or payment was allowed or made by
reason of section 6427(f)(1)), such person shall be
treated as the producer of such aviation fuel. The
amount of tax imposed on any sale of such aviation
fuel by such person shall be reduced by the amount
of tax imposed (and not credited or refunded) on
any prior sale of such fuel.
‘‘(3) TERMINATION.—Paragraph (1) shall not
apply to any sale after September 30, 2000.
702
‘‘(d) LOWER RATES OF TAX ON ALCOHOL MIXTURES
NOT MADE FROM ETHANOL.—In the case of a mixture
described in subsection (c)(1)(A)(i) none of the alcohol in
which is ethanol—
‘‘(1) subsections (c)(1)(A) and (c)(2) shall each
be applied by substituting rates which are 0.6 cents
less than the rates contained therein, and
‘‘(2) subsection (c)(1)(B) shall be applied by
substituting rates which are 10⁄9 of the rates deter-
mined under paragraph (1).
‘‘SEC. 4092. EXEMPTIONS.
‘‘(a) NONTAXABLE USES.—The Airport and Airway
Trust Fund financing rate under section 4091 shall not
apply to aviation fuel sold by a producer or importer for
use by the purchaser in a nontaxable use (as defined in
section 6427(l)(2)(B)).
‘‘(b) SALES TO PRODUCER.—Under regulations pre-
scribed by the Secretary, the tax imposed by section 4091
shall not apply to aviation fuel sold to a producer of such
fuel.
‘‘(c) SUPPLIES
FOR VESSELS
AND AIRCRAFT.—
Under regulations prescribed by the Secretary, the Leak-
ing Underground Storage Tank Trust Fund financing rate
under section 4091 shall not apply to aviation fuel sold
703
for use or used as supplies for vessels or aircraft (within
the meaning of section 4221(d)(3)).
‘‘SEC. 4093. DEFINITIONS.
‘‘(a) AVIATION FUEL.—For purposes of this subpart,
the term ‘aviation fuel’ means any liquid (other than any
product taxable under section 4081) which is suitable for
use as a fuel in an aircraft.
‘‘(b) PRODUCER.—For purposes of this subpart—
‘‘(1) CERTAIN PERSONS TREATED AS PRODUC-
ERS.—
‘‘(A) IN GENERAL.—The term ‘producer’
includes any person described in subparagraph
(B) and registered under section 4101 with re-
spect to the tax imposed by section 4091.
‘‘(B) PERSONS DESCRIBED.—A person is
described in this subparagraph if such person
is—
‘‘(i) a refiner, blender, or wholesale
distributor of aviation fuel, or
‘‘(ii) a dealer selling aviation fuel ex-
clusively to producers of aviation fuel.
‘‘(C) REDUCED RATE PURCHASERS TREAT-
ED AS PRODUCERS.—Any person to whom avia-
tion fuel is sold at a reduced rate under this
704
subpart shall be treated as the producer of such
fuel.
‘‘(2) WHOLESALE DISTRIBUTOR.—For purposes
of paragraph (1), the term ‘wholesale distributor’ in-
cludes any person who sells aviation fuel to produc-
ers, retailers, or to users who purchase in bulk quan-
tities and deliver into bulk storage tanks. Such term
does not include any person who (excluding the term
‘wholesale distributor’ from paragraph (1)) is a pro-
ducer or importer.’’
(b) CIVIL PENALTY FOR USING REDUCED-RATE
FUEL FOR TAXABLE USE.—
(1) Paragraph (1) of section 6714(c), as added
by subpart A, is amended by striking ‘‘and’’ at the
end of subparagraph (A), by striking the period at
the end of subparagraph (B) and inserting ‘‘, and’’,
and by adding at the end thereof the following new
subparagraph:
‘‘(C) diesel fuel dyed in accordance with
section 4082.’’
(2) Paragraph (2) of section 6714(b), as added
by subpart A, is amended by striking ‘‘section 4441’’
and inserting ‘‘sections 4081 and 4441’’ and by
striking ‘‘such section’’ and inserting ‘‘such sec-
tions’’.
705
(c) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Subsection (c) of section 40 is amended by
striking ‘‘, section 4081(c), or section 4091(c)’’ and
inserting ‘‘or section 4081(c)’’.
(2) Subsection (a) of section 4101 is amended
by striking ‘‘4081’’ and inserting ‘‘4041(a)(1),
4081,’’.
(3) Section 4102 is amended by striking ‘‘gaso-
line’’ and inserting ‘‘any taxable fuel (as defined in
section 4083)’’.
(4) Paragraph (1) of section 4041(a) is amend-
ed to read as follows:
‘‘(1) TAX
ON
DIESEL
FUEL
IN
CERTAIN
CASES.—
‘‘(A) IN GENERAL.—There is hereby im-
posed a tax on any liquid other than gasoline
(as defined in section 4083)—
‘‘(i) sold by any person to an owner,
lessee, or other operator of a diesel-pow-
ered highway vehicle, a diesel-powered
train, or a diesel-powered boat for use as
a fuel in such vehicle, train, or boat, or
‘‘(ii) used by any person as a fuel in
a diesel-powered highway vehicle, a diesel-
powered train, or a diesel-powered boat un-
706
less there was a taxable sale of such fuel
under clause (i).
‘‘(B) EXEMPTION FOR PREVIOUSLY TAXED
FUEL.—No tax shall be imposed by this para-
graph on the sale or use of diesel fuel if there
was a taxable sale of such fuel under section
4081 and the tax thereon was not credited or
refunded.
‘‘(C) RATE OF TAX.—
‘‘(i) IN GENERAL.—Except as other-
wise provided in this subparagraph, the
rate of the tax imposed by this paragraph
shall be the sum of the Highway Trust
Fund financing rate on diesel fuel and the
deficit reduction rate in effect under sec-
tion 4081 at the time of such sale or use.
‘‘(ii) HIGHWAY RATE NOT TO APPLY
TO TRAINS.—The Highway Trust Fund fi-
nancing rate shall not apply to any sale for
use, or use, of fuel in a train.
‘‘(iii) CERTAIN BUS USES.—If the lim-
itation in section 6427(b)(2)(A) applies to
fuel sold for use or used in an automobile
bus, the Highway Trust Fund financing
707
rate shall be 3 cents per gallon and the
deficit reduction rate shall not apply.’’
(5) Paragraph (2) of section 4041(a) is amend-
ed by striking ‘‘or paragraph (1) of this subsection’’
and by inserting ‘‘on gasoline’’ after ‘‘Highway
Trust Fund financing rate’’.
(6) Paragraph (2) of section 4041(c) is amend-
ed by striking ‘‘any product taxable under section
4081’’ and inserting ‘‘gasoline (as defined in section
4083)’’.
(7) Paragraph (2) of section 4041(d) is amend-
ed—
(A) by striking ‘‘(other than a product tax-
able under section 4081)’’ and inserting ‘‘(other
than gasoline (as defined in section 4083))’’,
and
(B) by striking ‘‘section 4091’’ and insert-
ing ‘‘section 4081’’.
(8) Paragraph (3) of section 4041(d) is amend-
ed by striking ‘‘(other than any product taxable
under section 4081)’’ and inserting ‘‘(other than
gasoline (as defined in section 4083))’’.
(9) Subparagraph (A) of section 4041(k)(1) is
amended by striking ‘‘sections 4081(c) and 4091(c),
708
as the case may be’’ and inserting ‘‘section
4081(c)’’.
(10) Subparagraph (B) of section 4041(m)(1)
is amended by striking ‘‘section 4091(d)(1)’’ and in-
serting ‘‘section 4091(c)(1)’’.
(11) Section 6206 is amended by striking
‘‘4041 or 4091’’ and inserting ‘‘4041, 4081, or
4091’’.
(12) Paragraph (1) of section 6302(f) is
amended by inserting ‘‘on gasoline’’ after ‘‘section
4081’’ and after ‘‘such tax’’.
(13) Paragraph (1) of section 6412(a) is
amended by striking ‘‘gasoline’’ each place it ap-
pears (including the heading) and inserting ‘‘taxable
fuel’’.
(14)(A) 
Subparagraph 
(A) 
of 
section
6416(a)(4) is amended by striking ‘‘product’’ each
place it appears and inserting ‘‘gasoline’’.
(B) Subparagraph (B) of section 6416(a)(4) is
amended by striking all that follows ‘‘substituting’’
and inserting ‘‘ ‘any gasoline taxable under section
4081’ for ‘aviation fuel’ therein).’’
(15) Sections 6420(c)(5) and 6421(e)(1) are
each amended by striking ‘‘section 4082(b)’’ and in-
serting ‘‘section 4083(a)’’.
709
(16) Subsection (b) of section 6427 is amend-
ed—
(A) by striking ‘‘if any fuel’’ in paragraph
(1) and inserting ‘‘if any diesel fuel (as defined
in section 4083(a))’’, and
(B) by striking ‘‘4091’’ each place it ap-
pears and inserting ‘‘4081’’.
(17)(A) Paragraph (1) of section 6427(f) is
amended 
by 
striking 
‘‘4091(c)(1)(A), 
or
4091(d)(1)(A)’’ and inserting ‘‘or 4091(c)(1)(A)’’.
(B) Paragraph (2) of section 6427(f) is amend-
ed to read as follows:
‘‘(2) DEFINITIONS.—For purposes of paragraph
(1)—
‘‘(A) REGULAR TAX RATE.—The term ‘reg-
ular tax rate’ means—
‘‘(i) in the case of gasoline or diesel
fuel, the aggregate rate of tax imposed by
section 4081 determined without regard to
subsection (c) thereof, and
‘‘(ii) in the case of aviation fuel, the
aggregate rate of tax imposed by section
4091 determined without regard to sub-
section (c) thereof.
710
‘‘(B) INCENTIVE
TAX
RATE.—The term
‘incentive tax rate’ means—
‘‘(i) in the case of gasoline or diesel
fuel, the aggregate rate of tax imposed by
section 4081 with respect to fuel described
in subsection (c)(1) thereof, and
‘‘(ii) in the case of aviation fuel, the
aggregate rate of tax imposed by section
4091 with respect to fuel described in sub-
section (c)(1)(B) thereof.’’
(18) Subsection (h) of section 6427 is amended
by striking ‘‘section 4082(b)’’ and inserting ‘‘section
4083(a)(2)’’.
(19) Paragraph (3) of section 6427(i) is amend-
ed—
(A) by striking ‘‘GASOHOL’’ in the heading
and inserting ‘‘ALCOHOL MIXTURE’’, and
(B) by striking ‘‘gasoline used to produce
gasohol (as defined in section 4081(c)(1))’’ in
subparagraph (A) and inserting ‘‘gasoline or
diesel fuel used to produce a qualified alcohol
mixture (as defined in section 4081(c)(3))’’.
(20) The heading of paragraph (4) of section
6427(i) is amended by inserting ‘‘4081 OR’’ before
‘‘4091’’.
711
(21) Subsection (l) of section 6427 is amended
to read as follows:
‘‘(l) NONTAXABLE USES OF DIESEL FUEL AND AVIA-
TION FUEL.—
‘‘(1) IN GENERAL.—Except as provided in sub-
section (k) and in paragraphs (3) and (4) of this
subsection, if—
‘‘(A) any diesel fuel on which tax has been
imposed by section 4081, or
‘‘(B) any aviation fuel on which tax has
been imposed by section 4091,
is used by any person in a nontaxable use, the Sec-
retary shall pay (without interest) to the ultimate
purchaser of such fuel an amount equal to the ag-
gregate amount of tax imposed on such fuel under
section 4081 or 4091, as the case may be.
‘‘(2) NONTAXABLE USE.—For purposes of this
subsection, the term ‘nontaxable use’ means—
‘‘(A) in the case of diesel fuel, any use
which is exempt from the tax imposed by sec-
tion 4041(a)(1) other than by reason of the im-
position of tax on any sale thereof, and
‘‘(B) in the case of aviation fuel, any use
which is exempt from the tax imposed by sec-
712
tion 4041(c)(1) other than by reason of the im-
position of tax on any sale thereof.
‘‘(3) LIMIT ON REFUND OF LEAKING UNDER-
GROUND STORAGE TANK TRUST FUND FINANCING
RATE.—Paragraph (1) shall not apply to so much of
the tax imposed by section 4081 or 4091 as is at-
tributable to the Leaking Underground Storage
Tank Trust Fund financing rate imposed by such
section in the case of—
‘‘(A) fuel used in a diesel-powered train,
and
‘‘(B) fuel used in any aircraft (other than
as supplies for vessels or aircraft, within the
meaning of section 4221(d)(3)).
‘‘(4) NO REFUND OF DEFICIT REDUCTION TAX
ON FUEL USED IN TRAINS.—Fuel used in a diesel-
powered train shall be treated as a nontaxable use
for purposes of this section, except that paragraph
(1) shall not apply to so much of the tax imposed
by section 4081 as is attributable to the deficit re-
duction rate imposed by such section unless such
fuel was used by a State or any political subdivision
thereof.’’
(22) Paragraph (1) of section 9503(b) is
amended—
713
(A) by striking ‘‘gasoline),’’ in subpara-
graph (E) and inserting ‘‘gasoline and diesel
fuel), and’’,
(B) by striking subparagraph (F), and
(C) by redesignating subparagraph (G) as
subparagraph (F).
(23)(A) 
Subparagraph 
(B) 
of 
section
9503(b)(4) is amended by striking ‘‘, 4081, and
4091’’ and inserting ‘‘and 4081’’.
(B) Subparagraph (C) of section 9503(b)(4), as
amended by subtitle A, is amended by striking
‘‘4091’’ and inserting ‘‘4081’’.
(24) Subparagraph (D) of section 9503(c)(6) is
amended by striking ‘‘, 4081, and 4091’’ and insert-
ing ‘‘and 4081’’.
(25) Paragraph (2) of section 9503(e) is
amended—
(A) by striking ‘‘, 4081, and 4091’’ and in-
serting ‘‘and 4081’’, and
(B) by striking ‘‘, 4081, or 4091’’ and in-
serting ‘‘or 4081’’.
(26) Subsection (b) of section 9508 is amend-
ed—
(A) by inserting ‘‘and diesel fuel’’ after
‘‘gasoline’’ in paragraph (2),
714
(B) by striking ‘‘diesel fuel and’’ in para-
graph (3), and
(C) by striking ‘‘4091’’ in the last sen-
tence, as added by subtitle A, and inserting
‘‘4081’’.
(27) The table of subparts for part III of sub-
chapter A of chapter 32 is amended by striking the
items relating to subparts A and B and inserting the
following new items:
‘‘Subpart A. Gasoline and diesel fuel.
‘‘Subpart B. Aviation fuel.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect on April 1, 1994.
SEC. 14243. FLOOR STOCKS TAX.
(a) IN GENERAL.—There is hereby imposed a floor
stocks tax on diesel fuel held by any person on April 1,
1994, if—
(1) no tax was imposed on such fuel under sec-
tion 4041(a) or 4091 of the Internal Revenue Code
of 1986 as in effect on the day before the date of
the enactment of this Act, and
(2) tax would have been imposed by section
4081 of such Code, as amended by this Act, on any
prior removal, entry, or sale of such fuel had such
section 4081 applied to all prior removals, entries,
and sales of such fuel.
715
(b) RATE OF TAX.—The rate of the tax imposed by
subsection (a) shall be the amount of tax which would be
imposed under section 4081 of the Internal Revenue Code
of 1986 if there were a taxable sale of such fuel on such
date.
(c) LIABILITY AND PAYMENT OF TAX.—
(1) LIABILITY FOR TAX.—A person holding the
diesel fuel on April 1, 1994, to which the tax im-
posed by this section applies shall be liable for such
tax.
(2) METHOD OF PAYMENT.—The tax imposed
by this section shall be paid in such manner as the
Secretary shall prescribe.
(3) TIME FOR PAYMENT.—The tax imposed by
this section shall be paid on or before January 31,
1995.
(d) DEFINITIONS.—For purposes of this section—
(1) DIESEL FUEL.—The term ‘‘diesel fuel’’ has
the meaning given such term by section 4083(a) of
such Code.
