[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1962 Introduced in Senate (IS)]







108th CONGRESS
  1st Session
                                S. 1962

 To amend the Internal Revenue Code of 1986 to provide for excise tax 
           reform and simplification, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 25, 2003

  Mr. Grassley (for himself, Mr. Baucus, Mr. Bunning, and Mr. Breaux) 
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 provide for excise tax 
           reform and simplification, 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; ETC.

    (a) Short Title.--This Act may be cited as the ``Excise Tax Reform 
and Simplification Act''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; etc.
                     TITLE I--HIGHWAY EXCISE TAXES

Sec. 101. Dedication of gas guzzler tax to Highway Trust Fund.
Sec. 102. Nonapplication of export exemption to delivery of fuel to 
                            motor vehicles removed from United States.
Sec. 103. Repeal of 4.3-cent motor fuel excise taxes on railroads and 
                            inland waterway transportation which remain 
                            in general fund.
                     TITLE II--AQUATIC EXCISE TAXES

Sec. 201. Aquatic Resources Trust Fund excise taxes.
Sec. 202. LED devices exempted from sonar devices suitable for finding 
                            fish.
Sec. 203. Repeal of harbor maintenance tax on exports.
Sec. 204. Cap on excise tax on certain fishing equipment.
                     TITLE III--AERIAL EXCISE TAXES

Sec. 301. Clarification of excise tax exemptions for agricultural 
                            aerial applicators.
Sec. 302. Modification of rural airport definition.
Sec. 303. Exemption from ticket taxes for transportation provided by 
                            seaplanes.
Sec. 304. Certain sightseeing flights exempt from taxes on air 
                            transportation.
               TITLE IV--ALCOHOLIC BEVERAGE EXCISE TAXES

Sec. 401. Repeal of occupational taxes relating to distilled spirits, 
                            wine, and beer.
Sec. 402. Repeal of limitation on cover over of tax to Puerto Rico and 
                            Virgin Islands on distilled spirits.
                      TITLE V--SPORT EXCISE TAXES

Sec. 501. Custom gunsmiths.
Sec. 502. Modified taxation of imported archery products.
Sec. 503. Treatment of tribal governments for purposes of Federal 
                            wagering excise and occupational taxes.
                       TITLE VI--OTHER PROVISIONS

Sec. 601. Income tax credit for distilled spirits wholesalers and for 
                            distilled spirits in control state bailment 
                            warehouses for costs of carrying Federal 
                            excise taxes on bottled distilled spirits.
Sec. 602. Credit for taxpayers owning commercial power takeoff 
                            vehicles.

                     TITLE I--HIGHWAY EXCISE TAXES

SEC. 101. DEDICATION OF GAS GUZZLER TAX TO HIGHWAY TRUST FUND.

    (a) In General.--Section 9503(b) (relating to transfer to Highway 
Trust Fund of amounts equivalent to certain taxes) is amended by 
redesignating subparagraphs (C), (D), and (E) as subparagraphs (D), 
(E), and (F), respectively, and by inserting after subparagraph (B) the 
following new subparagraph:
                    ``(C) section 4064 (relating to gas guzzler 
                tax),''.
    (b) Uniform Application of Tax.--Subparagraph (A) of section 
4064(b)(1) (defining automobile) is amended--
            (1) by striking ``6,000 pounds'' and inserting ``8,500 
        pounds'', and
            (2) by striking the second sentence.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 102. NONAPPLICATION OF EXPORT EXEMPTION TO DELIVERY OF FUEL TO 
              MOTOR VEHICLES REMOVED FROM UNITED STATES.

    (a) In General.--Section 4221(d)(2) (defining export) is amended by 
adding at the end the following new sentence: ``Such term does not 
include the delivery of a taxable fuel (as defined in section 
4083(a)(1)) into a fuel tank of a motor vehicle which is shipped or 
driven out of the United States.''.
    (b) Conforming Amendments.--
            (1) Section 4041(g) (relating to other exemptions) is 
        amended by adding at the end the following new sentence: 
        ``Paragraph (3) shall not apply to the sale for delivery of a 
        liquid into a fuel tank of a motor vehicle which is shipped or 
        driven out of the United States.''.
            (2) Clause (iv) of section 4081(a)(1)(A) (relating to tax 
        on removal, entry, or sale) is amended by inserting ``or at a 
        duty-free sales enterprise (as defined in section 555(b)(8) of 
        the Tariff Act of 1930)'' after ``section 4101''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales or deliveries made after the date of the enactment of 
this Act.

SEC. 103. REPEAL OF 4.3-CENT MOTOR FUEL EXCISE TAXES ON RAILROADS AND 
              INLAND WATERWAY TRANSPORTATION WHICH REMAIN IN GENERAL 
              FUND.

    (a) Taxes on Trains.--
            (1) In general.--Subparagraph (A) of section 4041(a)(1) is 
        amended by striking ``or a diesel-powered train'' each place it 
        appears and by striking ``or train''.
            (2) Conforming amendments.--
                    (A) Subparagraph (C) of section 4041(a)(1) is 
                amended by striking clause (ii) and by redesignating 
                clause (iii) as clause (ii).
                    (B) Subparagraph (C) of section 4041(b)(1) is 
                amended by striking all that follows ``section 
                6421(e)(2)'' and inserting a period.
                    (C) Subsection (d) of section 4041 is amended by 
                redesignating paragraph (3) as paragraph (4) and by 
                inserting after paragraph (2) the following new 
                paragraph:
            ``(3) Diesel fuel used in trains.--There is hereby imposed 
        a tax of 0.1 cent per gallon on any liquid other than gasoline 
        (as defined in section 4083)--
                    ``(A) sold by any person to an owner, lessee, or 
                other operator of a diesel-powered train for use as a 
                fuel in such train, or
                    ``(B) used by any person as a fuel in a diesel-
                powered train unless there was a taxable sale of such 
                fuel under subparagraph (A).
        No tax shall be imposed by this paragraph on the sale or use of 
        any liquid if tax was imposed on such liquid under section 
        4081.''.
                    (D) Subsection (f) of section 4082 is amended by 
                striking ``section 4041(a)(1)'' and inserting 
                ``subsections (d)(3) and (a)(1) of section 4041, 
                respectively''.
                    (E) Paragraph (3) of section 4083(a) is amended by 
                striking ``or a diesel-powered train''.
                    (F) Paragraph (3) of section 6421(f) is amended to 
                read as follows:
            ``(3) Gasoline used in trains.--In the case of gasoline 
        used as a fuel in a train, this section shall not apply with 
        respect to the Leaking Underground Storage Tank Trust Fund 
        financing rate under section 4081.''.
                    (G) Paragraph (3) of section 6427(l) is amended to 
                read as follows:
            ``(3) Refund of certain taxes on fuel used in diesel-
        powered trains.--For purposes of this subsection, the term 
        `nontaxable use' includes fuel used in a diesel-powered train. 
        The preceding sentence shall not apply to the tax imposed by 
        section 4041(d) and the Leaking Underground Storage Tank Trust 
        Fund financing rate under section 4081 except with respect to 
        fuel sold for exclusive use by a State or any political 
        subdivision thereof.''.
    (b) Fuel Used on Inland Waterways.--
            (1) In general.--Paragraph (1) of section 4042(b) is 
        amended by adding ``and'' at the end of subparagraph (A), by 
        striking ``, and'' at the end of subparagraph (B) and inserting 
        a period, and by striking subparagraph (C).
            (2) Conforming amendment.--Paragraph (2) of section 4042(b) 
        is amended by striking subparagraph (C).
    (c) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2004.

                     TITLE II--AQUATIC EXCISE TAXES

SEC. 201. AQUATIC RESOURCES TRUST FUND EXCISE TAXES.

    (a) Simplification of Funding for Boat Safety Account.--
            (1) In general.--Section 9503(c)(4) (relating to transfers 
        from Trust Fund for motorboat fuel taxes) is amended--
                    (A) by striking ``Fund--'' and all that follows 
                through ``transferred'' in subparagraph (B) and 
                inserting ``Fund which is attributable to motorboat 
                fuel taxes shall be transferred'', and
                    (B) by striking subparagraph (A), and
                    (C) by redesignating subparagraphs (B) through (E) 
                as subparagraphs (A) through (D), respectively.
            (2) Conforming amendments.--
                    (A) Section 9503(b)(4), as amended by this title, 
                is amended--
                            (i) by adding ``or'' at the end of 
                        subparagraph (B),
                            (ii) by striking the comma at the end of 
                        subparagraph (C) and inserting a period, and
                            (iii) by striking subparagraph (D).
                    (B) Subparagraph (B) of section 9503(c)(4), as 
                redesignated by subsection (a)(3), is amended--
                            (i) by striking ``account'' in the heading 
                        and inserting ``trust fund'',
                            (ii) by striking ``or (B)'' in clause (ii), 
                        and
                            (iii) by striking ``Account in the Aquatic 
                        Resources''.
                    (C) Subparagraph (C) of section 9503(c)(4), as 
                redesignated by subsection (a)(3), is amended by 
                striking ``, but only to the extent such taxes are 
                deposited into the Highway Trust Fund''.
                    (D) Paragraph (5) of section 9503(c) is amended--
                            (i) by striking ``Account in the Aquatic 
                        Resources'' in subparagraph (A), and
                            (ii) by striking ``, but only to the extent 
                        such taxes are deposited into the Highway Trust 
                        Fund'' in subparagraph (B).
    (b) Merging of Accounts.--
            (1) In general.--Subsection (a) of section 9504 is amended 
        to read as follows:
    ``(a) Creation of Trust Fund.--There is hereby established in the 
Treasury of the United States a trust fund to be known as the `Sport 
Fish Restoration Trust Fund'. Such Trust Fund shall consist of such 
amounts as may be appropriated, credited, or paid to it as provided in 
this section, section 9503(c)(4), section 9503(c)(5), or section 
9602(b).''.
            (2) Conforming amendments.--
                    (A) Subsection (b) of section 9504 is amended--
                            (i) by striking ``Account'' in the heading 
                        and inserting ``Trust Fund'',
                            (ii) by striking ``Account'' both places it 
                        appears in paragraphs (1) and (2) and inserting 
                        ``Trust Fund'', and
                            (iii) by striking ``account'' both places 
                        it appears in the headings for paragraphs (1) 
                        and (2) and inserting ``trust fund''.
                    (B) Subsection (d) of section 9504 is amended--
                            (i) by striking ``Aquatic Resources'' in 
                        the heading,
                            (ii) by striking ``any Account in the 
                        Aquatic Resources'' in paragraph (1) and 
                        inserting ``the Sports Fish Restoration'', and
                            (iii) by striking ``any such Account'' in 
                        paragraph (1) and inserting ``such Trust 
                        Fund''.
                    (C) Subsection (e) of section 9504 is amended by 
                striking ``Boat Safety Account and Sport Fish 
                Restoration Account'' and inserting ``Sport Fish 
                Restoration Trust Fund''.
                    (D) Section 9504 is amended--
                            (i) by striking subsection (c),
                            (ii) by redesignating subsections (d) and 
                        (e) as subsections (c) and (d), respectively, 
                        and
                            (iii) by striking ``aquatic resources'' in 
                        the heading and inserting ``sport fish 
                        restoration''.
                    (E) The item relating to section 9504 in the table 
                of sections for subchapter A of chapter 98 is amended 
                by striking ``aquatic resources'' and inserting ``sport 
                fish restoration''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on October 1, 2004.

SEC. 202. LED DEVICES EXEMPTED FROM SONAR DEVICES SUITABLE FOR FINDING 
              FISH.

    (a) In General.--Section 4162(b) (defining sonar device suitable 
for finding fish) is amended by striking ``or'' at the end of paragraph 
(3), by striking the period at the end of paragraph (4) and inserting 
``, or'', and by adding at the end the following new paragraph:
            ``(5) an LED display.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to articles sold by the manufacturer, producer, or importer after 
the date of the enactment of this Act.

SEC. 203. REPEAL OF HARBOR MAINTENANCE TAX ON EXPORTS.

    (a) In General.--Subsection (d) of section 4462 (relating to 
definitions and special rules) is amended to read as follows:
    ``(d) Nonapplicability of Tax to Exports.--The tax imposed by 
section 4461(a) shall not apply to any port use with respect to any 
commercial cargo to be exported from the United States.''.
    (b) Conforming Amendments.--
            (1) Section 4461(c)(1) is amended by adding ``or'' at the 
        end of subparagraph (A), by striking subparagraph (B), and by 
        redesignating subparagraph (C) as subparagraph (B).
            (2) Section 4461(c)(2) is amended by striking ``imposed--'' 
        and all that follows through ``in any other case,'' and 
        inserting ``imposed''.
    (c) Effective Date.--The amendments made by this section shall take 
effect before, on, and after the date of the enactment of this Act.

SEC. 204. CAP ON EXCISE TAX ON CERTAIN FISHING EQUIPMENT.

    (a) In General.--Paragraph (1) of section 4161(a) (relating to 
sport fishing equipment) is amended to read as follows:
            ``(1) Imposition of tax.--
                    ``(A) In general.--There is hereby imposed on the 
                sale of any article of sport fishing equipment by the 
                manufacturer, producer, or importer a tax equal to 10 
                percent of the price for which so sold.
                    ``(B) Limitation on tax imposed on fishing rods and 
                poles.--The tax imposed by subparagraph (A) on any 
                fishing rod or pole shall not exceed $10.''.
    (b) Conforming Amendments.--Section 4161(a)(2) is amended by 
striking ``paragraph (1)'' both places it appears and inserting 
``paragraph (1)(A)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales made after the date of the enactment of this Act.

                     TITLE III--AERIAL EXCISE TAXES

SEC. 301. CLARIFICATION OF EXCISE TAX EXEMPTIONS FOR AGRICULTURAL 
              AERIAL APPLICATORS.

    (a) No Waiver by Farm Owner, Tenant, or Operator Necessary.--
Subparagraph (B) of section 6420(c)(4) (relating to certain farming use 
other than by owner, etc.) is amended to read as follows:
                    ``(B) if the person so using the gasoline is an 
                aerial or other applicator of fertilizers or other 
                substances and is the ultimate purchaser of the 
                gasoline, then subparagraph (A) of this paragraph shall 
                not apply and the aerial or other applicator shall be 
                treated as having used such gasoline on a farm for 
                farming purposes.''.
    (b) Exemption Includes Fuel Used Between Airfield and Farm.--
Section 6420(c)(4), as amended by subsection (a), is amended by adding 
at the end the following new flush sentence:
        ``For purposes of this paragraph, in the case of an aerial 
        applicator, gasoline shall be treated as used on a farm for 
        farming purposes if the gasoline is used for the direct flight 
        between the airfield and 1 or more farms.''.
    (c) Exemption From Tax on Air Transportation of Persons for 
Forestry Purposes Extended to Fixed-Wing Aircraft.--Subsection (f) of 
section 4261 (relating to tax on air transportation of persons) is 
amended to read as follows:
    ``(f) Exemption for Certain Uses.--No tax shall be imposed under 
subsection (a) or (b) on air transportation--
            ``(1) by helicopter for the purpose of transporting 
        individuals, equipment, or supplies in the exploration for, or 
        the development or removal of, hard minerals, oil, or gas, or
            ``(2) by helicopter or by fixed-wing aircraft for the 
        purpose of the planting, cultivation, cutting, or 
        transportation of, or caring for, trees (including logging 
        operations),
but only if the helicopter or fixed-wing aircraft does not take off 
from, or land at, a facility eligible for assistance under the Airport 
and Airway Development Act of 1970, or otherwise use services provided 
pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of 
title 49, United States Code, during such use. In the case of 
helicopter transportation described in paragraph (1), this subsection 
shall be applied by treating each flight segment as a distinct 
flight.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to fuel use or air transportation after the date of the enactment 
of this Act.

SEC. 302. MODIFICATION OF RURAL AIRPORT DEFINITION.

    (a) In General.--Section 4261(e)(1)(B) (defining rural airport) is 
amended--
            (1) by inserting ``(in the case of any airport described in 
        clause (ii)(III), on flight segments of at least 100 miles)'' 
        after ``by air'' in clause (i), and
            (2) by striking the period at the end of subclause (II) of 
        clause (ii) and inserting ``, or'', and by adding at the end of 
        clause (ii) the following new subclause:
                                    ``(III) is not connected by paved 
                                roads to another airport.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning after 2003.

SEC. 303. EXEMPTION FROM TICKET TAXES FOR TRANSPORTATION PROVIDED BY 
              SEAPLANES.

    (a) In General.--Section 4261 (relating to imposition of tax) is 
amended by redesignating subsection (i) as subsection (j) and by 
inserting after subsection (h) the following new subsection:
    ``(i) Exemption for Seaplanes.--No tax shall be imposed by this 
section or section 4271 on any air transportation by a seaplane with 
respect to any segment consisting of a takeoff from, and a landing on, 
water, but only if the places at which such takeoff and landing occur 
have not received and are not receiving financial assistance from the 
Airport and Airways Trust Fund.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning after 2003.

SEC. 304. CERTAIN SIGHTSEEING FLIGHTS EXEMPT FROM TAXES ON AIR 
              TRANSPORTATION.

    (a) In General.--Section 4281 (relating to small aircraft on 
nonestablished lines) is amended by adding at the end the following new 
sentence: ``For purposes of this section, an aircraft shall not be 
considered as operated on an established line if such aircraft is 
operated on a flight the sole purpose of which is sightseeing.''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to transportation beginning on or after the date of the 
enactment of this Act, but shall not apply to any amount paid before 
such date.

               TITLE IV--ALCOHOLIC BEVERAGE EXCISE TAXES

SEC. 401. REPEAL OF OCCUPATIONAL TAXES RELATING TO DISTILLED SPIRITS, 
              WINE, AND BEER.

    (a) Repeal of Occupational Taxes.--
            (1) In general.--The following provisions of part II of 
        subchapter A of chapter 51 (relating to occupational taxes) are 
        hereby repealed:
                    (A) Subpart A (relating to proprietors of distilled 
                spirits plants, bonded wine cellars, etc.).
                    (B) Subpart B (relating to brewer).
                    (C) Subpart D (relating to wholesale dealers) 
                (other than sections 5114 and 5116).
                    (D) Subpart E (relating to retail dealers) (other 
                than section 5124).
                    (E) Subpart G (relating to general provisions) 
                (other than sections 5142, 5143, 5145, and 5146).
            (2) Nonbeverage domestic drawback.--Section 5131 is amended 
        by striking ``, on payment of a special tax per annum,''.
            (3) Industrial use of distilled spirits.--Section 5276 is 
        hereby repealed.
    (b) Conforming Amendments.--
            (1)(A) The heading for part II of subchapter A of chapter 
        51 and the table of subparts for such part are amended to read 
        as follows:

                  ``PART II--MISCELLANEOUS PROVISIONS

                              ``Subpart A. Manufacturers of stills.
                              ``Subpart B. Nonbeverage domestic 
                                        drawback claimants.
                              ``Subpart C. Recordkeeping by dealers.
                              ``Subpart D. Other provisions.''.
            (B) The table of parts for such subchapter A is amended by 
        striking the item relating to part II and inserting the 
        following new item:

                              ``Part II. Miscellaneous provisions.''.
            (2) Subpart C of part II of such subchapter (relating to 
        manufacturers of stills) is redesignated as subpart A.
            (3)(A) Subpart F of such part II (relating to nonbeverage 
        domestic drawback claimants) is redesignated as subpart B and 
        sections 5131 through 5134 are redesignated as sections 5111 
        through 5114, respectively.
            (B) The table of sections for such subpart B, as so 
        redesignated, is amended--
                    (i) by redesignating the items relating to sections 
                5131 through 5134 as relating to sections 5111 through 
                5114, respectively, and
                    (ii) by striking ``and rate of tax'' in the item 
                relating to section 5111, as so redesignated.
            (C) Section 5111, as redesignated by subparagraph (A), is 
        amended--
                    (i) by striking ``and rate of tax'' in the section 
                heading,
                    (ii) by striking the subsection heading for 
                subsection (a), and
                    (iii) by striking subsection (b).
            (4) Part II of subchapter A of chapter 51 is amended by 
        adding after subpart B, as redesignated by paragraph (3), the 
        following new subpart:

                 ``Subpart C--Recordkeeping by Dealers

                              ``Sec. 5121. Recordkeeping by wholesale 
                                        dealers.
                              ``Sec. 5122. Recordkeeping by retail 
                                        dealers.
                              ``Sec. 5123. Preservation and inspection 
                                        of records, and entry of 
                                        premises for inspection.''.
            (5)(A) Section 5114 (relating to records) is moved to 
        subpart C of such part II and inserted after the table of 
        sections for such subpart.
            (B) Section 5114 is amended--
                    (i) by striking the section heading and inserting 
                the following new heading:

``SEC. 5121. RECORDKEEPING BY WHOLESALE DEALERS.'',

                and
                    (ii) by redesignating subsection (c) as subsection 
                (d) and by inserting after subsection (b) the following 
                new subsection:
    ``(c) Wholesale Dealers.--For purposes of this part--
            ``(1) Wholesale dealer in liquors.--The term `wholesale 
        dealer in liquors' means any dealer (other than a wholesale 
        dealer in beer) who sells, or offers for sale, distilled 
        spirits, wines, or beer, to another dealer.
            ``(2) Wholesale dealer in beer.--The term `wholesale dealer 
        in beer' means any dealer who sells, or offers for sale, beer, 
        but not distilled spirits or wines, to another dealer.
            ``(3) Dealer.--The term `dealer' means any person who 
        sells, or offers for sale, any distilled spirits, wines, or 
        beer.
            ``(4) Presumption in case of sale of 20 wine gallons or 
        more.--The sale, or offer for sale, of distilled spirits, 
        wines, or beer, in quantities of 20 wine gallons or more to the 
        same person at the same time, shall be presumptive evidence 
        that the person making such sale, or offer for sale, is engaged 
        in or carrying on the business of a wholesale dealer in liquors 
        or a wholesale dealer in beer, as the case may be. Such 
        presumption may be overcome by evidence satisfactorily showing 
        that such sale, or offer for sale, was made to a person other 
        than a dealer.''.
            (C) Paragraph (3) of section 5121(d), as so redesignated, 
        is amended by striking ``section 5146'' and inserting ``section 
        5123''.
            (6)(A) Section 5124 (relating to records) is moved to 
        subpart C of part II of subchapter A of chapter 51 and inserted 
        after section 5121.
            (B) Section 5124 is amended--
                    (i) by striking the section heading and inserting 
                the following new heading:

``SEC. 5122. RECORDKEEPING BY RETAIL DEALERS.'',

                    (ii) by striking ``section 5146'' in subsection (c) 
                and inserting ``section 5123'', and
                    (iii) by redesignating subsection (c) as subsection 
                (d) and inserting after subsection (b) the following 
                new subsection:
    ``(c) Retail Dealers.--For purposes of this section--
            ``(1) Retail dealer in liquors.--The term `retail dealer in 
        liquors' means any dealer (other than a retail dealer in beer) 
        who sells, or offers for sale, distilled spirits, wines, or 
        beer, to any person other than a dealer.
            ``(2) Retail dealer in beer.--The term `retail dealer in 
        beer' means any dealer who sells, or offers for sale, beer, but 
        not distilled spirits or wines, to any person other than a 
        dealer.
            ``(3) Dealer.--The term `dealer' has the meaning given such 
        term by section 5121(c)(3).''.
            (7) Section 5146 is moved to subpart C of part II of 
        subchapter A of chapter 51, inserted after section 5122, and 
        redesignated as section 5123.
            (8) Part II of subchapter A of chapter 51 is amended by 
        inserting after subpart C the following new subpart:

                     ``Subpart D--Other Provisions

                              ``Sec. 5131. Packaging distilled spirits 
                                        for industrial uses.
                              ``Sec. 5132. Prohibited purchases by 
                                        dealers.''.
            (9) Section 5116 is moved to subpart D of part II of 
        subchapter A of chapter 51, inserted after the table of 
        sections, redesignated as section 5131, and amended by 
        inserting ``(as defined in section 5121(c))'' after ``dealer'' 
        in subsection (a).
            (10) Subpart D of part II of subchapter A of chapter 51 is 
        amended by adding at the end thereof the following new section:

``SEC. 5132. PROHIBITED PURCHASES BY DEALERS.

    ``(a) In General.--Except as provided in regulations prescribed by 
the Secretary, it shall be unlawful for a dealer to purchase distilled 
spirits for resale from any person other than a wholesale dealer in 
liquors who is required to keep the records prescribed by section 5121.
    ``(b) Penalty and Forfeiture.--

                                ``For penalty and forfeiture provisions 
applicable to violations of subsection (a), see sections 5687 and 
7302.''.

            (11) Subsection (b) of section 5002 is amended--
                    (A) by striking ``section 5112(a)'' and inserting 
                ``section 5121(c)(3)'',
                    (B) by striking ``section 5112'' and inserting 
                ``section 5121(c)'',
                    (C) by striking ``section 5122'' and inserting 
                ``section 5122(c)''.
            (12) Subparagraph (A) of section 5010(c)(2) is amended by 
        striking ``section 5134'' and inserting ``section 5114''.
            (13) Subsection (d) of section 5052 is amended to read as 
        follows:
    ``(d) Brewer.--For purposes of this chapter, the term `brewer' 
means any person who brews beer or produces beer for sale. Such term 
shall not include any person who produces only beer exempt from tax 
under section 5053(e).''.
            (14) The text of section 5182 is amended to read as 
        follows:
            ``For provisions requiring recordkeeping by wholesale 
        liquor dealers, see section 5121, and by retail liquor dealers, 
        see section 5122.''.
            (15) Subsection (b) of section 5402 is amended by striking 
        ``section 5092'' and inserting ``section 5052(d)''.
            (16) Section 5671 is amended by striking ``or 5091''.
            (17)(A) Part V of subchapter J of chapter 51 is hereby 
        repealed.
            (B) The table of parts for such subchapter J is amended by 
        striking the item relating to part V.
            (18)(A) Sections 5142, 5143, and 5145 are moved to 
        subchapter D of chapter 52, inserted after section 5731, 
        redesignated as sections 5732, 5733, and 5734, respectively, 
        and amended by striking ``this part'' each place it appears and 
        inserting ``this subchapter''.
            (B) Section 5732, as redesignated by subparagraph (A), is 
        amended by striking ``(except the tax imposed by section 
        5131)'' each place it appears.
            (C) Paragraph (2) of section 5733(c), as redesignated by 
        subparagraph (A), is amended by striking ``liquors'' both 
        places it appears and inserting ``tobacco products and 
        cigarette papers and tubes''.
            (D) The table of sections for subchapter D of chapter 52 is 
        amended by adding at the end thereof the following:

                              ``Sec. 5732. Payment of tax.
                              ``Sec. 5733. Provisions relating to 
                                        liability for occupational 
                                        taxes.
                              ``Sec. 5734. Application of State 
                                        laws.''.
            (E) Section 5731 is amended by striking subsection (c) and 
        by redesignating subsection (d) as subsection (c).
            (19) Subsection (c) of section 6071 is amended by striking 
        ``section 5142'' and inserting ``section 5732''.
            (20) Paragraph (1) of section 7652(g) is amended--
                    (A) by striking ``subpart F'' and inserting 
                ``subpart B'', and
                    (B) by striking ``section 5131(a)'' and inserting 
                ``section 5111''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on July 1, 2004, but shall not apply to taxes imposed for 
periods before such date.

SEC. 402. REPEAL OF LIMITATION ON COVER OVER OF TAX TO PUERTO RICO AND 
              VIRGIN ISLANDS ON DISTILLED SPIRITS.

    (a) In General.--Subsection (f) of section 7652 (relating to 
limitation on cover over of tax on distilled spirits) is repealed.
    (b) Effective Date.--
            (1) In general.--The repeal made by subsection (a) shall 
        apply to articles containing distilled spirits brought into the 
        United States after December 31, 2003.
            (2) Special rule.--
                    (A) In general.--After December 31, 2003, the 
                treasury of Puerto Rico shall make a Conservation Trust 
                Fund transfer within 30 days from the date of each 
                cover over payment made during such period to such 
                treasury under section 7652(e) of the Internal Revenue 
                Code of 1986.
                    (B) Conservation trust fund transfer.--
                            (i) In general.--For purposes of this 
                        paragraph, the term ``Conservation Trust Fund 
                        transfer'' means a transfer to the Puerto Rico 
                        Conservation Trust Fund of an amount equal to 
                        50 cents per proof gallon of the taxes imposed 
                        under section 5001 or section 7652 of such Code 
                        on distilled spirits that are covered over to 
                        the treasury of Puerto Rico under section 
                        7652(e) of such Code.
                            (ii) Treatment of transfer.--Each 
                        Conservation Trust Fund transfer shall be 
                        treated as principal for an endowment, the 
                        income from which to be available for use by 
                        the Puerto Rico Conservation Trust Fund for the 
                        purposes for which the Trust Fund was 
                        established.
                            (iii) Result of nontransfer.--
                                    (I) In general.--Upon notification 
                                by the Secretary of the Interior that a 
                                Conservation Trust Fund transfer has 
                                not been made by the treasury of Puerto 
                                Rico during the period described in 
                                subparagraph (A), the Secretary of the 
                                Treasury shall, except as provided in 
                                subclause (II), deduct and withhold 
                                from the next cover over payment to be 
                                made to the treasury of Puerto Rico 
                                under section 7652(e) of such Code an 
                                amount equal to the appropriate 
                                Conservation Trust Fund transfer and 
                                interest thereon at the underpayment 
                                rate established under section 6621 of 
                                such Code as of the due date of such 
                                transfer. The Secretary of the Treasury 
                                shall transfer such amount deducted and 
                                withheld, and the interest thereon, 
                                directly to the Puerto Rico 
                                Conservation Trust Fund.
                                    (II) Good cause exception.--If the 
                                Secretary of the Interior finds, after 
                                consultation with the Governor of 
                                Puerto Rico, that the failure by the 
                                treasury of Puerto Rico to make a 
                                required transfer was for good cause, 
                                and notifies the Secretary of the 
                                Treasury of the finding of such good 
                                cause before the due date of the next 
                                cover over payment following the 
                                notification of nontransfer, then the 
                                Secretary of the Treasury shall not 
                                deduct the amount of such nontransfer 
                                from any cover over payment.
                    (C) Puerto rico conservation trust fund.--For 
                purposes of this paragraph, the term ``Puerto Rico 
                Conservation Trust Fund'' means the fund established 
                pursuant to a Memorandum of Understanding between the 
                United States Department of the Interior and the 
                Commonwealth of Puerto Rico, dated December 24, 1968.

                      TITLE V--SPORT EXCISE TAXES

SEC. 501. CUSTOM GUNSMITHS.

    (a) Small Manufacturers Exempt From Firearms Excise Tax.--Section 
4182 (relating to exemptions) is amended by redesignating subsection 
(c) as subsection (d) and by inserting after subsection (b) the 
following new subsection:
    ``(c) Small Manufacturers, Etc.--
            ``(1) In general.--The tax imposed by section 4181 shall 
        not apply to any article described in such section if 
        manufactured, produced, or imported by a person who 
        manufactures, produces, and imports less than 50 of such 
        articles during the calendar year.
            ``(2) Controlled groups.--All persons treated as a single 
        employer for purposes of subsection (a) or (b) of section 52 
shall be treated as one person for purposes of paragraph (1).''.
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to articles sold by the manufacturer, producer, or 
        importer on or after the date which is the first day of the 
        month beginning at least 2 weeks after the date of the 
        enactment of this Act.
            (2) No inference.--Nothing in the amendments made by this 
        section shall be construed to create any inference with respect 
        to the proper tax treatment of any sales before the effective 
        date of such amendments.

