Title: Freight RAILCAR Act of 2020
Policy area: Taxation

Summary:
Freight Rail Assistance and Investment to Launch Coronavirus-era Activity and Recovery Act of 2020 or the Freight RAILCAR Act of 2020
This bill establishes a new tax credit for the replacement and modernization of qualified freight railcars. Specifically, it allows a credit for 50% of the sum of the qualifying replacement or modernization amount, the qualifying scrap amount, and the qualifying railcar facility and technology modernization amount.
The bill defines qualified freight railcar as a freight railcar that meets significant improvement requirements for capacity, fuel efficiency, or performance.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8082 Introduced in House (IH)]

<DOC>






116th CONGRESS
  2d Session
                                H. R. 8082

 To amend the Internal Revenue Code of 1986 to provide a tax credit to 
  encourage the replacement or modernization of inefficient, outdated 
               freight railcars, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            August 21, 2020

Mr. Schneider (for himself, Mr. LaHood, Mr. Lipinski, Mr. Crawford, Mr. 
Blumenauer, and Mr. Ferguson) introduced the following bill; which was 
              referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide a tax credit to 
  encourage the replacement or modernization of inefficient, outdated 
               freight railcars, and for other purposes.

    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 ``Freight Rail Assistance and 
Investment to Launch Coronavirus-era Activity and Recovery Act of 
2020'' or the ``Freight RAILCAR Act of 2020''.

SEC. 2. QUALIFIED FREIGHT RAILCAR CREDIT.

    (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. QUALIFIED FREIGHT RAILCAR CREDIT.

    ``(a) General Rule.--For purposes of section 38, the qualified 
freight railcar credit determined under this section for the taxable 
year is an amount equal to 50 percent of the sum of--
            ``(1) the qualifying replacement or modernization amount,
            ``(2) the qualifying scrap amount, and
            ``(3) the qualifying railcar facility and technology 
        modernization amount.
    ``(b) Definitions.--In this section--
            ``(1) Qualifying replacement or modernization amount.--The 
        term `qualifying replacement or modernization amount' means--
                    ``(A) the basis of any newly built qualified 
                freight railcar placed in service by the taxpayer 
                during the taxable year, plus
                    ``(B) the qualified freight railcar modernization 
                expenditures of the taxpayer for the taxable year.
            ``(2) Qualifying scrap amount.--The term `qualifying scrap 
        amount' means--
                    ``(A) the depreciated value of a qualified freight 
                railcar, as such value is defined and calculated in 
                accordance with the Association of American Railroads 
                Interchange Rules, less
                    ``(B) the sum of scrap and part out net proceeds 
                received by the taxpayer for such qualified freight 
                railcar.
            ``(3) Qualifying railcar facility and technology 
        modernization amount.--The term `qualifying railcar facility 
        equipment and technology modernization amount' means total 
        expenditures chargeable to capital account by a qualified 
        railway supply company--
                    ``(A) for re-equipping and enhancing the 
                infrastructure of an existing qualified facility for 
                the manufacture, repair, or modernization of railcars, 
                which--
                            ``(i) enables such facility, after such 
                        improvements, to modernize railcars such that 
                        they will meet the requirements of the 
                        Association of American Railroads Standard S-
                        286 or the design standards set forth in the 
                        Pipeline and Hazardous Materials Safety 
                        Administration's HM-251 final rule (as amended 
                        by HM-251C), or
                            ``(ii) enables such facility to implement 
                        enhanced controls to meet environmental 
                        standards including emissions limits under the 
                        Clean Air Act or wastewater standards under the 
                        Clean Water Act and corresponding state/local 
                        requirements, or
                    ``(B) is associated with the deployment of 
                technology, including equipment, used by any owner of a 
                qualified freight railcar or an existing qualified 
                facility to manufacture, repair, or modernize railcars 
                or to manufacture railcar components that improves the 
                efficiency, quality, or safety of railcar or railcar 
                component manufacturing, repair, modernization or fleet 
                management operations.
            ``(4) Newly built replacement railcar.--The term `newly 
        built replacement railcar' means a qualified freight railcar 
        which--
                    ``(A) is built after the date of the enactment of 
                this section, and
                    ``(B) is ordered or originally placed in service 
                before January 1, 2025.
            ``(5) Originates.--The term `originates' refers to the 
        country of origin of a part, component, subassembly or finished 
        product, as described in the Rules of Origin of Article 4.2 of 
        the United States-Mexico-Canada Agreement (19 U.S.C. 4531(c)) 
        or any subsequent free trade agreement between the United 
        States, Mexico, and Canada.
            ``(6) Qualified railway supply company.--The term 
        `qualified railway supply company' means an entity that 
        manufactures, repairs, modernizes or owns a qualified freight 
        railcar or manufactures components for qualified freight 
        railcars, that is not an entity that would be ineligible for an 
        award of a contract or subcontract under 49 U.S.C. 5323(u).
            ``(7) Qualified freight railcar.--
                    ``(A) In general.--The term `qualified freight 
                railcar' means a freight railcar that--
                            ``(i) is either acquired or modernized by 
                        the taxpayer after the date of the enactment of 
                        this section,
                            ``(ii) meets the significant improvement 
                        requirements for capacity, fuel efficiency, or 
                        performance of subparagraph (B),
                            ``(iii) originates from a qualified railway 
                        supply company and was built in a qualified 
                        facility, and
                            ``(iv) with respect to which no credit 
                        under this section has been previously claimed 
                        by any taxpayer.
                    ``(B) Significant improvement requirements.--
                            ``(i) In general.--A freight railcar shall 
                        be treated as meeting significant improvement 
                        requirements for capacity, fuel efficiency, or 
                        performance if--
                                    ``(I) in the case of a newly built 
                                replacement railcar, the taxpayer 
                                certifies--
                                            ``(aa) such railcar is 
                                        owned by the taxpayer, and
                                            ``(bb) that--