(2) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of the Treasury or his delegate.
(e) EXCEPTIONS.—
(1) PERSONS
ENTITLED
TO
CREDIT
OR
RE-
FUND.—The tax imposed by this section shall not
716
apply to fuel held by any person exclusively for any
use to the extent a credit or refund of the tax im-
posed by section 4081 is allowable for such use.
(2) COMPLIANCE
WITH
DYEING
REQUIRED.—
Paragraph (1) shall not apply to the holder of any
fuel if the holder of such fuel fails to comply with
any requirement imposed by the Secretary with re-
spect to dyeing and marking such fuel.
(f) OTHER LAWS APPLICABLE.—All provisions of
law, including penalties, applicable with respect to the
taxes imposed by section 4081 of such Code shall, insofar
as applicable and not inconsistent with the provisions of
this section, apply with respect to the floor stock taxes
imposed by this section to the same extent as if such taxes
were imposed by such section 4081.
Subpart C—Extension of Motor Fuel Tax Rates;
Increased Deposits Into Highway Trust Fund
SEC. 14244. EXTENSION OF MOTOR FUEL TAX RATES; IN-
CREASED DEPOSITS INTO HIGHWAY TRUST
FUND.
(a) 
IN
GENERAL.—Clause 
(i) 
of 
section
4081(a)(2)(B), as amended by subpart B, is amended—
(1) by striking ‘‘11.5 cents’’ and inserting ‘‘14
cents’’, and
717
(2) by striking ‘‘17.5 cents’’ and inserting ‘‘20
cents’’.
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (A) of section 4081(c)(4), as
so amended, is amended to read as follows:
‘‘(A) IN
GENERAL.—In the case of the
Highway Trust Fund financing rate, the other-
wise applicable rate for gasoline in a qualified
alcohol mixture is—
‘‘(i) 8.6 cents a gallon for 10 percent
gasohol,
‘‘(ii) 9.842 cents a gallon for 7.7 per-
cent gasohol, and
‘‘(iii) 10.922 cents a gallon for 5.7
percent gasohol.
In the case of a mixture none of the alcohol in which
consists of ethanol, clauses (i), (ii), and (iii) shall be
applied by substituting ‘8.0 cents’ for ‘8.6 cents’,
‘9.38 cents’ for ‘9.842 cents’, and ‘10.58 cents’ for
‘10.922’.’’
(2) Paragraph (5) of section 4081(c), as so
amended, is amended—
(A) by striking ‘‘12.1 cents’’ and inserting
‘‘14.6 cents’’, and
718
(B) by striking ‘‘11.5 cents’’ and inserting
‘‘14.0’’.
(3) Subparagraph (A) of section 4041(m)(1) is
amended to read as follows:
‘‘(A) under subsection (a)(2) the Highway
Trust Fund financing shall be 7 cents per gal-
lon, and’’.
(4) Paragraph (4) of section 6427(l), as amend-
ed by subpart B, is amended—
(A) by striking ‘‘the deficit reduction rate’’
and inserting ‘‘2.5 cents per gallon of the High-
way Trust Fund financing rate’’, and
(B) by striking ‘‘DEFICIT
REDUCTION
TAX’’ in the heading and inserting ‘‘PORTION
OF TAX’’.
(5) Subsection (b) of section 9503 is amended
by adding at the end thereof the following new para-
graph:
‘‘(6) RETENTION OF CERTAIN TAXES IN GEN-
ERAL FUND.—
‘‘(A) IN
GENERAL.—There shall not be
taken into account under paragraphs (1) and
(2)—
‘‘(i) the tax imposed by section 4081
on diesel fuel used in any train, and
719
‘‘(ii) so much of the following taxes as
are attributable to 2.5 cents of the High-
way Trust Fund financing rate:
‘‘(I) Motorboat fuel taxes (as de-
fined in subsection (c)(4)(D)).
‘‘(II) Small-engine fuel taxes (as
defined in subsection (c)(5)(B)).
‘‘(III) Nonhighway recreational
fuel taxes (as defined in subsection
(c)(6)(D)).
‘‘(B) TRANSFERS FROM HIGHWAY TRUST
FUND.—For 
purposes 
of 
determining 
the
amount paid from the Highway Trust Fund
under paragraphs (4), (5), and (6) of sub-
section (c), the Highway Trust Fund financing
rates shall be treated as being 2.5 cents less
than the otherwise applicable rates.’’
(c) INCREASE IN DEPOSITS IN MASS TRANSIT AC-
COUNT.—Paragraph (2) of section 9503(e) is amended by
striking ‘‘1.5 cents’’ and inserting ‘‘2 cents’’.
(d) REPEAL OF EXPIRED PROVISIONS.—
(1) Subparagraph (A) of section 4081(a)(2)
(relating to rate of tax), as amended by subpart B,
is amended—
720
(A) by adding ‘‘and’’ at the end of clause
(i),
(B) by striking ‘‘, and’’ at the end of
clause (ii) and inserting a period, and
(C) by striking clause (iii).
(2) Subparagraph (B) of section 4081(a)(2), as
so amended, is amended—
(A) by adding ‘‘and’’ at the end of clause
(i),
(B) by striking ‘‘, and’’ at the end of
clause (ii) and inserting a period, and
(C) by striking clause (iii).
(3) Subsection (d) of section 4081, as so
amended, is amended by striking paragraph (3).
(4) Paragraphs (1) and (2) of section 4041(a)
(as so amended), and paragraph (3) of section
4041(c), are each amended by striking ‘‘the sum of
the Highway Trust Fund financing rate and the die-
sel fuel deficit reduction rate’’ and by inserting ‘‘the
Highway Trust Fund financing rate’’.
(5) Clause (ii) of section 4041(a)(1)(C), as so
amended, is amended—
(A) by striking ‘‘The Highway Trust Fund
financing rate’’ and inserting ‘‘So much of the
721
Highway Trust Fund financing rate as exceeds
2.5 cents per gallon’’, and
(B) by striking ‘‘HIGHWAY RATE’’ in the
heading and inserting ‘‘PORTION OF HIGHWAY
RATE’’.
(6) Clause (iii) of section 4041(a)(1)(C), as so
amended, is amended by striking ‘‘and the deficit re-
duction rate shall not apply’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect October 1, 1995, but the
amendment made by subsection (c) shall apply only to
amounts attributable to taxes imposed on or after such
date.
PART V—COMPLIANCE PROVISIONS
SEC. 14251. REPORTING REQUIRED FOR CERTAIN PAY-
MENTS TO CORPORATIONS.
(a) SECTION 6041.—Section 6041 (relating to infor-
mation at source) is amended by adding at the end thereof
the following new subsection:
‘‘(f) SPECIAL RULES
FOR PAYMENTS
FOR SERV-
ICES.—No payment for the performance of services shall
be exempt from the requirements of this section merely
because it is a payment to a corporation.’’
(b) SECTION 6041A(a).—Subsection (a) of section
6041A is amended by adding at the end thereof the follow-
722
ing new sentence: ‘‘A payment shall not be exempt from
the requirements of this subsection merely because it is
a payment to a corporation.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to payments made after December
31, 1993.
SEC. 14252. MODIFICATIONS TO SUBSTANTIAL UNDER-
STATEMENT AND RETURN-PREPARER PEN-
ALTIES.
(a) REASONABLE BASIS REQUIRED.—
(1) SUBSTANTIAL
UNDERSTATEMENT
PEN-
ALTY.—Clause (ii) of section 6662(d)(2)(B) (relat-
ing to reduction for understatement due to position
of taxpayer or disclosed item) is amended to read as
follows:
‘‘(ii) any item if—
‘‘(I) the relevant facts affecting
the item’s tax treatment are ade-
quately disclosed in the return or in a
statement attached to the return, and
‘‘(II) there is a reasonable basis
for the tax treatment of such item by
the taxpayer.’’
(2) RETURN PREPARER PENALTY.—Paragraph
(3) of section 6694(a) (relating to understatement of
723
taxpayer’s liability by income tax return preparer) is
amended to read as follows:
‘‘(3) the requirements of subclauses (I) and (II)
of section 6662(d)(2)(B)(ii) are not satisfied with
respect to such position,’’.
(b) SPECIAL TAX SHELTER RULE.—Subclause (II)
of section 6662(d)(2)(C)(i) (relating to special rules for
tax shelters) is amended by inserting before the period at
the end thereof the following: ‘‘and the reasonably antici-
pated after-tax benefits from the taxpayer’s investment in
such shelter do not significantly exceed the reasonably an-
ticipated pre-tax economic profit or loss from such invest-
ment’’.
(c) REASONABLE CAUSE EXCEPTION.—Paragraph
(1) of section 6664(c) is revised by striking ‘‘this part’’
and inserting ‘‘section 6662’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to returns the due dates for which
(determined without regard to extensions) are after De-
cember 31, 1993.
SEC. 14253. RETURNS RELATING TO THE CANCELLATION
OF INDEBTEDNESS BY CERTAIN FINANCIAL
ENTITIES.
(a) IN GENERAL.—Subpart B of part III of sub-
chapter A of chapter 61 (relating to information concern-
724
ing transactions with other persons) is amended by adding
at the end thereof the following new section:
‘‘SEC. 6050P. RETURNS RELATING TO THE CANCELLATION
OF INDEBTEDNESS BY CERTAIN FINANCIAL
ENTITIES.
‘‘(a) IN GENERAL.—Any applicable financial entity
which discharges (in whole or in part) the indebtedness
of any person during any calendar year shall make a re-
turn (at such time and in such form as the Secretary may
by regulations prescribe) setting forth—
‘‘(1) the name, address, and TIN of each per-
son whose indebtedness was discharged during such
calendar year,
‘‘(2) the date of the discharge and the amount
of the indebtedness discharged, and
‘‘(3) such other information as the Secretary
may prescribe.
‘‘(b) EXCEPTION.—Subsection (a) shall not apply to
any discharge of less than $600.
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) APPLICABLE
FINANCIAL
ENTITY.—The
term ‘applicable financial entity’ means—
‘‘(A) any financial institution described in
section 581 or 591(a) and any credit union,
725
‘‘(B) the Federal Deposit Insurance Cor-
poration, the Resolution Trust Corporation, and
the National Credit Union Administration, and
any successor or subunit of any of the fore-
going, and
‘‘(C) any other corporation which is a di-
rect or indirect subsidiary of an entity referred
to in subparagraph (A) but only if, by virtue of
being affiliated with such entity, such other cor-
poration is subject to supervision and examina-
tion by a Federal or State agency which regu-
lates entities referred to in subparagraph (A).
‘‘(2) GOVERNMENTAL UNITS.—In the case of
an entity described in paragraph (1)(B), any return
under this section shall be made by the officer or
employee appropriately designated for the purpose of
making such return.
‘‘(d) STATEMENTS TO BE FURNISHED TO PERSONS
WITH RESPECT TO WHOM INFORMATION IS REQUIRED
TO BE FURNISHED.—Every applicable financial entity re-
quired to make a return under subsection (a) shall furnish
to each person whose name is required to be set forth in
such return a written statement showing—
‘‘(1) the name and address of the entity re-
quired to make such return, and
726
‘‘(2) the information required to be shown on
the return with respect to such person.
The written statement required under the preceding sen-
tence shall be furnished to the person on or before Janu-
ary 31 of the year following the calendar year for which
the return under subsection (a) was made.’’
(b) PENALTIES.—
(1) RETURNS.—Subparagraph (B) of section
6724(d)(1) is amended by redesignating clauses
(viii) through (xv) as clauses (ix) through (xvi), re-
spectively, and by inserting after clause (vii) the fol-
lowing new clause:
‘‘(viii) section 6050P (relating to re-
turns relating to the cancellation of indebt-
edness by certain financial entities),’’.
(2) STATEMENTS.—Paragraph (2) of section
6724(d) is amended by redesignating subparagraphs
(P) through (S) as subparagraphs (Q) through (T),
respectively, and by inserting after subparagraph
(O) the following new subparagraph:
‘‘(P) section 6050P(d) (relating to returns
relating to the cancellation of indebtedness by
certain financial entities),’’.
(c) CLERICAL AMENDMENT.—The table of sections
for subpart B of part III of subchapter A of chapter 61
727
is amended by adding at the end thereof the following new
item:
‘‘Sec. 6050P. Returns relating to the cancellation of indebtedness
by certain financial entities.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to discharges of indebtedness after
the date of the enactment of this Act.
PART VI—TREATMENT OF INTANGIBLES
SEC. 14261. AMORTIZATION OF GOODWILL AND CERTAIN
OTHER INTANGIBLES.
(a) GENERAL RULE.—Part VI of subchapter B of
chapter 1 (relating to itemized deductions for individuals
and corporations) is amended by adding at the end thereof
the following new section:
‘‘SEC. 197. AMORTIZATION OF GOODWILL AND CERTAIN
OTHER INTANGIBLES.
‘‘(a) GENERAL RULE.—A taxpayer shall be entitled
to an amortization deduction with respect to any amortiz-
able section 197 intangible. The amount of such deduction
shall be determined by amortizing the adjusted basis (for
purposes of determining gain) of such intangible ratably
over the 14-year period beginning with the month in which
such intangible was acquired.
‘‘(b) NO OTHER DEPRECIATION OR AMORTIZATION
DEDUCTION ALLOWABLE.—Except as provided in sub-
section (a), no depreciation or amortization deduction
728
shall be allowable with respect to any amortizable section
197 intangible.
‘‘(c) AMORTIZABLE SECTION 197 INTANGIBLE.—For
purposes of this section—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this section, the term ‘amortizable section
197 intangible’ means any section 197 intangible—
‘‘(A) which is acquired by the taxpayer
after the date of the enactment of this section,
and
‘‘(B) which is held in connection with the
conduct of a trade or business or an activity de-
scribed in section 212.
‘‘(2) EXCLUSION OF SELF-CREATED INTANGI-
BLES, ETC.—The term ‘amortizable section 197 in-
tangible’ shall not include any section 197 intangi-
ble—
‘‘(A) which is not described in subpara-
graph (D), (E), or (F) of subsection (d)(1), and
‘‘(B) which is created by the taxpayer.
This paragraph shall not apply if the intangible is
created in connection with a transaction (or series of
related transactions) involving the acquisition of as-
sets constituting a trade or business or substantial
portion thereof.
729
‘‘(3) ANTI-CHURNING RULES.—
‘‘For exclusion of intangibles acquired in certain
transactions, see subsection (f)(9).
‘‘(d) SECTION 197 INTANGIBLE.—For purposes of
this section—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this section, the term ‘section 197 intangi-
ble’ means—
‘‘(A) goodwill,
‘‘(B) going concern value,
‘‘(C) any of the following intangible items:
‘‘(i) workforce in place including its
composition and terms and conditions
(contractual or otherwise) of its employ-
ment,
‘‘(ii) business books and records, oper-
ating systems, or any other information
base (including lists or other information
with respect to current or prospective cus-
tomers),
‘‘(iii) any patent, copyright, formula,
process, design, pattern, knowhow, format,
or other similar item,
‘‘(iv) any customer-based intangible,
‘‘(v) any supplier-based intangible,
and
730
‘‘(vi) any other similar item,
‘‘(D) any license, permit, or other right
granted by a governmental unit or an agency or
instrumentality thereof,
‘‘(E) any covenant not to compete (or
other arrangement to the extent such arrange-
ment has substantially the same effect as a cov-
enant not to compete) entered into in connec-
tion with an acquisition (directly or indirectly)
of an interest in a trade or business or substan-
tial portion thereof, and
‘‘(F) any franchise, trademark, or trade
name.
‘‘(2) CUSTOMER-BASED INTANGIBLE.—
‘‘(A) IN GENERAL.—The term ‘customer-
based intangible’ means—
‘‘(i) composition of market,
‘‘(ii) market share, and
‘‘(iii) any other value resulting from
future provision of goods or services pursu-
ant to relationships (contractual or other-
wise) in the ordinary course of business
with customers.
‘‘(B) SPECIAL RULE FOR FINANCIAL INSTI-
TUTIONS.—In the case of a financial institu-
731
tion, the term ‘customer-based intangible’ in-
cludes deposit base and similar items.
