[Congressional Record Volume 148, Number 146 (Wednesday, November 13, 2002)]
[Senate]
[Pages S10889-S10891]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY (for himself and Mr. Baucus):
  S. 3154. A bill to amend the Internal Revenue Code of 1986 to combat 
fuel excise tax fraud; to the Committee on Finance.
  Mr. GRASSLEY. 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:
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. TRANSFER BY REGISTERED PIPELINE OR VESSEL REQUIRED 
                   FOR FUEL TAX EXEMPTION OF BULK TRANSFERS TO 
                   REGISTERED TERMINALS OR REFINERIES.

       (a) In General.--Section 4081(a)(1)(B) of the Internal 
     Revenue Code of 1986 (relating to exemption for bulk 
     transfers to registered terminals or refineries) is amended--
       (1) by inserting ``by pipeline or vessel'' after 
     ``transferred in bulk'', and
       (2) by inserting ``, the operator of the pipeline or 
     vessel,'' after ``the taxable fuel''.
       (b) Civil Penalty for Carrying Taxable Fuels by 
     Nonregistered Pipelines or Vessels.--
       (1) In general.--Part II of subchapter B of chapter 68 of 
     the Internal Revenue Code of 1986 (relating to assessable 
     penalties) is amended by adding at the end the following new 
     section:

     ``SEC. 6717. CARRYING TAXABLE FUELS BY NONREGISTERED 
                   PIPELINES OR VESSELS.

       ``(a) Imposition of Penalty.--If any taxable fuel (as 
     defined in section 4083(a)(1)) is willfully carried by 
     pipeline or vessel the operator of which is not registered 
     under section 4101, then such operator shall pay a penalty in 
     addition to the tax (if any).
       ``(b) Amount of Penalty.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     amount of the penalty under subsection (a) on each act shall 
     be $10,000.
       ``(2) Multiple violations.--In determining the penalty 
     under subsection (a) on any person, paragraph (1) shall be 
     applied by increasing the amount in paragraph (1) by the 
     product of such amount and the number of prior penalties (if 
     any) imposed by this section on such person (or a related 
     person or any predecessor of such person or related person).
       ``(c) Joint and Several Liability.--
       ``(1) In general.--If a penalty is imposed under this 
     section on any business entity, each officer, employee, or 
     agent of such entity or other contracting party who willfully 
     participated in any act giving rise to such penalty shall be 
     jointly and severally liable with such entity for such 
     penalty.
       ``(2) Affiliated groups.--If a business entity described in 
     paragraph (1) is part of an affiliated group (as defined in 
     section 1504(a)), the parent corporation of such entity shall 
     be jointly and severally liable with such entity for the 
     penalty imposed under this section.''.
       (2) Clerical amendment.--The table of sections for part II 
     of subchapter B of chapter 68 of such Code is amended by 
     adding at the end the following new item:
``Sec. 6717. Carrying taxable fuels by nonregistered pipelines or 
              vessels.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2003.

     SEC. 2. RETURNS FILED ELECTRONICALLY.

       (a) In General.--Section 4083 of the Internal Revenue Code 
     of 1986 (relating to definitions; special rule; 
     administrative authority) is amended by adding at the end the 
     following new subsection:
       ``(d) Returns Required to be Filed Electronically.--
       ``(1) Fuel.--Any registered operator of a terminal, 
     refinery, pipeline, or vessel, or any registered dealer in 
     aviation fuel, having more than 25 transactions in a month 
     shall file by electronic format any return required by the 
     Secretary for the tracking of fuel.
       ``(2) Vehicles.--Any person required to file a return under 
     section 4481 having at least 25 vehicles shall file such 
     return by electronic format.''.
       (b) Format for Filing.--The Secretary of the Treasury shall 
     describe the electronic format for filing--
       (1) in the case of returns described in section 4083(d)(1) 
     of the Internal Revenue Code of 1986 (as added by subsection 
     (a)), not later than 30 days after the date of the enactment 
     of this Act, and
       (2) in the case of returns described in section 4083(d)(2) 
     of such Code (as so added), not later than 90 days after such 
     date.
       (c) Effective Date.--The amendment made by this section 
     shall apply to returns due after the date the Secretary of 
     the Treasury describes the format for filing under subsection 
     (b).

