producer of the biodiesel which identifies the product 
produced and the percentage of biodiesel and agri- 
biodiesel in the product. 
‘‘(c) COORDINATION WITH CREDIT AGAINST EXCISE 
TAX.—The amount of the credit determined under this 
section with respect to any biodiesel shall be properly re-
duced to take into account any benefit provided with re-
spect to such biodiesel solely by reason of the application 
of section 6426. 
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) BIODIESEL.—The term ‘biodiesel’ means 
the monoalkyl esters of long chain fatty acids de-
rived from plant or animal matter which meet— 
‘‘(A) the registration requirements for 
fuels and fuel additives established by the Envi-
ronmental Protection Agency under section 211 
of the Clean Air Act (42 U.S.C. 7545), and 
‘‘(B) the requirements of the American So-
ciety of Testing and Materials D6751. 
‘‘(2) AGRI-BIODIESEL.—The term ‘agri-bio-
diesel’ means biodiesel derived solely from virgin oils, 
including esters derived from virgin vegetable oils 
from corn, soybeans, sunflower seeds, cottonseeds,
canola, crambe, rapeseeds, safflowers, flaxseeds, rice 
bran, and mustard seeds, and from animal fats. 
‘‘(3) MIXTURE OR BIODIESEL NOT USED AS A 
FUEL, ETC.— 
‘‘(A) MIXTURES.—If— 
‘‘(i) any credit was determined under 
this section with respect to biodiesel used 
in the production of any qualified biodiesel 
mixture, and 
‘‘(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 person a 
tax equal to the product of the rate applicable 
under subsection (b)(1)(A) and the number of 
gallons of such biodiesel in such mixture. 
‘‘(B) BIODIESEL.—If— 
‘‘(i) any credit was determined under 
this section with respect to the retail sale 
of any biodiesel, and 
‘‘(ii) any person mixes such biodiesel 
or uses such biodiesel 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 biodiesel. 
‘‘(C) APPLICABLE LAWS.—All provisions of 
law, including penalties, shall, insofar as appli-
cable 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. 
‘‘(4) 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) TERMINATION.—This section shall not apply to 
any sale or use after December 31, 2005.’’. 
(b) CREDIT TREATED AS PART OF GENERAL BUSI-
NESS CREDIT.—Section 38(b) (relating to current year 
business credit) is amended by striking ‘‘plus’’ at the end 
of paragraph (16), by striking the period at the end of 
paragraph (17) and inserting ‘‘, plus’’, and by adding at 
the end the following new paragraph: 
‘‘(18) the biodiesel fuels credit determined 
under section 40A(a).’’. 
(c) CONFORMING AMENDMENTS.—
(1)(A) Section 87 is amended to read as fol-
lows: 
‘‘SEC. 87. ALCOHOL AND BIODIESEL FUELS CREDITS. 
‘‘Gross income includes— 
‘‘(1) the amount of the alcohol fuels credit de-
termined with respect to the taxpayer for the taxable 
year under section 40(a), and 
‘‘(2) the biodiesel fuels credit determined with 
respect to the taxpayer for the taxable year under 
section 40A(a).’’. 
(B) The item relating to section 87 in the table 
of sections for part II of subchapter B of chapter 1 
is amended by striking ‘‘fuel credit’’ and inserting 
‘‘and biodiesel fuels credits’’. 
(2) Section 196(c) is amended by striking 
‘‘and’’ at the end of paragraph (9), by striking the 
period at the end of paragraph (10) and inserting ‘‘, 
and’’, and by adding at the end the following new 
paragraph: 
‘‘(11) the biodiesel fuels credit determined 
under section 40A(a).’’. 
(3) The table of sections for subpart D of part 
IV of subchapter A of chapter 1 is amended by add-
ing after the item relating to section 40 the fol-
lowing new item: 
‘‘Sec. 40A. Biodiesel used as fuel.’’.
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to fuel produced, and sold or used, 
after December 31, 2003, in taxable years ending after 
such date. 
SEC. 6. ALCOHOL FUEL AND BIODIESEL MIXTURES EXCISE 
TAX CREDIT. 
(a) IN GENERAL.—Subchapter B of chapter 65 (re-
lating to rules of special application) is amended by insert-
ing after section 6425 the following new section: 
‘‘SEC. 6426. CREDIT FOR ALCOHOL FUEL AND BIODIESEL 
MIXTURES. 
‘‘(a) ALLOWANCE OF CREDITS.—There shall be al-
lowed as a credit against the tax imposed by section 4081 
an amount equal to the sum of— 
‘‘(1) the alcohol fuel mixture credit, plus 
‘‘(2) the biodiesel mixture credit. 
‘‘(b) ALCOHOL FUEL MIXTURE CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the alcohol fuel mixture credit is the product 
of the applicable amount and the number of gallons 
of alcohol used by the taxpayer in producing any al-
cohol fuel mixture for sale or use in a trade or busi-
ness of the taxpayer. 
‘‘(2) APPLICABLE AMOUNT.—For purposes of 
this subsection—