[Congressional Record Volume 150, Number 45 (Friday, April 2, 2004)]
[House]
[Pages H2076-H2122]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TRANSPORTATION EQUITY ACT: A LEGACY FOR USERS
The SPEAKER pro tempore (Mr. Shaw). Pursuant to House Resolution 593
and rule XVIII, the Chair declares the House in the Committee of the
Whole House on the State of the Union for the further consideration of
the bill, H.R. 3550.
{time} 1033
In the Committee of the Whole
Accordingly, the House resolved itself into the Committee of the
Whole House on the State of the Union for the
[[Page H2077]]
further consideration of the bill (H.R. 3550) to authorize funds for
Federal-aid highways, highway safety programs, and transit programs,
and for other purposes, with Mr. Nethercutt (Chairman pro tempore) in
the chair.
The Clerk read the title of the bill.
The CHAIRMAN pro tempore. When the Committee of the Whole rose
earlier today, a request for a recorded vote on amendment No. 23 by the
gentleman from Georgia. (Mr. Isakson) had been postponed.
Pursuant to the order of the House of today, it is now in order for a
period of final debate on the bill. The gentleman from Alaska (Mr.
Young) and the gentleman from Minnesota (Mr. Oberstar) each will
control 5 minutes.
The Chair recognizes the gentleman from Alaska (Mr. Young).
Mr. YOUNG of Alaska. Mr. Chairman, I yield myself such time as I may
consume.
I hope everybody that is standing around will listen for a few
moments as a matter of courtesy, because I have to refer back to one of
the former speakers from New Jersey who said we had plenty of time on
this bill, and we should have done better. I can tell my colleagues, we
have done everything we could possibly do, because we had to really
write three different bills, which is very difficult to do, because the
numbers kept changing and kept floating. But every time we had to
change, the staffs on both sides, on this side and that side, majority
and minority, had to go back and rewrite most of the legislation each
time.
So at this time I would like to acknowledge not just the work of the
gentleman from Minnesota (Mr. Oberstar) and the gentleman from Illinois
(Mr. Lipinski) and the gentleman from Wisconsin (Mr. Petri), but those
who really did the work: Levon Boyagian, Graham Hill, Jim Tyman, Joyce
Rose, Mike Lamm, Sharon Barkeloo, Melissa Theriault, and Ryan Young. He
is not my son, either; he is no relation.
Also, Debbie Gephardt, not the daughter of the gentleman from
Missouri (Mr. Gephardt), either; Patrick Mullane on the gentleman from
Wisconsin's (Mr. Petri) staff. They were the real behind-the-
organization workers.
Also my chief of staff, Lloyd Jones; Liz Megginson; Charlie Ziegler;
Mark Zachares; and Fraser Verrusio, Debbie Callis and John Bressler.
I would also like to thank the minority staff. I can tell my
colleagues with sincerity that the minority staff, because the majority
staff would come to me and say, the minority staff is not working with
us; and the minority would say the majority staff is not working with
us but, in the long run, we all got together and solved, I think, a lot
of very serious, contentious problems and philosophies and where this
bill was headed.
I also want to thank David Heymsfeld, Ward McCarrager, Clyde Woodall,
Ken House, Katherine Donnelly, and Art Chan. On the staff of the
gentleman from Illinois (Mr. Lipinski), Jason Tai.
There are many others, and would I like to thank all of the members
of this committee that worked with me and have stood by me; and those
that object to provisions in this bill, they have my assurance that I
am going to try to make sure that we solve those problems in
conference. I have been one that does not weaken very easily when it
comes to working with the other body. And if we stand shoulder to
shoulder, I think we can solve those problems that have been brought to
the floor. We hope to do so. I am confident we can.
Again, I am extremely grateful for those who put all the time in, 4
o'clock in the morning, 5 o'clock in the morning, and back here, like
today, at 9 o'clock in the morning. This is a large legislative
package, and we could not have done it without the hard work and
dedication of professional people, I want to stress that, professional
people; and for that, I extend my sincerest thanks.
Mr. Chairman, I reserve the balance of my time.
Mr. OBERSTAR. Mr. Chairman, I yield myself 1 minute to join with the
chairman in complimenting the staff on both sides and expressing deep
gratitude. As a former staff member myself, I am well sensitive to the
long hours that staff put in.
On our side, Davis Heymsfeld, Ward McCarrager, Kathie Donnelly, Clyde
Woodle, Ken House, Art Chan, John Upchurch, Eric Van Scandle, and Jason
Tai, all have worked those long hours the chairman talked about. While
we were recharging our batteries, they were running theirs sometimes on
practically empty. But we also must express our appreciation to the
legislative counsels from the House Legislative Counsel's Office who
have provided such skilled draftsmanship for both sides, to David
Mendelsohn, Curt Haensel, and Rosemary Gallagher.
Mr. Chairman, I reserve the balance of my time.
Mr. YOUNG of Alaska. Mr. Chairman, I yield 1 minute to the gentleman
from Wisconsin (Mr. Petri), the chairman of the subcommittee, who has
done an outstanding job traveling across this country explaining our
bill.
Mr. PETRI. Mr. Chairman, I would just like to concur in the
commendation that our chairman extended to the working staff on both
sides of the aisle, and to say to my colleagues that this is a work in
progress.
This is an important milestone, but this is not the end of the
process by any means. We will be working on this and voting on it over
the coming months, and then we will be back under the terms of this
bill in about 18 months to readdress the needs of our Nation in the
transportation area.
So this is not a one-time snapshot that is set. This is a work in
progress; and I hope that, as we continue with this work in progress,
we will work together to meet the transportation needs of our country,
which are enormous.
Mr. OBERSTAR. Mr. Chairman, I yield 1 minute to the distinguished
gentleman from Oregon (Mr. Blumenauer).
Mr. BLUMENAUER. Mr. Chairman, while we are decompressing for a moment
and in a congratulatory mode, I would add my congratulations as well,
but I would have just one little footnote.
Before we are through today, there will be an opportunity for Members
of this Chamber to make a vote towards the level that was crafted by
our distinguished chairman and ranking member. We are not going to get
the $375 billion yet; some day we will, but we will have a motion by
the gentleman from Tennessee (Mr. Davis) that will permit us to at
least vote on the $318 billion that was approved by the other body. It
has no new user fees or taxes on gas; it is fully paid for, and it
includes money that Americans are already paying for transportation.
I sincerely hope that we will be able to have an ``aye'' vote for
this motion to recommit to keep faith with the broadest coalition that
we have seen supporting American transportation, allow not just an
empty gesture, but a House standing up for the future of America's
communities.
Mr. YOUNG of Alaska. Mr. Chairman, I reserve the balance of my time.
Mr. OBERSTAR. Mr. Chairman, I yield 1 minute to the gentleman from
Illinois (Mr. Lipinski), the ranking member of the Subcommittee on
Surface Transportation.
Mr. LIPINSKI. Mr. Chairman, I want to take this opportunity to thank
the gentleman from Wisconsin (Mr. Petri), the gentleman from Minnesota
(Mr. Oberstar), and the gentleman from Alaska (Mr. Young) for involving
me in this process very thoroughly, very completely. This truly has
been a bipartisan effort. I have been astonished by the willingness of
the gentleman from Alaska (Chairman Young) to involve this side of the
aisle in the deliberations, the planning, the execution of what we have
in this bill.
This is a bill that was approved unanimously by the very large
Committee on Transportation and Infrastructure. Not one single negative
vote was cast against this bill in committee. And that is a testament
to the leadership of the gentleman from Alaska (Mr. Young) of involving
everyone. But it was not only the big four that was involved in this
bill; every single member of this committee, every single Member of
this House had the opportunity to participate in this bill. That is a
tribute to the gentleman from Alaska (Chairman Young), and I thank him
for it.
Mr. YOUNG of Alaska. Mr. Chairman, I yield myself such time as I may
consume.
Again, we are about to close this very long 2 days. We will have a
series
[[Page H2078]]
of three votes: the Bradley amendment vote, the Kennedy amendment vote,
the Isakson amendment vote, and motion to recommit, and then final
passage. Again, I can suggest to most of the Members of this House that
this has been a long, trying time, but one which I take great pride in.
Regardless of what my colleagues read in the two rag sheets in this
body, and they are constantly reporting and trying to divide this
House, to try to pit one against the other in different fashions, we
have overcome that and I think have come out with a very good piece of
bipartisan legislation.
Yes, there are some that do not agree with it, and I understand that.
But overall, if we believe in the national transportation system, and I
want to stress, the national transportation system, H.R. 3550, the $275
billion does not completely do the job, but it is the nearest thing we
can do at this time.
I will say right up front, a motion to recommit is very attractive,
but it should not be done because it does break the budget against the
budget resolution that passed the House; and it does, in fact, send a
message to the Senate, but it does not accomplish the goals that I am
trying to achieve, and that is to pass legislation so we can make a
step forward, a step forward to the progress that is necessary to get
our country moving, to keep this country moving, to make sure our
people and our products move.
Mr. Chairman, I yield back the balance of my time.
Mr. OBERSTAR. Mr. Chairman, I yield myself the balance of the time.
Mr. Chairman, we will soon be voting on one amendment held over from
last night. I want to remind Members that that is a heavy-trucks
amendment. The position of our committee is no on heavy trucks. Vote
``no'' on the Bradley amendment. Vote ``no'' on this misguided Kennedy
amendment dealing with tolls on existing highways, expanding that
authority, and vote ``no'' on the Isakson amendment.
Let me restate, under TEA LU, every State gains. Look at your
revenues, not at some arcane formula, a percentage of this and a
percentage of that, and some percentage that is missing, like missing
matter from the universe. There is no missing money; it is all there.
It all goes to the States, and all States grow in their revenues under
this bill.
Let me just point out, however, that under the introduced bill of
last year, which the gentleman from Alaska and I and all, virtually all
of the other, all but one other member of the committee supported, we
have vastly increased funding. That is the direction we need to go.
That is where we ought to be making the investment. That bill will put
475,000 jobs on the work sites of America by Labor Day. We would have
$80 billion of additional economic activity in the workplace by Labor
Day. We would have an economy rising instead of one that is stagnating.
But we are not there.
{time} 1045
We have done a fair job with this legislation, taking every State
from the level of 90.5 percent return of their contribution of the
trust fund to 95 percent over the 6 years of this bill. That was the
goal. That is where we started. Everybody wanted to do that. We checked
with Members on both sides of the aisle. That is what we do with this
bill.
Let us not get bogged down into ``I get a little more percentage of
this and my State gets a little more percentage of that.'' Remember, we
are one Nation, one highway system, one sense of mobility. Let us move
America together ahead with TEA LU, not backwards with these
destructive amendments.
Mr. MICHAUD. Mr. Chairman, it is vitally important that we continue
our efforts to fund the Nation's highway and transit systems, and that
we find new ways to invest in these systems. I think we are seeing a
consensus within the transportation committee, and an impressive unity
in our committee's fine leaders, on the need to increase the level of
highway and transit investments.
These are extremely worthwhile investments. According to the Federal
Highway Administration, each $1 billion of Federal funds invested in
infrastructure creates approximately 47,500 jobs and $6.1 billion in
economic activity.
Today, America finds itself in a struggling economy. Maine is
suffering as badly as anyone, with unemployment in my hometown soaring.
People are looking for answers. Well--here is an answer, loud and
clear. We need new investment, we need new jobs, and we need the
highway and transit program to reach new levels of funding.
Many transportation committee members, including myself, had
supported a bill with even more robust funding, and we will be voting
during today for a version of the bill with an additional $100 billion
in funding over 6 years. The fact that this is not the version that
will be on the floor is disappointing.
Despite wide-ranging support from construction, engineering, trade,
and labor groups for its job-creating impact, this $375 billion version
of the bill has been blocked by a veto threat from the administration.
This leads me to ask--what is it about jobs and economic growth that
they object to?
Still, while today's bill is less than we would want, it does
represent the best we could do given the constraints, and it is a
testament to bipartisan cooperation and commitment to moving our
economy forward. Many would have preferred a bill with greater
investment in transportation, because this country needs jobs, and
transportation investment is the best way to do it. But given the
choice of stalling the process or supporting a bill with lower
investment levels, I suspect the most members will vote in favor of the
bill today, because of all the good things it does achieve. It
increases overall funding, creates vital new programs to improve
walking and biking routes, fund projects of regional and national
security, and increase border safety. It is good for the country, and
it is great for Maine.
I am particularly pleased with some of the project funding that will
be included in this bill for Maine. Among the most important is the
``Wood Composite Materials Demonstration Project'' that is aimed at the
University of Maine and its Advanced Wood Composites Laboratory. This
vital funding to demonstrate the durability and effectiveness of wood
composite materials in multimodal transportation facilities promises to
increase the efficiency and value of our transportation infrastructure
and find valuable new uses for our natural resources.
I believe that we will all work together in the coming months to
make the good start we are getting today into an even better final
bill.
Mr. SMITH of Michigan. Mr. Chairman, this bill has several problems.
The people of Michigan get even less money for their dollar than they
did before. Currently, Michigan taxpayers get 88 cents back for every
gas tax dollar that we pay to Washington for highway funding. Under
this new bill, that falls to 79 cents. That's unacceptable. Today,
people in Michigan pay 18.4 cents in federal gas taxes and 20 cents in
state gas taxes. All of the state gas taxes stay in Michigan, but only
79 percent of the federal gas taxes will be returned to Michigan.
President Bush's budget requested $256 billion over 6 years for a
transportation bill. H.R. 3550 has been estimated to cost $284 billion.
That's a 30 percent increase above the previous transportation bill of
$218 billion. And the reopener provision is going to force us to
increase spending in the future.
Much of this money is not even spent on transportation projects.
There is $3 million for a park in Alabama and $1.5 million for
``streetscape improvements'' in Long Beach, California. There are $1.2
billion for bike paths and more set asides for hiking trails, nature
centers, obesity programs for children and battlefield preservation.
There are 2,800 earmarks in this bill, 1,000 more than in the last
transportation bill. And the Manager's amendment added $1 billion in
projects to encourage people to support the bill.
Mr. ISTOOK. Mr. Chairman, I oppose the TEA-LU highway authorization
bill today, which will significantly reduce Oklahoma and many other
states' share of highway funds over the next 6 years.
For years, I've been fighting to reverse Oklahoma's donor state
status. Instead of helping, this bill will cause Oklahoma to slide
backwards, becoming more of a donor state than we already are.
Under the formula adopted by TEA-LU, Oklahoma will receive $2.8
billion over the next 6 years--which is about $250 million less than it
would have under the formula provided in the TEA-21 6-year
authorization that it replaces. People should not be confused by talk
that this bill ``preserves'' any state at a 90.5 percent funding
guarantee. It applies that guarantee against a significantly-lowered
base number, which has now been set at 90.5 percent of 84 percent,
rather than 90.5 percent of 93 percent of highway funding provided in
TEA-21.
The House of Representatives had a chance today to ensure fairness
for all states in this bill when my good friend Johnny Isakson of
Georgia introduced his amendment that would restore the base number to
the 93 percent level. I strongly supported that amendment and
encouraged others, especially in the Oklahoma delegation, to do so as
well. Unfortunately, it was not the will of the House to support Mr.
Isakson's amendment and provide the funding fairness that mine, and
other states, deserve.
[[Page H2079]]
Consequently, I cannot support a bill that takes one step forward and
two steps back. I worked to make sure the bill funds important projects
for my district, like $34 million for the Oklahoma City Crosstown
Expressway. But I also worked toward fair treatment for all of
Oklahoma. In the long run this bill hurts Oklahoma more than it helps
us by changing the formula and costing Oklahoma hundreds of millions
over the next 6 years.
Mr. YOUNG of Alaska. Mr. Chairman, I want to assure my colleagues
from Hawaii that pertaining to section 1812, I continue to be willing
to work with them to find an alternative resolution of the issues
addressed in that section.
We worked on legislative language last fall that would have
transferred the dry-dock back to the Federal Government and compensated
TDX for its costs and that would have ended all lawsuits. I am still
interested in this framework for a legislative solution to these
debilitating lawsuits.
Once again, I remain committed to working out a mutually acceptable
solution to this problem with my friends from Hawaii and others, in
conference or elsewhere.
Mr. LEVIN. Mr. Chairman, it is unfortunate that the House does not
have a better transportation bill before it today. As it is currently
written, the bill has a number of genuine shortcomings which are
inequitable to my home state of Michigan and a large number of other
donor states. Let me make it clear that these shortcomings will have to
be addressed.
I also want to underscore that this transportation reauthorization
is seriously behind schedule. Renewal of the highway bill was supposed
to be completed last year. The states need Congress to complete our
work and pass a long-term transportation bill in order to plan and
implement their road and transit projects. The inability of the House
to effectively deal with this legislation is negatively affecting the
economy and jobs.
The House is in this unenviable position because the Republican
Leadership and the White House cannot agree on the size and shape of
the highway bill. The White House has indicated the President may well
veto the bill that the Majority has brought to the Floor today. The
President's ``my way or the highway'' approach to this bill is the
single largest obstacle to providing equity to donor states in this
legislation.
But we simply cannot keep putting this off and passing short-term
extensions. We have got to break the impasse. Our country's roads and
transit are too important to maintain the status quo. It is time to
approve a multi-year reauthorization, move it to conference with the
Senate, and have all parties sit down and work through the difficult
issues that need to be addressed.
Primary among those issues is the need to address donor state
equity. By maintaining the current 90.5 percent minimum guaranteed
return on Federal highway dollars, this bill does nothing to improve
the status of donor states like Michigan. I worked with other concerned
Members in each of the past few highway funding reauthorization bills
to increase Michigan's rate of return. Along with so many of my
colleagues, I have cosponsored legislation in this session of Congress
to increase this return once more by requiring a minimum return of 95
percent. The House Leadership has agreed to address this concern when
this bill goes to conference.
The bill before the House today simply does not provide an adequate
level of funding to meet the needs of our states' transportation
infrastructure. The Senate has approved legislation providing $318
billion over 6 years, while we are considering a $275 billion measure.
I very much support the Senate-passed funding level, which would
provide $1.65 billion more for Michigan. I hope that we can move closer
to the Senate-passed funding level in conference.
I will vote for this legislation today to get the bill to conference
so that these shortcomings can be negotiated and addressed. Let me be
clear: My vote on the final version of this legislation will depend on
how these matters are addressed by the conferees.
Mr. STUPAK. Mr. Chairman, I have decided to vote in support for H.R.
3550 or the TEA-LU highway/transit reauthorization bill, but with
reservations and with the hope that it will be addressed during the
House-Senate conference.
I am pleased that this highway and transit reauthorization contains
my requests on the may critically needed transportation projects for
the First District.
However, this $275 billion bill still shortchanges Michigan in
overall funding. It fails to include enough funding to ensure my state
receives its fair share of highway funding.
Under the current highway authorization law, TEA-21, Michigan is a
``donor'' state. That means for every dollar Michigan taxpayers pay
into the federal highway/transit fund--the state gets back only 90.5
cents in federal highway funding. The new reauthorization bill, TEA-LU,
does not narrow this gap. Instead, it actually makes it worse by making
the pot of money where this formula applies even smaller.
The $318 billion Senate bill, however, would gradually increase
Michigan's rate of return on the dollar up to 95 cents by the end of FY
2009. That would be a vast improvement from the House version and I
urge the joint House-Senate conference committee to accept the Senate
version.
Congress needs to address this inequity to ensure Michigan receives a
more equitable share of funding so it can better address and upgrade
its highway and transit system as well as create much needed jobs in
Michigan. For every $1 billion in highway and transit funding, that
creates 47,500 new jobs and $6.2 billion in economic activity,
according to the House Budget Committee Minority Office.
Mr. CARSON of Oklahoma. Mr. Chairman, as a member of the
Transportation and Infrastructure Committee, I would like to thank the
Chairman and the Ranking Member for their leadership and tireless
efforts to bring this important bill to the House floor today.
This bill makes significant improvements over the previous
legislation and I strongly support it. Though there is much work behind
us, there is still more that can be done to continue to improve our
nation's transportation systems. As a representative of the state that
leads the nation in the highest percentage of bridges considered
structurally deficient, we must recognize the importance of investing
in our nation's infrastructure both for our economic well being, as
well as public safety.
This bill makes valuable improvements in programs of importance to
many Oklahomans. The Indian Reservation Roads program has a significant
impact in Oklahoma and allows tribal governments to partner with local
communities to improve roads for all Oklahomans. Bridge improvement
money will hopefully take Oklahoma out of the top position in this
perilous category by providing funds for the state to improve our many
deficient bridges. These improvements and repairs will then allow
commerce, such as our state's wheat harvest, to again use the most
direct routes to get their products to market. There are transit
programs, which take rural Oklahomans to jobs and healthcare, that they
would otherwise have no access to without this legislation. This bill
is truly good government at work.
This legislation will put Americans to work like no other legislation
brought to the floor during my time in Congress. For every $1 billion
invested in federal highway and transit programs, 47,500 jobs are
created here in the United States. These are jobs in small businesses,
in rural communities and cities alike. Investing in our Nation's
infrastructure is one of the best investments we can make, both for the
economic benefits as well as our transportation safety on roads and
transit systems all Americans use everyday.
Again I thank the Chairman and Ranking Member, as well as Mr. Petri
and Mr. Lipinski for their dedication to this legislation. I urge my
colleagues to support this important bill.
Mr. BACA. Mr. Chairman. I rise in opposition to the Graves amendment
to H.R. 3550. Don't be fooled by this amendment. This amendment is bad
for my district and bad for California.
My State is a destination State. Tourists come to visit and see the
sights and cities of Southern California. Sometimes these tourists rent
cars. And sometimes they get into accidents. California passed a
vicarious liability law that protects innocent bystanders from rental
car companies that rent to uninsured drivers. When people get hurt by
these uninsured drivers, there is no place to turn for compensation.
This law allows those that get hurt to ask for compensation from the
rental car companies. The State saw a need for such a law, so they
passed one.
The Graves amendment attempts to tell California what type of law it
needs. It will cancel California's law and hurt their citizens. What
makes Washington Congressmen think they know what's best for my
district and for California? California, 14 other States and the
District of Columbia know that vicarious liability laws are good for
their citizens. They know that when push comes to shove this will help
keep their citizens safe. That is why I oppose the Graves amendment and
support California's right to determine what best serves the interests
of its citizens.
Mr. RUSH. Mr. Chairman, I am pleased that we are voting on H.R. 3550,
``The Transportation Equity Act: A Legacy For Users'' (TEA-LU), a much
needed legislation that will fund our Nation's critical transportation
infrastructure. H.R. 3550 would not only repair our roads and alleviate
traffic congestion but it would also create and sustain 1.7 million new
jobs throughout all 50 states over the next 6 years. This bill
addresses many problems that plague our Nation's transportation
infrastructure. For example, TEA-LU creates a congestion relief program
which requires states to focus on the congestion resources that affect
their roadways. TEA-LU provides 28 percent increase in funding for
NHTSA highway safety formula grants that supports state safety
programs. This is extremely important because it
[[Page H2080]]
is well known that 42,000 Americans are killed and 3.3 million die from
our Nation's highways due to substandard road conditions and roadside
hazards. More importantly, H.R. 3550 recognizes that transportation in
the 21st century cannot exist without adequate resources for public
transportation. I am also pleased that TEA-LU provides $51 billion for
public transportation infrastructure programs. However, I am
disappointed that the funding level for this bill is well below the
Senate highway bill. Originally, this bill was to be funded at $318
billion but because of pressures from the White House it was scaled
back to $275 billion. This is quite unfortunate. H.R. 3550 may be the
only job creating measure considered by Congress this year, as every $1
billion invested in federal highway and transit creates 47,500 jobs.
These well paying jobs would go a long way in my district.
Mr. RODRIGUEZ. Mr. Chairman, I rise in support of H.R. 3550, the
Transportation Equity Act: A Legacy for Users. Today, we have a
historic opportunity to reinvest in our Nation's infrastructure and
promote sound economic development policy.
Highways make traveling the distances of our great State of Texas
feasible and affordable. These roads traverse our lands, connect people
together, and allow them to travel quickly and efficiently. They
facilitate the transfer of commerce and enable the delivery of goods
across state lines, and the construction and maintenance of these roads
are an important source of employment for Texas residents.
While highways perform valuable services, they are merely an
afterthought for the average person. However without timely maintenance
and construction, highways may become unsafe and overly congested.
Current economic problems have delayed critical maintenance and
expansion projects causing increased congestion, air pollution, and
accidents. The U.S. Department of Transportation reports that $375
billion is needed for highway and transit improvements.
NAFTA has brought numerous new economic and trade benefits to South
Texas and the Nation; however, this increased trade is straining our
current transportation infrastructure and causing an increase in air
pollution and chemical runoff. Funds for transportation projects are
urgently needed to offset and improve the many longstanding
transportation and infrastructure needs of San Antonio and South Texas.
I firmly believe that South Texas should not have to bear the burden of
increased international trade traffic alone. If we do not invest in the
region now, the flow of international trade will be negatively impacted
in the future.
Last April, I had the opportunity to speak before the House
Transportation and Infrastructure Committee and testified on the
pressing transportation needs in South Texas. I would like to take a
moment to thank the Chairman and Ranking Member and their staff for
their leadership and understanding of the complexity of our Nation's
transportation problems. As I mentioned a moment ago, South Texas has
many outstanding needs that will impact the Nation if not addressed in
the very near future.
I am pleased that the Committee included six projects for which I had
submitted requests. The legislation authorizes $4 million for Mission
Trails Packages 4 and 5, which would complete a project that is vital
to the revitalization of the South Side of San Antonio. The Mission
Trails project is a transportation enhancement project that upon
completion will be approximately 12 miles of picturesque, tree lined
hike and bike trails, improved well-lit roadways, and rest areas for
people to enjoy.
An additional $4 million authorization level was included for the
Anzalduas Bridge Connector Road in Hidalgo County and $3 million for
the Hidalgo County Loop. These projects are integral towards improving
our Nation's gateway to trade and alleviating congestion in the Lower
Rio Grande Valley. I would like to thank Congressman Lloyd Doggett for
his steadfast support and work on these projects.
A $6 million authorization level was also included for construction
of KellyUSA's 36th Street Extension Road. I would like to thank
Congressman Charlie Gonzalez for his role in supporting this project.
The 36th Street Extension Road is a critical component of the KellyUSA
base conversion plan which includes new gateways and an expanded road
access system. As a former military base, Kelly was originally built as
a closed access facility. The 36th Street Extension Road will provide a
new southern access point and expand community and commercial truck
access to the facility.
I am pleased that the bill contained a $4 million authorization level
for planning, design and engineering along the I-35 corridor in central
Texas. These funds will support an ongoing multi-modal transportation
project to improve the Austin-San Antonio corridor.
Lastly, I would like to thank the Committee for including language to
authorize $4.5 million for the Arkansas Avenue railroad grade
separation project in Laredo to improve public safety and overall
mobility by connecting north and south Laredo. The project will also
alleviate congestion along major trade corridors and allow traffic to
flow in the event of an emergency or evacuation.
I also strongly support critical funding for the VIA Metropolitan
Transit Authority that was championed by Congressman Gonzalez. A $7
million authorization level was included for VIA to purchase new buses
to replace the aging bus fleet and paratransit vans as well as upgrade
their bus maintenance facility. VIA provides critical services to the
greater San Antonio area and I thank them for all that they do.
As you know, funding for the Transportation Equity Act for the 21st
Century (TEA-21) expired in 2003. I fully supported the House
Transportation Committee's original reauthorization bill, which
authorized a $375 billion level, and I'm disappointed that the
President's veto threat of this jobs bill ultimately reduced the amount
to $275 billion. I hope that Americans understand that this means fewer
jobs in an already stagnant job market. For every $1 billion invested
in federal highway and transit spending, 47,500 jobs--over half of
which are in the construction industry--are created or sustained. This
is a jobs bill--it is about investment in our communities and our
economy.
