931
(A) 
SPORT
FISH
RESTORATION
AC-
COUNT.—Paragraph (2) of section 9504(b) of
such Code is amended by striking ‘‘Surface
Transportation Extension Act of 2004’’ each
place it appears and inserting ‘‘Transportation
Equity Act: A Legacy for Users’’.
(B) BOAT SAFETY ACCOUNT.—Subsection
(c) of section 9504 of such Code is amended—
(i) by striking ‘‘May 1, 2004’’ and in-
serting ‘‘October 1, 2009’’, and
(ii) by striking ‘‘Surface Transpor-
tation Extension Act of 2004’’ and insert-
ing ‘‘Transportation Equity Act: A Legacy
for Users’’.
(C) EXCEPTION TO LIMITATION ON TRANS-
FERS.—Paragraph (2) of section 9504(d) of
such Code is amended by striking ‘‘May 1,
2004’’ and inserting ‘‘October 1, 2009’’.
932
Subtitle B—Restructuring of
Incentives for Alcohol Fuels, Etc.
SEC. 9201. REDUCED RATES OF TAX ON GASOHOL RE-
PLACED WITH EXCISE TAX CREDIT; REPEAL
OF OTHER ALCOHOL-BASED FUEL INCEN-
TIVES; ETC.
(a) EXCISE TAX CREDIT FOR ALCOHOL FUEL MIX-
TURES.—
(1) IN
GENERAL.—Subsection (f) of section
6427 is amended to read as follows:
‘‘(f) ALCOHOL FUEL MIXTURES.—
‘‘(1) IN
GENERAL.—The amount of credit
which would (but for section 40(c)) be determined
under section 40(a)(1) for any period—
‘‘(A) shall, with respect to taxable events
occurring during such period, be treated—
‘‘(i) as a payment of the taxpayer’s li-
ability for tax imposed by section 4081,
and
‘‘(ii) as received at the time of the
taxable event, and
‘‘(B) to the extent such amount of credit
exceeds such liability for such period, shall (ex-
cept as provided in subsection (k)) be paid sub-
933
ject to subsection (i)(3) by the Secretary with-
out interest.
‘‘(2) SPECIAL RULES.—
‘‘(A) ONLY
CERTAIN
ALCOHOL
TAKEN
INTO
ACCOUNT.—For purposes of paragraph
(1), section 40 shall be applied—
‘‘(i) by not taking into account alcohol
with a proof of less than 190, and
‘‘(ii) by treating as alcohol the alcohol
gallon equivalent of ethyl tertiary butyl
ether or other ethers produced from such
alcohol.
‘‘(B) TREATMENT
OF
REFINERS.—For
purposes of paragraph (1), in the case of a
mixture—
‘‘(i) the alcohol in which is described
in subparagraph (A)(ii), and
‘‘(ii) which is produced by any person
at a refinery prior to any taxable event,
section 40 shall be applied by treating such per-
son as having sold such mixture at the time of
its removal from the refinery (and only at such
time) to another person for use as a fuel.
‘‘(3) MIXTURES
NOT
USED
AS
FUEL.—Rules
similar to the rules of subparagraphs (A) and (D)
934
of section 40(d)(3) shall apply for purposes of this
subsection.
‘‘(4) TERMINATION.—This section shall apply
only to periods to which section 40 applies, deter-
mined by substituting in section 40(e)—
‘‘(A) ‘December 31, 2010’ for ‘December
31, 2007’, and
‘‘(B) ‘January 1, 2011’ for ‘January 1,
2008’.’’
(2) REVISION
OF
RULES
FOR
PAYMENT
OF
CREDIT.—Paragraph (3) of section 6427(i) is
amended to read as follows:
‘‘(3) SPECIAL
RULE
FOR
ALCOHOL
MIXTURE
CREDIT.—
‘‘(A) IN GENERAL.—A claim may be filed
under subsection (f)(1)(B) by any person for
any period—
‘‘(i) for which $200 or more is pay-
able under such subsection (f)(1)(B), and
‘‘(ii) which is not less than 1 week.
In the case of an electronic claim, this subpara-
graph shall be applied without regard to clause
(i).
‘‘(B) 
PAYMENT
OF
CLAIM.—Notwith-
standing subsection (f)(1)(B), if the Secretary
935
has not paid pursuant to a claim filed under
this section within 45 days of the date of the
filing of such claim (20 days in the case of an
electronic claim), the claim shall be paid with
interest from such date determined by using the
overpayment rate and method under section
6621.
‘‘(C) 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.’’
(b) REPEAL OF OTHER INCENTIVES FOR FUEL MIX-
TURES.—
(1) Subsection (b) of section 4041 is amended
to read as follows:
‘‘(b) EXEMPTION
FOR
OFF-HIGHWAY
BUSINESS
USE.—
‘‘(1) IN GENERAL.—No tax shall be imposed by
subsection (a) or (d)(1) on liquids sold for use or
used in an off-highway business use.
‘‘(2) TAX WHERE OTHER USE.—If a liquid on
which no tax was imposed by reason of paragraph
(1) is used otherwise than in an off-highway busi-
ness use, a tax shall be imposed by paragraph
936
(1)(B), (2)(B), or (3)(A)(ii) of subsection (a)
(whichever is appropriate) and by the corresponding
provision of subsection (d)(1) (if any).
‘‘(3) OFF-HIGHWAY BUSINESS USE DEFINED.—
For purposes of this subsection, the term ‘off-high-
way business use’ has the meaning given to such
term by section 6421(e)(2); except that such term
shall not, for purposes of subsection (a)(1), include
use in a diesel-powered train.’’
(2) Section 4041(k) is hereby repealed.
(3) Section 4081(c) is hereby repealed.
(4) Section 4091(c) is hereby repealed.
(c) TRANSFERS TO HIGHWAY TRUST FUND.—Para-
graph (4) of section 9503(b) is amended by adding ‘‘or’’
at the end of subparagraph (B), by striking the comma
at the end of subparagraph (C) and inserting a period,
and by striking subparagraphs (D), (E), and (F).
(d) CONFORMING AMENDMENTS.—
(1) Subsection (c) of section 40 is amended to
read as follows:
‘‘(c) COORDINATION
WITH
EXCISE
TAX
BENE-
FITS.—The amount of the credit determined under this
section with respect to any alcohol shall, under regulations
prescribed by the Secretary, be properly reduced to take
937
into account the benefit provided with respect to such alco-
hol under section 6427(f).’’
(2) Subparagraph (B) of section 40(d)(4) is
amended by striking ‘‘under section 4041(k) or
4081(c)’’ and inserting ‘‘under section 6427(f)’’.
(e) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided by para-
graph (2), the amendments made by this section
shall apply to fuel sold or used after September 30,
2004.
(2) SUBSECTION (c).—The amendments made
by subsection (c) shall apply to taxes imposed after
September 30, 2003.
SEC. 9202. ALCOHOL FUEL SUBSIDIES BORNE BY GENERAL
FUND.
(a) TRANSFERS TO FUND.—Section 9503(b)(1) is
amended by adding at the end the following new flush sen-
tence:
‘‘For purposes of this paragraph, the amount of
taxes received under section 4081 shall include any
amount treated as a payment under section
6427(f)(1)(A) and shall not be reduced by the
amount paid under section 6427(f)(1)(B).’’.
(b) TRANSFERS FROM FUND.—Subparagraph (A) of
section 9503(c)(2) is amended by adding at the end the
938
following new sentence: ‘‘Clauses (i)(III) and (ii) shall not
apply to claims under section 6427(f)(1)(B).’’
(c) EFFECTIVE DATE.—
(1) SUBSECTION (a).—The amendment made by
subsection (a) shall apply to taxes received after
September 30, 2004.
(2) SUBSECTION (b).—The amendment made by
subsection (b) shall apply to amounts paid after
September 30, 2004, and (to the extent related to
section 34 of the Internal Revenue Code of 1986) to
fuel used after such date.
Subtitle C—Reduction of Fuel Tax
Evasion
SEC. 9301. EXEMPTION FROM CERTAIN EXCISE TAXES FOR
MOBILE MACHINERY.
(a) EXEMPTION FROM TAX ON HEAVY TRUCKS AND
TRAILERS SOLD AT RETAIL.—
(1) IN GENERAL.—Section 4053 (relating to ex-
emptions) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(8) MOBILE MACHINERY.—Any vehicle which
consists of a chassis—
‘‘(A) to which there has been permanently
mounted (by welding, bolting, riveting, or other
means) machinery or equipment to perform a
939
construction, manufacturing, processing, farm-
ing, mining, drilling, timbering, or similar oper-
ation if the operation of the machinery or
equipment is unrelated to transportation on or
off the public highways,
‘‘(B) which has been specially designed to
serve only as a mobile carriage and mount (and
a power source, where applicable) for the par-
ticular machinery or equipment involved, wheth-
er or not such machinery or equipment is in op-
eration, and
‘‘(C) which, by reason of such special de-
sign, could not, without substantial structural
modification, be used as a component of a vehi-
cle designed to perform a function of trans-
porting any load other than that particular ma-
chinery or equipment or similar machinery or
equipment requiring such a specially designed
chassis.’’.
(2) EFFECTIVE DATE.—The amendment made
by this subsection shall take effect on the day after
the date of the enactment of this Act.
(b) EXEMPTION FROM TAX ON USE OF CERTAIN VE-
HICLES.—
940
(1) IN GENERAL.—Section 4483 (relating to ex-
emptions) is amended by redesignating subsection
(g) as subsection (h) and by inserting after sub-
section (f) the following new subsection:
‘‘(g) EXEMPTION FOR MOBILE MACHINERY.—No tax
shall be imposed by section 4481 on the use of any vehicle
described in section 4053(8).’’.
(2) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect on the day after
the date of the enactment of this Act.
(c) EXEMPTION FROM TAX ON TIRES.—
(1) 
IN
GENERAL.—Section 
4072(b)(2) 
is
amended by adding at the end the following flush
sentence: ‘‘Such term shall not include tires of a
type used exclusively on vehicles described in section
4053(8).’’.
(2) EFFECTIVE DATE.—The amendment made
by this subsection shall take effect on the day after
the date of the enactment of this Act.
(d) REFUND OF FUEL TAXES.—
(1) IN GENERAL.—Section 6421(e)(2) (defining
off-highway business use) is amended by adding at
the end the following new subparagraph:
‘‘(C) USES IN MOBILE MACHINERY.—
941
‘‘(i) IN
GENERAL.—The term ‘off-
highway business use’ shall include any use
in a vehicle which meets the requirements
described in clause (ii).
‘‘(ii) REQUIREMENTS
FOR
MOBILE
MACHINERY.—The requirements described
in this clause are—
‘‘(I) the design-based test, and
‘‘(II) the use-based test.
‘‘(iii) DESIGN-BASED TEST.—For pur-
poses of clause (ii)(I), the design-based
test is met if the vehicle consists of a
chassis—
‘‘(I) to which there has been per-
manently mounted (by welding, bolt-
ing, riveting, or other means) machin-
ery or equipment to perform a con-
struction, manufacturing, processing,
farming, mining, drilling, timbering,
or similar operation if the operation of
the machinery or equipment is unre-
lated to transportation on or off the
public highways,
‘‘(II) which has been specially de-
signed to serve only as a mobile car-
942
riage and mount (and a power source,
where applicable) for the particular
machinery or equipment involved,
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 pur-
poses of clause (ii)(II), the use-based test
is met if the use of the vehicle on public
highways was less than 7,500 miles during
the taxpayer’s taxable year.’’.
(2) NO
TAX-FREE
SALES.—Subsection (b) of
section 4082, as amended by section 9302, is
amended by inserting before the period at the end
‘‘and such term shall not include any use described
in section 6421(e)(2)(C)’’.
943
(3) ANNUAL REFUND OF TAX PAID.—Section
6427(i)(2) (relating to exceptions) is amended by
adding at the end the following new subparagraph:
‘‘(C) NONAPPLICATION OF PARAGRAPH.—
This paragraph shall not apply to any fuel used
solely in any off-highway business use described
in section 6421(e)(2)(C).’’.
(4) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years begin-
ning after the date of the enactment of this Act.
SEC. 9302. TAXATION OF AVIATION-GRADE KEROSENE.
(a) RATE OF TAX.—
(1) IN GENERAL.—Subparagraph (A) of section
4081(a)(2) is amended by striking ‘‘and’’ at the end
of clause (ii), by striking the period at the end of
clause (iii) and inserting ‘‘, and’’, and by adding at
the end the following new clause:
‘‘(iv) in the case of aviation-grade ker-
osene, 21.8 cents per gallon.’’.
(2) COMMERCIAL AVIATION.—Paragraph (2) of
section 4081(a) is amended by adding at the end the
following new subparagraph:
‘‘(C) TAXES IMPOSED ON FUEL USED IN
COMMERCIAL AVIATION.—In the case of avia-
tion-grade kerosene which is removed from any
945
way use is loaded with aviation-grade ker-
osene at such terminal.
‘‘(B) REQUIREMENTS.—A refueler truck,
tanker, or tank wagon meets the requirements
of this subparagraph with respect to an airport
if such truck, tanker, or wagon—
‘‘(i) is loaded with aviation-grade ker-
osene at such terminal located within such
airport and delivers such kerosene only
into aircraft at such airport,
‘‘(ii) has storage tanks, hose, and cou-
pling equipment designed and used for the
purposes of fueling aircraft,
‘‘(iii) is not registered for highway
use, and
‘‘(iv) is operated by—
‘‘(I) the terminal operator of
such terminal, or
‘‘(II) a person that makes a daily
accounting to such terminal operator
of each delivery of fuel from such
truck, tanker, or wagon.
‘‘(C) REPORTING.—The Secretary shall re-
quire under section 4101(d) reporting by such
terminal operator of—
946
‘‘(i) any information obtained under
subparagraph (B)(iv)(II), and
‘‘(ii) any similar information main-
tained by such terminal operator with re-
spect to deliveries of fuel made by trucks,
tankers, or wagons operated by such ter-
minal operator.’’.
(4) LIABILITY
FOR
TAX
ON
AVIATION-GRADE
KEROSENE USED IN COMMERCIAL AVIATION.—Sub-
section (a) of section 4081 is amended by adding at
the end the following new paragraph:
‘‘(4) LIABILITY FOR TAX ON AVIATION-GRADE
KEROSENE USED IN COMMERCIAL AVIATION.—For
purposes of paragraph (2)(C), the person who uses
the fuel for commercial aviation shall pay the tax
imposed under such paragraph. For purposes of the
preceding sentence, fuel shall be treated as used
when such fuel is removed into the fuel tank.’’.
(5) NONTAXABLE USES.—
(A) IN GENERAL.—Section 4082 is amend-
ed by redesignating subsections (e) and (f) as
subsections (f) and (g), respectively, and by in-
serting after subsection (d) the following new
subsection:
947
‘‘(e) AVIATION-GRADE KEROSENE.—In the case of
aviation-grade kerosene which is exempt from the tax im-
posed by section 4041(c) (other than by reason of a prior
imposition of tax) and which is removed from any refinery
or terminal directly into the fuel tank of an aircraft, the
rate of tax under section 4081(a)(2)(A)(iv) shall be zero.’’.
(B) CONFORMING AMENDMENTS.—
(i) Subsection (b) of section 4082 is
amended by adding at the end the fol-
lowing new flush sentence:
‘‘The term ‘nontaxable use’ does not include the use of
aviation-grade kerosene in an aircraft.’’.
(ii) Section 4082(d) is amended by
striking paragraph (1) and by redesig-
nating paragraphs (2) and (3) as para-
graphs (1) and (2), respectively.
(6) NONAIRCRAFT
USE
OF
AVIATION-GRADE
KEROSENE.—
(A) IN GENERAL.—Subparagraph (B) of
section 4041(a)(1) is amended by adding at the
end the following new sentence: ‘‘This subpara-
graph shall not apply to aviation-grade ker-
osene.’’.
(B) 
CONFORMING
AMENDMENT.—The
heading for paragraph (1) of section 4041(a) is
948
amended by inserting ‘‘AND KEROSENE’’ after
‘‘DIESEL FUEL’’.
(b) 
COMMERCIAL
AVIATION.—Section 
4083 
is
amended by redesignating subsections (b) and (c) as sub-
sections (c) and (d), respectively, and by inserting after
subsection (a) the following new subsection:
‘‘(b) COMMERCIAL AVIATION.—For purposes of this
subpart, the term ‘commercial aviation’ means any use of
an aircraft in a business of transporting persons or prop-
erty for compensation or hire by air, unless properly allo-
cable to any transportation exempt from the taxes imposed
by sections 4261 and 4271 by reason of section 4281 or
4282 or by reason of section 4261(h).’’.
(c) REFUNDS.—
(1) IN
GENERAL.—Paragraph (4) of section
6427(l) is amended to read as follows:
‘‘(4) REFUNDS
FOR
AVIATION-GRADE
KER-
OSENE.—
‘‘(A) NO REFUND OF CERTAIN TAXES ON
FUEL USED IN COMMERCIAL AVIATION.—In the
case of aviation-grade kerosene used in com-
mercial aviation (as defined in section 4083(b))
(other than supplies for vessels or aircraft with-
in the meaning of section 4221(d)(3)), para-
949
graph (1) shall not apply to so much of the tax
imposed by section 4081 as is attributable to—
‘‘(i) the Leaking Underground Stor-
age Tank Trust Fund financing rate im-
posed by such section, and
‘‘(ii) so much of the rate of tax speci-
fied in section 4081(a)(2)(A)(iv) as does
not exceed 4.3 cents per gallon.
‘‘(B) 
PAYMENT
TO
ULTIMATE, 
REG-
ISTERED
VENDOR.—With respect to aviation-
grade kerosene, if the ultimate purchaser of
such kerosene waives (at such time and in such
form and manner as the Secretary shall pre-
scribe) the right to payment under paragraph
(1) and assigns such right to the ultimate ven-
dor, then the Secretary shall pay the amount
which would be paid under paragraph (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).’’.
950
(2) TIME FOR FILING CLAIMS.—Subparagraph
(A) of section 6427(i)(4) is amended—
(A) by striking ‘‘subsection (l)(5)’’ both
places it appears and inserting ‘‘paragraph
(4)(B) or (5) of subsection (l)’’, and
(B) by striking ‘‘the preceding sentence’’
and inserting ‘‘subsection (l)(5)’’.
(3) CONFORMING AMENDMENT.—Subparagraph
(B) of section 6427(l)(2) is amended to read as fol-
lows:
‘‘(B) 
in 
the 
case 
of 
aviation-grade
kerosene—
‘‘(i) any use which is exempt from the
tax imposed by section 4041(c) other than
by reason of a prior imposition of tax, or
‘‘(ii) any use in commercial aviation
(within the meaning of section 4083(b)).’’.
(d) REPEAL
OF PRIOR TAXATION
OF AVIATION
FUEL.—
(1) IN GENERAL.—Part III of subchapter A of
chapter 32 is amended by striking subpart B and by
redesignating subpart C as subpart B.
(2) CONFORMING AMENDMENTS.—
(A) Section 4041(c) is amended to read as
follows:
951
‘‘(c) AVIATION-GRADE KEROSENE.—
‘‘(1) IN GENERAL.—There is hereby imposed a
tax upon aviation-grade kerosene—
‘‘(A) sold by any person to an owner, les-
see, or other operator of an aircraft for use in
such aircraft, or
‘‘(B) used by any person in an aircraft un-
less there was a taxable sale of such fuel under
subparagraph (A).
‘‘(2) EXEMPTION
FOR
PREVIOUSLY
TAXED
FUEL.—No tax shall be imposed by this subsection
on the sale or use of any aviation-grade kerosene if
tax was imposed on such liquid under section 4081
and the tax thereon was not credited or refunded.
‘‘(3) RATE OF TAX.—The rate of tax imposed
by this subsection shall be the rate of tax specified
in section 4081(a)(2)(A)(iv) which is in effect at the
time of such sale or use.’’.
(B) Section 4041(d)(2) is amended by
striking ‘‘section 4091’’ and inserting ‘‘section
4081’’.
(C) Section 4041 is amended by striking
subsection (e).
(D) Section 4041 is amended by striking
subsection (i).
952
(E) Sections 4101(a), 4103, 4221(a), and
6206 are each amended by striking ‘‘, 4081, or
4091’’ and inserting ‘‘or 4081’’.
(F) Section 6416(b)(2) is amended by
striking ‘‘4091 or’’.
(G) Section 6416(b)(3) is amended by
striking ‘‘or 4091’’ each place it appears.
(H) Section 6416(d) is amended by strik-
ing ‘‘or to the tax imposed by section 4091 in
the case of refunds described in section
4091(d)’’.
(I) Section 6427(j)(1) is amended by strik-
ing ‘‘, 4081, and 4091’’ and inserting ‘‘and
4081’’.
