IB 
Union Calendar No. 257
108TH CONGRESS 
2D SESSION 
H. R. 3971
[Report No. 108–444] 
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. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 16, 2004
Mr. THOMAS introduced the following bill; which was referred to the 
Committee on Ways and Means 
MARCH 23, 2004
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on March 16, 2004] 
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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE, ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Highway Reauthorization Tax Act of 2004’’. 
(b) AMENDMENT OF 1986 CODE.—Except as otherwise 
expressly provided, whenever in this Act an amendment or 
repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be consid-
ered to be made to a section or other provision of the Inter-
nal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents of this 
Act is as follows:
Sec. 1. Short title, etc. 
TITLE I—RESTRUCTURING OF INCENTIVES FOR ALCOHOL FUELS, 
ETC. 
Sec. 101. Reduced rates of tax on gasohol replaced with excise tax credit; repeal 
of other alcohol-based fuel incentives; etc. 
Sec. 102. Alcohol fuel subsidies borne by general fund. 
TITLE II—REDUCTION OF FUEL TAX EVASION 
Sec. 201. Exemption from certain excise taxes for mobile machinery. 
Sec. 202. Taxation of aviation-grade kerosene. 
Sec. 203. Dye injection equipment. 
Sec. 204. Authority to inspect on-site records. 
Sec. 205. Registration of pipeline or vessel operators required for exemption of 
bulk transfers to registered terminals or refineries. 
Sec. 206. Display of registration. 
Sec. 207. Penalties for failure to register and failure to report. 
Sec. 208. Collection from Customs bond where importer not registered. 
Sec. 209. Modifications of tax on use of certain vehicles. 
Sec. 210. Modification of ultimate vendor refund claims with respect to farming. 
Sec. 211. Dedication of revenues from certain penalties to the Highway Trust 
Fund. 
TITLE III—OTHER EXCISE TAX PROVISIONS 
Sec. 301. Taxable fuel refunds for certain ultimate vendors. 
Sec. 302. Two-party exchanges. 
Sec. 303. Simplification of tax on tires.
TITLE 
I—RESTRUCTURING 
OF 
INCENTIVES 
FOR 
ALCOHOL 
FUELS, ETC. 
SEC. 101. REDUCED RATES OF TAX ON GASOHOL REPLACED 
WITH EXCISE TAX CREDIT; REPEAL OF OTHER 
ALCOHOL-BASED FUEL INCENTIVES; ETC. 
(a) EXCISE TAX CREDIT FOR ALCOHOL FUEL MIX-
TURES.—
(1) IN GENERAL.—Subsection (f) of section 6427 
is amended to read as follows: 
‘‘(f) ALCOHOL FUEL MIXTURES.—
‘‘(1) IN GENERAL.—The amount of credit which 
would (but for section 40(c)) be determined under sec-
tion 40(a)(1) for any period—
‘‘(A) shall, with respect to taxable events oc-
curring during such period, be treated—
‘‘(i) as a payment of the taxpayer’s li-
ability for tax imposed by section 4081, and 
‘‘(ii) as received at the time of the tax-
able event, and 
‘‘(B) to the extent such amount of credit ex-
ceeds such liability for such period, shall (except 
as provided in subsection (k)) be paid subject to 
subsection (i)(3) by the Secretary without inter-
est.
‘‘(2) SPECIAL RULES.—
‘‘(A) ONLY CERTAIN ALCOHOL TAKEN INTO 
ACCOUNT.—For purposes of paragraph (1), sec-
tion 40 shall be applied—
‘‘(i) by not taking into account alcohol 
with a proof of less than 190, and 
‘‘(ii) by treating as alcohol the alcohol 
gallon equivalent of ethyl tertiary butyl 
ether or other ethers produced from such al-
cohol. 
‘‘(B) TREATMENT OF REFINERS.—For pur-
poses of paragraph (1), in the case of a mix-
ture—
‘‘(i) the alcohol in which is described 
in subparagraph (A)(ii), and 
‘‘(ii) which is produced by any person 
at a refinery prior to any taxable event, 
section 40 shall be applied by treating such per-
son as having sold such mixture at the time of 
its removal from the refinery (and only at such 
time) to another person for use as a fuel. 