     SEC. 3. TAX ON SALE OF DIESEL FUEL WHETHER SUITABLE FOR USE 
                   OR NOT IN A DIESEL-POWERED VEHICLE OR TRAIN.

       (a) In General.--Section 4083(a)(3) of the Internal Revenue 
     Code of 1986 (defining diesel fuel) is amended by adding at 
     the end the following new sentence: ``For purposes of section 
     4081(a)(1)(A)(iv), such term includes any liquid (other than 
     gasoline) sold or offered for sale whether or not such fuel 
     is suitable for such use.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 4. CIVIL PENALTY FOR REFUSAL OF ENTRY.

       (a) In General.--Part II of subchapter B of chapter 68 of 
     the Internal Revenue Code of 1986 (relating to assessable 
     penalties), as amended by this Act, is amended by adding at 
     the end the following new section:

     ``SEC. 6718. REFUSAL OF ENTRY.

       ``In addition to any criminal penalty provided by law, in 
     the case of any person with the intent to transport and 
     distribute untaxed, adulterated fuel mixtures or to transport 
     and distribute dyed diesel for taxable use, if such person 
     refuses to admit entry or refuses to permit any other action 
     by the Secretary authorized by section 4083(c)(1), then such 
     person shall pay a penalty of $1,000 for such refusal.''.
       (b) Conforming Amendments.--
       (1) Section 4083(c)(3) of the Internal Revenue Code of 1986 
     is amended--
       (A) by striking ``entry.--The penalty'' and inserting: 
     ``entry.--
       ``(A) Forfeiture.--The penalty'', and
       (B) by adding at the end the following new subparagraph:
       ``(B) Civil penalty.--For a civil penalty for the refusal 
     to admit entry or other refusal to permit an action by the 
     Secretary authorized by paragraph (1), see section 6718.''.
       (2) The table of sections for part II of subchapter B of 
     chapter 68 of such Code, as amended by this Act, is amended 
     by adding at the end the following new item:

``Sec. 6718. Refusal of entry.''.

       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2003.

     SEC. 5. DISPLAY OF REGISTRATION.

       (a) In General.--Section 4101 of the Internal Revenue Code 
     of 1986 (relating to registration and bond) is amended by 
     adding at the end the following new subsection:
       ``(e) Display of Registration.--Every person required by 
     the Secretary to register under this section with respect to 
     tax imposed by section 4041(a)(1), 4081, or 4091 shall 
     receive and display proof of registration on vessels used in 
     transporting fuel.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2003.

     SEC. 6. UNTAXED ADULTERATED FUEL MIXTURES TREATED AS DYED 
                   FUELS UNDER PENALTY PROVISION.

       (a) In General.--Section 6715(c)(1) of the Internal Revenue 
     Code of 1986 (defining dyed fuel) is amended by inserting ``, 
     any dyed

[[Page S10891]]

     diesel fuel or kerosene which has been chemically altered in 
     an attempt to remove the dye, or any other adulterated fuel 
     mixture not previously taxed'' after ``section 4082''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 7. TAX AT POINT OF ENTRY WHERE IMPORTER NOT REGISTERED.

       (a) In General.--Section 4081(a)(1) of the Internal Revenue 
     Code of 1986 (relating to tax on entry, removal, or sale) is 
     amended by adding at the end the following new subparagraph:
       ``(C) Tax at entry where importer not registered.--
       ``(i) In general.--For purposes of subparagraph (A)(iii), 
     if the person entering the taxable fuel is not registered 
     under section 4101, the imposition of the tax is at the time 
     and point of entry.
       ``(ii) Jeopardy assessment.--The collection of any tax 
     imposed on fuel described in clause (i) shall be deemed to be 
     in jeopardy and the Secretary shall make an immediate 
     assessment under section 6862.
       ``(iii) Enforcement of assessment.--The fuel described in 
     clause (i) and the vehicle or vessel in which such fuel was 
     transported shall be detained for the period ending with--

       ``(I) the filing of a bond by the importer of record under 
     section 6863(a), or
       ``(II) if such a bond is not filed within the 5-day period 
     beginning with such detaining, the sale of such fuel as 
     provided under section 6336.''.

