[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1230 Placed on Calendar Senate (PCS)]






                                                       Calendar No. 127
109th CONGRESS
  1st Session
                                S. 1230

                          [Report No. 109-82]

To amend the Internal Revenue Code of 1986 to provide for the extension 
    of the Highway Trust Fund and the Aquatic Resources Trust Fund 
 expenditure authority and related taxes and to provide for excise tax 
           reform and simplification, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 14, 2005

   Mr. Grassley from the Committee on Finance reported the following 
     original bill; which was read twice and placed on the calendar

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide for the extension 
    of the Highway Trust Fund and the Aquatic Resources Trust Fund 
 expenditure authority and related taxes and 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; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Highway 
Reauthorization and Excise Tax Simplification Act of 2005''.
    (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; amendment of 1986 Code; table of contents.
                  TITLE I--TRUST FUND REAUTHORIZATION

Sec. 101. Extension of highway-related taxes and trust funds.
Sec. 102. Modification of adjustments of apportionments.
             TITLE II--EXCISE TAX REFORM AND SIMPLIFICATION

                    Subtitle A--Highway Excise Taxes

Sec. 201. Modification of gas guzzler tax.
                    Subtitle B--Aquatic Excise Taxes

Sec. 211. Elimination of Aquatic Resources Trust Fund and 
                            transformation of Sport Fish Restoration 
                            Account.
Sec. 212. Repeal of harbor maintenance tax on exports.
Sec. 213. Cap on excise tax on certain fishing equipment.
                    Subtitle C--Aerial Excise Taxes

Sec. 221. Clarification of excise tax exemptions for agricultural 
                            aerial applicators and exemption for fixed-
                            wing aircraft engaged in forestry 
                            operations.
Sec. 222. Modification of rural airport definition.
Sec. 223. Exemption from taxes for transportation provided by 
                            seaplanes.
Sec. 224. Certain sightseeing flights exempt from taxes on air 
                            transportation.
                 Subtitle D--Taxes Relating to Alcohol

Sec. 231. Repeal of special occupational taxes on producers and 
                            marketers of alcoholic beverages.
Sec. 232. Modification of limitation on rate of rum excise tax cover 
                            over to Puerto Rico and Virgin Islands.
Sec. 233. 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. 234. Quarterly excise tax filing for small alcohol excise 
                            taxpayers.
                     Subtitle E--Sport Excise Taxes

Sec. 241. Custom gunsmiths.
                  TITLE III--MISCELLANEOUS PROVISIONS

Sec. 301. Motor Fuel Tax Enforcement Advisory Commission.
Sec. 302. National Surface Transportation Infrastructure Financing 
                            Commission.
Sec. 303. Expansion of Highway Trust Fund expenditure purposes to 
                            include funding for studies of supplemental 
                            or alternative financing for the Highway 
                            Trust Fund.
Sec. 304. Delta regional transportation plan.
Sec. 305. Build America Corporation.
Sec. 306. Increase in dollar limitation for qualified transportation 
                            fringe benefits.
             TITLE IV--FUELS-RELATED TECHNICAL CORRECTIONS

Sec. 401. Fuels-related technical corrections.
                   TITLE V--REVENUE OFFSET PROVISIONS

Sec. 501. Treatment of contingent payment convertible debt instruments.
Sec. 502. Frivolous tax submissions.
Sec. 503. Increase in certain criminal penalties.
Sec. 504. Doubling of certain penalties, fines, and interest on 
                            underpayments related to certain offshore 
                            financial arrangements.
Sec. 505. Modification of interaction between subpart F and passive 
                            foreign investment company rules.
Sec. 506. Declaration by chief executive officer relating to Federal 
                            annual corporate income tax return.
Sec. 507. Treasury regulations on foreign tax credit.

                  TITLE I--TRUST FUND REAUTHORIZATION

SEC. 101. EXTENSION OF HIGHWAY-RELATED TAXES AND TRUST FUNDS.

    (a) Extension of Taxes.--
            (1) In general.--The following provisions are each amended 
        by striking ``2005'' each place it appears and inserting 
        ``2011'':
                    (A) Section 4041(a)(1)(C)(iii)(I) (relating to rate 
                of tax on certain buses).
                    (B) Section 4041(a)(2)(B) (relating to rate of tax 
                on special motor fuels).
                    (C) Section 4041(m)(1) (relating to certain alcohol 
                fuels).
                    (D) Section 4051(c) (relating to termination of tax 
                on heavy trucks and trailers).
                    (E) Section 4071(d) (relating to termination of tax 
                on tires).
                    (F) Section 4081(d)(1) (relating to termination of 
                tax on gasoline, diesel fuel, and kerosene).
                    (G) Section 4481(f) (relating to period tax in 
                effect).
                    (H) Section 4482(c)(4) (relating to taxable 
                period).
                    (I) Section 4482(d) (relating to special rule for 
                taxable period in which termination date occurs).
            (2) Floor stocks refunds.--Section 6412(a)(1) (relating to 
        floor stocks refunds) is amended--
                    (A) by striking ``2005'' each place it appears and 
                inserting ``2011'', and
                    (B) by striking ``2006'' each place it appears and 
                inserting ``2012''.
    (b) Extension of Certain Exemptions.--The following provisions are 
each amended by striking ``2005'' and inserting ``2011'':
            (1) Section 4221(a) (relating to certain tax-free sales).
            (2) Section 4483(h) (relating to termination of exemptions 
        for highway use tax).
    (c) Extension of Deposits Into Trust Funds.--
            (1) In general.--Paragraphs (1) and (2) of subsection (b), 
        and paragraphs (2) and (3) of subsection (c), of section 9503 
        (relating to the Highway Trust Fund) are each amended--
                    (A) by striking ``2005'' each place it appears and 
                inserting ``2011'', and
                    (B) by striking ``2006'' each place it appears and 
                inserting ``2012''.
            (2) Motorboat and small-engine fuel tax transfers.--
                    (A) In general.--Paragraphs (4)(A)(i) and (5)(A) of 
                section 9503(c) are each amended by striking ``2005'' 
                and inserting ``2011''.
                    (B) Conforming amendments to land and water 
                conservation fund.--Section 201(b) of the Land and 
                Water Conservation Fund Act of 1965 (16 U.S.C. 460l-
                11(b)) is amended--
                            (i) by striking ``2003'' and inserting 
                        ``2009'', and
                            (ii) by striking ``2004'' each place it 
                        appears and inserting ``2010''.
    (d) Extension and Expansion of Expenditures From Trust Funds.--
            (1) Highway trust fund.--
                    (A) Highway account.--Paragraph (1) of section 
                9503(c) is amended--
                            (i) in the matter before subparagraph (A), 
                        by striking ``June 1, 2005'' and inserting 
                        ``October 1, 2009'',
                            (ii) by striking ``or'' at the end of 
                        subparagraph (J),
                            (iii) by striking the period at the end of 
                        subparagraph (K) and inserting ``, or'',
                            (iv) by inserting after subparagraph (K) 
                        the following new subparagraph:
                    ``(L) authorized to be paid out of the Highway 
                Trust Fund under the Safe, Accountable, Flexible, and 
                Efficient Transportation Equity Act of 2005.'', and
                            (v) in the matter after subparagraph (L), 
                        as added by clause (iv), by striking ``Surface 
                        Transportation Extension Act of 2004, Part V'' 
                        and inserting ``Safe, Accountable, Flexible, 
                        and Efficient Transportation Equity Act of 
                        2005''.
                    (B) Mass transit account.--Paragraph (3) of section 
                9503(e) is amended--
                            (i) in the matter before subparagraph (A), 
                        by striking ``June 1, 2005'' and inserting 
                        ``October 1, 2009'',
                            (ii) by striking ``or'' at the end of 
                        subparagraph (H),
                            (iii) by inserting ``or'' at the end of 
                        subparagraph (I),
                            (iv) by inserting after subparagraph (I) 
                        the following new subparagraph:
                    ``(J) Safe, Accountable, Flexible, and Efficient 
                Transportation Equity Act of 2005,'', and
                            (v) in the matter after subparagraph (J), 
                        as added by clause (iv), by striking ``Surface 
                        Transportation Extension Act of 2004, Part V'' 
                        and inserting ``Safe, Accountable, Flexible, 
                        and Efficient Transportation Equity Act of 
                        2005''.
                    (C) Exception to limitation on transfers.--
                Subparagraph (B) of section 9503(b)(6) is amended by 
                striking ``June 1, 2005'' and inserting ``October 1, 
                2009''.
            (2) Aquatic resources trust fund.--
                    (A) Sport fish restoration account.--Paragraph (2) 
                of section 9504(b) is amended by striking ``Surface 
                Transportation Extension Act of 2004, Part V'' each 
                place it appears and inserting ``Safe, Accountable, 
                Flexible, and Efficient Transportation Equity Act of 
                2005'' .
                    (B) Exception to limitation on transfers.--
                Paragraph (2) of section 9504(d) is amended by striking 
                ``June 1, 2005'' and inserting ``October 1, 2009''.
    (e) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 102. MODIFICATION OF ADJUSTMENTS OF APPORTIONMENTS.

