[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1077 Introduced in Senate (IS)]







109th CONGRESS
  1st Session
                                S. 1077

   To amend the Internal Revenue Code of 1986 to provide a renewable 
            liquid fuels tax credit, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 19, 2005

 Mrs. Lincoln 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 a renewable 
            liquid fuels tax credit, 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. RENEWABLE LIQUID FUELS EXCISE TAX CREDIT.

    (a) In General.--Subchapter B of chapter 65 of the Internal Revenue 
Code of 1986 (relating to rules of special application) is amended by 
inserting after section 6426 the following new section:

``SEC. 6426A. CREDIT FOR RENEWABLE LIQUID FUELS.

    ``(a) Allowance of Credits.--There shall be allowed as a credit 
against the tax imposed by section 4081 an amount equal to the 
renewable liquid mixture credit.
    ``(b) Renewable Liquid Mixture Credit.--
            ``(1) In general.--For purposes of this section, the 
        renewable liquid mixture credit is the product of the 
        applicable amount and the number of gallons of renewable liquid 
        used by the taxpayer in producing any renewable liquid mixture 
        for sale or use in a trade or business of the taxpayer.
            ``(2) Applicable amount.--For purposes of this section, the 
        applicable amount is $1.00.
            ``(3) Renewable liquid mixture.--For purposes of this 
        section, the term `renewable liquid mixture' means a mixture of 
        renewable liquid and taxable fuel which--
                    ``(A) is sold by the taxpayer producing such 
                mixture to any person for use as a fuel or feedstock, 
                or
                    ``(B) is used as a fuel or feedstock by the 
                taxpayer producing such mixture.
        For purposes of subparagraph (A), a mixture produced by any 
        person at a refinery prior to a taxable event which includes 
        renewable liquid shall be treated as sold at the time of its 
        removal from the refinery (and only at such time) or sold to 
        another person for use as a fuel or feedstock.
    ``(c) Other Definitions.--For purposes of this subsection:
            ``(1) Renewable liquid.--The term `renewable liquid' means 
        liquid hydrocarbons derived from waste and byproduct streams 
        including: agricultural byproducts and wastes, aqua-culture 
        products produced from waste streams, food processing plant 
        byproducts, municipal solid and semi-solid waste streams, 
        industrial waste streams, automotive scrap waste streams, and 
        as further provided by regulations.
            ``(2) Taxable fuel.--The term `taxable fuel' has the 
        meaning given such term by section 4083(a)(1).
            ``(3) Feedstock.--The term `feedstock' means any precursor 
        material subject to further processing to make a petrochemical, 
        solvent, or other hydrocarbon which has the effect of 
        displacing conventional crude oil, or products produced from 
        conventional crude oil.
            ``(4) Additional definitions.--Any term used in this 
        section which is also used in section 40B shall have the 
        meaning given such term by section 40B.
    ``(d) Certification for Renewable Liquid Fuel.--No credit shall be 
allowed under this section unless the taxpayer obtains a certification 
(in such form and manner as prescribed by the Secretary) from the 
producer of the renewable liquid fuel, which identifies the product 
produced.
    ``(e) Mixture Not Used as Fuel, Etc.--
            ``(1) Imposition of tax.--If--
                    ``(A) any credit was determined under this section 
                with respect to renewable liquid used in the production 
                of any renewable liquid mixture, and
                    ``(B) any person--
                            ``(i) separates the renewable liquid from 
                        the mixture, or
                            ``(ii) without separation, uses the mixture 
                        other than as a fuel,
                then there is hereby imposed on such person a tax equal 
                to the product of the applicable amount and the number 
                of gallons of such renewable liquid.
            ``(2) Applicable laws.--All provisions of law, including 
        penalties, shall, insofar as applicable and not inconsistent 
        with this section, apply in respect of any tax imposed under 
        paragraph (1) as if such tax were imposed by section 4081 and 
        not by this section.
    ``(f) Coordination With Exemption From Excise Tax.--Rules similar 
to the rules under section 40(c) shall apply for purposes of this 
section.
    ``(g) Termination.--This section shall not apply to any sale, use, 
or removal for any period after December 31, 2010.''.
    (b) Registration Requirement.--Section 4101(a)(1) of the Internal 
Revenue Code of 1986 (relating to registration) is amended by inserting 
``and every person producing or importing renewable liquid as defined 
in section 6426A(c)(1)'' before ``shall register with the Secretary''.
    (c) Payments.--Section 6427 of the Internal Revenue Code of 1986 is 
amended by inserting after subsection (f) the following new subsection:
    ``(g) Renewable Liquid Used to Produce Mixture.--
            ``(1) Used to produce a mixture.--If any person produces a 
        mixture described in section 6426A in such person's trade or 
        business, the Secretary shall pay (without interest) to such 
        person an amount equal to the renewable liquid mixture credit 
        with respect to such mixture.
            ``(2) Coordination with other repayment provisions.--No 
        amount shall be payable under paragraph (1) with respect to any 
        mixture with respect to which an amount is allowed as a credit 
        under section 6426A.
            ``(3) Termination.--This subsection shall not apply with 
        respect to any renewable liquid fuel mixture (as defined in 
        section 6426A(b)(3) sold or used after December 31, 2010).''.
    (d) Conforming Amendment.--The last sentence of section 9503(b)(1) 
is amended by striking ``section 6426'' and inserting ``sections 6426 
and 6426A''.
    (e) Clerical Amendment.--The table of sections for subchapter B of 
chapter 65 of the Internal Revenue Code of 1986 is amended by inserting 
after the item relating to section 6426 the following new item:

        ``Sec. 6426A. Credit for renewable liquid fuels.''.
    (f) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        fuel sold or used after December 31, 2005.
            (2) Registration requirement.--The amendment made by 
        subsection (b) shall take effect on January 1, 2006.

