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Secretary determines that an opinion of the General Coun-
sel for the Department of the Treasury, or the Counsel’s del-
egate, is required with respect to a compromise, there shall
be placed on file in the office of the Secretary such opinion’’.
(b) CONFORMING AMENDMENTS.—Section 7122(b) is
amended by striking the second and third sentences.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to offers-in-compromise submitted or
pending on or after the date of the enactment of this Act.
SEC. 5534. PARTIAL PAYMENTS REQUIRED WITH SUBMIS-
SION OF OFFERS-IN-COMPROMISE.
(a) IN GENERAL.—Section 7122 (relating to com-
promises), as amended by this Act, is amended by redesig-
nating subsections (c), (d), and (e) as subsections (d), (e),
and (f), respectively, and by inserting after subsection (b)
the following new subsection:
‘‘(c) RULES
FOR SUBMISSION
OF OFFERS-IN-COM-
PROMISE.—
‘‘(1) PARTIAL PAYMENT REQUIRED WITH SUB-
MISSION.—
‘‘(A) LUMP-SUM OFFERS.—
‘‘(i) IN GENERAL.—The submission of
any lump-sum offer-in-compromise shall be
accompanied by the payment of 20 percent
of amount of such offer.
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‘‘(ii) 
LUMP-SUM
OFFER-IN-COM-
PROMISE.—For purposes of this section, the
term ‘lump-sum offer-in-compromise’ means
any offer of payments made in 5 or fewer
installments.
‘‘(B) PERIODIC
PAYMENT
OFFERS.—The
submission of any periodic payment offer-in-
compromise shall be accompanied by the pay-
ment of the amount of the first proposed install-
ment and each proposed installment due during
the period such offer is being evaluated for ac-
ceptance and has not been rejected by the Sec-
retary. Any failure to make a payment required
under the preceding sentence shall be deemed a
withdrawal of the offer-in-compromise.
‘‘(2) RULES OF APPLICATION.—
‘‘(A) USE OF PAYMENT.—The application of
any payment made under this subsection to the
assessed tax or other amounts imposed under this
title with respect to such tax may be specified by
the taxpayer.
‘‘(B) NO USER FEE IMPOSED.—Any user fee
which would otherwise be imposed under this sec-
tion shall not be imposed on any offer-in-com-
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promise accompanied by a payment required
under this subsection.’’.
(b) ADDITIONAL RULES RELATING TO TREATMENT OF
OFFERS.—
(1) UNPROCESSABLE
OFFER
IF
PAYMENT
RE-
QUIREMENTS ARE NOT MET.—Paragraph (3) of sec-
tion 7122(d) (relating to standards for evaluation of
offers), as redesignated by subsection (a), is amended
by striking ‘‘; and’’ at the end of subparagraph (A)
and inserting a comma, by striking the period at the
end of subparagraph (B) and inserting ‘‘, and’’, and
by adding at the end the following new subparagraph:
‘‘(C) any offer-in-compromise which does
not meet the requirements of subsection (c) shall
be returned to the taxpayer as unprocessable.’’.
(2) DEEMED ACCEPTANCE OF OFFER NOT RE-
JECTED WITHIN CERTAIN PERIOD.—Section 7122, as
amended by subsection (a), is amended by adding at
the end the following new subsection:
‘‘(g) DEEMED ACCEPTANCE OF OFFER NOT REJECTED
WITHIN CERTAIN PERIOD.—Any offer-in-compromise sub-
mitted under this section shall be deemed to be accepted by
the Secretary if such offer is not rejected by the Secretary
before the date which is 24 months after the date of the sub-
mission of such offer (12 months for offers-in-compromise
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submitted after the date which is 5 years after the date of
the enactment of this subsection). For purposes of the pre-
ceding sentence, any period during which any tax liability
which is the subject of such offer-in-compromise is in dis-
pute in any judicial proceeding shall not be taken in to
account in determining the expiration of the 24-month pe-
riod (or 12-month period, if applicable).’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to offers-in-compromise submitted on
and after the date which is 60 days after the date of the
enactment of this Act.
SEC. 5535. JOINT TASK FORCE ON OFFERS-IN-COMPROMISE.
