Biodiesel Tax Incentive Reform and Extension Act of 2015

Bill: 114-s-2353
Sponsor: full_name: Sen. Grassley, Chuck [R-IA]
Introduced: 2015-12-03
Policy area: Taxation
Subjects: Alternative and renewable resources

Income tax credits

Motor fuels

Sales and excise taxes
Latest action: action_date: 2015-12-03
text: Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S8380-8381)

Summaries:
action_date: 2015-12-03
action_desc: Introduced in Senate
text: <p><strong>Biodiesel Tax Incentive Reform and Extension Act of 2015</strong></p> <p>This bill amends the Internal Revenue Code to: (1) extend through March 31, 2016, the income tax credit for biodiesel and renewable diesel used as fuel and the excise tax credit for biodiesel fuel mixtures, (2) allow through 2018 a new income and excise tax credit equal to $1.00 for each gallon of biodiesel produced, and (3) provide for an increased credit for small biodiesel producers.</p>

tv_txt: II 114th CONGRESS 1st Session S. 2353 IN THE SENATE OF THE UNITED STATES December 3, 2015 Mr. Grassley (for himself and Ms. Cantwell ) 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 incentives for biodiesel.

1. Short title This Act may be cited as the Biodiesel Tax Incentive Reform and Extension Act of 2015 . 2. Extension and reform of biodiesel tax incentives (a) Extension of current law incentives (1) Income tax credit Subsection (g) of section 40A is amended by striking December 31, 2014 and inserting March 31, 2016 . (2) Excise tax incentives (A) In general Paragraph (6) of section 6426(c) is amended by striking December 31, 2014 and inserting March 31, 2016 . (B) Payments Subparagraph (B) of section 6427(e)(6) is amended by striking December 31, 2014 and inserting March 31, 2016 . (C) Special rule for certain periods during 2015 Notwithstanding any other provision of law, in the case of any biodiesel mixture credit properly determined under section 6426(c) of the Internal Revenue Code of 1986 for periods after December 31, 2014, and on or before the last day of the first calendar quarter ending after the date of the enactment of this Act, such credit shall be allowed, and any refund or payment attributable to such credit (including any payment under section 6427(e) of such Code) shall be made, only in such manner as the Secretary of the Treasury (or the Secretary’s delegate) shall provide. Such Secretary shall issue guidance within 30 days after the date of the enactment of this Act providing for a one-time submission of claims covering periods described in the preceding sentence. Such guidance shall provide for a 180-day period for the submission of such claims (in such manner as prescribed by such Secretary) to begin not later than 30 days after such guidance is issued. Such claims shall be paid by such Secretary not later than 60 days after receipt. If such Secretary has not paid pursuant to a claim filed under this subsection within 60 days after the date of the filing of such claim, the claim shall be paid with interest from such date determined by using the overpayment rate and method under section 6621 of such Code. (3) Effective date The amendments made by this subsection shall apply to fuel sold or used after December 31, 2014. (b) Reform of credit (1) Income tax credit (A) In general So much of section 40A as precedes subsection (c) is amended to read as follows: 40A. Biodiesel fuels credit (a) In general For purposes of section 38, the biodiesel fuels credit determined under this section for the taxable year is $1.00 for each gallon of biodiesel produced by the taxpayer which during the taxable year— (1) is sold by the taxpayer to another person— (A) for use by such other person’s trade or business as a fuel or in the production of a qualified biodiesel mixture (other than casual off-farm production), or (B) who sells such biodiesel at retail to another person and places such biodiesel in the fuel tank of such other person, or (2) is used by such taxpayer for any purpose described in paragraph (1). (b) Increased credit for small producers (1) In general In the case of any eligible small biodiesel producer, subsection (a) shall be applied by increasing the dollar amount contained therein by 10 cents. (2) Limitation Paragraph (1) shall only apply with respect to the first 15,000,000 gallons of biodiesel produced by any eligible small biodiesel producer during any taxable year. . (B) Definitions and special rules Section 40A(d) is amended by striking all that follows paragraph (1) and inserting the following: (2) Qualified biodiesel mixture; biodiesel mixture (A) Qualified biodiesel mixture (i) In general The term qualified biodiesel mixture means a biodiesel mixture which is— (I) sold by the producer of such mixture to any person for use as a fuel, or (II) used by the producer of such mixture as a fuel. (ii) Sale or use must be in trade or business, etc A biodiesel mixture shall not be treated as a qualified biodiesel mixture unless the sale or use described in clause (i) is in a trade or business of the person producing the biodiesel mixture. (B) Biodiesel mixture The term biodiesel mixture means a mixture which consists of biodiesel and diesel fuel (as defined in section 4083(a)(3)), determined without regard to any use of kerosene. (3) Biodiesel not used for a qualified purpose If— (A) any credit was determined with respect to any biodiesel under this section, and (B) any person uses such biodiesel for a purpose not described in subsection (a), then there is hereby imposed on such person a tax equal to the product of the rate applicable under subsection (a) and the number of gallons of such biodiesel. (4) Pass-thru in the case of estates and trusts Under regulations prescribed by the Secretary, rules similar to the rules of subsection (d) of section 52 shall apply. (5) Limitation to biodiesel with connection to the united states (A) In general No credit shall be determined under subsection (a) with respect to biodiesel unless such biodiesel is produced in the United States from qualified feedstocks. For purposes of this paragraph, the term United States includes any possession of the United States. (B) Qualified feedstocks For purposes of subparagraph (A), the term qualified feedstock means any feedstock which is allowable for a fuel that is assigned a D–Code of 4 under table 1 of section 80.1426(f) of title 40, Code of Federal Regulations. . (C) Rules for small biodiesel producers (i) In general Section 40A(e) is amended— (I) by striking agri-biodiesel each place it appears in paragraphs (1) and (5)(A) and inserting biodiesel , (II) by striking subsection (b)(4)(C) each place it appears in paragraphs (2) and (3) and inserting subsection (b)(2) , and (III) by striking subsection (a)(3) each place it appears in paragraphs (5)(A), (6)(A)(i), and (6)(B)(i) and inserting subsection (b) . (ii) The heading for subsection (e) of section 40A is amended by striking agri-biodiesel and inserting biodiesel . (iii) The headings for paragraphs (1) and (6) of section 40A(e) are each amended by striking agri-biodiesel and inserting biodiesel . (D) Renewable diesel (i) In general Paragraph (3) of section 40A(f) is amended to read as follows: (3) Renewable diesel defined (A) In general The term renewable diesel means liquid fuel derived from biomass which— (i) is not a mono-alkyl ester, (ii) can be used in engines designed to operate on conventional diesel fuel, and (iii) meets the requirements for any Grade No. 1–D fuel or Grade No. 2–D fuel covered under the American Society for Testing and Materials specification D–975–13a. (B) Exceptions Such term shall not include— (i) any liquid with respect to which a credit may be determined under section 40, (ii) any fuel derived from coprocessing biomass with a feedstock which is not biomass, or (iii) any fuel that is not chemically equivalent to petroleum diesel fuels that can meet fuel quality specifications applicable to diesel fuel, gasoline, or aviation fuel. (C) Biomass For purposes of this paragraph, the term biomass has the meaning given such term by section 45K(c)(3). . (ii) Conforming amendments Section 40A(f) is amended— (I) by striking Subsection (b)(4) in paragraph (2) and inserting Subsection (b) , and (II) by striking paragraph (4) and inserting the following: (4) Certain aviation fuel Except as provided paragraph (3)(B), the term renewable diesel shall include fuel derived from biomass which meets the requirements of a Department of Defense specification for military jet fuel or an American Society of Testing and Materials specification for aviation turbine fuel. . (E) Termination Subsection (g) of section 40A, as amended by subsection (a)(1), is amended by striking March 31, 2016 and inserting December 31, 2018 . (F) Clerical amendment The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by striking the item relating to section 40A and inserting the following new item: Sec. 40A. Biodiesel fuels credit. . (2) Reform of excise tax credit (A) In