                                                    ``(AA) such railcar 
                                                replaces two freight 
                                                railcars owned by the 
                                                taxpayer that were in 
                                                service within the 48 
                                                months preceding the 
                                                taxable year, and

                                                    ``(BB) such freight 
                                                railcars were scrapped 
                                                and permanently removed 
                                                from the AAR Umler 
                                                System master file 
                                                during the taxable 
                                                year, and

                                    ``(II) in the case of a freight 
                                railcar that is modernized, the 
                                taxpayer certifies that the 
                                modernization has resulted in a 
                                significant improvement in capacity, 
                                fuel efficiency or performance.
                            ``(ii) Significant improvement.--For 
                        purposes of this paragraph, an improvement in 
                        capacity or fuel efficiency and performance 
                        with respect to a modernized freight railcar 
                        shall be treated as a significant improvement 
                        if--
                                    ``(I) such capacity or fuel 
                                efficiency, as the case may be, is 
                                increased by at least 8 percent, or
                                    ``(II) in the case of performance, 
                                the qualified freight railcar meets the 
                                requirements of the Association of 
                                American Railroads Standard S-286 or is 
                                modernized to meet the design standards 
                                set forth in final rule HM-251 of the 
                                Pipeline and Hazardous Materials Safety 
                                Administration (as amended by HM-251C).
                    ``(C) Modernized.--The term `modernized' means a 
                modification, retrofit, conversion or rebuild for the 
                purpose of meeting capacity, fuel efficiency, or 
                performance criteria identified in subparagraph 
                (B)(ii).
            ``(8) Qualified freight railcar modernization 
        expenditure.--The term `qualified freight railcar significant 
        improvement expenditure' means any amount paid or incurred--
                    ``(A) in connection with the modernization of a 
                freight railcar resulting in such railcar being 
                designated a qualified freight railcar, and
                    ``(B) which is properly chargeable to a capital 
                account with respect to such freight railcar.
            ``(9) Qualified facility.--The term `qualified facility' 
        means a facility that is not owned by an entity that would be 
        ineligible for an award of a contract or subcontract under 49 
        U.S.C. 5323(u).
    ``(c) Special Rules.--
            ``(1) Denial of double benefit.--No credit shall be allowed 
        under subsection (a) for any expense for which a deduction or 
        credit is allowed under any other provision of this chapter.
            ``(2) Credit treated as refundable.--In the case of any 
        taxable year in which the taxpayer is allowed a credit under 
        subsection (a)(1) and is unable to utilize such credit as an 
        offset to their regular tax liability, the taxpayer may elect 
        to have such credit treated as an overpayment and refunded to 
        the taxpayer for such year.
            ``(3) Basis adjustment.--For purposes of this subtitle, if 
        a credit is allowed under subsection (a)(1) with respect to any 
        qualified freight railcar, the basis of such railcar shall be 
        reduced by the amount of the credit so allowed.
            ``(4) Sale-leaseback.--For purposes of subsection (a)(1), 
        if any qualified freight railcar is--
                    ``(A) originally placed in service by a person 
                after the date of the enactment of this section, and
                    ``(B) sold and leased back by such person within 3 
                months after the railcars are originally placed in 
                service (or, in the case of more than one railcar 
                subject to the same lease, within 3 months after the 
                date the final railcar is placed in service, so long as 
                the period between the time the first railcar is placed 
                in service and the time the last railcar is placed in 
                service does not exceed 24 months),
        such railcar shall be treated as originally placed in service 
        not earlier than the date on which such railcar is used under 
        the leaseback referred to in this paragraph.
            ``(5) Syndication.--For purposes of subsection (a)(1), if--
                    ``(A) any qualified freight railcar is originally 
                placed in service after the date of enactment of this 
                section by the lessor of such railcar,
                    ``(B) such railcar is sold by such lessor or any 
                subsequent purchaser within 3 months after the date 
                such railcar was originally placed in service (or, in 
                the case of more than one railcar subject to the same 
                lease, within 3 months after the date the final railcar 
                is placed in service and the time the last railcar is 
                placed in service does not exceed 12 months), and
                    ``(C) the user of such railcar after the last sale 
                during such 3-month period remains the same as when 
                such railcar was originally placed in service, such 
                railcars shall be treated as originally placed in 
                service not earlier than the date of such last sale.
            ``(6) Entities owned or controlled by state-owned 
        enterprises ineligible.--No credit under subsection (a) shall 
        be allowed to any taxpayer that would be ineligible for an 
        award of a contract or subcontract under 49 U.S.C. 5323(u).
    ``(d) Termination.--This section shall not apply to any qualifying 
railcar facility equipment and technology modernization amount after 
December 31, 2023, or to any qualifying replacement or modernization 
amount, or any qualifying scrap amount after December 31, 2024.''.
    (b) Credit Allowed as Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 (relating to current year business 
credit) 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 inserting at the end thereof the following new paragraph:
            ``(34) the qualified freight railcar credit determined 
        under section 45U.''.
    (c) Coordination With Section 55.--Section 38(c)(4)(B) of the 
Internal Revenue Code of 1986 is amended by redesignating clauses (x), 
(xi), and (xii) as clauses (xi), (xii), and (xiii) respectively, and by 
inserting after clause (ix) the following new clause:
                            ``(x) the qualified freight railcar credit 
                        determined under section 45U,''.
    (d) Clerical 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 inserting after the item relating to section 45T the 
following new item:

``Sec. 45U. Qualified freight railcar credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service, and amounts paid or incurred, 
after April 30, 2020.

SEC. 3. REPORT ON THE QUALIFIED FREIGHT RAILCAR CREDIT.

    (a) In General.--Not later than 3 years after the date of the 
enactment of this Act, the Secretary of the Treasury (or the 
Secretary's delegate), shall submit to the Committee on Ways and Means 
of the House of Representatives and the Committee on Finance of the 
Senate a report on activity with respect to the qualified freight 
railcar credit under section 36D of the Internal Revenue Code of 1986.
    (b) Report Contents.--The report submitted under subsection (a) 
shall contain information with respect to the following:
            (1) The number of times the credit was claimed.
            (2) The number of railcars scrapped as a result of the 
        credit.
            (3) The number of new railcars entered into contract as a 
        result of the credit.
            (4) The number of new railcars built as a result of the 
        credit.
            (5) The number of facilities modified as a result of the 
        credit.
                                 <all>