[Congressional Record Volume 145, Number 144 (Thursday, October 21, 1999)]
[Senate]
[Pages S13012-S13013]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BREAUX (for himself, and Mr. Mack):
  S. 1759. A bill to amend the Internal Revenue Code of 1986 to allow a 
refundable credit for taxpayers owning certain commercial power takeoff 
vehicles; to the Committee on Finance.


THE FUEL TAX EQUALIZATION CREDIT FOR SUBSTANTIAL POWER TAKEOFF VEHICLES 
                                  ACT

  Mr. BREAUX. Mr. President, today I rise to introduce the Fuel Tax 
Equalization Credit for Substantial Power Takeoff Vehicles Act. This 
bill upholds a long-held principle in the application of the Federal 
fuels excise tax, and restores this principle for certain single engine 
``dual-use'' vehicles.
  This long-held principle is simple: fuel consumed for the purpose of 
moving vehicles over the road is taxed, while fuel consumed for ``off-
road'' purposes is not taxed. The tax is designed to compensate for the 
wear and tear impacts on roads. Fuel used for a non-propulsion ``off-
road'' purpose has no impact on the roads. It should not be taxed as if 
it does. Mr. President, this bill is based on this principle, and it 
remedies a problem created by IRS regulations that control the 
application of the federal fuels excise tax to ``dual-use'' vehicles.
  Dual-use vehicles are vehicles that use fuel both to propel the 
vehicle on the road, and also to operate separate, on-board equipment. 
The two prominent examples of dual-use vehicles are concrete mixers, 
which use fuel to rotate the mixing drum, and sanitation trucks, which 
use fuel to operate the compactor. Both of these trucks move over the 
road, but at the same time, a substantial portion of their fuel use is 
attributable to the non-propulsion function.
  Mr. President, the current problem developed because progress in 
technology has outstripped the regulatory process. In the past, dual-
use vehicles commonly had two engines. IRS regulations, written in the 
1950s, specifically exempt the portion of fuel used by the separate 
engine that operates special equipment such as a mixing drum or a trash 
compactor. These IRS regulations reflect the principle that fuel 
consumed for non-propulsion purposes is not taxed.
  Today, however, typical dual-use vehicles use only one engine. The 
single engine both propels the vehicle over the road and powers the 
non-propulsion function through ``power takeoff.'' A major reason for 
the growth of these single-engine, power takeoff vehicles is that they 
use less fuel. And a major benefit for everyone is that they are better 
for the environment.
  Power takeoff was not in widespread use when the IRS regulations were 
drafted, and the regulations deny an exemption for fuel used in single-
engine, dual-use vehicles. The IRS defends its distinction between one-
engine and two-engine vehicles based on possible administrative 
problems if vehicle owners were permitted to allocate fuel between the 
propulsion and non-propulsion functions.
  Mr. President, our bill is designed to address the administrative 
concerns expressed by the IRS, but at the same time, restore tax 
fairness for dual-use vehicles with one engine. The bill does this by 
establishing an annual tax credit available for taxpayers that own a 
licensed and insured concrete mixer or sanitation truck with a 
compactor. The amount of the credit is $250 and is a conservative 
estimate of the excise taxes actually paid, based on information 
compiled on typical sanitation trucks and concrete mixers.
  In sum, as a fixed income tax credit, no audit or administrative 
issue will arise about the amount of fuel used for the off-road 
purpose. At the same time, the credit provides a rough justice method 
to make sure these taxpayers are not required to pay tax on fuels that 
they shouldn't be paying. Also, as an income tax credit, the proposal 
would have no effect on the highway trust fund.
  Mr. President, I would like to stress that I believe the IRS' 
interpretation of the law is not consistent with long-help principles 
under the tax law, despite their administrative concerns. Quite simply, 
the law should not condone a situation where taxpayers are required to 
pay the excise tax on fuel attributable to non-propulsion functions. 
This bill corrects an unfair tax that should have never been imposed in 
the first place. I urge my colleagues to cosponsor this important piece 
of legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1759

       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 ``Fuel Tax Equalization Credit 
     for Substantial Power Takeoff Vehicles Act''.

     SEC. 2. REFUNDABLE CREDIT FOR TAXPAYERS OWNING COMMERCIAL 
                   POWER TAKEOFF VEHICLES.