    (a) In General.--Section 9503(d) (relating to adjustments for 
apportionments) is amended--
            (1) by striking ``24-month'' in paragraph (1)(B) and 
        inserting ``48-month'', and
            (2) by striking ``2 years' '' in the heading for paragraph 
        (3) and inserting ``4 years' ''.
    (b) Measurement of Net Highway Receipts.--Section 9503(d) is 
amended by redesignating paragraph (6) as paragraph (7) and by 
inserting after paragraph (5) the following new paragraph:
            ``(6) Measurement of net highway receipts.--For purposes of 
        making any estimate under paragraph (1) of net highway receipts 
        for periods ending after the date specified in subsection 
        (b)(1), the Secretary shall treat--
                    ``(A) each expiring provision of subsection (b) 
                which is related to appropriations or transfers to the 
                Highway Trust Fund to have been extended through the 
                end of the 48-month period referred to in paragraph 
                (1)(B), and
                    ``(B) with respect to each tax imposed under the 
                sections referred to in subsection (b)(1), the rate of 
                such tax during the 48-month period referred to in 
                paragraph (1)(B) to be the same as the rate of such tax 
                as in effect on the date of such estimate.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

             TITLE II--EXCISE TAX REFORM AND SIMPLIFICATION

                    Subtitle A--Highway Excise Taxes

SEC. 201. MODIFICATION OF GAS GUZZLER TAX.

    (a) Uniform Application of Tax.--Subparagraph (A) of section 
4064(b)(1) (defining automobile) is amended by striking the second 
sentence.
    (b) Effective Date.--The amendment made by this section shall take 
effect on October 1, 2005.

                    Subtitle B--Aquatic Excise Taxes

SEC. 211. ELIMINATION OF AQUATIC RESOURCES TRUST FUND AND 
              TRANSFORMATION OF SPORT FISH RESTORATION ACCOUNT.

    (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 ``shall be transferred'' in subparagraph (B) 
                and inserting ``Fund which is attributable to motorboat 
                fuel taxes shall be transferred'',
                    (B) by striking subparagraph (A), and
                    (C) by redesignating subparagraphs (B) through (E) 
                as subparagraphs (A) through (D), respectively.
            (2) Conforming amendments.--
                    (A) Subparagraph (B) of section 9503(c)(4), as 
                redesignated by paragraph (1)(C), is amended--
                            (i) by striking ``Account'' in the heading 
                        and inserting ``and Boating Trust Fund'',
                            (ii) by striking ``or (B)'' in clause (ii), 
                        and
                            (iii) by striking ``account in the Aquatic 
                        Resources'' and inserting ``and Boating''.
                    (B) Paragraph (5) of section 9503(c) is amended by 
                striking ``Account in the Aquatic Resources'' in 
                subparagraph (A) and inserting ``and Boating''.
    (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 and Boating 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, as amended by 
                section 101 of this Act, is amended--
                            (i) by striking ``Account'' in the heading 
                        and inserting ``and Boating Trust Fund'',
                            (ii) by striking ``Account'' both places it 
                        appears in paragraphs (1) and (2) and inserting 
                        ``and Boating Trust Fund'', and
                            (iii) by striking ``account'' both places 
                        it appears in the headings for paragraphs (1) 
                        and (2) and inserting ``and boating trust 
                        fund''.
                    (B) Subsection (d) of section 9504, as amended by 
                section 101 of this Act, 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 
                        Boating'', 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 and Boating Trust Fund''.
                    (D) Section 9504 is amended by striking ``aquatic 
                resources'' in the heading and inserting ``sport fish 
                restoration and boating''.
                    (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 and boating''.
    (c) Phaseout of Boat Safety Account.--Subsection (c) of section 
9504 is amended to read as follows:
    ``(c) Expenditures From Boat Safety Account.--Amounts remaining in 
the Boat Safety Account on October 1, 2005, and amounts thereafter 
credited to the Account under section 9602(b), shall be available, 
without further appropriation, for making expenditures before October 
1, 2010, to carry out the purposes of section 15 of the Dingell-Johnson 
Sport Fish Restoration Act (as in effect on the date of the enactment 
of the Safe, Accountable, Flexible, and Efficient Transportation Equity 
Act of 2005). For purposes of section 9602, the Boat Safety Account 
shall be treated as a Trust Fund established by this subchapter.''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on October 1, 2005.

SEC. 212. 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. 213. 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 articles sold by the manufacturer, producer, or importer after 
September 30, 2005.

                    Subtitle C--Aerial Excise Taxes

SEC. 221. CLARIFICATION OF EXCISE TAX EXEMPTIONS FOR AGRICULTURAL 
              AERIAL APPLICATORS AND EXEMPTION FOR FIXED-WING AIRCRAFT 
              ENGAGED IN FORESTRY OPERATIONS.

