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. 302. TWO-PARTY EXCHANGES. 
(a) IN GENERAL.—Subpart B of part III of subchapter 
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 position 
for taxable fuel in the terminal as reflected in the 
records of the terminal operator.
‘‘(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 sections 
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. 303. 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 hereby 
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 so 
much of the maximum rated load capacity thereof as ex-
ceeds 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 highway 
use.’’
(c) EXEMPTION FOR TIRES SOLD TO DEPARTMENT OF 
DEFENSE.—Section 4073 is amended to read as follows: 
‘‘SEC. 4073. EXEMPTIONS. 
‘‘The tax imposed by section 4071 shall not apply to 
tires sold for the exclusive use of the Department of Defense 
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). 
(2) The item relating to section 4073 in the table 
of sections for part II of subchapter A of chapter 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 beginning
more than 30 days after the date of the enactment of this 
Act.
Union Calendar No. 257
108TH CONGRESS 
2D SESSION 
H. R. 3971
[Report No. 108–444] 
A BILL 
To amend the Internal Revenue Code of 1986 to 
credit the Highway Trust Fund with the full 
amount of fuel taxes, to combat fuel tax evasion, 
and for other purposes. 
MARCH 23, 2004
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed