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Subtitle B—Excise Tax Reform and
Simplification
PART I—HIGHWAY EXCISE TAXES
SEC. 5201. MODIFICATION OF GAS GUZZLER TAX.
(a) UNIFORM APPLICATION OF TAX.—Subparagraph
(A) of section 4064(b)(1) (defining automobile) is amended
by striking the second sentence.
(b) EFFECTIVE DATE.—The amendment made by this
section shall take effect on October 1, 2005.
SEC. 5202. EXCLUSION FOR TRACTORS WEIGHING 19,500
POUNDS OR LESS FROM FEDERAL EXCISE
TAX ON HEAVY TRUCKS AND TRAILERS.
(a) IN GENERAL.—Subsection (a) of section 4051 (re-
lating to imposition of tax) is amended by redesignating
paragraph (4) as paragraph (5) and by inserting after
paragraph (3) the following new paragraph:
‘‘(4) EXCLUSION FOR TRACTORS WEIGHING 19,500
POUNDS OR LESS.—The tax imposed by paragraph
(1) shall not apply to tractors of the kind chiefly used
for highway transportation in combination with a
trailer or semitrailer if such tractor has a gross vehi-
cle weight of 19,500 pounds or less (as determined
under regulations prescribed by the Secretary).’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to sales after September 30, 2005.
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SEC. 5203. EXEMPTION FOR EQUIPMENT FOR TRANS-
PORTING BULK BEDS OF FARM CROPS FROM
EXCISE TAX ON RETAIL SALE OF HEAVY
TRUCKS AND TRAILERS.
(a) IN GENERAL.—Section 4053 of the Internal Rev-
enue Code of 1986 (relating to exemptions) is amended by
adding at the end the following new paragraph:
‘‘(9) EQUIPMENT FOR TRANSPORTING BULK BEDS
OF FARM CROPS.—Any box, container, receptacle, bin,
or other similar article the length of which does not
exceed 26 feet, which is mounted or placed on an
automobile truck, and which is sold to a person who
certifies to the seller that—
‘‘(A) such person is actively engaged in the
trade or business of farming, and
‘‘(B) the primary use of the article is to
haul to and on farms bulk beds of farm crops
grown in connection with such trade or busi-
ness.’’.
(b) RECAPTURE
OF TAX UPON RESALE
OR NON-
EXEMPT USE.—Section 4052 (relating to definitions and
special rules) is amended by redesignating subsection (g)
as subsection (h) and by inserting after subsection (f) the
following new subsection:
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‘‘(g) IMPOSITION OF TAX ON SALES, ETC., WITHIN 2
YEARS OF EQUIPMENT FOR TRANSPORTING BULK BEDS OF
FARM CROPS PURCHASED TAX-FREE.—
‘‘(1) IN GENERAL.—If—
‘‘(A) no tax was imposed under section
4051 on the first retail sale of any article de-
scribed in section 4053(9) by reason of its ex-
empt use, and
‘‘(B) within 2 years after the date of such
first retail sale, such article is resold by the pur-
chaser or such purchaser makes a substantial
nonexempt use of such article,
then such sale or use of such article by such purchaser
shall be treated as the first retail sale of such article
for a price equal to its fair market value at the time
of such sale or use.
‘‘(2) EXEMPT USE.—For purposes of this sub-
section, the term ‘exempt use’ means any use of an
article described in section 4053(9) if the first retail
sale of such article is not taxable under section 4051
by reason of such use.’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to sales after September 30, 2005.
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SEC. 5204. VOLUMETRIC EXCISE TAX CREDIT FOR ALTER-
NATIVE FUELS.
(a) IMPOSITION OF TAX.—
(1) IN GENERAL.—Section 4081(a)(2)(A) (relat-
ing to rates of tax), as amended by section 5611 of
this Act, is amended—
(A) by striking ‘‘and’’ at the end of clause
(ii),
(B) by striking the period at the end of
clause (iii), and
(C) by adding at the end the following new
clauses:
‘‘(iv) in the case of P Series Fuels, 18.3
cents per gallon,
‘‘(v) in the case of compressed natural
gas and hydrogen, 18.3 cents per energy
equivalent of a gallon of gasoline, and
‘‘(vi) in the case of liquefied natural
gas, any liquid fuel (other than ethanol and
methanol) derived from coal (including
peat), and liquid hydrocarbons derived from
biomass (as defined in section 29(c)(3)),
24.3 cents per gallon.’’.
