‘‘(ii) any person— 
‘‘(I) separates the biodiesel from 
the mixture, or 
‘‘(II) without separation, uses the 
mixture other than as a fuel, 
then there is hereby imposed on such per-
son a tax equal to the product of the rate 
applicable under subsection (b)(1)(A) and 
the number of gallons of such diesel in 
such mixture. 
‘‘(B) DIESEL.—If— 
‘‘(i) any credit was determined under 
this section with respect to the retail sale 
of any diesel, and 
‘‘(ii) any person mixes such diesel or 
uses such diesel other than as a fuel, 
then there is hereby imposed on such person a 
tax equal to the product of the rate applicable 
under subsection (b)(2)(A) and the number of 
gallons of such diesel. 
‘‘(C) PRODUCER CREDIT.—If— 
‘‘(i) any credit was determined under 
subsection (a)(3), and 
VerDate Aug 31 2005 
01:26 Jun 14, 2007
Jkt 059200
PO 00000
Frm 00032
Fmt 6652
Sfmt 6201
E:\BILLS\H2652.IH
H2652
pwalker on PROD1PC71 with BILLS
‘‘(ii) any person does not use such 
fuel for a purpose described in subsection 
(b)(5)(B), 
then there is hereby imposed on such person a 
tax equal to 10 cents a gallon for each gallon 
of such diesel. 
‘‘(D) APPLICABLE
LAWS.—All provisions 
of law, including penalties, shall, insofar as ap-
plicable and not inconsistent with this section, 
apply in respect of any tax imposed under sub-
paragraph (A) or (B) as if such tax were im-
posed by section 4081 and not by this chapter. 
‘‘(3) PASS-THRU IN THE CASE OF ESTATES AND 
TRUSTS.—Under regulations prescribed by the Sec-
retary, rules similar to the rules of subsection (d) of 
section 52 shall apply. 
‘‘(e) DEFINITIONS AND SPECIAL RULES FOR SMALL 
QUALIFIED DIESEL PRODUCER CREDIT.—For purposes 
of this section— 
‘‘(1) ELIGIBLE SMALL QUALIFIED DIESEL PRO-
DUCER.—The term ‘eligible small qualified diesel 
producer’ means a person who, at all times during 
the taxable year, has a productive capacity for quali-
fied diesel not in excess of 60,000,000 gallons. 
VerDate Aug 31 2005 
01:26 Jun 14, 2007
Jkt 059200
PO 00000
Frm 00033
Fmt 6652
Sfmt 6201
E:\BILLS\H2652.IH
H2652
pwalker on PROD1PC71 with BILLS
‘‘(2) AGGREGATION
RULE.—For purposes of 
the 15,000,000 gallon limitation under subsection 
(b)(5)(C) and the 60,000,000 gallon limitation 
under paragraph (1), all members of the same con-
trolled group of corporations (within the meaning of 
section 267(f)) and all persons under common con-
trol (within the meaning of section 52(b) but deter-
mined by treating an interest of more than 50 per-
cent as a controlling interest) shall be treated as 1 
person. 
‘‘(3) PARTNERSHIP, 
S
CORPORATION, 
AND 
OTHER
PASS-THRU
ENTITIES.—In the case of a 
partnership, trust, S corporation, or other pass-thru 
entity, the limitations contained in subsection 
(b)(5)(C) and paragraph (1) shall be applied at the 
entity level and at the partner or similar level. 
‘‘(4) ALLOCATION.—For purposes of this sub-
section, in the case of a facility in which more than 
1 person has an interest, productive capacity shall 
be allocated among such persons in such manner as 
the Secretary may prescribe. 
‘‘(5) REGULATIONS.—The Secretary may pre-
scribe such regulations as may be necessary— 
‘‘(A) to prevent the credit provided for in 
subsection (a)(3) from directly or indirectly 
VerDate Aug 31 2005 
01:26 Jun 14, 2007
Jkt 059200
PO 00000
Frm 00034
Fmt 6652
Sfmt 6201
E:\BILLS\H2652.IH
H2652
pwalker on PROD1PC71 with BILLS
benefitting any person with a direct or indirect 
productive capacity of more than 60,000,000 
gallons of agri-biodiesel during the taxable year, 
or 
‘‘(B) to prevent any person from directly 
or indirectly benefitting with respect to more 
than 15,000,000 gallons during the taxable 
year. 
‘‘(6) ALLOCATION OF SMALL QUALIFIED DIE-
SEL CREDIT TO PATRONS OF COOPERATIVE.— 
‘‘(A) ELECTION TO ALLOCATE.— 
‘‘(i) IN GENERAL.—In the case of a 
cooperative organization described in sec-
tion 1381(a), any portion of the credit de-
termined under subsection (a)(3) for the 
taxable year may, at the election of the or-
ganization, be apportioned pro rata among 
patrons of the organization on the basis of 
the quantity or value of business done with 
or for such patrons for the taxable year. 
‘‘(ii) FORM
AND
EFFECT
OF
ELEC-
TION.—An election under clause (i) for any 
taxable year shall be made on a timely 
filed return for such year. Such election, 
once made, shall be irrevocable for such 
VerDate Aug 31 2005 
01:26 Jun 14, 2007
Jkt 059200
PO 00000
Frm 00035
Fmt 6652
Sfmt 6201
E:\BILLS\H2652.IH
H2652
pwalker on PROD1PC71 with BILLS
taxable year. Such election shall not take 
effect unless the organization designates 
the apportionment as such in a written no-
tice mailed to its patrons during the pay-
ment period described in section 1382(d). 
‘‘(B) TREATMENT OF ORGANIZATIONS AND 
PATRONS.— 
‘‘(i) ORGANIZATIONS.—The amount of 
the credit not apportioned to patrons pur-
suant to subparagraph (A) shall be in-
cluded in the amount determined under 
subsection (a)(3) for the taxable year of 
the organization. 
‘‘(ii) PATRONS.—The amount of the 
credit apportioned to patrons pursuant to 
subparagraph (A) shall be included in the 
amount determined under such subsection 
for the first taxable year of each patron 
ending on or after the last day of the pay-
ment 
period 
(as 
defined 
in 
section 
1382(d)) for the taxable year of the orga-
nization or, if earlier, for the taxable year 
of each patron ending on or after the date 
on which the patron receives notice from 
the cooperative of the apportionment. 
VerDate Aug 31 2005 
01:26 Jun 14, 2007
Jkt 059200
PO 00000
Frm 00036
Fmt 6652
Sfmt 6201
E:\BILLS\H2652.IH
H2652
pwalker on PROD1PC71 with BILLS