       (a) In General.--Section 34 of the Internal Revenue Code of 
     1986 (relating to certain uses of gasoline and special fuels) 
     is amended by adding at the end the following new subsection:
       ``(c) Credit for Commercial Power Takeoff Vehicles.--
       ``(1) In general.--There shall be allowed as a credit 
     against the tax imposed by this subtitle for the taxable year 
     the amount of $250 for each qualified commercial power 
     takeoff vehicle owned by the taxpayer as of the close of the 
     calendar year in which or with which the taxable year of the 
     taxpayer ends.
       ``(2) Qualified commercial power takeoff vehicle.--For 
     purposes of this subsection, the term `qualified commercial 
     power takeoff vehicle' means any highway vehicle described in 
     paragraph (3) which is propelled by any fuel subject to tax 
     under section 4041 or 4081 if such vehicle is used in a trade 
     or business or for the production of income (and is licensed 
     and insured for such use).
       ``(3) Highway vehicle described.--A highway vehicle is 
     described in this paragraph if such vehicle is--
       ``(A) designed to engage in the daily collection of refuse 
     or recyclables from homes or businesses and is equipped with 
     a mechanism under which the vehicle's propulsion engine 
     provides the power to operate a load compactor, or
       ``(B) designed to deliver ready mixed concrete on a daily 
     basis and is equipped with a mechanism under which the 
     vehicle's propulsion engine provides the power to operate a 
     mixer drum to agitate and mix the product en route to the 
     delivery site.

[[Page S13013]]

       ``(4) Exception for vehicles used by governments, etc.--No 
     credit shall be allowed under this subsection for any vehicle 
     owned by any person at the close of a calendar year if such 
     vehicle is used at any time during such year by--
       ``(A) the United States or an agency or instrumentality 
     thereof, a State, a political subdivision of a State, or an 
     agency or instrumentality of one or more States or political 
     subdivisions, or
       ``(B) an organization exempt from tax under section 501(a).
       ``(5) Denial of double benefit.--The amount of any 
     deduction under this subtitle for any tax imposed by 
     subchapter B of chapter 31 or part III of subchapter A of 
     chapter 32 for any taxable year shall be reduced (but not 
     below zero) by the amount of the credit determined under this 
     subsection for such taxable year.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years ending after December 31, 1999.

  Mr. MACK. Mr. President, I am pleased to join my colleague, Senator 
John Breaux, in introducing the Fuel Tax Equalization Credit for 
Substantial Power Takeoff Act.
  This bill would create a simple mechanism to reimburse owners of 
concrete mixers and sanitation trucks for the Federal excise taxes that 
they pay on fuels used to power the off-road function of their 
vehicles.
  Today, IRS regulations impose the Federal fuels excise tax on 
``single engine, dual-use vehicles.'' Two prominent examples of such 
single-engine, dual-use vehicles are concrete mixers and sanitation 
trucks. The IRS taxes the entire amount of fuel used in these vehicles, 
despite the fact that a substantial portion of the fuel consumed is 
used to power an off-road function--the trash compactor of a sanitation 
truck, or the rotating drum of the cement truck.
  Mr. President, the Federal fuels excise tax is meant to pay for our 
Nation's roads. If fuel is used for an off-road purpose, it is a well-
established principle that we do not tax the fuel. In this case, fuels 
used to power the trash compactor or rotate the drum on a concrete 
mixer do not result in wear and tear on the roads and, therefore, 
should not be taxes.
  Contrary to this well-established principle, the IRS imposes the 
excise tax on single engine, dual-use vehicles. The simple reason given 
by the IRS for this distinction is administrative convenience. But the 
convenience of the IRS is no reason to overtax diesel fuel consumers.
  Mr. President, our bill corrects the discrepancy created under IRS 
regulations, and does so without creating any administrative red tape. 
The $250 income tax credit crafted in the bill would be easy to 
administer. While it will not fully and precisely compensate these 
truck owners for the taxes paid on fuel used off-road, this credit has 
been calculated based on industry data and using conservative 
estimates, and reduces a tax that these truck owners should not be 
paying in the first place. Therefore, I urge my colleagues to join 
Senator Breaux and me in supporting this important piece of 
legislation.
                                 ______