[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8082 Introduced in House (IH)]
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116th CONGRESS
2d Session
H. R. 8082
To amend the Internal Revenue Code of 1986 to provide a tax credit to
encourage the replacement or modernization of inefficient, outdated
freight railcars, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
August 21, 2020
Mr. Schneider (for himself, Mr. LaHood, Mr. Lipinski, Mr. Crawford, Mr.
Blumenauer, and Mr. Ferguson) introduced the following bill; which was
referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide a tax credit to
encourage the replacement or modernization of inefficient, outdated
freight railcars, 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.
This Act may be cited as the ``Freight Rail Assistance and
Investment to Launch Coronavirus-era Activity and Recovery Act of
2020'' or the ``Freight RAILCAR Act of 2020''.
SEC. 2. QUALIFIED FREIGHT RAILCAR CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 45U. QUALIFIED FREIGHT RAILCAR CREDIT.
``(a) General Rule.--For purposes of section 38, the qualified
freight railcar credit determined under this section for the taxable
year is an amount equal to 50 percent of the sum of--
``(1) the qualifying replacement or modernization amount,
``(2) the qualifying scrap amount, and
``(3) the qualifying railcar facility and technology
modernization amount.
``(b) Definitions.--In this section--
``(1) Qualifying replacement or modernization amount.--The
term `qualifying replacement or modernization amount' means--
``(A) the basis of any newly built qualified
freight railcar placed in service by the taxpayer
during the taxable year, plus
``(B) the qualified freight railcar modernization
expenditures of the taxpayer for the taxable year.
``(2) Qualifying scrap amount.--The term `qualifying scrap
amount' means--
``(A) the depreciated value of a qualified freight
railcar, as such value is defined and calculated in
accordance with the Association of American Railroads
Interchange Rules, less
``(B) the sum of scrap and part out net proceeds
received by the taxpayer for such qualified freight
railcar.
``(3) Qualifying railcar facility and technology
modernization amount.--The term `qualifying railcar facility
equipment and technology modernization amount' means total
expenditures chargeable to capital account by a qualified
railway supply company--
``(A) for re-equipping and enhancing the
infrastructure of an existing qualified facility for
the manufacture, repair, or modernization of railcars,
which--
``(i) enables such facility, after such
improvements, to modernize railcars such that
they will meet the requirements of the
Association of American Railroads Standard S-
286 or the design standards set forth in the
Pipeline and Hazardous Materials Safety
Administration's HM-251 final rule (as amended
by HM-251C), or
``(ii) enables such facility to implement
enhanced controls to meet environmental
standards including emissions limits under the
Clean Air Act or wastewater standards under the
Clean Water Act and corresponding state/local
requirements, or
``(B) is associated with the deployment of
technology, including equipment, used by any owner of a
qualified freight railcar or an existing qualified
facility to manufacture, repair, or modernize railcars
or to manufacture railcar components that improves the
efficiency, quality, or safety of railcar or railcar
component manufacturing, repair, modernization or fleet
management operations.
``(4) Newly built replacement railcar.--The term `newly
built replacement railcar' means a qualified freight railcar
which--
``(A) is built after the date of the enactment of
this section, and
``(B) is ordered or originally placed in service
before January 1, 2025.
``(5) Originates.--The term `originates' refers to the
country of origin of a part, component, subassembly or finished
product, as described in the Rules of Origin of Article 4.2 of
the United States-Mexico-Canada Agreement (19 U.S.C. 4531(c))
or any subsequent free trade agreement between the United
States, Mexico, and Canada.
``(6) Qualified railway supply company.--The term
`qualified railway supply company' means an entity that
manufactures, repairs, modernizes or owns a qualified freight
railcar or manufactures components for qualified freight
railcars, that is not an entity that would be ineligible for an
award of a contract or subcontract under 49 U.S.C. 5323(u).
``(7) Qualified freight railcar.--
``(A) In general.--The term `qualified freight
railcar' means a freight railcar that--
``(i) is either acquired or modernized by
the taxpayer after the date of the enactment of
this section,
``(ii) meets the significant improvement
requirements for capacity, fuel efficiency, or
performance of subparagraph (B),
``(iii) originates from a qualified railway
supply company and was built in a qualified
facility, and
``(iv) with respect to which no credit
under this section has been previously claimed
by any taxpayer.
``(B) Significant improvement requirements.--
``(i) In general.--A freight railcar shall
be treated as meeting significant improvement
requirements for capacity, fuel efficiency, or
performance if--
``(I) in the case of a newly built
replacement railcar, the taxpayer
certifies--
``(aa) such railcar is
owned by the taxpayer, and
``(bb) that--
``(AA) such railcar
replaces two freight
railcars owned by the
taxpayer that were in
service within the 48
months preceding the
taxable year, and
``(BB) such freight
railcars were scrapped
and permanently removed
from the AAR Umler
System master file
during the taxable
year, and
``(II) in the case of a freight
railcar that is modernized, the
taxpayer certifies that the
modernization has resulted in a
significant improvement in capacity,
fuel efficiency or performance.