    (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:
        ``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 September 30, 2005.

SEC. 222. 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 ``or'' at the end of subclause (I) of 
        clause (ii), 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 take 
effect on October 1, 2005.

SEC. 223. EXEMPTION FROM 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 transportation beginning after September 30, 2005.

SEC. 224. 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 at any time during which 
such aircraft is being 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 after September 30, 2005, but 
shall not apply to any amount paid before such date for such 
transportation.

                 Subtitle D--Taxes Relating to Alcohol

SEC. 231. REPEAL OF SPECIAL OCCUPATIONAL TAXES ON PRODUCERS AND 
              MARKETERS OF ALCOHOLIC BEVERAGES.

    (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 and registration 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 and Registration 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.
        ``Sec. 5124. Registration by dealers.''.
            (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 
        or a limited retail dealer) 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 (other than a limited retail dealer) who 
        sells, or offers for sale, beer, but not distilled spirits or 
        wines, to any person other than a dealer.
            ``(3) Limited retail dealer.--The term `limited retail 
        dealer' means any fraternal, civic, church, labor, charitable, 
        benevolent, or ex-servicemen's organization making sales of 
        distilled spirits, wine or beer on the occasion of any kind of 
        entertainment, dance, picnic, bazaar, or festival held by it, 
        or any person making sales of distilled spirits, wine or beer 
        to the members, guests, or patrons of bona fide fairs, 
        reunions, picnics, carnivals, or other similar outings, if such 
        organization or person is not otherwise engaged in business as 
        a dealer.
            ``(4) 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) Subpart C of part II of subchapter A of chapter 51, as 
        amended by paragraph (7), is amended by adding at the end the 
        following new section:

``SEC. 5124. REGISTRATION BY DEALERS.

    ``Every dealer who is subject to the recordkeeping requirements 
under section 5121 or 5122 shall register with the Secretary such 
dealer's name or style, place of residence, trade or business, and the 
place where such trade or business is to be carried on. In case of a 
firm or company, the names of the several persons constituting the 
same, and the places of residence, shall be so registered.''.
            (9) Section 7012 is amended by redesignating paragraphs (4) 
        and (5) as paragraphs (5) and (6), respectively, and by 
        inserting after paragraph (3) the following new paragraph:
            ``(4) For provisions relating to registration by dealers in 
        distilled spirits, wines, and beer, see section 5124.''.
            (10) 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.''.
            (11) 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).
            (12) Subpart D of part II of subchapter A of chapter 51 is 
        amended by adding at the end 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) Limited Retail Dealers.--A limited retail dealer may lawfully 
purchase distilled spirits for resale from a retail dealer in liquors.
    ``(c) Penalty and Forfeiture.--

``For penalty and forfeiture provisions applicable to violations of 
                            subsection (a), see sections 5687 and 
                            7302.''.
            (13) 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)''.
            (14) Subparagraph (A) of section 5010(c)(2) is amended by 
        striking ``section 5134'' and inserting ``section 5114''.
            (15) 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).''.
            (16) The text of section 5182 is amended to read as 
        follows:

        ``For provisions requiring recordkeeping by wholesale liquor 
                            dealers, see section 5112, and by retail 
                            liquor dealers, see section 5122.''.
            (17) Subsection (b) of section 5402 is amended by striking 
        ``section 5092'' and inserting ``section 5052(d)''.
            (18) Section 5671 is amended by striking ``or 5091''.
            (19)(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.
            (20)(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 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).
            (21) Subsection (c) of section 6071 is amended by striking 
        ``section 5142'' and inserting ``section 5732''.
            (22) 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, 2008, but shall not apply to taxes imposed for 
periods before such date.

SEC. 232. MODIFICATION OF LIMITATION ON RATE OF RUM EXCISE TAX COVER 
              OVER TO PUERTO RICO AND VIRGIN ISLANDS.

    (a) In General.--Section 7652(f)(1) (relating to limitation on 
cover over of tax on distilled spirits) is amended by inserting ``, and 
$13.50 in the case of distilled spirits brought into the United States 
after December 31, 2005, and before January 1, 2007'' after ``2006''.
    (b) Special Rule.--
            (1) In general.--After December 31, 2005, and before 
        January 1, 2007, the Commonwealth of Puerto Rico shall make a 
        Conservation Trust Fund transfer from the treasury of Puerto 
        Rico within 30 days from the date of each cover overpayment to 
        such treasury under section 7652(e) of the Internal Revenue 
        Code of 1986.
            (2) Conservation trust fund transfer.--
                    (A) In general.--For purposes of this subsection, 
                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.
                    (B) 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.
                    (C) 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 
                        Commonwealth of Puerto Rico, the Secretary of 
                        the Treasury shall, except as provided in 
                        clause (ii), deduct and withhold from the next 
                        cover overpayment 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 Commonwealth 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 
                        overpayment following the notification of 
                        nontransfer, then the Secretary of the Treasury 
                        shall not deduct the amount of such nontransfer 
                        from any cover overpayment.
            (3) Puerto rico conservation trust fund.--For purposes of 
        this subsection, 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.

SEC. 233. 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, 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 
                political subdivision thereof, or an agency of either, 
                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 political subdivision thereof, or an agency of 
either.
    ``(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) Credit Treated as Part of General Business Credit.--Section 
38(b) (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 (19), and inserting ``, plus'', and by adding at the 
end the following new paragraph:
            ``(20) the distilled spirits credit determined under 
        section 5011(a).''.
    (c) Conforming Amendment.--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.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after September 30, 2005.

SEC. 234. QUARTERLY EXCISE TAX FILING FOR SMALL ALCOHOL EXCISE 
              TAXPAYERS.

    (a) In General.--Subsection (d) of section 5061 (relating to time 
for collecting tax on distilled spirits, wines, and beer) is amended by 
redesignating paragraphs (4) and (5) as paragraphs (5) and (6), 
respectively, and by inserting after paragraph (3) the following new 
paragraph:
            ``(4) Taxpayers liable for taxes of not more than 
        $50,000.--
                    ``(A) In general.--In the case of any taxpayer who 
                reasonably expects to be liable for not more than 
                $50,000 in taxes imposed with respect to distilled 
                spirits, wines, and beer under subparts A, C, and D for 
                the calendar year and who was liable for not more than 
                $50,000 in such taxes in the preceding calendar year, 
                the last day for the payment of tax shall be the 14th 
                day after the last day of the calendar quarter during 
                which the action giving rise to the imposition of such 
                tax occurs.
                    ``(B) No application after limit exceeded.--
                Subparagraph (A) shall not apply to any taxpayer for 
                any portion of the calendar year following the first 
                date on which the aggregate amount of tax due under 
                subparts A, C, and D from such taxpayer during such 
                calendar year exceeds $50,000, and any tax under such 
                subparts which has not been paid on such date shall be 
                due on the 14th day after the last day of the 
                semimonthly period in which such date occurs.
                    ``(C) Calendar quarter.--For purposes of this 
                paragraph, the term `calendar quarter' means the three-
                month period ending on March 31, June 30, September 30, 
                or December 31.''.
    (b) Conforming Amendment.--Section 5061(d)(6), as redesignated by 
subsection (a), is amended by striking ``paragraph (4)'' and inserting 
``paragraph (5)''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to quarterly periods beginning on and after January 
1, 2006.

                     Subtitle E--Sport Excise Taxes

SEC. 241. 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 pistol, revolver, or firearm described in such 
        section if manufactured, produced, or imported by a person who 
        manufactures, produces, and imports less than an aggregate of 
        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 after September 30, 2005.
            (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.

                  TITLE III--MISCELLANEOUS PROVISIONS

SEC. 301. MOTOR FUEL TAX ENFORCEMENT ADVISORY COMMISSION.

    (a) Establishment.--There is established a Motor Fuel Tax 
Enforcement Advisory Commission (in this section referred to as the 
``Commission'').
    (b) Function.--The Commission shall--
            (1) review motor fuel revenue collections, historical and 
        current;
            (2) review the progress of investigations;
            (3) develop and review legislative proposals with respect 
        to motor fuel taxes;
            (4) monitor the progress of administrative regulation 
        projects relating to motor fuel taxes;
            (5) review the results of Federal and State agency 
        cooperative efforts regarding motor fuel taxes;
            (6) review the results of Federal interagency cooperative 
        efforts regarding motor fuel taxes; and
            (7) evaluate and make recommendations to the President and 
        Congress regarding--
                    (A) the effectiveness of existing Federal 
                enforcement programs regarding motor fuel taxes,
                    (B) enforcement personnel allocation, and
                    (C) proposals for regulatory projects, legislation, 
                and funding.
    (c) Membership.--
            (1) Appointment.--The Commission shall be composed of the 
        following representatives appointed by the Chairmen and the 
        Ranking Members of the Committee on Finance of the Senate and 
        the Committee on Ways and Means of the House of 
        Representatives:
                    (A) At least 1 representative from each of the 
                following Federal entities: the Department of Homeland 
                Security, the Department of Transportation--Office of 
                Inspector General, the Federal Highway Administration, 
                the Department of Defense, and the Department of 
                Justice.
                    (B) At least 1 representative from the Federation 
                of State Tax Administrators.
                    (C) At least 1 representative from any State 
                department of transportation.
                    (D) 2 representatives from the highway construction 
                industry.
                    (E) 6 representatives from industries relating to 
                fuel distribution -- refiners (2 representatives), 
                distributors (1 representative), pipelines (1 
                representative), and terminal operators (2 
                representatives).
                    (F) 1 representative from the retail fuel industry.
                    (G) 2 representatives from the staff of the 
                Committee on Finance of the Senate and 2 
                representatives from the staff of the Committee on Ways 
                and Means of the House of Representatives.
            (2) Terms.--Members shall be appointed for the life of the 
        Commission.
            (3) Vacancies.--A vacancy in the Commission shall be filled 
        in the manner in which the original appointment was made.
            (4) Travel expenses.--Members shall serve without pay but 
        shall receive travel expenses, including per diem in lieu of 
        subsistence, in accordance with sections 5702 and 5703 of title 
        5, United States Code.
            (5) Chairman.--The Chairman of the Commission shall be 
        elected by the members.
    (d) Funding.--Such sums as are necessary shall be available from 
the Highway Trust fund for the expenses of the Commission.
    (e) Consultation.--Upon request of the Commission, representatives 
of the Department of the Treasury and the Internal Revenue Service 
shall be available for consultation to assist the Commission in 
carrying out its duties under this section.
    (f) Obtaining Data.--The Commission may secure directly from any 
department or agency of the United States, information (other than 
information required by any law to be kept confidential by such 
department or agency) necessary for the Commission to carry out its 
duties under this section. Upon request of the Commission, the head of 
that department or agency shall furnish such nonconfidential 
information to the Commission. The Commission shall also gather 
evidence through such means as it may deem appropriate, including 
through holding hearings and soliciting comments by means of Federal 
Register notices.
    (g) Termination.--The Commission shall terminate as of the close of 
September 30, 2009.

SEC. 302. NATIONAL SURFACE TRANSPORTATION INFRASTRUCTURE FINANCING 
              COMMISSION.

    (a) Establishment.--There is established a National Surface 
Transportation Infrastructure Financing Commission (in this section 
referred to as the ``Commission''). The Commission shall hold its first 
meeting within 90 days of the appointment of the eighth individual to 
be named to the Commission.
    (b) Function.--
            (1) In general.--The Commission shall, with respect to the 
        period beginning on the date of the enactment of this Act and 
        ending before 2016--
                    (A) make a thorough investigation and study of 
                revenues flowing into the Highway Trust Fund under 
                current law, including the individual components of the 
                overall flow of such revenues;
                    (B) consider whether the amount of such revenues is 
                likely to increase, decline, or remain unchanged, 
                absent changes in the law, particularly by taking into 
                account the impact of possible changes in public 
                vehicular choice, fuel use, or travel alternatives that 
                could be expected to reduce or increase revenues into 
                the Highway Trust Fund;
                    (C) consider alternative approaches to generating 
                revenues for the Highway Trust Fund, and the level of 
                revenues that such alternatives would yield;
                    (D) consider highway and transit needs and whether 
                additional revenues into the Highway Trust Fund, or 
                other Federal revenues dedicated to highway and transit 
                infrastructure, would be required in order to meet such 
                needs; and
                    (E) study such other matters closely related to the 
                subjects described in the preceding subparagraphs as it 
                may deem appropriate.
            (2) Preparation of report.--Based on such investigation and 
        study, the Commission shall develop a final report, with 
        recommendations and the bases for those recommendations, 
        indicating policies that should be adopted, or not adopted, to 
        achieve various levels of annual revenue for the Highway Trust 
        Fund and to enable the Highway Trust Fund to receive revenues 
        sufficient to meet highway and transit needs. Such 
        recommendations shall address, among other matters as the 
        Commission may deem appropriate--
                    (A) what levels of revenue are required by the 
                Federal Highway Trust Fund in order for it to meet 
                needs to maintain and improve the condition and 
                performance of the Nation's highway and transit 
                systems;
                    (B) what levels of revenue are required by the 
                Federal Highway Trust Fund in order to ensure that 
                Federal levels of investment in highways and transit do 
                not decline in real terms; and
                    (C) the extent, if any, to which the Highway Trust 
                Fund should be augmented by other mechanisms or funds 
                as a Federal means of financing highway and transit 
                infrastructure investments.
    (c) Membership.--
            (1) Appointment.--The Commission shall be composed of 15 
        members, appointed as follows:
                    (A) 7 members appointed by the Secretary of 
                Transportation, in consultation with the Secretary of 
                the Treasury.
                    (B) 2 members appointed by the Chairman of the 
                Committee on Ways and Means of the House of 
                Representatives.
                    (C) 2 members appointed by the Ranking Minority 
                Member of the Committee on Ways and Means of the House 
                of Representatives.
                    (D) 2 members appointed by the Chairman of the 
                Committee on Finance of the Senate.
                    (E) 2 members appointed by the Ranking Minority 
                Member of the Committee on Finance of the Senate.
            (2) Qualifications.--Members appointed pursuant to 
        paragraph (1) shall be appointed from among individuals 
        knowledgeable in the fields of public transportation finance or 
        highway and transit programs, policy, and needs, and may 
        include representatives of interested parties, such as State 
        and local governments or other public transportation 
        authorities or agencies, representatives of the transportation 
        construction industry (including suppliers of technology, 
        machinery and materials), transportation labor (including 
        construction and providers), transportation providers, the 
        financial community, and users of highway and transit systems.
            (3) Terms.--Members shall be appointed for the life of the 
        Commission.
            (4) Vacancies.--A vacancy in the Commission shall be filled 
        in the manner in which the original appointment was made.
            (5) Travel expenses.--Members shall serve without pay but 
        shall receive travel expenses, including per diem in lieu of 
        subsistence, in accordance with sections 5702 and 5703 of title 
        5, United States Code.
            (6) Chairman.--The Chairman of the Commission shall be 
        elected by the members.
    (d) Staff.--The Commission may appoint and fix the pay of such 
personnel as it considers appropriate.
    (e) Funding.--Funding for the Commission shall be provided by the 
Secretary of the Treasury and by the Secretary of Transportation, out 
of funds available to those agencies for administrative and policy 
functions.
    (f) Staff of Federal Agencies.--Upon request of the Commission, the 
head of any department or agency of the United States may detail any of 
the personnel of that department or agency to the Commission to assist 
in carrying out its duties under this section.
    (g) Obtaining Data.--The Commission may secure directly from any 
department or agency of the United States, information (other than 
information required by any law to be kept confidential by such 
department or agency) necessary for the Commission to carry out its 
duties under this section. Upon request of the Commission, the head of 
that department or agency shall furnish such nonconfidential 
information to the Commission. The Commission shall also gather 
evidence through such means as it may deem appropriate, including 
through holding hearings and soliciting comments by means of Federal 
Register notices.
    (h) Report.--Not later than 2 years after the date of its first 
meeting, the Commission shall transmit its final report, including 
recommendations, to the Secretary of Transportation, the Secretary of 
the Treasury, and the Committee on Ways and Means of the House of 
Representatives, the Committee on Finance of the Senate, the Committee 
on Transportation and Infrastructure of the House of Representatives, 
the Committee on Environment and Public Works of the Senate, and the 
Committee on Banking, Housing, and Urban Affairs of the Senate.
    (i) Termination.--The Commission shall terminate on the 180th day 
following the date of transmittal of the report under subsection (h). 
All records and papers of the Commission shall thereupon be delivered 
to the Administrator of General Services for deposit in the National 
Archives.

SEC. 303. EXPANSION OF HIGHWAY TRUST FUND EXPENDITURE PURPOSES TO 
              INCLUDE FUNDING FOR STUDIES OF SUPPLEMENTAL OR 
              ALTERNATIVE FINANCING FOR THE HIGHWAY TRUST FUND.

    (a) In General.--From amounts available in the Highway Trust Fund, 
there is authorized to be expended for 2 comprehensive studies of 
supplemental or alternative funding sources for the Highway Trust 
Fund--
            (1) $1,000,000 to the Western Transportation Institute of 
        the College of Engineering at Montana State University for the 
        study and report described in subsection (b), and
            (2) $16,500,000 to the Public Policy Center of the 
        University of Iowa for the study and report described in 
        subsection (c).
    (b) Study of Funding Mechanisms.--Not later than December 31, 2006, 
the Western Transportation Institute of the College of Engineering at 
Montana State University shall report to the Secretary of the Treasury 
and the Secretary of Transportation on a study of highway funding 
mechanisms of other industrialized nations, an examination of the 
viability of alternative funding proposals, including congestion 
pricing, greater reliance on tolls, privatization of facilities, and 
bonding for construction of added capacity, and an examination of 
increasing the rates of motor fuels taxes in effect on the date of the 
enactment of this Act, including the indexation of such rates.
    (c) Study on Field Test of Onboard Computer Assessment of Highway 
Use Taxes.--Not later than December 31, 2011, the Public Policy Center 
of the University of Iowa shall direct, analyze, and report to the 
Secretary of the Treasury and the Secretary of Transportation on a 
long-term field test of an approach to assessing highway use taxes 
based upon actual mileage driven by a specific vehicle on specific 
types of highways by use of an onboard computer--
            (1) which is linked to satellites to calculate highway 
        mileage traversed,
            (2) which computes the appropriate highway use tax for each 
        of the Federal, State, and local governments as the vehicle 
        makes use of the highways, and
            (3) the data from which is periodically downloaded by the 
        vehicle owner to a collection center for an assessment of 
        highway use taxes due in each jurisdiction traversed. The 
        components of the field test shall include 2 years for 
        preparation, including selection of vendors and test 
        participants, and 3-year testing period.

SEC. 304. DELTA REGIONAL TRANSPORTATION PLAN.

    (a) Study.--The Delta Regional Authority shall conduct a study of 
the transportation assets and needs in the States of Alabama, Arkansas, 
Illinois, Kentucky, Louisiana, Mississippi, Missouri, and Tennessee 
which comprise the Delta region.
    (b) Regional Strategic Transportation Plan.--Upon completion of the 
study required under subsection (a), the Delta Regional Authority shall 
establish a regional strategic transportation plan to achieve efficient 
transportation systems in the Delta region. In developing the regional 
strategic transportation plan, the Delta Regional Authority shall 
consult with local planning and development districts, local and 
regional governments, metropolitan planning organizations, State 
transportation entities, and Federal transportation agencies.
    (c) Elements of Study and Plan.--The study and plan under this 
section shall include the following transportation modes and systems: 
transit, rail, highway, interstate, bridges, air, airports, waterways, 
and ports.
    (d) Authorization of Appropriations.--There is authorized to be 
appropriated to the Delta Regional Authority $500,000 for each of the 
fiscal years 2005 and 2006 to carry out the purposes of this section, 
to remain available until expended.

SEC. 305. BUILD AMERICA CORPORATION.

    (a) Establishment of Build America Corporation.--There is 
established a nonprofit corporation, to be known as the ``Build America 
Corporation''. The Build America Corporation is not an agency or 
establishment of the United States Government. The purpose of the 
Corporation is to issue Build America bonds. The Corporation shall be 
subject, to the extent consistent with this section, to the laws of the 
State of Delaware applicable to corporations not for profit.
    (b) Use of Build America Bond Proceeds.--The proceeds from the sale 
of any Build America bonds issued by the Build America Corporation as 
authorized by subsection (a) may be used to fund any qualified project.
    (c) Qualified Projects.--For purposes of this section--
            (1) In general.--With respect to any Build America bonds 
        issued by the Build America Corporation as authorized by 
        subsection (a), the term ``qualified project'' means any--
                    (A) qualified highway project,
                    (B) qualified public transportation project, and
                    (C) congestion relief project,
        proposed by 1 or more States and approved by the Build America 
        Corporation, which meets the requirements under subparagraphs 
        (A), (B), and (C) of paragraph (5).
            (2) Qualified highway project.--The term ``qualified 
        highway project'' means a project for highway facilities or 
        other facilities which are eligible for assistance under title 
        23, United States Code.
            (3) Qualified public transportation project.--The term 
        ``qualified public transportation project'' means a project for 
        public transportation facilities or other facilities which are 
        eligible for assistance under title 49, United States Code.
            (4) Congestion relief project.--The term ``congestion 
        relief project'' means an intermodal freight transfer facility, 
        freight rail facility, freight movement corridor, intercity 
        passenger rail facility, intercity bus facility, border 
        crossing facility, or other public or private facility approved 
        as a congestion relief project by the Secretary of 
        Transportation. In making such approvals, the Secretary of 
        Transportation shall--
                    (A) consider the economic, environmental, mobility, 
                and national security improvements to be realized 
                through the project, and
                    (B) give preference to projects with national or 
                regional significance, including any projects sponsored 
                by a coalition of States or a combination of States and 
                private sector entities, in terms of generating 
                economic benefits, supporting international commerce, 
                or otherwise enhancing the national transportation 
                system.
            (5) Additional requirements for qualified projects.--For 
        purposes of paragraph (1)--
                    (A) Costs of qualified projects.--The requirement 
                of this subparagraph is met if the costs of the 
                qualified project funded by Build America bonds only 
                relate to capital investments and do not include any 
                costs relating to operations, maintenance, or rolling 
                stock.
                    (B) Applicability of federal law.--The requirement 
                of this subparagraph is met if the requirements of any 
                Federal law, including titles 23, 40, and 49 of the 
                United States Code, which would otherwise apply to 
                projects to which the United States is a party or to 
                funds made available under such law and projects 
                assisted with those funds are applied to--
                            (i) funds made available under Build 
                        America bonds for similar qualified projects, 
                        and
                            (ii) similar qualified projects assisted by 
                        the Build America Corporation through the use 
                        of such funds.
                    (C) Utilization of updated construction technology 
                for qualified projects.--The requirement of this 
                subparagraph is met if the appropriate State agency 
                relating to the qualified project has updated its 
                accepted construction technologies to match a list 
                prescribed by the Secretary of Transportation and in 
                effect on the date of the approval of the project as a 
                qualified project.

SEC. 306. INCREASE IN DOLLAR LIMITATION FOR QUALIFIED TRANSPORTATION 
              FRINGE BENEFITS.

    (a) In General.--Section 132(f)(2) (relating to limitation on 
exclusion) is amended--
            (1) by striking ``$100'' in subparagraph (A) and inserting 
        ``$155'', and
            (2) by striking ``$175'' in subparagraph (B) and inserting 
        ``$200''.
    (b) Inflation Adjustment Conforming Amendments.--Subparagraph (A) 
of section 132(f)(6) (relating to inflation adjustment) is amended--
            (1) by striking the last sentence,
            (2) by striking ``1999'' and inserting ``2008'', and
            (3) by striking ``1998'' and inserting ``2007''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

             TITLE IV--FUELS-RELATED TECHNICAL CORRECTIONS

SEC. 401. FUELS-RELATED TECHNICAL CORRECTIONS.

    (a) Amendments Related to Section 301 of the American Jobs Creation 
Act of 2004.--Section 6427 is amended--
            (1) by striking subsection (f), and
            (2) by striking subsection (o) and redesignating subsection 
        (p) as subsection (o).
    (b) Amendments Related to Section 853 of the American Jobs Creation 
Act of 2004.--
            (1) Subparagraph (C) of section 4081(a)(2) is amended by 
        striking ``for use in commercial aviation'' and inserting ``for 
        use in commercial aviation by a person registered for such use 
        under section 4101''.
            (2) So much of paragraph (2) of section 4081(d) as precedes 
        subparagraph (A) is amended to read as follows:
            ``(2) Aviation fuels.--The rates of tax specified in 
        clauses (ii) and (iv) of subsection (a)(2)(A) shall be 4.3 
        cents per gallon--''.
    (c) Amendment Related to Section 9005 of the Transportation Equity 
Act for the 21st Century.--The last sentence of paragraph (2) of 
section 9504(b) is amended by striking ``subparagraph (B)'', and 
inserting ``subparagraph (C)''.
    (d) Effective Dates.--
            (1) American jobs creation act of 2004.--The amendments 
        made by subsections (a) and (b) shall take effect as if 
        included in the provisions of the American Jobs Creation Act of 
        2004 to which they relate.
            (2) Transportation equity act for the 21st century.--The 
        amendment made by subsection (c) shall take effect as if 
        included in the provision of the Transportation Equity Act for 
        the 21st Century to which it relates.

                   TITLE V--REVENUE OFFSET PROVISIONS

SEC. 501. TREATMENT OF CONTINGENT PAYMENT CONVERTIBLE DEBT INSTRUMENTS.

    (a) In General.--Section 1275(d) (relating to regulation authority) 
is amended--
            (1) by striking ``The Secretary'' and inserting the 
        following:
            ``(1) In general.--The Secretary'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Treatment of contingent payment convertible debt.--
                    ``(A) In general.--In the case of a debt instrument 
                which--
                            ``(i) is convertible into stock of the 
                        issuing corporation, into stock or debt of a 
                        related party (within the meaning of section 
                        267(b) or 707(b)(1)), or into cash or other 
                        property in an amount equal to the approximate 
                        value of such stock or debt, and
                            ``(ii) provides for contingent payments,
                any regulations which require original issue discount 
                to be determined by reference to the comparable yield 
                of a noncontingent fixed-rate debt instrument shall be 
                applied as if the regulations require that such 
                comparable yield be determined by reference to a 
                noncontingent fixed-rate debt instrument which is 
                convertible into stock.
                    ``(B) Special rule.--For purposes of subparagraph 
                (A), the comparable yield shall be determined without 
                taking into account the yield resulting from the 
                conversion of a debt instrument into stock.''.
    (b) Cross Reference.--Section 163(e)(6) (relating to cross 
references) is amended by adding at the end the following:
                ``For the treatment of contingent payment convertible 
                debt, see section 1275(d)(2).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to debt instruments issued on or after the date of the enactment 
of this Act.

SEC. 502. FRIVOLOUS TAX SUBMISSIONS.