Mr. Chairman, while I believe we should continue to push for
additional funds, we must also face the harsh economic reality that
recent tax cuts and a skyrocketing deficit have left us with less money
to invest in our infrastructure. This bill that we have before us today
is a start, and I urge my colleagues to vote in favor of H.R. 3550.
Let's start reinvesting in our Nation.
Mr. KIND. Mr. Chairman, I rise in support of H.R. 3550, the
Transportation Equity Act. I want to acknowledge the work of the
Transportation Committee on this complex bill and especially thank my
friend and colleague from Wisconsin, Mr. Petri, for his leadership on
the legislation; the Wisconsin delegation is lucky to have such a
strong advocate for our citizens.
We all know that transportation bills are job bills, and now is
certainly the time that we need more jobs throughout the country. Over
8 million Americans are looking for jobs, and last month only 21,000
new jobs were created, none of which was a private-sector job. I
consistently hear from constituents who are searching for work; who
have sent out dozens of resumes and updated their skills but remain
unemployed. Each billion dollars spent on highway funding creates not
only safer and better roads: It also creates an estimated 47,500 new
jobs. An investment in highway funding is an investment for steady work
for those in Wisconsin and around the Nation.
Furthermore, I am pleased that the bill recognizes the importance of
funding crucial highways, transit centers, and bridges in Wisconsin's
Third Congressional District. Specifically, the inclusion of funding
for the Stillwater Bridge, which connects Houlton, Wisconsin and
Stillwater, Minnesota is great news for those of us who have been
working on this project for years. The bridge is only one example of an
important project that will provide the Nation with safer roads,
shorter commutes, and better jobs. I urge my colleagues to support the
bill.
Sequential Votes Postponed In Committee of The Whole
The CHAIRMAN pro tempore (Mr. Nethercutt). Pursuant to clause 6 of
rule XVIII, proceedings will now resume on those amendments on which
further proceedings were postponed in the following order:
Amendment number 20 by Mr. Bradley of New Hampshire, amendment number
22 by Mr. Kennedy of Minnesota, amendment number 23 by Mr. Isakson of
Georgia.
The first electronic vote will be conducted as a 15-minute vote.
Remaining electronic votes will be conducted as 5-minute votes.
Amendment No. 20 Offered by Mr. Bradley of New Hampshire
The CHAIRMAN pro tempore. The unfinished business is the demand for a
recorded vote on the amendment offered by the gentleman from New
Hampshire (Mr. Bradley) on which further proceedings were postponed and
on which the noes prevailed by voice vote.
The Clerk will redesignate the amendment.
The text of the amendment is as follows:
Amendment No. 20 offered by Mr. Bradley of New Hampshire:
Add at the end the following new section:
SECTION . VEHICLE WEIGHT LIMITATIONS.
(a) The next to the last sentence of section 127(a) of
title 23, United States Code, is amended by striking
``Interstate Route 95'' and inserting ``Interstate Routes 89,
93, and 95''.
(b)(1) In General.--In consultation with the Secretary of
Transportation, the State of
[[Page H2081]]
New Hampshire shall conduct a study analyzing the economic,
safety, and infrastructure impacts of the exemption provided
by the amendment made by subsection (a), including the impact
of not having such an exemption. In preparing the study, the
State shall provide adequate opportunity for public comment.
(2) Funding.--There is authorized to be appropriated from
the Highway Trust Fund (other than the Mass Transit Account)
$250,000 for fiscal year 2004 to carry out the study.
(3) Applicability of Title 23, United States Code.--Funds
authorized by this section shall be available for obligation
in the same manner as if such funds were apportioned under
chapter 1 of title 23, United States Code; except that such
funds shall remain available until expended.
Recorded Vote
The CHAIRMAN pro tempore. A recorded vote has been demanded.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 90,
noes 334, not voting 10, as follows:
[Roll No. 110]
AYES--90
Aderholt
Akin
Allen
Barrett (SC)
Bartlett (MD)
Bass
Beauprez
Bilirakis
Bishop (UT)
Blackburn
Blunt
Boehner
Bonner
Bradley (NH)
Burns
Burr
Buyer
Calvert
Cannon
Cantor
Castle
Chocola
Cox
Deal (GA)
DeLay
Diaz-Balart, M.
Dreier
Everett
Feeney
Flake
Fossella
Franks (AZ)
Frelinghuysen
Garrett (NJ)
Gingrey
Goode
Granger
Greenwood
Hall
Harris
Hastert
Hayes
Hayworth
Hensarling
Herger
Hostettler
Houghton
Hunter
Johnson (CT)
Keller
Kennedy (MN)
King (IA)
Kline
Latham
Lewis (KY)
Manzullo
McIntyre
Michaud
Miller (FL)
Musgrave
Myrick
Nethercutt
Neugebauer
Norwood
Nunes
Paul
Pearce
Pence
Pitts
Pryce (OH)
Rehberg
Rogers (AL)
Ryun (KS)
Sessions
Shadegg
Sherwood
Shimkus
Simmons
Simpson
Smith (MI)
Souder
Stenholm
Sweeney
Tancredo
Taylor (NC)
Terry
Thornberry
Walsh
Whitfield
Wilson (SC)
NOES--334
Abercrombie
Ackerman
Alexander
Andrews
Baca
Bachus
Baird
Baker
Baldwin
Ballance
Ballenger
Barton (TX)
Becerra
Bell
Bereuter
Berkley
Berman
Berry
Biggert
Bishop (GA)
Bishop (NY)
Blumenauer
Boehlert
Bonilla
Bono
Boozman
Boswell
Boucher
Boyd
Brady (PA)
Brady (TX)
Brown (OH)
Brown (SC)
Brown, Corrine
Brown-Waite, Ginny
Burgess
Burton (IN)
Camp
Capito
Capps
Capuano
Cardin
Cardoza
Carson (IN)
Carson (OK)
Carter
Case
Chabot
Chandler
Clay
Clyburn
Coble
Cole
Collins
Conyers
Cooper
Costello
Cramer
Crane
Crenshaw
Crowley
Cubin
Cummings
Cunningham
Davis (AL)
Davis (CA)
Davis (FL)
Davis (IL)
Davis (TN)
Davis, Jo Ann
Davis, Tom
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Diaz-Balart, L.
Dicks
Dingell
Doggett
Dooley (CA)
Doolittle
Doyle
Duncan
Dunn
Edwards
Ehlers
Emanuel
Emerson
Engel
English
Eshoo
Etheridge
Evans
Farr
Fattah
Ferguson
Filner
Foley
Forbes
Ford
Frank (MA)
Frost
Gallegly
Gerlach
Gibbons
Gilchrest
Gillmor
Gonzalez
Goodlatte
Gordon
Goss
Graves
Green (TX)
Green (WI)
Grijalva
Gutierrez
Gutknecht
Harman
Hart
Hastings (FL)
Hastings (WA)
Hefley
Hill
Hinchey
Hinojosa
Hobson
Hoeffel
Hoekstra
Holden
Holt
Honda
Hooley (OR)
Hoyer
Hyde
Inslee
Isakson
Israel
Issa
Istook
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Jenkins
John
Johnson (IL)
Johnson, E. B.
Johnson, Sam
Jones (NC)
Jones (OH)
Kanjorski
Kaptur
Kelly
Kennedy (RI)
Kildee
Kilpatrick
Kind
King (NY)
Kingston
Kirk
Kleczka
Knollenberg
Kolbe
Kucinich
LaHood
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
LaTourette
Leach
Lee
Levin
Lewis (CA)
Lewis (GA)
Linder
Lipinski
LoBiondo
Lofgren
Lowey
Lucas (KY)
Lucas (OK)
Lynch
Majette
Maloney
Markey
Marshall
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McCotter
McCrery
McDermott
McGovern
McHugh
McInnis
McKeon
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Mica
Millender-McDonald
Miller (MI)
Miller (NC)
Miller, Gary
Mollohan
Moore
Moran (KS)
Moran (VA)
Murphy
Murtha
Nadler
Napolitano
Neal (MA)
Ney
Northup
Nussle
Oberstar
Obey
Olver
Ortiz
Osborne
Ose
Otter
Owens
Oxley
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Peterson (PA)
Petri
Pickering
Platts
Pombo
Pomeroy
Porter
Portman
Price (NC)
Putnam
Quinn
Radanovich
Rahall
Ramstad
Rangel
Regula
Renzi
Reynolds
Rodriguez
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Ross
Rothman
Roybal-Allard
Royce
Ruppersberger
Rush
Ryan (OH)
Ryan (WI)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Sandlin
Saxton
Schakowsky
Schiff
Schrock
Scott (GA)
Scott (VA)
Sensenbrenner
Serrano
Shaw
Shays
Sherman
Shuster
Skelton
Slaughter
Smith (NJ)
Smith (TX)
Smith (WA)
Snyder
Solis
Spratt
Stark
Stearns
Strickland
Stupak
Sullivan
Tauscher
Taylor (MS)
Thomas
Thompson (CA)
Thompson (MS)
Tiahrt
Tiberi
Tierney
Toomey
Towns
Turner (OH)
Turner (TX)
Udall (CO)
Udall (NM)
Upton
Van Hollen
Velazquez
Visclosky
Vitter
Walden (OR)
Wamp
Waters
Watson
Watt
Weiner
Weldon (PA)
Weller
Wexler
Wicker
Wilson (NM)
Wolf
Woolsey
Wu
Wynn
Young (AK)
Young (FL)
NOT VOTING--10
Culberson
DeMint
Gephardt
Hulshof
Miller, George
Reyes
Tanner
Tauzin
Waxman
Weldon (FL)
{time} 1109
Ms. CARSON of Indiana, and Messrs. GERLACH, LUCAS of Kentucky,
McHUGH, DICKS, HILL, VITTER, LEVIN and MATSUI changed their vote from
``aye'' to ``no.''
Mr. PENCE and Mrs. MYRICK changed their vote from ``no'' to ``aye.''
So the amendment was rejected.
The result of the vote was announced as above recorded.
Announcement By The Chairman Pro Tempore
The CHAIRMAN pro tempore (Mr. Nethercutt). Pursuant to clause 6 of
rule XVIII, the remaining votes in this series will be conducted as 5-
minute votes.
Amendment No. 22 Offered by Mr. Kennedy of Minnesota
The CHAIRMAN pro tempore. The pending business is the demand for a
recorded vote on the amendment offered by the gentleman from Minnesota
(Mr. Kennedy) on which further proceedings were postponed and on which
the noes prevailed by voice vote.
The Clerk will redesignate the amendment.
The Clerk redesignated the amendment.
Recorded Vote
The CHAIRMAN pro tempore. A recorded vote has been demanded.
A recorded vote was ordered.
The CHAIRMAN pro tempore. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--ayes 231,
noes 193, not voting 10, as follows:
[Roll No. 111]
AYES--231
Aderholt
Akin
Alexander
Bachus
Baker
Ballenger
Barrett (SC)
Bartlett (MD)
Bass
Beauprez
Bereuter
Berkley
Bilirakis
Bishop (GA)
Bishop (UT)
Blackburn
Blunt
Boehlert
Boehner
Bonner
Bono
Boozman
Boyd
Bradley (NH)
Brady (TX)
Brown (OH)
Brown (SC)
Brown-Waite, Ginny
Burns
Burr
Burton (IN)
Buyer
Calvert
Camp
Cannon
Cantor
Capito
Cardin
Cardoza
Carter
Chabot
Chocola
Coble
Cole
Collins
Cox
Crane
Crenshaw
Cubin
Cunningham
Davis (TN)
Davis, Tom
Deal (GA)
DeLay
Deutsch
Diaz-Balart, L.
Diaz-Balart, M.
Doggett
Doolittle
Dreier
Duncan
Dunn
Ehlers
Emerson
Engel
English
Everett
Feeney
Ferguson
Flake
Foley
Forbes
Fossella
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Gonzalez
Goode
Graves
Green (TX)
Green (WI)
Gutknecht
Hall
Harris
Hart
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hill
Hinchey
Hinojosa
Hobson
Hoekstra
Hostettler
Houghton
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
John
Johnson (IL)
Johnson, Sam
Jones (NC)
Jones (OH)
Keller
Kelly
Kennedy (MN)
Kind
King (IA)
King (NY)
Kingston
Kline
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (GA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Manzullo
McCotter
McHugh
McIntyre
Mica
Miller (FL)
Miller (MI)
Miller, Gary
Moore
Moran (KS)
Murphy
Musgrave
Myrick
Nethercutt
Neugebauer
Ney
Northup
Norwood
Nunes
Nussle
Obey
Ortiz
Osborne
Ose
Otter
Oxley
Paul
Pearce
Pence
Peterson (PA)
Pickering
Pitts
[[Page H2082]]
Platts
Pombo
Porter
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Ros-Lehtinen
Ross
Royce
Ryan (WI)
Ryun (KS)
Sandlin
Saxton
Schrock
Scott (GA)
Sensenbrenner
Sessions
Shadegg
Shaw
Sherwood
Shimkus
Shuster
Simpson
Smith (MI)
Smith (NJ)
Smith (TX)
Smith (WA)
Souder
Stearns
Stenholm
Strickland
Stupak
Sullivan
Sweeney
Tancredo
Taylor (NC)
Terry
Thornberry
Tiahrt
Tiberi
Toomey
Turner (OH)
Turner (TX)
Upton
Vitter
Walden (OR)
Walsh
Wamp
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
NOES--193
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldwin
Ballance
Barton (TX)
Becerra
Bell
Berman
Berry
Biggert
Bishop (NY)
Blumenauer
Bonilla
Boswell
Boucher
Brady (PA)
Brown, Corrine
Burgess
Capps
Capuano
Carson (IN)
Carson (OK)
Case
Castle
Chandler
Clay
Clyburn
Conyers
Cooper
Costello
Cramer
Crowley
Cummings
Davis (AL)
Davis (CA)
Davis (FL)
Davis (IL)
Davis, Jo Ann
DeFazio
DeGette
Delahunt
DeLauro
Dicks
Dingell
Dooley (CA)
Doyle
Edwards
Emanuel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank (MA)
Frost
Goodlatte
Gordon
Goss
Granger
Greenwood
Grijalva
Gutierrez
Harman
Hastings (FL)
Hoeffel
Holden
Holt
Honda
Hooley (OR)
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson (CT)
Johnson, E. B.
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kirk
Kleczka
Kucinich
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (CA)
Lipinski
Lofgren
Lowey
Lucas (OK)
Lynch
Majette
Maloney
Markey
Marshall
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McCrery
McDermott
McGovern
McInnis
McKeon
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Michaud
Millender-McDonald
Miller (NC)
Mollohan
Moran (VA)
Murtha
Nadler
Napolitano
Neal (MA)
Oberstar
Olver
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Petri
Pomeroy
Price (NC)
Rahall
Rangel
Rodriguez
Rohrabacher
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Schakowsky
Schiff
Scott (VA)
Serrano
Shays
Sherman
Simmons
Skelton
Slaughter
Snyder
Solis
Spratt
Stark
Tauscher
Taylor (MS)
Thomas
Thompson (CA)
Thompson (MS)
Tierney
Towns
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Waters
Watson
Watt
Weiner
Wexler
Wolf
Woolsey
Wu
Wynn
Young (AK)
Young (FL)
NOT VOTING--10
Culberson
DeMint
Gephardt
Hulshof
Miller, George
Reyes
Tanner
Tauzin
Waxman
Weldon (FL)
Announcement by the Chairman Pro Tempore
The CHAIRMAN pro tempore (during the vote). Members are advised there
are 2 minutes remaining in this vote.
{time} 1118
Ms. BERKLEY changed her vote from ``no'' to ``aye.''
Mr. MEEKS of New York and Mr. FORD changed their vote from ``aye'' to
``no.''
So the amendment was agreed to.
The result of the vote was announced as above recorded.
Amendment No. 23 Offered by Mr. Isakson
The CHAIRMAN pro tempore (Mr. Nethercutt). The pending business is
the demand for a recorded vote on amendment No. 23 offered by the
gentleman from Georgia (Mr. Isakson) on which further proceedings were
postponed and on which the noes prevailed by voice vote.
The Clerk will redesignate the amendment.
The Clerk redesignated the amendment.
Recorded Vote
A recorded vote has been demanded.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 170,
noes 254, not voting 9, as follows:
[Roll No. 112]
AYES--170
Akin
Bachus
Ballance
Ballenger
Barrett (SC)
Bartlett (MD)
Barton (TX)
Beauprez
Bell
Bilirakis
Bishop (GA)
Blackburn
Blunt
Boehner
Bonilla
Boyd
Brady (TX)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burns
Burr
Burton (IN)
Buyer
Camp
Cantor
Carson (IN)
Carson (OK)
Carter
Chabot
Chandler
Chocola
Coble
Cole
Collins
Conyers
Crenshaw
Cunningham
Davis (AL)
Davis (FL)
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeGette
DeLay
Deutsch
Diaz-Balart, L.
Diaz-Balart, M.
Dingell
Doggett
Duncan
Edwards
Ehlers
Emerson
Etheridge
Feeney
Ferguson
Flake
Foley
Forbes
Franks (AZ)
Frelinghuysen
Frost
Garrett (NJ)
Gingrey
Gonzalez
Goode
Goodlatte
Goss
Granger
Green (TX)
Gutknecht
Hall
Harris
Hastings (FL)
Hayes
Hayworth
Hefley
Hensarling
Hill
Hoekstra
Hunter
Isakson
Istook
Jackson-Lee (TX)
Jefferson
Jenkins
Johnson, E. B.
Johnson, Sam
Jones (NC)
Keller
Kennedy (MN)
Kildee
Kilpatrick
King (IA)
Kingston
Kline
Knollenberg
Kolbe
Lampson
Leach
Levin
Lewis (GA)
Lewis (KY)
Linder
Lucas (KY)
Lucas (OK)
Majette
Marshall
McCotter
McInnis
McIntyre
Meek (FL)
Mica
Miller (FL)
Miller (MI)
Miller (NC)
Musgrave
Myrick
Neugebauer
Northup
Norwood
Nussle
Otter
Paul
Pence
Portman
Price (NC)
Putnam
Ramstad
Renzi
Rodriguez
Rogers (KY)
Rogers (MI)
Ros-Lehtinen
Sandlin
Schrock
Scott (GA)
Scott (VA)
Sessions
Shadegg
Shaw
Simpson
Smith (MI)
Smith (TX)
Souder
Spratt
Stearns
Stenholm
Strickland
Stupak
Sullivan
Tancredo
Taylor (NC)
Terry
Thornberry
Tiahrt
Tiberi
Turner (TX)
Udall (CO)
Upton
Visclosky
Wamp
Watt
Weldon (FL)
Wexler
Whitfield
Wilson (SC)
Wolf
Young (FL)
NOES--254
Abercrombie
Ackerman
Aderholt
Alexander
Allen
Andrews
Baca
Baird
Baker
Baldwin
Bass
Becerra
Bereuter
Berkley
Berman
Berry
Biggert
Bishop (NY)
Bishop (UT)
Blumenauer
Boehlert
Bonner
Bono
Boozman
Boswell
Boucher
Bradley (NH)
Brady (PA)
Brown (OH)
Brown, Corrine
Calvert
Cannon
Capito
Capps
Capuano
Cardin
Cardoza
Case
Castle
Clay
Clyburn
Cooper
Costello
Cox
Cramer
Crane
Crowley
Cubin
Cummings
Davis (CA)
Davis (IL)
Davis (TN)
DeFazio
Delahunt
DeLauro
Dicks
Dooley (CA)
Doolittle
Doyle
Dreier
Dunn
Emanuel
Engel
English
Eshoo
Evans
Everett
Farr
Fattah
Filner
Ford
Fossella
Frank (MA)
Gallegly
Gerlach
Gibbons
Gilchrest
Gillmor
Gordon
Graves
Green (WI)
Greenwood
Grijalva
Gutierrez
Harman
Hart
Hastings (WA)
Herger
Hinchey
Hinojosa
Hobson
Hoeffel
Holden
Holt
Honda
Hooley (OR)
Hostettler
Houghton
Hoyer
Hyde
Inslee
Israel
Issa
Jackson (IL)
John
Johnson (CT)
Johnson (IL)
Jones (OH)
Kanjorski
Kaptur
Kelly
Kennedy (RI)
Kind
King (NY)
Kirk
Kleczka
Kucinich
LaHood
Langevin
Lantos
Larsen (WA)
Larson (CT)
Latham
LaTourette
Lee
Lewis (CA)
Lipinski
LoBiondo
Lofgren
Lowey
Lynch
Maloney
Manzullo
Markey
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McCrery
McDermott
McGovern
McHugh
McKeon
McNulty
Meehan
Meeks (NY)
Menendez
Michaud
Millender-McDonald
Miller, Gary
Mollohan
Moore
Moran (KS)
Moran (VA)
Murphy
Murtha
Nadler
Napolitano
Neal (MA)
Nethercutt
Ney
Nunes
Oberstar
Obey
Olver
Ortiz
Osborne
Ose
Owens
Oxley
Pallone
Pascrell
Pastor
Payne
Pearce
Pelosi
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Pomeroy
Porter
Pryce (OH)
Quinn
Radanovich
Rahall
Rangel
Regula
Rehberg
Reynolds
Rogers (AL)
Rohrabacher
Ross
Rothman
Roybal-Allard
Royce
Ruppersberger
Rush
Ryan (OH)
Ryan (WI)
Ryun (KS)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Saxton
Schakowsky
Schiff
Sensenbrenner
Serrano
Shays
Sherman
Sherwood
Shimkus
Shuster
Simmons
Skelton
Slaughter
Smith (NJ)
Smith (WA)
Snyder
Solis
Stark
Sweeney
Tauscher
Taylor (MS)
Thomas
Thompson (CA)
Thompson (MS)
Tierney
Toomey
Towns
Turner (OH)
Udall (NM)
Van Hollen
Velazquez
Vitter
Walden (OR)
Walsh
Waters
Watson
Weiner
Weldon (PA)
Weller
Wicker
Wilson (NM)
Woolsey
Wu
Wynn
Young (AK)
NOT VOTING--9
Culberson
DeMint
Gephardt
Hulshof
Miller, George
Reyes
Tanner
Tauzin
Waxman
[[Page H2083]]
Announcement by the Chairman Pro Tempore
The CHAIRMAN pro tempore (during the vote). Members are advised there
are 2 minutes remaining in this vote.
{time} 1126
So the amendment was rejected.
The result of the vote was announced as above recorded.
The CHAIRMAN pro tempore. Under the rule, the Committee rises.
Accordingly, the Committee rose; and the Speaker pro tempore (Mr.
Thornberry) having assumed the chair, Mr. Nethercutt, Chairman pro
tempore of the Committee of the Whole House on the State of the Union,
reported that that Committee, having had under consideration the bill
(H.R. 3550) to authorize funds for Federal-aid highways, highway safety
programs, and transit programs, and for other purposes, pursuant to
House Resolution 593, he reported the bill, as amended pursuant to that
rule, back to the House with further sundry amendments adopted by the
Committee of the Whole.
The SPEAKER pro tempore. Under the rule, the previous question is
ordered.
The committee amendment in the nature of a substitute, modified by
the amendments printed in part A of House Report 108-456, is adopted.
Is a separate vote demanded on any further amendment reported from
the Committee of the Whole? If not, the Chair will put them en gros.
The amendments were agreed to.
The SPEAKER pro tempore. The question is on the engrossment and third
reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
Motion to Recommit Offered by Mr. Davis of Tennessee
Mr. DAVIS of Tennessee. Mr. Speaker, I offer a motion to recommit.
The SPEAKER pro tempore. Is the gentleman opposed to the bill?
Mr. DAVIS of Tennessee. Yes, in its present form, Mr. Speaker.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:
Mr. Davis of Tennessee moves to recommit the bill H.R. 3550
to the Committee on Transportation and Infrastructure with
instructions to report the same back to the House forthwith
with the following amendments:
In section 1101(a)(1) of the bill, strike
``$4,323,076,000'' and all that follows through
``$4,891,164,000'' and insert ``$5,076,187,293 for fiscal
year 2004, $4,953,445,477 for fiscal year 2005,
$5,171,212,959 for fiscal year 2006, $5,263,571,478 for
fiscal year 2007, $5,556,536,840 for fiscal year 2008, and
$6,654,739,293''.
In section 1101(a)(2) of the bill, strike
``$5,187,691,000'' and all that follows through
``$5,869,396,000'' and insert ``$6,091,424,517 for fiscal
year 2004, $5,944,133,902 for fiscal year 2005,
$6,205,455,095 for fiscal year 2006, $6,316,285,773 for
fiscal year 2007, $6,667,843,743 for fiscal year 2008, and
$7,985,686,064''.
In section 1101(a)(3) of the bill, strike
``$3,709,440,000'' and all that follows through
``$4,196,891,000'' and insert ``$4,355,651,438 for fiscal
year 2004, $4,250,332,027 for fiscal year 2005,
$4,437,189,163 for fiscal year 2006, $4,516,437,339 for
fiscal year 2007, $4,767,818,482 for fiscal year 2008, and
$5,710,136,779''.
In section 1101(a)(5) of the bill, strike
``$6,052,306,000'' and all that follows through
``$6,847,629,000'' and insert ``$7,106,661,741 for fiscal
year 2004, $6,934,823,445 for fiscal year 2005,
$7,239,697,231 for fiscal year 2006, $7,369,000,069 for
fiscal year 2007, $7,779,151,809 for fiscal year 2008, and
$9,316,634,194''.
In section 1101(a)(6) of the bill, strike
``$1,469,846,000'' and all that follows through
``$1,662,996,000'' and insert ``$1,725,903,868 for fiscal
year 2004, $1,684,171,440 for fiscal year 2005,
$1,758,212,543 for fiscal year 2006, $1,789,614,076 for
fiscal year 2007, $1,889,222,762 for fiscal year 2008, and
$2,262,611,686''.
In section 1102(a) of the bill, strike paragraphs (2)
through (6) and insert the following:
(2) $37,900,000,000 for fiscal year 2005;
(3) $39,100,000,000 for fiscal year 2006;
(4) $39,100,000,000 for fiscal year 2007;
(5) $39,400,000,000 for fiscal year 2008; and
(6) $44,400,000,000 for fiscal year 2009.
In the matter proposed to be inserted as section
5338(a)(2)(A) of title 49, United States Code, by section
3034 of the bill, strike clauses (i) through (vi) and insert
the following:
``(i) $5,081,125,000 for fiscal year 2005;
``(ii) $5,283,418,000 for fiscal year 2006;
``(iii) $5,550,420,000 for fiscal year 2007;
``(iv) $6,176,172,500 for fiscal year 2008; and
``(v) $6,834,667,500 for fiscal year 2009.
In section 3043 of the bill, strike paragraphs (2) through
(6) and insert the following:
(2) $8,650,000,000 for fiscal year 2005;
(3) $9,085,123,000 for fiscal year 2006;
(4) $9,600,000,000 for fiscal year 2007;
(5) $10,490,000,000 for fiscal year 2008; and
(6) $11,430,000,000 for fiscal year 2009.
Add at the end the following new title:
TITLE IX--HIGHWAY REAUTHORIZATION AND EXCISE TAX SIMPLIFICATION
SEC. 9000. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) Short Title.--This title may be cited as the ``Highway
reauthorization and excise tax simplification Act of 2004''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this title 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.
Subtitle A--Trust Fund Reauthorization
SEC. 9001. EXTENSION OF HIGHWAY TRUST FUND AND AQUATIC
RESOURCES TRUST FUND EXPENDITURE AUTHORITY AND
RELATED TAXES.
(a) Highway Trust Fund Expenditure Authority.--
(1) Highway account.--Paragraph (1) of section 9503(c)
(relating to transfers from Highway Trust Fund for certain
repayments and credits) is amended--
(A) in the matter before subparagraph (A), by striking
``May 1, 2004'' and inserting ``October 1, 2009'',
(B) by striking ``or'' at the end of subparagraph (F),
(C) by striking the period at the end of subparagraph (G)
and inserting ``, or'',
(D) by inserting after subparagraph (G), the following new
subparagraph:
``(H) authorized to be paid out of the Highway Trust Fund
under the Highway reauthorization and excise tax
simplification Act of 2004.'', and
(E) in the matter after subparagraph (G), as added by
subparagraph (D), by striking ``Surface Transportation
Extension Act of 2004'' and inserting ``Highway
reauthorization and excise tax simplification Act of 2004''.
(2) Mass transit account.--Paragraph (3) of section 9503(e)
(relating to establishment of Mass Transit Account) is
amended--
(A) in the matter before subparagraph (A), by striking
``May 1, 2004'' and inserting ``October 1, 2009'',
(B) by striking ``or'' at the end of subparagraph (D),
(C) by striking the period at the end of subparagraph (E)
and inserting ``, or'',
(D) by inserting after subparagraph (E), the following new
subparagraph:
``(F) the Highway reauthorization and excise tax
simplification Act of 2004,'', and
(E) in the matter after subparagraph (E), as added by
subparagraph (D), by striking ``Surface Transportation
Extension Act of 2004'' and inserting ``Highway
reauthorization and excise tax simplification Act of 2004''.
(3) Exception to limitation on transfers.--Subparagraph (B)
of section 9503(b)(5) (relating to limitation on transfers to
Highway Trust Fund) is amended by striking ``May 1, 2004''
and inserting ``October 1, 2009''.
(b) Aquatic Resources Trust Fund Expenditure Authority.--
(1) Sport fish restoration account.--Paragraph (2) of
section 9504(b) (relating to Sport Fish Restoration Account)
is amended by striking ``Surface Transportation Extension Act
of 2004'' each place it appears and inserting ``Highway
reauthorization and excise tax simplification Act of 2004''.
(2) Boat safety account.--Section 9504(c) (relating to
expenditures from Boat Safety Account) is amended--
(A) by striking ``May 1, 2004'' and inserting ``October 1,
2009'', and
(B) by striking ``Surface Transportation Extension Act of
2004'' and inserting ``Highway reauthorization and excise tax
simplification Act of 2004''.
(3) Exception to limitation on transfers.--Paragraph (2) of
section 9504(d) (relating to limitation on transfers to
Aquatic Resources Trust Fund) is amended by striking ``May 1,
2004'' and inserting ``October 1, 2009''.
(4) Technical correction.--The last sentence of paragraph
(2) of section 9504(b) is amended by striking ``subparagraph
(B)'', and inserting ``subparagraph (C)''.
(c) Extension of Taxes.--
(1) In general.--The following provisions are each amended
by striking ``2005'' each place it appears and inserting
``2009'':
(A) Section 4041(a)(1)(C)(iii)(I) (relating to rate of tax
on certain buses).
(B) Section 4041(a)(2)(B) (relating to rate of tax on
special motor fuels).
(C) Section 4041(m)(1)(A) (relating to certain alcohol
fuels produced from natural gas).
(D) Section 4051(c) (relating to termination of tax on
heavy trucks and trailers).
(E) Section 4071(d) (relating to termination of tax on
tires).
(F) Section 4081(d)(1) (relating to termination of tax on
gasoline, diesel fuel, and kerosene).
(G) Section 4481(e) (relating to period tax in effect).
(H) Section 4482(c)(4) (relating to taxable period).
(I) Section 4482(d) (relating to special rule for taxable
period in which termination date occurs).
(2) Floor stocks refunds.--Section 6412(a)(1) (relating to
floor stocks refunds) is amended--
(A) by striking ``2005'' each place it appears and
inserting ``2009'', and
[[Page H2084]]
(B) by striking ``2006'' each place it appears and
inserting ``2010''.
(d) Extension of Certain Exemptions.--The following
provisions are each amended by striking ``2005'' and
inserting ``2009'':
(1) Section 4221(a) (relating to certain tax-free sales).
(2) Section 4483(g) (relating to termination of exemptions
for highway use tax).
(e) Extension of Deposits Into, and Certain Transfers From,
Trust Fund.--
(1) In general.--Subsections (b), (c)(2), (c)(3),
(c)(4)(A)(i), and (c)(5)(A) of section 9503 (relating to the
Highway Trust Fund) are amended--
(A) by striking ``2005'' each place it appears and
inserting ``2009'', and
(B) by striking ``2006'' each place it appears and
inserting ``2010''.
(2) Conforming amendments to land and water conservation
fund.--Section 201(b) of the Land and Water Conservation Fund
Act of 1965 (16 U.S.C. 460l-11(b)) is amended--
(A) by striking ``2003'' and inserting ``2007'', and
(B) by striking ``2004'' each place it appears and
inserting ``2008''.
(f) Extension of Tax Benefits for Qualified Methanol and
Ethanol Fuel Produced From Coal.--Section 4041(b)(2)
(relating to qualified methanol and ethanol fuel) is
amended--
(1) by striking ``2007'' in subparagraph (C)(ii) and
inserting ``2010'', and
(2) by striking ``October 1, 2007'' in subparagraph (D) and
inserting ``January 1, 2011''.
(g) Prohibition on Use of Highway Account for Rail
Projects.--Section 9503(c) (relating to transfers from
Highway Trust Fund for certain repayments and credits) is
amended by adding at the end the following new paragraph:
``(6) Prohibition on use of highway account for certain
rail projects.--With respect to rail projects beginning after
the date of the enactment of this paragraph, no amount shall
be available from the Highway Account (as defined in
subsection (e)(5)(B)) for any rail project, except for any
rail project involving publicly owned rail facilities or any
rail project yielding a public benefit.''.
(h) Highway Trust Fund Expenditures for Highway Use Tax
Evasion Projects.--Section 9503(c), as amended by subsection
(g), is amended to add at the end the following new
paragraph:
``(7) Highway use tax evasion projects.--From amounts
available in the Highway Trust Fund, there is authorized to
be expended--
``(A) for each fiscal year after 2003 to the Internal
Revenue Service--
``(i) $30,000,000 for enforcement of fuel tax compliance,
including the per-certification of tax-exempt users,
``(ii) $10,000,000 for Xstars, and
``(iii) $10,000,000 for xfirs, and
``(B) for each fiscal year after 2003 to the Federal
Highway Administration, $50,000,000 to be allocated
$1,000,000 to each State to combat fuel tax evasion on the
State level.''.
(i) Effective Date.--The amendments made by and provisions
of this section shall take effect on the date of the
enactment of this Act.
SEC. 9002. FULL ACCOUNTING OF FUNDS RECEIVED BY THE HIGHWAY
TRUST FUND.
(a) In General.--Section 9503(c) (relating to transfers
from Highway Trust Fund for certain repayments and credits),
as amended by section 9001 of this Act, is amended by
striking paragraph (2) and redesignating paragraphs (3), (4),
(5), (6), and (7) as paragraphs (2), (3), (4), (5), and (6),
respectively.
(b) Interest on Unexpended Balances Credited to Trust
Fund.--Section 9503 (relating to the Highway Trust Fund) is
amended by striking subsection (f).
(c) Conforming Amendments.--
(1) Section 9503(b)(4)(D) is amended by striking
``paragraph (4)(D) or (5)(B)'' and inserting ``paragraph
(3)(D) or (4)(B)''.
(2) Paragraph (2) of section 9503(c) (as redesignated by
subsection (a)) is amended by adding at the end the following
new sentence: ``The amounts payable from the Highway Trust
Fund under this paragraph shall be determined by taking into
account only the portion of the taxes which are deposited
into the Highway Trust Fund.''.
(3) Section 9504(a)(2) is amended by striking ``section
9503(c)(4), section 9503(c)(5)'' and inserting ``section
9503(c)(3), section 9503(c)(4)''.
(4) Paragraph (2) of section 9504(b), as amended by section
9001 of this Act, is amended by striking ``section
9503(c)(5)'' and inserting ``section 9503(c)(4)''.
(5) Section 9504(e) is amended by striking ``section
9503(c)(4)'' and inserting ``section 9503(c)(3)''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to amounts paid
for which no transfer from the Highway Trust Fund has been
made before April 1, 2004.
(2) Interest credited.--The amendment made by subsection
(b) shall take effect on the date of the enactment of this
Act.
SEC. 9003. MODIFICATION OF ADJUSTMENTS OF APPORTIONMENTS.
(a) In General.--Section 9503(d) (relating to adjustments
for apportionments) is amended--
(1) by striking ``24-month'' in paragraph (1)(B) and
inserting ``48-month'', and
(2) by striking ``2 years' '' in the heading for paragraph
(3) and inserting ``4 years' ''.
(b) Measurement of Net Highway Receipts.--Section 9503(d)
is amended by redesignating paragraph (6) as paragraph (7)
and by inserting after paragraph (5) the following new
paragraph:
``(6) Measurement of net highway receipts.--For purposes of
making any estimate under paragraph (1) of net highway
receipts for periods ending after the date specified in
subsection (b)(1), the Secretary shall treat--
``(A) each expiring provision of subsection (b) which is
related to appropriations or transfers to the Highway Trust
Fund to have been extended through the end of the 48-month
period referred to in paragraph (1)(B), and
``(B) with respect to each tax imposed under the sections
referred to in subsection (b)(1), the rate of such tax during
the 48-month period referred to in paragraph (1)(B) to be the
same as the rate of such tax as in effect on the date of such
estimate.''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
Subtitle B--Volumetric Ethanol Excise Tax Credit
SEC. 9101. SHORT TITLE.
This subtitle may be cited as the ``Volumetric Ethanol
Excise Tax Credit (VEETC) Act of 2004''.
SEC. 9102. ALCOHOL AND BIODIESEL EXCISE TAX CREDIT AND
EXTENSION OF ALCOHOL FUELS INCOME TAX CREDIT.
(a) In General.--Subchapter B of chapter 65 (relating to
rules of special application) is amended by inserting after
section 6425 the following new section:
``SEC. 6426. CREDIT FOR ALCOHOL FUEL AND BIODIESEL MIXTURES.
``(a) Allowance of Credits.--There shall be allowed as a
credit against the tax imposed by section 4081 an amount
equal to the sum of--
``(1) the alcohol fuel mixture credit, plus
``(2) the biodiesel mixture credit.
``(b) Alcohol Fuel Mixture Credit.--
``(1) In general.--For purposes of this section, the
alcohol fuel mixture credit is the product of the applicable
amount and the number of gallons of alcohol used by the
taxpayer in producing any alcohol fuel mixture for sale or
use in a trade or business of the taxpayer.
``(2) Applicable amount.--For purposes of this subsection--
``(A) In general.--Except as provided in subparagraph (B),
the applicable amount is 52 cents (51 cents in the case of
any sale or use after 2004).
``(B) Mixtures not containing ethanol.--In the case of an
alcohol fuel mixture in which none of the alcohol consists of
ethanol, the applicable amount is 60 cents.
``(3) Alcohol fuel mixture.--For purposes of this
subsection, the term `alcohol fuel mixture' means a mixture
of alcohol and a taxable fuel which--
``(A) is sold by the taxpayer producing such mixture to any
person for use as a fuel,
``(B) is used as a fuel by the taxpayer producing such
mixture, or
``(C) is removed from the refinery by a person producing
such mixture.
``(4) Other definitions.--For purposes of this subsection--
``(A) Alcohol.--The term `alcohol' includes methanol and
ethanol but does not include--
``(i) alcohol produced from petroleum, natural gas, or coal
(including peat), or
``(ii) alcohol with a proof of less than 190 (determined
without regard to any added denaturants).
Such term also includes an alcohol gallon equivalent of ethyl
tertiary butyl ether or other ethers produced from such
alcohol.
``(B) Taxable fuel.--The term `taxable fuel' has the
meaning given such term by section 4083(a)(1).
``(5) Termination.--This subsection shall not apply to any
sale, use, or removal for any period after December 31, 2010.
``(c) Biodiesel Mixture Credit.--
``(1) In general.--For purposes of this section, the
biodiesel mixture credit is the product of the applicable
amount and the number of gallons of biodiesel used by the
taxpayer in producing any biodiesel mixture for sale or use
in a trade or business of the taxpayer.
``(2) Applicable amount.--For purposes of this subsection--
``(A) In general.--Except as provided in subparagraph (B),
the applicable amount is 50 cents.
``(B) Amount for agri-biodiesel.--In the case of any
biodiesel which is agri-biodiesel, the applicable amount is
$1.00.
``(3) Biodiesel mixture.--For purposes of this section, the
term `biodiesel mixture' means a mixture of biodiesel and
diesel fuel (as defined in section 4083(a)(3)), determined
without regard to any use of kerosene, which--
``(A) is sold by the taxpayer producing such mixture to any
person for use as a fuel,
``(B) is used as a fuel by the taxpayer producing such
mixture, or
``(C) is removed from the refinery by a person producing
such mixture.
``(4) Certification for biodiesel.--No credit shall be
allowed under this section unless the taxpayer obtains a
certification (in such form and manner as prescribed by the
Secretary) from the producer of the biodiesel which
identifies the product produced and the percentage of
biodiesel and agri-biodiesel in the product.
``(5) Other definitions.--Any term used in this subsection
which is also used in section 40A shall have the meaning
given such term by section 40A.
[[Page H2085]]
``(6) Termination.--This subsection shall not apply to any
sale, use, or removal for any period after December 31, 2006.
``(d) Mixture not Used as a Fuel, Etc.--
``(1) Imposition of tax.--If--
``(A) any credit was determined under this section with
respect to alcohol or biodiesel used in the production of any
alcohol fuel mixture or biodiesel mixture, respectively, and
``(B) any person--
``(i) separates the alcohol or biodiesel from the mixture,
or
``(ii) without separation, uses the mixture other than as a
fuel,
then there is hereby imposed on such person a tax equal to
the product of the applicable amount and the number of
gallons of such alcohol or biodiesel.
``(2) Applicable laws.--All provisions of law, including
penalties, shall, insofar as applicable and not inconsistent
with this section, apply in respect of any tax imposed under
paragraph (1) as if such tax were imposed by section 4081 and
not by this section.
``(e) Coordination With Exemption From Excise Tax.--Rules
similar to the rules under section 40(c) shall apply for
purposes of this section.''.
(b) Registration Requirement.--Section 4101(a)(1) (relating
to registration), as amended by sections 9211 and 9242 of
this Act, is amended by inserting ``and every person
producing or importing biodiesel (as defined in section
40A(d)(1)) or alcohol (as defined in section 6426(b)(4)(A))''
after ``4081''.
(c) Additional Amendments.--
(1) Section 40(c) is amended by striking ``subsection
(b)(2), (k), or (m) of section 4041, section 4081(c), or
section 4091(c)'' and inserting ``section 4041(b)(2), section
6426, or section 6427(e)''.
(2) Paragraph (4) of section 40(d) is amended to read as
follows:
``(4) Volume of alcohol.--For purposes of determining under
subsection (a) the number of gallons of alcohol with respect
to which a credit is allowable under subsection (a), the
volume of alcohol shall include the volume of any denaturant
(including gasoline) which is added under any formulas
approved by the Secretary to the extent that such denaturants
do not exceed 5 percent of the volume of such alcohol
(including denaturants).''.
(3) Section 40(e)(1) is amended--
(A) by striking ``2007'' in subparagraph (A) and inserting
``2010'', and
(B) by striking ``2008'' in subparagraph (B) and inserting
``2011''.
(4) Section 40(h) is amended--
(A) by striking ``2007'' in paragraph (1) and inserting
``2010'', and
(B) by striking ``, 2006, or 2007'' in the table contained
in paragraph (2) and inserting ``through 2010''.
(5) Section 4041(b)(2)(B) is amended by striking ``a
substance other than petroleum or natural gas'' and inserting
``coal (including peat)''.
(6) Section 4041 is amended by striking subsection (k).
(7) Section 4081 is amended by striking subsection (c).
(8) Paragraph (2) of section 4083(a) is amended to read as
follows:
``(2) Gasoline.--The term `gasoline'--
``(A) includes any gasoline blend, other than qualified
methanol or ethanol fuel (as defined in section
4041(b)(2)(B)), partially exempt methanol or ethanol fuel (as
defined in section 4041(m)(2)), or a denatured alcohol, and
``(B) includes, to the extent prescribed in regulations--
``(i) any gasoline blend stock, and
``(ii) any product commonly used as an additive in gasoline
(other than alcohol).
For purposes of subparagraph (B)(i), the term `gasoline blend
stock' means any petroleum product component of gasoline.''.
(9) Section 6427 is amended by inserting after subsection
(d) the following new subsection:
``(e) Alcohol or Biodiesel Used to Produce Alcohol Fuel and
Biodiesel Mixtures or Used as Fuels.--Except as provided in
subsection (k)--
``(1) Used to produce a mixture.--If any person produces a
mixture described in section 6426 in such person's trade or
business, the Secretary shall pay (without interest) to such
person an amount equal to the alcohol fuel mixture credit or
the biodiesel mixture credit with respect to such mixture.
``(2) Used as fuel.--If alcohol (as defined in section
40(d)(1)) or biodiesel (as defined in section 40A(d)(1)) or
agri-biodiesel (as defined in section 40A(d)(2)) which is not
in a mixture described in section 6426--
``(A) is used by any person as a fuel in a trade or
business, or
``(B) is sold by any person at retail to another person and
placed in the fuel tank of such person's vehicle,
the Secretary shall pay (without interest) to such person an
amount equal to the alcohol credit (as determined under
section 40(b)(2)) or the biodiesel credit (as determined
under section 40A(b)(2)) with respect to such fuel.
``(3) Coordination with other repayment provisions.--No
amount shall be payable under paragraph (1) with respect to
any mixture with respect to which an amount is allowed as a
credit under section 6426.
``(4) Termination.--This subsection shall not apply with
respect to--
``(A) any alcohol fuel mixture (as defined in section
6426(b)(3)) or alcohol (as so defined) sold or used after
December 31, 2010, and
``(B) any biodiesel mixture (as defined in section
6426(c)(3)) or biodiesel (as so defined) or agri-biodiesel
(as so defined) sold or used after December 31, 2006.''.
(10) Section 6427(i)(3) is amended--
(A) by striking ``subsection (f)'' both places it appears
in subparagraph (A) and inserting ``subsection (e)(1)'',
(B) by striking ``gasoline, diesel fuel, or kerosene used
to produce a qualified alcohol mixture (as defined in section
4081(c)(3))'' in subparagraph (A) and inserting ``a mixture
described in section 6426'',
(C) by adding at the end of subparagraph (A) the following
new flush sentence: ``In the case of an electronic claim,
this subparagraph shall be applied without regard to clause
(i).'',
(D) by striking ``subsection (f)(1)'' in subparagraph (B)
and inserting ``subsection (e)(1)'',
(E) by striking ``20 days of the date of the filing of such
claim'' in subparagraph (B) and inserting ``45 days of the
date of the filing of such claim (20 days in the case of an
electronic claim)'', and
(F) by striking ``alcohol mixture'' in the heading and
inserting ``alcohol fuel and biodiesel mixture''.
(11) Section 9503(b)(1) is amended by adding at the end the
following new flush sentence: ``For purposes of this
paragraph, taxes received under sections 4041 and 4081 shall
be determined without reduction for credits under section
6426.''.
(12) Section 9503(b)(4), as amended by section 9101 of this
Act, is amended--
(A) by adding ``or'' at the end of subparagraph (C),
(B) by striking the comma at the end of subparagraph
(D)(iii) and inserting a period, and
(C) by striking subparagraphs (E) and (F).
(13) The table of sections for subchapter B of chapter 65
is amended by inserting after the item relating to section
6425 the following new item:
``Sec. 6426. Credit for alcohol fuel and biodiesel mixtures.''.
(14) Tariff schedule.--Headings 9901.00.50 and 9901.00.52
of the Harmonized Tariff Schedule of the United States (19
U.S.C. 3007) are each amended in the effective period column
by striking ``10/1/2007'' each place it appears and inserting
``1/1/2011''.
(d) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to fuel sold or used after September 30, 2004.
(2) Registration requirement.--The amendment made by
subsection (b) shall take effect on April 1, 2005.
(3) Extension of alcohol fuels credit.--The amendments made
by paragraphs (3), (4), and (14) of subsection (c) shall take
effect on the date of the enactment of this Act.
(4) Repeal of general fund retention of certain alcohol
fuels taxes.--The amendments made by subsection (c)(12) shall
apply to fuel sold or used after September 30, 2003.
(e) Format for Filing.--The Secretary of the Treasury shall
describe the electronic format for filing claims described in
section 6427(i)(3)(B) of the Internal Revenue Code of 1986
(as amended by subsection (c)(10)(C)) not later than
September 30, 2004.
SEC. 9103. BIODIESEL INCOME TAX CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business related credits) is amended
by inserting after section 40 the following new section:
``SEC. 40A. BIODIESEL USED AS FUEL.
``(a) General Rule.--For purposes of section 38, the
biodiesel fuels credit determined under this section for the
taxable year is an amount equal to the sum of--
``(1) the biodiesel mixture credit, plus
``(2) the biodiesel credit.
``(b) Definition of Biodiesel Mixture Credit and Biodiesel
Credit.--For purposes of this section--
``(1) Biodiesel mixture credit.--
``(A) In general.--The biodiesel mixture credit of any
taxpayer for any taxable year is 50 cents for each gallon of
biodiesel used by the taxpayer in the production of a
qualified biodiesel mixture.
``(B) Qualified biodiesel mixture.--The term `qualified
biodiesel mixture' means a mixture of biodiesel and diesel
fuel (as defined in section 4083(a)(3)), determined without
regard to any use of kerosene, which--
``(i) is sold by the taxpayer producing such mixture to any
person for use as a fuel, or
``(ii) is used as a fuel by the taxpayer producing such
mixture.
``(C) Sale or use must be in trade or business, etc.--
Biodiesel used in the production of a qualified biodiesel
mixture shall be taken into account--
``(i) only if the sale or use described in subparagraph (B)
is in a trade or business of the taxpayer, and
``(ii) for the taxable year in which such sale or use
occurs.
``(D) Casual off-farm production not eligible.--No credit
shall be allowed under this section with respect to any
casual off-farm production of a qualified biodiesel mixture.
``(2) Biodiesel credit.--
``(A) In general.--The biodiesel credit of any taxpayer for
any taxable year is 50 cents for each gallon of biodiesel
which is not in a mixture with diesel fuel and which during
the taxable year--
``(i) is used by the taxpayer as a fuel in a trade or
business, or
``(ii) is sold by the taxpayer at retail to a person and
placed in the fuel tank of such person's vehicle.
``(B) User credit not to apply to biodiesel sold at
retail.--No credit shall be
[[Page H2086]]
allowed under subparagraph (A)(i) with respect to any
biodiesel which was sold in a retail sale described in
subparagraph (A)(ii).
``(3) Credit for agri-biodiesel.--In the case of any
biodiesel which is agri-biodiesel, paragraphs (1)(A) and
(2)(A) shall be applied by substituting `$1.00' for `50
cents'.
``(4) Certification for biodiesel.--No credit shall be
allowed under this section unless the taxpayer obtains a
certification (in such form and manner as prescribed by the
Secretary) from the producer or importer of the biodiesel
which identifies the product produced and the percentage of
biodiesel and agri-biodiesel in the product.
``(c) Coordination With Credit Against Excise Tax.--The
amount of the credit determined under this section with
respect to any biodiesel shall be properly reduced to take
into account any benefit provided with respect to such
biodiesel solely by reason of the application of section 6426
or 6427(e).
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Biodiesel.--The term `biodiesel' means the monoalkyl
esters of long chain fatty acids derived from plant or animal
matter which meet--
``(A) the registration requirements for fuels and fuel
additives established by the Environmental Protection Agency
under section 211 of the Clean Air Act (42 U.S.C. 7545), and
``(B) the requirements of the American Society of Testing
and Materials D6751.
``(2) Agri-biodiesel.--The term `agri-biodiesel' means
biodiesel derived solely from virgin oils, including esters
derived from virgin vegetable oils from corn, soybeans,
sunflower seeds, cottonseeds, canola, crambe, rapeseeds,
safflowers, flaxseeds, rice bran, and mustard seeds, and from
animal fats.
``(3) Mixture or biodiesel not used as a fuel, etc.--
``(A) Mixtures.--If--
``(i) any credit was determined under this section with
respect to biodiesel used in the production of any qualified
biodiesel mixture, and
``(ii) any person--
``(I) separates the biodiesel from the mixture, or
``(II) without separation, uses the mixture other than as a
fuel,
then there is hereby imposed on such person a tax equal to
the product of the rate applicable under subsection (b)(1)(A)
and the number of gallons of such biodiesel in such mixture.
``(B) Biodiesel.--If--
``(i) any credit was determined under this section with
respect to the retail sale of any biodiesel, and
``(ii) any person mixes such biodiesel or uses such
biodiesel other than as a fuel,
then there is hereby imposed on such person a tax equal to
the product of the rate applicable under subsection (b)(2)(A)
and the number of gallons of such biodiesel.
``(C) Applicable laws.--All provisions of law, including
penalties, shall, insofar as applicable and not inconsistent
with this section, apply in respect of any tax imposed under
subparagraph (A) or (B) as if such tax were imposed by
section 4081 and not by this chapter.
``(4) Pass-thru in the case of estates and trusts.--Under
regulations prescribed by the Secretary, rules similar to the
rules of subsection (d) of section 52 shall apply.
``(e) Termination.--This section shall not apply to any
sale or use after December 31, 2006.''.
(b) Credit Treated as Part of General Business Credit.--
Section 38(b) (relating to current year business credit) is
amended by striking ``plus'' at the end of paragraph (14), by
striking the period at the end of paragraph (15) and
inserting ``, plus'', and by adding at the end the following
new paragraph:
``(16) the biodiesel fuels credit determined under section
40A(a).''.
(c) Conforming Amendments.--
(1) Section 39(d) is amended by adding at the end the
following new paragraph:
``(11) No carryback of biodiesel fuels credit before
effective date.--No portion of the unused business credit for
any taxable year which is attributable to the biodiesel fuels
credit determined under section 40A may be carried back to a
taxable year ending on or before September 30, 2004.''.
(2)(A) Section 87 is amended to read as follows:
``SEC. 87. ALCOHOL AND BIODIESEL FUELS CREDITS.
``Gross income includes--
``(1) the amount of the alcohol fuels credit determined
with respect to the taxpayer for the taxable year under
section 40(a), and
``(2) the biodiesel fuels credit determined with respect to
the taxpayer for the taxable year under section 40A(a).''.
(B) The item relating to section 87 in the table of
sections for part II of subchapter B of chapter 1 is amended
by striking ``fuel credit'' and inserting ``and biodiesel
fuels credits''.
(3) Section 196(c) is amended by striking ``and'' at the
end of paragraph (9), by striking the period at the end of
paragraph (10) and inserting ``, and'', and by adding at the
end the following new paragraph:
``(11) the biodiesel fuels credit determined under section
40A(a).''.
(4) The table of sections for subpart D of part IV of
subchapter A of chapter 1 is amended by adding after the item
relating to section 40 the following new item:
``Sec. 40A. Biodiesel used as fuel.''.
(d) Effective Date.--The amendments made by this section
shall apply to fuel produced, and sold or used, after
September 30, 2004, in taxable years ending after such date.
Subtitle C--Fuel Fraud Prevention
SEC. 9200. SHORT TITLE.
This subtitle may be cited as the ``Fuel Fraud Prevention
Act of 2004''.
PART I--AVIATION JET FUEL
SEC. 9211. TAXATION OF AVIATION-GRADE KEROSENE.
(a) Rate of Tax.--
(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, 21.8 cents
per gallon.''.
(2) Commercial aviation.--Paragraph (2) of section 4081(a)
is amended by adding at the end the following new
subparagraph:
``(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, the rate of tax
under subparagraph (A)(iv) shall be 4.3 cents per gallon.''.
(3) Nontaxable uses.--
(A) In general.--Section 4082 is amended by redesignating
subsections (e) and (f) as subsections (f) and (g),
respectively, and by inserting after subsection (d) the
following new subsection:
``(e) Aviation-Grade Kerosene.--In the case of aviation-
grade kerosene which is exempt from the tax imposed by
section 4041(c) (other than by reason of a prior imposition
of tax) and which is removed from any refinery or terminal
directly into the fuel tank of an aircraft, the rate of tax
under section 4081(a)(2)(A)(iv) shall be zero.''.
(B) Conforming amendments.--
(i) Subsection (b) of section 4082 is amended by adding at
the end the following new flush sentence: ``The term
`nontaxable use' does not include the use of aviation-grade
kerosene in an aircraft.''.
(ii) Section 4082(d) is amended by striking paragraph (1)
and by redesignating paragraphs (2) and (3) as paragraphs (1)
and (2), respectively.
(4) Nonaircraft use of aviation-grade kerosene.--
(A) In general.--Subparagraph (B) of section 4041(a)(1) is
amended by adding at the end the following new sentence:
``This subparagraph shall not apply to aviation-grade
kerosene.''.
(B) Conforming amendment.--The heading for paragraph (1) of
section 4041(a) is amended by inserting ``and kerosene''
after ``diesel fuel''.
(b) Commercial Aviation.--Section 4083 is amended
redesignating subsections (b) and (c) as subsections (c) and
(d), respectively, and by inserting after subsection (a) the
following new subsection:
``(b) Commercial Aviation.--For purposes of this subpart,
the term `commercial aviation' means any use of an aircraft
in a business of transporting persons or property for
compensation or hire by air, unless properly allocable to any
transportation exempt from the taxes imposed by section 4261
and 4271 by reason of section 4281 or 4282 or by reason of
section 4261(h).''.
(c) Refunds.--
(1) In general.--Paragraph (4) of section 6427(l) is
amended to read as follows:
``(4) Refunds for aviation-grade kerosene.--
``(A) No refund of certain taxes on fuel used in commercial
aviation.--In the case of aviation-grade kerosene used in
commercial aviation (as defined in section 4083(b)) (other
than supplies for vessels or aircraft within the meaning of
section 4221(d)(3)), paragraph (1) shall not apply to so much
of the tax imposed by section 4081 as is attributable to--
``(i) the Leaking Underground Storage Tank Trust Fund
financing rate imposed by such section, and
``(ii) so much of the rate of tax specified in section
4081(a)(2)(A)(iv) as does not exceed 4.3 cents per gallon.
``(B) Payment to ultimate, registered vendor.--With respect
to aviation-grade kerosene, 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 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).''.
(2) Time for filing claims.--Paragraph (4) of section
6427(i) is amended by striking ``subsection (l)(5)'' and
inserting ``paragraph (4)(B) or (5) of subsection (l)''.
(3) Conforming amendment.--Subparagraph (B) of section
6427(l)(2) is amended to read as follows:
``(B) in the case of aviation-grade kerosene--
``(i) any use which is exempt from the tax imposed by
section 4041(c) other than by reason of a prior imposition of
tax, or
``(ii) any use in commercial aviation (within the meaning
of section 4083(b)).''.
(d) Repeal of Prior Taxation of Aviation Fuel.--
(1) In general.--Part III of subchapter A of chapter 32 is
amended by striking subpart B and by redesignating subpart C
as subpart B.
(2) Conforming amendments.--
[[Page H2087]]
(A) Section 4041(c) is amended to read as follows:
``(c) Aviation-Grade Kerosene.--
``(1) In general.--There is hereby imposed a tax upon
aviation-grade kerosene--
``(A) sold by any person to an owner, lessee, or other
operator of an aircraft for use in such aircraft, or
``(B) used by any person in an aircraft unless there was a
taxable sale of such fuel under subparagraph (A).
``(2) Exemption for previously taxed fuel.--No tax shall be
imposed by this subsection on the sale or use of any
aviation-grade kerosene if tax was imposed on such liquid
under section 4081 and the tax thereon was not credited or
refunded.
``(3) Rate of tax.--The rate of tax imposed by this
subsection shall be the rate of tax specified in section
4081(a)(2)(A)(iv) which is in effect at the time of such sale
or use.''.
(B) Section 4041(d)(2) is amended by striking ``section
4091'' and inserting ``section 4081''.
(C) Section 4041 is amended by striking subsection (e).
(D) Section 4041 is amended by striking subsection (i).
(E) Section 4041(m)(1) is amended to read as follows:
``(1) In general.--In the case of the sale or use of any
partially exempt methanol or ethanol fuel, the rate of the
tax imposed by subsection (a)(2) shall be--
``(A) after September 30, 1997, and before September 30,
2009--
``(i) in the case of fuel none of the alcohol in which
consists of ethanol, 9.15 cents per gallon, and
``(ii) in any other case, 11.3 cents per gallon, and
``(B) after September 30, 2009--
``(i) in the case of fuel none of the alcohol in which
consists of ethanol, 2.15 cents per gallon, and
``(ii) in any other case, 4.3 cents per gallon.''.
(F) Sections 4101(a), 4103, 4221(a), and 6206 are each
amended by striking ``, 4081, or 4091'' and inserting ``or
4081''.
(G) Section 6416(b)(2) is amended by striking ``4091 or''.
(H) Section 6416(b)(3) is amended by striking ``or 4091''
each place it appears.
(I) Section 6416(d) is amended by striking ``or to the tax
imposed by section 4091 in the case of refunds described in
section 4091(d)''.
(J) Section 6427 is amended by striking subsection (f).
(K) Section 6427(j)(1) is amended by striking ``, 4081, and
4091'' and inserting ``and 4081''.
(L)(i) Section 6427(l)(1) is amended to read as follows:
``(1) In general.--Except as otherwise provided in this
subsection and in subsection (k), if any diesel fuel or
kerosene on which tax has been imposed by section 4041 or
4081 is used by any person in a nontaxable use, the Secretary
shall pay (without interest) to the ultimate purchaser of
such fuel an amount equal to the aggregate amount of tax
imposed on such fuel under section 4041 or 4081, as the case
may be, reduced by any refund paid to the ultimate vendor
under paragraph (4)(B).''.
(ii) Paragraph (5)(B) of section 6427(l) is amended by
striking ``Paragraph (1)(A) shall not apply to kerosene'' and
inserting ``Paragraph (1) shall not apply to kerosene (other
than aviation-grade kerosene)''.
(M) Subparagraph (B) of section 6724(d)(1) is amended by
striking clause (xv) and by redesignating the succeeding
clauses accordingly.
(N) Paragraph (2) of section 6724(d) is amended by striking
subparagraph (W) and by redesignating the succeeding
subparagraphs accordingly.
(O) Paragraph (1) of section 9502(b) is amended by adding
``and'' at the end of subparagraph (B) and by striking
subparagraphs (C) and (D) and inserting the following new
subparagraph:
``(C) section 4081 with respect to aviation gasoline and
aviation-grade kerosene, and''.
(P) The last sentence of section 9502(b) is amended to read
as follows: ``There shall not be taken into account under
paragraph (1) so much of the taxes imposed by section 4081 as
are determined at the rate specified in section
4081(a)(2)(B).''.
(Q) Subsection (b) of section 9508 is amended by striking
paragraph (3) and by redesignating paragraphs (4) and (5) as
paragraphs (3) and (4), respectively.
(R) Section 9508(c)(2)(A) is amended by striking ``sections
4081 and 4091'' and inserting ``section 4081''.
(S) The table of subparts for part III of subchapter A of
chapter 32 is amended to read as follows:
``Subpart A. motor and aviation fuels
``Subpart B. special provisions applicable to fuels tax''.
(T) The heading for subpart A of part III of subchapter A
of chapter 32 is amended to read as follows:
``Subpart A--Motor and Aviation Fuels''.
(U) The heading for subpart B of part III of subchapter A
of chapter 32 is amended to read as follows:
``Subpart B--Special Provisions Applicable to Fuels Tax''.
(e) Effective Date.--The amendments made by this section
shall apply to aviation-grade kerosene removed, entered, or
sold after September 30, 2004.
(f) Floor Stocks Tax.--
(1) In general.--There is hereby imposed on aviation-grade
kerosene held on October 1, 2004, by any person a tax 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 under section 4091 of
the Internal Revenue Code of 1986, as in effect on the day
before the date of the enactment of this Act.
(2) Liability for tax and method of payment.--
(A) Liability for tax.--The person holding the kerosene on
October 1, 2004, to which the tax imposed by paragraph (1)
applies shall be liable for such tax.
(B) Method and time for 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, including
the nonapplication of such tax on de minimis amounts of
kerosene.
(3) Transfer of floor stock tax revenues to trust funds.--
For purposes of determining the amount transferred to any
trust fund, the tax imposed by this subsection shall be
treated as imposed by section 4081 of the Internal Revenue
Code of 1986--
(A) at the Leaking Underground Storage Tank Trust Fund
financing rate under such section to the extent of 0.1 cents
per gallon, and
(B) at the rate under section 4081(a)(2)(A)(iv) to the
extent of the remainder.
(4) Held by a person.--For purposes of this section,
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).
(5) Other laws applicable.--All provisions of law,
including penalties, applicable with respect to the tax
imposed by section 4081 of such Code shall, insofar as
applicable and not inconsistent with the provisions of this
subsection, apply with respect to the floor stock tax imposed
by paragraph (1) to the same extent as if such tax were
imposed by such section.
SEC. 9212. TRANSFER OF CERTAIN AMOUNTS FROM THE AIRPORT AND
AIRWAY TRUST FUND TO THE HIGHWAY TRUST FUND TO
REFLECT HIGHWAY USE OF JET FUEL.
(a) In General.--Section 9502(d) is amended by adding at
the end the following new paragraph:
``(7) Transfers from the trust fund to the highway trust
fund.--
``(A) In general.--The Secretary shall pay annually from
the Airport and Airway Trust Fund into the Highway Trust Fund
an amount (as determined by him) equivalent to amounts
received in the Airport and Airway Trust Fund which are
attributable to fuel that is used primarily for highway
transportation purposes.
``(B) Amounts transferred to mass transit account.--The
Secretary shall transfer 11 percent of the amounts paid into
the Highway Trust Fund under subparagraph (A) to the Mass
Transit Account established under section 9503(e).''.
(b) Conforming Amendments.--
(1) Subsection (a) of section 9503 is amended--
(A) by striking ``appropriated or credited'' and inserting
``paid, appropriated, or credited'', and
(B) by striking ``or section 9602(b)'' and inserting ``,
section 9502(d)(7), or section 9602(b)''.
(2) Subsection (e)(1) of section 9503 is amended by
striking ``or section 9602(b)'' and inserting ``, section
9502(d)(7), or section 9602(b)''.
(c) Effective Date.--The amendments made by this section
shall take effect on October 1, 2004.
PART II--DYED FUEL
SEC. 9221. DYE INJECTION EQUIPMENT.
(a) In General.--Section 4082(a)(2) (relating to exemptions
for diesel fuel and kerosene) is amended by inserting ``by
mechanical injection'' after ``indelibly dyed''.
(b) Dye Injector Security.--Not later than June 30, 2004,
the Secretary of the Treasury shall issue regulations
regarding mechanical dye injection systems described in the
amendment made by subsection (a), and such regulations shall
include standards for making such systems tamper resistant.
(c) Penalty for Tampering With or Failing to Maintain
Security Requirements for Mechanical Dye Injection Systems.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by adding after
section 6715 the following new section:
``SEC. 6715A. TAMPERING WITH OR FAILING TO MAINTAIN SECURITY
REQUIREMENTS FOR MECHANICAL DYE INJECTION
SYSTEMS.
``(a) Imposition of Penalty.--
``(1) Tampering.--If any person tampers with a mechanical
dye injection system used to indelibly dye fuel for purposes
of section 4082, then such person shall pay a penalty in
addition to the tax (if any).
``(2) Failure to maintain security requirements.--If any
operator of a mechanical dye injection system used to
indelibly dye fuel for purposes of section 4082 fails to
maintain the security standards for such system as
established by the Secretary, then such operator shall pay a
penalty.
``(b) Amount of Penalty.--The amount of the penalty under
subsection (a) shall be--
``(1) for each violation described in paragraph (1), the
greater of--
[[Page H2088]]
``(A) $25,000, or
``(B) $10 for each gallon of fuel involved, and
``(2) for each--
``(A) failure to maintain security standards described in
paragraph (2), $1,000, and
``(B) failure to correct a violation described in paragraph
(2), $1,000 per day for each day after which such violation
was discovered or such person should have reasonably known of
such violation.
``(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 I
of subchapter B of chapter 68 is amended by adding after the
item related to section 6715 the following new item:
``Sec. 6715A. Tampering with or failing to maintain security
requirements for mechanical dye injection systems.''.
(d) Effective Date.--The amendments made by subsections (a)
and (c) shall take effect 180 days after the date on which
the Secretary issues the regulations described in subsection
(b).
SEC. 9222. ELIMINATION OF ADMINISTRATIVE REVIEW FOR TAXABLE
USE OF DYED FUEL.
(a) In General.--Section 6715 is amended by inserting at
the end the following new subsection:
``(e) No Administrative Appeal for Third and Subsequent
Violations.--In the case of any person who is found to be
subject to the penalty under this section after a chemical
analysis of such fuel and who has been penalized under this
section at least twice after the date of the enactment of
this subsection, no administrative appeal or review shall be
allowed with respect to such finding except in the case of a
claim regarding--
``(1) fraud or mistake in the chemical analysis, or
``(2) mathematical calculation of the amount of the
penalty.''.
(b) Effective Date.--The amendment made by this section
shall apply to penalties assessed after the date of the
enactment of this Act.
SEC. 9223. PENALTY ON UNTAXED CHEMICALLY ALTERED DYED FUEL
MIXTURES.
(a) In General.--Section 6715(a) (relating to dyed fuel
sold for use or used in taxable use, etc.) is amended by
striking ``or'' in paragraph (2), by inserting ``or'' at the
end of paragraph (3), and by inserting after paragraph (3)
the following new paragraph:
``(4) any person who has knowledge that a dyed fuel which
has been altered as described in paragraph (3) sells or holds
for sale such fuel for any use which the person knows or has
reason to know is not a nontaxable use of such fuel,''.
(b) Conforming Amendment.--Section 6715(a)(3) is amended by
striking ``alters, or attempts to alter,'' and inserting
``alters, chemically or otherwise, or attempts to so
alter,''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 9224. TERMINATION OF DYED DIESEL USE BY INTERCITY BUSES.
(a) In General.--Paragraph (3) of section 4082(b) (relating
to nontaxable use) is amended to read as follows:
``(3) any use described in section
4041(a)(1)(C)(iii)(II).''.
(b) Ultimate Vendor Refund.--Subsection (b) of section 6427
is amended by adding at the end the following new paragraph:
``(4) Refunds for use of diesel fuel in certain intercity
buses.--
``(A) In general.--With respect to any fuel to which
paragraph (2)(A) applies, if the ultimate purchaser of such
fuel 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 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).
``(B) Credit cards.--For purposes of this paragraph, if the
sale of such fuel is made by means of a credit card, the
person extending credit to the ultimate purchaser shall be
deemed to be the ultimate vendor.''.
(c) Payment of Refunds.--Subparagraph (A) of section
6427(i)(4), as amended by section 9211 of this Act, is
amended by inserting ``subsections (b)(4) and'' after ``filed
under''.
(b) Effective Date.--The amendments made by this section
shall apply to fuel sold after September 30, 2004.
PART III--MODIFICATION OF INSPECTION OF RECORDS PROVISIONS
SEC. 9231. AUTHORITY TO INSPECT ON-SITE RECORDS.
(a) In General.--Section 4083(d)(1)(A) (relating to
administrative authority), as amended by section 9211 of this
Act, 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 and any shipping
papers pertaining to 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. 9232. ASSESSABLE PENALTY FOR REFUSAL OF ENTRY.
(a) In General.--Part I of subchapter B of chapter 68
(relating to assessable penalties), as amended by section
9221 of this Act, is amended by adding at the end the
following new section:
``SEC. 6717. REFUSAL OF ENTRY.
``(a) In General.--In addition to any other penalty
provided by law, any person who refuses to admit entry or
refuses to permit any other action by the Secretary
authorized by section 4083(d)(1) shall pay a penalty of
$1,000 for such refusal.
``(b) 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.
``(c) Reasonable Cause Exception.--No penalty shall be
imposed under this section with respect to any failure if it
is shown that such failure is due to reasonable cause.''.
(b) Conforming Amendments.--
(1) Section 4083(d)(3), as amended by section 9211 of this
Act, 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) Assessable penalty.--For additional assessable
penalty for the refusal to admit entry or other refusal to
permit an action by the Secretary authorized by paragraph
(1), see section 6717.''.
(2) The table of sections for part I of subchapter B of
chapter 68, as amended by section 9221 of this Act, is
amended by adding at the end the following new item:
``Sec. 6717. Refusal of entry.''.
(c) Effective Date.--The amendments made by this section
shall take effect on October 1, 2004.
PART IV--REGISTRATION AND REPORTING REQUIREMENTS
SEC. 9241. REGISTRATION OF PIPELINE OR VESSEL OPERATORS
REQUIRED FOR EXEMPTION OF BULK TRANSFERS TO
REGISTERED TERMINALS OR REFINERIES.
(a) In General.--Section 4081(a)(1)(B) (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 such pipeline or
vessel,'' after ``the taxable fuel''.
(b) Civil Penalty for Carrying Taxable Fuels by
Nonregistered Pipelines or Vessels.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties), as amended by section
9232 of this Act, is amended by adding at the end the
following new section:
``SEC. 6718. CARRYING TAXABLE FUELS BY NONREGISTERED
PIPELINES OR VESSELS.
``(a) Imposition of Penalty.--If any person knowingly
transfers any taxable fuel (as defined in section 4083(a)(1))
in bulk pursuant to section 4081(a)(1)(B) to an unregistered,
such person 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 an amount equal to the greater of--
``(A) $10,000, or
``(B) $1 per gallon.
``(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.
``(d) Reasonable Cause Exception.--No penalty shall be
imposed under this section with respect to any failure if it
is shown that such failure is due to reasonable cause.''.
(2) Clerical amendment.--The table of sections for part I
of subchapter B of chapter
[[Page H2089]]
68, as amended by section 9232 of this Act, is amended by
adding at the end the following new item:
``Sec. 6718. Carrying taxable fuels by nonregistered pipelines or
vessels.''.
(c) Publication of Registered Persons.--Not later than June
30, 2004, the Secretary of the Treasury shall publish a list
of persons required to be registered under section 4101 of
the Internal Revenue Code of 1986.
(d) Effective Date.--The amendments made by subsections (a)
and (b) shall take effect on October 1, 2004.
SEC. 9242. DISPLAY OF REGISTRATION.
(a) In General.--Subsection (a) of section 4101 (relating
to registration) is amended--
(1) by striking ``Every'' and inserting the following:
``(1) In general.--Every'', and
(2) by adding at the end the following new paragraph:
``(2) Display of registration.--Every operator of a vessel
required by the Secretary to register under this section
shall display proof of registration through an electronic
identification device prescribed by the Secretary on each
vessel used by such operator to transport any taxable
fuel.''.
(b) Civil Penalty for Failure to Display Registration.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties), as amended by section
9241 of this Act, is amended by adding at the end the
following new section:
``SEC. 6719. FAILURE TO DISPLAY REGISTRATION OF VESSEL.
``(a) Failure to Display Registration.--Every operator of a
vessel who fails to display proof of registration pursuant to
section 4101(a)(2) shall pay a penalty of $500 for each such
failure. With respect to any vessel, only one penalty shall
be imposed by this section during any calendar month.
``(b) Multiple Violations.--In determining the penalty
under subsection (a) on any person, subsection (a) shall be
applied by increasing the amount in subsection (a) 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) Reasonable Cause Exception.--No penalty shall be
imposed under this section with respect to any failure if it
is shown that such failure is due to reasonable cause.''.
(2) Clerical amendment.--The table of sections for part I
of subchapter B of chapter 68, as amended by section 9241 of
this Act, is amended by adding at the end the following new
item:
``Sec. 6719. Failure to display registration of vessel.''.
(c) Effective Date.--The amendments made by this section
shall take effect on October 1, 2004.
SEC. 9243. REGISTRATION OF PERSONS WITHIN FOREIGN TRADE
ZONES, ETC.
(a) In General.--Section 4101(a), as amended by section
9242 of this Act, is amended by redesignating paragraph (2)
as paragraph (3), and by inserting after paragraph (1) the
following new paragraph:
``(2) Registration of persons within foreign trade zones,
etc.--The Secretary shall require registration by any person
which--
``(A) operates a terminal or refinery within a foreign
trade zone or within a customs bonded storage facility, or
``(B) holds an inventory position with respect to a taxable
fuel in such a terminal.''.
(b) Effective Date.--The amendments made by this section
shall take effect on October 1, 2004.
SEC. 9244. PENALTIES FOR FAILURE TO REGISTER AND FAILURE TO
REPORT.
(a) Increased Penalty.--Subsection (a) of section 7272
(relating to penalty for failure to register) is amended by
inserting ``($10,000 in the case of a failure to register
under section 4101)'' after ``$50''.
(b) Increased Criminal Penalty.--Section 7232 (relating to
failure to register under section 4101, false representations
of registration status, etc.) is amended by striking
``$5,000'' and inserting ``$10,000''.
(c) Assessable Penalty for Failure to Register.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties), as amended by section
9242 of this Act, is amended by adding at the end the
following new section:
``SEC. 6720. FAILURE TO REGISTER.
``(a) Failure to Register.--Every person who is required to
register under section 4101 and fails to do so shall pay a
penalty in addition to the tax (if any).
``(b) Amount of Penalty.--The amount of the penalty under
subsection (a) shall be--
``(1) $10,000 for each initial failure to register, and
``(2) $1,000 for each day thereafter such person fails to
register.
``(c) Reasonable Cause Exception.--No penalty shall be
imposed under this section with respect to any failure if it
is shown that such failure is due to reasonable cause.''.
(2) Clerical amendment.--The table of sections for part I
of subchapter B of chapter 68, as amended by section 9242 of
this Act, is amended by adding at the end the following new
item:
``Sec. 6720. Failure to register.''.
(d) Assessable Penalty for Failure to Report.--
(1) In general.--Part II of subchapter B of chapter 68
(relating to assessable penalties) is amended by adding at
the end the following new section:
``SEC. 6725. FAILURE TO REPORT INFORMATION UNDER SECTION
4101.
``(a) In General.--In the case of each failure described in
subsection (b) by any person with respect to a vessel or
facility, such person shall pay a penalty of $10,000 in
addition to the tax (if any).
``(b) Failures Subject to Penalty.--For purposes of
subsection (a), the failures described in this subsection
are--
``(1) any failure to make a report under section 4101(d) on
or before the date prescribed therefor, and
``(2) any failure to include all of the information
required to be shown on such report or the inclusion of
incorrect information.
``(c) Reasonable Cause Exception.--No penalty shall be
imposed under this section with respect to any failure if it
is shown that such failure is due to reasonable cause.''.
(2) Clerical amendment.--The table of sections for part II
of subchapter B of chapter 68 is amended by adding at the end
the following new item:
``Sec. 6725. Failure to report information under section 4101.''.
(e) Effective Date.--The amendments made by this section
shall apply to failures pending or occurring after September
30, 2004.
SEC. 9245. INFORMATION REPORTING FOR PERSONS CLAIMING CERTAIN
TAX BENEFITS.
(a) In General.--Subpart C of part III of subchapter A of
chapter 32 is amended by adding at the end the following new
section:
``SEC. 4104. INFORMATION REPORTING FOR PERSONS CLAIMING
CERTAIN TAX BENEFITS.
``(a) In General.--The Secretary shall require any person
claiming tax benefits--
``(1) under the provisions of section 34, 40, and 40A to
file a return at the time such person claims such benefits
(in such manner as the Secretary may prescribe), and
``(2) under the provisions of section 4041(b)(2), 6426, or
6427(e) to file a monthly return (in such manner as the
Secretary may prescribe).
``(b) Contents of Return.--Any return filed under this
section shall provide such information relating to such
benefits and the coordination of such benefits as the
Secretary may require to ensure the proper administration and
use of such benefits.
``(c) Enforcement.--With respect to any person described in
subsection (a) and subject to registration requirements under
this title, rules similar to rules of section 4222(c) shall
apply with respect to any requirement under this section.''.
(b) Conforming Amendment.--The table of sections for
subpart C of part III of subchapter A of chapter 32 is
amended by adding at the end the following new item:
``Sec. 4104. Information reporting for persons claiming certain tax
benefits.''.
(c) Effective Date.--The amendments made by this section
shall take effect on October 1, 2004.
SEC. 9246. ELECTRONIC REPORTING.
(a) In General.--Section 4101(d), as amended by section
9273 of this Act, is amended by adding at the end the
following new sentence: ``Any person who is required to
report under this subsection and who has 25 or more
reportable transactions in a month shall file such report in
electronic format.''.
(b) Effective Date.--The amendments made by this section
shall apply on October 1, 2004.
PART V--IMPORTS
SEC. 9251. TAX AT POINT OF ENTRY WHERE IMPORTER NOT
REGISTERED.
(a) Tax at Point of Entry Where Importer not Registered.--
(1) In general.--Subpart C of part III of subchapter A of
chapter 31, as amended by section 9245 of this Act, is
amended by adding at the end the following new section:
``SEC. 4105. TAX AT ENTRY WHERE IMPORTER NOT REGISTERED.
``(a) In General.--Any tax imposed under this part on any
person not registered under section 4101 for the entry of a
fuel into the United States shall be imposed at the time and
point of entry.
``(b) Enforcement of Assessment.--If any person liable for
any tax described under subsection (a) has not paid the tax
or posted a bond, the Secretary may--
``(1) seize the fuel on which the tax is due, or
``(2) detain any vehicle transporting such fuel,
until such tax is paid or such bond is filed.
``(c) Levy of Fuel.--If no tax has been paid or no bond has
been filed within 5 days from the date the Secretary seized
fuel pursuant to subsection (b), the Secretary may sell such
fuel as provided under section 6336.''.
(2) Conforming amendment.--The table of sections for
subpart C of part III of subchapter A of chapter 31 of the
Internal Revenue Code of 1986, as amended by section 9245 of
this Act, is amended by adding after the last item the
following new item:
``Sec. 4105. Tax at entry where importer not registered.''.
(b) Denial of Entry Where Tax not Paid.--The Secretary of
Homeland Security is authorized to deny entry into the United
States of any shipment of a fuel which is taxable under
section 4081 of the Internal Revenue Code of 1986 if the
person entering such shipment fails to pay the tax imposed
[[Page H2090]]
under such section or post a bond in accordance with the
provisions of section 4105 of such Code.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 9252. RECONCILIATION OF ON-LOADED CARGO TO ENTERED
CARGO.
(a) In General.--Subsection (a) of section 343 of the Trade
Act of 2002 is amended by inserting at the end the following
new paragraph:
``(4) In general.--Subject to paragraphs (2) and (3), not
later than 1 year after the enactment of this paragraph, the
Secretary of Homeland Security, together with the Secretary
of the Treasury, shall promulgate regulations providing for
the transmission to the Internal Revenue Service, through an
electronic data interchange system, of information pertaining
to cargo of taxable fuels (as defined in section 4083 of the
Internal Revenue Code of 1986) destined for importation into
the United States prior to such importation.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
PART VI--MISCELLANEOUS PROVISIONS
SEC. 9261. 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) is amended--
(1) by striking ``The term'' and inserting the following:
``(A) In general.--The term'', and
(2) by inserting at the end the following new subparagraph:
``(B) Liquid sold as diesel fuel.--The term `diesel fuel'
includes any liquid which is sold as or offered for sale as a
fuel in a diesel-powered highway vehicle or a diesel-powered
train.''.
(b) Conforming Amendments.--
(1) Section 40A(b)(1)(B), as amended by section 9103 of
this Act, is amended by striking ``4083(a)(3)'' and inserting
``4083(a)(3)(A)''.
(2) Section 6426(c)(3), as added by section 5102 of this
Act, is amended by striking ``4083(a)(3)'' and inserting
``4083(a)(3)(A)''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 9262. MODIFICATION OF ULTIMATE VENDOR REFUND CLAIMS WITH
RESPECT TO FARMING.
(a) In General.--
(1) Refunds.--Section 6427(l) is amended by adding at the
end the following new paragraph:
``(6) Registered vendors permitted to administer certain
claims for refund of diesel fuel and kerosene sold to
farmers.--
``(A) In general.--In the case of diesel fuel or kerosene
used on a farm for farming purposes (within the meaning of
section 6420(c)), paragraph (1) shall not apply to the
aggregate amount of such diesel fuel or kerosene if such
amount does not exceed 500 gallons (as determined under
subsection (i)(5)(A)(iii)).
``(B) Payment to ultimate vendor.--The amount which would
(but for subparagraph (A)) have been paid under paragraph (1)
with respect to any fuel shall be paid to the ultimate vendor
of such fuel, if such vendor--
``(i) is registered under section 4101, and
``(ii) meets the requirements of subparagraph (A), (B), or
(D) of section 6416(a)(1).''.
(2) Filing of claims.--Section 6427(i) is amended by
inserting at the end the following new paragraph:
``(5) Special rule for vendor refunds with respect to
farmers.--
``(A) In general.--A claim may be filed under subsection
(l)(6) by any person with respect to fuel sold by such person
for any period--
``(i) for which $200 or more ($100 or more in the case of
kerosene) is payable under subsection (l)(6),
``(ii) which is not less than 1 week, and
``(iii) which is for not more than 500 gallons for each
farmer for which there is a claim.
Notwithstanding subsection (l)(1), paragraph (3)(B) shall
apply to claims filed under the preceding sentence.
``(B) Time for filing claim.--No claim filed under this
paragraph shall be allowed unless filed on or before the last
day of the first quarter following the earliest quarter
included in the claim.''.
(3) Conforming amendments.--
(A) Section 6427(l)(5)(A) is amended to read as follows:
``(A) In general.--Paragraph (1) shall not apply to diesel
fuel or kerosene used by a State or local government.''.
(B) The heading for section 6427(l)(5) is amended by
striking ``farmers and''.
(b) Effective Date.--The amendment made by this section
shall apply to fuels sold for nontaxable use after the date
of the enactment of this Act.
SEC. 9263. TAXABLE FUEL REFUNDS FOR CERTAIN ULTIMATE VENDORS.
(a) In General.--Paragraph (4) of section 6416(a) (relating
to abatements, credits, and refunds) is amended to read as
follows:
``(4) Registered ultimate vendor to administer credits and
refunds of gasoline tax.--
``(A) In general.--For purposes of this subsection, if an
ultimate vendor purchases any gasoline on which tax imposed
by section 4081 has been paid and sells such gasoline to an
ultimate purchaser described in subparagraph (C) or (D) of
subsection (b)(2) (and such gasoline is for a use described
in such subparagraph), such ultimate vendor shall be treated
as the person (and the only person) who paid such tax, but
only if such ultimate vendor is registered under section
4101. For purposes of this subparagraph, if the sale of
gasoline is made by means of a credit card, the person
extending the credit to the ultimate purchaser shall be
deemed to be the ultimate vendor.
``(B) Timing of claims.--The procedure and timing of any
claim under subparagraph (A) shall be the same as for claims
under section 6427(i)(4), except that the rules of section
6427(i)(3)(B) regarding electronic claims shall not apply
unless the ultimate vendor has certified to the Secretary for
the most recent quarter of the taxable year that all ultimate
purchasers of the vendor are certified and entitled to a
refund under subparagraph (C) or (D) of subsection (b)(2).''.
(b) Credit Card Purchases of Diesel Fuel or Kerosene by
State and Local Governments.--Section 6427(l)(5)(C) (relating
to nontaxable uses of diesel fuel, kerosene, and aviation
fuel), as amended by section 9252 of this Act, is amended by
adding at the end the following new sentence: ``For purposes
of this subparagraph, if the sale of diesel fuel or kerosene
is made by means of a credit card, the person extending the
credit to the ultimate purchaser shall be deemed to be the
ultimate vendor.''.
(c) Effective Date.--The amendments made by this section
shall take effect on October 1, 2004.
SEC. 9264. TWO-PARTY EXCHANGES.
(a) In General.--Subpart C of part III of subchapter A of
chapter 32, as amended by section 9251 of this Act, is
amended by adding at the end the following new section:
``SEC. 4106. TWO-PARTY EXCHANGES.
``(a) In General.--In a two-party exchange, the delivering
person shall not be liable for the tax imposed under of
section 4081(a)(1)(A)(ii).
``(b) Two-Party Exchange.--The term `two-party exchange'
means a transaction, other than a sale, in which taxable fuel
is transferred from a delivering person registered under
section 4101 as a taxable fuel registrant to a receiving
person who is so registered where all of the following occur:
``(1) The transaction includes a transfer from the
delivering person, who holds the inventory position for
taxable fuel in the terminal as reflected in the records of
the terminal operator.
``(2) The exchange transaction occurs before or
contemporaneous with completion of removal across the rack
from the terminal by the receiving person.
``(3) The terminal operator in its books and records treats
the receiving person as the person that removes the product
across the terminal rack for purposes of reporting the
transaction to the Secretary.
``(4) The transaction is the subject of a written
contract.''.
(b) Conforming Amendment.--The table of sections for
subpart C of part III of subchapter A of chapter 32, as
amended by section 9251 of this Act, is amended by adding
after the last item the following new item:
``Sec. 4106. Two-party exchanges.''.
(c) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 9265. MODIFICATIONS OF TAX ON USE OF CERTAIN VEHICLES.
(a) No Proration of Tax Unless Vehicle Is Destroyed or
Stolen.--
(1) In general.--Section 4481(c) (relating to proration of
tax) is amended to read as follows:
``(c) Proration of Tax Where Vehicle Sold, Destroyed, or
Stolen.--
``(1) In general.--If in any taxable period a highway motor
vehicle is sold, 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 sold, 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) Conforming amendments.--
(A) Section 6156 (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 is
amended by striking the item relating to section 6156.
(b) Display of Tax Certificate.--Paragraph (2) of section
4481(d) (relating to one tax liability for period) is amended
to read as follows:
``(2) Display of tax certificate.--Every taxpayer which
pays the tax imposed under this section with respect to a
highway motor vehicle shall, not later than 1 month after the
due date of the return of tax with respect to each taxable
period, receive and display on such vehicle an electronic
identification device prescribed by the Secretary.''.
(c) Electronic Filing.--Section 4481, as amended by section
9001 of this Act, is amended by redesignating subsection (e)
as subsection (f) and by inserting after subsection (d) the
following new subsection:
``(e) Electronic Filing.--Any taxpayer who files a return
under this section with respect to 25 or more vehicles for
any taxable period shall file such return electronically.''.
[[Page H2091]]
(d) Repeal of Reduction in Tax for Certain Trucks.--Section
4483 of the Internal Revenue Code of 1986 is amended by
striking subsection (f).
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable
periods beginning after the date of the enactment of this
Act.
(2) Subsection (b).--The amendment made by subsection (b)
shall take effect on October 1, 2005.
SEC. 9266. DEDICATION OF REVENUES FROM CERTAIN PENALTIES TO
THE HIGHWAY TRUST FUND.
(a) In General.--Subsection (b) of section 9503 (relating
to transfer to Highway Trust Fund of amounts equivalent to
certain taxes), as amended by section 9001 of this Act, is
amended by redesignating paragraph (5) as paragraph (6) and
inserting after paragraph (4) the following new paragraph:
``(5) Certain penalties.--There are hereby appropriated to
the Highway Trust Fund amounts equivalent to the penalties
assessed under sections 6715, 6715A, 6717, 6718, 6719, 6720,
6725, 7232, and 7272 (but only with regard to penalties under
such section related to failure to register under section
4101).''.
(b) Conforming Amendments.--
(1) The heading of subsection (b) of section 9503 is
amended by inserting ``and Penalties'' after ``Taxes''.
(2) The heading of paragraph (1) of section 9503(b) is
amended by striking ``In general'' and inserting ``Certain
taxes''.
(c) Effective Date.--The amendments made by this section
shall apply to penalties assessed after October 1, 2004.
SEC. 9267. NONAPPLICATION OF EXPORT EXEMPTION TO DELIVERY OF
FUEL TO MOTOR VEHICLES REMOVED FROM UNITED
STATES.
(a) In General.--Section 4221(d)(2) (defining export) is
amended by adding at the end the following new sentence:
``Such term does not include the delivery of a taxable fuel
(as defined in section 4083(a)(1)) into a fuel tank of a
motor vehicle which is shipped or driven out of the United
States.''.
(b) Conforming Amendments.--
(1) Section 4041(g) (relating to other exemptions) is
amended by adding at the end the following new sentence:
``Paragraph (3) shall not apply to the sale for delivery of a
liquid into a fuel tank of a motor vehicle which is shipped
or driven out of the United States.''.
(2) Clause (iv) of section 4081(a)(1)(A) (relating to tax
on removal, entry, or sale) is amended by inserting ``or at a
duty-free sales enterprise (as defined in section 555(b)(8)
of the Tariff Act of 1930)'' after ``section 4101''.
(c) Effective Date.--The amendments made by this section
shall apply to sales or deliveries made after the date of the
enactment of this Act.
PART VII--TOTAL ACCOUNTABILITY
SEC. 9271. TOTAL ACCOUNTABILITY.
(a) Taxation of Reportable Liquids.--
(1) In general.--Section 4081(a), as amended by this Act,
is amended--
(A) by inserting ``or reportable liquid'' after ``taxable
fuel'' each place it appears, and
(B) by inserting ``such liquid'' after ``such fuel'' in
paragraph (1)(A)(iv).
(2) Rate of tax.--Subparagraph (A) of section 4081(a)(2),
as amended by section 9211 of this Act, is amended by
striking ``and'' at the end of clause (iii), by striking the
period at the end of clause (iv) and inserting ``, and'', and
by adding at the end the following new clause:
``(v) in the case of reportable liquids, the rate
determined under section 4083(c)(2).''.
(3) Exemption.--Section 4081(a)(1) is amended by adding at
the end the following new subparagraph:
``(C) Exemption for registered transfers of reportable
liquids.--The tax imposed by this paragraph shall not apply
to any removal, entry, or sale of a reportable liquid if--
``(i) such removal, entry, or sale is to a registered
person who certifies that such liquid will not be used as a
fuel or in the production of a fuel, or
``(ii) the sale is to the ultimate purchaser of such
liquid.''.
(4) Reportable liquids.--Section 4083, as amended by this
Act, is amended by redesignating subsections (c) and (d) (as
redesignated by section 5211 of this Act) as subsections (d)
and (e), respectively, and by inserting after subsection (b)
the following new section:
``(c) Reportable Liquid.--For purposes of this subpart--
``(1) In general.--The term `reportable liquid' means any
petroleum-based liquid other than a taxable fuel.
``(2) Taxation.--
``(A) Gasoline blend stocks and additives.--Gasoline blend
stocks and additives which are reportable liquids (as defined
in paragraph (1)) shall be subject to the rate of tax under
clause (i) of section 4081(a)(2)(A).
``(B) Other reportable liquids.--Any reportable liquid (as
defined in paragraph (1)) not described in subparagraph (A)
shall be subject to the rate of tax under clause (iii) of
section 4081(a)(2)(A).''.
(5) Conforming amendments.--
(A) Section 4081(e) is amended by inserting ``or reportable
liquid'' after ``taxable fuel''.
(B) Section 4083(d) (relating to certain use defined as
removal), as redesignated by paragraph (4), is amended by
inserting ``or reportable liquid'' after ``taxable fuel''.
(C) Section 4083(e)(1) (relating to administrative
authority), as redesignated by paragraph (4), is amended--
(i) in subparagraph (A)--
(I) by inserting ``or reportable liquid'' after ``taxable
fuel'', and
(II) by inserting ``or such liquid'' after ``such fuel''
each place it appears, and
(ii) in subparagraph (B), by inserting ``or any reportable
liquid'' after ``any taxable fuel''.
(D) Section 4101(a)(2), as added by section 5243 of this
Act, is amended by inserting ``or a reportable liquid'' after
``taxable fuel''.
(E) Section 4101(a)(3), as added by section 5242 of this
Act and redesignated by section 5243 of this Act, is amended
by inserting ``or any reportable liquid'' before the period
at the end.
(F) Section 4102 is amended by inserting ``or any
reportable liquid'' before the period at the end.
(G)(i) Section 6718, as added by section 5241 of this Act,
is amended--
(I) in subsection (a), by inserting ``or any reportable
liquid (as defined in section 4083(c)(1))'' after `` section
4083(a)(1))'', and
(II) in the heading, by inserting ``or reportable liquids''
after ``taxable fuel''.
(ii) The item relating to section 6718 in table of sections
for part I of subchapter B of chapter 68, as added by section
5241 of this Act, is amended by inserting ``or reportable
liquids'' after ``taxable fuels''.
(H) Section 6427(h) is amended to read as follows:
``(h) Gasoline Blend Stocks or Additives and Reportable
Liquids.--Except as provided in subsection (k)--
``(1) if any gasoline blend stock or additive (within the
meaning of section 4083(a)(2)) is not used by any person to
produce gasoline and such person establishes that the
ultimate use of such gasoline blend stock or additive is not
to produce gasoline, or
``(2) if any reportable liquid (within the meaning of
section 4083(c)(1)) is not used by any person to produce a
taxable fuel and such person establishes that the ultimate
use of such reportable liquid is not to produce a taxable
fuel,
then the Secretary shall pay (without interest) to such
person an amount equal to the aggregate amount of the tax
imposed on such person with respect to such gasoline blend
stock or additive or such reportable fuel.''.
(I) Section 7232, as amended by this Act, is amended by
inserting ``or reportable liquid (within the meaning of
section 4083(c)(1))'' after ``section 4083)''.
(J) Section 343 of the Trade Act of 2002, as amended by
section 9252 of this Act, is amended by inserting ``and
reportable liquids (as defined in section 4083(c)(1) of such
Code)'' after ``Internal Revenue Code of 1986)''.
(b) Dyed Diesel.--Section 4082(a) is amended by striking
``and'' at the end of paragraph (2), by striking the period
at the end of paragraph (3) and inserting ``and'', and by
inserting after paragraph (3) the following new paragraph:
``(4) which is removed, entered, or sold by a person
registered under section 4101.''.
(c) Effective Date.--The amendments made by this section
shall apply to reportable liquids (as defined in section
4083(c) of the Internal Revenue Code) and fuel sold or used
after September 30, 2004.
SEC. 9272. EXCISE TAX REPORTING.
(a) In General.--Part II of subchapter A of chapter 61 is
amended by adding at the end the following new subpart:
``Subpart E--Excise Tax Reporting
``SEC. 6025. RETURNS RELATING TO FUEL TAXES.
``(a) In General.--The Secretary shall require any person
liable for the tax imposed under Part III of subchapter A of
chapter 32 to file a return of such tax on a monthly basis.
``(b) Information Included With Return.--The Secretary
shall require any person filing a return under subsection (a)
to provide information regarding any refined product (whether
or not such product is taxable under this title) removed from
a terminal during the period for which such return
applies.''.
(b) Conforming Amendment.--The table of parts for
subchapter A of chapter 61 is amended by adding at the end
the following new item:
``Subpart E--Excise tax reporting''.
(c) Effective Date.--The amendments made by this section
shall apply to fuel sold or used after September 30, 2004.
SEC. 9273. INFORMATION REPORTING.
(a) In General.--Section 4101(d) is amended by adding at
the end the following new flush sentence: ``The Secretary
shall require reporting under the previous sentence with
respect to taxable fuels removed, entered, or transferred
from any refinery, pipeline, or vessel which is registered
under this section.''.
(b) Effective Date.--The amendment made by this section
shall apply on October 1, 2004.
Subtitle D--Definition of Highway Vehicle
SEC. 9301. EXEMPTION FROM CERTAIN EXCISE TAXES FOR MOBILE
MACHINERY.
(a) Exemption From Tax on Heavy Trucks and Trailers Sold at
Retail.--
(1) In general.--Section 4053 (relating to exemptions) is
amended by adding at the end the following new paragraph:
``(8) Mobile machinery.--Any vehicle which consists of a
chassis--
[[Page H2092]]
``(A) to which there has been permanently mounted (by
welding, bolting, riveting, or other means) machinery or
equipment to perform a construction, manufacturing,
processing, farming, mining, drilling, timbering, or similar
operation if the operation of the machinery or equipment is
unrelated to transportation on or off the public highways,
``(B) which has been specially designed to serve only as a
mobile carriage and mount (and a power source, where
applicable) for the particular machinery or equipment
involved, whether or not such machinery or equipment is in
operation, and
``(C) which, by reason of such special design, could not,
without substantial structural modification, be used as a
component of a vehicle designed to perform a function of
transporting any load other than that particular machinery or
equipment or similar machinery or equipment requiring such a
specially designed chassis.''.
(2) Effective date.--The amendment made by this subsection
shall take effect on the day after the date of the enactment
of this Act.
(b) Exemption From Tax on Use of Certain Vehicles.--
(1) In general.--Section 4483 (relating to exemptions) is
amended by redesignating subsection (g) as subsection (h) and
by inserting after subsection (f) the following new
subsection:
``(g) Exemption for Mobile Machinery.--No tax shall be
imposed by section 4481 on the use of any vehicle described
in section 4053(8).''.
(2) Effective date.--The amendments made by this subsection
shall take effect on the day after the date of the enactment
of this Act.
(d) Exemption From Fuel Taxes.--
(1) In general.--Section 6421(e)(2) (defining off-highway
business use) is amended by adding at the end the following
new subparagraph:
``(C) Uses in mobile machinery.--
``(i) In general.--The term `off-highway business use'
shall include any use in a vehicle which meets the
requirements described in clause (ii).
``(ii) Requirements for mobile machinery.--The requirements
described in this clause are--
``(I) the design-based test, and
``(II) the use-based test.
``(iii) Design-based test.--For purposes of clause (ii)(I),
the design-based test is met if the vehicle consists of a
chassis--
``(I) to which there has been permanently mounted (by
welding, bolting, riveting, or other means) machinery or
equipment to perform a construction, manufacturing,
processing, farming, mining, drilling, timbering, or similar
operation if the operation of the machinery or equipment is
unrelated to transportation on or off the public highways,
``(II) which has been specially designed to serve only as a
mobile carriage and mount (and a power source, where
applicable) for the particular machinery or equipment
involved, whether or not such machinery or equipment is in
operation, and
``(III) which, by reason of such special design, could not,
without substantial structural modification, be used as a
component of a vehicle designed to perform a function of
transporting any load other than that particular machinery or
equipment or similar machinery or equipment requiring such a
specially designed chassis.
``(iv) Use-based test.--For purposes of clause (ii)(II),
the use-based test is met if the use of the vehicle on public
highways was less than 5,000 miles during the taxpayer's
taxable year.
``(v) Special rule for use by certain tax-exempt
organizations.--In the case of any use in a vehicle by an
organization which is described in section 501(c) and exempt
from tax under section 501(a), clause (ii) shall be applied
without regard to subclause (II) thereof.''.
(2) Annual refund of tax paid.--Section 6427(i)(2)
(relating to exceptions) is amended by adding at the end the
following new subparagraph:
``(C) Nonapplication of paragraph.--This paragraph shall
not apply to any fuel used in any off-highway business use
described in section 6421(e)(2)(C).''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 9302. MODIFICATION OF DEFINITION OF OFF-HIGHWAY VEHICLE.
(a) In General.--Section 7701(a) (relating to definitions)
is amended by adding at the end the following new paragraph:
``(48) Off-highway vehicles.--
``(A) Off-highway transportation vehicles.--
``(i) In general.--A vehicle shall not be treated as a
highway vehicle if such vehicle is specially designed for the
primary function of transporting a particular type of load
other than over the public highway and because of this
special design such vehicle's capability to transport a load
over the public highway is substantially limited or impaired.
``(ii) Determination of vehicle's design.--For purposes of
clause (i), a vehicle's design is determined solely on the
basis of its physical characteristics.
``(iii) Determination of substantial limitation or
impairment.--For purposes of clause (i), in determining
whether substantial limitation or impairment exists, account
may be taken of factors such as the size of the vehicle,
whether such vehicle is subject to the licensing, safety, and
other requirements applicable to highway vehicles, and
whether such vehicle can transport a load at a sustained
speed of at least 25 miles per hour. It is immaterial that a
vehicle can transport a greater load off the public highway
than such vehicle is permitted to transport over the public
highway.
``(B) Nontransportation trailers and semitrailers.--A
trailer or semitrailer shall not be treated as a highway
vehicle if it is specially designed to function only as an
enclosed stationary shelter for the carrying on of an off-
highway function at an off-highway site.''.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendment made by this section shall take effect on the date
of the enactment of this Act.
(2) Fuel taxes.--With respect to taxes imposed under
subchapter B of chapter 31 and part III of subchapter A of
chapter 32, the amendment made by this section shall apply to
taxable periods beginning after the date of the enactment of
this Act.
Subtitle E--Miscellaneous Provisions
SEC. 9401. DEDICATION OF GAS GUZZLER TAX TO HIGHWAY TRUST
FUND.
(a) In General.--Section 9503(b)(1) (relating to transfer
to Highway Trust Fund of amounts equivalent to certain
taxes), as amended by section 9101 of this Act, is amended by
redesignating subparagraphs (C), (D), and (E) as
subparagraphs (D), (E), and (F), respectively, and by
inserting after subparagraph (B) the following new
subparagraph:
``(C) section 4064 (relating to gas guzzler tax),''.
(b) Uniform Application of Tax.--Subparagraph (A) of
section 4064(b)(1) (defining automobile) is amended by
striking the second sentence.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 9402. MOTOR FUEL TAX ENFORCEMENT ADVISORY COMMISSION.
(a) Establishment.--There is established a Motor Fuel Tax
Enforcement Advisory Commission (in this section referred to
as the ``Commission'').
(b) Function.--The Commission shall--
(1) review motor fuel revenue collections, historical and
current;
(2) review the progress of investigations;
(3) develop and review legislative proposals with respect
to motor fuel taxes;
(4) monitor the progress of administrative regulation
projects relating to motor fuel taxes;
(5) review the results of Federal and State agency
cooperative efforts regarding motor fuel taxes;
(6) review the results of Federal interagency cooperative
efforts regarding motor fuel taxes; and
(7) evaluate and make recommendations regarding--
(A) the effectiveness of existing Federal enforcement
programs regarding motor fuel taxes,
(B) enforcement personnel allocation, and
(C) proposals for regulatory projects, legislation, and
funding.
(c) Membership.--
(1) Appointment.--The Commission shall be composed of the
following representatives appointed by the Chairmen and the
Ranking Members of the Committee on Finance of the Senate and
the Committee on Ways and Means of the House of
Representatives:
(A) At least 1 representative from each of the following
Federal entities: the Department of Homeland Security, the
Department of Transportation--Office of Inspector General,
the Federal Highway Administration, the Department of
Defense, and the Department of Justice.
(B) At least 1 representative from the Federation of State
Tax Administrators.
(C) At least 1 representative from any State department of
transportation.
(D) 2 representatives from the highway construction
industry.
(E) 5 representatives from industries relating to fuel
distribution -- refiners (2 representatives), distributors (1
representative), pipelines (1 representative), and terminal
operators (2 representatives).
(F) 1 representative from the retail fuel industry.
(G) 2 representatives from the staff of the Committee on
Finance of the Senate and 2 representatives from the staff of
the Committee on Ways and Means of the House of
Representatives.
(2) Terms.--Members shall be appointed for the life of the
Commission.
(3) Vacancies.--A vacancy in the Commission shall be filled
in the manner in which the original appointment was made.
(4) Travel expenses.--Members shall serve without pay but
shall receive travel expenses, including per diem in lieu of
subsistence, in accordance with sections 5702 and 5703 of
title 5, United States Code.
(5) Chairman.--The Chairman of the Commission shall be
elected by the members.
(d) Funding.--Such sums as are necessary shall be available
from the Highway Trust fund for the expenses of the
Commission.
(e) Consultation.--Upon request of the Commission,
representatives of the Department of the Treasury and the
Internal Revenue Service shall be available for consultation
to assist the Commission in carrying out its duties under
this section.
(f) Obtaining Data.--The Commission may secure directly
from any department or
[[Page H2093]]
agency of the United States, information (other than
information required by any law to be kept confidential by
such department or agency) necessary for the Commission to
carry out its duties under this section. Upon request of the
Commission, the head of that department or agency shall
furnish such nonconfidential information to the Commission.
The Commission shall also gather evidence through such means
as it may deem appropriate, including through holding
hearings and soliciting comments by means of Federal Register
notices.
(g) Termination.--The Commission shall terminate after
September 30, 2009.
SEC. 9403. TREASURY STUDY OF FUEL TAX COMPLIANCE AND
INTERAGENCY COOPERATION.
(a) In General.--Not later than January 31, 2006, the
Secretary of the Treasury shall submit to the Committee on
Finance of the Senate and the Committee on Ways and Means of
the House of Representatives a report regarding fuel tax
enforcement which shall include the information and analysis
specified in subsections (b) and (c) and any other
information and recommendations the Secretary of the Treasury
may deem appropriate.
(b) Audits.--With respect to audits conducted by the
Internal Revenue Service, the report required under
subsection (a) shall include--
(1) the number and geographic distribution of audits
conducted annually, by fiscal year, between October 1, 2001,
and September 30, 2005;
(2) the total volume involved for each of the taxable fuels
covered by such audits and a comparison to the annual
production of such fuels;
(3) the staff hours and number of personnel devoted to the
audits per year; and
(4) the results of such audits by year, including total tax
collected, total penalties collected, and number of referrals
for criminal prosecution.
(c) Enforcement Activities.--With respect to enforcement
activities, the report required under subsection (a) shall
include--
(1) the number and geographic distribution of criminal
investigations and prosecutions annually, by fiscal year,
between October 1, 2001, and September 30, 2005, and the
results of such investigations and prosecutions;
(2) to the extent such investigations and prosecutions
involved other agencies, State or Federal, a breakdown by
agency of the number of joint investigations involved;
(3) an assessment of the effectiveness of joint action and
cooperation between the Department of the Treasury and other
Federal and State agencies, including a discussion of the
ability and need to share information across agencies for
both civil and criminal Federal tax enforcement and
enforcement of State or Federal laws relating to fuels;
(4) the staff hours and number of personnel devoted to
criminal investigations and prosecutions per year;
(5) the staff hours and number of personnel devoted to
administrative collection of fuel taxes; and
(6) the results of administrative collection efforts
annually, by fiscal year, between October 1, 2001, and
September 30, 2005.
SEC. 9404. TREASURY STUDY OF HIGHWAY FUELS USED BY TRUCKS FOR
NON-TRANSPORTATION PURPOSES.
(a) Study.--The Secretary of the Treasury shall conduct a
study regarding the use of highway motor fuel by trucks that
is not used for the propulsion of the vehicle. As part of
such study--
(1) in the case of vehicles carrying equipment that is
unrelated to the transportation function of the vehicle--
(A) the Secretary of the Treasury, in consultation with the
Secretary of Transportation, and with public notice and
comment, shall determine the average annual amount of tax
paid fuel consumed per vehicle, by type of vehicle, used by
the propulsion engine to provide the power to operate the
equipment attached to the highway vehicle, and
(B) the Secretary of the Treasury shall review the
technical and administrative feasibility of exempting such
nonpropulsive use of highway fuels for the highway motor
fuels excise taxes,
(2) in the case where non-transportation equipment is run
by a separate motor--
(A) the Secretary of the Treasury shall determine the
annual average amount of fuel exempted from tax in the use of
such equipment by equipment type, and
(B) the Secretary of the Treasury shall review issues of
administration and compliance related to the present-law
exemption provided for such fuel use, and
(3) the Secretary of the Treasury shall--
(A) estimate the amount of taxable fuel consumed by trucks
and the emissions of various pollutants due to the long-term
idling of diesel engines, and
(B) determine the cost of reducing such long-term idling
through the use of plug-ins at truck stops, auxiliary power
units, or other technologies.