‘‘(3) MIXTURES
NOT
USED
AS
FUEL.—Rules 
similar to the rules of subparagraphs (A) and (D) of 
section 40(d)(3) shall apply for purposes of this sub-
section.
‘‘(4) TERMINATION.—This section shall apply 
only to periods to which section 40 applies, deter-
mined by substituting in section 40(e)—
‘‘(A) ‘December 31, 2010’ for ‘December 31, 
2007’, and 
‘‘(B) ‘January 1, 2011’ for ‘January 1, 
2008’.’’
(2) REVISION OF RULES FOR PAYMENT OF CRED-
IT.—Paragraph (3) of section 6427(i) is amended to 
read as follows: 
‘‘(3) SPECIAL
RULE
FOR
ALCOHOL
MIXTURE 
CREDIT.—
‘‘(A) IN GENERAL.—A claim may be filed 
under subsection (f)(1)(B) by any person for any 
period—
‘‘(i) for which $200 or more is payable 
under such subsection (f)(1)(B), and 
‘‘(ii) which is not less than 1 week. 
In the case of an electronic claim, this subpara-
graph shall be applied without regard to clause 
(i). 
‘‘(B) 
PAYMENT
OF
CLAIM.—Notwith-
standing subsection (f)(1)(B), if the Secretary 
has not paid pursuant to a claim filed under 
this section within 45 days of the date of the fil-
ing of such claim (20 days in the case of an elec-
tronic claim), the claim shall be paid with inter-
est from such date determined by using the over-
payment rate and method under section 6621. 
‘‘(C) 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.’’
(b) REPEAL OF OTHER INCENTIVES FOR FUEL MIX-
TURES.—
(1) Subsection (b) of section 4041 is amended to 
read as follows: 
‘‘(b) EXEMPTION
FOR
OFF-HIGHWAY
BUSINESS 
USE.—
‘‘(1) IN GENERAL.—No tax shall be imposed by 
subsection (a) or (d)(1) on liquids sold for use or used 
in an off-highway business use. 
‘‘(2) TAX WHERE OTHER USE.—If a liquid on 
which no tax was imposed by reason of paragraph (1) 
is used otherwise than in an off-highway business use, 
a tax shall be imposed by paragraph (1)(B), (2)(B), 
or (3)(A)(ii) of subsection (a) (whichever is appro-
priate) and by the corresponding provision of sub-
section (d)(1) (if any).
‘‘(3) OFF-HIGHWAY BUSINESS USE DEFINED.—
For purposes of this subsection, the term ‘off-highway 
business use’ has the meaning given to such term by 
section 6421(e)(2); except that such term shall not, for 
purposes of subsection (a)(1), include use in a diesel-
powered train.’’
(2) Section 4041(k) is hereby repealed. 
(3) Section 4081(c) is hereby repealed. 
(4) Section 4091(c) is hereby repealed. 
(c) TRANSFERS TO HIGHWAY TRUST FUND.—Para-
graph (4) of section 9503(b) is amended by adding ‘‘or’’ 
at the end of subparagraph (B), by striking the comma at 
the end of subparagraph (C) and inserting a period, and 
by striking subparagraphs (D), (E), and (F). 
(d) CONFORMING AMENDMENTS.—
(1) Subsection (c) of section 40 is amended to 
read as follows: 
‘‘(c) COORDINATION WITH EXCISE TAX BENEFITS.—
The amount of the credit determined under this section with 
respect to any alcohol shall, under regulations prescribed 
by the Secretary, be properly reduced to take into account 
the benefit provided with respect to such alcohol under sec-
tion 6427(f).’’
(2) Subparagraph (B) of section 40(d)(4) is 
amended by striking ‘‘under section 4041(k) or 
4081(c)’’ and inserting ‘‘under section 6427(f)’’. 
(e) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided by para-
graph (2), the amendments made by this section shall 
apply to fuel sold or used after September 30, 2004. 
(2) SUBSECTION (c).—The amendments made by 
subsection (c) shall apply to taxes imposed after Sep-
tember 30, 2003. 
SEC. 102. ALCOHOL FUEL SUBSIDIES BORNE BY GENERAL 
FUND. 