(J)(i) Section 6427(l)(1) is amended to
read as follows:
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection and in subsection (k), if any
diesel fuel or kerosene on which tax has been im-
posed by section 4041 or 4081 is used by any person
in a nontaxable use, the Secretary shall pay (without
interest) to the ultimate purchaser of such fuel an
amount equal to the aggregate amount of tax im-
posed on such fuel under section 4041 or 4081, as
953
the case may be, reduced by any payment made to
the ultimate vendor under paragraph (4)(B).’’.
(ii) Paragraph (5)(B) of section 6427(l) is
amended by striking ‘‘Paragraph (1)(A) shall
not apply to kerosene’’ and inserting ‘‘Para-
graph (1) shall not apply to kerosene (other
than aviation-grade kerosene)’’.
(K) 
Subparagraph 
(B) 
of 
section
6724(d)(1) is amended by striking clause (xv)
and by redesignating the succeeding clauses ac-
cordingly.
(L) Paragraph (2) of section 6724(d) is
amended by striking subparagraph (W) and by
redesignating the succeeding subparagraphs ac-
cordingly.
(M) Paragraph (1) of section 9502(b) is
amended by adding ‘‘and’’ at the end of sub-
paragraph (B) and by striking subparagraphs
(C) and (D) and inserting the following new
subparagraph:
‘‘(C) section 4081 with respect to aviation
gasoline and aviation-grade kerosene, and’’.
(N) The last sentence of section 9502(b) is
amended to read as follows:
954
‘‘There shall not be taken into account under paragraph
(1) so much of the taxes imposed by section 4081 as are
determined 
at 
the 
rate 
specified 
in 
section
4081(a)(2)(B).’’.
(O) Subsection (b) of section 9508 is
amended by striking paragraph (3) and by re-
designating paragraphs (4) and (5) as para-
graphs (3) and (4), respectively.
(P) Section 9508(c)(2)(A) is amended by
striking ‘‘sections 4081 and 4091’’ and insert-
ing ‘‘section 4081’’.
(Q) The table of subparts for part III of
subchapter A of chapter 32 is amended to read
as follows:
‘‘Subpart A. Motor and aviation fuels.
‘‘Subpart B. Special provisions applicable to fuels tax.’’.
(R) The heading for subpart A of part III
of subchapter A of chapter 32 is amended to
read as follows:
‘‘Subpart A—Motor and Aviation Fuels’’.
(S) The heading for subpart B of part III
of subchapter A of chapter 32, as redesignated
by paragraph (1), is amended to read as fol-
lows:
955
‘‘Subpart B—Special Provisions Applicable to Fuels
Tax’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to aviation-grade kerosene re-
moved, entered, or sold after September 30, 2004.
(f) FLOOR STOCKS TAX.—
(1) IN GENERAL.—There is hereby imposed on
aviation-grade kerosene held on October 1, 2004, by
any person a tax equal to—
(A) the tax which would have been imposed
before such date on such kerosene had the
amendments made by this section been in effect
at all times before such date, reduced by
(B) the tax imposed before such date
under section 4091 of the Internal Revenue
Code of 1986, as in effect on the day before the
date of the enactment of this Act.
(2) LIABILITY FOR TAX AND METHOD OF PAY-
MENT.—
(A) LIABILITY
FOR
TAX.—The person
holding the kerosene on October 1, 2004, to
which the tax imposed by paragraph (1) applies
shall be liable for such tax.
(B) METHOD AND TIME FOR PAYMENT.—
The tax imposed by paragraph (1) shall be paid
at such time and in such manner as the Sec-
956
retary of the Treasury (or the Secretary’s dele-
gate) shall prescribe, including the nonapplica-
tion of such tax on de minimis amounts of ker-
osene.
(3) TRANSFER
OF
FLOOR
STOCK
TAX
REVE-
NUES TO TRUST FUNDS.—For purposes of deter-
mining the amount transferred to any trust fund,
the tax imposed by this subsection shall be treated
as imposed by section 4081 of the Internal Revenue
Code of 1986—
(A) at the Leaking Underground Storage
Tank Trust Fund financing rate under such
section to the extent of 0.1 cents per gallon,
and
(B) 
at 
the 
rate 
under 
section
4081(a)(2)(A)(iv) to the extent of the remain-
der.
(4) HELD BY A PERSON.—For purposes of this
section, kerosene shall be considered as held by a
person if title thereto has passed to such person
(whether or not delivery to the person has been
made).
(5) OTHER LAWS APPLICABLE.—All provisions
of law, including penalties, applicable with respect to
the tax imposed by section 4081 of such Code shall,
957
insofar as applicable and not inconsistent with the
provisions of this subsection, apply with respect to
the floor stock tax imposed by paragraph (1) to the
same extent as if such tax were imposed by such
section.
SEC. 9303. DYE INJECTION EQUIPMENT.
(a) IN GENERAL.—Section 4082(a)(2) (relating to
exemptions for diesel fuel and kerosene) is amended by
inserting ‘‘by mechanical injection’’ after ‘‘indelibly dyed’’.
(b) DYE INJECTOR SECURITY.—Not later than 180
days after the date of the enactment of this Act, the Sec-
retary of the Treasury shall issue regulations regarding
mechanical dye injection systems described in the amend-
ment made by subsection (a), and such regulations shall
include standards for making such systems tamper resist-
ant.