(b) Report.--Not later than January 1, 2006, the Secretary
of the Treasury shall report the findings of the study
required under subsection (a) to the Committee on Finance of
the Senate and the Committee on Ways and Means of the House
of Representatives.
SEC. 9405. TREATMENT OF EMPLOYER-PROVIDED TRANSIT AND VAN
POOLING BENEFITS.
(a) In General.--Subparagraph (A) of section 132(f)(2)
(relating to limitation on exclusion) is amended by striking
``$100'' and inserting ``$120''.
(b) Inflation Adjustment Conforming Amendments.--The last
sentence of section 132(f)(6)(A) (relating to inflation
adjustment) is amended--
(1) by striking ``2002'' and inserting ``2005'', and
(2) by striking ``2001'' and inserting ``2004''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2004.
SEC. 9406. STUDY OF INCENTIVES FOR PRODUCTION OF BIODIESEL.
(a) Study.--The General Comptroller of the United States
shall conduct a study related to biodiesel fuels and the tax
credit for biodiesel fuels established under this Act. Such
study shall include--
(1) an assessment on whether such credit provides
sufficient assistance to the producers of biodiesel fuel to
establish the fuel as a viable energy alternative in the
current market place,
(2) an assessment on how long such credit or similar
subsidy would have to remain in effect before biodiesel fuel
can compete in the market place without such assistance,
(3) a cost-benefit analysis of such credit, comparing the
cost of the credit in forgone revenue to the benefits of
lower fuel costs for consumers, increased profitability for
the biodiesel industry, increased farm income, reduced
program outlays from the Department of Agriculture, and the
improved environmental conditions through the use of
biodiesel fuel, and
(4) an assessment on whether such credit results in any
unintended consequences for unrelated industries, including
the impact, if any, on the glycerin market.
(b) Report.--Not later than 2 years after the date of the
enactment of this Act, the Comptroller General of the United
States shall report the findings of the study required under
subsection (a) to the Committee on Finance of the Senate and
the Committee on Ways and Means of the House of
Representatives.
Subtitle F--Provisions Designed to Curtail Tax Shelters
SEC. 9501. CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.
(a) In General.--Section 7701 is amended by redesignating
subsection (m) as subsection (n) and by inserting after
subsection (l) the following new subsection:
``(m) Clarification of Economic Substance Doctrine; Etc.--
``(1) General rules.--
``(A) In general.--In applying the economic substance
doctrine, the determination of whether a transaction has
economic substance shall be made as provided in this
paragraph.
``(B) Definition of economic substance.--For purposes of
subparagraph (A)--
``(i) In general.--A transaction has economic substance
only if--
``(I) the transaction changes in a meaningful way (apart
from Federal tax effects and, if there are any Federal tax
effects, also apart from any foreign, State, or local tax
effects) the taxpayer's economic position, and
``(II) the taxpayer has a substantial nontax purpose for
entering into such transaction and the transaction is a
reasonable means of accomplishing such purpose.
``(ii) Special rule where taxpayer relies on profit
potential.--A transaction shall not be treated as having
economic substance by reason of having a potential for profit
unless--
``(I) the present value of the reasonably expected pre-tax
profit from the transaction is substantial in relation to the
present value of the expected net tax benefits that would be
allowed if the transaction were respected, and
``(II) the reasonably expected pre-tax profit from the
transaction exceeds a risk-free rate of return.
``(C) Treatment of fees and foreign taxes.--Fees and other
transaction expenses and foreign taxes shall be taken into
account as expenses in determining pre-tax profit under
subparagraph (B)(ii).
``(2) Special rules for transactions with tax-indifferent
parties.--
``(A) Special rules for financing transactions.--The form
of a transaction which is in substance the borrowing of money
or the acquisition of financial capital directly or
indirectly from a tax-indifferent party shall not be
respected if the present value of the deductions to be
claimed with respect to the transaction is substantially in
excess of the present value of the anticipated economic
returns of the person lending the money or providing the
financial capital. A public offering shall be treated as a
borrowing, or an acquisition of financial capital, from a
tax-indifferent party if it is reasonably expected that at
least 50 percent of the offering will be placed with tax-
indifferent parties.
``(B) Artificial income shifting and basis adjustments.--
The form of a transaction with a tax-indifferent party shall
not be respected if--
``(i) it results in an allocation of income or gain to the
tax-indifferent party in excess of such party's economic
income or gain, or
``(ii) it results in a basis adjustment or shifting of
basis on account of overstating the income or gain of the
tax-indifferent party.
``(3) Definitions and special rules.--For purposes of this
subsection--
``(A) Economic substance doctrine.--The term `economic
substance doctrine' means the common law doctrine under which
tax benefits under subtitle A with respect to a
[[Page H2094]]
transaction are not allowable if the transaction does not
have economic substance or lacks a business purpose.
``(B) Tax-indifferent party.--The term `tax-indifferent
party' means any person or entity not subject to tax imposed
by subtitle A. A person shall be treated as a tax-indifferent
party with respect to a transaction if the items taken into
account with respect to the transaction have no substantial
impact on such person's liability under subtitle A.
``(C) Substantial nontax purpose.--In applying subclause
(II) of paragraph (1)(B)(i), a purpose of achieving a
financial accounting benefit shall not be taken into account
in determining whether a transaction has a substantial nontax
purpose if the origin of such financial accounting benefit is
a reduction of income tax.
``(D) Exception for personal transactions of individuals.--
In the case of an individual, this subsection shall apply
only to transactions entered into in connection with a trade
or business or an activity engaged in for the production of
income.
``(E) Treatment of lessors.--In applying subclause (I) of
paragraph (1)(B)(ii) to the lessor of tangible property
subject to a lease, the expected net tax benefits shall not
include the benefits of depreciation, or any tax credit, with
respect to the leased property and subclause (II) of
paragraph (1)(B)(ii) shall be disregarded in determining
whether any of such benefits are allowable.
``(4) Other common law doctrines not affected.--Except as
specifically provided in this subsection, the provisions of
this subsection shall not be construed as altering or
supplanting any other rule of law, and the requirements of
this subsection shall be construed as being in addition to
any such other rule of law.
``(5) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this subsection. Such regulations may include
exemptions from the application of this subsection.''
(b) Effective Date.--The amendments made by this section
shall apply to transactions entered into after February 13,
2003.
SEC. 9502. PENALTY FOR FAILING TO DISCLOSE REPORTABLE
TRANSACTION.
(a) In General.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6707 the following new section:
``SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE REPORTABLE
TRANSACTION INFORMATION WITH RETURN OR
STATEMENT.
``(a) Imposition of Penalty.--Any person who fails to
include on any return or statement any information with
respect to a reportable transaction which is required under
section 6011 to be included with such return or statement
shall pay a penalty in the amount determined under subsection
(b).
``(b) Amount of Penalty.--
``(1) In general.--Except as provided in paragraphs (2) and
(3), the amount of the penalty under subsection (a) shall be
$50,000.
``(2) Listed transaction.--The amount of the penalty under
subsection (a) with respect to a listed transaction shall be
$100,000.
``(3) Increase in penalty for large entities and high net
worth individuals.--
``(A) In general.--In the case of a failure under
subsection (a) by--
``(i) a large entity, or
``(ii) a high net worth individual,
the penalty under paragraph (1) or (2) shall be twice the
amount determined without regard to this paragraph.
``(B) Large entity.--For purposes of subparagraph (A), the
term `large entity' means, with respect to any taxable year,
a person (other than a natural person) with gross receipts in
excess of $10,000,000 for the taxable year in which the
reportable transaction occurs or the preceding taxable year.
Rules similar to the rules of paragraph (2) and subparagraphs
(B), (C), and (D) of paragraph (3) of section 448(c) shall
apply for purposes of this subparagraph.
``(C) High net worth individual.--For purposes of
subparagraph (A), the term `high net worth individual' means,
with respect to a reportable transaction, a natural person
whose net worth exceeds $2,000,000 immediately before the
transaction.
``(c) Definitions.--For purposes of this section--
``(1) Reportable transaction.--The term `reportable
transaction' means any transaction with respect to which
information is required to be included with a return or
statement because, as determined under regulations prescribed
under section 6011, such transaction is of a type which the
Secretary determines as having a potential for tax avoidance
or evasion.
``(2) Listed transaction.--Except as provided in
regulations, the term `listed transaction' means a reportable
transaction which is the same as, or substantially similar
to, a transaction specifically identified by the Secretary as
a tax avoidance transaction for purposes of section 6011.
``(d) Authority to Rescind Penalty.--
``(1) In general.--The Commissioner of Internal Revenue may
rescind all or any portion of any penalty imposed by this
section with respect to any violation if--
``(A) the violation is with respect to a reportable
transaction other than a listed transaction,
``(B) the person on whom the penalty is imposed has a
history of complying with the requirements of this title,
``(C) it is shown that the violation is due to an
unintentional mistake of fact;
``(D) imposing the penalty would be against equity and good
conscience, and
``(E) rescinding the penalty would promote compliance with
the requirements of this title and effective tax
administration.
``(2) Discretion.--The exercise of authority under
paragraph (1) shall be at the sole discretion of the
Commissioner and may be delegated only to the head of the
Office of Tax Shelter Analysis. The Commissioner, in the
Commissioner's sole discretion, may establish a procedure to
determine if a penalty should be referred to the Commissioner
or the head of such Office for a determination under
paragraph (1).
``(3) No appeal.--Notwithstanding any other provision of
law, any determination under this subsection may not be
reviewed in any administrative or judicial proceeding.
``(4) Records.--If a penalty is rescinded under paragraph
(1), the Commissioner shall place in the file in the Office
of the Commissioner the opinion of the Commissioner or the
head of the Office of Tax Shelter Analysis with respect to
the determination, including--
``(A) the facts and circumstances of the transaction,
``(B) the reasons for the rescission, and
``(C) the amount of the penalty rescinded.
``(5) Report.--The Commissioner shall each year report to
the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate--
``(A) a summary of the total number and aggregate amount of
penalties imposed, and rescinded, under this section, and
``(B) a description of each penalty rescinded under this
subsection and the reasons therefor.
``(e) Penalty Reported to SEC.--In the case of a person--
``(1) which is required to file periodic reports under
section 13 or 15(d) of the Securities Exchange Act of 1934 or
is required to be consolidated with another person for
purposes of such reports, and
``(2) which--
``(A) is required to pay a penalty under this section with
respect to a listed transaction,
``(B) is required to pay a penalty under section 6662A with
respect to any reportable transaction at a rate prescribed
under section 6662A(c), or
``(C) is required to pay a penalty under section 6662B with
respect to any noneconomic substance transaction,
the requirement to pay such penalty shall be disclosed in
such reports filed by such person for such periods as the
Secretary shall specify. Failure to make a disclosure in
accordance with the preceding sentence shall be treated as a
failure to which the penalty under subsection (b)(2) applies.
``(f) Coordination With Other Penalties.--The penalty
imposed by this section is in addition to any penalty imposed
under this title.''.
(b) Conforming Amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by inserting after
the item relating to section 6707 the following:
``Sec. 6707A. Penalty for failure to include reportable transaction
information with return or statement.''.
(c) Effective Date.--The amendments made by this section
shall apply to returns and statements the due date for which
is after the date of the enactment of this Act.
SEC. 9503. ACCURACY-RELATED PENALTY FOR LISTED TRANSACTIONS
AND OTHER REPORTABLE TRANSACTIONS HAVING A
SIGNIFICANT TAX AVOIDANCE PURPOSE.
(a) In General.--Subchapter A of chapter 68 is amended by
inserting after section 6662 the following new section:
``SEC. 6662A. IMPOSITION OF ACCURACY-RELATED PENALTY ON
UNDERSTATEMENTS WITH RESPECT TO REPORTABLE
TRANSACTIONS.
``(a) Imposition of Penalty.--If a taxpayer has a
reportable transaction understatement for any taxable year,
there shall be added to the tax an amount equal to 20 percent
of the amount of such understatement.
``(b) Reportable Transaction Understatement.--For purposes
of this section--
``(1) In general.--The term `reportable transaction
understatement' means the sum of--
``(A) the product of--
``(i) the amount of the increase (if any) in taxable income
which results from a difference between the proper tax
treatment of an item to which this section applies and the
taxpayer's treatment of such item (as shown on the taxpayer's
return of tax), and
``(ii) the highest rate of tax imposed by section 1
(section 11 in the case of a taxpayer which is a
corporation), and
``(B) the amount of the decrease (if any) in the aggregate
amount of credits determined under subtitle A which results
from a difference between the taxpayer's treatment of an item
to which this section applies (as shown on the taxpayer's
return of tax) and the proper tax treatment of such item.
For purposes of subparagraph (A), any reduction of the excess
of deductions allowed for the taxable year over gross income
for such year, and any reduction in the amount of capital
losses which would (without regard to section 1211) be
allowed for such year, shall be treated as an increase in
taxable income.
``(2) Items to which section applies.--This section shall
apply to any item which is attributable to--
[[Page H2095]]
``(A) any listed transaction, and
``(B) any reportable transaction (other than a listed
transaction) if a significant purpose of such transaction is
the avoidance or evasion of Federal income tax.
``(c) Higher Penalty for Nondisclosed Listed and Other
Avoidance Transactions.--
``(1) In general.--Subsection (a) shall be applied by
substituting `30 percent' for `20 percent' with respect to
the portion of any reportable transaction understatement with
respect to which the requirement of section 6664(d)(2)(A) is
not met.
``(2) Rules applicable to compromise of penalty.--
``(A) In general.--If the 1st letter of proposed deficiency
which allows the taxpayer an opportunity for administrative
review in the Internal Revenue Service Office of Appeals has
been sent with respect to a penalty to which paragraph (1)
applies, only the Commissioner of Internal Revenue may
compromise all or any portion of such penalty.
``(B) Applicable rules.--The rules of paragraphs (3), (4),
and (5) of section 6707A(d) shall apply for purposes of
subparagraph (A).
``(d) Definitions of Reportable and Listed Transactions.--
For purposes of this section, the terms `reportable
transaction' and `listed transaction' have the respective
meanings given to such terms by section 6707A(c).
``(e) Special Rules.--
``(1) Coordination with penalties, etc., on other
understatements.--In the case of an understatement (as
defined in section 6662(d)(2))--
``(A) the amount of such understatement (determined without
regard to this paragraph) shall be increased by the aggregate
amount of reportable transaction understatements and
noneconomic substance transaction understatements for
purposes of determining whether such understatement is a
substantial understatement under section 6662(d)(1), and
``(B) the addition to tax under section 6662(a) shall apply
only to the excess of the amount of the substantial
understatement (if any) after the application of subparagraph
(A) over the aggregate amount of reportable transaction
understatements and noneconomic substance transaction
understatements.
``(2) Coordination with other penalties.--
``(A) Application of fraud penalty.--References to an
underpayment in section 6663 shall be treated as including
references to a reportable transaction understatement and a
noneconomic substance transaction understatement.
``(B) No double penalty.--This section shall not apply to
any portion of an understatement on which a penalty is
imposed under section 6662B or 6663.
``(3) Special rule for amended returns.--Except as provided
in regulations, in no event shall any tax treatment included
with an amendment or supplement to a return of tax be taken
into account in determining the amount of any reportable
transaction understatement or noneconomic substance
transaction understatement if the amendment or supplement is
filed after the earlier of the date the taxpayer is first
contacted by the Secretary regarding the examination of the
return or such other date as is specified by the Secretary.
``(4) Noneconomic substance transaction understatement.--
For purposes of this subsection, the term `noneconomic
substance transaction understatement' has the meaning given
such term by section 6662B(c).
``(5) Cross reference.--For reporting of section 6662A(c)
penalty to the Securities and Exchange Commission, see
section 6707A(e).''
(b) Determination of Other Understatements.--Subparagraph
(A) of section 6662(d)(2) is amended by adding at the end the
following flush sentence: ``The excess under the preceding
sentence shall be determined without regard to items to which
section 6662A applies and without regard to items with
respect to which a penalty is imposed by section 6662B.''
(c) Reasonable Cause Exception.--
(1) In general.--Section 6664 is amended by adding at the
end the following new subsection:
``(d) Reasonable Cause Exception for Reportable Transaction
Understatements.--
``(1) In general.--No penalty shall be imposed under
section 6662A with respect to any portion of a reportable
transaction understatement if it is shown that there was a
reasonable cause for such portion and that the taxpayer acted
in good faith with respect to such portion.
``(2) Special rules.--Paragraph (1) shall not apply to any
reportable transaction understatement unless--
``(A) the relevant facts affecting the tax treatment of the
item are adequately disclosed in accordance with the
regulations prescribed under section 6011,
``(B) there is or was substantial authority for such
treatment, and
``(C) the taxpayer reasonably believed that such treatment
was more likely than not the proper treatment.
A taxpayer failing to adequately disclose in accordance with
section 6011 shall be treated as meeting the requirements of
subparagraph (A) if the penalty for such failure was
rescinded under section 6707A(d).
``(3) Rules relating to reasonable belief.--For purposes of
paragraph (2)(C)--
``(A) In general.--A taxpayer shall be treated as having a
reasonable belief with respect to the tax treatment of an
item only if such belief--
``(i) is based on the facts and law that exist at the time
the return of tax which includes such tax treatment is filed,
and
``(ii) relates solely to the taxpayer's chances of success
on the merits of such treatment and does not take into
account the possibility that a return will not be audited,
such treatment will not be raised on audit, or such treatment
will be resolved through settlement if it is raised.
``(B) Certain opinions may not be relied upon.--
``(i) In general.--An opinion of a tax advisor may not be
relied upon to establish the reasonable belief of a taxpayer
if--
``(I) the tax advisor is described in clause (ii), or
``(II) the opinion is described in clause (iii).
``(ii) Disqualified tax advisors.--A tax advisor is
described in this clause if the tax advisor--
``(I) is a material advisor (within the meaning of section
6111(b)(1)) who participates in the organization, management,
promotion, or sale of the transaction or who is related
(within the meaning of section 267(b) or 707(b)(1)) to any
person who so participates,
``(II) is compensated directly or indirectly by a material
advisor with respect to the transaction,
``(III) has a fee arrangement with respect to the
transaction which is contingent on all or part of the
intended tax benefits from the transaction being sustained,
or
``(IV) as determined under regulations prescribed by the
Secretary, has a continuing financial interest with respect
to the transaction.
``(iii) Disqualified opinions.--For purposes of clause (i),
an opinion is disqualified if the opinion--
``(I) is based on unreasonable factual or legal assumptions
(including assumptions as to future events),
``(II) unreasonably relies on representations, statements,
findings, or agreements of the taxpayer or any other person,
``(III) does not identify and consider all relevant facts,
or
``(IV) fails to meet any other requirement as the Secretary
may prescribe.''
(2) Conforming amendment.--The heading for subsection (c)
of section 6664 is amended by inserting ``for Underpayments''
after ``Exception''.
(d) Conforming Amendments.--
(1) Subparagraph (C) of section 461(i)(3) is amended by
striking ``section 6662(d)(2)(C)(iii)'' and inserting
``section 1274(b)(3)(C)''.
(2) Paragraph (3) of section 1274(b) is amended--
(A) by striking ``(as defined in section
6662(d)(2)(C)(iii))'' in subparagraph (B)(i), and
(B) by adding at the end the following new subparagraph:
``(C) Tax shelter.--For purposes of subparagraph (B), the
term `tax shelter' means--
``(i) a partnership or other entity,
``(ii) any investment plan or arrangement, or
``(iii) any other plan or arrangement,
if a significant purpose of such partnership, entity, plan,
or arrangement is the avoidance or evasion of Federal income
tax.''
(3) Section 6662(d)(2) is amended by striking subparagraphs
(C) and (D).
(4) Section 6664(c)(1) is amended by striking ``this part''
and inserting ``section 6662 or 6663''.
(5) Subsection (b) of section 7525 is amended by striking
``section 6662(d)(2)(C)(iii)'' and inserting ``section
1274(b)(3)(C)''.
(6)(A) The heading for section 6662 is amended to read as
follows:
``SEC. 6662. IMPOSITION OF ACCURACY-RELATED PENALTY ON
UNDERPAYMENTS. ''
(B) The table of sections for part II of subchapter A of
chapter 68 is amended by striking the item relating to
section 6662 and inserting the following new items:
``Sec. 6662. Imposition of accuracy-related penalty on underpayments.
``Sec. 6662A. Imposition of accuracy-related penalty on understatements
with respect to reportable transactions.''
(e) Effective Date.--The amendments made by this section
shall apply to taxable years ending after the date of the
enactment of this Act.
SEC. 9504. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO
TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.
(a) In General.--Subchapter A of chapter 68 is amended by
inserting after section 6662A the following new section:
``SEC. 6662B. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO
TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.
``(a) Imposition of Penalty.--If a taxpayer has an
noneconomic substance transaction understatement for any
taxable year, there shall be added to the tax an amount equal
to 40 percent of the amount of such understatement.
``(b) Reduction of Penalty for Disclosed Transactions.--
Subsection (a) shall be applied by substituting `20 percent'
for `40 percent' with respect to the portion of any
noneconomic substance transaction understatement with respect
to which the relevant facts affecting the tax treatment of
the item are adequately disclosed in the return or a
statement attached to the return.
[[Page H2096]]
``(c) Noneconomic Substance Transaction Understatement.--
For purposes of this section--
``(1) In general.--The term `noneconomic substance
transaction understatement' means any amount which would be
an understatement under section 6662A(b)(1) if section 6662A
were applied by taking into account items attributable to
noneconomic substance transactions rather than items to which
section 6662A would apply without regard to this paragraph.
``(2) Noneconomic substance transaction.--The term
`noneconomic substance transaction' means any transaction
if--
``(A) there is a lack of economic substance (within the
meaning of section 7701(m)(1)) for the transaction giving
rise to the claimed tax benefit or the transaction was not
respected under section 7701(m)(2), or
``(B) the transaction fails to meet the requirements of any
similar rule of law.
``(d) Rules Applicable to Compromise of Penalty.--
``(1) In general.--If the 1st letter of proposed deficiency
which allows the taxpayer an opportunity for administrative
review in the Internal Revenue Service Office of Appeals has
been sent with respect to a penalty to which this section
applies, only the Commissioner of Internal Revenue may
compromise all or any portion of such penalty.
``(2) Applicable rules.--The rules of paragraphs (3), (4),
and (5) of section 6707A(d) shall apply for purposes of
paragraph (1).
``(e) Coordination With Other Penalties.--Except as
otherwise provided in this part, the penalty imposed by this
section shall be in addition to any other penalty imposed by
this title.
``(f) Cross References.--
``(1) For coordination of penalty with understatements
under section 6662 and other special rules, see section
6662A(e).
``(2) For reporting of penalty imposed under this section
to the Securities and Exchange Commission, see section
6707A(e).''
(b) Clerical Amendment.--The table of sections for part II
of subchapter A of chapter 68 is amended by inserting after
the item relating to section 6662A the following new item:
``Sec. 6662B. Penalty for understatements attributable to transactions
lacking economic substance, etc.''
(c) Effective Date.--The amendments made by this section
shall apply to transactions entered into after February 13,
2003.
SEC. 9505. MODIFICATIONS OF SUBSTANTIAL UNDERSTATEMENT
PENALTY FOR NONREPORTABLE TRANSACTIONS.
(a) Substantial Understatement of Corporations.--Section
6662(d)(1)(B) (relating to special rule for corporations) is
amended to read as follows:
``(B) Special rule for corporations.--In the case of a
corporation other than an S corporation or a personal holding
company (as defined in section 542), there is a substantial
understatement of income tax for any taxable year if the
amount of the understatement for the taxable year exceeds the
lesser of--
``(i) 10 percent of the tax required to be shown on the
return for the taxable year (or, if greater, $10,000), or
``(ii) $10,000,000.''
(b) Reduction for Understatement of Taxpayer Due to
Position of Taxpayer or Disclosed Item.--
(1) In general.--Section 6662(d)(2)(B)(i) (relating to
substantial authority) is amended to read as follows:
``(i) the tax treatment of any item by the taxpayer if the
taxpayer had reasonable belief that the tax treatment was
more likely than not the proper treatment, or''.
(2) Conforming amendment.--Section 6662(d) is amended by
adding at the end the following new paragraph:
``(3) Secretarial list.--For purposes of this subsection,
section 6664(d)(2), and section 6694(a)(1), the Secretary may
prescribe a list of positions for which the Secretary
believes there is not substantial authority or there is no
reasonable belief that the tax treatment is more likely than
not the proper tax treatment. Such list (and any revisions
thereof) shall be published in the Federal Register or the
Internal Revenue Bulletin.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 9506. TAX SHELTER EXCEPTION TO CONFIDENTIALITY
PRIVILEGES RELATING TO TAXPAYER COMMUNICATIONS.
(a) In General.--Section 7525(b) (relating to section not
to apply to communications regarding corporate tax shelters)
is amended to read as follows:
``(b) Section not to Apply to Communications Regarding Tax
Shelters.--The privilege under subsection (a) shall not apply
to any written communication which is--
``(1) between a federally authorized tax practitioner and--
``(A) any person,
``(B) any director, officer, employee, agent, or
representative of the person, or
``(C) any other person holding a capital or profits
interest in the person, and
``(2) in connection with the promotion of the direct or
indirect participation of the person in any tax shelter (as
defined in section 1274(b)(3)(C)).''
(b) Effective Date.--The amendment made by this section
shall apply to communications made on or after the date of
the enactment of this Act.
SEC. 9507. DISCLOSURE OF REPORTABLE TRANSACTIONS.
(a) In General.--Section 6111 (relating to registration of
tax shelters) is amended to read as follows:
``SEC. 6111. DISCLOSURE OF REPORTABLE TRANSACTIONS.
``(a) In General.--Each material advisor with respect to
any reportable transaction shall make a return (in such form
as the Secretary may prescribe) setting forth--
``(1) information identifying and describing the
transaction,
``(2) information describing any potential tax benefits
expected to result from the transaction, and
``(3) such other information as the Secretary may
prescribe.
Such return shall be filed not later than the date specified
by the Secretary.
``(b) Definitions.--For purposes of this section--
``(1) Material advisor.--
``(A) In general.--The term `material advisor' means any
person--
``(i) who provides any material aid, assistance, or advice
with respect to organizing, promoting, selling, implementing,
or carrying out any reportable transaction, and
``(ii) who directly or indirectly derives gross income in
excess of the threshold amount for such aid, assistance, or
advice.
``(B) Threshold amount.--For purposes of subparagraph (A),
the threshold amount is--
``(i) $50,000 in the case of a reportable transaction
substantially all of the tax benefits from which are provided
to natural persons, and
``(ii) $250,000 in any other case.
``(2) Reportable transaction.--The term `reportable
transaction' has the meaning given to such term by section
6707A(c).
``(c) Regulations.--The Secretary may prescribe regulations
which provide--
``(1) that only 1 person shall be required to meet the
requirements of subsection (a) in cases in which 2 or more
persons would otherwise be required to meet such
requirements,
``(2) exemptions from the requirements of this section, and
``(3) such rules as may be necessary or appropriate to
carry out the purposes of this section.''
(b) Conforming Amendments.--
(1) The item relating to section 6111 in the table of
sections for subchapter B of chapter 61 is amended to read as
follows:
``Sec. 6111. Disclosure of reportable transactions.''