       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 8. MODIFICATIONS OF TAX ON USE OF CERTAIN VEHICLES.

       (a) Increase in Rate of tax.--The table contained in 
     section 4481(a) of the Internal Revenue Code of 1986 
     (relating to imposition of tax) is amended by striking 
     ``$550'' and inserting ``$600''.
       (b) No Proration of Tax Unless Vehicle is Destroyed or 
     Stolen.--
       (1) In general.--Section 4481(c) of the Internal Revenue 
     Code of 1986 (relating to proration of tax) is amended to 
     read as follows:
       ``(c) Proration of Tax Where Vehicle Destroyed or Stolen.--
       ``(1) In general.--If in any taxable period a highway motor 
     vehicle is destroyed or stolen before the first day of the 
     last month in such period and not subsequently used during 
     such taxable period, the tax shall be reckoned 
     proportionately from the first day of the month in such 
     period in which the first use of such highway motor vehicle 
     occurs to and including the last day of the month in which 
     such highway motor vehicle was destroyed or stolen.
       ``(2) Destroyed.--For purposes of paragraph (1), a highway 
     motor vehicle is destroyed if such vehicle is damaged by 
     reason of an accident or other casualty to such an extent 
     that it is not economic to rebuild.''.
       (2) Display of Tax Certificate.--Paragraph (2) of section 
     4481(d) of such Code (relating to one tax liability for 
     period) is amended to read as follows:
       ``(2) Display of tax certificate.--Every person, agency, or 
     instrumentality which pays the tax imposed under this section 
     with respect to a highway motor vehicle shall, not later than 
     October 1 with respect to each taxable period, receive and 
     display on such vehicle a proof of payment decal.''.
       (3) Conforming amendments.--
       (A) Section 6156 of such Code (relating to installment 
     payment of tax on use of highway motor vehicles) is repealed.
       (B) The table of sections for subchapter A of chapter 62 of 
     such Code is amended by striking the item relating to section 
     6156.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable periods beginning after the date of 
     the enactment of this Act.

     SEC. 9. ADDITIONAL RULES REGARDING INSPECTIONS OF RECORDS.

       (a) Provision of Copies of Records.--Section 4102 of the 
     Internal Revenue Code of 1986 (relating to inspection of 
     records by local officers) is amended by inserting ``, and 
     copies shall be furnished upon request of,'' after 
     ``inspection by''.
       (b) Inspection By Other Enforcement Agencies.--Section 4102 
     of the Internal Revenue Code of 1986, as amended by 
     subsection (a), is amended by inserting ``, and information 
     on returns required to be filed with respect to taxes under 
     section 4481 shall be open to inspection by officers of any 
     State agency charged with the registration and licensing of 
     vehicles described in such section and officers of any other 
     Federal or State agency charged with the enforcement of 
     Federal or State law regarding motor fuels or criminal 
     activities regarding motor fuels'' after ``section 4083)''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 10. AUTHORITY TO INSPECT ON-SITE RECORDS.

       (a) In General.--Section 4083(c)(1)(A) of the Internal 
     Revenue Code of 1986 (relating to administrative authority) 
     is amended by striking ``and'' at the end of clause (i) and 
     by inserting after clause (ii) the following new clause:
       ``(iii) inspecting any books and records to determine the 
     names and addresses of the persons selling or purchasing such 
     fuel, and''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 11. PROHIBITION OF ADMINISTRATIVE REVIEW OF PENALTY FOR 
                   TAXABLE USE OF DYED DIESEL FUEL.

       (a) In General.--Section 6406 of the Internal Revenue Code 
     of 1986 (relating to prohibition of administrative review of 
     decisions) is amended--
       (1) by striking ``In the absence'' and inserting ``(a) In 
     General.--In the absence'', and
       (2) by adding at the end the following new subsection:
       ``(b) Penalty Decision Regarding Taxable Use of Dyed Diesel 
     Fuel.--In the absence of fraud or mistake in chemical 
     analysis or mathematical calculation, if the findings of fact 
     by chemical analysis show the presence of dye in diesel fuel 
     being used on the highway, the assertion of the penalty under 
     section 6715 shall not be subject to appeal to or review by 
     any other administrative or accounting officer, employee, or 
     agent of the United States.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.
                                 ______