‘‘(3) SUPPLIER-BASED INTANGIBLE.—The term
‘supplier-based intangible’ means any value resulting
from future acquisitions of goods or services pursu-
ant to relationships (contractual or otherwise) in the
ordinary course of business with suppliers of goods
or services to be used or sold by the taxpayer.
‘‘(e) EXCEPTIONS.—For purposes of this section, the
term ‘section 197 intangible’ shall not include any of the
following:
‘‘(1) FINANCIAL INTERESTS.—Any interest—
‘‘(A) in a corporation, partnership, trust,
or estate, or
‘‘(B) under an existing futures contract,
foreign currency contract, notional principal
contract, or other similar financial contract.
‘‘(2) LAND.—Any interest in land.
‘‘(3) COMPUTER SOFTWARE.—
‘‘(A) IN GENERAL.—Any—
‘‘(i) computer software which is read-
ily available for purchase by the general
public, is subject to a nonexclusive license,
and has not been substantially modified,
and
732
‘‘(ii) other computer software which is
not acquired in a transaction (or series of
related transactions) involving the acquisi-
tion of assets constituting a trade or busi-
ness or substantial portion thereof.
‘‘(B) COMPUTER
SOFTWARE
DEFINED.—
For purposes of subparagraph (A), the term
‘computer software’ means any program de-
signed to cause a computer to perform a de-
sired function. Such term shall not include any
data base or similar item unless the data base
or item is in the public domain and is incidental
to the operation of otherwise qualifying com-
puter software.
‘‘(4) CERTAIN
INTERESTS
OR
RIGHTS
AC-
QUIRED SEPARATELY.—Any of the following not ac-
quired in a transaction (or series of related trans-
actions) involving the acquisition of assets constitut-
ing a trade business or substantial portion thereof:
‘‘(A) Any interest in a film, sound record-
ing, video tape, book, or similar property.
‘‘(B) Any right to receive tangible property
or services under a contract or granted by a
governmental unit or agency or instrumentality
thereof.
733
‘‘(C) Any interest in a patent or copyright.
‘‘(D) To the extent provided in regulations,
any right under a contract (or granted by a
governmental unit or an agency or instrumen-
tality thereof) if such right—
‘‘(i) has a fixed duration of less than
14 years, or
‘‘(ii) is fixed as to amount and, with-
out regard to this section, would be recov-
erable under a method similar to the unit-
of-production method.
‘‘(5) INTERESTS UNDER LEASES AND DEBT IN-
STRUMENTS.—Any interest under—
‘‘(A) an existing lease of tangible property,
or
‘‘(B) except as provided in subsection
(d)(2)(B), any existing indebtedness.
‘‘(6) TREATMENT OF SPORTS FRANCHISES.—A
franchise to engage in professional football, basket-
ball, baseball, or other professional sport, and any
item acquired in connection with such a franchise.
‘‘(7) CERTAIN TRANSACTION COSTS.—Any fees
for professional services, and any transaction costs,
incurred by parties to a transaction with respect to
734
which any portion of the gain or loss is not recog-
nized under part III of subchapter C.
‘‘(f) SPECIAL RULES.—
‘‘(1) TREATMENT OF CERTAIN DISPOSITIONS,
ETC.—If there is a disposition of any amortizable
section 197 intangible acquired in a transaction or
series of related transactions (or any such intangible
becomes worthless) and one or more other amortiz-
able section 197 intangibles acquired in such trans-
action or series of related transactions are re-
tained—
‘‘(A) no loss shall be recognized by reason
of such disposition (or such worthlessness), and
‘‘(B) appropriate adjustments to the ad-
justed bases of such retained intangibles shall
be made for any loss not recognized under sub-
paragraph (A).
All persons treated as a single taxpayer under sec-
tion 41(f)(1) shall be so treated for purposes of the
preceding sentence.
‘‘(2) TREATMENT OF CERTAIN TRANSFERS.—
‘‘(A) IN GENERAL.—In the case of any sec-
tion 197 intangible transferred in a transaction
described in subparagraph (B), the transferee
shall be treated as the transferor for purposes
735
of applying this section with respect to so much
of the adjusted basis in the hands of the trans-
feree as does not exceed the adjusted basis in
the hands of the transferor.
‘‘(B) 
TRANSACTIONS
COVERED.—The
transactions described in this subparagraph
are—
‘‘(i) any transaction described in sec-
tion 332, 351, 361, 721, 731, 1031, or
1033, and
‘‘(ii) any transaction between mem-
bers of the same affiliated group during
any taxable year for which a consolidated
return is made by such group.
‘‘(3) TREATMENT OF AMOUNTS PAID PURSUANT
TO
COVENANTS
NOT
TO
COMPETE, 
ETC.—Any
amount paid or incurred pursuant to a covenant or
arrangement referred to in subsection (d)(1)(E)
shall be treated as an amount chargeable to capital
account.
‘‘(4) TREATMENT OF FRANCHISES, ETC.—
‘‘(A) FRANCHISE.—The term ‘franchise’
has the meaning given to such term by section
1253(b)(1).
736
‘‘(B) TREATMENT
OF
RENEWALS.—Any
renewal of a franchise, trademark, or trade
name (or of a license, a permit, or other right
referred to in subsection (d)(1)(D)) shall be
treated as an acquisition. The preceding sen-
tence shall only apply with respect to costs in-
curred in connection with such renewal.
‘‘(C) CERTAIN AMOUNTS NOT TAKEN INTO
ACCOUNT.—Any amount to which section
1253(d)(1) applies shall not be taken into ac-
count under this section.
‘‘(5) TREATMENT
OF
CERTAIN
REINSURANCE
TRANSACTIONS.—In the case of any amortizable sec-
tion 197 intangible resulting from an assumption re-
insurance transaction, the amount taken into ac-
count as the adjusted basis of such intangible under
this section shall be the excess of—
‘‘(A) the amount paid or incurred by the
acquirer under the assumption reinsurance
transaction, over
‘‘(B) the amount required to be capitalized
under section 848 in connection with such
transaction.
Subsection (b) shall not apply to any amount re-
quired to be capitalized under section 848.
737
‘‘(6) TREATMENT OF CERTAIN SUBLEASES.—
For purposes of this section, a sublease shall be
treated in the same manner as a lease of the under-
lying property involved.
‘‘(7) TREATMENT AS DEPRECIABLE.—For pur-
poses of this chapter, any amortizable section 197
intangible shall be treated as property which is of a
character subject to the allowance for depreciation
provided in section 167.
‘‘(8) TREATMENT OF CERTAIN INCREMENTS IN
VALUE.—This section shall not apply to any incre-
ment in value if, without regard to this section, such
increment is properly taken into account in deter-
mining the cost of property which is not a section
197 intangible.
‘‘(9) ANTI-CHURNING RULES.—For purposes of
this section—
‘‘(A) IN GENERAL.—The term ‘amortizable
section 197 intangible’ shall not include any
section 197 intangible which is described in
subparagraph (A) or (B) of subsection (d)(1)
(or for which depreciation or amortization
would not have been allowable but for this sec-
tion) and which is acquired by the taxpayer
738
after the date of the enactment of this section,
if—
‘‘(i) the intangible was held or used at
any time on or after July 25, 1991, and on
or before such date of enactment by the
taxpayer or a related person,
‘‘(ii) the intangible was acquired from
a person who held such intangible at any
time on or after July 25, 1991, and on or
before such date of enactment, and, as
part of the transaction, the user of such
intangible does not change, or
‘‘(iii) the taxpayer grants the right to
use such intangible to a person (or a per-
son related to such person) who held or
used such intangible at any time on or
after July 25, 1991, and on or before such
date of enactment.
For purposes of this subparagraph, the deter-
mination of whether the user of property
changes as part of a transaction shall be deter-
mined in accordance with regulations prescribed
by the Secretary. For purposes of this subpara-
graph, deductions allowable under section
739
1253(d) shall be treated as deductions allowable
for amortization.
‘‘(B) EXCEPTION
WHERE
GAIN
RECOG-
NIZED.—If—
‘‘(i) subparagraph (A) would not
apply to an intangible acquired by the tax-
payer but for the last sentence of subpara-
graph (C)(i), and
‘‘(ii) the person from whom the tax-
payer acquired the intangible elects, not-
withstanding any other provision of this
title—
‘‘(I) to recognize gain on the dis-
position of the intangible, and
‘‘(II) to pay a tax on such gain
which, when added to any other in-
come tax on such gain under this title,
equals such gain multiplied by the
highest rate of income tax applicable
to such person under this title,
then subparagraph (A) shall apply to the
intangible only to the extent that the tax-
payer’s adjusted basis in the intangible ex-
ceeds the gain recognized under clause
(ii)(I).
740
‘‘(C) RELATED
PERSON
DEFINED.—For
purposes of this paragraph—
‘‘(i) RELATED
PERSON.—A person
(hereinafter in this paragraph referred to
as the ‘related person’) is related to any
person if—
‘‘(I) the related person bears a
relationship to such person specified
in section 267(b) or section 707(b)(1),
or
‘‘(II) the related person and such
person are engaged in trades or busi-
nesses under common control (within
the meaning of subparagraphs (A)
and (B) of section 41(f)(1)).
For purposes of subclause (I), in applying
section 267(b) or 707(b)(1), ‘20 percent’
shall be substituted for ‘50 percent’.
‘‘(ii) TIME FOR MAKING DETERMINA-
TION.—A person shall be treated as related
to another person if such relationship ex-
ists immediately before or immediately
after the acquisition of the intangible in-
volved.
741
‘‘(D) 
ACQUISITIONS
BY
REASON
OF
DEATH.—Subparagraph (A) shall not apply to
the acquisition of any property by the taxpayer
if the basis of the property in the hands of the
taxpayer is determined under section 1014(a).
‘‘(E) 
SPECIAL
RULE
FOR
PARTNER-
SHIPS.—With respect to any increase in the
basis of partnership property under section 732,
734, or 743, determinations under this para-
graph shall be made at the partner level and
each partner shall be treated as having owned
and used such partner’s proportionate share of
the partnership assets.
‘‘(F) ANTI-ABUSE RULES.—The term ‘am-
ortizable section 197 intangible’ does not in-
clude any section 197 intangible acquired in a
transaction, one of the principal purposes of
which is to avoid the requirement of subsection
(c)(1) that the intangible be acquired after the
date of the enactment of this section or to avoid
the provisions of subparagraph (A).
‘‘(g) REGULATIONS.—The Secretary shall prescribe
such regulations as may be appropriate to carry out the
purposes of this section, including such regulations as may
742
be appropriate to prevent avoidance of the purposes of this
section through related persons or otherwise.’’
(b) MODIFICATIONS TO DEPRECIATION RULES.—
(1) TREATMENT
OF
CERTAIN
PROPERTY
EX-
CLUDED FROM SECTION 197.—Section 167 (relating
to depreciation deduction) is amended by redesignat-
ing subsection (f) as subsection (g) and by inserting
after subsection (e) the following new subsection:
‘‘(f) TREATMENT OF CERTAIN PROPERTY EXCLUDED
FROM SECTION 197.—
‘‘(1) COMPUTER SOFTWARE.—
‘‘(A) IN GENERAL.—If a depreciation de-
duction is allowable under subsection (a) with
respect to any computer software, such deduc-
tion shall be computed by using the straight
line method and a useful life of 36 months.
‘‘(B) COMPUTER
SOFTWARE.—For pur-
poses of this section, the term ‘computer soft-
ware’ has the meaning given to such term by
section 197(e)(3)(B); except that such term
shall not include any such software which is an
amortizable section 197 intangible.
‘‘(2) CERTAIN
INTERESTS
OR
RIGHTS
AC-
QUIRED SEPARATELY.—If a depreciation deduction
is allowable under subsection (a) with respect to any
743
property described in subparagraph (B), (C), or (D)
of section 197(e)(4), such deduction shall be com-
puted in accordance with regulations prescribed by
the Secretary.’’
(2) ALLOCATION OF BASIS IN CASE OF LEASED
PROPERTY.—Subsection (c) of section 167 is amend-
ed to read as follows:
‘‘(c) BASIS FOR DEPRECIATION.—
‘‘(1) IN GENERAL.—The basis on which exhaus-
tion, wear and tear, and obsolescence are to be al-
lowed in respect of any property shall be the ad-
justed basis provided in section 1011, for the pur-
pose of determining the gain on the sale or other
disposition of such property.
‘‘(2) SPECIAL RULE FOR PROPERTY SUBJECT
TO LEASE.—If any property is acquired subject to a
lease—
‘‘(A) no portion of the adjusted basis shall
be allocated to the leasehold interest, and
‘‘(B) the entire adjusted basis shall be
taken into account in determining the deprecia-
tion deduction (if any) with respect to the prop-
erty subject to the lease.’’
744
(c) AMENDMENTS
TO SECTION 1253.—Subsection
(d) of section 1253 is amended by striking paragraphs (2),
(3), (4), and (5) and inserting the following:
‘‘(2) OTHER PAYMENTS.—Any amount paid or
incurred on account of a transfer, sale, or other dis-
position of a franchise, trademark, or trade name to
which paragraph (1) does not apply shall be treated
as an amount chargeable to capital account.
‘‘(3) RENEWALS, ETC.—For purposes of deter-
mining the term of a transfer agreement under this
section, there shall be taken into account all renewal
options (and any other period for which the parties
reasonably expect the agreement to be renewed).’’
(d) AMENDMENT TO SECTION 848.—Subsection (g)
of section 848 is amended by striking ‘‘this section’’ and
inserting ‘‘this section or section 197’’.
(e) AMENDMENTS TO SECTION 1060.—
(1) Paragraph (1) of section 1060(b) is amend-
ed by striking ‘‘goodwill or going concern value’’ and
inserting ‘‘section 197 intangibles’’.
(2) Paragraph (1) of section 1060(d) is amend-
ed by striking ‘‘goodwill or going concern value (or
similar items)’’ and inserting ‘‘section 197 intangi-
bles’’.
(f) TECHNICAL AND CONFORMING AMENDMENTS.—
745
(1) Subsection (g) of section 167 (as redesig-
nated by subsection (b)) is amended to read as fol-
lows:
‘‘(g) CROSS REFERENCES.—
‘‘(1) For additional rule applicable to depreciation
of improvements in the case of mines, oil and gas
wells, other natural deposits, and timber, see sec-
tion 611.
‘‘(2) For amortization of goodwill and certain
other intangibles, see section 197.’’
(2) Subsection (f) of section 642 is amended by
striking ‘‘section 169’’ and inserting ‘‘sections 169
and 197’’.
(3) Subsection (a) of section 1016 is amended
by striking paragraph (19) and by redesignating the
following paragraphs accordingly.
(4) Subparagraph (C) of section 1245(a)(2) is
amended by striking ‘‘193, or 1253(d) (2) or (3)’’
and inserting ‘‘or 193’’.
(5) Paragraph (3) of section 1245(a) is amend-
ed by striking ‘‘section 185 or 1253(d) (2) or (3)’’.
(6) The table of sections for part VI of sub-
chapter B of chapter 1 is amended by adding at the
end thereof the following new item:
‘‘Sec. 197. Amortization of goodwill and certain other intangi-
bles.’’
(g) EFFECTIVE DATE.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by
746
this section shall apply with respect to property ac-
quired after the date of the enactment of this Act.
(2) ELECTION TO HAVE AMENDMENTS APPLY
TO PROPERTY ACQUIRED AFTER JULY 25, 1991.—
(A) IN
GENERAL.—If an election under
this paragraph applies to the taxpayer—
(i) the amendments made by this sec-
tion shall apply to property acquired by the
taxpayer after July 25, 1991,
(ii) subsection (c)(1)(A) of section
197 of the Internal Revenue Code of 1986
(as added by this section) (and so much of
subsection (f)(9)(A) of such section 197 as
precedes clause (i) thereof) shall be applied
with respect to the taxpayer by treating
July 25, 1991, as the date of the enact-
ment of such section, and
(iii) in applying subsection (f)(9) of
such section, with respect to any property
acquired by the taxpayer on or before the
date of the enactment of this Act, only
holding or use on July 25, 1991, shall be
taken into account.
