[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 340 Placed on Calendar Senate (PCS)]

                                                        Calendar No. 10
112th CONGRESS
  1st Session
                                 S. 340

                           [Report No. 112-1]

 To amend the Internal Revenue Code of 1986 to extend the funding and 
  expenditure authority of the Airport and Airway Trust Fund, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 14, 2011

   Mr. Baucus, 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 extend the funding and 
  expenditure authority of the Airport and Airway Trust Fund, 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.

    (a) Short Title.--This Act may be cited as the ``Airport and Airway 
Trust Fund Reauthorization Act of 2011''.
    (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.

SEC. 2. EXTENSION OF TAXES FUNDING AIRPORT AND AIRWAY TRUST FUND.

    (a) Fuel Taxes.--Subparagraph (B) of section 4081(d)(2) is amended 
by striking ``March 31, 2010'' and inserting ``September 30, 2013''.
    (b) Ticket Taxes.--
            (1) Persons.--Clause (ii) of section 4261(j)(1)(A) is 
        amended by striking ``March 31, 2010'' and inserting 
        ``September 30, 2013''.
            (2) Property.--Clause (ii) of section 4271(d)(1)(A) is 
        amended by striking ``March 31, 2010'' and inserting 
        ``September 30, 2013''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on April 1, 2010.

SEC. 3. EXTENSION OF AIRPORT AND AIRWAY TRUST FUND EXPENDITURE 
              AUTHORITY.

    (a) In General.--Paragraph (1) of section 9502(d) is amended--
            (1) by striking ``April 1, 2010'' in the matter preceding 
        subparagraph (A) and inserting ``October 1, 2013'', and
            (2) by striking the semicolon at the end of subparagraph 
        (A) and inserting ``or the FAA Air Transportation Modernization 
        and Safety Improvement Act;''.
    (b) Conforming Amendment.--Paragraph (2) of section 9502(e) is 
amended by striking ``April 1, 2010'' and inserting ``October 1, 
2013''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on April 1, 2010.

SEC. 4. MODIFICATION OF EXCISE TAX ON KEROSENE USED IN AVIATION.

