I 111th CONGRESS 1st Session H. R. 3592 IN THE HOUSE OF REPRESENTATIVES September 17, 2009 Mr. Pascrell (for himself, Mr. Reichert, Mrs. Christensen, and Ms. Jackson-Lee of Texas) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend the Internal Revenue Code of 1986 to allow a tax credit for producing oil from recycled waste.

1.

Short title

This Act may be cited as the Plastics Recycling Act of 2009.

2.

Production Tax Credit for Certain Recycling Activities

(a)

In general

Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business related credits) is amended by adding at the end the following new section:

45R.

Oil produced from certain recycling activities

(a)

General rule

For purposes of section 38, the waste plastic recycling credit for any taxable year is an amount equal to the product of— (1)60 cents, multiplied by (2)the number of gallons of qualified synthetic oil— (A)produced by the taxpayer from qualified feedstock at a qualified small conversion process recycling facility during the 10-year period beginning on the date the facility was originally placed in service, and (B)used or sold by the taxpayer in a trade or business to an unrelated person during the taxable year. (b)

Exception for de minimis percentage of non-Qualifying feedstock

In the case that a producer uses non-qualified feedstock to produce a gallon (or part thereof) of qualified synthetic oil, the amount of the credit determined under subsection (a) with respect to such gallon— (1)shall be reduced by an amount equal to the amount of the credit (determined without regard to this subsection) multiplied by the percentage of non-qualifying feedstock used in the production of such gallon, and (2)if the percentage of non-qualifying feedstock so used is greater than 15 percent, the credit determined under subsection (a) with respect to such gallon shall be zero. (c)

Definitions

For purposes of this section— (1)

Qualified synthetic oil

The term qualified synthetic oil means oil derived from eligible feedstocks and which has a minimum market value of 90 percent of crude oil, represented by the New York Mercantile Exchange front-month contract quoted at the time of sale. (2)

Qualified small conversion process recycling facility

The term qualified small conversion process recycling facility means any facility which— (A)is owned by the taxpayer, (B)is originally placed in service after the date of the enactment of this section and before January 1, 2015, and (C)has a maximum daily production capacity of not more than 2,000 barrels of qualified synthetic oil. (3)

Eligible Feedstock

The term eligible feedstock means post-consumer and post-industrial waste plastics. (4)

Plastic

The term plastic means any material that is derived from one or more of the categories of materials in the resin identification system developed by the Society of the Plastics Industry (SPI) in 1988. (d)

Applicable rules

For purposes of this section, rules similar to the rules of paragraphs (1), (3), (4), and (5) of section 45(e) shall apply. (e)

Denial of double benefit

A credit shall not be allowed under section 40, 40A, or 6426 with respect to any fuel for which a credit is allowed under this section. (f)

Coordination with Department of Treasury grants

In the case of any taxpayer with respect to whom the Secretary makes a grant under section 3 of the Plastics Recycling Act of 2009 with respect to any oil— (1)

Denial of credits

No credit with respect to such oil shall be determined under this section or section 40, 40A, or 6426 for the taxable year in which such grant is made or any subsequent taxable year. (2)

Recapture of credits made before grant

If a credit was determined under this section with respect to such oil for any taxable year ending before such grant is made— (A)the tax imposed under subtitle A on the taxpayer for the taxable year in which such grant is made shall be increased by so much of such credit as was allowed under section 38, (B)the general business carryforwards under section 39 shall be adjusted so as to recapture the portion of such credit which was not so allowed, and (C)the amount of such grant shall be determined without regard to any reduction in the basis of such property by reason of such credit. (3)

Treatment of grants

Any such grant shall not be includible in the gross income of the taxpayer.

. (b)

Credit allowed as part of general business credit

Section 38(b) of such Code (defining current year business credit) is amended by striking plus at the end of paragraph (34), by striking the period at the end of paragraph (35) and inserting , plus, and by adding at the end the following new paragraph: (36)the waste plastic recycling credit determined under section 45R(a). . (c)

Conforming amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 45R. Oil produced from certain recycling activities. . (d)

Effective date

The amendments made by this section shall apply to oil produced after the date of enactment of this Act.

3.

Grants for oil produced from certain recycling activities in lieu of tax credits

(a)

In general

Upon application, the Secretary of the Treasury (or the Secretary’s delegate) shall make a grant to each person to whom the waste plastic recycling credit determined under section 45R of the Internal Revenue Code of 1986 is allowable for the taxable year in which the grant is made. (b)

Grant determination

The grant under subsection (a) shall be determined in the same manner as the credit is determined under section 45R of the Internal Revenue Code of 1986 (determined without regard to section 38(c) of such Code) for the taxable year in which the grant is made. (c)

Exception for certain non-Taxpayers

The Secretary of the Treasury shall not make any grant under this section to— (1)any Federal, State, or local government (or any political subdivision, agency, or instrumentality thereof), (2)any organization described in section 501(c) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code, (3)any entity referred to in paragraph (4) of section 54(j) of such Code, or (4)any partnership or other pass-thru entity any partner (or other holder of an equity or profits interest) of which is described in paragraph (1), (2) or (3). (d)

Appropriations

For purposes of section 1324(b) of title 31, United States Code, a grant under this section shall be treated as a credit provision described in paragraph (2) of such section.