(c) PENALTY FOR TAMPERING WITH OR FAILING TO
MAINTAIN SECURITY REQUIREMENTS FOR MECHANICAL
DYE INJECTION SYSTEMS.—
(1) IN GENERAL.—Part I of subchapter B of
chapter 68 (relating to assessable penalties) is
amended by adding after section 6715 the following
new section:
958
‘‘SEC. 6715A. TAMPERING WITH OR FAILING TO MAINTAIN
SECURITY 
REQUIREMENTS 
FOR 
MECHAN-
ICAL DYE INJECTION SYSTEMS.
‘‘(a) IMPOSITION OF PENALTY—
‘‘(1) TAMPERING.—If any person tampers with
a mechanical dye injection system used to indelibly
dye fuel for purposes of section 4082, such person
shall pay a penalty in addition to the tax (if any).
‘‘(2) FAILURE
TO
MAINTAIN
SECURITY
RE-
QUIREMENTS.—If any operator of a mechanical dye
injection system used to indelibly dye fuel for pur-
poses of section 4082 fails to maintain the security
standards for such system as established by the Sec-
retary, then such operator shall pay a penalty in ad-
dition to the tax (if any).
‘‘(b) AMOUNT OF PENALTY.—The amount of the
penalty 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
959
‘‘(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 offi-
cer, employee, or agent of such entity or other con-
tracting party who willfully participated in any act
giving rise to such penalty shall be jointly and sever-
ally liable 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
corporation of such entity shall be jointly and sever-
ally 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 re-
quirements for mechanical dye injection systems.’’.
(d) EFFECTIVE DATE.—The amendments made by
subsections (a) and (c) shall take effect on the 180th day
960
after the date on which the Secretary issues the regula-
tions described in subsection (b).
SEC. 9304. AUTHORITY TO INSPECT ON-SITE RECORDS.
(a) IN GENERAL.—Section 4083(d)(1)(A) (relating
to administrative authority), as previously amended by
this Act, is amended by striking ‘‘and’’ at the end of clause
(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. 9305. 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
refineries) 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’’.
961
(b) EFFECTIVE DATE.—The amendments made by
this section shall take effect on October 1, 2004.
(c) PUBLICATION OF REGISTERED PERSONS.—Be-
ginning on July 1, 2004, the Secretary of the Treasury
(or the Secretary’s delegate) shall periodically publish a
current list of persons registered under section 4101 of
the Internal Revenue Code of 1986 who are required to
register under such section.
SEC. 9306. DISPLAY OF REGISTRATION.
(a) IN GENERAL.—Subsection (a) of section 4101
(relating to registration) is amended—
(1) by striking ‘‘Every’’ and inserting the fol-
lowing:
‘‘(1) IN GENERAL.—Every’’, and
(2) by adding at the end the following new
paragraph:
‘‘(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 oper-
ator to transport any taxable fuel.’’.
(b) CIVIL PENALTY FOR FAILURE TO DISPLAY REG-
ISTRATION.—
962
(1) IN GENERAL.—Part I of subchapter B of
chapter 68 (relating to assessable penalties) is
amended by inserting after section 6716 the fol-
lowing new section:
‘‘SEC. 6717. FAILURE TO DISPLAY TAX REGISTRATION ON
VESSELS.
‘‘(a) FAILURE TO DISPLAY REGISTRATION.—Every
operator of a vessel who fails to display proof of registra-
tion 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 calendar month.
‘‘(b) MULTIPLE VIOLATIONS.—In determining the
penalty 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 aggregate num-
ber of penalties (if any) imposed with respect to prior
months 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
failure 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 is
963
amended by inserting after the item relating to sec-
tion 6716 the following new item:
‘‘Sec. 6717. Failure to display tax registration on vessels.’’.
(c) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendments made
by subsection (a) shall take effect on October 1,
2004.
(2) SUBSECTION (b).—The amendments made
by subsection (b) shall apply to penalties imposed
after September 30, 2004.
SEC. 9307. 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 amend-
ed by inserting ‘‘($10,000 in the case of a failure to reg-
ister under section 4101)’’ after ‘‘$50’’.
(b) INCREASED CRIMINAL PENALTY.—Section 7232
(relating to failure to register under section 4101, false
representations of registration status, etc.) is amended by
striking ‘‘$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) is
amended by inserting after section 6717 the fol-
lowing new section:
964
‘‘SEC. 6718. FAILURE TO REGISTER.
‘‘(a) FAILURE TO REGISTER.—Every person who is
required 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
penalty 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
failure 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 is
amended by inserting after the item relating to sec-
tion 6717 the following new item:
‘‘Sec. 6718. 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
amended by adding at the end the following new sec-
tion:
965
‘‘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 pur-
poses of subsection (a), the failures described in this sub-
section 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 informa-
tion required to be shown on such report or the in-
clusion of incorrect information.
‘‘(c) REASONABLE CAUSE EXCEPTION.—No penalty
shall be imposed under this section with respect to any
failure 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.’’.
966
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to penalties imposed after Sep-
tember 30, 2004.
SEC. 9308. COLLECTION FROM CUSTOMS BOND WHERE IM-
PORTER NOT REGISTERED.
(a) TAX AT POINT OF ENTRY WHERE IMPORTER
NOT REGISTERED.—Subpart B of part III of subchapter
A of chapter 32, as redesignated by section 9302(d), is
amended by adding after section 4103 the following new
section:
‘‘SEC. 4104. COLLECTION FROM CUSTOMS BOND WHERE IM-
PORTER NOT REGISTERED.