(a) IN GENERAL.—The Secretary of the Treasury shall
establish a joint task force—
(1) to review the Internal Revenue Service’s de-
terminations with respect to offers-in-compromise, in-
cluding offers which raise equitable, public policy, or
economic hardship grounds for compromise of a tax
liability under section 7122 of the Internal Revenue
Code of 1986,
(2) to review the extent to which the Internal
Revenue Service has used its authority to resolve long-
standing cases by forgoing penalties and interest
which have accumulated as a result of delay in deter-
mining the taxpayer’s liability,
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(3) to provide recommendations as to whether the
Internal Revenue Service’s evaluation of offers-in-
compromise should include—
(A) the taxpayer’s compliance history,
(B) errors by the Internal Revenue Service
with respect to the underlying tax, and
(C) wrongful acts by a third party which
gave rise to the liability, and
(4) to annually report to the Committee on Fi-
nance of the Senate and the Committee on Ways and
Means of the House of Representatives (beginning in
2006) regarding such review and recommendations.
(b) MEMBERS OF JOINT TASK FORCE.—The member-
ship of the joint task force under subsection (a) shall consist
of 1 representative each from the Department of the Treas-
ury, the Internal Revenue Service Oversight Board, the Of-
fice of the Chief Counsel for the Internal Revenue Service,
the Office of the Taxpayer Advocate, the Office of Appeals,
and the division of the Internal Revenue Service charged
with operating the offer-in-compromise program.
(c) REPORT OF NATIONAL TAXPAYER ADVOCATE.—
(1) 
IN
GENERAL.—Clause 
(ii) 
of 
section
7803(c)(2)(B) (relating to annual reports) is amended
by striking ‘‘and’’ at the end of subclause (X), by re-
designating subclause (XI) as subclause (XII), and by
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inserting after subclause (X) the following new sub-
clause:
‘‘(XI) include a list of the factors
taxpayers have raised to support their
claims for offers-in-compromise relief,
the number of such offers submitted,
accepted, and rejected, the number of
such offers appealed, the period during
which review of such offers have re-
mained pending, and the efforts the In-
ternal Revenue Service has made to
correctly identify such offers, including
the training of employees in identi-
fying and evaluating such offers.’’.
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall apply to reports in calendar year
2006 and thereafter.
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Subtitle F—Additional Revenue
Provisions
PART I—GENERAL PROVISIONS
SEC. 5601. SUSPENSION OF TRANSFERS FROM HIGHWAY
TRUST FUND FOR CERTAIN REPAYMENTS
AND CREDITS.
(a) IN GENERAL.—Section 9503(c)(2)(A) (relating to
transfers from Highway Trust Fund for certain repayments
and credits) is amended—
(1) by striking ‘‘July 1, 2006’’ in clause (i) and
inserting ‘‘July 1, 2012’’,
(2) by striking ‘‘October 1, 2005’’ in the matter
following clause (i)(III) and inserting ‘‘April 1, 2005,
or for periods ending after September 30, 2009, and
before October 1, 2011’’, and
(3) by striking ‘‘October 1, 2005’’ in clause (ii)
and inserting ‘‘April 1, 2005, or used after September
30, 2009, and before October 1, 2011’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to amounts paid for which no transfer
has been made before April 1, 2005.
SEC. 5602. TEMPORARY DEDICATION OF GAS GUZZLER TAX
TO HIGHWAY TRUST FUND.
(a) IN GENERAL.—Section 9503(b)(1) (relating to
transfer to Highway Trust Fund of amounts equivalent to
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certain taxes), as amended by this Act, is amended by redes-
ignating subparagraphs (C), (D), and (E) as subpara-
graphs (D), (E), and (F), respectively, and by inserting
after subparagraph (B) the following new subparagraph:
‘‘(C) section 4064 (relating to gas guzzler
tax),’’.
(b) TEMPORARY PERIOD FOR DEDICATION.—Section
9503(b)(4) (relating to certain taxes not transferred to
Highway Trust Fund) is amended by redesignating sub-
paragraphs (B), (C), and (D) as subparagraphs (C), (D),
and (E), respectively, and by inserting after subparagraph
(A) the following new subparagraph:
‘‘(B) section 4064 with respect to taxes im-
posed after September 30, 2009,’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxes imposed on and after July 1,
2005.
PART II—PROVISIONS TO COMBAT FUEL FRAUD
SEC. 5611. TREATMENT OF KEROSENE FOR USE IN AVIA-
TION.
(a) ALL KEROSENE TAXED AT HIGHEST RATE.—
(1) IN GENERAL.—Section 4081(a)(2)(A) (relat-
ing to rates of tax) is amended by adding ‘‘and’’ at
the end of clause (ii), by striking ‘‘, and’’ at the end
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of clause (iii) and inserting a period, and by striking
clause (iv).