(a) TRANSFERS
TO FUND.—Section 9503(b)(1) is 
amended by adding at the end the following new flush sen-
tence: 
‘‘For purposes of this paragraph, the amount of taxes 
received under section 4081 shall include any amount 
treated as a payment under section 6427(f)(1)(A) and 
shall not be reduced by the amount paid under section 
6427(f)(1)(B).’’. 
(b) TRANSFERS FROM FUND.—Subparagraph (A) of 
section 9503(c)(2) is amended by adding at the end the fol-
lowing 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 Sep-
tember 30, 2004. 
(2) SUBSECTION (b).—The amendment made by 
subsection (b) shall apply to amounts paid after Sep-
tember 30, 2004, and (to the extent related to section 
34 of the Internal Revenue Code of 1986) to fuel used 
after such date. 
TITLE II—REDUCTION OF FUEL 
TAX EVASION 
SEC. 201. 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 
construction, manufacturing, processing, farm-
ing, mining, drilling, timbering, or similar oper-
ation if the operation of the machinery or equip-
ment 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 vehicle 
designed to perform a function of transporting 
any load other than that particular machinery 
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 VEHI-
CLES.—
(1) IN GENERAL.—Section 4483 (relating to ex-
emptions) is amended by redesignating subsection (g) 
as subsection (h) and by inserting after subsection (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 amend-
ed by adding at the end the following flush sentence: 
‘‘Such term shall not include tires of a type used ex-
clusively 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.—
‘‘(i) IN GENERAL.—The term ‘off-high-
way business use’ shall include any use in 
a vehicle which meets the requirements de-
scribed in clause (ii).
‘‘(ii) REQUIREMENTS FOR MOBILE MA-
CHINERY.—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 chassis—
‘‘(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-
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 purposes 
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 tax-
payer’s taxable year.’’. 
(2) NO TAX-FREE SALES.—Subsection (b) of sec-
tion 4082, as amended by section 202, 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)’’. 
(3) ANNUAL
REFUND
OF
TAX
PAID.—Section 
6427(i)(2) (relating to exceptions) is amended by add-
ing 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. 202. 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 aviation-
grade kerosene which is removed from any refin-
ery or terminal directly into the fuel tank of an 
aircraft for use in commercial aviation, the rate 
of tax under subparagraph (A)(iv) shall be 4.3 
cents per gallon.’’.
(3) CERTAIN REFUELER TRUCKS, TANKERS, AND 
TANK WAGONS TREATED AS TERMINAL.—Subsection 
(a) of section 4081 is amended by adding at the end 
the following new paragraph: 
‘‘(3) CERTAIN
REFUELER
TRUCKS, TANKERS, 
AND TANK WAGONS TREATED AS TERMINAL.—
‘‘(A) IN GENERAL.—In the case of aviation-
grade kerosene which is removed from any ter-
minal directly into the fuel tank of an aircraft 
(determined without regard to any refueler truck, 
tanker, or tank wagon which meets the require-
ments of subparagraph (B)), a refueler truck, 
tanker, or tank wagon shall be treated as part of 
such terminal if—
‘‘(i) such truck, tanker, or wagon meets 
the requirements of subparagraph (B) with 
respect to an airport, and 
‘‘(ii) except in the case of exigent cir-
cumstances identified by the Secretary in 
regulations, no vehicle registered for high-
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—
‘‘(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 im-
posed under such paragraph. For purposes of the pre-
ceding 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 amended 
by redesignating subsections (e) and (f) as sub-
sections (f) and (g), respectively, and by insert-
ing after subsection (d) the following new sub-
section: 
‘‘(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 following 
new flush sentence: 
‘‘The term ‘nontaxable use’ does not include the use of avia-
tion-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 KER-
OSENE.—
(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 head-
ing 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 subsections (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 commer-
cial aviation (as defined in section 4083(b)) 
(other than supplies for vessels or aircraft within 
the meaning of section 4221(d)(3)), 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)(iv) as does not 
exceed 4.3 cents per gallon. 
‘‘(B) PAYMENT TO ULTIMATE, REGISTERED 
VENDOR.—With respect to aviation-grade ker-
osene, if the ultimate purchaser of such kerosene 
waives (at such time and in such form and man-
ner as the Secretary shall prescribe) the right to 
payment under paragraph (1) and assigns such 
right to the ultimate vendor, 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—
‘‘(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, lessee, 
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 sec-
tion 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 strik-
ing ‘‘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 strik-
ing ‘‘4091 or’’. 