‘‘(a) IN GENERAL.—The importer of record shall be
jointly and severally liable for the tax imposed by section
4081(a)(1)(A)(iii) if, under regulations prescribed by the
Secretary, any other person that is not a person who is
registered under section 4101 is liable for such tax.
‘‘(b) COLLECTION FROM CUSTOMS BOND.—If any
tax for which any importer of record is liable under sub-
section (a), or for which any importer of record that is
not a person registered under section 4101 is otherwise
liable, is not paid on or before the last date prescribed
for payment, the Secretary may collect such tax from the
Customs bond posted with respect to the importation of
the taxable fuel to which the tax relates. For purposes of
967
determining the jurisdiction of any court of the United
States or any agency of the United States, any action by
the Secretary described in the preceding sentence shall be
treated as an action to collect the tax from a bond de-
scribed in section 4101(b)(1) and not as an action to col-
lect from a bond relating to the importation of merchan-
dise.’’.
(b) CONFORMING AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of chapter
32, as redesignated by section 9302(d), is amended by
adding after the item related to section 4103 the following
new item:
‘‘Sec. 4104. Collection from Customs bond where importer not
registered.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to fuel entered after
September 30, 2004.
SEC. 9309. MODIFICATIONS OF TAX ON USE OF CERTAIN VE-
HICLES.
(a) PRORATION OF TAX WHERE VEHICLE SOLD.—
(1) IN GENERAL.—Subparagraph (A) of section
4481(c)(2) (relating to where vehicle destroyed or
stolen) is amended by striking ‘‘destroyed or stolen’’
both places it appears and inserting ‘‘sold, de-
stroyed, or stolen’’.
968
(2) CONFORMING AMENDMENT.—The heading
for section 4481(c)(2) is amended by striking ‘‘DE-
STROYED
OR
STOLEN’’ and inserting ‘‘SOLD, DE-
STROYED, OR STOLEN’’.
(b) REPEAL OF INSTALLMENT PAYMENT.—
(1) Section 6156 (relating to installment pay-
ment of tax on use of highway motor vehicles) is re-
pealed.
(2) The table of sections for subchapter A of
chapter 62 is amended by striking the item relating
to section 6156.
(c) ELECTRONIC FILING.—Section 4481 is amended
by redesignating subsection (e) as subsection (f) and by
inserting after subsection (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 elec-
tronically.’’.
(d) REPEAL OF REDUCTION IN TAX FOR CERTAIN
TRUCKS.—Section 4483 is amended by striking subsection
(f).
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable periods beginning after
the date of the enactment of this Act.
969
SEC. 9310. 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)), paragraph (1) shall not apply to the
aggregate amount of such diesel fuel or ker-
osene if such amount does not exceed 250 gal-
lons 
(as 
determined 
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).’’.
970
(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
period—
‘‘(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 250
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.’’.
971
(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. 9311. DEDICATION OF REVENUES FROM CERTAIN PEN-
ALTIES TO THE HIGHWAY TRUST FUND.
(a) IN GENERAL.—Subsection (b) of section 9503
(relating to transfer to Highway Trust Fund of amounts
equivalent to certain taxes) is amended by redesignating
paragraph (5) as paragraph (6) and inserting after para-
graph (4) the following new paragraph:
‘‘(5) CERTAIN PENALTIES.—There are hereby
appropriated to the Highway Trust Fund amounts
equivalent to the penalties paid under sections 6715,
6715A, 6717, 6718, 6725, 7232, and 7272 (but only
with regard to penalties under such section related
to failure to register under section 4101).’’.
(b) CONFORMING AMENDMENTS.—
972
(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.
Subtitle D—Other Excise Tax
Provisions
SEC. 9401. 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 AD-
MINISTER
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
973
is for a use described in such subparagraph),
such 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 sub-
paragraph, 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 ultimate vendor.
‘‘(B) TIMING OF CLAIMS.—The procedure
and timing of any claim under subparagraph
(A) shall be the same as for claims under sec-
tion 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 quar-
ter of the taxable year that all ultimate pur-
chasers of the vendor covered by such claim are
certified and entitled to a refund under sub-
paragraph (C) or (D) of subsection (b)(2).’’.
(b) CREDIT CARD PURCHASES OF DIESEL FUEL OR
KEROSENE BY STATE AND LOCAL GOVERNMENTS.—Sec-
tion 6427(l)(5)(C) (relating to nontaxable uses of diesel
fuel, kerosene, and aviation fuel) is amended by adding
at the end the following new flush sentence: ‘‘For purposes
974
of this subparagraph, if the sale of diesel fuel or kerosene
is made by means of a credit card, the person extending
the credit to the ultimate purchaser 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. 9402. TWO-PARTY EXCHANGES.
(a) IN GENERAL.—Subpart B of part III of sub-
chapter A of chapter 32, as amended by this Act, is
amended by adding after section 4104 the following new
section:
‘‘SEC. 4105. TWO-PARTY EXCHANGES.
‘‘(a) IN GENERAL.—In a two-party exchange, the de-
livering person shall not be liable for the tax imposed
under 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 fuel
to a receiving person who is so registered where all of the
following occur:
‘‘(1) The transaction includes a transfer from
the delivering person, who holds the inventory posi-
tion for taxable fuel in the terminal as reflected in
the records of the terminal operator.
