[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1873 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                S. 1873

  To amend the Internal Revenue Code of 1986 to allow credits for the 
  installation of energy efficiency home improvements, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

            December 20 (legislative day, December 18), 2001

   Ms. Snowe 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 allow credits for the 
  installation of energy efficiency home improvements, 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. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after section 25B the 
following new section:

``SEC. 25C. ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to 20 percent of the amount paid 
or incurred by the taxpayer for qualified energy efficiency 
improvements installed during such taxable year.
    ``(b) Limitations.--
            ``(1) Maximum credit.--The credit allowed by this section 
        with respect to a dwelling shall not exceed $2,000.
            ``(2) Prior credit amounts for taxpayer on same dwelling 
        taken into account.--If a credit was allowed to the taxpayer 
        under subsection (a) with respect to a dwelling in 1 or more 
        prior taxable years, the amount of the credit otherwise 
        allowable for the taxable year with respect to that dwelling 
        shall not exceed the amount of $2,000 reduced by the sum of the 
        credits allowed under subsection (a) to the taxpayer with 
        respect to the dwelling for all prior taxable years.
            ``(3) Limitation based on amount of tax.--The credit 
        allowed under subsection (a) for the taxable year shall not 
        exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                subpart (other than this section and section 23) and 
                section 27 for the taxable year.
    ``(c) Carryforward of Unused Credit.--If the credit allowable under 
subsection (a) exceeds the limitation imposed by subsection (b)(3) for 
such taxable year, such excess shall be carried to the succeeding 
taxable year and added to the credit allowable under subsection (a) for 
such succeeding taxable year.
    ``(d) Qualified Energy Efficiency Improvements.--For purposes of 
this section, the term `qualified energy efficiency improvements' means 
any energy efficient building envelope component which meets the 
prescriptive criteria for such component established by the 1998 
International Energy Conservation Code, if--
            ``(1) such component is installed in or on a dwelling--
                    ``(A) located in the United States, and
                    ``(B) owned and used by the taxpayer as the 
                taxpayer's principal residence (within the meaning of 
                section 121),
            ``(2) the original use of such component commences with the 
        taxpayer, and
            ``(3) such component reasonably can be expected to remain 
        in use for at least 5 years.
If the aggregate cost of such components with respect to any dwelling 
exceeds $1,000, such components shall be treated as qualified energy 
efficiency improvements only if such components are also certified in 
accordance with subsection (e) as meeting such criteria.
    ``(e) Certification.--The certification described in subsection (d) 
shall be--
            ``(1) determined on the basis of the technical 
        specifications or applicable ratings (including product 
        labeling requirements) for the measurement of energy 
        efficiency, based upon energy use or building envelope 
        component performance, for the energy efficient building 
        envelope component,
            ``(2) provided by a local building regulatory authority, a 
        utility, a manufactured home production inspection primary 
        inspection agency (IPIA), or an accredited home energy rating 
        system provider who is accredited by or otherwise authorized to 
        use approved energy performance measurement methods by the Home 
        Energy Ratings Systems Council or the National Association of 
        State Energy Officials, and
            ``(3) made in writing in a manner that specifies in readily 
        verifiable fashion the energy efficient building envelope 
        components installed and their respective energy efficiency 
        levels.
    ``(f) Definitions and Special Rules.--
            ``(1) Tenant-stockholder in cooperative housing 
        corporation.--In the case of an individual who is a tenant-
        stockholder (as defined in section 216) in a cooperative 
        housing corporation (as defined in such section), such 
        individual shall be treated as having paid his tenant-
        stockholder's proportionate share (as defined in section 
        216(b)(3)) of the cost of qualified energy efficiency 
        improvements made by such corporation.
            ``(2) Condominiums.--
                    ``(A) In general.--In the case of an individual who 
                is a member of a condominium management association 
                with respect to a condominium which he owns, such 
                individual shall be treated as having paid his 
                proportionate share of the cost of qualified energy 
                efficiency improvements made by such association.
                    ``(B) Condominium management association.--For 
                purposes of this paragraph, the term `condominium 
                management association' means an organization which 
meets the requirements of paragraph (1) of section 528(c) (other than 
subparagraph (E) thereof) with respect to a condominium project 
substantially all of the units of which are used as residences.
            ``(3) Building envelope component.--The term `building 
        envelope component' means insulation material or system which 
        is specifically and primarily designed to reduce the heat loss 
        or gain of a dwelling when installed in or on such dwelling, 
        exterior windows (including skylights) and doors, and metal 
        roofs with appropriate pigmented coatings which are 
        specifically and primarily designed to reduce the heat gain of 
        a dwelling when installed in or on such dwelling.
            ``(4) Manufactured homes included.--For purposes of this 
        section, the term `dwelling' includes a manufactured home which 
        conforms to Federal Manufactured Home Construction and Safety 
        Standards (24 C.F.R. 3280).
    ``(g) Basis Adjustment.--For purposes of this subtitle, if a credit 
is allowed under this section for any expenditure with respect to any 
property, the increase in the basis of such property which would (but 
for this subsection) result from such expenditure shall be reduced by 
the amount of the credit so allowed.
    ``(h) Application of Section.--This section shall apply to 
qualified energy efficiency improvements installed after December 31, 
2001, and before January 1, 2007.''.
    (b) Conforming Amendments.--
            (1) Subsection (a) of section 1016 of the Internal Revenue 
        Code of 1986 is amended by striking ``and'' at the end of 
        paragraph (27), by striking the period at the end of paragraph 
        (28) and inserting ``, and'', and by adding at the end the 
        following new paragraph:
            ``(29) to the extent provided in section 25C(g), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 25C.''.
            (2) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 25B the following new item:

                              ``Sec. 25C. Energy efficiency 
                                        improvements to existing 
                                        homes.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2001.

SEC. 2. BUSINESS CREDIT FOR CONSTRUCTION OF NEW ENERGY EFFICIENT HOME.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by inserting after section 45F the following new 
section:

``SEC. 45G. NEW ENERGY EFFICIENT HOME CREDIT.

    ``(a) In General.--For purposes of section 38, in the case of an 
eligible contractor, the credit determined under this section for the 
taxable year is an amount equal to the aggregate adjusted bases of all 
energy efficient property installed in a qualified new energy efficient 
home during construction of such home.
    ``(b) Limitations.--
            ``(1) Maximum credit.--
                    ``(A) In general.--The credit allowed by this 
                section with respect to a dwelling shall not exceed 
                $2,000.
                    ``(B) Prior credit amounts on same dwelling taken 
                into account.--If a credit was allowed under subsection 
                (a) with respect to a dwelling in 1 or more prior 
                taxable years, the amount of the credit otherwise 
                allowable for the taxable year with respect to that 
                dwelling shall not exceed the amount of $2,000 reduced 
                by the sum of the credits allowed under subsection (a) 
                with respect to the dwelling for all prior taxable 
                years.
            ``(2) Coordination with rehabilitation and energy 
        credits.--For purposes of this section--
                    ``(A) the basis of any property referred to in 
                subsection (a) shall be reduced by that portion of the 
                basis of any property which is attributable to 
                qualified rehabilitation expenditures (as defined in 
                section 47(c)(2)) or to the energy percentage of energy 
                property (as determined under section 48(a)), and
                    ``(B) expenditures taken into account under either 
                section 47 or 48(a) shall not be taken into account 
                under this section.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Eligible contractor.--The term `eligible contractor' 
        means the person who constructed the new energy efficient home, 
        or in the case of a manufactured home which conforms to Federal 
        Manufactured Home Construction and Safety Standards (24 C.F.R. 
        3280), the manufactured home producer of such home.
            ``(2) Energy efficient property.--The term `energy 
        efficient property' means any energy efficient building 
        envelope component, and any energy efficient heating or cooling 
        appliance.
            ``(3) Qualified new energy efficient home.--The term 
        `qualified new energy efficient home' means a dwelling--
                    ``(A) located in the United States,
                    ``(B) the construction of which is substantially 
                completed after December 31, 2001,
                    ``(C) the original use of which is as a principal 
                residence (within the meaning of section 121) which 
                commences with the person who acquires such dwelling 
                from the eligible contractor, and
                    ``(D) which is certified to have a level of annual 
                heating and cooling energy consumption that is at least 
                30 percent below the annual level of heating and 
                cooling energy consumption of a comparable dwelling 
                constructed in accordance with the standards of the 
                1998 International Energy Conservation Code.
            ``(4) Construction.--The term `construction' includes 
        reconstruction and rehabilitation.
            ``(5) Acquire.--The term `acquire' includes purchase and, 
        in the case of reconstruction and rehabilitation, such term 
        includes a binding written contract for such reconstruction or 
        rehabilitation.
            ``(6) Building envelope component.--The term `building 
        envelope component' means insulation material or system which 
        is specifically and primarily designed to reduce the heat loss 
        or gain of a dwelling when installed in or on such dwelling, 
        exterior windows (including skylights) and doors, and metal 
        roofs with appropriate pigmented coatings which are 
        specifically and primarily designed to reduce the heat gain of 
        a dwelling when installed in or on such dwelling.
            ``(7) Manufactured home included.--The term `dwelling' 
        includes a manufactured home conforming to Federal Manufactured 
        Home Construction and Safety Standards (24 C.F.R. 3280).
    ``(d) Certification.--
            ``(1) Method.--A certification described in subsection 
        (c)(3)(D) shall be determined on the basis of one of the 
        following methods:
                    ``(A) The technical specifications or applicable 
                ratings (including product labeling requirements) for 
                the measurement of energy efficiency for the energy 
                efficient building envelope component or energy 
                efficient heating or cooling appliance, based upon 
energy use or building envelope component performance.
                    ``(B) An energy performance measurement method that 
                utilizes computer software approved by organizations 
                designated by the Secretary.
            ``(2) Provider.--Such certification shall be provided by--
                    ``(A) in the case of a method described in 
                paragraph (1)(A), a local building regulatory 
                authority, a utility, a manufactured home production 
                inspection primary inspection agency (IPIA), or an 
                accredited home energy rating systems provider who is 
                accredited by, or otherwise authorized to use, approved 
                energy performance measurement methods by the Home 
                Energy Ratings Systems Council or the National 
                Association of State Energy Officials, or
                    ``(B) in the case of a method described in 
                paragraph (1)(B), an individual recognized by an 
                organization designated by the Secretary for such 
                purposes.
            ``(3) Form.--Such certification shall be made in writing in 
        a manner that specifies in readily verifiable fashion the 
        energy efficient building envelope components and energy 
        efficient heating or cooling appliances installed and their 
        respective energy efficiency levels, and in the case of a 
        method described in subparagraph (B) of paragraph (1), 
        accompanied by written analysis documenting the proper 
        application of a permissible energy performance measurement 
        method to the specific circumstances of such dwelling.
            ``(4) Regulations.--
                    ``(A) In general.--In prescribing regulations under 
                this subsection for energy performance measurement 
                methods, the Secretary shall prescribe procedures for 
                calculating annual energy costs for heating and cooling 
                and cost savings and for the reporting of the results. 
                Such regulations shall--
                            ``(i) be based on the National Home Energy 
                        Rating Technical Guidelines of the National 
                        Association of State Energy Officials, the Home 
                        Energy Rating Guidelines of the Home Energy 
                        Rating Systems Council, or the modified 1998 
                        California Residential ACM manual,
                            ``(ii) provide that any calculation 
                        procedures be developed such that the same 
                        energy efficiency measures allow a home to 
                        qualify for the credit under this section 
                        regardless of whether the house uses a gas or 
                        oil furnace or boiler or an electric heat pump, 
                        and
                            ``(iii) require that any computer software 
                        allow for the printing of the Federal tax forms 
                        necessary for the credit under this section and 
                        explanations for the homebuyer of the energy 
                        efficient features that were used to comply 
                        with the requirements of this section.
                    ``(B) Providers.--For purposes of paragraph (2)(B), 
                the Secretary shall establish requirements for the 
                designation of individuals based on the requirements 
                for energy consultants and home energy raters specified 
                by the National Association of State Energy Officials.
    ``(e) Basis Adjustment.--For purposes of this subtitle, if a credit 
is allowed under this section for any expenditure with respect to any 
property, the increase in the basis of such property which would (but 
for this subsection) result from such expenditure shall be reduced by 
the amount of the credit so allowed.
    ``(f) Application of Section.--Subsection (a) shall apply to 
dwellings purchased during the period beginning on January 1, 2002, and 
ending on December 31, 2006.''.
    (b) Credit Made Part of General Business Credit.--Subsection (b) of 
section 38 of the Internal Revenue Code of 1986 (relating to current 
year business credit) is amended by striking ``plus'' at the end of 
paragraph (14), by striking the period at the end of paragraph (15) and 
inserting ``, plus'', and by adding at the end thereof the following 
new paragraph:
            ``(16) the new energy efficient home credit determined 
        under section 45G.''.
    (c) Denial of Double Benefit.--Section 280C of the Internal Revenue 
Code of 1986 (relating to certain expenses for which credits are 
allowable) is amended by adding at the end the following new 
subsection:
    ``(d) New Energy Efficient Home Expenses.--No deduction shall be 
allowed for that portion of expenses for a new energy efficient home 
otherwise allowable as a deduction for the taxable year which is equal 
to the amount of the credit determined for such taxable year under 
section 45G.''.
    (d) Limitation on Carryback.--Subsection (d) of section 39 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new paragraph:
            ``(11) No carryback of new energy efficient home credit 
        before effective date.--No portion of the unused business 
        credit for any taxable year which is attributable to the credit 
        determined under section 45G may be carried back to any taxable 
        year ending before January 1, 2002.''.
    (e) Deduction for Certain Unused Business Credits.--Subsection (c) 
of section 196 of the Internal Revenue Code of 1986 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 after 
paragraph (10) the following new paragraph:
            ``(11) the new energy efficient home credit determined 
        under section 45G.''.
    (f) 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 45F the 
following new item:

                              ``Sec. 45G. New energy efficient home 
                                        credit.''.
    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2001.
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