(B) ELECTION.—An election under this
paragraph shall be made at such time and in
747
such manner as the Secretary of the Treasury
or his delegate may prescribe. Such an election
by any taxpayer, once made—
(i) may be revoked only with the con-
sent of the Secretary, and
(ii) shall apply to the taxpayer making
such election and any other taxpayer under
common control with the taxpayer (within
the meaning of subparagraphs (A) and (B)
of section 41(f)(1) of such Code) at any
time after November 22, 1991, and on or
before the date on which such election is
made.
(3) ELECTIVE
BINDING
CONTRACT
EXCEP-
TION.—
(A) IN GENERAL.—The amendments made
by this section shall not apply to any acquisi-
tion of property by the taxpayer if—
(i) such acquisition is pursuant to a
written binding contract in effect on the
date of the enactment of this Act and at
all times thereafter before such acquisition,
(ii) an election under paragraph (2)
does not apply to the taxpayer, and
748
(iii) the taxpayer makes an election
under this paragraph with respect to such
contract.
(B) ELECTION.—An election under this
paragraph shall be made at such time and in
such manner as the Secretary of the Treasury
or his delegate shall prescribe. Such an election,
once made—
(i) may be revoked only with the con-
sent of the Secretary, and
(ii) shall apply to all property ac-
quired pursuant to the contract with re-
spect to which such election was made.
(h) ANNUAL REPORTS.—The Secretary of the Treas-
ury shall submit annual reports to the Committee on Ways
and Means of the House of Representatives and the Com-
mittee on Finance of the Senate on the implementation
and effects of the amendments made by this section, in-
cluding the effects of such amendments on merger and
acquisition activities. The first such annual report shall
be submitted on or before December 31, 1994.
(i) ANNUAL REPORTS ON OUTSTANDING CASES.—
The Secretary of the Treasury shall submit annual reports
to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the
749
Senate regarding the volume of cases still outstanding that
involve disputes regarding the amortization of intangibles,
progress made in resolving such cases, efforts made to co-
ordinate settlement proceedings, and factors inhibiting the
resolution of such cases. The report shall also address the
impact of the amendments made by this section on the
volume of disputes regarding the amortization of intangi-
bles. The first such annual report shall be submitted on
or before December 31, 1994.
SEC. 14262. TREATMENT OF CERTAIN PAYMENTS TO RE-
TIRED OR DECEASED PARTNER.
(a) SECTION 736(b) NOT TO APPLY IN CERTAIN
CASES.—Subsection (b) of section 736 (relating to pay-
ments for interest in partnership) is amended by adding
at the end thereof the following new paragraph:
‘‘(3) LIMITATION
ON
APPLICATION
OF
PARA-
GRAPH (2).—Paragraph (2) shall apply only if—
‘‘(A) capital is not a material income-pro-
ducing factor for the partnership, and
‘‘(B) the retiring or deceased partner was
a general partner in the partnership.’’
(b) LIMITATION ON DEFINITION OF UNREALIZED
RECEIVABLES.—
(1) IN
GENERAL.—Subsection (c) of section
751 (defining unrealized receivables) is amended—
750
(A) by striking ‘‘sections 731, 736, and
741’’ each place they appear and inserting ‘‘,
sections 731 and 741 (but not for purposes of
section 736)’’, and
(B) by striking ‘‘section 731, 736, or 741’’
each place it appears and inserting ‘‘section
731 or 741’’.
(2) TECHNICAL AMENDMENTS.—
(A) Subsection (e) of section 751 is
amended by striking ‘‘sections 731, 736, and
741’’ and inserting ‘‘sections 731 and 741’’.
(B) Section 736 is amended by striking
subsection (c).
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply in the case of partners retir-
ing or dying on or after January 5, 1993.
(2) 
BINDING
CONTRACT
EXCEPTION.—The
amendments made by this section shall not apply to
any partner retiring on or after January 5, 1993, if
a written contract to purchase such partner’s inter-
est in the partnership was binding on January 4,
1993, and at all times thereafter before such pur-
chase.
751
PART VII—MISCELLANEOUS PROVISIONS
SEC. 14271. SUBSTANTIATION REQUIREMENT FOR DEDUC-
TION OF CERTAIN CHARITABLE CONTRIBU-
TIONS.
(a) 
SUBSTANTIATION
REQUIREMENT.—Section
170(f) (providing special rules relating to the deduction
of charitable contributions and gifts) is amended by add-
ing at the end the following new paragraph:
‘‘(8) SUBSTANTIATION REQUIREMENT FOR CER-
TAIN CONTRIBUTIONS.—
‘‘(A) GENERAL RULE.—No deduction shall
be allowed under subsection (a) for any con-
tribution of $750 or more unless the taxpayer
substantiates the contribution by a contempora-
neous written acknowledgment of the contribu-
tion by the donee organization that meets the
requirements of subparagraph (B).
‘‘(B) CONTENT OF ACKNOWLEDGMENT.—
An acknowledgment meets the requirements of
this subparagraph if it provides information
sufficient to substantiate the amount of the de-
ductible contribution. If the contribution was
made by means of a payment part of which con-
stituted consideration for goods or services pro-
vided by the donee organization, the acknowl-
752
edgment must provide a good faith estimate of
the value of such goods or services.
‘‘(C) CONTEMPORANEOUS.—For purposes
of subparagraph (A), an acknowledgment shall
be considered to be contemporaneous if the tax-
payer obtains the acknowledgment on or before
the earlier of—
‘‘(i) the date on which the taxpayer
files a return for the taxable year in which
the contribution was made, or
‘‘(ii) the due date (including exten-
sions) for filing such return.
‘‘(D) SUBSTANTIATION
NOT
REQUIRED
FOR
CONTRIBUTIONS
REPORTED
BY
THE
DONEE
ORGANIZATION.—Subparagraph 
(A)
shall not apply to a contribution if the donee
organization files a return, on such form and in
accordance with such regulations as the Sec-
retary may prescribe, which includes the infor-
mation described in subparagraph (B) with re-
spect to the contribution.
‘‘(E) REGULATIONS.—The Secretary shall
prescribe such regulations as may be necessary
or appropriate to carry out the purposes of this
paragraph, including regulations that may pro-
753
vide that some or all of the requirements of this
paragraph do not apply in appropriate cases.’’
(b) EFFECTIVE DATE.—The provisions of this sec-
tion shall apply to contributions made on or after January
1, 1994.
SEC. 14272. DISCLOSURE RELATED TO QUID PRO QUO
CONTRIBUTIONS.
(a) DISCLOSURE REQUIREMENT.—Subchapter B of
chapter 61 (relating to information and returns) is amend-
ed by redesignating section 6115 as section 6116 and by
inserting after section 6114 the following new section:
‘‘SEC. 6115. DISCLOSURE RELATED TO QUID PRO QUO CON-
TRIBUTIONS.
‘‘(a) DISCLOSURE REQUIREMENT.—If an organiza-
tion described in section 170(c) (other than paragraph (1)
thereof) receives a quid pro quo contribution, the organi-
zation shall, in connection with the solicitation or receipt
of the contribution—
‘‘(1) inform the donor that the amount of the
contribution that is deductible for Federal income
tax purposes is limited to the excess of the amount
of any money and the value of any property other
than money contributed by the donor over the value
of the goods or services provided by the organiza-
tion, and
754
‘‘(2) provide the donor with a good faith esti-
mate of the value of such goods or services.
‘‘(b) QUID PRO QUO CONTRIBUTION.—For purposes
of this section, the term ‘quid pro quo contribution’ means
a payment made partly as a contribution and partly in
consideration for goods or services provided to the payor
by the donee organization.’’
(b) PENALTY FOR FAILURE TO DISCLOSE.—Part I
of subchapter B of chapter 68 (relating to assessable pen-
alties) is amended by inserting after section 6713 the fol-
lowing new section:
‘‘SEC. 6714. FAILURE TO MEET DISCLOSURE REQUIRE-
MENTS APPLICABLE TO QUID PRO QUO CON-
TRIBUTIONS.
‘‘(a) IMPOSITION OF PENALTY.—If an organization
fails to meet the disclosure requirement of section 6115
with respect to a quid pro quo contribution, such organiza-
tion shall pay a penalty of $10 for each contribution in
respect of which the organization fails to make the re-
quired disclosure, except that the total penalty imposed
by this subsection with respect to a particular fundraising
event or mailing shall not exceed $5,000.
‘‘(b) REASONABLE CAUSE EXCEPTION.—No penalty
shall be imposed under this section with respect to any
755
failure if it is shown that such failure is due to reasonable
cause.’’
(c) CLERICAL AMENDMENTS.—
(1) The table for subchapter B of chapter 61
is amended by striking the item relating to section
6115 and inserting the following new item:
‘‘Sec. 6115. Disclosure related to quid pro quo contributions.
‘‘Sec. 6116. Cross reference.’’
(2) The table for part I of subchapter B of
chapter 68 is amended by inserting after the item
for section 6713 the following new item:
‘‘Sec. 6714. Failure to meet disclosure requirements applicable to
quid pro quo contributions.’’
(d) EFFECTIVE DATE.—The provisions of this sec-
tion shall apply to quid pro quo contributions made on
or after January 1, 1994.
SEC. 14273. DISALLOWANCE OF INTEREST ON CERTAIN
OVERPAYMENTS OF TAX.
(a) GENERAL RULE.—Subsection (e) of section 6611
is amended to read as follows:
‘‘(e) DISALLOWANCE
OF INTEREST
ON CERTAIN
OVERPAYMENTS.—
‘‘(1) REFUNDS WITHIN 45 DAYS AFTER RETURN
IS FILED.—If any overpayment of tax imposed by
this title is refunded within 45 days after the last
day prescribed for filing the return of such tax (de-
termined without regard to any extension of time for
756
filing the return) or, in the case of a return filed
after such last date, is refunded within 45 days after
the date the return is filed, no interest shall be al-
lowed under subsection (a) on such overpayment.
‘‘(2) REFUNDS AFTER CLAIM FOR CREDIT OR
REFUND.—If—
‘‘(A) the taxpayer files a claim for a credit
or refund for any overpayment of tax imposed
by this title, and
‘‘(B) such overpayment is refunded within
45 days after such claim is filed,
no interest shall be allowed on such overpayment
from the date the claim is filed until the day the re-
fund is made.
‘‘(3) IRS INITIATED ADJUSTMENTS.—If an ad-
justment initiated by the Secretary, results in a re-
fund or credit of an overpayment, interest on such
overpayment shall be computed by subtracting 45
days from the number of days interest would other-
wise be allowed with respect to such overpayment.’’
(b) EFFECTIVE DATES.—
(1) Paragraph (1) of section 6611(e) of the In-
ternal Revenue Code of 1986 (as amended by sub-
section (a)) shall apply in the case of returns the
757
due date for which (determined without regard to
extensions) is on or after January 1, 1994.
(2) Paragraph (2) of section 6611(e) of such
Code (as so amended) shall apply in the case of
claims for credit or refund of any overpayment filed
on or after January 1, 1995, regardless of the tax-
able period to which such refund relates.
(3) Paragraph (3) of section 6611(e) of such
Code (as so amended) shall apply in the case of any
refund paid on or after January 1, 1995, regardless
of the taxable period to which such refund relates.
SEC. 14274. DENIAL OF DEDUCTION RELATING TO TRAVEL
EXPENSES.
(a) IN GENERAL.—Section 274(m) (relating to addi-
tional limitations on travel expenses) is amended by add-
ing at the end thereof the following new paragraph:
‘‘(3) TRAVEL EXPENSES OF SPOUSE, DEPEND-
ENT, OR OTHERS.—No deduction shall be allowed
under this chapter (other than section 217) for trav-
el expenses paid or incurred with respect to a
spouse, dependent, or other individual accompanying
the taxpayer (or an officer or employee of the tax-
payer) on business travel, unless—
‘‘(A) the spouse, dependent, or other indi-
vidual is an employee of the taxpayer,
758
‘‘(B) the travel of the spouse, dependent,
or other individual is for a bona fide business
purpose, and
‘‘(C) such expenses would otherwise be de-
ductible by the spouse, dependent, or other indi-
vidual.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to amounts paid or incurred after
December 31, 1993.
SEC. 14275. INCREASE IN WITHHOLDING FROM SUPPLE-
MENTAL WAGE PAYMENTS.
If an employer elects under Treasury Regulation
31.3402 (g)–1 to determine the amount to be deducted
and withheld from any supplemental wage payment by
using a flat percentage rate, the rate to be used in deter-
mining the amount to be so deducted and withheld shall
not be less than 28 percent. The preceding sentence shall
apply to payments made after December 31, 1993.
759
Subtitle C—Empowerment Zones
and Enterprise Communities, Etc.
PART I—EMPOWERMENT ZONES AND
ENTERPRISE COMMUNITIES
SEC. 
14301. 
DESIGNATION 
AND 
TREATMENT 
OF
EMPOWERMENT 
ZONES 
AND 
ENTERPRISE
COMMUNITIES.
(a) IN GENERAL.—Chapter 1 (relating to normal
taxes and surtaxes) is amended by inserting after sub-
chapter T the following new subchapter:
‘‘Subchapter U—Designation and Treatment
of Empowerment Zones and Enterprise
Communities
‘‘Part I. Designation.
‘‘Part II. Incentives for empowerment zones and enterprise com-
munities.
‘‘Part III. Additional incentives for empowerment zones.
‘‘Part IV. Regulations.
‘‘PART I—DESIGNATION
‘‘Sec. 1391. Designation procedure.
‘‘Sec. 1392. Eligibility criteria.
‘‘Sec. 1393. Definitions and special rules.
‘‘SEC. 1391. DESIGNATION PROCEDURE.
‘‘(a) IN GENERAL.—From among the areas nomi-
nated for designation under this section, the appropriate
Secretaries may, in consultation with the Enterprise
Board, designate empowerment zones and enterprise com-
munities.
‘‘(b) NUMBER OF DESIGNATIONS.—
760
‘‘(1) ENTERPRISE COMMUNITIES.—The appro-
priate Secretaries may designate in the aggregate
100 nominated areas as enterprise communities
under this section, subject to the availability of eligi-
ble nominated areas. Of that number, not more than
65 may be designated in urban areas, not more than
30 may be designated in rural areas, and not more
than 5 may be designated by the Secretary of the
Interior in Indian reservations.
‘‘(2) EMPOWERMENT ZONES.—The appropriate
Secretaries may designate in the aggregate 10 nomi-
nated areas as empowerment zones under this sec-
tion, subject to the availability of eligible nominated
areas. Of that number, not more than 6 may be des-
ignated in urban areas, not more than 3 may be des-
ignated in rural areas, and not more than 1 may be
designated by the Secretary of the Interior in an In-
dian reservation. If 6 empowerment zones are des-
ignated in urban areas, no less than 1 shall be des-
ignated in an urban area the most populous city of
which has a population of 500,000 or less. The Sec-
retary of Housing and Urban Development shall des-
ignate empowerment zones located in urban areas in
such a manner that the aggregate population of all
such zones does not exceed 750,000.
761
‘‘(c) PERIOD DESIGNATIONS MAY BE MADE.—A des-
ignation may be made under this section only after 1993
and before 1996.
‘‘(d) PERIOD FOR WHICH DESIGNATION IS IN EF-
FECT.—
‘‘(1) IN GENERAL.—Any designation under this
section shall remain in effect during the period be-
ginning on the date of the designation and ending
on the earliest of—
‘‘(A) the close of the 10th calendar year
beginning on or after such date of designation,
‘‘(B) the termination date designated by
the State and local governments as provided for
in their nomination, or
‘‘(C) the date the appropriate Secretary re-
vokes the designation.
‘‘(2) REVOCATION OF DESIGNATION.—
‘‘(A) IN GENERAL.—The appropriate Sec-
retary, in consultation with the Enterprise
Board, may revoke the designation under this
section of an area if such Secretary determines
that the local government or the State in which
it is located—
‘‘(i) has modified the boundaries of
the area, or
762
‘‘(ii) is not complying substantially
with, or fails to make progress in achieving
the benchmarks set forth in, the strategic
plan under subsection (f)(2).