    (a) Rate of Tax on Aviation-grade Kerosene.--
            (1) In general.--Subparagraph (A) of section 4081(a)(2) is 
        amended by striking ``and'' at the end of clause (ii), by 
        striking the period at the end of clause (iii) and inserting 
        ``, and'', and by adding at the end the following new clause:
                            ``(iv) in the case of aviation-grade 
                        kerosene, 35.9 cents per gallon.''.
            (2) Fuel removed directly into fuel tank of airplane used 
        in noncommercial aviation.--Subparagraph (C) of section 
        4081(a)(2) is amended to read as follows:
                    ``(C) Taxes imposed on fuel used in commercial 
                aviation.--In the case of aviation-grade kerosene which 
                is removed from any refinery or terminal directly into 
                the fuel tank of an aircraft for use in commercial 
                aviation by a person registered for such use under 
                section 4101, the rate of tax under subparagraph 
                (A)(iv) shall be 4.3 cents per gallon.''.
            (3) Exemption for aviation-grade kerosene removed into an 
        aircraft.--Subsection (e) of section 4082 is amended--
                    (A) by striking ``kerosene'' and inserting 
                ``aviation-grade kerosene'',
                    (B) by striking ``section 4081(a)(2)(A)(iii)'' and 
                inserting ``section 4081(a)(2)(A)(iv)'', and
                    (C) by striking ``Kerosene'' in the heading and 
                inserting ``Aviation-Grade Kerosene''.
            (4) Conforming amendments.--
                    (A) Clause (iii) of section 4081(a)(2)(A) is 
                amended by inserting ``other than aviation-grade 
                kerosene'' after ``kerosene''.
                    (B) The following provisions are each amended by 
                striking ``kerosene'' and inserting ``aviation-grade 
                kerosene'':
                            (i) Section 4081(a)(3)(A)(ii).
                            (ii) Section 4081(a)(3)(A)(iv).
                            (iii) Section 4081(a)(3)(D).
                    (C) Subparagraph (D) of section 4081(a)(3) is 
                amended--
                            (i) by striking ``paragraph (2)(C)(i)'' in 
                        clause (i) and inserting ``paragraph (2)(C)'', 
                        and
                            (ii) by striking ``paragraph (2)(C)(ii)'' 
                        in clause (ii) and inserting ``paragraph 
                        (2)(A)(iv)''.
                    (D) Paragraph (4) of section 4081(a) is amended--
                            (i) by striking ``kerosene'' in the heading 
                        and inserting ``aviation-grade kerosene'', and
                            (ii) by striking ``paragraph (2)(C)(i)'' 
                        and inserting ``paragraph (2)(C)''.
                    (E) Paragraph (2) of section 4081(d) is amended by 
                striking ``(a)(2)(C)(ii)'' and inserting 
                ``(a)(2)(A)(iv)''.
    (b) Retail Tax on Aviation Fuel.--
            (1) Exemption for previously taxed fuel.--Paragraph (2) of 
        section 4041(c) is amended by inserting ``at the rate specified 
        in subsection (a)(2)(A)(iv) thereof'' after ``section 4081''.
            (2) Rate of tax.--Paragraph (3) of section 4041(c) is 
        amended to read as follows:
            ``(3) Rate of tax.--The rate of tax imposed by this 
        subsection shall be the rate of tax in effect under section 
        4081(a)(2)(A)(iv) (4.3 cents per gallon with respect to any 
        sale or use for commercial aviation).''.
    (c) Refunds Relating to Aviation-grade Kerosene.--
            (1) Aviation-grade kerosene used in commercial aviation.--
        Clause (ii) of section 6427(l)(4)(A) is amended by striking 
        ``specified in section 4041(c) or 4081(a)(2)(A)(iii), as the 
        case may be,'' and inserting ``so imposed''.
            (2) Kerosene used in aviation.--Paragraph (4) of section 
        6427(l) is amended by striking subparagraphs (B) and (C) and 
        inserting the following new subparagraph:
                    ``(B) Payments to ultimate, registered vendor.--
                With respect to any kerosene used in aviation (other 
                than kerosene to which paragraph (6) applies), if the 
                ultimate purchaser of such kerosene waives (at such 
                time and in such form and manner as the Secretary shall 
                prescribe) the right to payment under paragraph (1) and 
                assigns such right to the ultimate vendor, then the 
                Secretary shall pay (without interest) the amount which 
                would be paid under paragraph (1) to such ultimate 
                vendor, but only if such ultimate vendor--
                            ``(i) is registered under section 4101, and
                            ``(ii) meets the requirements of 
                        subparagraph (A), (B), or (D) of section 
                        6416(a)(1).''.
            (3) Aviation-grade kerosene not used in aviation.--
        Subsection (l) of section 6427 is amended by redesignating 
        paragraph (5) as paragraph (6) and by inserting after paragraph 
        (4) the following new paragraph:
            ``(5) Refunds for aviation-grade kerosene not used in 
        aviation.--If tax has been imposed under section 4081 at the 
        rate specified in section 4081(a)(2)(A)(iv) and the fuel is 
        used other than in an aircraft, the Secretary shall pay 
        (without interest) to the ultimate purchaser of such fuel an 
        amount equal to the amount of tax imposed on such fuel reduced 
        by the amount of tax that would be imposed under section 4041 
        if no tax under section 4081 had been imposed.''.
            (4) Conforming amendments.--
                    (A) Subparagraph (B) of section 4082(d)(2) is 
                amended by striking ``6427(l)(5)(B)'' and inserting 
                ``6427(l)(6)(B)''.
                    (B) Paragraph (4) of section 6427(i) is amended--
                            (i) by striking ``(4)(C) or (5)'' and 
                        inserting ``(4)(B) or (6)'', and
                            (ii) by striking ``, (l)(4)(C)(ii), and 
                        (l)(5)'' and inserting ``and (l)(6)''.
                    (C) Subsection (l) of section 6427 is amended by 
                striking ``Diesel Fuel and Kerosene'' in the heading 
                and inserting ``Diesel Fuel, Kerosene, and Aviation 
                Fuel''.
                    (D) Paragraph (1) of section 6427(l) is amended by 
                striking ``paragraph (4)(C)(i)'' and inserting 
                ``paragraph (4)(B)''.
                    (E) Paragraph (4) of section 6427(l) is amended--
                            (i) by striking ``kerosene used in 
                        aviation'' in the heading and inserting 
                        ``aviation-grade kerosene used in commercial 
                        aviation'', and
                            (ii) in subparagraph (A)--
                                    (I) by striking ``kerosene'' and 
                                inserting ``aviation-grade kerosene'',
                                    (II) by striking ``Kerosene used in 
                                commercial aviation'' in the heading 
                                and inserting ``In general''.
    (d) Transfers to the Airport and Airway Trust Fund.--
            (1) In general.--Subparagraph (C) of section 9502(b)(1) is 
        amended to read as follows:
                    ``(C) section 4081 with respect to aviation 
                gasoline and aviation-grade kerosene, and''.
            (2) Transfers on account of certain refunds.--
                    (A) In general.--Subsection (d) of section 9502 is 
                amended--
                            (i) by striking ``(other than subsection 
                        (l)(4) thereof)'' in paragraph (2), and
                            (ii) by striking ``(other than payments 
                        made by reason of paragraph (4) of section 
                        6427(l))'' in paragraph (3).
                    (B) Conforming amendments.--
                            (i) Paragraph (4) of section 9503(b) is 
                        amended by striking ``or'' at the end of 
                        subparagraph (C), by striking the period at the 
                        end of subparagraph (D) and inserting a comma, 
                        and by inserting after subparagraph (D) the 
                        following new subparagraphs:
                    ``(E) section 4081 to the extent attributable to 
                the rate specified in clause (ii) or (iv) of section 
                4081(a)(2)(A), or
                    ``(F) section 4041(c).''.
                            (ii) Subsection (c) of section 9503 is 
                        amended by striking paragraph (5).
                            (iii) Subsection (a) of section 9502 is 
                        amended--
                                    (I) by striking ``appropriated, 
                                credited, or paid into'' and inserting 
                                ``appropriated or credited to'', and
                                    (II) by striking ``, section 
                                9503(c)(5),''.
    (e) Effective Date.--The amendments made by this section shall 
apply to fuels removed, entered, or sold after March 31, 2011.
    (f) Floor Stocks Tax.--
            (1) Imposition of tax.--In the case of aviation-grade 
        kerosene fuel which is held on April 1, 2011, by any person, 
        there is hereby imposed a floor stocks tax on aviation-grade 
        kerosene equal to--
                    (A) the tax which would have been imposed before 
                such date on such kerosene had the amendments made by 
                this section been in effect at all times before such 
                date, reduced by
                    (B) the tax imposed before such date on such 
                kerosene under section 4081 of the Internal Revenue 
                Code of 1986, as in effect on such date.
            (2) Liability for tax and method of payment.--
                    (A) Liability for tax.--A person holding aviation-
                grade kerosene on April 1, 2011, shall be liable for 
                such tax.
                    (B) Time and method of payment.--The tax imposed by 
                paragraph (1) shall be paid at such time and in such 
                manner as the Secretary of the Treasury shall 
                prescribe.
            (3) Transfer of floor stock tax revenues to trust funds.--
        For purposes of determining the amount transferred to the 
        Airport and Airway Trust Fund, the tax imposed by this 
        subsection shall be treated as imposed by section 
        4081(a)(2)(A)(iv) of the Internal Revenue Code of 1986.
            (4) Definitions.--For purposes of this subsection--
                    (A) Aviation-grade kerosene.--The term ``aviation-
                grade kerosene'' means aviation-grade kerosene as such 
                term is used within the meaning of section 4081 of the 
                Internal Revenue Code of 1986.
                    (B) Held by a person.--Aviation-grade kerosene 
                shall be considered as held by a person if title 
                thereto has passed to such person (whether or not 
                delivery to the person has been made).
                    (C) Secretary.--The term ``Secretary'' means the 
                Secretary of the Treasury or the Secretary's delegate.
            (5) Exception for exempt uses.--The tax imposed by 
        paragraph (1) shall not apply to any aviation-grade kerosene 
        held by any person exclusively for any use to the extent a 
        credit or refund of the tax is allowable under the Internal 
        Revenue Code of 1986 for such use.
            (6) Exception for certain amounts of aviation-grade 
        kerosene.--
                    (A) In general.--No tax shall be imposed by 
                paragraph (1) on any aviation-grade kerosene held on 
                April 1, 2011, by any person if the aggregate amount of 
                such aviation-grade kerosene held by such person on 
                such date does not exceed 2,000 gallons. The preceding 
                sentence shall apply only if such person submits to the 
                Secretary (at the time and in the manner required by 
                the Secretary) such information as the Secretary shall 
                require for purposes of this subparagraph.
                    (B) Exempt aviation-grade kerosene.--For purposes 
                of subparagraph (A), there shall not be taken into 
                account any aviation-grade kerosene held by any person 
                which is exempt from the tax imposed by paragraph (1) 
                by reason of paragraph (5).
                    (C) Controlled groups.--For purposes of this 
                subsection--
                            (i) Corporations.--
                                    (I) In general.--All persons 
                                treated as a controlled group shall be 
                                treated as 1 person.
                                    (II) Controlled group.--The term 
                                ``controlled group'' has the meaning 
                                given to such term by subsection (a) of 
                                section 1563 of the Internal Revenue 
                                Code of 1986; except that for such 
                                purposes the phrase ``more than 50 
                                percent'' shall be substituted for the 
                                phrase ``at least 80 percent'' each 
                                place it appears in such subsection.
                            (ii) Nonincorporated persons under common 
                        control.--Under regulations prescribed by the 
                        Secretary, principles similar to the principles 
                        of subparagraph (A) shall apply to a group of 
                        persons under common control if 1 or more of 
                        such persons is not a corporation.
            (7) Other laws applicable.--All provisions of law, 
        including penalties, applicable with respect to the taxes 
        imposed by section 4081 of the Internal Revenue Code of 1986 on 
        the aviation-grade kerosene involved shall, insofar as 
        applicable and not inconsistent with the provisions of this 
        subsection, apply with respect to the floor stock taxes imposed 
        by paragraph (1) to the same extent as if such taxes were 
        imposed by such section.

SEC. 5. AIR TRAFFIC CONTROL SYSTEM MODERNIZATION ACCOUNT.

    (a) In General.--Section 9502 is amended by adding at the end the 
following new subsection:
    ``(f) Establishment of Air Traffic Control System Modernization 
Account.--
            ``(1) Creation of account.--There is established in the 
        Airport and Airway Trust Fund a separate account to be known as 
        the `Air Traffic Control System Modernization Account' 
        consisting of such amounts as may be transferred or credited to 
        the Air Traffic Control System Modernization Account as 
        provided in this subsection or section 9602(b).
            ``(2) Transfers to air traffic control system modernization 
        account.--On October 1, 2011, and annually thereafter the 
        Secretary shall transfer $400,000,000 to the Air Traffic 
        Control System Modernization Account from amounts appropriated 
        to the Airport and Airway Trust Fund under subsection (b) which 
        are attributable to taxes on aviation-grade kerosene.
            ``(3) Expenditures from account.--Amounts in the Air 
        Traffic Control System Modernization Account shall be available 
        subject to appropriation for expenditures relating to the 
        modernization of the air traffic control system (including 
        facility and equipment account expenditures).''.
    (b) Conforming Amendment.--Paragraph (1) of section 9502(d) is 
amended by striking ``Amounts'' and inserting ``Except as provided in 
subsection (f), amounts''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 6. TREATMENT OF FRACTIONAL AIRCRAFT OWNERSHIP PROGRAMS.

    (a) Fuel Surtax.--
            (1) In general.--Subchapter B of chapter 31 is amended by 
        adding at the end the following new section:

``SEC. 4043. SURTAX ON FUEL USED IN AIRCRAFT PART OF A FRACTIONAL 
              OWNERSHIP PROGRAM.

    ``(a) In General.--There is hereby imposed a tax on any liquid used 
during any calendar quarter by any person as a fuel in an aircraft 
which is--
            ``(1) registered in the United States, and
            ``(2) part of a fractional ownership aircraft program.
    ``(b) Amount of Tax.--The rate of tax imposed by subsection (a) is 
14.1 cents per gallon.
    ``(c) Fractional Ownership Aircraft Program.--For purposes of this 
section--
            ``(1) In general.--The term `fractional ownership aircraft 
        program' means a program under which--
                    ``(A) a single fractional ownership program manager 
                provides fractional ownership program management 
                services on behalf of the fractional owners,
                    ``(B) 2 or more airworthy aircraft are part of the 
                program,
                    ``(C) there are 1 or more fractional owners per 
                program aircraft, with at least 1 program aircraft 
                having more than 1 owner,
                    ``(D) each fractional owner possesses at least a 
                minimum fractional ownership interest in 1 or more 
                program aircraft,
                    ``(E) there exists a dry-lease aircraft exchange 
                arrangement among all of the fractional owners, and
                    ``(F) there are multi-year program agreements 
                covering the fractional ownership, fractional ownership 
                program management services, and dry-lease aircraft 
                exchange aspects of the program.
            ``(2) Minimum fractional ownership interest.--
                    ``(A) In general.--The term `minimum fractional 
                ownership interest' means, with respect to each type of 
                aircraft--
                            ``(i) a fractional ownership interest equal 
                        to or greater than \1/16\ of at least 1 
                        subsonic, fixed wing or powered lift program 
                        aircraft, or
                            ``(ii) a fractional ownership interest 
                        equal to or greater than \1/32\ of a least 1 
                        rotorcraft program aircraft.
                    ``(B) Fractional ownership interest.--The term 
                `fractional ownership interest' means--
                            ``(i) the ownership of an interest in a 
                        program aircraft,
                            ``(ii) the holding of a multi-year 
                        leasehold interest in a program aircraft, or
                            ``(iii) the holding of a multi-year 
                        leasehold interest which is convertible into an 
                        ownership interest in a program aircraft.
            ``(3) Dry-lease aircraft exchange.--The term `dry-lease 
        aircraft exchange' means an agreement, documented by the 
        written program agreements, under which the program aircraft 
        are available, on an as needed basis without crew, to each 
        fractional owner.
    ``(d) Termination.--This section shall not apply to liquids used as 
a fuel in an aircraft after September 30, 2013.''.
            (2) Conforming amendment.--Subsection (e) of section 4082 
        is amended by inserting ``(other than an aircraft described in 
        section 4043(a))'' after ``an aircraft''.
            (3) Transfer of revenues to airport and airway trust 
        fund.--Subsection (1) of section 9502(b) is amended by 
        redesignating subparagraphs (B) and (C) as subparagraphs (C) 
        and (D), respectively, and by inserting after subparagraph (A) 
        the following new subparagraph:
                    ``(B) section 4043 (relating to surtax on fuel used 
                in aircraft part of a fractional ownership program),''.
            (4) Clerical amendment.--The table of sections for 
        subchapter B of chapter 31 is amended by adding at the end the 
        following new item:

``Sec. 4043. Surtax on fuel used in aircraft part of a fractional 
                            ownership program.''.
    (b) Fractional Ownership Programs Treated as Non-commercial 
Aviation.--Subsection (b) of section 4083 is amended by adding at the 
end the following new sentence: ``For uses of aircraft before October 
1, 2013, such term shall not include the use of any aircraft which is 
part of a fractional ownership aircraft program (as defined by section 
4043(c)).''.
    (c) Exemption From Tax on Transportation of Persons.--Section 4261, 
as amended by this Act, is amended by redesignating subsection (j) as 
subsection (k) and by inserting after subsection (i) the following new 
subsection:
    ``(j) Exemption for Aircraft in Fractional Ownership Aircraft 
Programs.--No tax shall be imposed by this section or section 4271 on 
any air transportation provided before October 1, 2013, by an aircraft 
which is part of a fractional ownership aircraft program (as defined by 
section 4043(c)).''.
    (d) Effective Dates.--
            (1) Subsection (a).--The amendments made by subsection (a) 
        shall apply to fuel used after March 31, 2011.
            (2) Subsection (b).--The amendment made by subsection (b) 
        shall apply to uses of aircraft after March 31, 2011.
            (3) Subsection (c).--The amendments made by subsection (c) 
        shall apply to taxable transportation provided after March 31, 
        2011.

SEC. 7. TERMINATION OF EXEMPTION FOR SMALL JET AIRCRAFT ON 
              NONESTABLISHED LINES.

    (a) In General.--the first sentence of section 4281 is amended by 
inserting ``or when such aircraft is a turbine engine powered 
aircraft'' after ``an established line''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable transportation provided after March 31, 2011.

SEC. 8. TRANSPARENCY IN PASSENGER TAX DISCLOSURES.

    (a) In General.--Section 7275 (relating to penalty for offenses 
relating to certain airline tickets and advertising) is amended--
            (1) by redesignating subsection (c) as subsection (d),
            (2) by striking ``subsection (a) or (b)'' in subsection 
        (d), as so redesignated, and inserting ``subsection (a), (b), 
        or (c)'', and
            (3) by inserting after subsection (b) the following new 
        subsection:
    ``(c) Non-tax Charges.--
            ``(1) In general.--In the case of transportation by air for 
        which disclosure on the ticket or advertising for such 
        transportation of the amounts paid for passenger taxes is 
        required by subsection (a)(2) or (b)(1)(B), if such amounts are 
        separately disclosed, it shall be unlawful for the disclosure 
        of such amounts to include any amounts not attributable to such 
        taxes.
            ``(2) Inclusion in transportation cost.--Nothing in this 
        subsection shall prohibit the inclusion of amounts not 
        attributable to the taxes imposed by subsection (a), (b), or 
        (c) of section 4261 in the disclosure of the amount paid for 
        transportation as required by subsection (a)(1) or (b)(1)(A), 
        or in a separate disclosure of amounts not attributable to such 
        taxes.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable transportation provided after March 31, 2011.

SEC. 9. TAX-EXEMPT BOND FINANCING FOR FIXED-WING EMERGENCY MEDICAL 
              AIRCRAFT.

    (a) In General.--Subsection (e) of section 147 is amended by adding 
at the end the following new sentence: ``The preceding sentence shall 
not apply to any fixed-wing aircraft equipped for, and exclusively 
dedicated to providing, acute care emergency medical services (within 
the meaning of 4261(g)(2)).''
    (b) Effective Date.--The amendment made by this section shall apply 
to obligations issued after the date of the enactment of this Act.

SEC. 10. PROTECTION OF AIRPORT AND AIRWAY TRUST FUND SOLVENCY.

    (a) In General.--Paragraph (1) of section 9502(d) is amended by 
adding at the end the following new sentence: ``Unless otherwise 
provided by this section, for purposes of this paragraph for fiscal 
year 2012 or 2013, the amount available for making expenditures for 
such fiscal year shall not exceed 90 percent of the receipts of the 
Airport and Airway Trust Fund plus interest credited to such Trust Fund 
for such fiscal year as estimated by the Secretary of the Treasury.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to fiscal years beginning after September 30, 2011.
                                                        Calendar No. 10

112th CONGRESS

  1st Session

                                 S. 340

                           [Report No. 112-1]

_______________________________________________________________________

                                 A BILL

 To amend the Internal Revenue Code of 1986 to extend the funding and 
  expenditure authority of the Airport and Airway Trust Fund, and for 
                            other purposes.

_______________________________________________________________________

                           February 14, 2011

                 Read twice and placed on the calendar