(2) EXCEPTION
FOR
USE
IN
AVIATION.—Sub-
paragraph (C) of section 4081(a)(2), as amended by
this Act, is amended to read as follows:
‘‘(C) TAXES
IMPOSED
ON
FUEL
USED
IN
AVIATION.—In the case of kerosene which is re-
moved from any refinery or terminal directly
into the fuel tank of an aircraft for use in avia-
tion, the rate of tax under subparagraph (A)(iii)
shall be—
‘‘(i) in the case of use for commercial
aviation by a person registered for such use
under section 4101, 4.3 cents per gallon,
and
‘‘(ii) in the case of use for aviation not
described in clause (i), 21.8 cents per gal-
lon.’’.
(3) CONFORMING AMENDMENTS.—
(A) Sections 4081(a)(3)(A) and 4082(b) are
amended by striking ‘‘aviation-grade’’ each place
it appears.
(B) Section 4081(a)(4) is amended by strik-
ing ‘‘paragraph (2)(C)’’ and inserting ‘‘para-
graph (2)(C)(i)’’.
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(C) The heading for paragraph (4) of sec-
tion 4081(a) is amended by striking ‘‘AVIATION-
GRADE’’.
(D) Section 4081(d)(2), as amended by this
Act, is amended by striking so much as precedes
subparagraph (A) and inserting the following:
‘‘(2) AVIATION FUELS.—The rates of tax speci-
fied in subsections (a)(2)(A)(ii) and (a)(2)(C)(ii)
shall be 4.3 cents per gallon—’’.
(E) Subsection (e) of section 4082 is
amended—
(i) by striking ‘‘aviation-grade’’,
(ii) 
by 
striking 
‘‘section
4081(a)(2)(A)(iv)’’ and inserting ‘‘section
4081(a)(2)(A)(iii)’’, and
(iii) by striking ‘‘AVIATION-GRADE
KEROSENE’’ in the heading thereof and in-
serting ‘‘KEROSENE
REMOVED
INTO
AN
AIRCRAFT’’.
(b) REDUCED RATE FOR USE OF CERTAIN LIQUIDS
IN AVIATION.—
(1) IN GENERAL.—Subsection (c) of section 4041
(relating to imposition of tax) is amended—
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(A) by striking ‘‘aviation-grade kerosene’’ in
paragraph (1) and inserting ‘‘any liquid for use
as a fuel other than aviation gasoline’’,
(B) by striking ‘‘aviation-grade kerosene’’
in paragraph (2) and inserting ‘‘liquid for use
as a fuel other than aviation gasoline’’,
(C) by striking paragraph (3) and inserting
the following new paragraph:
‘‘(3) RATE OF TAX.—The rate of tax imposed by
this subsection shall be 21.8 cents per gallon (4.3
cents per gallon with respect to any sale or use for
commercial aviation).’’, and
(D) by striking ‘‘AVIATION-GRADE KER-
OSENE’’ in the heading thereof and inserting
‘‘CERTAIN LIQUIDS USED AS A FUEL IN AVIA-
TION’’.
(2) PARTIAL REFUND OF FULL RATE.—
(A) IN GENERAL.—Paragraph (2) of section
6427(l) (relating to nontaxable uses of diesel fuel,
kerosene and aviation fuel) is amended to read
as follows:
‘‘(2) NONTAXABLE USE.—For purposes of this
subsection, the term ‘nontaxable use’ means any use
which is exempt from the tax imposed by section
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4041(a)(1) other than by reason of a prior imposition
of tax.’’.
(B) REFUNDS FOR NONCOMMERCIAL AVIA-
TION.—Section 6427(l) (relating to nontaxable
uses of diesel fuel, kerosene and aviation fuel) is
amended by redesignating paragraph (5) as
paragraph (6) and by inserting after paragraph
(4) the following new paragraph:
‘‘(5) REFUNDS FOR KEROSENE USED IN NON-
COMMERCIAL AVIATION.—
‘‘(A) IN GENERAL.—In the case of kerosene
used in aviation not described in paragraph
(4)(A) (other than any use which is exempt from
the tax imposed by section 4041(c) other than by
reason of a prior imposition of tax), paragraph
(1) shall not apply to so much of the tax imposed
by section 4081 as is attributable to—
‘‘(i) the Leaking Underground Storage
Tank Trust Fund financing rate imposed
by such section, and
‘‘(ii) so much of the rate of tax speci-
fied in section 4081(a)(2)(A)(iii) as does
not exceed the rate specified in section
4081(a)(2)(C)(ii).