(2)(A) So much of section 6112 as precedes subsection (c)
thereof is amended to read as follows:
``SEC. 6112. MATERIAL ADVISORS OF REPORTABLE TRANSACTIONS
MUST KEEP LISTS OF ADVISEES.
``(a) In General.--Each material advisor (as defined in
section 6111) with respect to any reportable transaction (as
defined in section 6707A(c)) shall maintain, in such manner
as the Secretary may by regulations prescribe, a list--
``(1) identifying each person with respect to whom such
advisor acted as such a material advisor with respect to such
transaction, and
``(2) containing such other information as the Secretary
may by regulations require.
This section shall apply without regard to whether a material
advisor is required to file a return under section 6111 with
respect to such transaction.''
(B) Section 6112 is amended by redesignating subsection (c)
as subsection (b).
(C) Section 6112(b), as redesignated by subparagraph (B),
is amended--
(i) by inserting ``written'' before ``request'' in
paragraph (1)(A), and
(ii) by striking ``shall prescribe'' in paragraph (2) and
inserting ``may prescribe''.
(D) The item relating to section 6112 in the table of
sections for subchapter B of chapter 61 is amended to read as
follows:
``Sec. 6112. Material advisors of reportable transactions must keep
lists of advisees.''
(3)(A) The heading for section 6708 is amended to read as
follows:
``SEC. 6708. FAILURE TO MAINTAIN LISTS OF ADVISEES WITH
RESPECT TO REPORTABLE TRANSACTIONS. ''
(B) The item relating to section 6708 in the table of
sections for part I of subchapter B of chapter 68 is amended
to read as follows:
``Sec. 6708. Failure to maintain lists of advisees with respect to
reportable transactions.''
(c) Effective Date.--The amendments made by this section
shall apply to transactions with respect to which material
aid, assistance, or advice referred to in section
6111(b)(1)(A)(i) of the Internal Revenue Code of 1986 (as
added by this section) is provided after the date of the
enactment of this Act.
SEC. 9508. MODIFICATIONS TO PENALTY FOR FAILURE TO REGISTER
TAX SHELTERS.
(a) In General.--Section 6707 (relating to failure to
furnish information regarding tax shelters) is amended to
read as follows:
``SEC. 6707. FAILURE TO FURNISH INFORMATION REGARDING
REPORTABLE TRANSACTIONS.
``(a) In General.--If a person who is required to file a
return under section 6111(a) with respect to any reportable
transaction--
``(1) fails to file such return on or before the date
prescribed therefor, or
``(2) files false or incomplete information with the
Secretary with respect to such transaction,
[[Page H2097]]
such person shall pay a penalty with respect to such return
in the amount determined under subsection (b).
``(b) Amount of Penalty.--
``(1) In general.--Except as provided in paragraph (2), the
penalty imposed under subsection (a) with respect to any
failure shall be $50,000.
``(2) Listed transactions.--The penalty imposed under
subsection (a) with respect to any listed transaction shall
be an amount equal to the greater of--
``(A) $200,000, or
``(B) 50 percent of the gross income derived by such person
with respect to aid, assistance, or advice which is provided
with respect to the reportable transaction before the date
the return including the transaction is filed under section
6111.
Subparagraph (B) shall be applied by substituting `75
percent' for `50 percent' in the case of an intentional
failure or act described in subsection (a).
``(c) Rescission Authority.--The provisions of section
6707A(d) (relating to authority of Commissioner to rescind
penalty) shall apply to any penalty imposed under this
section.
``(d) Reportable and Listed Transactions.--The terms
`reportable transaction' and `listed transaction' have the
respective meanings given to such terms by section
6707A(c).''.
(b) Clerical Amendment.--The item relating to section 6707
in the table of sections for part I of subchapter B of
chapter 68 is amended by striking ``tax shelters'' and
inserting ``reportable transactions''.
(c) Effective Date.--The amendments made by this section
shall apply to returns the due date for which is after the
date of the enactment of this Act.
SEC. 9509. MODIFICATION OF PENALTY FOR FAILURE TO MAINTAIN
LISTS OF INVESTORS.
(a) In General.--Subsection (a) of section 6708 is amended
to read as follows:
``(a) Imposition of Penalty.--
``(1) In general.--If any person who is required to
maintain a list under section 6112(a) fails to make such list
available upon written request to the Secretary in accordance
with section 6112(b)(1)(A) within 20 business days after the
date of the Secretary's request, such person shall pay a
penalty of $10,000 for each day of such failure after such
20th day.
``(2) Reasonable cause exception.--No penalty shall be
imposed by paragraph (1) with respect to the failure on any
day if such failure is due to reasonable cause.''
(b) Effective Date.--The amendment made by this section
shall apply to requests made after the date of the enactment
of this Act.
SEC. 9510. MODIFICATION OF ACTIONS TO ENJOIN CERTAIN CONDUCT
RELATED TO TAX SHELTERS AND REPORTABLE
TRANSACTIONS.
(a) In General.--Section 7408 (relating to action to enjoin
promoters of abusive tax shelters, etc.) is amended by
redesignating subsection (c) as subsection (d) and by
striking subsections (a) and (b) and inserting the following
new subsections:
``(a) Authority to Seek Injunction.--A civil action in the
name of the United States to enjoin any person from further
engaging in specified conduct may be commenced at the request
of the Secretary. Any action under this section shall be
brought in the district court of the United States for the
district in which such person resides, has his principal
place of business, or has engaged in specified conduct. The
court may exercise its jurisdiction over such action (as
provided in section 7402(a)) separate and apart from any
other action brought by the United States against such
person.
``(b) Adjudication and Decree.--In any action under
subsection (a), if the court finds--
``(1) that the person has engaged in any specified conduct,
and
``(2) that injunctive relief is appropriate to prevent
recurrence of such conduct,
the court may enjoin such person from engaging in such
conduct or in any other activity subject to penalty under
this title.
``(c) Specified Conduct.--For purposes of this section, the
term `specified conduct' means any action, or failure to take
action, subject to penalty under section 6700, 6701, 6707, or
6708.''
(b) Conforming Amendments.--
(1) The heading for section 7408 is amended to read as
follows:
``SEC. 7408. ACTIONS TO ENJOIN SPECIFIED CONDUCT RELATED TO
TAX SHELTERS AND REPORTABLE TRANSACTIONS. ''
(2) The table of sections for subchapter A of chapter 67 is
amended by striking the item relating to section 7408 and
inserting the following new item:
``Sec. 7408. Actions to enjoin specified conduct related to tax
shelters and reportable transactions.''
(c) Effective Date.--The amendment made by this section
shall take effect on the day after the date of the enactment
of this Act.
SEC. 9511. UNDERSTATEMENT OF TAXPAYER'S LIABILITY BY INCOME
TAX RETURN PREPARER.
(a) Standards Conformed to Taxpayer Standards.--Section
6694(a) (relating to understatements due to unrealistic
positions) is amended--
(1) by striking ``realistic possibility of being sustained
on its merits'' in paragraph (1) and inserting ``reasonable
belief that the tax treatment in such position was more
likely than not the proper treatment'',
(2) by striking ``or was frivolous'' in paragraph (3) and
inserting ``or there was no reasonable basis for the tax
treatment of such position'', and
(3) by striking ``Unrealistic'' in the heading and
inserting ``Improper''.
(b) Amount of Penalty.--Section 6694 is amended--
(1) by striking ``$250'' in subsection (a) and inserting
``$1,000'', and
(2) by striking ``$1,000'' in subsection (b) and inserting
``$5,000''.
(c) Effective Date.--The amendments made by this section
shall apply to documents prepared after the date of the
enactment of this Act.
SEC. 9512. PENALTY ON FAILURE TO REPORT INTERESTS IN FOREIGN
FINANCIAL ACCOUNTS.
(a) In General.--Section 5321(a)(5) of title 31, United
States Code, is amended to read as follows:
``(5) Foreign financial agency transaction violation.--
``(A) Penalty authorized.--The Secretary of the Treasury
may impose a civil money penalty on any person who violates,
or causes any violation of, any provision of section 5314.
``(B) Amount of penalty.--
``(i) In general.--Except as provided in subparagraph (C),
the amount of any civil penalty imposed under subparagraph
(A) shall not exceed $5,000.
``(ii) Reasonable cause exception.--No penalty shall be
imposed under subparagraph (A) with respect to any violation
if--
``(I) such violation was due to reasonable cause, and
``(II) the amount of the transaction or the balance in the
account at the time of the transaction was properly reported.
``(C) Willful violations.--In the case of any person
willfully violating, or willfully causing any violation of,
any provision of section 5314--
``(i) the maximum penalty under subparagraph (B)(i) shall
be increased to the greater of--
``(I) $25,000, or
``(II) the amount (not exceeding $100,000) determined under
subparagraph (D), and
``(ii) subparagraph (B)(ii) shall not apply.
``(D) Amount.--The amount determined under this
subparagraph is--
``(i) in the case of a violation involving a transaction,
the amount of the transaction, or
``(ii) in the case of a violation involving a failure to
report the existence of an account or any identifying
information required to be provided with respect to an
account, the balance in the account at the time of the
violation.''
(b) Effective Date.--The amendment made by this section
shall apply to violations occurring after the date of the
enactment of this Act.
SEC. 9513. FRIVOLOUS TAX SUBMISSIONS.
(a) Civil Penalties.--Section 6702 is amended to read as
follows:
``SEC. 6702. FRIVOLOUS TAX SUBMISSIONS.
``(a) Civil Penalty for Frivolous Tax Returns.--A person
shall pay a penalty of $5,000 if--
``(1) such person files what purports to be a return of a
tax imposed by this title but which--
``(A) does not contain information on which the substantial
correctness of the self-assessment may be judged, or
``(B) contains information that on its face indicates that
the self-assessment is substantially incorrect; and
``(2) the conduct referred to in paragraph (1)--
``(A) is based on a position which the Secretary has
identified as frivolous under subsection (c), or
``(B) reflects a desire to delay or impede the
administration of Federal tax laws.
``(b) Civil Penalty for Specified Frivolous Submissions.--
``(1) Imposition of penalty.--Except as provided in
paragraph (3), any person who submits a specified frivolous
submission shall pay a penalty of $5,000.
``(2) Specified frivolous submission.--For purposes of this
section--
``(A) Specified frivolous submission.--The term `specified
frivolous submission' means a specified submission if any
portion of such submission--
``(i) is based on a position which the Secretary has
identified as frivolous under subsection (c), or
``(ii) reflects a desire to delay or impede the
administration of Federal tax laws.
``(B) Specified submission.--The term `specified
submission' means--
``(i) a request for a hearing under--
``(I) section 6320 (relating to notice and opportunity for
hearing upon filing of notice of lien), or
``(II) section 6330 (relating to notice and opportunity for
hearing before levy), and
``(ii) an application under--
``(I) section 6159 (relating to agreements for payment of
tax liability in installments),
``(II) section 7122 (relating to compromises), or
``(III) section 7811 (relating to taxpayer assistance
orders).
``(3) Opportunity to withdraw submission.--If the Secretary
provides a person with notice that a submission is a
specified frivolous submission and such person withdraws such
submission within 30 days after such notice, the penalty
imposed under paragraph (1) shall not apply with respect to
such submission.
[[Page H2098]]
``(c) Listing of Frivolous Positions.--The Secretary shall
prescribe (and periodically revise) a list of positions which
the Secretary has identified as being frivolous for purposes
of this subsection. The Secretary shall not include in such
list any position that the Secretary determines meets the
requirement of section 6662(d)(2)(B)(ii)(II).
``(d) Reduction of Penalty.--The Secretary may reduce the
amount of any penalty imposed under this section if the
Secretary determines that such reduction would promote
compliance with and administration of the Federal tax laws.
``(e) Penalties in Addition to Other Penalties.--The
penalties imposed by this section shall be in addition to any
other penalty provided by law.''
(b) Treatment of Frivolous Requests for Hearings Before
Levy.--
(1) Frivolous requests disregarded.--Section 6330 (relating
to notice and opportunity for hearing before levy) is amended
by adding at the end the following new subsection:
``(g) Frivolous Requests for Hearing, Etc.--Notwithstanding
any other provision of this section, if the Secretary
determines that any portion of a request for a hearing under
this section or section 6320 meets the requirement of clause
(i) or (ii) of section 6702(b)(2)(A), then the Secretary may
treat such portion as if it were never submitted and such
portion shall not be subject to any further administrative or
judicial review.''
(2) Preclusion from raising frivolous issues at hearing.--
Section 6330(c)(4) is amended--
(A) by striking ``(A)'' and inserting ``(A)(i)'';
(B) by striking ``(B)'' and inserting ``(ii)'';
(C) by striking the period at the end of the first sentence
and inserting ``; or''; and
(D) by inserting after subparagraph (A)(ii) (as so
redesignated) the following:
``(B) the issue meets the requirement of clause (i) or (ii)
of section 6702(b)(2)(A).''
(3) Statement of grounds.--Section 6330(b)(1) is amended by
striking ``under subsection (a)(3)(B)'' and inserting ``in
writing under subsection (a)(3)(B) and states the grounds for
the requested hearing''.
(c) Treatment of Frivolous Requests for Hearings Upon
Filing of Notice of Lien.--Section 6320 is amended--
(1) in subsection (b)(1), by striking ``under subsection
(a)(3)(B)'' and inserting ``in writing under subsection
(a)(3)(B) and states the grounds for the requested hearing'',
and
(2) in subsection (c), by striking ``and (e)'' and
inserting ``(e), and (g)''.
(d) Treatment of Frivolous Applications for Offers-In-
Compromise and Installment Agreements.--Section 7122 is
amended by adding at the end the following new subsection:
``(e) Frivolous Submissions, Etc.--Notwithstanding any
other provision of this section, if the Secretary determines
that any portion of an application for an offer-in-compromise
or installment agreement submitted under this section or
section 6159 meets the requirement of clause (i) or (ii) of
section 6702(b)(2)(A), then the Secretary may treat such
portion as if it were never submitted and such portion shall
not be subject to any further administrative or judicial
review.''
(e) Clerical Amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by striking the item
relating to section 6702 and inserting the following new
item:
``Sec. 6702. Frivolous tax submissions.''
(f) Effective Date.--The amendments made by this section
shall apply to submissions made and issues raised after the
date on which the Secretary first prescribes a list under
section 6702(c) of the Internal Revenue Code of 1986, as
amended by subsection (a).
SEC. 9514. REGULATION OF INDIVIDUALS PRACTICING BEFORE THE
DEPARTMENT OF TREASURY.
(a) Censure; Imposition of Penalty.--
(1) In general.--Section 330(b) of title 31, United States
Code, is amended--
(A) by inserting ``, or censure,'' after ``Department'',
and
(B) by adding at the end the following new flush sentence:
``The Secretary may impose a monetary penalty on any
representative described in the preceding sentence. If the
representative was acting on behalf of an employer or any
firm or other entity in connection with the conduct giving
rise to such penalty, the Secretary may impose a monetary
penalty on such employer, firm, or entity if it knew, or
reasonably should have known, of such conduct. Such penalty
shall not exceed the gross income derived (or to be derived)
from the conduct giving rise to the penalty and may be in
addition to, or in lieu of, any suspension, disbarment, or
censure.''
(2) Effective date.--The amendments made by this subsection
shall apply to actions taken after the date of the enactment
of this Act.
(b) Tax Shelter Opinions, Etc.--Section 330 of such title
31 is amended by adding at the end the following new
subsection:
``(d) Nothing in this section or in any other provision of
law shall be construed to limit the authority of the
Secretary of the Treasury to impose standards applicable to
the rendering of written advice with respect to any entity,
transaction plan or arrangement, or other plan or
arrangement, which is of a type which the Secretary
determines as having a potential for tax avoidance or
evasion.''
SEC. 9515. PENALTY ON PROMOTERS OF TAX SHELTERS.
(a) Penalty on Promoting Abusive Tax Shelters.--Section
6700(a) is amended by adding at the end the following new
sentence: ``Notwithstanding the first sentence, if an
activity with respect to which a penalty imposed under this
subsection involves a statement described in paragraph
(2)(A), the amount of the penalty shall be equal to 50
percent of the gross income derived (or to be derived) from
such activity by the person on which the penalty is
imposed.''
(b) Effective Date.--The amendment made by this section
shall apply to activities after the date of the enactment of
this Act.
SEC. 9516. STATUTE OF LIMITATIONS FOR TAXABLE YEARS FOR WHICH
LISTED TRANSACTIONS NOT REPORTED.
(a) In General.--Section 6501(e)(1) (relating to
substantial omission of items for income taxes) is amended by
adding at the end the following new subparagraph:
``(C) Listed transactions.--If a taxpayer fails to include
on any return or statement for any taxable year any
information with respect to a listed transaction (as defined
in section 6707A(c)(2)) which is required under section 6011
to be included with such return or statement, the tax for
such taxable year may be assessed, or a proceeding in court
for collection of such tax may be begun without assessment,
at any time within 6 years after the time the return is
filed. This subparagraph shall not apply to any taxable year
if the time for assessment or beginning the proceeding in
court has expired before the time a transaction is treated as
a listed transaction under section 6011.''
(b) Effective Date.--The amendment made by this section
shall apply to transactions after the date of the enactment
of this Act in taxable years ending after such date.
SEC. 9517. DENIAL OF DEDUCTION FOR INTEREST ON UNDERPAYMENTS
ATTRIBUTABLE TO NONDISCLOSED REPORTABLE AND
NONECONOMIC SUBSTANCE TRANSACTIONS.
(a) In General.--Section 163 (relating to deduction for
interest) is amended by redesignating subsection (m) as
subsection (n) and by inserting after subsection (l) the
following new subsection:
``(m) Interest on Unpaid Taxes Attributable to Nondisclosed
Reportable Transactions and Noneconomic Substance
Transactions.--No deduction shall be allowed under this
chapter for any interest paid or accrued under section 6601
on any underpayment of tax which is attributable to--
``(1) the portion of any reportable transaction
understatement (as defined in section 6662A(b)) with respect
to which the requirement of section 6664(d)(2)(A) is not met,
or
``(2) any noneconomic substance transaction understatement
(as defined in section 6662B(c)).''
(b) Effective Date.--The amendments made by this section
shall apply to transactions after the date of the enactment
of this Act in taxable years ending after such date.
Subtitle G--Other Provisions
SEC. 9601. LIMITATION ON TRANSFER OR IMPORTATION OF BUILT-IN
LOSSES.
(a) In General.--Section 362 (relating to basis to
corporations) is amended by adding at the end the following
new subsection:
``(e) Limitations on Built-In Losses.--
``(1) Limitation on importation of built-in losses.--
``(A) In general.--If in any transaction described in
subsection (a) or (b) there would (but for this subsection)
be an importation of a net built-in loss, the basis of each
property described in subparagraph (B) which is acquired in
such transaction shall (notwithstanding subsections (a) and
(b)) be its fair market value immediately after such
transaction.
``(B) Property described.--For purposes of subparagraph
(A), property is described in this paragraph if--
``(i) gain or loss with respect to such property is not
subject to tax under this subtitle in the hands of the
transferor immediately before the transfer, and
``(ii) gain or loss with respect to such property is
subject to such tax in the hands of the transferee
immediately after such transfer.
In any case in which the transferor is a partnership, the
preceding sentence shall be applied by treating each partner
in such partnership as holding such partner's proportionate
share of the property of such partnership.
``(C) Importation of net built-in loss.--For purposes of
subparagraph (A), there is an importation of a net built-in
loss in a transaction if the transferee's aggregate adjusted
bases of property described in subparagraph (B) which is
transferred in such transaction would (but for this
paragraph) exceed the fair market value of such property
immediately after such transaction.''
``(2) Limitation on transfer of built-in losses in section
351 transactions.--
``(A) In general.--If--
``(i) property is transferred in any transaction which is
described in subsection (a) and which is not described in
paragraph (1) of this subsection, and
``(ii) the transferee's aggregate adjusted bases of the
property so transferred would (but for this paragraph) exceed
the fair market value of such property immediately after such
transaction,
then, notwithstanding subsection (a), the transferee's
aggregate adjusted bases of the
[[Page H2099]]
property so transferred shall not exceed the fair market
value of such property immediately after such transaction.
``(B) Allocation of basis reduction.--The aggregate
reduction in basis by reason of subparagraph (A) shall be
allocated among the property so transferred in proportion to
their respective built-in losses immediately before the
transaction.
``(C) Exception for transfers within affiliated group.--
Subparagraph (A) shall not apply to any transaction if the
transferor owns stock in the transferee meeting the
requirements of section 1504(a)(2). In the case of property
to which subparagraph (A) does not apply by reason of the
preceding sentence, the transferor's basis in the stock
received for such property shall not exceed its fair market
value immediately after the transfer.''
(b) Comparable Treatment Where Liquidation.--Paragraph (1)
of section 334(b) (relating to liquidation of subsidiary) is
amended to read as follows:
``(1) In general.--If property is received by a corporate
distributee in a distribution in a complete liquidation to
which section 332 applies (or in a transfer described in
section 337(b)(1)), the basis of such property in the hands
of such distributee shall be the same as it would be in the
hands of the transferor; except that the basis of such
property in the hands of such distributee shall be the fair
market value of the property at the time of the
distribution--
``(A) in any case in which gain or loss is recognized by
the liquidating corporation with respect to such property, or
``(B) in any case in which the liquidating corporation is a
foreign corporation, the corporate distributee is a domestic
corporation, and the corporate distributee's aggregate
adjusted bases of property described in section 362(e)(1)(B)
which is distributed in such liquidation would (but for this
subparagraph) exceed the fair market value of such property
immediately after such liquidation.''
(c) Effective Date.--The amendments made by this section
shall apply to transactions after the date of the enactment
of this Act.
SEC. 9602. DISALLOWANCE OF CERTAIN PARTNERSHIP LOSS
TRANSFERS.
(a) Treatment of Contributed Property With Built-In Loss.--
Paragraph (1) of section 704(c) is amended by striking
``and'' at the end of subparagraph (A), by striking the
period at the end of subparagraph (B) and inserting ``,
and'', and by adding at the end the following:
``(C) if any property so contributed has a built-in loss--
``(i) such built-in loss shall be taken into account only
in determining the amount of items allocated to the
contributing partner, and
``(ii) except as provided in regulations, in determining
the amount of items allocated to other partners, the basis of
the contributed property in the hands of the partnership
shall be treated as being equal to its fair market value
immediately after the contribution.
For purposes of subparagraph (C), the term `built-in loss'
means the excess of the adjusted basis of the property
(determined without regard to subparagraph (C)(ii)) over its
fair market value immediately after the contribution.''
(b) Adjustment to Basis of Partnership Property on Transfer
of Partnership Interest If There Is Substantial Built-In
Loss.--
(1) Adjustment required.--Subsection (a) of section 743
(relating to optional adjustment to basis of partnership
property) is amended by inserting before the period ``or
unless the partnership has a substantial built-in loss
immediately after such transfer''.
(2) Adjustment.--Subsection (b) of section 743 is amended
by inserting ``or with respect to which there is a
substantial built-in loss immediately after such transfer''
after ``section 754 is in effect''.
(3) Substantial built-in loss.--Section 743 is amended by
adding at the end the following new subsection:
``(d) Substantial Built-In Loss.--
``(1) In general.--For purposes of this section, a
partnership has a substantial built-in loss with respect to a
transfer of an interest in a partnership if the transferee
partner's proportionate share of the adjusted basis of the
partnership property exceeds by more than $250,000 the basis
of such partner's interest in the partnership.
``(2) Regulations.--The Secretary shall prescribe such
regulations as may be appropriate to carry out the purposes
of paragraph (1) and section 734(d), including regulations
aggregating related partnerships and disregarding property
acquired by the partnership in an attempt to avoid such
purposes.''
(4) Clerical amendments.--
(A) The section heading for section 743 is amended to read
as follows:
``SEC. 743. ADJUSTMENT TO BASIS OF PARTNERSHIP PROPERTY WHERE
SECTION 754 ELECTION OR SUBSTANTIAL BUILT-IN
LOSS. ''
(B) The table of sections for subpart C of part II of
subchapter K of chapter 1 is amended by striking the item
relating to section 743 and inserting the following new item:
``Sec. 743. Adjustment to basis of partnership property where section
754 election or substantial built-in loss.''
(c) Adjustment to Basis of Undistributed Partnership
Property If There Is Substantial Basis Reduction.--
(1) Adjustment required.--Subsection (a) of section 734
(relating to optional adjustment to basis of undistributed
partnership property) is amended by inserting before the
period ``or unless there is a substantial basis reduction''.
(2) Adjustment.--Subsection (b) of section 734 is amended
by inserting ``or unless there is a substantial basis
reduction'' after ``section 754 is in effect''.
(3) Substantial basis reduction.--Section 734 is amended by
adding at the end the following new subsection:
``(d) Substantial Basis Reduction.--
``(1) In general.--For purposes of this section, there is a
substantial basis reduction with respect to a distribution if
the sum of the amounts described in subparagraphs (A) and (B)
of subsection (b)(2) exceeds $250,000.
``(2) Regulations.--For regulations to carry out this
subsection, see section 743(d)(2).''
(4) Clerical amendments.--
(A) The section heading for section 734 is amended to read
as follows:
``SEC. 734. ADJUSTMENT TO BASIS OF UNDISTRIBUTED PARTNERSHIP
PROPERTY WHERE SECTION 754 ELECTION OR
SUBSTANTIAL BASIS REDUCTION. ''
(B) The table of sections for subpart B of part II of
subchapter K of chapter 1 is amended by striking the item
relating to section 734 and inserting the following new item:
``Sec. 734. Adjustment to basis of undistributed partnership property
where section 754 election or substantial basis
reduction.''
(d) Effective Dates.--
(1) Subsection (a).--The amendment made by subsection (a)
shall apply to contributions made after the date of the
enactment of this Act.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to transfers after the date of the enactment of
this Act.
(3) Subsection (c).--The amendments made by subsection (c)
shall apply to distributions after the date of the enactment
of this Act.
SEC. 9603. NO REDUCTION OF BASIS UNDER SECTION 734 IN STOCK
HELD BY PARTNERSHIP IN CORPORATE PARTNER.
(a) In General.--Section 755 is amended by adding at the
end the following new subsection:
``(c) No Allocation of Basis Decrease to Stock of Corporate
Partner.--In making an allocation under subsection (a) of any
decrease in the adjusted basis of partnership property under
section 734(b)--
``(1) no allocation may be made to stock in a corporation
which is a partner in the partnership, and
``(2) any amount not allocable to stock by reason of
paragraph (1) shall be allocated under subsection (a) to
other partnership property.
Gain shall be recognized to the partnership to the extent
that the amount required to be allocated under paragraph (2)
to other partnership property exceeds the aggregate adjusted
basis of such other property immediately before the
allocation required by paragraph (2).''
(b) Effective Date.--The amendment made by this section
shall apply to distributions after the date of the enactment
of this Act.
SEC. 9604. REPEAL OF SPECIAL RULES FOR FASITS.
(a) In General.--Part V of subchapter M of chapter 1
(relating to financial asset securitization investment
trusts) is hereby repealed.
(b) Conforming Amendments.--
(1) Paragraph (6) of section 56(g) is amended by striking
``REMIC, or FASIT'' and inserting ``or REMIC''.
(2) Clause (ii) of section 382(l)(4)(B) is amended by
striking ``a REMIC to which part IV of subchapter M applies,
or a FASIT to which part V of subchapter M applies,'' and
inserting ``or a REMIC to which part IV of subchapter M
applies,''.
(3) Paragraph (1) of section 582(c) is amended by striking
``, and any regular interest in a FASIT,''.
(4) Subparagraph (E) of section 856(c)(5) is amended by
striking the last sentence.
(5) Paragraph (5) of section 860G(a) is amended by adding
``and'' at the end of subparagraph (B), by striking ``, and''
at the end of subparagraph (C) and inserting a period, and by
striking subparagraph (D).