‘‘(B) APPLICABLE PROCEDURES.—A des-
ignation may be revoked by the appropriate
Secretary under subparagraph (A) only after a
hearing on the record involving officials of the
State or local government involved.
‘‘(e) LIMITATIONS ON DESIGNATIONS.—An area may
be designated under subsection (a) only if—
‘‘(1) the area is nominated by 1 or more local
governments and the State or States in which it is
located for designation under this section,
‘‘(2) such State or States and the local govern-
ments have the authority—
‘‘(A) to nominate the area for designation
under this section, and
‘‘(B) to provide the assurances described in
paragraph (3),
‘‘(3) such State or States and the local govern-
ments provide written assurances satisfactory to the
appropriate Secretary that the strategic plan de-
scribed in the application under subsection (f)(2) for
such area will be implemented,
763
‘‘(4) the appropriate Secretary determines that
any information furnished is reasonably accurate,
and
‘‘(5) such State or States and local govern-
ments certify that no portion of the area nominated
is already included in an empowerment zone or in an
enterprise community or in an area otherwise nomi-
nated to be designated under this section.
‘‘(f) APPLICATION.—An application for designation
as an empowerment zone or as an enterprise community
shall—
‘‘(1) demonstrate that the nominated area sat-
isfies the eligibility criteria described in section
1392,
‘‘(2) include a strategic plan for accomplishing
the purposes of this subchapter that—
‘‘(A) describes the coordinated economic,
human, community, and physical development
plan and related activities proposed for the
nominated area,
‘‘(B) describes the process by which the af-
fected community is a full partner in the proc-
ess of developing and implementing the plan
and the extent to which local institutions and
764
organizations have contributed to the planning
process,
‘‘(C) identifies the amount of State, local,
and private resources that will be available in
the nominated area and the private/public part-
nerships to be used, which may include partici-
pation by, and cooperation with, universities,
medical centers, and other private and public
entities,
‘‘(D) identifies the funding requested
under any Federal program in support of the
proposed economic, human, community, and
physical development and related activities,
‘‘(E) identifies baselines, methods, and
benchmarks for measuring the success of carry-
ing out the strategic plan, including the extent
to which poor persons and families will be em-
powered to become economically self-sufficient,
and
‘‘(F) does not include any action to assist
any establishment in relocating from one area
outside the nominated area to the nominated
area, except that assistance for the expansion of
an existing business entity through the estab-
765
lishment of a new branch, affiliate, or subsidi-
ary is permitted if—
‘‘(i) the establishment of the new
branch, affiliate, or subsidiary will not re-
sult in a decrease in employment in the
area of original location or in any other
area where the existing business entity
conducts business operations, and
‘‘(ii) there is no reason to believe that
the new branch, affiliate, or subsidiary is
being established with the intention of clos-
ing down the operations of the existing
business entity in the area of its original
location or in any other area where the ex-
isting business entity conducts business op-
eration, and
‘‘(3) include such other information as may be
required by the appropriate Secretary or the Enter-
prise Board.
‘‘SEC. 1392. ELIGIBILITY CRITERIA.
‘‘(a) IN GENERAL.—A nominated area shall be eligi-
ble for designation under section 1391 only if it meets the
following criteria:
‘‘(1) POPULATION.—The nominated area has a
maximum population of—
766
‘‘(A) in the case of an urban area, the
lesser of—
‘‘(i) 200,000, or
‘‘(ii) the greater of 50,000 or 10 per-
cent of the population of the most popu-
lous city located within the nominated
area, and
‘‘(B) in the case of a rural area, 30,000.
‘‘(2) DISTRESS.—The nominated area is one of
pervasive poverty, unemployment, and general dis-
tress.
‘‘(3) SIZE.—The nominated area—
‘‘(A) does not exceed 20 square miles if an
urban area or 1,000 square miles if a rural
area or an Indian reservation,
‘‘(B) has a boundary which is continuous,
or, except in the case of a rural area located in
more than 1 State, consists of not more than
3 noncontiguous parcels,
‘‘(C)(i) in the case of an urban area, is lo-
cated entirely within no more than 2 contiguous
States, and
‘‘(ii) in the case of a rural area, is located
entirely within no more than 3 contiguous
States, and
767
‘‘(D) does not include any portion of a
central business district (as such term is used
for purposes of the most recent Census of Re-
tail Trade) unless the poverty rate for each
population census tract in such district is not
less than 35 percent (30 percent in the case of
an enterprise community).
‘‘(4) POVERTY RATE.—The poverty rate—
‘‘(A) for each population census tract with-
in the nominated area is not less than 20 per-
cent,
‘‘(B) for at least 90 percent of the popu-
lation census tracts within the nominated area
is not less than 25 percent, and
‘‘(C) for at least 50 percent of the popu-
lation census tracts within the nominated area
is not less than 35 percent.
‘‘(b) SPECIAL RULES RELATING TO DETERMINATION
OF POVERTY RATE.—For purposes of subsection (a)(4)—
‘‘(1) TREATMENT
OF
CENSUS
TRACTS
WITH
SMALL POPULATIONS.—
‘‘(A) TRACTS WITH NO POPULATION.—In
the case of a population census tract with no
population—
768
‘‘(i) such tract shall be treated as hav-
ing a poverty rate which meets the require-
ments of subparagraphs (A) and (B) of
subsection (a)(4), but
‘‘(ii) such tract shall be treated as
having a zero poverty rate for purposes of
applying subparagraph (C) thereof.
‘‘(B) TRACTS WITH POPULATIONS OF LESS
THAN 2,000.—A population census tract with a
population of less than 2,000 shall be treated as
having a poverty rate which meets the require-
ments of subparagraphs (A) and (B) of sub-
section (a)(4) if more than 75 percent of such
tract is zoned for commercial or industrial use.
‘‘(2) 
DISCRETION
TO
ADJUST
REQUIRE-
MENTS.—Where necessary to carry out the purposes
of this subchapter, the appropriate Secretary may
reduce by 5 percentage points one of the following
thresholds for not more than 10 percent of the popu-
lation census tracts (or, if fewer, 5 population cen-
sus tracts) in the nominated area:
‘‘(A) The 20 percent threshold in sub-
section (a)(4)(A).
‘‘(B) The 25 percent threshold in sub-
section (a)(4)(B).
769
‘‘(C) The 35 percent threshold in sub-
section (a)(4)(C).
If the appropriate Secretary elects to reduce the
threshold under subparagraph (C) for an enterprise
community, such Secretary may (in lieu of applying
the preceding sentence) reduce by 10 percentage
points the threshold under subparagraph (C) for 3
population census tracts.
‘‘(3) EACH NONCONTIGUOUS AREA MUST SAT-
ISFY POVERTY RATE RULE.—A nominated area may
not include a noncontiguous parcel unless such par-
cel separately meets (subject to paragraphs (1) and
(2)) the criteria set forth in subsection (a)(4).
‘‘(4) AREAS NOT WITHIN CENSUS TRACTS.—In
the case of an area which is not tracted for popu-
lation census tracts, the equivalent county divisions
(as defined by the Bureau of the Census for pur-
poses of defining poverty areas) shall be used for
purposes of determining poverty rates.
‘‘(c) FACTORS TO CONSIDER.—From among the
nominated areas eligible for designation under section
1391 by the appropriate Secretary, such appropriate Sec-
retary shall make designations of empowerment zones and
enterprise communities on the basis of—
770
‘‘(1) the effectiveness of the strategic plan sub-
mitted pursuant to section 1391(f)(2) and the assur-
ances made pursuant to section 1391(e)(3), and
‘‘(2) criteria specified by the Enterprise Board.
‘‘SEC. 1393. DEFINITIONS AND SPECIAL RULES.
‘‘(a) IN
GENERAL.—For purposes of this sub-
chapter—
‘‘(1) APPROPRIATE SECRETARY.—The term ‘ap-
propriate Secretary’ means—
‘‘(A) the Secretary of Housing and Urban
Development in the case of any nominated area
which is located in an urban area,
‘‘(B) the Secretary of Agriculture in the
case of any nominated area which is located in
a rural area, and
‘‘(C) the Secretary of the Interior in the
case of any nominated area which is located in
an Indian reservation.
‘‘(2) ENTERPRISE BOARD.—The term ‘Enter-
prise Board’ means any board hereafter established
and designated for purposes of this subchapter as
the ‘Enterprise Board’.
‘‘(3) RURAL
AREA.—The term ‘rural area’
means any area which is—
771
‘‘(A) outside of a metropolitan statistical
area 
(within 
the 
meaning 
of 
section
143(k)(2)(B)), or
‘‘(B) determined by the Secretary of Agri-
culture, after consultation with the Secretary of
Commerce, to be a rural area.
‘‘(4) URBAN
AREA.—The term ‘urban area’
means an area which is not a rural area.
‘‘(5) INDIAN RESERVATION.—
‘‘(A) IN GENERAL.—The term ‘Indian res-
ervation’ means a reservation as defined in—
‘‘(i) section 3(d) of the Indian Financ-
ing Act of 1974 (25 U.S.C. 1452(d)), or
‘‘(ii) section 4(10) of the Indian Child
Welfare 
Act 
of 
1978 
(25 
U.S.C.
1903(10)).
‘‘(B) GOVERNMENTS.—In the case of an
area in an Indian reservation, the reservation
governing body (as determined by the Secretary
of the Interior) shall be deemed to be both the
State and local governments with respect to
such area.
‘‘(6) LOCAL
GOVERNMENT.—The term ‘local
government’ means—
772
‘‘(A) any county, city, town, township, par-
ish, village, or other general purpose political
subdivision of a State, and
‘‘(B) any combination of political subdivi-
sions described in subparagraph (A) recognized
by the appropriate Secretary.
‘‘(7) NOMINATED AREA.—The term ‘nominated
area’ means an area which is nominated by 1 or
more local governments and the State or States in
which it is located for designation under section
1391.
‘‘(8) GOVERNMENTS.—If more than 1 State or
local government seeks to nominate an area as a tax
enterprise zone, any reference to, or requirement of,
this subchapter shall apply to all such governments.
‘‘(9) SPECIAL RULE.—An area shall be treated
as nominated by a State and a local government if
it is nominated by such other entity as may be speci-
fied by the Enterprise Board.
‘‘(10) USE OF CENSUS DATA.—Population and
poverty rate shall be determined by the most recent
decennial census data available.
‘‘(b) EMPOWERMENT ZONE; ENTERPRISE COMMU-
NITY.—For purposes of this title, the terms ‘empowerment
773
zone’ and ‘enterprise community’ mean areas designated
as such under section 1391.
‘‘PART II—INCENTIVES FOR EMPOWERMENT
ZONES AND ENTERPRISE COMMUNITIES
‘‘Sec. 1394. Incentives.
‘‘SEC. 1394. INCENTIVES.
‘‘(a) INCREASE IN LOW INCOME HOUSING CREDIT.—
For purposes of section 42(d)(5)(C), a building shall be
treated as located in a qualified census tract if—
‘‘(1) such building is located in a census tract
having a poverty rate of at least 30 percent (deter-
mined in accordance with section 1393(a)(10)), and
‘‘(2) 
such 
building 
is 
located 
in 
an
empowerment zone or an enterprise community.
‘‘(b) TAX EXEMPT ENTERPRISE ZONE FACILITY
BONDS.—
‘‘(1) IN GENERAL.—For purposes of part IV of
subchapter B of chapter 1 (relating to tax exemption
requirements for State and local bonds), the term
‘exempt facility bond’ includes any bond issued as
part of an issue 95 percent or more of the net pro-
ceeds (as defined in section 150(a)(3)) of which are
to be used to provide any enterprise zone facility.
‘‘(2) ENTERPRISE ZONE FACILITY.—For pur-
poses of this subsection—
774
‘‘(A) IN GENERAL.—The term ‘enterprise
zone facility’ means any qualified zone property
the principal user of which is an enterprise zone
business (as defined in section 1399B), and any
land which is functionally related and subordi-
nate to such property.
‘‘(B) QUALIFIED
ZONE
PROPERTY.—The
term ‘qualified zone property’ has the meaning
given such term by section 1399(c); except
that—
‘‘(i) section 1399(c)(3) shall not
apply, and
‘‘(ii) the references to empowerment
zones shall be treated as including ref-
erences to enterprise communities.
‘‘(3) LIMITATION ON AMOUNT OF BONDS.—
‘‘(A) IN
GENERAL.—Paragraph (1) shall
not apply to any issue if the aggregate amount
of outstanding enterprise zone facility bonds al-
locable to any enterprise zone business (taking
into account such issue) exceeds—
‘‘(i) $3,000,000 with respect to any 1
empowerment zone or enterprise commu-
nity, or
775
‘‘(ii) $20,000,000 with respect to all
empowerment zones and enterprise com-
munities.
‘‘(B) AGGREGATE ENTERPRISE ZONE FA-
CILITY BOND BENEFIT.—For purposes of sub-
paragraph (A), the aggregate amount of out-
standing enterprise zone facility bonds allocable
to any business shall be determined under rules
similar to the rules of section 144(a)(10), tak-
ing into account only bonds to which paragraph
(1) applies.
‘‘(4) ACQUISITION
OF
LAND
AND
EXISTING
PROPERTY PERMITTED.—The requirements of sec-
tions 147(c)(1)(A) and 147(d) shall not apply to any
bond described in paragraph (1).
‘‘(5) PARTIAL
EXEMPTION
FROM
VOLUME
CAP.—Only for purposes of section 146, the term
‘private activity bond’ shall not include 50 percent of
any bond issued as part of an issue described in
paragraph (1).
‘‘(6) PENALTY
FOR
CEASING
TO
MEET
RE-
QUIREMENTS.—
‘‘(A) FAILURES
CORRECTED.—An issue
which fails to meet 1 or more of the require-
776
ments of paragraphs (1) and (2) shall be
treated as meeting such requirements if—
‘‘(i) the issuer and any principal user
in good faith attempted to meet such re-
quirements, and
‘‘(ii) any failure to meet such require-
ments is corrected within a reasonable pe-
riod after such failure is first discovered.
‘‘(B) LOSS OF DEDUCTIONS WHERE FACIL-
ITY CEASES TO BE QUALIFIED.—No deduction
shall be allowed under this chapter for interest
on any financing provided from any bond to
which paragraph (1) applies with respect to any
facility to the extent such interest accrues dur-
ing the period beginning on the first day of the
calendar year which includes the date on
which—
‘‘(i) substantially all of the facility
with respect to which the financing was
provided 
ceases 
to 
be 
used 
in 
an
empowerment zone or enterprise commu-
nity, or
‘‘(ii) the principal user of such facility
ceases to be an enterprise zone business
(as defined in section 1399B, but treating
777
references to empowerment zones as in-
cluding references to enterprise commu-
nities).
‘‘(C) EXCEPTION IF ZONE CEASES.—Sub-
paragraphs (A) and (B) shall not apply solely
by reason of the termination or revocation of a
designation as an empowerment zone or an en-
terprise community.
‘‘(D) EXCEPTION
FOR
BANKRUPTCY.—
Subparagraphs (A) and (B) shall not apply to
any cessation resulting from bankruptcy.
‘‘(c) ENTERPRISE ZONE FACILITY BONDS NOT SUB-
JECT TO INTEREST DEDUCTION LIMITATIONS ON FINAN-
CIAL INSTITUTIONS.—Any tax-exempt bond described in
subsection (b)(1)—
‘‘(1) shall be treated as acquired before August
8, 1986, for purposes of sections 265(b) and
291(e)(1)(B), and
‘‘(2) shall not be taken into account in deter-
mining whether any issuer is a qualified small issuer
for purposes of section 265(b).
‘‘(d) ADDITIONAL LOW-INCOME HOUSING CREDIT
AMOUNT.—
‘‘(1) IN GENERAL.—Each State which includes
any empowerment zone or enterprise community
778
shall receive an additional State housing credit ceil-
ing amount for purposes of section 42 of $818,000
for each such zone or community.