``(ii) Significant improvement.--For
purposes of this paragraph, an improvement in
capacity or fuel efficiency and performance
with respect to a modernized freight railcar
shall be treated as a significant improvement
if--
``(I) such capacity or fuel
efficiency, as the case may be, is
increased by at least 8 percent, or
``(II) in the case of performance,
the qualified freight railcar meets the
requirements of the Association of
American Railroads Standard S-286 or is
modernized to meet the design standards
set forth in final rule HM-251 of the
Pipeline and Hazardous Materials Safety
Administration (as amended by HM-251C).
``(C) Modernized.--The term `modernized' means a
modification, retrofit, conversion or rebuild for the
purpose of meeting capacity, fuel efficiency, or
performance criteria identified in subparagraph
(B)(ii).
``(8) Qualified freight railcar modernization
expenditure.--The term `qualified freight railcar significant
improvement expenditure' means any amount paid or incurred--
``(A) in connection with the modernization of a
freight railcar resulting in such railcar being
designated a qualified freight railcar, and
``(B) which is properly chargeable to a capital
account with respect to such freight railcar.
``(9) Qualified facility.--The term `qualified facility'
means a facility that is not owned by an entity that would be
ineligible for an award of a contract or subcontract under 49
U.S.C. 5323(u).
``(c) Special Rules.--
``(1) Denial of double benefit.--No credit shall be allowed
under subsection (a) for any expense for which a deduction or
credit is allowed under any other provision of this chapter.
``(2) Credit treated as refundable.--In the case of any
taxable year in which the taxpayer is allowed a credit under
subsection (a)(1) and is unable to utilize such credit as an
offset to their regular tax liability, the taxpayer may elect
to have such credit treated as an overpayment and refunded to
the taxpayer for such year.
``(3) Basis adjustment.--For purposes of this subtitle, if
a credit is allowed under subsection (a)(1) with respect to any
qualified freight railcar, the basis of such railcar shall be
reduced by the amount of the credit so allowed.
``(4) Sale-leaseback.--For purposes of subsection (a)(1),
if any qualified freight railcar is--
``(A) originally placed in service by a person
after the date of the enactment of this section, and
``(B) sold and leased back by such person within 3
months after the railcars are originally placed in
service (or, in the case of more than one railcar
subject to the same lease, within 3 months after the
date the final railcar is placed in service, so long as
the period between the time the first railcar is placed
in service and the time the last railcar is placed in
service does not exceed 24 months),
such railcar shall be treated as originally placed in service
not earlier than the date on which such railcar is used under
the leaseback referred to in this paragraph.
``(5) Syndication.--For purposes of subsection (a)(1), if--
``(A) any qualified freight railcar is originally
placed in service after the date of enactment of this
section by the lessor of such railcar,
``(B) such railcar is sold by such lessor or any
subsequent purchaser within 3 months after the date
such railcar was originally placed in service (or, in
the case of more than one railcar subject to the same
lease, within 3 months after the date the final railcar
is placed in service and the time the last railcar is
placed in service does not exceed 12 months), and
``(C) the user of such railcar after the last sale
during such 3-month period remains the same as when
such railcar was originally placed in service, such
railcars shall be treated as originally placed in
service not earlier than the date of such last sale.
``(6) Entities owned or controlled by state-owned
enterprises ineligible.--No credit under subsection (a) shall
be allowed to any taxpayer that would be ineligible for an
award of a contract or subcontract under 49 U.S.C. 5323(u).
``(d) Termination.--This section shall not apply to any qualifying
railcar facility equipment and technology modernization amount after
December 31, 2023, or to any qualifying replacement or modernization
amount, or any qualifying scrap amount after December 31, 2024.''.
(b) Credit Allowed as Business Credit.--Section 38(b) of the
Internal Revenue Code of 1986 (relating to current year business
credit) is amended by striking ``plus'' at the end of paragraph (32),
by striking the period at the end of paragraph (33) and inserting ``,
plus'' and by inserting at the end thereof the following new paragraph:
``(34) the qualified freight railcar credit determined
under section 45U.''.
(c) Coordination With Section 55.--Section 38(c)(4)(B) of the
Internal Revenue Code of 1986 is amended by redesignating clauses (x),
(xi), and (xii) as clauses (xi), (xii), and (xiii) respectively, and by
inserting after clause (ix) the following new clause:
``(x) the qualified freight railcar credit
determined under section 45U,''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after the item relating to section 45T the
following new item:
``Sec. 45U. Qualified freight railcar credit.''.
(e) Effective Date.--The amendments made by this section shall
apply to property placed in service, and amounts paid or incurred,
after April 30, 2020.
SEC. 3. REPORT ON THE QUALIFIED FREIGHT RAILCAR CREDIT.
(a) In General.--Not later than 3 years after the date of the
enactment of this Act, the Secretary of the Treasury (or the
Secretary's delegate), shall submit to the Committee on Ways and Means
of the House of Representatives and the Committee on Finance of the
Senate a report on activity with respect to the qualified freight
railcar credit under section 36D of the Internal Revenue Code of 1986.
(b) Report Contents.--The report submitted under subsection (a)
shall contain information with respect to the following:
(1) The number of times the credit was claimed.
(2) The number of railcars scrapped as a result of the
credit.
(3) The number of new railcars entered into contract as a
result of the credit.
(4) The number of new railcars built as a result of the
credit.
(5) The number of facilities modified as a result of the
credit.
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