(2) TREATMENT OF ALTERNATIVE FUEL AS TAX-
ABLE FUEL.—
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(A) IN GENERAL.—Section 4083(a)(1) (de-
fining taxable fuel) is amended—
(i) by striking ‘‘and’’ at the end of sub-
paragraph (B),
(ii) by striking the period at the end of
subparagraph (C) and inserting ‘‘, and’’,
and
(iii) by adding at the end the following
new subparagraph:
‘‘(D) alternative fuel.’’.
(B) 
DEFINITION.—Section 
4083(a) 
is
amended by adding at the end the following new
paragraph:
‘‘(4) ALTERNATIVE FUEL.—The term ‘alternative
fuel’ means—
‘‘(A) compressed or liquefied natural gas,
‘‘(B) P Series Fuels (as defined by the Sec-
retary of Energy under section 13211(2) of title
42, United States Code,
‘‘(C) hydrogen,
‘‘(D) any liquid fuel (other than ethanol
and methanol) derived from coal (including
peat), and
‘‘(E) liquid hydrocarbons derived from bio-
mass (as defined in section 29(c)(3)).’’.
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(3) CONFORMING AMENDMENT.—Section 4041(a),
as amended by section 5101 of this Act, is amended
by striking paragraphs (2) and (3) and inserting the
following:
‘‘(2) SPECIAL MOTOR FUELS.—
‘‘(A) IN
GENERAL.—There is hereby im-
posed a tax on any alternative fuel (other than
gas oil or fuel oil) and liquefied petroleum gas—
‘‘(i) sold by any person to an owner,
lessee, or other operator of a motor vehicle
or motorboat for use as a fuel in such motor
vehicle or motorboat, or
‘‘(ii) used by any person as a fuel in
a motor vehicle or motorboat unless there
was a taxable sale of such fuel under clause
(i).
‘‘(B) EXEMPTION FOR PREVIOUSLY TAXED
FUEL.—No tax shall be imposed by this para-
graph on the sale or use of any alternative fuel
or liquefied petroleum gas if tax was imposed on
such alternative fuel or liquefied petroleum gas
under section 4081 and the tax thereon was not
credited or refunded.
‘‘(C) RATE OF TAX.—Except as otherwise
provided, the rate of the tax imposed by this
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paragraph shall be the rate of tax specified in
clause (iv), (v), or (vi) of section 4081(a)(2)(A)
on the alternative fuel which is in effect at the
time of such sale or use. In the case of liquefied
petroleum gas, the rate of the tax imposed by
this paragraph shall be 13.6 cents per gallon (3.2
cents per gallon in the case of any sale or use
after September 30, 2011).
‘‘(D) BUS USES.—No tax shall be imposed
by this paragraph on any sale for use, or use, de-
scribed in subparagraph (B) or (C) of section
6427(b)(2) (relating to school bus and intracity
transportation).’’.
(b) CREDIT
FOR ALTERNATIVE FUEL
AND ALTER-
NATIVE FUEL MIXTURES.—
(1) IN GENERAL.—Section 6426(a) (relating to
allowance of credits) is amended by striking ‘‘plus’’ at
the end of paragraph (1), by striking the period at the
end of paragraph (2) and by adding at the end the
following new paragraphs:
‘‘(3) the alternative fuel credit, plus
‘‘(4) the alternative fuel mixture credit.’’.
(2) ALTERNATIVE FUEL AND ALTERNATIVE FUEL
MIXTURE CREDIT.—Section 6426 (relating to credit
for alcohol fuel and biodiesel mixtures) is amended by
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redesignating subsections (d) and (e) as subsections
(f) and (g) and by inserting after subsection (c) the
following new subsection:
‘‘(d) ALTERNATIVE FUEL CREDIT.—
‘‘(1) IN GENERAL.—For purposes of this section,
the alternative fuel credit is the product of 50 cents
and the number of gallons of an alternative fuel or
gasoline gallon equivalents of a nonliquid alternative
fuel sold by the taxpayer for use as a motor fuel in
a highway vehicle.