‘‘(2) ADDITIONAL
AMOUNT
MUST
BE
ALLO-
CATED TO BUILDINGS IN DESIGNATED AREAS.—
‘‘(A) IN GENERAL.—The portion of the ad-
ditional amount received under paragraph (1)
by reason of any empowerment zone or enter-
prise community which may be applied to in-
crease the State housing credit ceiling for any
calendar year shall not exceed the lesser of—
‘‘(i) the unused portion of such addi-
tional amount with respect to such zone or
community, or
‘‘(ii) the aggregate housing credit dol-
lar amount allocated from such ceiling for
such year to buildings located in such zone
or community.
‘‘(B) UNUSED PORTION.—For purposes of
subparagraph (A), the unused portion for any
calendar year of the additional amount received
under paragraph (1) is the amount equal to the
excess of—
779
‘‘(i) the additional amount received
under paragraph (1) by the State by rea-
son of the zone or community, over
‘‘(ii) the aggregate of the increases in
the State housing credit ceiling by reason
of such amount for all prior calendar
years.
‘‘(3) AVAILABILITY OF ADDITIONAL AMOUNT.—
None of the additional amount received under para-
graph (1) may be applied after 1996.
‘‘(4) AREAS
LOCATED
IN
MORE
THAN
STATE.—In the case of an empowerment zone or en-
terprise community which is located in more than 1
State, the $818,000 amount shall be allocated
among such States in proportion to the population
of such zone or community which is within each
such State.
‘‘(5) ZONES
LOCATED
IN
CONSTITUTIONAL
HOME RULE CITIES.—If any empowerment zone or
enterprise community is located in a constitutional
home rule city (as defined in section 42(h)(4)(E)),
the additional amount received under paragraph (1)
shall be allocated to such city and shall not be taken
into account in determining such city’s share of the
780
State 
housing 
credit 
ceiling 
under 
section
42(h)(4)(E).
‘‘PART III—ADDITIONAL INCENTIVES FOR
EMPOWERMENT ZONES
‘‘SUBPART A. Empowerment zone employment credit.
‘‘SUBPART B. Zone resident empowerment savings credit.
‘‘SUBPART C. Depreciation and other incentives.
‘‘Subpart A—Empowerment Zone Employment Credit
‘‘Sec. 1396. Empowerment zone employment credit.
‘‘Sec. 1397. Other definitions and special rules.
‘‘SEC. 1396. EMPOWERMENT ZONE EMPLOYMENT CREDIT.
‘‘(a) AMOUNT OF CREDIT.—For purposes of section
38, the amount of the empowerment zone employment
credit determined under this section with respect to any
employer for any taxable year is the applicable percentage
of the qualified zone wages paid or incurred during the
calendar year which ends with or within such taxable year.
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of
this section, the term ‘applicable percentage’ means the
percentage determined in accordance with the following
table:
‘‘In the case of wages paid or
The applicable
incurred during calendar year:
percentage is:
1994 through 2000 ........................................
2001 ...............................................................
2002 ...............................................................
2003 ...............................................................
2004 ...............................................................
‘‘(c) QUALIFIED ZONE WAGES.—
781
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified zone wages’ means any
wages paid or incurred by an employer for services
performed by an employee while such employee is a
qualified zone employee.
‘‘(2) ONLY FIRST $20,000 OF WAGES PER YEAR
TAKEN INTO ACCOUNT.—With respect to each quali-
fied zone employee, the amount of qualified zone
wages which may be taken into account for a cal-
endar year shall not exceed $20,000.
‘‘(3) COORDINATION
WITH
TARGETED
JOBS
CREDIT.—
‘‘(A) IN
GENERAL.—The term ‘qualified
zone wages’ shall not include wages taken into
account in determining the credit under section
51.
‘‘(B) COORDINATION
WITH
PARAGRAPH
(2).—The $20,000 amount in paragraph (2)
shall be reduced for any calendar year by the
amount of wages paid or incurred during such
year which are taken into account in determin-
ing the credit under section 51.
‘‘(d) QUALIFIED ZONE EMPLOYEE.—For purposes of
this section—
782
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the term ‘qualified zone em-
ployee’ means, with respect to any period, any em-
ployee of an employer if—
‘‘(A) substantially all of the services per-
formed during such period by such employee for
such 
employer 
are 
performed 
within 
an
empowerment zone in a trade or business of the
employer, and
‘‘(B) the principal place of abode of such
employee while performing such services is
within such empowerment zone.
‘‘(2) CERTAIN INDIVIDUALS NOT ELIGIBLE.—
The term ‘qualified zone employee’ shall not in-
clude—
‘‘(A) any individual described in subpara-
graph (A), (B), or (C) of section 51(i)(1),
‘‘(B) any 5-percent owner (as defined in
section 416(i)(1)(B)),
‘‘(C) any individual employed by the em-
ployer for less than 90 days,
‘‘(D) any individual employed by the em-
ployer at any facility described in section
144(c)(6)(B), and
783
‘‘(E) any individual employed by the em-
ployer in a trade or business the principal activ-
ity of which is farming (within the meaning of
subparagraphs 
(A) 
or 
(B) 
of 
section
2032A(e)(5)), but only if, as of the close of the
taxable year, the sum of—
‘‘(i) the aggregate unadjusted bases
(or, if greater, the fair market value) of
the assets owned by the employer which
are used in such a trade or business, and
‘‘(ii) the aggregate value of assets
leased by the employer which are used in
such a trade or business (as determined
under regulations prescribed by the Sec-
retary),
exceeds $500,000.
‘‘(3) SPECIAL
RULES
RELATED
TO
TERMI-
NATION OF EMPLOYMENT.—
‘‘(A) IN
GENERAL.—Paragraph (2)(C)
shall not apply to—
‘‘(i) a termination of employment of
an individual who before the close of the
period referred to in paragraph (2)(C) be-
comes disabled to perform the services of
such employment unless such disability is
784
removed before the close of such period
and the taxpayer fails to offer reemploy-
ment to such individual, or
‘‘(ii) a termination of employment of
an individual if it is determined under the
applicable State unemployment compensa-
tion law that the termination was due to
the misconduct of such individual.
‘‘(B) CHANGES IN FORM OF BUSINESS.—
For purposes of paragraph (2)(C), the employ-
ment relationship between the taxpayer and an
employee shall not be treated as terminated—
‘‘(i) by a transaction to which section
381(a) applies if the employee continues to
be employed by the acquiring corporation,
or
‘‘(ii) by reason of a mere change in
the form of conducting the trade or busi-
ness of the taxpayer if the employee con-
tinues to be employed in such trade or
business and the taxpayer retains a sub-
stantial interest in such trade or business.
‘‘SEC. 1397. OTHER DEFINITIONS AND SPECIAL RULES.
‘‘(a) WAGES.—For purposes of this subpart—
785
‘‘(1) IN GENERAL.—The term ‘wages’ has the
same meaning as when used in section 51.
‘‘(2) CERTAIN
TRAINING
AND
EDUCATIONAL
BENEFITS.—
‘‘(A) 
IN
GENERAL.—The 
following
amounts shall be treated as wages paid to an
employee:
‘‘(i) Any amount paid or incurred by
an employer which is excludable from the
gross income of an employee under section
127, but only to the extent paid or in-
curred to a person not related to the em-
ployer.
‘‘(ii) In the case of an employee who
has not attained the age of 19, any
amount paid or incurred by an employer
for any youth training program operated
by such employer in conjunction with local
education officials.
‘‘(B) RELATED PERSON.—A person is re-
lated to any other person if the person bears a
relationship to such other person specified in
section 267(b) or 707(b)(1), or such person and
such other person are engaged in trades or
businesses under common control (within the
786
meaning of subsections (a) and (b) of section
52). For purposes of the preceding sentence, in
applying section 267(b) or 707(b)(1), ‘10 per-
cent’ shall be substituted for ‘50 percent’.
‘‘(b) CONTROLLED GROUPS.—For purposes of this
subpart—
‘‘(1) all employers treated as a single employer
under subsection (a) or (b) of section 52 shall be
treated as a single employer for purposes of this
subpart, and
‘‘(2) the credit (if any) determined under sec-
tion 1396 with respect to each such employer shall
be its proportionate share of the wages giving rise
to such credit.
‘‘(c) CERTAIN OTHER RULES MADE APPLICABLE.—
For purposes of this subpart, rules similar to the rules
of section 51(k) and subsections (c), (d), and (e) of section
52 shall apply.
‘‘(d) NOTICE OF AVAILABILITY OF ADVANCE PAY-
MENT
OF EARNED INCOME CREDIT.—Each employer
shall take reasonable steps to notify all qualified zone em-
ployees of the availability to eligible individuals of receiv-
ing advanced payments of the credit under section 32 (re-
lating to the earned income credit).
787
‘‘Subpart B—Zone Resident Empowerment Savings
Credit
‘‘Sec. 1398. Zone resident empowerment savings credit.
‘‘SEC. 1398. ZONE RESIDENT EMPOWERMENT SAVINGS
CREDIT.
‘‘(a) GENERAL RULE.—For purposes of section 38,
the amount of the zone resident empowerment savings
credit determined under this section with respect to any
employer for any taxable year is 50 percent of the quali-
fied savings contributions for the taxable year.
‘‘(b) QUALIFIED
SAVINGS
CONTRIBUTIONS.—For
purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified savings
contribution’ means any contribution by an employer
to a defined contribution plan—
‘‘(A) which is made on behalf of an em-
ployee in connection with services performed by
such employee while such employee is a quali-
fied zone employee, and
‘‘(B) with respect to which the employee
has a nonforfeitable right.
‘‘(2) LIMITATION BASED ON COMPENSATION.—
‘‘(A) IN GENERAL.—The qualified savings
contributions taken into account with respect to
any qualified zone employee for any taxable
year shall not exceed an amount equal to 2 per-
788
cent of so much of the employee’s compensation
(as defined in section 414(s)) as does not
exceed $35,000.
‘‘(B) ZONE DESIGNATION IN EFFECT FOR
PARTIAL YEAR.—If a designation of an area as
an empowerment zone is in effect for less than
the entire taxable year, the $35,000 amount
under subparagraph (A) shall be ratably re-
duced to reflect the portion of the year such
designation is not in effect.
‘‘(3) CERTAIN
CONTRIBUTIONS
EXCLUDED.—
The term ‘qualified savings contribution’ shall not
include any contribution—
‘‘(A) to a plan subject to the funding re-
quirements of section 412,
‘‘(B) to a tax credit employee stock owner-
ship plan (as defined in section 409(a)) or to an
employee stock ownership plan (as defined in
section 4975(e)(7)),
‘‘(C) to a stock bonus plan, or
‘‘(D) which is an elective deferral (within
the meaning of section 402(g)(3)).
‘‘(4) SIMPLIFIED EMPLOYEE PENSION.—A con-
tribution to an individual savings plan pursuant to
a simplified employee pension (as defined in section
789
408(k)) shall be treated as a contribution to a de-
fined contribution plan.
‘‘(c) EMPLOYER REQUIREMENTS.—This section shall
apply to an employer for any taxable year only if—
‘‘(1) the employer elects the application of this
section, and
‘‘(2) the plan pursuant to which any qualified
savings contribution is made provides that any con-
tribution to such plan (whether or not a qualified
savings contribution) may be withdrawn by a quali-
fied zone employee as described in section 72(t)(2)
(B) or (D).
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED ZONE EMPLOYEE.—The term
‘qualified zone employee’ has the meaning given such
term by section 1396(d).
‘‘(2) DEFINED
CONTRIBUTION
PLAN.—The
term ‘defined contribution plan’ means a defined
contribution plan (as defined in section 414(i))
which is described in section 401(a) and includes a
trust exempt from tax under section 501(a).
‘‘(e) TREATMENT OF PLANS.—A plan shall not be
treated as failing to meet any requirement of part I of
subchapter D of chapter 1 by reason of permitting with-
drawals required to be permitted under subsection (c)(2).
791
enterprise zone business, the applicable recovery pe-
riod shall be determined in accordance with the table
contained in paragraph (2) in lieu of the table con-
tained in section 168(c).
‘‘(2) APPLICABLE
RECOVERY
PERIOD
FOR
QUALIFIED ZONE PROPERTY.—For purposes of para-
graph (1)—
The applicable
‘‘In the case of:
recovery period is:
3-year property ........................................................................
2 years
5-year property ........................................................................
3 years
7-year property ........................................................................
4 years
10-year property ......................................................................
6 years
15-year property ......................................................................
9 years
20-year property ......................................................................
12 years
Nonresidential real property ....................................................
22 years.
‘‘(3) DEDUCTION
ALLOWED
IN
COMPUTING
MINIMUM TAX.—Paragraph (1) shall apply for pur-
poses of determining alternative minimum taxable
income under section 55.
‘‘(c) QUALIFIED ZONE PROPERTY.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘qualified zone
property’ means any property to which section 168
applies (or would apply but for section 179) if—
‘‘(A) such property was acquired by the
taxpayer by purchase (as defined in section
179(d)(2)) after the date on which the designa-
tion of the empowerment zone took effect,
792
‘‘(B) the original use of which in an
empowerment zone commences with the tax-
payer, and
‘‘(C) substantially all of the use of which
is in an empowerment zone and is in the active
conduct of a trade or business by the taxpayer
in such zone.
‘‘(2) SPECIAL
RULE
FOR
SUBSTANTIAL
REN-
OVATIONS.—In the case of any property which is
substantially renovated by the taxpayer, the require-
ments of subparagraphs (A) and (B) of paragraph
(1) shall be treated as satisfied. For purposes of the
preceding sentence, property shall be treated as sub-
stantially renovated by the taxpayer if, during any
24-month period beginning after the date on which
the designation of the empowerment zone took ef-
fect, additions to basis with respect to such property
in the hands of the taxpayer exceed the greater of
(i) an amount equal to the adjusted basis at the be-
ginning of such 24-month period in the hands of the
taxpayer, or (ii) $5,000.
‘‘(3) EXCEPTION FOR ALTERNATIVE DEPRECIA-
TION
PROPERTY.—The term ‘qualified zone prop-
erty’ does not include any property to which the al-
793
ternative depreciation system under section 168(g)
applies, determined—
‘‘(A) without regard to section 168(g)(7)
(relating to election to use alternative deprecia-
tion system), and
‘‘(B) after the application of section
280F(b) (relating to listed property with limited
business use).
‘‘(d) SPECIAL RULES FOR SALE-LEASEBACKS.—For
purposes of subsection (c)(1)(B), if property is sold and
leased back by the taxpayer within 3 months after the date
such property was originally placed in service, such prop-
erty shall be treated as originally placed in service not ear-
lier than the date on which such property is used under
the leaseback.
‘‘(e) RECAPTURE.—Rules similar to the rules under
section 179(d)(10) shall apply with respect to any quali-
fied zone property of any business which ceases to be an
enterprise zone business.
‘‘SEC. 1399A. ADDITIONAL EXCLUSION FROM VOLUME CAP
FOR CERTAIN ENTERPRISE ZONE FACILITY
BONDS.
‘‘(a) IN GENERAL.—Section 1394(b)(5) shall be ap-
plied by substituting ‘75 percent’ for ‘50 percent’ in the
case of any bond described in section 1394(b)(1) issued
794
as part of an issue 95 percent or more of the net proceeds
(as defined in section 150(a)(3)) of which are used to pro-
vide qualified zone property the principal user of which
is any enterprise zone business if the ownership require-
ments of subsection (b) are met with respect to such busi-
ness.
‘‘(b) OWNERSHIP REQUIREMENTS.—The ownership
requirements of this subsection are met with respect to
an enterprise zone business if—
‘‘(1) in the case of a sole proprietorship, the
principal place of abode of the proprietor is in an
empowerment zone,
‘‘(2) in the case of a corporation, more than 50
percent of the stock (by vote and value) in the cor-
poration is owned (directly or indirectly) by individ-
uals whose principal place of abode is in an
empowerment zone, and
‘‘(3) in the case of a partnership, more than 50
percent of the capital and profits interests in the
partnership is owned (directly or indirectly) by indi-
viduals whose principal place of abode is in an
empowerment zone.