(G) Section 6416(b)(3) is amended by strik-
ing ‘‘or 4091’’ each place it appears.
(H) Section 6416(d) is amended by striking 
‘‘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 provided 
in this subsection and in subsection (k), if any diesel 
fuel or kerosene on which tax has been imposed by 
section 4041 or 4081 is used by any person in a non-
taxable use, the Secretary shall pay (without interest) 
to the ultimate purchaser of such fuel an amount 
equal to the aggregate amount of tax imposed on such 
fuel under section 4041 or 4081, as 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 redes-
ignating the succeeding clauses accordingly. 
(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 subpara-
graph (B) and by striking subparagraphs (C) 
and (D) and inserting the following new sub-
paragraph: 
‘‘(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 inserting 
‘‘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 follows: 
‘‘Subpart B—Special Provisions Applicable to Fuels 
Tax’’.
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to aviation-grade kerosene removed, en-
tered, 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 amend-
ments 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 hold-
ing 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 REVENUES 
TO TRUST FUNDS.—For purposes of determining the 
amount transferred to any trust fund, the tax im-
posed 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 sec-
tion 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 remainder. 
(4) HELD BY A PERSON.—For purposes of this 
section, kerosene shall be considered as held by a per-
son 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. 203. DYE INJECTION EQUIPMENT. 
(a) IN GENERAL.—Section 4082(a)(2) (relating to ex-
emptions for diesel fuel and kerosene) is amended by insert-
ing ‘‘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 me-
chanical dye injection systems described in the amendment
made by subsection (a), and such regulations shall include 
standards for making such systems tamper resistant. 
(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 amend-
ed by adding after section 6715 the following new sec-
tion: 
‘‘SEC. 6715A. TAMPERING WITH OR FAILING TO MAINTAIN 
SECURITY REQUIREMENTS FOR MECHANICAL 
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 REQUIRE-
MENTS.—If any operator of a mechanical dye injec-
tion system used to indelibly dye fuel for purposes of 
section 4082 fails to maintain the security standards 
for such system as established by the Secretary, then 
such operator shall pay a penalty in addition to the 
tax (if any).
‘‘(b) AMOUNT OF PENALTY.—The amount of the pen-
alty 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 
‘‘(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 officer, 
employee, or agent of such entity or other contracting 
party who willfully participated in any act giving 
rise to such penalty shall be jointly and severally lia-
ble 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 cor-
poration of such entity shall be jointly and severally 
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 
after the date on which the Secretary issues the regulations 
described in subsection (b). 
SEC. 204. 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. 205. 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 refin-
eries) 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’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on October 1, 2004. 
(c) PUBLICATION OF REGISTERED PERSONS.—Begin-
ning 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. 206. DISPLAY OF REGISTRATION. 
(a) IN GENERAL.—Subsection (a) of section 4101 (re-
lating 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 para-
graph: 
‘‘(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 operator 
to transport any taxable fuel.’’. 
(b) CIVIL PENALTY FOR FAILURE TO DISPLAY REG-
ISTRATION.—
(1) IN GENERAL.—Part I of subchapter B of 
chapter 68 (relating to assessable penalties) is amend-
ed by inserting after section 6716 the following 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 registration 
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 cal-
endar month. 
‘‘(b) MULTIPLE VIOLATIONS.—In determining the pen-
alty 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 number of 
penalties (if any) imposed with respect to prior months by 
this section on such person (or a related person or any pred-
ecessor of such person or related person). 
‘‘(c) REASONABLE CAUSE EXCEPTION.—No penalty 
shall be imposed under this section with respect to any fail-
ure 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 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. 207. PENALTIES FOR FAILURE TO REGISTER AND FAIL-
URE TO REPORT. 
(a) INCREASED PENALTY.—Subsection (a) of section 
7272 (relating to penalty for failure to register) is amended 
by inserting ‘‘($10,000 in the case of a failure to register 
under section 4101)’’ after ‘‘$50’’.
(b) INCREASED CRIMINAL PENALTY.—Section 7232 
(relating to failure to register under section 4101, false rep-
resentations of registration status, etc.) is amended by strik-
ing ‘‘$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 amend-
ed by inserting after section 6717 the following new 
section: 
‘‘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 pen-
alty 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 fail-
ure 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 amend-
ed by adding at the end the following new section: 
‘‘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 purposes 
of subsection (a), the failures described in this subsection 
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 information 
required to be shown on such report or the inclusion 
of incorrect information. 
