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‘‘(2) FAILURE TO MAINTAIN SECURITY REQUIRE-
MENTS.—If any operator of a mechanical dye injec-
tion system used to indelibly dye fuel for purposes of 
section 4082 fails to maintain the security standards 
for such system as established by the Secretary, then 
such operator shall pay a penalty. 
‘‘(b) AMOUNT OF PENALTY.—The amount of the pen-
alty under subsection (a) shall be— 
‘‘(1) for each violation described in paragraph 
(1), the greater of— 
‘‘(A) $25,000, or 
‘‘(B) $10 for each gallon of fuel involved, 
and 
‘‘(2) for each— 
‘‘(A) failure to maintain security standards 
described in paragraph (2), $1,000, and 
‘‘(B) failure to correct a violation described 
in paragraph (2), $1,000 per day for each day 
after which such violation was discovered or such 
person should have reasonably known of such 
violation. 
‘‘(c) JOINT AND SEVERAL LIABILITY.— 
‘‘(1) IN
GENERAL.—If a penalty is imposed 
under this section on any business entity, each officer, 
employee, or agent of such entity or other contracting
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party who willfully participated in any act giving 
rise to such penalty shall be jointly and severally lia-
ble with such entity for such penalty. 
‘‘(2) AFFILIATED GROUPS.—If a business entity 
described in paragraph (1) is part of an affiliated 
group (as defined in section 1504(a)), the parent cor-
poration of such entity shall be jointly and severally 
liable with such entity for the penalty imposed under 
this section.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part I of subchapter B of chapter 68 is 
amended by adding after the item related to section 
6715 the following new item: 
‘‘Sec. 6715A. Tampering with or failing to maintain security requirements for 
mechanical dye injection systems.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
subsections (a) and (c) shall take effect 180 days after the 
date on which the Secretary issues the regulations described 
in subsection (b). 
SEC. 5222. ELIMINATION OF ADMINISTRATIVE REVIEW FOR 
TAXABLE USE OF DYED FUEL. 
(a) IN GENERAL.—Section 6715 is amended by insert-
ing at the end the following new subsection: 
‘‘(e) NO ADMINISTRATIVE APPEAL FOR THIRD AND 
SUBSEQUENT VIOLATIONS.—In the case of any person who 
is found to be subject to the penalty under this section after
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a chemical analysis of such fuel and who has been penalized 
under this section at least twice after the date of the enact-
ment of this subsection, no administrative appeal or review 
shall be allowed with respect to such finding except in the 
case of a claim regarding— 
‘‘(1) fraud or mistake in the chemical analysis, 
or 
‘‘(2) mathematical calculation of the amount of 
the penalty.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to penalties assessed after the date of 
the enactment of this Act. 
SEC. 5223. PENALTY ON UNTAXED CHEMICALLY ALTERED 
DYED FUEL MIXTURES. 
(a) IN GENERAL.—Section 6715(a) (relating to dyed 
fuel sold for use or used in taxable use, etc.) is amended 
by striking ‘‘or’’ in paragraph (2), by inserting ‘‘or’’ at the 
end of paragraph (3), and by inserting after paragraph (3) 
the following new paragraph: 
‘‘(4) any person who has knowledge that a dyed 
fuel which has been altered as described in paragraph 
(3) sells or holds for sale such fuel for any use which 
the person knows or has reason to know is not a non-
taxable use of such fuel,’’.
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HR 3550 EAS 
(b) CONFORMING AMENDMENT.—Section 6715(a)(3) is 
amended by striking ‘‘alters, or attempts to alter,’’ and in-
serting ‘‘alters, chemically or otherwise, or attempts to so 
alter,’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on the date of the enactment of this 
Act. 
SEC. 5224. TERMINATION OF DYED DIESEL USE BY INTER-
CITY BUSES. 
(a) IN GENERAL.—Paragraph (3) of section 4082(b) 
(relating to nontaxable use) is amended to read as follows: 
‘‘(3) 
any 
use 
described 
in 
section 
4041(a)(1)(C)(iii)(II).’’. 
(b) ULTIMATE VENDOR REFUND.—Subsection (b) of 
section 6427 is amended by adding at the end the following 
new paragraph: 
‘‘(4) REFUNDS FOR USE OF DIESEL FUEL IN 
CERTAIN INTERCITY BUSES.— 
‘‘(A) IN
GENERAL.—With respect to any 
fuel to which paragraph (2)(A) applies, if the ul-
timate purchaser of such fuel waives (at such 
time and in such form and manner as the Sec-
retary shall prescribe) the right to payment 
under paragraph (1) and assigns such right to 
the ultimate vendor, then the Secretary shall pay
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the amount which would be paid under para-
graph (1) to such ultimate vendor, but only if 
such ultimate vendor— 
‘‘(i) is registered under section 4101, 
and 
‘‘(ii) meets the requirements of sub-
paragraph (A), (B), or (D) of section 
6416(a)(1). 
‘‘(B) CREDIT CARDS.—For purposes of this 
paragraph, if the sale of such fuel is made by 
means of a credit card, the person extending 
credit to the ultimate purchaser shall be deemed 
to be the ultimate vendor.’’. 
(c) PAYMENT OF REFUNDS.—Subparagraph (A) of sec-
tion 6427(i)(4), as amended by section 5211 of this Act, 
is amended by inserting ‘‘subsections (b)(4) and’’ after 
‘‘filed under’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to fuel sold after September 30, 2004. 
PART III—MODIFICATION OF INSPECTION OF 
RECORDS PROVISIONS 
SEC. 5231. AUTHORITY TO INSPECT ON-SITE RECORDS. 
(a) IN GENERAL.—Section 4083(d)(1)(A) (relating to 
administrative authority), as amended by section 5211 of 
this Act, is amended by striking ‘‘and’’ at the end of clause
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(i) and by inserting after clause (ii) the following new 
clause: 
‘‘(iii) inspecting any books and records 
and any shipping papers pertaining to such 
fuel, and’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on the date of the enactment of this 
Act. 
SEC. 5232. ASSESSABLE PENALTY FOR REFUSAL OF ENTRY. 
(a) IN GENERAL.—Part I of subchapter B of chapter 
68 (relating to assessable penalties), as amended by section 
5221 of this Act, is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 6717. REFUSAL OF ENTRY. 
‘‘(a) IN GENERAL.—In addition to any other penalty 
provided by law, any person who refuses to admit entry 
or refuses to permit any other action by the Secretary au-
thorized by section 4083(d)(1) shall pay a penalty of $1,000 
for such refusal. 
‘‘(b) JOINT AND SEVERAL LIABILITY.— 
‘‘(1) IN
GENERAL.—If a penalty is imposed 
under this section on any business entity, each officer, 
employee, or agent of such entity or other contracting 
party who willfully participated in any act giving
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rise to such penalty shall be jointly and severally lia-
ble with such entity for such penalty. 
‘‘(2) AFFILIATED GROUPS.—If a business entity 
described in paragraph (1) is part of an affiliated 
group (as defined in section 1504(a)), the parent cor-
poration of such entity shall be jointly and severally 
liable with such entity for the penalty imposed under 
this section. 
‘‘(c) REASONABLE CAUSE EXCEPTION.—No penalty 
shall be imposed under this section with respect to any fail-
ure if it is shown that such failure is due to reasonable 
cause.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 4083(d)(3), as amended by section 
5211 of this Act, is amended— 
(A) by striking ‘‘ENTRY.—The penalty’’ and 
inserting: ‘‘ENTRY.— 
‘‘(A) FORFEITURE.—The penalty’’, and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(B) ASSESSABLE
PENALTY.—For addi-
tional assessable penalty for the refusal to admit 
entry or other refusal to permit an action by the 
Secretary authorized by paragraph (1), see sec-
tion 6717.’’.
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(2) The table of sections for part I of subchapter 
B of chapter 68, as amended by section 5221 of this 
Act, is amended by adding at the end the following 
new item: 
‘‘Sec. 6717. Refusal of entry.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on October 1, 2004. 
PART IV—REGISTRATION AND REPORTING 
REQUIREMENTS 
SEC. 5241. REGISTRATION OF PIPELINE OR VESSEL OPERA-
TORS REQUIRED FOR EXEMPTION OF BULK 
TRANSFERS TO REGISTERED TERMINALS OR 
REFINERIES. 
(a) IN GENERAL.—Section 4081(a)(1)(B) (relating to 
exemption for bulk transfers to registered terminals or refin-
eries) is amended— 
(1) by inserting ‘‘by pipeline or vessel’’ after 
‘‘transferred in bulk’’, and 
(2) by inserting ‘‘, the operator of such pipeline 
or vessel,’’ after ‘‘the taxable fuel’’. 
