Low Carbon Biofuel Act
Bill: H.R.4254 | Sponsor: Rep. Axne, Cynthia (D-IA)
Policy area: Taxation

Summary:
Low Carbon Biofuel Act
This bill allows certain taxpayers (defined by this bill as an oxygenate blender and a retailer) a new business-related income tax credit for the sale or blending of E15 gasoline (more than 13 and not more than 15 volume percent ethanol) and other fuels containing more than 15 volume percent ethanol.

To amend the Internal Revenue Code of 1986 to establish an income tax 
  credit for the sale or blending of certain fuels containing ethanol.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Low Carbon Biofuel Act''.

SEC. 2. CREDIT FOR SALE OR BLENDING OF ETHANOL FUELS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 45U. CREDIT FOR SALE OR BLENDING OF ETHANOL FUELS.

    ``(a) In General.--For purposes of section 38, the ethanol fuel 
credit determined under this section for any taxable year is an amount 
equal to--
            ``(1) in the case of an applicable taxpayer which is 
        described in subsection (b)(1)(A)--
                    ``(A) for each gallon of E15 blended by such 
                taxpayer, 5 cents, and
                    ``(B) for each gallon of fuel blended by such 
                taxpayer which contains more than 15 volume percent 
                ethanol, 10 cents, and
            ``(2) subject to subsection (c), in the case of an 
        applicable taxpayer which is described in subsection 
        (b)(1)(B)--
                    ``(A) for each gallon of E15 sold by such taxpayer, 
                5 cents, and
                    ``(B) for each gallon of fuel sold by such taxpayer 
                which contains more than 15 volume percent ethanol, 10 
                cents.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Applicable taxpayer.--The term `applicable taxpayer' 
        means--
                    ``(A) an oxygenate blender (as defined in section 
                1090.80 of title 40, Code of Federal Regulations), and
                    ``(B) a retailer (as defined in paragraph (7) of 
                section 101 of the Petroleum Marketing Practices Act 
                (15 U.S.C. 2801)).
            ``(2) E15.--The term `E15' means gasoline that contains 
        more than 13, and not more than 15, volume percent ethanol.
    ``(c) Election.--
            ``(1) In general.--
                    ``(A) Election by oxygenate blender.--Subsection 
                (a)(1) shall apply with respect to any gallon of fuel 
                described in such subsection only if the applicable 
                taxpayer described in subsection (b)(1)(A) elects to 
                have such subsection apply with respect to such gallon 
                of fuel.
                    ``(B) Notification.--The applicable taxpayer 
                described in subparagraph (A) shall provide notice of 
                their election with respect to any gallon of fuel 
                described in such subparagraph to any applicable 
                taxpayer described in subsection (b)(1)(B) to which 
                such fuel is sold, with such notice to be provided on 
                or before the date of such sale.
            ``(2) Credit for retailer available only if not claimed by 
        oxygenate blender.--Subsection (a)(2) shall apply with respect 
        to any gallon of fuel described in such subsection only if the 
        applicable taxpayer described in subsection (b)(1)(A) has not 
        elected (pursuant to paragraph (1)) to apply subsection (a)(1) 
        with respect to such gallon of fuel.
    ``(d) Refundable Credit for Small Retailers.--For purposes of this 
title, in the case of a retailer with not greater than 5 retail 
locations at the close of the taxable year, the credit allowed under 
subsection (a)(2) for such taxable year shall be treated as a credit 
allowable under subpart C (and not allowable under this subpart) for 
such taxable year.
    ``(e) Transfer of Credit.--
            ``(1) In general.--Subject to such regulations or other 
        guidance as the Secretary determines necessary or appropriate, 
        if, with respect to the credit allowed under subsection (a) for 
        any taxable year, the applicable taxpayer elects the 
        application of this subsection for such taxable year with 
        respect to all (or any portion specified in such election) of 
        such credit, the eligible entity specified in such election, 
        and not the applicable taxpayer, shall be treated as the 
        taxpayer for purposes of this title with respect to such credit 
        (or such portion thereof).
            ``(2) Eligible entity.--For purposes of this subsection, 
        the term `eligible entity' means any person within the supply 
        chain for fuel described in such section (a).''.
    (b) Credit To Be Part of General Business Credit.--Subsection (b) 
of section 38 of the Internal Revenue Code of 1986 is amended by 
striking ``plus'' at the end of paragraph (32), by striking the period 
at the end of paragraph (33) and inserting ``, plus'', and by adding at 
the end the following new paragraph:
            ``(34) the credit for sale or blending of ethanol fuels 
        under section 45U to which subsection (d) of such section does 
        not apply.''.
    (c) Conforming Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new item:

``Sec. 45U. Credit for sale or blending of ethanol fuels.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to fuel blended or sold after December 31, 2021.
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