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‘‘(B) PAYMENT TO ULTIMATE, REGISTERED
VENDOR.—The amount which would be paid
under paragraph (1) with respect to any ker-
osene shall be paid to the ultimate vendor of such
kerosene, 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).’’.
(3) CONFORMING AMENDMENTS.—
(A) Section 4041(a)(1)(B) is amended by
striking the last sentence.
(B) The heading for subsection (l) of section
6427 is amended by striking ‘‘, KEROSENE AND
AVIATION
FUEL’’ and inserting ‘‘AND
KER-
OSENE’’.
(C) Section 4082(d)(2)(B) is amended by
striking ‘‘section 6427(l)(5)(B)’’ and inserting
‘‘section 6427(l)(6)(B)’’.
(D) Section 6427(i)(4)(A) is amended—
(i) by striking ‘‘paragraph (4)(B) or
(5)’’ both places it appears and inserting
‘‘paragraph (4)(B), (5), or (6)’’, and
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(ii) by striking ‘‘subsection (b)(4) and
subsection (l)(5)’’ in the last sentence and
inserting ‘‘subsections (b)(4), (l)(5), and
(l)(6)’’.
(E) Paragraph (4) of section 6427(l) is
amended—
(i) by striking ‘‘aviation-grade’’ in
subparagraph (A),
(ii) 
by 
striking 
‘‘section
4081(a)(2)(A)(iv)’’ and inserting ‘‘section
4081(a)(2)(iii)’’,
(iii) by striking ‘‘aviation-grade ker-
osene’’ in subparagraph (B) and inserting
‘‘kerosene used in commercial aviation as
described in subparagraph (A)’’, and
(iv) by striking ‘‘AVIATION-GRADE KER-
OSENE’’ in the heading thereof and insert-
ing ‘‘KEROSENE
USED
IN
COMMERCIAL
AVIATION’’.
(F) Section 6427(l)(6)(B), as redesignated
by paragraph (2)(B), is amended by striking
‘‘aviation-grade kerosene’’ and inserting ‘‘ker-
osene used in aviation’’.
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(c) TRANSFERS FROM HIGHWAY TRUST FUND
OF
TAXES ON FUELS USED IN AVIATION TO AIRPORT AND AIR-
WAY TRUST FUND.—
(1) IN GENERAL.—Section 9503(c) (relating to
expenditures from Highway Trust Fund), as amended
by this Act, is amended by adding at the end the fol-
lowing new paragraph:
‘‘(7) TRANSFERS FROM THE TRUST FUND FOR
CERTAIN AVIATION FUEL TAXES.—The Secretary shall
pay from time to time from the Highway Trust Fund
into the Airport and Airway Trust Fund amounts (as
determined by the Secretary) equivalent to the taxes
received on or after October 1, 2005, and before Octo-
ber 1, 2011, under sections 4041 and 4081 with re-
spect to fuels used in a nontaxable use (as described
in section 6427(l)(2)(B)) to the extent such amounts
exceed the amounts paid with respect to such use
under paragraphs (4) and (5) of section 6427(l).’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 9502(a) is amended by striking
‘‘appropriated or credited to the Airport and
Airway Trust Fund as provided in this section
or section 9602(b)’’ and inserting ‘‘appropriated,
credited, or paid into the Airport and Airway
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Trust Fund as provided in this section, section
9503(c)(7), or section 9602(b)’’.
(B) Section 9502(b)(1) is amended—
(i) by striking ‘‘subsections (c) and (e)
of section 4041’’ in subparagraph (A) and
inserting ‘‘section 4041(c)’’, and
(ii) by striking ‘‘and aviation-grade
kerosene’’ in subparagraph (C) and insert-
ing ‘‘and kerosene to the extent attributable
to 
the 
rate 
specified 
in 
section
4081(a)(2)(C)’’.
(C) Section 9503(b) is amended by striking
paragraph (3).
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to fuels or liquids removed, entered, or
sold after September 30, 2005.
SEC. 5612. REPEAL OF ULTIMATE VENDOR REFUND CLAIMS
WITH RESPECT TO FARMING.
(a) IN
GENERAL.—Subparagraph (A) of section
6427(l)(6) (relating to registered vendors to administer
claims for refund of diesel fuel or kerosene sold to farmers
and State and local governments), as redesignated by sec-
tion 5611, is amended to read as follows: