Steel Industry Preservation Act

Bill: 114-s-2823
Sponsor: full_name: Sen. Capito, Shelley Moore [R-WV]
Introduced: 2016-04-20
Policy area: Taxation
Subjects: Alternative and renewable resources

Business expenses

Coal

Income tax credits

Income tax deductions

Industrial facilities

Manufacturing

Metals

Oil and gas

Tax administration and collection, taxpayers
Latest action: action_date: 2016-04-20
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2016-04-20
action_desc: Introduced in Senate
text: <p><b>Steel Industry Preservation Act </b></p> <p>This bill amends the Internal Revenue Code to extend and modify the production tax credit for steel industry fuel. </p> <p>(Under current law, steel industry fuel is a fuel which is: (1) produced through a process of liquefying coal waste sludge and distributing it on coal, and (2) used as a feedstock for the manufacture of coke.) </p> <p>The bill modifies the tax credit for steel industry fuel to: </p> <ul> <li> extend the credit period and the placed-in-service date, </li> <li> revise the definition of &quot;steel industry fuel&quot; to allow blends of coal and petroleum coke or other coke feedstock in the fuel, </li> <li> set forth ownership requirements, and </li> <li>specify requirements for treating an owner as producing and selling steel industry fuel. </li> </ul> <p>A taxpayer that produces steel industry fuel may elect to accept an increased tax credit in lieu of certain deductions for expenses in connection with the production of steel industry fuel. </p> <p>The bill specifies the treatment of the credit for the purpose of the alternative minimum tax. It also exempts transactions related to steel industry fuel from rules that restrict deductions and other tax benefits for activities that are not engaged in for profit or that do not have economic substance. </p>

tv_txt: II 114th CONGRESS 2d Session S. 2823 IN THE SENATE OF THE UNITED STATES April 20, 2016 Mrs. Capito introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to extend and modify the section 45 credit for refined coal from steel industry fuel, and for other purposes.

1. Short title This Act may be cited as the Steel Industry Preservation Act . 2. Extension and modification of credit for steel industry fuel (a) Credit period (1) In general Subclause (II) of section 45(e)(8)(D)(ii) of the Internal Revenue Code of 1986 is amended to read as follows: (II) Credit period In lieu of the 10-year period referred to in clauses (i) and (ii)(II) of subparagraph (A), the credit period shall be the period beginning on the first date that the facility first produces steel industry fuel that is sold to an unrelated person after the date of the enactment of the Steel Industry Preservation Act , and ending 10 years after such first date. . (2) Conforming amendment Section 45(e)(8)(D) of such Code is amended by striking clause (iii) and by redesignating clause (iv) as clause (iii). (b) Extension of placed-in-Service date Subparagraph (A) of section 45(d)(8) of the Internal Revenue Code of 1986 is amended— (1) by striking (or any modification to a facility) ; (2) by striking placed in service before and inserting placed in service— (i) before ; (3) by striking and at the end and inserting or ; and (4) by adding at the end the following new clause: (ii) after the date of the enactment of this clause and before January 1, 2019, and . (c) Clarifications (1) Steel industry fuel Subclause (I) of section 45(c)(7)(C)(i) of the Internal Revenue Code of 1986 is amended by inserting , or a blend of coal and petroleum coke, or other coke feedstock after on coal . (2) Ownership interest Section 45(d)(8) of such Code is amended by adding at the end the following new flush sentence: With respect to a facility producing steel industry fuel, no person (including a ground lessor, customer, supplier, or technology licensor) shall be treated as having an ownership interest in the facility or as otherwise entitled to the credit allowable under this section with respect to such facility if such person’s rent, license fee, or other entitlement to net payments from the owner of such facility is measured by a fixed dollar amount or a fixed amount per ton, or otherwise determined without regard to the profit or loss of such facility. . (3) Production and sale Subparagraph (D) of section 45(e)(8) of such Code, as amended by subsection (a)(2), is amended by redesignating clause (iii) as clause (iv) and by inserting after clause (ii) the following new clause: (iii) Production and sale The owner of a facility producing steel industry fuel shall be treated as producing and selling steel industry fuel where that owner manufactures such steel industry fuel from coal, a blend of coal and petroleum coke, or other coke feedstock to which it has title. The sale of such steel industry fuel by the owner of the facility to a person who is not the owner of the facility shall not fail to qualify as a sale to an unrelated person solely because such purchaser may also be a ground lessor, supplier, or customer. . (d) Election To increase credit in lieu of steel industry fuel deductions Paragraph (8) of section 45(e) is amended by adding at the end the following new subparagraph: (E) Election for increased credit in lieu of deductions for steel industry fuel In the case of a taxpayer who produces steel industry fuel— (i) In general At the election of the taxpayer— (I) no deduction shall be allowed with respect to expenses made in connection with the production and sale of steel industry for such taxable year which are otherwise deductible under this chapter (determined without regard to this subparagraph), (II) no expense made in connection with the production of and sale of steel industry fuel which is otherwise chargeable to capital account in such taxable year shall be so charged, and (III) the credit determined under this section (without regard to this subparagraph) for such taxable year shall be increased by an amount equal to the product of the sum of the amounts to which subclauses (I) and (II) apply and the maximum rate of tax applicable under section 1 or 11 (b)(1), as applicable to the taxpayer in such taxable year. (ii) Application to partnerships and S corporations In the case of a partnership or S corporation, the election shall be made at the partnership or S corporation level. (iii) Election An election under this subparagraph for any taxable year shall be made not later than the time for filing the return of tax for such year (including extensions), in such manner as the Secretary may prescribe. Such an election, once made, shall be irrevocable. . (e) Specified credit for purposes of alternative minimum tax exclusion Subclause (II) of section 38(c)(4)(B)(iv) of the Internal Revenue Code of 1986 is amended by inserting (in the case of a refined coal production facility producing steel industry fuel, during the credit period set forth in section 45(e)(8)(D)(ii)(II)) after service . (f) Application of certain rules to steel industry fuel (1) Activity not engaged in for profit Section 183 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (f) Exception This section shall not apply to any deduction with respect to the production of steel industry fuel (as defined in section 45(c)(7)(C)). . (2) Application of economic substance doctrine (A) In general Subsection (o) of section 7701 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (6) Non-application to steel industry fuel The economic substance doctrine shall not apply to any transaction to the extent such transaction relates to steel industry fuel (as defined in section 45(c)(7)(C)). . (B) Conforming amendment Paragraph (5)(C) of section 7701(o) of such Code is amended by striking The determination and inserting Except as provided in paragraph (6), the determination . (g) Effective dates (1) In general Except as provided in paragraph (2), the amendments made by this section shall apply to fuel produced and sold after the date of the enactment of this Act, in taxable years ending after such date. (2) Application of economic substance rules The amendments made by subsection (f)(2) shall apply to transactions entered into after the date of the enactment of this Act.