975
‘‘(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 taxable fuel across the terminal
rack for purposes of reporting the transaction to the
Secretary.
‘‘(4) The transaction is the subject of a written
contract.’’.
(b) CONFORMING AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of chapter
32, as amended by this Act, is amended by adding after
the item relating to section 4104 the following new item:
‘‘Sec. 4105. 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. 9403. SIMPLIFICATION OF TAX ON TIRES.
(a) IN GENERAL.—Subsection (a) of section 4071 is
amended to read as follows:
‘‘(a) IMPOSITION AND RATE OF TAX.—There is here-
by imposed on taxable tires sold by the manufacturer, pro-
ducer, or importer thereof a tax at the rate of 9.4 cents
(4.7 cents in the case of a biasply tire) for each 10 pounds
976
so much of the maximum rated load capacity thereof as
exceeds 3,500 pounds.’’
(b) TAXABLE TIRE.—Section 4072 is amended by re-
designating subsections (a) and (b) as subsections (b) and
(c), respectively, and by inserting before subsection (b) (as
so redesignated) the following new subsection:
‘‘(a) TAXABLE TIRE.—For purposes of this chapter,
the term ‘taxable tire’ means any tire of the type used
on highway vehicles if wholly or in part made of rubber
and if marked pursuant to Federal regulations for high-
way use.’’
(c) EXEMPTION FOR TIRES SOLD TO DEPARTMENT
OF DEFENSE.—Section 4073 is amended to read as fol-
lows:
‘‘SEC. 4073. EXEMPTIONS.
‘‘The tax imposed by section 4071 shall not apply to
tires sold for the exclusive use of the Department of De-
fense or the Coast Guard.’’
(d) CONFORMING AMENDMENTS.—
(1) Section 4071 is amended by striking sub-
section (c) and by moving subsection (e) after sub-
section (b) and redesignating subsection (e) as sub-
section (c).
977
(2) The item relating to section 4073 in the
table of sections for part II of subchapter A of chap-
ter 32 is amended to read as follows:
‘‘Sec. 4073. Exemptions.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to sales in calendar years begin-
ning more than 30 days after the date of the enactment
of this Act.
Subtitle E—Small Business
Expensing
SEC. 9501. 2-YEAR EXTENSION OF INCREASED EXPENSING
FOR SMALL BUSINESS.
Subsections (b), (c), and (d) of section 179 (as
amended by the Jobs and Growth Tax Relief Reconcili-
ation Act of 2003) are each amended by striking ‘‘2006’’
each place it appears and inserting ‘‘2008’’.
Subtitle F—Alternative Minimum
Tax Relief
SEC. 9601. NET OPERATING LOSSES AND FOREIGN TAX
CREDIT UNDER ALTERNATIVE MINIMUM TAX.
(a) NET OPERATING LOSSES.—
(1) IN GENERAL.—Subparagraph (A) of section
56(d)(1) is amended to read as follows:
‘‘(A) the amount of such deduction shall
not exceed the applicable percentage (deter-
mined under paragraph (3)) of the alternative
978
minimum taxable income determined without
regard to such deduction, and’’.
(2) APPLICABLE PERCENTAGE.—Subsection (d)
of section 56 is amended by adding at the end the
following new paragraph:
‘‘(3) APPLICABLE PERCENTAGE.—For purposes
of paragraph (1)(A)—
‘‘For taxable years beginning
The applicable
in calendar year—
percentage is—
2006, 2007, or 2008 ............................................................
2009 or 2010 .......................................................................
2011 .....................................................................................
2012 .....................................................................................
2013 or thereafter ................................................................ 100.’’
(b) FOREIGN TAX CREDIT.—
(1) Subsection (a) of section 59 is amended by
striking paragraph (2) and by redesignating para-
graphs (3) and (4) as paragraphs (2) and (3), re-
spectively.
(2) Section 53(d)(1)(B)(i)(II) is amended by
striking ‘‘and if section 59(a)(2) did not apply’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2005.
SEC. 9602. EXPANSION OF EXEMPTION FROM ALTERNATIVE
MINIMUM TAX FOR SMALL CORPORATIONS.
(a) IN GENERAL.—Subparagraphs (A) and (B) of
section 
55(e)(1) 
are 
each 
amended 
by 
striking
979
‘‘$7,500,000’’ each place it appears and inserting
‘‘$20,000,000’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 2005.
SEC. 9603. INCOME AVERAGING FOR FARMERS NOT TO IN-
CREASE ALTERNATIVE MINIMUM TAX.
(a) IN GENERAL.—Subsection (c) of section 55 (de-
fining regular tax) is amended by redesignating paragraph
(2) as paragraph (3) and by inserting after paragraph (1)
the following new paragraph:
‘‘(2) COORDINATION WITH INCOME AVERAGING
FOR FARMERS.—Solely for purposes of this section,
section 1301 (relating to averaging of farm income)
shall not apply in computing the regular tax liabil-
ity.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 2003.
TITLE X—RAIL PROVISIONS
SEC. 10001. HIGH-SPEED RAIL CORRIDOR DEVELOPMENT.
(a) CORRIDOR DEVELOPMENT.—
(1) AMENDMENTS.—Section 26101 of title 49,
United States Code, is amended—