(b) CIVIL PENALTY FOR CARRYING TAXABLE FUELS 
BY NONREGISTERED PIPELINES OR VESSELS.— 
(1) IN GENERAL.—Part I of subchapter B of 
chapter 68 (relating to assessable penalties), as 
amended by section 5232 of this Act, is amended by 
adding at the end the following new section:
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‘‘SEC. 6718. CARRYING TAXABLE FUELS BY NONREGISTERED 
PIPELINES OR VESSELS. 
‘‘(a) IMPOSITION OF PENALTY.—If any person know-
ingly transfers any taxable fuel (as defined in section 
4083(a)(1)) in bulk pursuant to section 4081(a)(1)(B) to 
an unregistered, such person shall pay a penalty in addi-
tion to the tax (if any). 
‘‘(b) AMOUNT OF PENALTY.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the amount of the penalty under subsection 
(a) on each act shall be an amount equal to the great-
er of— 
‘‘(A) $10,000, or 
‘‘(B) $1 per gallon. 
‘‘(2) MULTIPLE
VIOLATIONS.—In determining 
the penalty under subsection (a) on any person, para-
graph (1) shall be applied by increasing the amount 
in paragraph (1) by the product of such amount and 
the number of prior penalties (if any) imposed by this 
section on such person (or a related person or any 
predecessor of such person or related person). 
‘‘(c) JOINT AND SEVERAL LIABILITY.— 
‘‘(1) IN
GENERAL.—If a penalty is imposed 
under this section on any business entity, each officer, 
employee, or agent of such entity or other contracting 
party who willfully participated in any act giving
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rise to such penalty shall be jointly and severally lia-
ble with such entity for such penalty. 
‘‘(2) AFFILIATED GROUPS.—If a business entity 
described in paragraph (1) is part of an affiliated 
group (as defined in section 1504(a)), the parent cor-
poration of such entity shall be jointly and severally 
liable with such entity for the penalty imposed under 
this section. 
‘‘(d) REASONABLE CAUSE EXCEPTION.—No penalty 
shall be imposed under this section with respect to any fail-
ure if it is shown that such failure is due to reasonable 
cause.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part I of subchapter B of chapter 68, as 
amended by section 5232 of this Act, is amended by 
adding at the end the following new item: 
‘‘Sec. 6718. Carrying taxable fuels by nonregistered pipelines or vessels.’’. 
(c) PUBLICATION
OF REGISTERED PERSONS.—Not 
later than June 30, 2004, the Secretary of the Treasury 
shall publish a list of persons required to be registered under 
section 4101 of the Internal Revenue Code of 1986. 
(d) EFFECTIVE DATE.—The amendments made by 
subsections (a) and (b) shall take effect on October 1, 2004. 
SEC. 5242. DISPLAY OF REGISTRATION. 
(a) IN GENERAL.—Subsection (a) of section 4101 (re-
lating to registration) is amended—
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(1) by striking ‘‘Every’’ and inserting the fol-
lowing: 
‘‘(1) IN GENERAL.—Every’’, and 
(2) by adding at the end the following new para-
graph: 
‘‘(2) DISPLAY OF REGISTRATION.—Every oper-
ator of a vessel required by the Secretary to register 
under this section shall display proof of registration 
through an electronic identification device prescribed 
by the Secretary on each vessel used by such operator 
to transport any taxable fuel.’’. 
(b) CIVIL PENALTY FOR FAILURE TO DISPLAY REG-
ISTRATION.— 
(1) IN GENERAL.—Part I of subchapter B of 
chapter 68 (relating to assessable penalties), as 
amended by section 5241 of this Act, is amended by 
adding at the end the following new section: 
‘‘SEC. 6719. FAILURE TO DISPLAY REGISTRATION OF VES-
SEL. 
‘‘(a) FAILURE
TO DISPLAY REGISTRATION.—Every 
operator of a vessel who fails to display proof of registration 
pursuant to section 4101(a)(2) shall pay a penalty of $500 
for each such failure. With respect to any vessel, only one 
penalty shall be imposed by this section during any cal-
endar month.
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‘‘(b) MULTIPLE VIOLATIONS.—In determining the pen-
alty under subsection (a) on any person, subsection (a) shall 
be applied by increasing the amount in subsection (a) by 
the product of such amount and the number of prior pen-
alties (if any) imposed by this section on such person (or 
a related person or any predecessor of such person or related 
person). 
‘‘(c) REASONABLE CAUSE EXCEPTION.—No penalty 
shall be imposed under this section with respect to any fail-
ure if it is shown that such failure is due to reasonable 
cause.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part I of subchapter B of chapter 68, as 
amended by section 5241 of this Act, is amended by 
adding at the end the following new item: 
‘‘Sec. 6719. Failure to display registration of vessel.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on October 1, 2004. 
