326 
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: 
‘‘(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:
327 
‘‘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 
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-
328 
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-
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
329 
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).’’. 
(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 ker-
osene—
330 
‘‘(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: 
‘‘(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
331 
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). 
(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)’’.
333 
(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: 
‘‘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’’.
334 
(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: 
‘‘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
335 
(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-
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
336 
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, 
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. 653. 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
337 
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: 
‘‘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-