‘‘(c) REASONABLE CAUSE EXCEPTION.—No penalty 
shall be imposed under this section with respect to any fail-
ure 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.’’.
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to penalties imposed after September 30, 
2004. 
SEC. 208. COLLECTION FROM CUSTOMS BOND WHERE IM-
PORTER NOT REGISTERED. 
(a) TAX AT POINT OF ENTRY WHERE IMPORTER NOT 
REGISTERED.—Subpart B of part III of subchapter A of 
chapter 32, as redesignated by section 202(d), is amended 
by adding after section 4103 the following new section:
‘‘SEC. 4104. COLLECTION FROM CUSTOMS BOND WHERE IM-
PORTER NOT REGISTERED. 
‘‘(a) IN GENERAL.—The importer of record shall be 
jointly and severally liable for the tax imposed by section 
4081(a)(1)(A)(iii) if, under regulations prescribed by the 
Secretary, any other person that is not a person who is 
registered under section 4101 is liable for such tax. 
‘‘(b) COLLECTION FROM CUSTOMS BOND.—If any tax 
for which any importer of record is liable under subsection 
(a), or for which any importer of record that is not a person 
registered under section 4101 is otherwise liable, is not paid
on or before the last date prescribed for payment, the Sec-
retary may collect such tax from the Customs bond posted 
with respect to the importation of the taxable fuel to which 
the tax relates. For purposes of 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 described in section 4101(b)(1) and 
not as an action to collect from a bond relating to the im-
portation of merchandise.’’. 
(b) CONFORMING AMENDMENT.—The table of sections 
for subpart B of part III of subchapter A of chapter 32, 
as redesignated by section 202(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 reg-
istered.’’.
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply with respect to fuel entered after Sep-
tember 30, 2004. 
SEC. 209. 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 sto-
len) is amended by striking ‘‘destroyed or stolen’’ both
places it appears and inserting ‘‘sold, destroyed, or 
stolen’’. 
(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 insert-
ing 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 electronically.’’. 
(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.
SEC. 210. 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)), para-
graph (1) shall not apply to the aggregate 
amount of such diesel fuel or kerosene if such 
amount does not exceed 250 gallons (as deter-
mined 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).’’.
(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.’’.
(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. 211. DEDICATION OF REVENUES FROM CERTAIN PEN-
ALTIES TO THE HIGHWAY TRUST FUND. 
(a) IN GENERAL.—Subsection (b) of section 9503 (re-
lating 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 ap-
propriated 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.—
(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.
TITLE III—OTHER EXCISE TAX 
PROVISIONS 
SEC. 301. TAXABLE FUEL REFUNDS FOR CERTAIN ULTIMATE 
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 ADMIN-
ISTER 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 is 
for a use described in such subparagraph), such
ultimate vendor shall be treated as the person 
(and the only person) who paid such tax, but 
only if such ultimate vendor is registered under 
section 4101. For purposes of this subparagraph, 
if the sale of gasoline is made by means of a 
credit card, the person extending the credit to the 
ultimate purchaser shall be deemed to be the ulti-
mate vendor. 
‘‘(B) TIMING
OF
CLAIMS.—The procedure 
and timing of any claim under subparagraph 
(A) shall be the same as for claims under section 
6427(i)(4), except that the rules of section 
6427(i)(3)(B) regarding electronic claims shall 
not apply unless the ultimate vendor has cer-
tified to the Secretary for the most recent quarter 
of the taxable year that all ultimate purchasers 
of the vendor covered by such claim are certified 
and entitled to a refund under subparagraph (C) 
or (D) of subsection (b)(2).’’. 
(b) CREDIT CARD PURCHASES OF DIESEL FUEL OR 
KEROSENE BY STATE AND LOCAL GOVERNMENTS.—Section 
6427(l)(5)(C) (relating to nontaxable uses of diesel fuel, ker-
osene, and aviation fuel) is amended by adding at the end 
the following new flush sentence: ‘‘For purposes of this sub-
paragraph, if the sale of diesel fuel or kerosene is made by