SEC. 2. RENEWABLE LIQUID INCOME TAX CREDIT.

    (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 40A the following new 
section:

``SEC. 40B. RENEWABLE LIQUID USED AS FUEL.

    ``(a) General Rule.--For purposes of section 38, the renewable 
liquid credit determined under this section for the taxable year is an 
amount equal to the sum of--
            ``(1) the renewable liquid mixture credit, plus
            ``(2) the renewable liquid credit.
    ``(b) Definition of Renewable Liquid Mixture Credit and Renewable 
Liquid Credit.--For purposes of this section--
            ``(1) Renewable liquid mixture credit.--
                    ``(A) In general.--The renewable liquid mixture 
                credit of any taxpayer for any taxable year is $1.00 
                for each gallon of renewable liquid fuel used by the 
                taxpayer in the production of a qualified renewable 
                liquid fuel mixture.
                    ``(B) Qualified renewable liquid mixture.--The term 
                `qualified renewable liquid mixture' means a mixture of 
                renewable liquid and taxable fuel (as defined in 
                section 4083(a)(1)), which--
                            ``(i) is sold by the taxpayer producing 
                        such a mixture to any person for use as a fuel 
                        or feedstock, or
                            ``(ii) is used as a fuel or feedstock by 
                        the taxpayer producing such mixture.
                    ``(C) Sale or use must be in trade or business, 
                etc.--Renewable liquid used in the production of a 
                qualified renewable liquid fuel mixture shall be taken 
                into account--
                            ``(i) only if the sale or use described in 
                        subparagraph (B) is in a trade or business of 
                        the taxpayer, and
                            ``(ii) for the taxable year in which such 
                        sale or use occurs.
            ``(2) Renewable liquid credit.--
                    ``(A) In general.--The renewable liquid credit of 
                any taxpayer for any taxable year is $1.00 for each 
                gallon of renewable liquid which is not in a mixture 
                with taxable fuel and which during the taxable year--
                            ``(i) is used by the taxpayer as a fuel or 
                        feedstock in a trade or business, or
                            ``(ii) is sold by the taxpayer at retail to 
                        a person and placed in the fuel tank of such 
                        person's vehicle.
                    ``(B) User credit not to apply to renewable liquid 
                sold at retail.--No credit shall be allowed under 
                subparagraph (A)(i) with respect to any renewable 
                liquid which was sold in a retail sale described in 
                subparagraph (A)(ii).
    ``(c) Certification for Renewable Liquid.--No credit shall be 
allowed under this section unless the taxpayer obtains a certification 
(in such form and manner as prescribed by the Secretary) from the 
producer or importer of the renewable liquid fuel which identifies the 
product produced and percentage of renewable liquid fuel in the 
product.
    ``(d) Coordination With Credit Against Excise Tax.--The amount of 
the credit determined under this section with respect to any renewable 
liquid fuel shall be properly reduced to take into account any benefit 
provided with respect to such renewable liquid fuel solely by reason of 
the application of section 6426A or 6427(g).
    ``(e) Definitions and Special Rules.--For purposes of this section, 
the term `renewable liquid' means liquid hydrocarbons derived from 
waste and byproduct streams including: agricultural byproducts and 
wastes, agriculture materials produced from waste streams, food 
processing plant byproducts, municipal solid and semi-solid waste 
streams, industrial waste streams, automotive scrap waste streams, as 
further provided by regulations.
    ``(f) Mixture or Renewable Liquid Not Used as a Fuel, Etc.--
            ``(1) Mixtures.--If--
                    ``(A) any credit was determined under this section 
                with respect to renewable liquid used in the production 
                of any qualified renewable liquid mixture, and
                    ``(B) any person--
                            ``(i) separates the renewable liquid from 
                        the mixture, or
                            ``(ii) without separation, uses the mixture 
                        other than as a fuel,
                        then there is hereby imposed on such person a 
                        tax equal to the product of the rate applicable 
                        under subsection (b)(1)(A) and the number of 
                        gallons of such renewable liquid in such 
                        mixture.
            ``(2) Renewable liquid.--If--
                    ``(A) any credit was determined under this section 
                with respect to the retail sale of any renewable 
                liquid, and
                    ``(B) any person mixes such renewable liquid or 
                uses such renewable liquid other than as a fuel, then 
                there is hereby imposed on such person a tax equal to 
                the product of the rate applicable under subsection 
                (b)(2)(A) and the number of gallons of such renewable 
                liquid.
            ``(3) Applicable laws.--All provisions of law, including 
        penalties, shall, insofar as applicable and not inconsistent 
        with this section, apply in respect of any tax imposed under 
        subparagraph (A) or (B) as if such tax were imposed by section 
        4081 and not by this chapter.
    ``(g) 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.
    ``(h) Termination.--This section shall not apply to any sale or use 
after December 31, 2010.''.
    (b) Credit Treated as Part of General Business Credit.--Section 
38(b) of the Internal Revenue Code of 1986 (relating to current year 
business credit), is amended by striking ``plus'' at the end of 
paragraph (18), by striking the period at the end of paragraph (17), 
and inserting ``, plus'', and by inserting after paragraph (19) the 
following new paragraph:
            ``(20) The renewable liquid credit determined under section 
        40B.''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter I of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 40A the 
following new item:

        ``Sec. 40B. Renewable liquid used as fuel.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to fuel produced, and sold as used, after December 31, 2005.
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