‘‘(2) ALTERNATIVE FUEL.—For purposes of this
section, the term ‘alternative fuel’—
‘‘(A) has the meaning given such term by
subparagraphs (A), (B), (C), and (E) of section
4083(a)(4),
‘‘(B) includes any liquid fuel derived from
coal (including peat) through the Fischer-
Tropsch process, and
‘‘(C) does not include ethanol, methanol, or
biodiesel.
‘‘(3) GASOLINE GALLON EQUIVALENT.—For pur-
poses of this subsection, the term ‘gasoline gallon
equivalent’ means, with respect to any nonliquid al-
ternative fuel, the amount of such fuel having a Btu
content of 124,800 (higher heating value).
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‘‘(4) TERMINATION.—This subsection shall not
apply to any sale, use, or removal for any period
after September 30, 2009.
‘‘(e) ALTERNATIVE FUEL MIXTURE CREDIT.—
‘‘(1) IN GENERAL.—For purposes of this section,
the alternative fuel mixture credit is the product of 50
cents and the number of gallons of alternative fuel
used by the taxpayer in producing any alternative
fuel mixture for sale or use in a trade or business of
the taxpayer.
‘‘(2) ALTERNATIVE
FUEL
MIXTURE.—For pur-
poses of this section, the term ‘alternative fuel mix-
ture’ means a mixture of alternative fuel and taxable
fuel (as defined in subparagraph (A), (B), or (C) of
section 4083(a)(1)) which—
‘‘(A) is sold by the taxpayer producing such
mixture to any person for use as fuel in a high-
way vehicle, or
‘‘(B) is used as a fuel in a highway vehicle
by the taxpayer producing such mixture.
‘‘(3) TERMINATION.—This subsection shall not
apply to any sale, use, or removal for any period
after September 30, 2009.’’.
(3) CONFORMING AMENDMENTS.—
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(A) The section heading for section 6426 is
amended by striking ‘‘ALCOHOL
FUEL
AND
BIODIESEL’’ and inserting ‘‘CERTAIN ALTER-
NATIVE FUEL’’.
(B) The table of sections for subchapter B of
chapter 65 is amended by striking ‘‘alcohol fuel
and biodiesel’’ in the item relating to section
6426 and inserting ‘‘certain alternative fuel’’.
(C) Section 6427(a) is amended by striking
‘‘paragraph (2) or (3) of section 4041(a) or sec-
tion 4041(c)’’ and inserting ‘‘section 4041(a)(2)
or 4041(c)’’.
(D) Section 6427(e) is amended—
(i) by inserting ‘‘or the alternative fuel
mixture credit’’ after ‘‘biodiesel mixture
credit’’ in paragraph (1),
(ii) by redesignating paragraphs (2)
and (3) as paragraphs (3) and (4), respec-
tively, and by inserting after paragraph (1)
the following new paragraph:
‘‘(2) ALTERNATIVE FUEL.—If any person pro-
duces an alternative fuel described in section 6426 in
such person’s trade or business, the Secretary shall
pay (without interest) to such person an amount
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equal to the alternative fuel credit with respect to
such fuel.’’,
(iii) by striking ‘‘under paragraph (1)
with respect to any mixture’’ in paragraph
(3) (as redesignated by clause (ii)) and in-
serting ‘‘under paragraph (1) or (2) with
respect to any mixture or alternative fuel’’,
(iv) by striking ‘‘and’’ at the end of
paragraph (4)(A) (as redesignated by clause
(ii)),
(v) by striking the period at the end of
paragraph (4)(B) (as so redesignated),
(vi) by adding at the end of paragraph
(4) (as so redesignated) the following new
subparagraph:
‘‘(C) any alternative fuel or alternative fuel
mixture (as defined in section 6426 (d)(2) or
(e)(3)) sold or used after September 30, 2009.’’,
and
(vii) by striking ‘‘OR BIODIESEL USED
TO PRODUCE ALCOHOL FUEL
AND BIO-
DIESEL MIXTURES’’ in the heading and in-
serting ‘‘, BIODIESEL, OR ALTERNATIVE
FUEL’’.