    (a) Civil Penalties.--Section 6702 is amended to read as follows:

``SEC. 6702. FRIVOLOUS TAX SUBMISSIONS.

    ``(a) Civil Penalty for Frivolous Tax Returns.--A person shall pay 
a penalty of $5,000 if--
            ``(1) such person files what purports to be a return of a 
        tax imposed by this title but which--
                    ``(A) does not contain information on which the 
                substantial correctness of the self-assessment may be 
                judged, or
                    ``(B) contains information that on its face 
                indicates that the self-assessment is substantially 
                incorrect; and
            ``(2) the conduct referred to in paragraph (1)--
                    ``(A) is based on a position which the Secretary 
                has identified as frivolous under subsection (c), or
                    ``(B) reflects a desire to delay or impede the 
                administration of Federal tax laws.
    ``(b) Civil Penalty for Specified Frivolous Submissions.--
            ``(1) Imposition of penalty.--Except as provided in 
        paragraph (3), any person who submits a specified frivolous 
        submission shall pay a penalty of $5,000.
            ``(2) Specified frivolous submission.--For purposes of this 
        section--
                    ``(A) Specified frivolous submission.--The term 
                `specified frivolous submission' means a specified 
                submission if any portion of such submission--
                            ``(i) is based on a position which the 
                        Secretary has identified as frivolous under 
                        subsection (c), or
                            ``(ii) reflects a desire to delay or impede 
                        the administration of Federal tax laws.
                    ``(B) Specified submission.--The term `specified 
                submission' means--
                            ``(i) a request for a hearing under--
                                    ``(I) section 6320 (relating to 
                                notice and opportunity for hearing upon 
                                filing of notice of lien), or
                                    ``(II) section 6330 (relating to 
                                notice and opportunity for hearing 
                                before levy), and
                            ``(ii) an application under--
                                    ``(I) section 6159 (relating to 
                                agreements for payment of tax liability 
                                in installments),
                                    ``(II) section 7122 (relating to 
                                compromises), or
                                    ``(III) section 7811 (relating to 
                                taxpayer assistance orders).
            ``(3) Opportunity to withdraw submission.--If the Secretary 
        provides a person with notice that a submission is a specified 
        frivolous submission and such person withdraws such submission 
        within 30 days after such notice, the penalty imposed under 
        paragraph (1) shall not apply with respect to such submission.
    ``(c) Listing of Frivolous Positions.--The Secretary shall 
prescribe (and periodically revise) a list of positions which the 
Secretary has identified as being frivolous for purposes of this 
subsection. The Secretary shall not include in such list any position 
that the Secretary determines meets the requirement of section 
6662(d)(2)(B)(ii)(II).
    ``(d) Reduction of Penalty.--The Secretary may reduce the amount of 
any penalty imposed under this section if the Secretary determines that 
such reduction would promote compliance with and administration of the 
Federal tax laws.
    ``(e) Penalties in Addition to Other Penalties.--The penalties 
imposed by this section shall be in addition to any other penalty 
provided by law.''.
    (b) Treatment of Frivolous Requests for Hearings Before Levy.--
            (1) Frivolous requests disregarded.--Section 6330 (relating 
        to notice and opportunity for hearing before levy) is amended 
        by adding at the end the following new subsection:
    ``(g) Frivolous Requests for Hearing, Etc.--Notwithstanding any 
other provision of this section, if the Secretary determines that any 
portion of a request for a hearing under this section or section 6320 
meets the requirement of clause (i) or (ii) of section 6702(b)(2)(A), 
then the Secretary may treat such portion as if it were never submitted 
and such portion shall not be subject to any further administrative or 
judicial review.''.
            (2) Preclusion from raising frivolous issues at hearing.--
        Section 6330(c)(4) is amended--
                    (A) by striking ``(A)'' and inserting ``(A)(i)'';
                    (B) by striking ``(B)'' and inserting ``(ii)'';
                    (C) by striking the period at the end of the first 
                sentence and inserting ``; or''; and
                    (D) by inserting after subparagraph (A)(ii) (as so 
                redesignated) the following:
                    ``(B) the issue meets the requirement of clause (i) 
                or (ii) of section 6702(b)(2)(A).''.
            (3) Statement of grounds.--Section 6330(b)(1) is amended by 
        striking ``under subsection (a)(3)(B)'' and inserting ``in 
        writing under subsection (a)(3)(B) and states the grounds for 
        the requested hearing''.
    (c) Treatment of Frivolous Requests for Hearings Upon Filing of 
Notice of Lien.--Section 6320 is amended--
            (1) in subsection (b)(1), by striking ``under subsection 
        (a)(3)(B)'' and inserting ``in writing under subsection 
        (a)(3)(B) and states the grounds for the requested hearing'', 
        and
            (2) in subsection (c), by striking ``and (e)'' and 
        inserting ``(e), and (g)''.
    (d) Treatment of Frivolous Applications for Offers-in-Compromise 
and Installment Agreements.--Section 7122 is amended by adding at the 
end the following new subsection:
    ``(e) Frivolous Submissions, Etc.--Notwithstanding any other 
provision of this section, if the Secretary determines that any portion 
of an application for an offer-in-compromise or installment agreement 
submitted under this section or section 6159 meets the requirement of 
clause (i) or (ii) of section 6702(b)(2)(A), then the Secretary may 
treat such portion as if it were never submitted and such portion shall 
not be subject to any further administrative or judicial review.''.
    (e) Clerical Amendment.--The table of sections for part I of 
subchapter B of chapter 68 is amended by striking the item relating to 
section 6702 and inserting the following new item:

``Sec. 6702. Frivolous tax submissions.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to submissions made and issues raised after the date on which the 
Secretary first prescribes a list under section 6702(c) of the Internal 
Revenue Code of 1986, as amended by subsection (a).

SEC. 503. INCREASE IN CERTAIN CRIMINAL PENALTIES.

    (a) In General.--Section 7206 (relating to fraud and false 
statements) is amended--
            (1) by striking ``Any person who--'' and inserting ``(a) In 
        General.--Any person who--'', and
            (2) by adding at the end the following new subsection:
    ``(b) Increase in Monetary Limitation for Underpayment or 
Overpayment of Tax Due to Fraud.--If any portion of any underpayment 
(as defined in section 6664(a)) or overpayment (as defined in section 
6401(a)) of tax required to be shown on a return is attributable to 
fraudulent action described in subsection (a), the applicable dollar 
amount under subsection (a) shall in no event be less than an amount 
equal to such portion. A rule similar to the rule under section 6663(b) 
shall apply for purposes of determining the portion so attributable.''.
    (b) Increase in Penalties.--
            (1) Attempt to evade or defeat tax.--Section 7201 is 
        amended--
                    (A) by striking ``$100,000'' and inserting 
                ``$500,000'',
                    (B) by striking ``$500,000'' and inserting 
                ``$1,000,000'', and
                    (C) by striking ``5 years'' and inserting ``10 
                years''.
            (2) Willful failure to file return, supply information, or 
        pay tax.--Section 7203 is amended--
                    (A) in the first sentence--
                            (i) by striking ``Any person'' and 
                        inserting the following:
    ``(a) In General.--Any person'', and
                            (ii) by striking ``$25,000'' and inserting 
                        ``$50,000'',
                    (B) in the third sentence, by striking ``section'' 
                and inserting ``subsection'', and
                    (C) by adding at the end the following new 
                subsection:
    ``(b) Aggravated Failure To File.--
            ``(1) In general.--In the case of any failure described in 
        paragraph (2), the first sentence of subsection (a) shall be 
        applied by substituting--
                    ``(A) `felony' for `misdemeanor',
                    ``(B) `$500,000 ($1,000,000' for `$25,000 
                ($100,000', and
                    ``(C) `10 years' for `1 year'.
            ``(2) Failure described.--A failure described in this 
        paragraph is a failure to make a return described in subsection 
        (a) for a period of 3 or more consecutive taxable years and the 
        aggregated tax liability for such period is at least 
        $100,000.''.
            (3) Fraud and false statements.--Section 7206(a) (as 
        redesignated by subsection (a)) is amended--
                    (A) by striking ``$100,000'' and inserting 
                ``$500,000'',
                    (B) by striking ``$500,000'' and inserting 
                ``$1,000,000'', and
                    (C) by striking ``3 years'' and inserting ``5 
                years''.
    (c) Effective Date.--The amendments made by this section shall 
apply to actions, and failures to act, occurring after the date of the 
enactment of this Act.

SEC. 504. DOUBLING OF CERTAIN PENALTIES, FINES, AND INTEREST ON 
              UNDERPAYMENTS RELATED TO CERTAIN OFFSHORE FINANCIAL 
              ARRANGEMENTS.

    (a) Determination of Penalty.--
            (1) In general.--Notwithstanding any other provision of 
        law, in the case of an applicable taxpayer--
                    (A) the determination as to whether any interest or 
                applicable penalty is to be imposed with respect to any 
                arrangement to which any initiative described in 
                paragraph (2) applied, or to any underpayment of 
                Federal income tax attributable to items arising in 
                connection with any arrangement described in paragraph 
                (2), shall be made without regard to section 6664 of 
                the Internal Revenue Code of 1986, and
                    (B) if any such interest or applicable penalty is 
                imposed, the amount of such interest or penalty shall 
                be equal to twice that determined without regard to 
                this section.
            (2) Applicable taxpayer.--For purposes of this subsection, 
        the term ``applicable taxpayer'' means a taxpayer who was 
        eligible to participate in, but did not participate in--
                    (A) the Department of the Treasury's Offshore 
                Voluntary Compliance Initiative, or
                    (B) the Department of the Treasury's voluntary 
                disclosure initiative which applies to the taxpayer by 
                reason of the taxpayer's underreporting of United 
                States income tax liability through financial 
                arrangements which rely on the use of offshore 
                arrangements which were the subject of the initiative 
                described in subparagraph (A).
    (b) Definitions and Rules.--For purposes of this section--
            (1) Applicable penalty.--The term ``applicable penalty'' 
        means any penalty, addition to tax, or fine imposed under 
        chapter 68 of the Internal Revenue Code of 1986.
            (2) Voluntary offshore compliance initiative.--The term 
        ``Voluntary Offshore Compliance Initiative'' means the program 
        established by the Department of the Treasury in January 2003, 
        under which any taxpayer was eligible to voluntarily disclose 
        previously undisclosed income on assets placed in offshore 
        accounts and accessed through credit card and other financial 
        arrangements.
            (3) Participation.--A taxpayer shall be treated as having 
        participated in the Voluntary Offshore Compliance Initiative if 
        the taxpayer submitted the request in a timely manner and all 
        information requested by the Secretary of the Treasury or his 
        delegate within a reasonable period of time following the 
        request.
    (c) Effective Date.--The provisions of this section shall apply to 
interest, penalties, additions to tax, and fines with respect to any 
taxable year if, as of the date of the enactment of this Act, the 
assessment of any tax, penalty, or interest with respect to such 
taxable year is not prevented by the operation of any law or rule of 
law.

SEC. 505. MODIFICATION OF INTERACTION BETWEEN SUBPART F AND PASSIVE 
              FOREIGN INVESTMENT COMPANY RULES.

    (a) Limitation on Exception From PFIC Rules for United States 
Shareholders of Controlled Foreign Corporations.--Paragraph (2) of 
section 1297(e) (relating to passive foreign investment company) is 
amended by adding at the end the following flush sentence:
        ``Such term shall not include any period if the earning of 
        subpart F income by such corporation during such period would 
        result in only a remote likelihood of an inclusion in gross 
        income under section 951(a)(1)(A)(i).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years of controlled foreign corporations beginning after 
March 2, 2005, and to taxable years of United States shareholders with 
or within which such taxable years of controlled foreign corporations 
end.

SEC. 506. DECLARATION BY CHIEF EXECUTIVE OFFICER RELATING TO FEDERAL 
              ANNUAL CORPORATE INCOME TAX RETURN.

    (a) In General.--The Federal annual tax return of a corporation 
with respect to income shall also include a declaration signed by the 
chief executive officer of such corporation (or other such officer of 
the corporation as the Secretary of the Treasury may designate if the 
corporation does not have a chief executive officer), under penalties 
of perjury, that the corporation has in place processes and procedures 
that ensure that such return complies with the Internal Revenue Code of 
1986 and that the chief executive officer was provided reasonable 
assurance of the accuracy of all material aspects of such return. The 
preceding sentence shall not apply to any return of a regulated 
investment company (within the meaning of section 851 of such Code).
    (b) Effective Date.--This section shall apply to Federal annual tax 
returns for taxable years ending after the date of the enactment of 
this Act.

SEC. 507. TREASURY REGULATIONS ON FOREIGN TAX CREDIT.

    Section 901 (relating to taxes of foreign countries and of 
possessions of United States) is amended by redesignating subsection 
(m) as subsection (n) and by inserting after subsection (l) the 
following new subsection:
    ``(m) Regulations.--The Secretary may prescribe regulations 
disallowing a credit under subsection (a) for all or a portion of any 
foreign tax, or allocating a foreign tax among 2 or more persons, in 
cases where the foreign tax is imposed on any person in respect of 
income of another person or in other cases involving the inappropriate 
separation of the foreign tax from the related foreign income.''.
                                                       Calendar No. 127

109th CONGRESS

  1st Session

                                S. 1230

                          [Report No. 109-82]

_______________________________________________________________________

                                 A BILL

To amend the Internal Revenue Code of 1986 to provide for the extension 
    of the Highway Trust Fund and the Aquatic Resources Trust Fund 
 expenditure authority and related taxes and to provide for excise tax 
           reform and simplification, and for other purposes.

_______________________________________________________________________

                             June 14, 2005

                 Read twice and placed on the calendar