[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 3154 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 3154

 To amend the Internal Revenue Code of 1986 to combat fuel excise tax 
                                 fraud.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 13, 2002

  Mr. Grassley (for himself and Mr. Baucus) 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 combat fuel excise tax 
                                 fraud.

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

SECTION 1. TRANSFER BY REGISTERED PIPELINE OR VESSEL REQUIRED FOR FUEL 
              TAX EXEMPTION OF BULK TRANSFERS TO REGISTERED TERMINALS 
              OR REFINERIES.

    (a) In General.--Section 4081(a)(1)(B) of the Internal Revenue Code 
of 1986 (relating to exemption for bulk transfers to registered 
terminals or refineries) is amended--
            (1) by inserting ``by pipeline or vessel'' after 
        ``transferred in bulk'', and
            (2) by inserting ``, the operator of the pipeline or 
        vessel,'' after ``the taxable fuel''.
    (b) Civil Penalty for Carrying Taxable Fuels by Nonregistered 
Pipelines or Vessels.--
            (1) In general.--Part II of subchapter B of chapter 68 of 
        the Internal Revenue Code of 1986 (relating to assessable 
        penalties) is amended by adding at the end the following new 
        section:

``SEC. 6717. CARRYING TAXABLE FUELS BY NONREGISTERED PIPELINES OR 
              VESSELS.

    ``(a) Imposition of Penalty.--If any taxable fuel (as defined in 
section 4083(a)(1)) is willfully carried by pipeline or vessel the 
operator of which is not registered under section 4101, then such 
operator shall pay a penalty in addition to the tax (if any).
    ``(b) Amount of Penalty.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        amount of the penalty under subsection (a) on each act shall be 
        $10,000.
            ``(2) Multiple violations.--In determining the penalty 
        under subsection (a) on any person, paragraph (1) shall be 
        applied by increasing the amount in paragraph (1) by the 
        product of such amount and the number of prior penalties (if 
        any) imposed by this section on such person (or a related 
        person or any predecessor of such person or related person).
    ``(c) Joint and Several Liability.--
            ``(1) In general.--If a penalty is imposed under this 
        section on any business entity, each officer, employee, or 
        agent of such entity or other contracting party who willfully 
        participated in any act giving rise to such penalty shall be 
        jointly and severally liable with such entity for such penalty.
            ``(2) Affiliated groups.--If a business entity described in 
        paragraph (1) is part of an affiliated group (as defined in 
        section 1504(a)), the parent corporation of such entity shall 
        be jointly and severally liable with such entity for the 
        penalty imposed under this section.''.
            (2) Clerical amendment.--The table of sections for part II 
        of subchapter B of chapter 68 of such Code is amended by adding 
        at the end the following new item:

                              ``Sec. 6717. Carrying taxable fuels by 
                                        nonregistered pipelines or 
                                        vessels.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2003.

SEC. 2. RETURNS FILED ELECTRONICALLY.

    (a) In General.--Section 4083 of the Internal Revenue Code of 1986 
(relating to definitions; special rule; administrative authority) is 
amended by adding at the end the following new subsection:
    ``(d) Returns Required To Be Filed Electronically.--
            ``(1) Fuel.--Any registered operator of a terminal, 
        refinery, pipeline, or vessel, or any registered dealer in 
        aviation fuel, having more than 25 transactions in a month 
        shall file by electronic format any return required by the 
        Secretary for the tracking of fuel.
            ``(2) Vehicles.--Any person required to file a return under 
        section 4481 having at least 25 vehicles shall file such return 
        by electronic format.''.
    (b) Format for Filing.--The Secretary of the Treasury shall 
describe the electronic format for filing--
            (1) in the case of returns described in section 4083(d)(1) 
        of the Internal Revenue Code of 1986 (as added by subsection 
        (a)), not later than 30 days after the date of the enactment of 
        this Act, and
            (2) in the case of returns described in section 4083(d)(2) 
        of such Code (as so added), not later than 90 days after such 
        date.
    (c) Effective Date.--The amendment made by this section shall apply 
to returns due after the date the Secretary of the Treasury describes 
the format for filing under subsection (b).

SEC. 3. TAX ON SALE OF DIESEL FUEL WHETHER SUITABLE FOR USE OR NOT IN A 
              DIESEL-POWERED VEHICLE OR TRAIN.

    (a) In General.--Section 4083(a)(3) of the Internal Revenue Code of 
1986 (defining diesel fuel) is amended by adding at the end the 
following new sentence: ``For purposes of section 4081(a)(1)(A)(iv), 
such term includes any liquid (other than gasoline) sold or offered for 
sale whether or not such fuel is suitable for such use.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 4. CIVIL PENALTY FOR REFUSAL OF ENTRY.

    (a) In General.--Part II of subchapter B of chapter 68 of the 
Internal Revenue Code of 1986 (relating to assessable penalties), as 
amended by this Act, is amended by adding at the end the following new 
section:

``SEC. 6718. REFUSAL OF ENTRY.

    ``In addition to any criminal penalty provided by law, in the case 
of any person with the intent to transport and distribute untaxed, 
adulterated fuel mixtures or to transport and distribute dyed diesel 
for taxable use, if such person refuses to admit entry or refuses to 
permit any other action by the Secretary authorized by section 
4083(c)(1), then such person shall pay a penalty of $1,000 for such 
refusal.''.
    (b) Conforming Amendments.--
            (1) Section 4083(c)(3) of the Internal Revenue Code of 1986 
        is amended--
                    (A) by striking ``entry.--The penalty'' and 
                inserting: ``entry.--
                    ``(A) Forfeiture.--The penalty'', and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(B) Civil penalty.--For a civil penalty for the 
                refusal to admit entry or other refusal to permit an 
                action by the Secretary authorized by paragraph (1), 
                see section 6718.''.
            (2) The table of sections for part II of subchapter B of 
        chapter 68 of such Code, as amended by this Act, is amended by 
        adding at the end the following new item:

                              ``Sec. 6718. Refusal of entry.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2003.

SEC. 5. DISPLAY OF REGISTRATION.

    (a) In General.--Section 4101 of the Internal Revenue Code of 1986 
(relating to registration and bond) is amended by adding at the end the 
following new subsection:
    ``(e) Display of Registration.--Every person required by the 
Secretary to register under this section with respect to tax imposed by 
section 4041(a)(1), 4081, or 4091 shall receive and display proof of 
registration on vessels used in transporting fuel.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2003.

SEC. 6. UNTAXED ADULTERATED FUEL MIXTURES TREATED AS DYED FUELS UNDER 
              PENALTY PROVISION.

    (a) In General.--Section 6715(c)(1) of the Internal Revenue Code of 
1986 (defining dyed fuel) is amended by inserting ``, any dyed diesel 
fuel or kerosene which has been chemically altered in an attempt to 
remove the dye, or any other adulterated fuel mixture not previously 
taxed'' after ``section 4082''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 7. TAX AT POINT OF ENTRY WHERE IMPORTER NOT REGISTERED.

    (a) In General.--Section 4081(a)(1) of the Internal Revenue Code of 
1986 (relating to tax on entry, removal, or sale) is amended by adding 
at the end the following new subparagraph:
                    ``(C) Tax at entry where importer not registered.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(iii), if the person entering 
                        the taxable fuel is not registered under 
                        section 4101, the imposition of the tax is at 
                        the time and point of entry.
                            ``(ii) Jeopardy assessment.--The collection 
                        of any tax imposed on fuel described in clause 
                        (i) shall be deemed to be in jeopardy and the 
                        Secretary shall make an immediate assessment 
                        under section 6862.
                            ``(iii) Enforcement of assessment.--The 
                        fuel described in clause (i) and the vehicle or 
                        vessel in which such fuel was transported shall 
                        be detained for the period ending with--
                                    ``(I) the filing of a bond by the 
                                importer of record under section 
                                6863(a), or
                                    ``(II) if such a bond is not filed 
                                within the 5-day period beginning with 
                                such detaining, the sale of such fuel 
                                as provided under section 6336.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 8. MODIFICATIONS OF TAX ON USE OF CERTAIN VEHICLES.

    (a) Increase in Rate of Tax.--The table contained in section 
4481(a) of the Internal Revenue Code of 1986 (relating to imposition of 
tax) is amended by striking ``$550'' and inserting ``$600''.
    (b) No Proration of Tax Unless Vehicle is Destroyed or Stolen.--
            (1) In general.--Section 4481(c) of the Internal Revenue 
        Code of 1986 (relating to proration of tax) is amended to read 
        as follows:
    ``(c) Proration of Tax Where Vehicle Destroyed or Stolen.--
            ``(1) In general.--If in any taxable period a highway motor 
        vehicle is destroyed or stolen before the first day of the last 
        month in such period and not subsequently used during such 
        taxable period, the tax shall be reckoned proportionately from 
        the first day of the month in such period in which the first 
        use of such highway motor vehicle occurs to and including the 
        last day of the month in which such highway motor vehicle was 
        destroyed or stolen.
            ``(2) Destroyed.--For purposes of paragraph (1), a highway 
        motor vehicle is destroyed if such vehicle is damaged by reason 
        of an accident or other casualty to such an extent that it is 
        not economic to rebuild.''.
            (2) Display of tax certificate.--Paragraph (2) of section 
        4481(d) of such Code (relating to one tax liability for period) 
        is amended to read as follows:
            ``(2) Display of tax certificate.--Every person, agency, or 
        instrumentality which pays the tax imposed under this section 
        with respect to a highway motor vehicle shall, not later than 
        October 1 with respect to each taxable period, receive and 
        display on such vehicle a proof of payment decal.''.
            (3) Conforming amendments.--
                    (A) Section 6156 of such Code (relating to 
                installment payment of tax on use of highway motor 
                vehicles) is repealed.
                    (B) The table of sections for subchapter A of 
                chapter 62 of such Code is amended by striking the item 
                relating to section 6156.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable periods beginning after the date of the enactment of 
this Act.

SEC. 9. ADDITIONAL RULES REGARDING INSPECTIONS OF RECORDS.

    (a) Provision of Copies of Records.--Section 4102 of the Internal 
Revenue Code of 1986 (relating to inspection of records by local 
officers) is amended by inserting ``, and copies shall be furnished 
upon request of,'' after ``inspection by''.
    (b) Inspection by Other Enforcement Agencies.--Section 4102 of the 
Internal Revenue Code of 1986, as amended by subsection (a), is amended 
by inserting ``, and information on returns required to be filed with 
respect to taxes under section 4481 shall be open to inspection by 
officers of any State agency charged with the registration and 
licensing of vehicles described in such section and officers of any 
other Federal or State agency charged with the enforcement of Federal 
or State law regarding motor fuels or criminal activities regarding 
motor fuels'' after ``section 4083)''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 10. AUTHORITY TO INSPECT ON-SITE RECORDS.

    (a) In General.--Section 4083(c)(1)(A) of the Internal Revenue Code 
of 1986 (relating to administrative authority) is amended by striking 
``and'' at the end of clause (i) and by inserting after clause (ii) the 
following new clause:
                            ``(iii) inspecting any books and records to 
                        determine the names and addresses of the 
                        persons selling or purchasing such fuel, and''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 11. PROHIBITION OF ADMINISTRATIVE REVIEW OF PENALTY FOR TAXABLE 
              USE OF DYED DIESEL FUEL.

    (a) In General.--Section 6406 of the Internal Revenue Code of 1986 
(relating to prohibition of administrative review of decisions) is 
amended--
            (1) by striking ``In the absence'' and inserting ``(a) In 
        General.--In the absence'', and
            (2) by adding at the end the following new subsection:
    ``(b) Penalty Decision Regarding Taxable Use of Dyed Diesel Fuel.--
In the absence of fraud or mistake in chemical analysis or mathematical 
calculation, if the findings of fact by chemical analysis show the 
presence of dye in diesel fuel being used on the highway, the assertion 
of the penalty under section 6715 shall not be subject to appeal to or 
review by any other administrative or accounting officer, employee, or 
agent of the United States.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.
                                 <all>