SEC. 502. MODIFIED TAXATION OF IMPORTED ARCHERY PRODUCTS.

    (a) Bows.--Paragraph (1) of section 4161(b) (relating to bows) is 
amended to read as follows:
            ``(1) Bows.--
                    ``(A) In general.--There is hereby imposed on the 
                sale by the manufacturer, producer, or importer of any 
                bow which has a peak draw weight of 30 pounds or more, 
                a tax equal to 11 percent of the price for which so 
                sold.
                    ``(B) Archery equipment.--There is hereby imposed 
                on the sale by the manufacturer, producer, or 
                importer--
                            ``(i) of any part or accessory suitable for 
                        inclusion in or attachment to a bow described 
                        in subparagraph (A), and
                            ``(ii) of any quiver or broadhead suitable 
                        for use with an arrow described in paragraph 
                        (2),
                a tax equal to 11 percent of the price for which so 
                sold.''.
    (b) Arrows.--Subsection (b) of section 4161 (relating to bows and 
arrows, etc.) is amended by redesignating paragraph (3) as paragraph 
(4) and inserting after paragraph (2) the following:
            ``(3) Arrows.--
                    ``(A) In general.--There is hereby imposed on the 
                sale by the manufacturer, producer, or importer of any 
                arrow, a tax equal to 12 percent of the price for which 
                so sold.
                    ``(B) Exception.--In the case of any arrow of which 
                the shaft or any other component has been previously 
                taxed under paragraph (1) or (2)--
                            ``(i) section 6416(b)(3) shall not apply, 
                        and
                            ``(ii) the tax imposed by subparagraph (A) 
                        shall be an amount equal to the excess (if any) 
                        of--
                                    ``(I) the amount of tax imposed by 
                                this paragraph (determined without 
                                regard to this subparagraph), over
                                    ``(II) the amount of tax paid with 
                                respect to the tax imposed under 
                                paragraph (1) or (2) on such shaft or 
                                component.
                    ``(C) Arrow.--For purposes of this paragraph, the 
                term `arrow' means any shaft described in paragraph (2) 
                to which additional components are attached.''.
    (c) Conforming Amendments.--Section 4161(b)(2) is amended--
            (1) by inserting ``(other than broadheads)'' after 
        ``point'', and
            (2) by striking ``Arrows.--'' in the heading and inserting 
        ``Arrow components.--''.
    (d) Effective Date.--The amendments made by this section shall 
apply to articles sold by the manufacturer, producer, or importer after 
the date of the enactment of this Act.

SEC. 503. TREATMENT OF TRIBAL GOVERNMENTS FOR PURPOSES OF FEDERAL 
              WAGERING EXCISE AND OCCUPATIONAL TAXES.

    (a) In General.--Subsection (a) of section 7871 (relating to Indian 
tribal governments treated as States for certain purposes) is amended 
by striking ``and'' at the end of paragraph (6), by striking the period 
at the end of paragraph (7) and inserting ``; and'', and by adding at 
the end the following new paragraph:
            ``(8) for purposes of chapter 35 (relating to taxes on 
        wagering).''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on July 1, 2004, but shall not apply to taxes imposed for 
periods before such date.

                       TITLE VI--OTHER PROVISIONS

SEC. 601. INCOME TAX CREDIT FOR DISTILLED SPIRITS WHOLESALERS AND FOR 
              DISTILLED SPIRITS IN CONTROL STATE BAILMENT WAREHOUSES 
              FOR COSTS OF CARRYING FEDERAL EXCISE TAXES ON BOTTLED 
              DISTILLED SPIRITS.

    (a) In General.--Subpart A of part I of subchapter A of chapter 51 
(relating to gallonage and occupational taxes) is amended by adding at 
the end the following new section:

``SEC. 5011. INCOME TAX CREDIT FOR AVERAGE COST OF CARRYING EXCISE TAX.

    ``(a) In General.--For purposes of section 38, the amount of the 
distilled spirits credit for any taxable year is the amount equal to 
the product of--
            ``(1) in the case of--
                    ``(A) any eligible wholesaler--
                            ``(i) the number of cases of bottled 
                        distilled spirits--
                                    ``(I) which were bottled in the 
                                United States, and
                                    ``(II) which are purchased by such 
                                wholesaler during the taxable year 
                                directly from the bottler of such 
                                spirits, or
                    ``(B) any person which is subject to section 5005 
                and which is not an eligible wholesaler, the number of 
                cases of bottled distilled spirits which are stored in 
                a warehouse operated by, or on behalf of, a State, or 
                agency or political subdivision thereof, on which title 
                has not passed on an unconditional sale basis, and
            ``(2) the average tax-financing cost per case for the most 
        recent calendar year ending before the beginning of such 
        taxable year.
    ``(b) Eligible Wholesaler.--For purposes of this section, the term 
`eligible wholesaler' means any person which holds a permit under the 
Federal Alcohol Administration Act as a wholesaler of distilled spirits 
which is not a State, or agency or political subdivision thereof.
    ``(c) Average Tax-Financing Cost.--
            ``(1) In general.--For purposes of this section, the 
        average tax-financing cost per case for any calendar year is 
        the amount of interest which would accrue at the deemed 
        financing rate during a 60-day period on an amount equal to the 
        deemed Federal excise tax per case.
            ``(2) Deemed financing rate.--For purposes of paragraph 
        (1), the deemed financing rate for any calendar year is the 
        average of the corporate overpayment rates under paragraph (1) 
        of section 6621(a) (determined without regard to the last 
        sentence of such paragraph) for calendar quarters of such year.
            ``(3) Deemed federal excise tax per case.--For purposes of 
        paragraph (1), the deemed Federal excise tax per case is 
        $25.68.
    ``(d) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Case.--The term `case' means 12 80-proof 750 
        milliliter bottles.
            ``(2) Number of cases in lot.--The number of cases in any 
        lot of distilled spirits shall be determined by dividing the 
        number of liters in such lot by 9.''.
    (b) Conforming Amendments.--
            (1) Subsection (b) of section 38 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 the following new paragraph:
            ``(16) the distilled spirits credit determined under 
        section 5011(a).''.
            (2) Subsection (d) of section 39 is amended by adding at 
        the end the following new paragraph:
            ``(11) No carryback of section 5011 credit before january 
        1, 2004.--No portion of the unused business credit for any 
        taxable year which is attributable to the credit determined 
        under section 5011(a) may be carried back to a taxable year 
        beginning before January 1, 2004.''.
            (3) The table of sections for subpart A of part I of 
        subchapter A of chapter 51 is amended by adding at the end the 
        following new item:

                              ``Sec. 5011. Income tax credit for 
                                        average cost of carrying excise 
                                        tax.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 602. CREDIT FOR TAXPAYERS OWNING COMMERCIAL POWER TAKEOFF 
              VEHICLES.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business-related credits) is amended by adding at the end 
the following new section:

``SEC. 45G. COMMERCIAL POWER TAKEOFF VEHICLES CREDIT.

    ``(a) General Rule.--For purposes of section 38, the amount of the 
commercial power takeoff vehicles credit determined under this section 
for the taxable year is $250 for each qualified commercial power 
takeoff vehicle owned by the taxpayer as of the close of the calendar 
year in which or with which the taxable year of the taxpayer ends.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Qualified commercial power takeoff vehicle.--The term 
        `qualified commercial power takeoff vehicle' means any highway 
        vehicle described in paragraph (2) which is propelled by any 
        fuel subject to tax under section 4041 or 4081 if such vehicle 
        is used in a trade or business or for the production of income 
        (and is licensed and insured for such use).
            ``(2) Highway vehicle described.--A highway vehicle is 
        described in this paragraph if such vehicle is--
                    ``(A) designed to engage in the daily collection of 
                refuse or recyclables from homes or businesses and is 
                equipped with a mechanism under which the vehicle's 
                propulsion engine provides the power to operate a load 
                compactor, or
                    ``(B) designed to deliver ready mixed concrete on a 
                daily basis and is equipped with a mechanism under 
                which the vehicle's propulsion engine provides the 
                power to operate a mixer drum to agitate and mix the 
                product en route to the delivery site.
    ``(c) Exception for Vehicles Used by Governments, etc.--No credit 
shall be allowed under this section for any vehicle owned by any person 
at the close of a calendar year if such vehicle is used at any time 
during such year by--
            ``(1) the United States or an agency or instrumentality 
        thereof, a State, a political subdivision of a State, or an 
        agency or instrumentality of one or more States or political 
        subdivisions, or
            ``(2) an organization exempt from tax under section 501(a).
    ``(d) Denial of Double Benefit.--The amount of any deduction under 
this subtitle for any tax imposed by subchapter B of chapter 31 or part 
III of subchapter A of chapter 32 for any taxable year shall be reduced 
(but not below zero) by the amount of the credit determined under this 
subsection for such taxable year.
    ``(e) Termination.--This section shall not apply with respect to 
any calendar year after 2006.''.
    (b) Conforming Amendments.--
            (1) Subsection (b) of section 38, as amended by this Act, 
        is amended by striking ``plus'' at the end of paragraph (15), 
        by striking the period at the end of paragraph (16) and 
        inserting ``, plus'', and by adding at the end the following 
        new paragraph:
            ``(17) the commercial power takeoff vehicles credit under 
        section 45G(a).''.
            (2) Subsection (d) of section 39, as amended by this Act, 
        is amended by adding at the end the following new paragraph:
            ``(12) No carryback of section 45g credit before january 1, 
        2004.--No portion of the unused business credit for any taxable 
        year which is attributable to the credit determined under 
        section 45G(a) may be carried back to a taxable year beginning 
        before January 1, 2004.''.
            (3) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 is amended by adding at the end the 
        following new item:

                              ``Sec. 45G. Commercial power takeoff 
                                        vehicles credit.''.
    (c) Regulations.--Not later than January 1, 2007, the Secretary of 
the Treasury, in consultation with the Secretary of Energy, shall by 
regulation provide for the method of determining the exemption from any 
excise tax imposed under section 4041 or 4081 of the Internal Revenue 
Code of 1986 on fuel used through a mechanism to power equipment 
attached to a highway vehicle as described in section 45G(b)(2) of such 
Code, as added by subsection (a).
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.
                                 <all>