‘‘SEC. 1399B. ENTERPRISE ZONE BUSINESS DEFINED.
‘‘(a) IN GENERAL.—For purposes of this subpart, the
term ‘enterprise zone business’ means—
795
‘‘(1) any qualified business entity, and
‘‘(2) any qualified proprietorship.
‘‘(b) QUALIFIED BUSINESS ENTITY.—For purposes
of this section, the term ‘qualified business entity’ means,
with respect to any taxable year, any corporation or part-
nership if for such year—
‘‘(1) every trade or business of such entity is
the active conduct of a qualified business within an
empowerment zone,
‘‘(2) at least 80 percent of the total gross in-
come of such entity is derived from the active con-
duct of such business,
‘‘(3) substantially all of the use of the tangible
property of such entity (whether owned or leased) is
within an empowerment zone,
‘‘(4) substantially all of the intangible property
of such entity is used in, and exclusively related to,
the active conduct of any such business,
‘‘(5) substantially all of the services performed
for such entity by its employees are performed in an
empowerment zone,
‘‘(6) at least 35 percent of its employees are
residents of an empowerment zone,
‘‘(7) less than 5 percent of the average of the
aggregate unadjusted bases of the property of such
796
entity is attributable to collectibles (as defined in
section 408(m)(2)) other than collectibles that are
held primarily for sale to customers in the ordinary
course of such business, and
‘‘(8) less than 5 percent of the average of the
aggregate unadjusted bases of the property of such
entity is attributable to nonqualified financial prop-
erty.
‘‘(c) QUALIFIED PROPRIETORSHIP.—For purposes of
this section, the term ‘qualified proprietorship’ means,
with respect to any taxable year, any qualified business
carried on by an individual as a proprietorship if for such
year—
‘‘(1) at least 80 percent of the total gross in-
come of such individual from such business is de-
rived from the active conduct of such business in an
empowerment zone,
‘‘(2) substantially all of the use of the tangible
property of such individual in such business (wheth-
er owned or leased) is within an empowerment zone,
‘‘(3) substantially all of the intangible property
of such business is used in, and exclusively related
to, the active conduct of such business,
‘‘(4) substantially all of the services performed
for such individual in such business by employees of
797
such business are performed in an empowerment
zone,
‘‘(5) at least 35 percent of such employees are
residents of an empowerment zone,
‘‘(6) less than 5 percent of the average of the
aggregate unadjusted bases of the property of such
individual which is used in such business is attrib-
utable 
to 
collectibles 
(as 
defined 
in 
section
408(m)(2)) other than collectibles that are held pri-
marily for sale to customers in the ordinary course
of such business, and
‘‘(7) less than 5 percent of the average of the
aggregate unadjusted bases of the property of such
individual which is used in such business is attrib-
utable to nonqualified financial property.
For purposes of this subsection, the term ‘employee’ in-
cludes the proprietor.
‘‘(d) QUALIFIED BUSINESS.—For purposes of this
section—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the term ‘qualified business’
means any trade or business.
‘‘(2) RENTAL OF REAL PROPERTY.—The rental
to 
others 
of 
real 
property 
located 
in 
an
799
of subparagraphs (A) or (B) of section
2032A(e)(5)), but only if, as of the close of the
preceding taxable year, the sum of—
‘‘(i) the aggregate unadjusted bases
(or, if greater, the fair market value) of
the assets owned by the taxpayer which are
used in such a trade or business, and
‘‘(ii) the aggregate value of assets
leased by the taxpayer which are used in
such a trade or business,
exceeds $500,000.
For purposes of subparagraph (B), rules similar to
the rules of section 1397(b) shall apply.
‘‘(e) NONQUALIFIED FINANCIAL PROPERTY.—For
purposes of this section, the term ‘nonqualified financial
property’ means debt, stock, partnership interests, op-
tions, futures contracts, forward contracts, warrants, no-
tional principal contracts, annuities, and other similar
property specified in regulations; except that such term
shall not include—
‘‘(1) reasonable amounts of working capital
held in cash, cash equivalents, or debt instruments
with a term of 18 months or less, or
‘‘(2) debt instruments described in section
1221(4).
800
‘‘PART IV—REGULATIONS
‘‘Sec. 1399C. Regulations.
‘‘SEC. 1399C. REGULATIONS.
‘‘The Secretary shall prescribe such regulations as
may be necessary or appropriate to carry out the purposes
of parts II and III, including—
‘‘(1) regulations limiting the benefit of parts II
and III in circumstances where such benefits, in
combination with benefits provided under other Fed-
eral programs, would result in an activity being 100
percent or more subsidized by the Federal Govern-
ment,
‘‘(2) regulations preventing abuse of the provi-
sions of parts II and III, and
‘‘(3) regulations dealing with inadvertent fail-
ures of entities to be enterprise zone businesses.’’
(b) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 1 is amended by inserting after the
item relating to subchapter T the following new item:
‘‘Subchapter U. Designation and treatment of empowerment
zones and enterprise communities.’’
SEC. 14302. EXPANSION OF TARGETED JOBS CREDIT.
(a) 
ALLOWANCE
OF
CREDIT
FOR
HIRING
EMPOWERMENT ZONE RESIDENT.—Paragraph (1) of sec-
tion 51(d) (defining members of targeted groups) is
amended by striking ‘‘or’’ at the end of subparagraph (I),
801
by striking the period at the end of subparagraph (J) and
inserting ‘‘, or’’, and by adding at the end the following
new subparagraph:
‘‘(K) 
an 
economically 
disadvantaged
empowerment zone resident.’’
(b) 
ECONOMICALLY
DISADVANTAGED
EMPOWERMENT
ZONE
RESIDENT.—Section 51(d) is
amended by redesignating paragraphs (13) through (16)
as paragraphs (14) through (17), respectively, and by in-
serting after paragraph (12) the following new paragraph:
‘‘(13) 
ECONOMICALLY
DISADVANTAGED
EMPOWERMENT
ZONE
RESIDENT.—The term ‘eco-
nomically disadvantaged empowerment zone resi-
dent’ means an individual—
‘‘(A) whose principal place of abode while
performing services for the employer is within
an empowerment zone, and
‘‘(B) who is certified by the designated
local agency as being a member of an economi-
cally disadvantaged family (as determined
under paragraph (11)).
Such term shall not include a qualified zone em-
ployee (as defined in section 1396(d) without regard
to paragraph (2) thereof).’’
802
(c) CONFORMING AMENDMENT.—Subparagraph (C)
of section 51(d)(12) is amended by striking ‘‘paragraph
(14)’’ and inserting ‘‘paragraph (15)’’.
SEC. 14303. TECHNICAL AND CONFORMING AMENDMENTS.
(a) CERTAIN CREDITS PART OF GENERAL BUSINESS
CREDIT.—
(1) Subsection (b) of section 38 (relating to
current year business credit) is amended by striking
‘‘plus’’ at the end of paragraph (7), by striking the
period at the end of paragraph (8) and inserting a
comma, and by adding at the end the following new
paragraphs:
‘‘(9) the empowerment zone employment credit
determined under section 1396(a), plus
‘‘(10) the zone resident empowerment savings
credit determined under section 1398.’’
(2) Subsection (d) of section 39 is amended by
adding at the end the following new paragraph:
‘‘(4) ENTERPRISE ZONE CREDITS.—No portion
of the unused business credit which is attributable to
the credit determined under section 1396 (relating
to empowerment zone employment credit) or section
1398 (relating to zone resident empowerment sav-
ings credit) may be carried to any taxable year end-
ing before January 1, 1994.’’
803
(b) DENIAL OF DEDUCTION FOR PORTION OF WAGES
EQUAL TO EMPOWERMENT ZONE EMPLOYMENT CRED-
IT.—
(1) Subsection (a) of section 280C (relating to
rule for targeted jobs credit) is amended—
(A) by striking ‘‘the amount of the credit
determined for the taxable year under section
51(a)’’ and inserting ‘‘the sum of the credits
determined for the taxable year under sections
51(a) and 1396(a)’’, and
(B) by striking ‘‘TARGETED JOBS CRED-
IT’’ in the subsection heading and inserting
‘‘EMPLOYMENT CREDITS’’.
(2) Subsection (c) of section 196 (relating to
deduction for certain unused business credits) is
amended by striking ‘‘and’’ at the end of paragraph
(4), by striking the period at the end of paragraph
(5) and inserting ‘‘, and’’, and by adding at the end
the following new paragraph:
‘‘(6) the empowerment zone employment credit
determined under section 1396(a).’’
(c) EMPLOYMENT AND SAVINGS CREDITS MAY OFF-
SET 25 PERCENT OF MINIMUM TAX.—
(1) IN
GENERAL.—Section 38(c) (relating to
limitation based on amount of tax) is amended by
804
redesignating paragraph (2) as paragraph (3) and
by inserting after paragraph (1) the following new
paragraph:
‘‘(2) EMPOWERMENT ZONE CREDITS MAY OFF-
SET 25 PERCENT OF MINIMUM TAX.—
‘‘(A) IN
GENERAL.—In the case of the
empowerment zone credits—
‘‘(i) this section and section 39 shall
be applied separately with respect to such
credits, and
‘‘(ii) for purposes of applying para-
graph (1) to such credits—
‘‘(I) 75 percent of the tentative
minimum tax shall be substituted for
the tentative minimum tax under sub-
paragraph (A) thereof, and
‘‘(II) the limitation under para-
graph (1) (as modified by subclause
(I)) shall be reduced by the credit al-
lowed under subsection (a) for the
taxable 
year 
(other 
than 
the
empowerment zone credits).
‘‘(B) EMPOWERMENT
ZONE
CREDITS.—
For purposes of this paragraph, the term
‘empowerment zone credits’ means the portion
805
of the credit under subsection (a) which is at-
tributable to the credits determined under sec-
tion 1396 (relating to empowerment zone em-
ployment credit) and section 1398 (relating to
zone resident empowerment savings credit).’’
(d) CHANGES RELATING TO EMPOWERMENT ZONE
RESIDENT EMPOWERMENT SAVINGS CREDIT.—
(1) DISALLOWANCE
OF
DEDUCTION.—Section
404 (relating to deduction for certain employer con-
tributions) is amended by adding at the end the fol-
lowing new subsection:
‘‘(m) COORDINATION WITH EMPOWERMENT ZONE
CREDIT.—No deduction shall be allowed under this sec-
tion for any qualified employer contribution taken into ac-
count in computing the credit determined under section
1398.’’
(2) PENALTY-FREE DISTRIBUTIONS.—
(A) IN GENERAL.—Paragraph (2) of sec-
tion 72(t) (relating to exceptions to 10-percent
additional tax on early distributions from quali-
fied retirement plans) is amended by adding at
the end thereof the following new subpara-
graph:
806
‘‘(D) 
DISTRIBUTIONS
FROM
CERTAIN
PLANS FOR FIRST HOME PURCHASES OR EDU-
CATIONAL EXPENSES.—
‘‘(i) IN
GENERAL.—Distributions to
an individual from a qualified retirement
plan—
‘‘(I) which are qualified first-time
homebuyer distributions (as defined in
paragraph (6)),
‘‘(II) to the extent such distribu-
tions do not exceed the qualified high-
er education expenses (as defined in
paragraph (7)) of the taxpayer for the
taxable year, or
‘‘(III) to the extent such distribu-
tions do not exceed an amount equal
to the aggregate investment made by
the taxpayer during the taxable year
in any enterprise zone business (as
defined in section 1399B) that meets
the ownership requirements of section
1399A(b).
‘‘(ii) LIMITATION.—Clause (i) shall
not apply to the extent that the aggregate
807
amount of the distributions described in
clause (i) is greater than the excess of—
‘‘(I) the qualified savings con-
tributions (as defined in section
1398(b)) of the taxpayer, and any
earnings thereon, over
‘‘(II) the aggregate amounts to
which clause (i) and the last sentence
of paragraph (3)(A) applied for pre-
ceding taxable years.’’
(B) 
DEFINITIONS.—Section 
72(t) 
is
amended by adding at the end thereof the fol-
lowing new paragraphs:
‘‘(6) QUALIFIED FIRST-TIME HOMEBUYER DIS-
TRIBUTIONS.—For 
purposes 
of 
paragraph
(2)(D)(i)(I)—
‘‘(A) IN
GENERAL.—The term ‘qualified
first-time homebuyer distribution’ means any
payment or distribution received by an individ-
ual to the extent such payment or distribution
is used by the individual before the close of the
60th day after the day on which such payment
or distribution is received to pay qualified ac-
quisition costs with respect to a principal resi-
808
dence of a first-time homebuyer who is such in-
dividual or the spouse of such individual.
‘‘(B) QUALIFIED
ACQUISITION
COSTS.—
For purposes of this paragraph, the term
‘qualified acquisition costs’ means the costs of
acquiring, constructing, or reconstructing a res-
idence. Such term includes any usual or reason-
able settlement, financing, or other closing
costs.
‘‘(C) FIRST-TIME
HOMEBUYER; 
OTHER
DEFINITIONS.—For purposes of this para-
graph—
‘‘(i) FIRST-TIME
HOMEBUYER.—The
term ‘first-time homebuyer’ means any in-
dividual if—
‘‘(I) such individual (and if mar-
ried, such individual’s spouse) had no
present ownership interest in a prin-
cipal residence during the 3-year pe-
riod ending on the date of acquisition
of the principal residence to which
this paragraph applies, and
‘‘(II) subsection (a)(6), (h), or
(k) of section 1034 did not suspend
the running of any period of time
809
specified in section 1034 with respect
to such individual on the day before
the date the distribution is applied
pursuant to subparagraph (A)(ii).
‘‘(ii) 
PRINCIPAL
RESIDENCE.—The
term ‘principal residence’ has the same
meaning as when used in section 1034.
‘‘(iii) DATE
OF
ACQUISITION.—The
term ‘date of acquisition’ means the date—
‘‘(I) on which a binding contract
to acquire the principal residence to
which subparagraph (A) applies is en-
tered into, or
‘‘(II) on which construction or re-
construction of such a principal resi-
dence is commenced.
‘‘(D) SPECIAL RULE WHERE DELAY IN AC-
QUISITION.—If any distribution from any quali-
fied retirement plan fails to meet the require-
ments of subparagraph (A) solely by reason of
a delay or cancellation of the purchase or con-
struction of the residence, the amount of the
distribution may be recontributed to the plan
from which it was distributed within 120 days
after the date of such distribution.
810
‘‘(7) QUALIFIED
HIGHER
EDUCATION
EX-
PENSES.—For 
purposes 
of 
paragraph
(2)(D)(ii)(II)—
‘‘(A) IN
GENERAL.—The term ‘qualified
higher education expenses’ means tuition, fees,
books, supplies, and equipment required for the
enrollment or attendance of—
‘‘(i) the taxpayer,
‘‘(ii) the taxpayer’s spouse, or
‘‘(iii) the taxpayer’s child (as defined
in section 151(c)(3)) or grandchild,
at an eligible educational institution (as defined
in section 135(c)(3)).
‘‘(B) COORDINATION WITH SAVINGS BOND
PROVISIONS.—The amount of qualified higher
education expenses for any taxable year shall be
reduced by any amount excludable from gross
income under section 135.’’
(C) CONFORMING AMENDMENTS.—
(i) Subparagraph (B) of section
72(t)(2) is amended by striking ‘‘or (C)’’
and inserting ‘‘, (C), or (D)’’.
(ii) Section 401(k)(2)(B)(i) is amend-
ed by striking ‘‘or’’ at the end of subclause
(III), by striking ‘‘and’’ at the end of
811
subclause (IV) and inserting ‘‘or’’, and by
inserting after subclause (IV) the following
new subclause:
‘‘(V) subject to the limitation of
section 72(t)(2)(D)(ii), the date on
which qualified first-time homebuyer
distributions (as defined in section
72(t)(6)), distributions for qualified
higher education expenses (as defined
in section 72(t)(7)), or distributions
for investments described in section
72(t)(2)(D)(i)(III) are made, and’’.
(e) AMENDMENT
OF TARGETED JOBS CREDIT.—
Subparagraph (A) of section 51(i)(1) is amended by in-
serting ‘‘, or, if the taxpayer is an entity other than a
corporation, to any individual who owns, directly or indi-
rectly, more than 50 percent of the capital and profits in-
terests in the entity,’’ after ‘‘of the corporation’’.
(f) CARRYOVERS.—Subsection (c) of section 381 (re-
lating to carryovers in certain corporate acquisitions) is
amended by adding at the end the following new para-
graph:
‘‘(26) ENTERPRISE
ZONE
PROVISIONS.—The
acquiring corporation shall take into account (to the
extent proper to carry out the purposes of this sec-
812
tion and subchapter U, and under such regulations
as may be prescribed by the Secretary) the items re-
quired to be taken into account for purposes of sub-
chapter U in respect of the distributor or transferor
corporation.’’
SEC. 14304. EFFECTIVE DATE.
The amendments made by this part shall take effect
on the date of the enactment of this Act.
PART II—CREDIT FOR CONTRIBUTIONS TO CER-
TAIN COMMUNITY DEVELOPMENT CORPORA-
TIONS
SEC. 14311. CREDIT FOR CONTRIBUTIONS TO CERTAIN
COMMUNITY DEVELOPMENT CORPORATIONS.
(a) IN GENERAL.—For purposes of section 38 of the
Internal Revenue Code of 1986, the current year business
credit shall include the credit determined under this sec-
tion.
(b) DETERMINATION OF CREDIT.—The credit deter-
mined under this section for each taxable year in the credit
period with respect to any qualified CDC contribution
made by the taxpayer is an amount equal to 5 percent
of such contribution.
(c) CREDIT PERIOD.—For purposes of this section,
the credit period with respect to any qualified CDC con-
813
tribution is the period of 10 taxable years beginning with
the taxable year during which such contribution was made.
(d) QUALIFIED CDC CONTRIBUTION.—For purposes
of this section—
(1) IN GENERAL.—The term ‘‘qualified CDC
contribution’’ means any transfer of cash—
(A) which is made to a selected community
development corporation during the 5-year pe-
riod beginning on the date such corporation was
selected for purposes of this section,
(B) the amount of which is available for
use by such corporation for at least 10 years,
(C) which is to be used by such corpora-
tion for qualified low-income assistance within
its operational area, and
(D) which is designated by such corpora-
tion for purposes of this section.
(2) LIMITATIONS ON AMOUNT DESIGNATED.—
The aggregate amount of contributions to a selected
community development corporation which may be
designated by such corporation shall not exceed
$4,000,000.
(e) SELECTED COMMUNITY DEVELOPMENT COR-
PORATIONS.—
815
such Secretary shall give priority to corpora-
tions with a demonstrated record of perform-
ance in administering community development
programs which target at least 75 percent of
the jobs emanating from their investment funds
to low income or unemployed individuals.
(3) OPERATIONAL AREAS MUST HAVE CERTAIN
CHARACTERISTICS.—A corporation may be selected
for purposes of this section only if its operational
area meets the following criteria:
(A) The area meets the size requirements
under section 1392(a)(3).
(B) The unemployment rate (as deter-
mined by the appropriate available data) is not
less than the national unemployment rate.
(C) The median family income of residents
of such area does not exceed 80 percent of the
median gross income of residents of the juris-
diction of the local government which includes
such area.
(f) QUALIFIED LOW-INCOME ASSISTANCE.—For pur-
poses of this section, the term ‘‘qualified low-income as-
sistance’’ means assistance—
(1) which is designed to provide employment of,
and business opportunities for, low-income individ-
816
uals who are residents of the operational area of the
community development corporation, and
(2) which is approved by the Secretary of Hous-
ing and Urban Development.
Subtitle D—Other Provisions
PART I—DISCLOSURE PROVISIONS
SEC. 14401. DISCLOSURE OF RETURN INFORMATION FOR
ADMINISTRATION OF CERTAIN VETERANS
PROGRAMS.
(a) GENERAL RULE.—Subparagraph (D) of section
6103(l)(7) (relating to disclosure of return information to
Federal, State, and local agencies administering certain
programs) is amended by striking ‘‘September 30, 1997’’
in the second sentence following clause (viii) and inserting
‘‘September 30, 1998’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 14402. DISCLOSURE OF RETURN INFORMATION TO
CARRY OUT INCOME CONTINGENT REPAY-
MENT OF STUDENT LOANS.
(a) GENERAL RULE.—Subsection (l) of section 6103
(relating to confidentiality and disclosure of returns and
return information) is amended by adding at the end
thereof the following new paragraph:
817
‘‘(13) DISCLOSURE OF RETURN INFORMATION
TO CARRY OUT INCOME CONTINGENT REPAYMENT
OF STUDENT LOANS.—
‘‘(A) IN
GENERAL.—The Secretary may,
upon written request from the Secretary of
Education, disclose to officers and employees of
the Department of Education return informa-
tion with respect to a taxpayer who has received
an applicable student loan and whose loan re-
payment amounts are based in whole or in part
on the taxpayer’s income. Such return informa-
tion shall be limited to—
‘‘(i) taxpayer identity information
with respect to such taxpayer,
‘‘(ii) the filing status of such tax-
payer, and
‘‘(iii) the adjusted gross income of
such taxpayer.
‘‘(B) RESTRICTION ON USE OF DISCLOSED
INFORMATION.—Return information disclosed
under subparagraph (A) may be used by offi-
cers and employees of the Department of Edu-
cation only for the purposes of, and to the ex-
tent necessary in, establishing the appropriate
818
income contingent repayment amount for an
applicable student loan.
‘‘(C) APPLICABLE
STUDENT
LOAN.—For
purposes of this paragraph, the term ‘applicable
student loan’ means—
‘‘(i) any loan made under the program
authorized under part D of title IV of the
Higher Education Act of 1965, and
‘‘(ii) any loan made under part B or
E of title IV of the Higher Education Act
of 1965 which is in default and has been
assigned to the Department of Education.
‘‘(D) 
TERMINATION.—This 
paragraph
shall not apply to any request made after Sep-
tember 30, 1998.’’
(b) CONFORMING AMENDMENTS.—
(1) So much of paragraph (4) of section
6103(m) as precedes subparagraph (B) thereof is
amended to read as follows:
‘‘(4) INDIVIDUALS WHO OWE AN OVERPAYMENT
OF
FEDERAL
PELL
GRANTS
OR
WHO
HAVE
DE-
FAULTED ON STUDENT LOANS ADMINISTERED BY
THE DEPARTMENT OF EDUCATION.—
‘‘(A) IN GENERAL.—Upon written request
by the Secretary of Education, the Secretary
819
may disclose the mailing address of any tax-
payer—
‘‘(i) who owes an overpayment of a
grant awarded to such taxpayer under sub-
part 1 of part A of title IV of the Higher
Education Act of 1965, or
‘‘(ii) who has defaulted on a loan—
‘‘(I) made under part B, D, or E
of title IV of the Higher Education
Act of 1965, or
‘‘(II) made pursuant to section
3(a)(1) of the Migration and Refugee
Assistance Act of 1962 to a student
at an institution of higher education,
for use only by officers, employees, or agents of
the Department of Education for purposes of
locating such taxpayer for purposes of collecting
such overpayment or loan.’’
(2) Subparagraph (B) of section 6103(m)(4) is
amended—
(A) in clause (i), by striking ‘‘under part
B’’ and inserting ‘‘under part B or D’’; and
(B) in clause (ii), by striking ‘‘under part
E’’ and inserting ‘‘under subpart 1 of part A,
or part D or E,’’;
820
(3) Section 6103(p) is amended—
(A) in paragraph (3)(A), by striking ‘‘(11),
or (12), (m)’’ and inserting ‘‘(11), (12), or
(13), (m)’’;
(B) in paragraph (4)—
(i) in the matter preceding subpara-
graph (A), by striking out ‘‘(10), or (11),’’
and inserting ‘‘(10), (11), or (13),’’, and
(ii) in subparagraph (F)(ii), by strik-
ing ‘‘(11), or (12),’’ and inserting ‘‘(11),
(12), or (13),’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
(d) STUDY OF INTERNAL REVENUE SERVICE COL-
LECTION OF STUDENT LOANS.—
(1) GENERAL
RULE.—The Secretary of the
Treasury, in consultation with the Secretary of Edu-
cation, shall conduct a study of the feasibility of im-
plementing a system for the repayment of Federal
student loans through wage withholding or other
means involving the Internal Revenue Service. Such
study shall include an examination of—
(A) whether the Internal Revenue Service
could implement such a system within its cur-
821
rent resources and without adversely affecting
the ability of the Internal Revenue Service to
collect tax revenues,
(B) the cumulative impact on voluntary
compliance with the tax system of increased dis-
closure of tax return information and increased
Internal Revenue Service involvement in nontax
collection activities,
(C) the anticipated effect on the manage-
ment of Federal student loan collections and on
borrower repayment of such loans, and
(D) the ability of the Internal Revenue
Service to effectively service student loans.
(2) RECOMMENDATIONS.—Not later than the
date 6 months after the date of the enactment of
this Act, the Secretary of the Treasury shall submit
to the Congress a report on the study conducted
under paragraph (1) (together with such legislative
recommendations as such Secretary may deem advis-
able).
SEC. 14403. USE OF RETURN INFORMATION FOR INCOME
VERIFICATION UNDER CERTAIN HOUSING AS-
SISTANCE PROGRAMS.
(a) IN GENERAL.—Subparagraph (D) of section
6103(l)(7) (relating to the disclosure of return information
822
to Federal, State, and local agencies administering certain
programs) is amended—
(1) in clause (vii), by striking ‘‘and’’ at the end;
(2) in clause (viii), by striking the period at the
end and inserting ‘‘; and’’;
(3) by inserting after clause (viii) the following
new clause:
‘‘(ix) any housing assistance program adminis-
tered by the Department of Housing and Urban De-
velopment that involves initial and periodic review of
an applicant’s or participant’s income, except that
return information may be disclosed under this
clause only on written request by the Secretary of
Housing and Urban Development and only for use
by officers and employees of the Department of
Housing and Urban Development with respect to ap-
plicants for and participants in such programs.’’;
and
(4) by adding at the end thereof the following:
‘‘Clause (ix) shall not apply after September 30,
1998.’’
(b) CONFORMING AMENDMENT.—The heading of
paragraph (7) of section 6103(l) is amended by inserting
after ‘‘CODE’’ the following: ‘‘, OR CERTAIN HOUSING AS-
SISTANCE PROGRAMS’’.
823
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
(d) STUDY.—The Secretary of the Treasury or his
delegate, in consultation with the Secretary of Housing
and Urban Development, shall conduct a study on—
(1) whether the information provided under sec-
tion 6103(l)(7)(D)(ix) of the Internal Revenue Code
of 1986 is being used effectively by the Department
of Housing and Urban Development,
(2) such Department’s compliance with the re-
quirements of section 6103(p) of such Code, and
(3) the impact on the privacy rights of appli-
cants for and participants in housing assistance pro-
grams administered by the Department of Housing
and Urban Development.
The report of such study shall be submitted before Janu-
ary 1, 1998, to the Congress.
PART II—USER FEE PROVISIONS
SEC. 14411. FEES FOR APPLICATIONS FOR ALCOHOL LA-
BELING AND FORMULA REVIEWS.
(a) IN GENERAL.—The Secretary of the Treasury or
his delegate (hereinafter in this section referred to as the
‘Secretary’) shall establish a program requiring the pay-
ment of user fees for—
824
(1) requests for each certificate of alcohol label
approval required under the Federal Alcohol Admin-
istration Act (27 U.S.C. 201 et seq.) and for each
request for exemption from such requirement, and
(2) requests for each formula review, and re-
quests for each statement of process (including lab-
oratory tests and analyses), under such Act or under
chapter 51 of the Internal Revenue Code of 1986.
(b) PROGRAM CRITERIA.—
(1) IN GENERAL.—The fees charged under the
program required by subsection (a) shall be deter-
mined such that the Secretary estimates that the ag-
gregate of such fees received during any fiscal year
will be $5,000,000.
(2) MINIMUM FEES.—The fee charged under
the program required by subsection (a) shall not be
less than—
(A) $50 for each request referred to in
subsection (a)(1), and
(B) $250 for each request referred to in
subsection (a)(2).
(c) APPLICATION OF SECTION.—Subsection (a) shall
apply to requests made on or after the 90th day after the
date of the enactment of this Act.
825
(d) DEPOSIT
AND CREDIT
AS OFFSETTING RE-
CEIPTS.—The amounts collected by the Secretary under
the program required by subsection (a) (to the extent such
amounts do not exceed $5,000,000) shall be deposited into
the Treasury as offsetting receipts and ascribed to the
alcohol compliance program of the Bureau of Alcohol, To-
bacco, and Firearms.
SEC. 14412. USE OF HARBOR MAINTENANCE TRUST FUND
AMOUNTS FOR ADMINISTRATIVE EXPENSES.
(a) IN GENERAL.—Paragraph (3) of section 9505(c)
(relating to expenditures from Harbor Maintenance Trust
Fund) is amended to read as follows:
‘‘(3) for the payment of all expenses of adminis-
tration incurred by the Department of the Treasury
in administering subchapter A of chapter 36 (relat-
ing to harbor maintenance tax), but not in excess of
$5,000,000 for any fiscal year.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to fiscal years beginning after
the date of the enactment of this Act.
SEC. 14413. INCREASE IN TAX ON FUEL USED IN COMMER-
CIAL TRANSPORTATION ON INLAND WATER-
WAYS.
(a) IN GENERAL.—The table contained in section
4042(a)(2)(A) is amended to read as follows:
826
‘‘If the use occurs during:
The tax per gallon is:
1994 ............................................................... 24 cents
1995 ............................................................... 40 cents
1996 ............................................................... 55 cents
1997 or thereafter ......................................... 70 cents.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on January 1, 1994.
PART III—PUBLIC DEBT LIMIT
SEC. 14421. INCREASE IN PUBLIC DEBT LIMIT.
(a) GENERAL RULE.—Subsection (b) of section 3101
of title 31, United States Code, is amended by striking
out the dollar limitation contained in such subsection and
inserting in lieu thereof ‘‘$4,900,000,000,000’’.
(b) REPEAL OF TEMPORARY INCREASE.—Effective
on and after the date of the enactment of this Act, section
1 of Public Law 103–12 is hereby repealed.
PART IV—VACCINE PROVISIONS
SEC. 14431. EXCISE TAX ON CERTAIN VACCINES MADE PER-
MANENT.
(a) TAX.—Subsection (c) of section 4131 (relating to
tax on certain vaccines) is amended to read as follows:
‘‘(c) APPLICATION OF SECTION.—The tax imposed by
this section shall apply—
‘‘(1) after December 31, 1987, and before Jan-
uary 1, 1993, and
‘‘(2) during periods after the date of the enact-
ment of this subsection.’’
827
(b) TRUST FUND.—Paragraph (1) of section 9510(c)
(relating to expenditures from Vaccine Injury Compensa-
tion Trust Fund) is amended by striking ‘‘and before Oc-
tober 1, 1992,’’.
(c) STUDY.—The Secretary of the Treasury, in con-
sultation with the Secretary of Health and Human Serv-
ices, shall conduct a study of—
(1) the estimated amount that will be paid from
the Vaccine Injury Compensation Trust Fund with
respect to vaccines administered after September 30,
1988,
(2) the rates of vaccine-related injury or death
with respect to the various types of such vaccines,
(3) new vaccines and immunization practices
being developed or used for which amounts may be
paid from such Trust Fund,
(4) whether additional vaccines should be in-
cluded in the vaccine injury compensation program,
and
(5) the appropriate treatment of vaccines pro-
duced by State governmental entities.
The report of such study shall be submitted not later than
1 year after the date of the enactment of this Act, to the
Committee on Ways and Means of the House of Rep-
resentatives and the Committee on Finance of the Senate.