SEC. 5243. REGISTRATION OF PERSONS WITHIN FOREIGN 
TRADE ZONES, ETC. 
(a) IN GENERAL.—Section 4101(a), as amended by 
section 5242 of this Act, is amended by redesignating para-
graph (2) as paragraph (3), and by inserting after para-
graph (1) the following new paragraph:
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HR 3550 EAS 
‘‘(2) REGISTRATION OF PERSONS WITHIN FOR-
EIGN TRADE ZONES, ETC..—The Secretary shall re-
quire registration by any person which— 
‘‘(A) operates a terminal or refinery within 
a foreign trade zone or within a customs bonded 
storage facility, or 
‘‘(B) holds an inventory position with re-
spect to a taxable fuel in such a terminal.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on October 1, 2004. 
SEC. 5244. PENALTIES FOR FAILURE TO REGISTER AND 
FAILURE TO REPORT. 
(a) INCREASED PENALTY.—Subsection (a) of section 
7272 (relating to penalty for failure to register) is amended 
by inserting ‘‘($10,000 in the case of a failure to register 
under section 4101)’’ after ‘‘$50’’. 
(b) INCREASED CRIMINAL PENALTY.—Section 7232 
(relating to failure to register under section 4101, false rep-
resentations of registration status, etc.) is amended by strik-
ing ‘‘$5,000’’ and inserting ‘‘$10,000’’. 
(c) ASSESSABLE PENALTY
FOR FAILURE
TO REG-
ISTER.— 
(1) IN GENERAL.—Part I of subchapter B of 
chapter 68 (relating to assessable penalties), as
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amended by section 5242 of this Act, is amended by 
adding at the end the following new section: 
‘‘SEC. 6720. FAILURE TO REGISTER. 
‘‘(a) FAILURE TO REGISTER.—Every person who is re-
quired to register under section 4101 and fails to do so shall 
pay a penalty in addition to the tax (if any). 
‘‘(b) AMOUNT OF PENALTY.—The amount of the pen-
alty under subsection (a) shall be— 
‘‘(1) $10,000 for each initial failure to register, 
and 
‘‘(2) $1,000 for each day thereafter such person 
fails to register. 
‘‘(c) REASONABLE CAUSE EXCEPTION.—No penalty 
shall be imposed under this section with respect to any fail-
ure if it is shown that such failure is due to reasonable 
cause.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part I of subchapter B of chapter 68, as 
amended by section 5242 of this Act, is amended by 
adding at the end the following new item: 
‘‘Sec. 6720. Failure to register.’’. 
(d) ASSESSABLE PENALTY
FOR FAILURE
TO RE-
PORT.— 
(1) IN GENERAL.—Part II of subchapter B of 
chapter 68 (relating to assessable penalties) is amend-
ed by adding at the end the following new section:
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HR 3550 EAS 
‘‘SEC. 6725. FAILURE TO REPORT INFORMATION UNDER 
SECTION 4101. 
‘‘(a) IN GENERAL.—In the case of each failure de-
scribed in subsection (b) by any person with respect to a 
vessel or facility, such person shall pay a penalty of $10,000 
in addition to the tax (if any). 
‘‘(b) FAILURES SUBJECT TO PENALTY.—For purposes 
of subsection (a), the failures described in this subsection 
are— 
‘‘(1) any failure to make a report under section 
4101(d) on or before the date prescribed therefor, and 
‘‘(2) any failure to include all of the information 
required to be shown on such report or the inclusion 
of incorrect information. 
‘‘(c) REASONABLE CAUSE EXCEPTION.—No penalty 
shall be imposed under this section with respect to any fail-
ure if it is shown that such failure is due to reasonable 
cause.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part II of subchapter B of chapter 68 is 
amended by adding at the end the following new item: 
‘‘Sec. 6725. Failure to report information under section 4101.’’. 
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to failures pending or occurring after 
September 30, 2004.
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SEC. 5245. INFORMATION REPORTING FOR PERSONS CLAIM-
ING CERTAIN TAX BENEFITS. 
(a) IN GENERAL.—Subpart C of part III of subchapter 
A of chapter 32 is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 
4104. 
INFORMATION 
REPORTING 
FOR 
PERSONS 
CLAIMING CERTAIN TAX BENEFITS. 
‘‘(a) IN GENERAL.—The Secretary shall require any 
person claiming tax benefits— 
‘‘(1) under the provisions of section 34, 40, and 
40A to file a return at the time such person claims 
such benefits (in such manner as the Secretary may 
prescribe), and 
‘‘(2) under the provisions of section 4041(b)(2), 
6426, or 6427(e) to file a monthly return (in such 
manner as the Secretary may prescribe). 
‘‘(b) CONTENTS OF RETURN.—Any return filed under 
this section shall provide such information relating to such 
benefits and the coordination of such benefits as the Sec-
retary may require to ensure the proper administration and 
use of such benefits. 
‘‘(c) ENFORCEMENT.—With respect to any person de-
scribed in subsection (a) and subject to registration require-
ments under this title, rules similar to rules of section 
4222(c) shall apply with respect to any requirement under 
this section.’’.
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HR 3550 EAS 
(b) CONFORMING AMENDMENT.—The table of sections 
for subpart C of part III of subchapter A of chapter 32 
is amended by adding at the end the following new item: 
‘‘Sec. 4104. Information reporting for persons claiming certain tax benefits.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on October 1, 2004. 
SEC. 5246. ELECTRONIC REPORTING. 
(a) IN GENERAL.—Section 4101(d), as amended by 
section 5273 of this Act, is amended by adding at the end 
the following new sentence: ‘‘Any person who is required 
to report under this subsection and who has 25 or more 
reportable transactions in a month shall file such report 
in electronic format.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply on October 1, 2004. 
PART V—IMPORTS 
SEC. 5251. TAX AT POINT OF ENTRY WHERE IMPORTER NOT 
REGISTERED. 
(a) TAX AT POINT OF ENTRY WHERE IMPORTER NOT 
REGISTERED.— 
(1) IN GENERAL.—Subpart C of part III of sub-
chapter A of chapter 31, as amended by section 5245 
of this Act, is amended by adding at the end the fol-
lowing new section:
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HR 3550 EAS 
‘‘SEC. 4105. TAX AT ENTRY WHERE IMPORTER NOT REG-
ISTERED. 
‘‘(a) IN GENERAL.—Any tax imposed under this part 
on any person not registered under section 4101 for the 
entry of a fuel into the United States shall be imposed at 
the time and point of entry. 
‘‘(b) ENFORCEMENT OF ASSESSMENT.—If any person 
liable for any tax described under subsection (a) has not 
paid the tax or posted a bond, the Secretary may— 
‘‘(1) seize the fuel on which the tax is due, or 
‘‘(2) detain any vehicle transporting such fuel, 
until such tax is paid or such bond is filed. 
‘‘(c) LEVY OF FUEL.—If no tax has been paid or no 
bond has been filed within 5 days from the date the Sec-
retary seized fuel pursuant to subsection (b), the Secretary 
may sell such fuel as provided under section 6336.’’. 
(2) CONFORMING AMENDMENT.—The table of sec-
tions for subpart C of part III of subchapter A of 
chapter 31 of the Internal Revenue Code of 1986, as 
amended by section 5245 of this Act, is amended by 
adding after the last item the following new item: 
‘‘Sec. 4105. Tax at entry where importer not registered.’’. 
(b) DENIAL OF ENTRY WHERE TAX NOT PAID.—The 
Secretary of Homeland Security is authorized to deny entry 
into the United States of any shipment of a fuel which is 
taxable under section 4081 of the Internal Revenue Code
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HR 3550 EAS 
of 1986 if the person entering such shipment fails to pay 
the tax imposed under such section or post a bond in ac-
cordance with the provisions of section 4105 of such Code. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on the date of the enactment of this 
Act. 
SEC. 5252. RECONCILIATION OF ON-LOADED CARGO TO EN-
TERED CARGO. 
(a) IN GENERAL.—Subsection (a) of section 343 of the 
Trade Act of 2002 is amended by inserting at the end the 
following new paragraph: 
‘‘(4) IN GENERAL.—Subject to paragraphs (2) 
and (3), not later than 1 year after the enactment of 
this paragraph, the Secretary of Homeland Security, 
together with the Secretary of the Treasury, shall pro-
mulgate regulations providing for the transmission to 
the Internal Revenue Service, through an electronic 
data interchange system, of information pertaining to 
cargo of taxable fuels (as defined in section 4083 of 
the Internal Revenue Code of 1986) destined for im-
portation into the United States prior to such impor-
tation.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall take effect on the date of the enactment of this 
Act.
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PART VI—MISCELLANEOUS PROVISIONS 
SEC. 5261. TAX ON SALE OF DIESEL FUEL WHETHER SUIT-
ABLE FOR USE OR NOT IN A DIESEL-POW-
ERED VEHICLE OR TRAIN. 
(a) IN GENERAL.—Section 4083(a)(3) is amended— 
(1) by striking ‘‘The term’’ and inserting the fol-
lowing: 
‘‘(A) IN GENERAL.—The term’’, and 
(2) by inserting at the end the following new 
subparagraph: 
‘‘(B) LIQUID SOLD AS DIESEL FUEL.—The 
term ‘diesel fuel’ includes any liquid which is 
sold as or offered for sale as a fuel in a diesel- 
powered highway vehicle or a diesel-powered 
train.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 40A(b)(1)(B), as amended by section 
5103 of this Act, is amended by striking ‘‘4083(a)(3)’’ 
and inserting ‘‘4083(a)(3)(A)’’. 
(2) Section 6426(c)(3), as added by section 5102 
of this Act, is amended by striking ‘‘4083(a)(3)’’ and 
inserting ‘‘4083(a)(3)(A)’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on the date of the enactment of this 
Act.
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HR 3550 EAS 
SEC. 5262. MODIFICATION OF ULTIMATE VENDOR REFUND 
CLAIMS WITH RESPECT TO FARMING. 
(a) IN GENERAL.— 
(1) REFUNDS.—Section 6427(l) is amended by 
adding at the end the following new paragraph: 
‘‘(6) REGISTERED VENDORS PERMITTED TO AD-
MINISTER CERTAIN CLAIMS FOR REFUND OF DIESEL 
FUEL AND KEROSENE SOLD TO FARMERS.— 
‘‘(A) IN GENERAL.—In the case of diesel fuel 
or kerosene used on a farm for farming purposes 
(within the meaning of section 6420(c)), para-
graph (1) shall not apply to the aggregate 
amount of such diesel fuel or kerosene if such 
amount does not exceed 500 gallons (as deter-
mined under subsection (i)(5)(A)(iii)). 
‘‘(B) PAYMENT TO ULTIMATE VENDOR.—The 
amount which would (but for subparagraph (A)) 
have been paid under paragraph (1) with respect 
to any fuel shall be paid to the ultimate vendor 
of such fuel, if such vendor— 
‘‘(i) is registered under section 4101, 
and 
‘‘(ii) meets the requirements of sub-
paragraph (A), (B), or (D) of section 
6416(a)(1).’’.
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HR 3550 EAS 
(2) FILING
OF
CLAIMS.—Section 6427(i) is 
amended by inserting at the end the following new 
paragraph: 
‘‘(5) SPECIAL RULE FOR VENDOR REFUNDS WITH 
RESPECT TO FARMERS.— 
‘‘(A) IN GENERAL.—A claim may be filed 
under subsection (l)(6) by any person with re-
spect to fuel sold by such person for any pe-
riod— 
‘‘(i) for which $200 or more ($100 or 
more in the case of kerosene) is payable 
under subsection (l)(6), 
‘‘(ii) which is not less than 1 week, 
and 
‘‘(iii) which is for not more than 500 
gallons for each farmer for which there is a 
claim. 
Notwithstanding subsection (l)(1), paragraph 
(3)(B) shall apply to claims filed under the pre-
ceding sentence. 
‘‘(B) TIME FOR FILING CLAIM.—No claim 
filed under this paragraph shall be allowed un-
less filed on or before the last day of the first 
quarter following the earliest quarter included in 
the claim.’’.
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HR 3550 EAS 
(3) CONFORMING AMENDMENTS.— 
(A) Section 6427(l)(5)(A) is amended to 
read as follows: 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply to diesel fuel or kerosene used by a 
State or local government.’’. 
(B) The heading for section 6427(l)(5) is 
amended by striking ‘‘FARMERS AND’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to fuels sold for nontaxable use after the 
date of the enactment of this Act. 
SEC. 5263. TAXABLE FUEL REFUNDS FOR CERTAIN ULTI-
MATE VENDORS. 
(a) IN GENERAL.—Paragraph (4) of section 6416(a) 
(relating to abatements, credits, and refunds) is amended 
to read as follows: 
‘‘(4) REGISTERED ULTIMATE VENDOR TO ADMIN-
ISTER CREDITS AND REFUNDS OF GASOLINE TAX.— 
‘‘(A) IN
GENERAL.—For purposes of this 
subsection, if an ultimate vendor purchases any 
gasoline on which tax imposed by section 4081 
has been paid and sells such gasoline to an ulti-
mate purchaser described in subparagraph (C) 
or (D) of subsection (b)(2) (and such gasoline is 
for a use described in such subparagraph), such
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ultimate vendor shall be treated as the person 
(and the only person) who paid such tax, but 
only if such ultimate vendor is registered under 
section 4101. For purposes of this subparagraph, 
if the sale of gasoline is made by means of a 
credit card, the person extending the credit to the 
ultimate purchaser shall be deemed to be the ulti-
mate vendor. 
‘‘(B) TIMING
OF
CLAIMS.—The procedure 
and timing of any claim under subparagraph 
(A) shall be the same as for claims under section 
6427(i)(4), except that the rules of section 
6427(i)(3)(B) regarding electronic claims shall 
not apply unless the ultimate vendor has cer-
tified to the Secretary for the most recent quarter 
of the taxable year that all ultimate purchasers 
of the vendor are certified and entitled to a re-
fund under subparagraph (C) or (D) of sub-
section (b)(2).’’. 
(b) CREDIT CARD PURCHASES OF DIESEL FUEL OR 
KEROSENE BY STATE AND LOCAL GOVERNMENTS.—Section 
6427(l)(5)(C) (relating to nontaxable uses of diesel fuel, ker-
osene, and aviation fuel), as amended by section 5252 of 
this Act, is amended by adding at the end the following 
new sentence: ‘‘For purposes of this subparagraph, if the
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sale of diesel fuel or kerosene is made by means of a credit 
card, the person extending the credit to the ultimate pur-
chaser shall be deemed to be the ultimate vendor.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on October 1, 2004. 
SEC. 5264. TWO-PARTY EXCHANGES. 
(a) IN GENERAL.—Subpart C of part III of subchapter 
A of chapter 32, as amended by section 5251 of this Act, 
is amended by adding at the end the following new section: 
‘‘SEC. 4106. TWO-PARTY EXCHANGES. 
‘‘(a) IN GENERAL.—In a two-party exchange, the de-
livering person shall not be liable for the tax imposed under 
of section 4081(a)(1)(A)(ii). 
‘‘(b) TWO-PARTY EXCHANGE.—The term ‘two-party 
exchange’ means a transaction, other than a sale, in which 
taxable fuel is transferred from a delivering person reg-
istered under section 4101 as a taxable fuel registrant to 
a receiving person who is so registered where all of the fol-
lowing occur: 
‘‘(1) The transaction includes a transfer from the 
delivering person, who holds the inventory position 
for taxable fuel in the terminal as reflected in the 
records of the terminal operator.
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‘‘(2) The exchange transaction occurs before or 
contemporaneous with completion of removal across 
the rack from the terminal by the receiving person. 
‘‘(3) The terminal operator in its books and 
records treats the receiving person as the person that 
removes the product across the terminal rack for pur-
poses of reporting the transaction to the Secretary. 
‘‘(4) The transaction is the subject of a written 
contract.’’. 
(b) CONFORMING AMENDMENT.—The table of sections 
for subpart C of part III of subchapter A of chapter 32, 
as amended by section 5251 of this Act, is amended by add-
ing after the last item the following new item: 
‘‘Sec. 4106. Two-party exchanges.’’. 
(c) EFFECTIVE DATE.—The amendment made by this 
section shall take effect on the date of the enactment of this 
Act. 
SEC. 5265. MODIFICATIONS OF TAX ON USE OF CERTAIN VE-
HICLES. 
(a) NO PRORATION OF TAX UNLESS VEHICLE IS DE-
STROYED OR STOLEN.— 
(1) IN GENERAL.—Section 4481(c) (relating to 
proration of tax) is amended to read as follows: 
‘‘(c) PRORATION OF TAX WHERE VEHICLE SOLD, DE-
STROYED, OR STOLEN.—
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‘‘(1) IN GENERAL.—If in any taxable period a 
highway motor vehicle is sold, destroyed, or stolen be-
fore the first day of the last month in such period and 
not subsequently used during such taxable period, the 
tax shall be reckoned proportionately from the first 
day of the month in such period in which the first use 
of such highway motor vehicle occurs to and including 
the last day of the month in which such highway 
motor vehicle was sold, destroyed, or stolen. 
‘‘(2) DESTROYED.—For purposes of paragraph 
(1), a highway motor vehicle is destroyed if such vehi-
cle is damaged by reason of an accident or other cas-
ualty to such an extent that it is not economic to re-
build.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 6156 (relating to installment 
payment of tax on use of highway motor vehi-
cles) is repealed. 
(B) The table of sections for subchapter A of 
chapter 62 is amended by striking the item relat-
ing to section 6156. 
(b) DISPLAY OF TAX CERTIFICATE.—Paragraph (2) of 
section 4481(d) (relating to one tax liability for period) is 
amended to read as follows:
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‘‘(2) DISPLAY OF TAX CERTIFICATE.—Every tax-
payer which pays the tax imposed under this section 
with respect to a highway motor vehicle shall, not 
later than 1 month after the due date of the return 
of tax with respect to each taxable period, receive and 
display on such vehicle an electronic identification 
device prescribed by the Secretary.’’. 
(c) ELECTRONIC FILING.—Section 4481, as amended 
by section 5001 of this Act, is amended by redesignating 
subsection (e) as subsection (f) and by inserting after sub-
section (d) the following new subsection: 
‘‘(e) ELECTRONIC FILING.—Any taxpayer who files a 
return under this section with respect to 25 or more vehicles 
for any taxable period shall file such return electronically.’’. 
(d) REPEAL
OF
REDUCTION
IN
TAX
FOR
CERTAIN 
TRUCKS.—Section 4483 of the Internal Revenue Code of 
1986 is amended by striking subsection (f). 
(e) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall 
apply to taxable periods beginning after the date of 
the enactment of this Act. 
(2) SUBSECTION (b).—The amendment made by 
subsection (b) shall take effect on October 1, 2005.
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SEC. 5266. DEDICATION OF REVENUES FROM CERTAIN PEN-
ALTIES TO THE HIGHWAY TRUST FUND. 
(a) IN GENERAL.—Subsection (b) of section 9503 (re-
lating to transfer to Highway Trust Fund of amounts 
equivalent to certain taxes), as amended by section 5001 
of this Act, is amended by redesignating paragraph (5) as 
paragraph (6) and inserting after paragraph (4) the fol-
lowing new paragraph: 
‘‘(5) CERTAIN PENALTIES.—There are hereby ap-
propriated to the Highway Trust Fund amounts 
equivalent to the penalties assessed under sections 
6715, 6715A, 6717, 6718, 6719, 6720, 6725, 7232, 
and 7272 (but only with regard to penalties under 
such section related to failure to register under section 
4101).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) The heading of subsection (b) of section 9503 
is amended by inserting ‘‘AND PENALTIES’’ after 
‘‘TAXES’’. 
(2) The heading of paragraph (1) of section 
9503(b) is amended by striking ‘‘IN GENERAL’’ and 
inserting ‘‘CERTAIN TAXES’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to penalties assessed after October 1, 
2004.
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SEC. 5267. NONAPPLICATION OF EXPORT EXEMPTION TO 
DELIVERY OF FUEL TO MOTOR VEHICLES RE-
MOVED FROM UNITED STATES. 
(a) IN GENERAL.—Section 4221(d)(2) (defining ex-
port) is amended by adding at the end the following new 
sentence: ‘‘Such term does not include the delivery of a tax-
able fuel (as defined in section 4083(a)(1)) into a fuel tank 
of a motor vehicle which is shipped or driven out of the 
United States.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 4041(g) (relating to other exemp-
tions) is amended by adding at the end the following 
new sentence: ‘‘Paragraph (3) shall not apply to the 
sale for delivery of a liquid into a fuel tank of a 
motor vehicle which is shipped or driven out of the 
United States.’’. 
(2) Clause (iv) of section 4081(a)(1)(A) (relating 
to tax on removal, entry, or sale) is amended by in-
serting ‘‘or at a duty-free sales enterprise (as defined 
in section 555(b)(8) of the Tariff Act of 1930)’’ after 
‘‘section 4101’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to sales or deliveries made after the date 
of the enactment of this Act.
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whether or not such machinery or 
equipment is in operation, and 
‘‘(III) which, by reason of such 
special design, could not, without sub-
stantial structural modification, be 
used as a component of a vehicle de-
signed to perform a function of trans-
porting any load other than that par-
ticular machinery or equipment or 
similar machinery or equipment re-
quiring such a specially designed chas-
sis. 
‘‘(iv) USE-BASED TEST.—For purposes 
of clause (ii)(II), the use-based test is met if 
the use of the vehicle on public highways 
was less than 5,000 miles during the tax-
payer’s taxable year. 
‘‘(v) SPECIAL RULE FOR USE BY CER-
TAIN TAX-EXEMPT ORGANIZATIONS.—In the 
case of any use in a vehicle by an organiza-
tion which is described in section 501(c) 
and exempt from tax under section 501(a), 
clause (ii) shall be applied without regard 
to subclause (II) thereof.’’.