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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
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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.—
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(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.—
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‘‘(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 chas-
sis— 
‘‘(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-
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HR 3550 PCS 
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)’’.
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(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
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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—
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‘‘(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:
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HR 3550 PCS 
‘‘(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
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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-
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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).’’.
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(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— 
‘‘(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:
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‘‘(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).
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(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
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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:
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‘‘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:
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‘‘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-
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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,
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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:
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‘‘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
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HR 3550 PCS 
‘‘(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
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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’’.
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(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.—
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(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
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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:
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‘‘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:
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‘‘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.’’.
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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’’.
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(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.
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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).’’.
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(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 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.’’.
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(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.—
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(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
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‘‘$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—