general Subsection (c) of section 6426, as amended by subsection (a)(2)(A), is amended to read as follows: (c) Biodiesel production credit (1) In general For purposes of this section, the biodiesel production credit is $1.00 for each gallon of biodiesel produced by the taxpayer and which— (A) is sold by such taxpayer to another person— (i) for use by such other person’s trade or business as a fuel or in the production of a qualified biodiesel mixture (other than casual off-farm production), or (ii) who sells such biodiesel at retail to another person and places such biodiesel in the fuel tank of such other person, or (B) is used by such taxpayer for any purpose described in subparagraph (A). (2) Definitions Any term used in this subsection which is also used in section 40A shall have the meaning given such term by section 40A. (3) Termination This subsection shall not apply to any sale, use, or removal after December 31, 2018. . (B) Producer registration requirement Subsection (a) of section 6426 is amended by striking subsections (d) and (e) in the flush sentence at the end and inserting subsections (c), (d), and (e) . (C) Recapture (i) In general Subsection (f) of section 6426 is amended— (I) by striking or biodiesel each place it appears in subparagraphs (A) and (B)(i) of paragraph (1), (II) by striking or biodiesel mixture in paragraph (1)(A), and (III) by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph: (2) Biodiesel If any credit was determined under this section or paid pursuant to section 6427(e) with respect to the production of any biodiesel and any person uses such biodiesel for a purpose not described in subsection (c)(1), then there is hereby imposed on such person a tax equal to $1 for each gallon of such biodiesel. . (ii) Conforming amendments (I) Paragraph (3) of section 6426(f), as redesignated by clause (i)(III), is amended by inserting or (2) after paragraph (1) . (II) The heading for paragraph (1) of section 6426(f) is amended by striking Imposition of tax and inserting In general . (D) Limitation Section 6426(i) is amended— (i) in paragraph (2)— (I) by striking biodiesel or , and (II) by striking Biodiesel and in the heading, and (ii) by inserting after paragraph (2) the following new paragraph: (3) Biodiesel No credit shall be determined under subsection (a) with respect to biodiesel unless such biodiesel is produced in the United States from qualified feedstocks (as defined in section 40A(d)(5)(B)). . (E) Clerical amendments (i) The heading of section 6426 is amended by striking alcohol fuel, biodiesel, and alternative fuel mixtures and inserting alcohol fuel mixtures, biodiesel production, and alternative fuel mixtures . (ii) The item relating to section 6426 in the table of sections for subchapter B of chapter 65 is amended by striking alcohol fuel, biodiesel, and alternative fuel mixtures and inserting alcohol fuel mixtures, biodiesel production, and alternative fuel mixtures . (3) Reform of excise payments of credit Subsection (e) of section 6427 is amended— (A) by striking or the biodiesel mixture credit in paragraph (1), (B) by redesignating paragraphs (3) through (6) as paragraphs (4) through (7), respectively, and by inserting after paragraph (2) the following new paragraph: (3) Biodiesel production credit If any person produces biodiesel and sells or uses such biodiesel as provided in section 6426(c)(1), the Secretary shall pay (without interest) to such person an amount equal to the biodiesel production credit with respect to such biodiesel. , (C) by striking paragraph (1) or (2) each place it appears in paragraphs (4) and (6), as redesignated by subparagraph (B), and inserting paragraph (1), (2), or (3) , (D) by striking alternative fuel each place it appears in paragraphs (4) and (6), as redesignated by subparagraph (B), and inserting fuel , and (E) in paragraph (7)(B) (as amended by subsection (a)(2)(B) and redesignated by subparagraph (B)) (2)— (i) by striking biodiesel mixture (as defined in section 6426(c)(3)) and inserting biodiesel (within the meaning of section 40A) , and (ii) by striking March 31, 2016 and inserting December 31, 2018 . (4) Guidance Not later than 30 days after the date of the enactment of this Act, the Secretary of the Treasury, or the Secretary's delegate, shall issue preliminary guidance with respect to the amendments made by this subsection. (5) Effective date The amendments made by this subsection shall apply to fuel sold or used after March 31, 2016.