(6) Subparagraph (C) of section 1202(e)(4) is amended by
striking ``REMIC, or FASIT'' and inserting ``or REMIC''.
(7) Subparagraph (C) of section 7701(a)(19) is amended by
adding ``and'' at the end of clause (ix), by striking ``,
and'' at the end of clause (x) and inserting a period, and by
striking clause (xi).
(8) The table of parts for subchapter M of chapter 1 is
amended by striking the item relating to part V.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2003.
(2) Exception for existing FASITs.--
(A) In general.--Paragraph (1) shall not apply to any FASIT
in existence on the date of the enactment of this Act.
(B) Transfer of additional assets not permitted.--Except as
provided in regulations prescribed by the Secretary of the
Treasury or the Secretary's delegate, subparagraph (A) shall
cease to apply as of the
[[Page H2100]]
earliest date after the date of the enactment of this Act
that any property is transferred to the FASIT.
SEC. 9605. EXPANDED DISALLOWANCE OF DEDUCTION FOR INTEREST ON
CONVERTIBLE DEBT.
(a) In General.--Paragraph (2) of section 163(l) is amended
by striking ``or a related party'' and inserting ``or equity
held by the issuer (or any related party) in any other
person''.
(b) Conforming Amendment.--Paragraph (3) of section 163(l)
is amended by striking ``or a related party'' in the material
preceding subparagraph (A) and inserting ``or any other
person''.
(c) Effective Date.--The amendments made by this section
shall apply to debt instruments issued after the date of the
enactment of this Act.
SEC. 9606. EXPANDED AUTHORITY TO DISALLOW TAX BENEFITS UNDER
SECTION 269.
(a) In General.--Subsection (a) of section 269 (relating to
acquisitions made to evade or avoid income tax) is amended to
read as follows:
``(a) In General.--If--
``(1)(A) any person acquires stock in a corporation, or
``(B) any corporation acquires, directly or indirectly,
property of another corporation and the basis of such
property, in the hands of the acquiring corporation, is
determined by reference to the basis in the hands of the
transferor corporation, and
``(2) the principal purpose for which such acquisition was
made is evasion or avoidance of Federal income tax by
securing the benefit of a deduction, credit, or other
allowance,
then the Secretary may disallow such deduction, credit, or
other allowance.''
(b) Effective Date.--The amendment made by this section
shall apply to stock and property acquired after February 13,
2003.
SEC. 9607. MODIFICATIONS OF CERTAIN RULES RELATING TO
CONTROLLED FOREIGN CORPORATIONS.
(a) Limitation on Exception From PFIC Rules for United
States Shareholders of Controlled Foreign Corporations.--
Paragraph (2) of section 1297(e) (relating to passive
investment company) is amended by adding at the end the
following flush sentence: ``Such term shall not include any
period if there is only a remote likelihood of an inclusion
in gross income under section 951(a)(1)(A)(i) of subpart F
income of such corporation for such period.''
(b) Determination of Pro Rata Share of Subpart F Income.--
Subsection (a) of section 951 (relating to amounts included
in gross income of United States shareholders) is amended by
adding at the end the following new paragraph:
``(4) Special rules for determining pro rata share of
subpart f income.--The pro rata share under paragraph (2)
shall be determined by disregarding--
``(A) any rights lacking substantial economic effect, and
``(B) stock owned by a shareholder who is a tax-indifferent
party (as defined in section 7701(m)(3)) if the amount which
would (but for this paragraph) be allocated to such
shareholder does not reflect such shareholder's economic
share of the earnings and profits of the corporation.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years on controlled foreign
corporation beginning after February 13, 2003, and to taxable
years of United States shareholder in which or with which
such taxable years of controlled foreign corporations end.
SEC. 9608. BASIS FOR DETERMINING LOSS ALWAYS REDUCED BY
NONTAXED PORTION OF DIVIDENDS.
(a) In General.--Section 1059 (relating to corporate
shareholder's basis in stock reduced by nontaxed portion of
extraordinary dividends) is amended by redesignating
subsection (g) as subsection (h) and by inserting after
subsection (f) the following new subsection:
``(g) Basis for Determining Loss Always Reduced by Nontaxed
Portion of Dividends.--The basis of stock in a corporation
(for purposes of determining loss) shall be reduced by the
nontaxed portion of any dividend received with respect to
such stock if this section does not otherwise apply to such
dividend.''
(b) Effective Date.--The amendment made by this section
shall apply to dividends received after the date of the
enactment of this Act.
SEC. 9609. AFFIRMATION OF CONSOLIDATED RETURN REGULATION
AUTHORITY.
(a) In General.--Section 1502 (relating to consolidated
return regulations) is amended by adding at the end the
following new sentence: ``In prescribing such regulations,
the Secretary may prescribe rules applicable to corporations
filing consolidated returns under section 1501 that are
different from other provisions of this title that would
apply if such corporations filed separate returns.''
(b) Result not Overturned.--Notwithstanding subsection (a),
the Internal Revenue Code of 1986 shall be construed by
treating Treasury regulation section 1.1502-20(c)(1)(iii) (as
in effect on January 1, 2001) as being inapplicable to the
type of factual situation in 255 F.3d 1357 (Fed. Cir. 2001).
(c) Effective Date.--The provisions of this section shall
apply to taxable years beginning before, on, or after the
date of the enactment of this Act.
SEC. 9610. EXTENSION OF CUSTOMS USER FEES.
Section 13031(j)(3) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)) is amended
by striking ``March 1, 2005'' and inserting ``March 31,
2010''.
Subtitle H--Prevention of Corporate Expatriation to Avoid United States
Income Tax
SEC. 9701. PREVENTION OF CORPORATE EXPATRIATION TO AVOID
UNITED STATES INCOME TAX.
(a) In General.--Paragraph (4) of section 7701(a) (defining
domestic) is amended to read as follows:
``(4) Domestic.--
``(A) In general.--Except as provided in subparagraph (B),
the term `domestic' when applied to a corporation or
partnership means created or organized in the United States
or under the law of the United States or of any State unless,
in the case of a partnership, the Secretary provides
otherwise by regulations.
``(B) Certain corporations treated as domestic.--
``(i) In general.--The acquiring corporation in a corporate
expatriation transaction shall be treated as a domestic
corporation.
``(ii) Corporate expatriation transaction.--For purposes of
this subparagraph, the term `corporate expatriation
transaction' means any transaction if--
``(I) a nominally foreign corporation (referred to in this
subparagraph as the `acquiring corporation') acquires, as a
result of such transaction, directly or indirectly
substantially all of the properties held directly or
indirectly by a domestic corporation, and
``(II) immediately after the transaction, more than 80
percent of the stock (by vote or value) of the acquiring
corporation is held by former shareholders of the domestic
corporation by reason of holding stock in the domestic
corporation.
``(iii) Lower stock ownership requirement in certain
cases.--Subclause (II) of clause (ii) shall be applied by
substituting `50 percent' for `80 percent' with respect to
any nominally foreign corporation if--
``(I) such corporation does not have substantial business
activities (when compared to the total business activities of
the expanded affiliated group) in the foreign country in
which or under the law of which the corporation is created or
organized, and
``(II) the stock of the corporation is publicly traded and
the principal market for the public trading of such stock is
in the United States.
``(iv) Partnership transactions.--The term `corporate
expatriation transaction' includes any transaction if--
``(I) a nominally foreign corporation (referred to in this
subparagraph as the `acquiring corporation') acquires, as a
result of such transaction, directly or indirectly properties
constituting a trade or business of a domestic partnership,
``(II) immediately after the transaction, more than 80
percent of the stock (by vote or value) of the acquiring
corporation is held by former partners of the domestic
partnership or related foreign partnerships (determined
without regard to stock of the acquiring corporation which is
sold in a public offering related to the transaction), and
``(III) the acquiring corporation meets the requirements of
subclauses (I) and (II) of clause (iii).
``(v) Special rules.--For purposes of this subparagraph--
``(I) a series of related transactions shall be treated as
1 transaction, and
``(II) stock held by members of the expanded affiliated
group which includes the acquiring corporation shall not be
taken into account in determining ownership.
``(vi) Other definitions.--For purposes of this
subparagraph--
``(I) Nominally foreign corporation.--The term `nominally
foreign corporation' means any corporation which would (but
for this subparagraph) be treated as a foreign corporation.
``(II) Expanded affiliated group.--The term `expanded
affiliated group' means an affiliated group (as defined in
section 1504(a) without regard to section 1504(b)).
``(III) Related foreign partnership.--A foreign partnership
is related to a domestic partnership if they are under common
control (within the meaning of section 482), or they shared
the same trademark or tradename.''
(b) Effective Dates.--
(1) In general.--The amendment made by this section shall
apply to corporate expatriation transactions completed after
September 11, 2001.
(2) Special rule.--The amendment made by this section shall
also apply to corporate expatriation transactions completed
on or before September 11, 2001, but only with respect to
taxable years of the acquiring corporation beginning after
December 31, 2003.
Mr. DAVIS of Tennessee (during the reading). Mr. Speaker, I ask
unanimous consent that the motion to recommit be considered as read and
printed in the Record.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Tennessee?
There was no objection.
Mr. NUSSLE. Mr. Speaker, I reserve a point of order against the
gentleman's motion to recommit.
[[Page H2101]]
The SPEAKER pro tempore. The gentleman reserves a point of order. The
gentleman from Tennessee (Mr. Davis) will be recognized for 5 minutes
on his motion to recommit.
Mr. DAVIS of Tennessee. Mr. Speaker, do we have opposition on the
point of order? On the point of order, may I continue with my motion to
recommit?
The SPEAKER pro tempore. The Chair will entertain a point of order
after the gentleman's debate on his motion to recommit. At this point,
the point of order is reserved.
Mr. DAVIS of Tennessee. Mr. Speaker, I would ask the gentleman to
reconsider his point of order on my offering of this amendment. My
amendment increases the funds in the bill to the Senate-passed level of
$318 billion, and I believe that the House should be allowed to vote on
this amendment.
The SPEAKER pro tempore. If the gentleman will suspend. The gentleman
is recognized for 5 minutes to debate his motion to recommit.
Mr. DAVIS of Tennessee. Mr. Speaker, today I rise with the gentleman
from New Jersey (Mr. Menendez), the gentleman from Oregon (Mr.
Blumenauer), and the gentleman from Washington (Mr. Baird) to offer
this motion to recommit.
The amendment increases highway and transit investment by $37.8
billion, a level of funding equal to the Senate/House-passed TEA 21
reauthorization bill, includes the Senate-passed Highway Trust Fund
financing mechanisms, which includes no tax increases, and fully
offsets these investments by cracking down on abusive corporate tax
shelters, such as those enjoyed by Enron, and prevents American
corporations from avoiding paying U.S. taxes by moving to a foreign
country, and by extending customs user fees.
{time} 1130
The amendment is paid for by drawing down from the highway trust fund
and eliminating subsidies such as ethanol. We should continue to
promote the use of ethanol, but we should keep the highway trust fund
for truly highway-related activities.
A recent national survey found that transportation construction
contractors hire employees within 3 weeks of obtaining a contract.
Employees begin receiving paychecks within 2 weeks of hiring. In
addition, this infrastructure investment will increase business
productivity by reducing the costs of producing goods in virtually
every industrial sector of our economy, which results in increased
demand for labor, capital and raw materials and generally leads to
lower product prices and increased sales.
Mr. Speaker, this investment will help create jobs for almost 3
million Americans who have lost their jobs in the last 3 years and will
specifically help the more than 1 million unemployed construction
workers. The number of unemployed private sector construction workers
in 2003 averaged 810,000. The unemployment rate for these workers
averaged 9.3 percent. We can invest in a future that our children and
grandchildren will benefit from rather than continue to create debt for
the future for our children.
Mr. Speaker, I yield back the balance of my time.
Point of Order
The SPEAKER pro tempore (Mr. Thornberry). Does the gentleman from
Iowa wish to make his point of order?
Mr. NUSSLE. I do, Mr. Speaker.
I make a point of order against the motion to recommit because it is
in violation of section 302(f) of the Congressional Budget Act of 1974.
A motion that would cause any increase in new budget authority will
breach the allocation made under section 302(a) to the applicable
committee and is not permitted under 302(f) of the act. This motion
causes such an increase in new budget authority and, therefore, is not
in order.
I insist on my point of order.
The SPEAKER pro tempore. Does the gentleman from Tennessee wish to be
heard on the point of order?
Mr. DAVIS of Tennessee. No.
The SPEAKER pro tempore. Does the gentleman concede the point of
order?
Mr. DAVIS of Tennessee. Mr. Speaker, I concede the point of order.
The SPEAKER pro tempore. The point of order is therefore sustained.
Motion to Recommit Offered by Mr. Davis of Tennessee
Mr. DAVIS of Tennessee. Mr. Speaker, I offer a motion to recommit.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:
Mr. DAVIS of Tennessee moves to recommit the bill H.R. 3550
to the Committee on Transportation and Infrastructure with
instructions to report the same back to the House promptly
with the following amendments:
In section 1101(a)(1) of the bill, strike
``$4,323,076,000'' and all that follows through
``$4,891,164,000'' and insert ``$5,076,187,293 for fiscal
year 2004, $4,953,445,477 for fiscal year 2005,
$5,171,212,959 for fiscal year 2006, $5,263,571,478 for
fiscal year 2007, $5,556,536,840 for fiscal year 2008, and
$6,654,739,293''.
In section 1101(a)(2) of the bill, strike
``$5,187,691,000'' and all that follows through
``$5,869,396,000'' and insert ``$6,091,424,517 for fiscal
year 2004, $5,944,133,902 for fiscal year 2005,
$6,205,455,095 for fiscal year 2006, $6,316,285,773 for
fiscal year 2007, $6,667,843,743 for fiscal year 2008, and
$7,985,686,064''.
In section 1101(a)(3) of the bill, strike
``$3,709,440,000'' and all that follows through
``$4,196,891,000'' and insert ``$4,355,651,438 for fiscal
year 2004, $4,250,332,027 for fiscal year 2005,
$4,437,189,163 for fiscal year 2006, $4,516,437,339 for
fiscal year 2007, $4,767,818,482 for fiscal year 2008, and
$5,710,136,779''.
In section 1101(a)(5) of the bill, strike
``$6,052,306,000'' and all that follows through
``$6,847,629,000'' and insert ``$7,106,661,741 for fiscal
year 2004, $6,934,823,445 for fiscal year 2005,
$7,239,697,231 for fiscal year 2006, $7,369,000,069 for
fiscal year 2007, $7,779,151,809 for fiscal year 2008, and
$9,316,634,194''.
In section 1101(a)(6) of the bill, strike
``$1,469,846,000'' and all that follows through
``$1,662,996,000'' and insert ``$1,725,903,868 for fiscal
year 2004, $1,684,171,440 for fiscal year 2005,
$1,758,212,543 for fiscal year 2006, $1,789,614,076 for
fiscal year 2007, $1,889,222,762 for fiscal year 2008, and
$2,262,611,686''.
In section 1102(a) of the bill, strike paragraphs (2)
through (6) and insert the following:
(2) $37,900,000,000 for fiscal year 2005;
(3) $39,100,000,000 for fiscal year 2006;
(4) $39,100,000,000 for fiscal year 2007;
(5) $39,400,000,000 for fiscal year 2008; and
(6) $44,400,000,000 for fiscal year 2009.
In the matter proposed to be inserted as section
5338(a)(2)(A) of title 49, United States Code, by section
3034 of the bill, strike clauses (i) through (vi) and insert
the following:
``(i) $5,081,125,000 for fiscal year 2005;
``(ii) $5,283,418,000 for fiscal year 2006;
``(iii) $5,550,420,000 for fiscal year 2007;
``(iv) $6,176,172,500 for fiscal year 2008; and
``(v) $6,834,667,500 for fiscal year 2009.
In section 3043 of the bill, strike paragraphs (2) through
(6) and insert the following:
(2) $8,650,000,000 for fiscal year 2005;
(3) $9,085,123,000 for fiscal year 2006;
(4) $9,600,000,000 for fiscal year 2007;
(5) $10,490,000,000 for fiscal year 2008; and
(6) $11,430,000,000 for fiscal year 2009.
Strike the revenue title (other than the small business
benefits) and insert the following:
TITLE IX--HIGHWAY REAUTHORIZATION AND EXCISE TAX SIMPLIFICATION
SECTION 9000. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) Short Title.--This title may be cited as the ``Highway
Reauthorization and Excise Tax Simplification Act of 2004''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this title 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.
Subtitle A--Trust Fund Reauthorization
SEC. 9001. EXTENSION OF HIGHWAY TRUST FUND AND AQUATIC
RESOURCES TRUST FUND EXPENDITURE AUTHORITY AND
RELATED TAXES.
(a) Highway Trust Fund Expenditure Authority.--
(1) Highway account.--Paragraph (1) of section 9503(c)
(relating to transfers from Highway Trust Fund for certain
repayments and credits) is amended--
(A) in the matter before subparagraph (A), by striking
``May 1, 2004'' and inserting ``October 1, 2009'',
(B) by striking ``or'' at the end of subparagraph (F),
(C) by striking the period at the end of subparagraph (G)
and inserting ``, or'',
(D) by inserting after subparagraph (G), the following new
subparagraph:
``(H) authorized to be paid out of the Highway Trust Fund
under the Highway Reauthorization and Excise Tax
Simplification Act of 2004.'', and
(E) in the matter after subparagraph (G), as added by
subparagraph (D), by striking ``Surface Transportation
Extension Act of 2004'' and inserting ``Highway
Reauthorization and Excise Tax Simplification Act of 2004''.
(2) Mass transit account.--Paragraph (3) of section 9503(e)
(relating to establishment of Mass Transit Account) is
amended--
(A) in the matter before subparagraph (A), by striking
``May 1, 2004'' and inserting ``October 1, 2009'',
(B) by striking ``or'' at the end of subparagraph (D),
(C) by striking the period at the end of subparagraph (E)
and inserting ``, or'',
[[Page H2102]]
(D) by inserting after subparagraph (E), the following new
subparagraph:
``(F) the Highway Reauthorization and Excise Tax
Simplification Act of 2004,'', and
(E) in the matter after subparagraph (E), as added by
subparagraph (D), by striking ``Surface Transportation
Extension Act of 2004'' and inserting ``Highway
Reauthorization and Excise Tax Simplification Act of 2004''.
(3) Exception to limitation on transfers.--Subparagraph (B)
of section 9503(b)(5) (relating to limitation on transfers to
Highway Trust Fund) is amended by striking ``May 1, 2004''
and inserting ``October 1, 2009''.
(b) Aquatic Resources Trust Fund Expenditure Authority.--
(1) Sport fish restoration account.--Paragraph (2) of
section 9504(b) (relating to Sport Fish Restoration Account)
is amended by striking ``Surface Transportation Extension Act
of 2004'' each place it appears and inserting ``Highway
Reauthorization and Excise Tax Simplification Act of 2004''.
(2) Boat safety account.--Section 9504(c) (relating to
expenditures from Boat Safety Account) is amended--
(A) by striking ``May 1, 2004'' and inserting ``October 1,
2009'', and
(B) by striking ``Surface Transportation Extension Act of
2004'' and inserting ``Highway Reauthorization and Excise Tax
Simplification Act of 2004''.
(3) Exception to limitation on transfers.--Paragraph (2) of
section 9504(d) (relating to limitation on transfers to
Aquatic Resources Trust Fund) is amended by striking ``May 1,
2004'' and inserting ``October 1, 2009''.
(4) Technical correction.--The last sentence of paragraph
(2) of section 9504(b) is amended by striking ``subparagraph
(B)'', and inserting ``subparagraph (C)''.
(c) Extension of Taxes.--
(1) In general.--The following provisions are each amended
by striking ``2005'' each place it appears and inserting
``2009'':
(A) Section 4041(a)(1)(C)(iii)(I) (relating to rate of tax
on certain buses).
(B) Section 4041(a)(2)(B) (relating to rate of tax on
special motor fuels).
(C) Section 4041(m)(1)(A) (relating to certain alcohol
fuels produced from natural gas).
(D) Section 4051(c) (relating to termination of tax on
heavy trucks and trailers).
(E) Section 4071(d) (relating to termination of tax on
tires).
(F) Section 4081(d)(1) (relating to termination of tax on
gasoline, diesel fuel, and kerosene).
(G) Section 4481(e) (relating to period tax in effect).
(H) Section 4482(c)(4) (relating to taxable period).
(I) Section 4482(d) (relating to special rule for taxable
period in which termination date occurs).
(2) Floor stocks refunds.--Section 6412(a)(1) (relating to
floor stocks refunds) is amended--
(A) by striking ``2005'' each place it appears and
inserting ``2009'', and
(B) by striking ``2006'' each place it appears and
inserting ``2010''.
(d) Extension of Certain Exemptions.--The following
provisions are each amended by striking ``2005'' and
inserting ``2009'':
(1) Section 4221(a) (relating to certain tax-free sales).
(2) Section 4483(g) (relating to termination of exemptions
for highway use tax).
(e) Extension of Deposits Into, and Certain Transfers From,
Trust Fund.--
(1) In general.--Subsections (b), (c)(2), (c)(3),
(c)(4)(A)(i), and (c)(5)(A) of section 9503 (relating to the
Highway Trust Fund) are amended--
(A) by striking ``2005'' each place it appears and
inserting ``2009'', and
(B) by striking ``2006'' each place it appears and
inserting ``2010''.
(2) Conforming amendments to land and water conservation
fund.--Section 201(b) of the Land and Water Conservation Fund
Act of 1965 (16 U.S.C. 460l-11(b)) is amended--
(A) by striking ``2003'' and inserting ``2007'', and
(B) by striking ``2004'' each place it appears and
inserting ``2008''.
(f) Extension of Tax Benefits for Qualified Methanol and
Ethanol Fuel Produced From Coal.--Section 4041(b)(2)
(relating to qualified methanol and ethanol fuel) is
amended--
(1) by striking ``2007'' in subparagraph (C)(ii) and
inserting ``2010'', and
(2) by striking ``October 1, 2007'' in subparagraph (D) and
inserting ``January 1, 2011''.
(g) Prohibition on Use of Highway Account for Rail
Projects.--Section 9503(c) (relating to transfers from
Highway Trust Fund for certain repayments and credits) is
amended by adding at the end the following new paragraph:
``(6) Prohibition on use of highway account for certain
rail projects.--With respect to rail projects beginning after
the date of the enactment of this paragraph, no amount shall
be available from the Highway Account (as defined in
subsection (e)(5)(B)) for any rail project, except for any
rail project involving publicly owned rail facilities or any
rail project yielding a public benefit.''.
(h) Highway Trust Fund Expenditures for Highway Use Tax
Evasion Projects.--Section 9503(c), as amended by subsection
(g), is amended to add at the end the following new
paragraph:
``(7) Highway use tax evasion projects.--From amounts
available in the Highway Trust Fund, there is authorized to
be expended--
``(A) for each fiscal year after 2003 to the Internal
Revenue Service--
``(i) $30,000,000 for enforcement of fuel tax compliance,
including the per-certification of tax-exempt users,
``(ii) $10,000,000 for Xstars, and
``(iii) $10,000,000 for xfirs, and
``(B) for each fiscal year after 2003 to the Federal
Highway Administration, $50,000,000 to be allocated
$1,000,000 to each State to combat fuel tax evasion on the
State level.''.
(i) Effective Date.--The amendments made by and provisions
of this section shall take effect on the date of the
enactment of this Act.
SEC. 9002. FULL ACCOUNTING OF FUNDS RECEIVED BY THE HIGHWAY
TRUST FUND.
(a) In General.--Section 9503(c) (relating to transfers
from Highway Trust Fund for certain repayments and credits),
as amended by section 9001 of this Act, is amended by
striking paragraph (2) and redesignating paragraphs (3), (4),
(5), (6), and (7) as paragraphs (2), (3), (4), (5), and (6),
respectively.
(b) Interest on Unexpended Balances Credited to Trust
Fund.--Section 9503 (relating to the Highway Trust Fund) is
amended by striking subsection (f).
(c) Conforming Amendments.--
(1) Section 9503(b)(4)(D) is amended by striking
``paragraph (4)(D) or (5)(B)'' and inserting ``paragraph
(3)(D) or (4)(B)''.
(2) Paragraph (2) of section 9503(c) (as redesignated by
subsection (a)) is amended by adding at the end the following
new sentence: ``The amounts payable from the Highway Trust
Fund under this paragraph shall be determined by taking into
account only the portion of the taxes which are deposited
into the Highway Trust Fund.''.
(3) Section 9504(a)(2) is amended by striking ``section
9503(c)(4), section 9503(c)(5)'' and inserting ``section
9503(c)(3), section 9503(c)(4)''.
(4) Paragraph (2) of section 9504(b), as amended by section
9001 of this Act, is amended by striking ``section
9503(c)(5)'' and inserting ``section 9503(c)(4)''.
(5) Section 9504(e) is amended by striking ``section
9503(c)(4)'' and inserting ``section 9503(c)(3)''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to amounts paid
for which no transfer from the Highway Trust Fund has been
made before April 1, 2004.
(2) Interest credited.--The amendment made by subsection
(b) shall take effect on the date of the enactment of this
Act.
SEC. 9003. MODIFICATION OF ADJUSTMENTS OF APPORTIONMENTS.
(a) In General.--Section 9503(d) (relating to adjustments
for apportionments) is amended--
(1) by striking ``24-month'' in paragraph (1)(B) and
inserting ``48-month'', and
(2) by striking ``2 years' '' in the heading for paragraph
(3) and inserting ``4 years' ''.
(b) Measurement of Net Highway Receipts.--Section 9503(d)
is amended by redesignating paragraph (6) as paragraph (7)
and by inserting after paragraph (5) the following new
paragraph:
``(6) Measurement of net highway receipts.--For purposes of
making any estimate under paragraph (1) of net highway
receipts for periods ending after the date specified in
subsection (b)(1), the Secretary shall treat--
``(A) each expiring provision of subsection (b) which is
related to appropriations or transfers to the Highway Trust
Fund to have been extended through the end of the 48-month
period referred to in paragraph (1)(B), and
``(B) with respect to each tax imposed under the sections
referred to in subsection (b)(1), the rate of such tax during
the 48-month period referred to in paragraph (1)(B) to be the
same as the rate of such tax as in effect on the date of such
estimate.''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
Subtitle B--Volumetric Ethanol Excise Tax Credit
SEC. 9101. SHORT TITLE.
This subtitle may be cited as the ``Volumetric Ethanol
Excise Tax Credit (VEETC) Act of 2004''.
SEC. 9102. ALCOHOL AND BIODIESEL EXCISE TAX CREDIT AND
EXTENSION OF ALCOHOL FUELS INCOME TAX CREDIT.
(a) In General.--Subchapter B of chapter 65 (relating to
rules of special application) is amended by inserting after
section 6425 the following new section:
``SEC. 6426. CREDIT FOR ALCOHOL FUEL AND BIODIESEL MIXTURES.
``(a) Allowance of Credits.--There shall be allowed as a
credit against the tax imposed by section 4081 an amount
equal to the sum of--
``(1) the alcohol fuel mixture credit, plus
``(2) the biodiesel mixture credit.
``(b) Alcohol Fuel Mixture Credit.--
``(1) In general.--For purposes of this section, the
alcohol fuel mixture credit is the product of the applicable
amount and the number of gallons of alcohol used by the
taxpayer in producing any alcohol fuel mixture for sale or
use in a trade or business of the taxpayer.
``(2) Applicable amount.--For purposes of this subsection--
[[Page H2103]]
``(A) In general.--Except as provided in subparagraph (B),
the applicable amount is 52 cents (51 cents in the case of
any sale or use after 2004).
``(B) Mixtures not containing ethanol.--In the case of an
alcohol fuel mixture in which none of the alcohol consists of
ethanol, the applicable amount is 60 cents.
``(3) Alcohol fuel mixture.--For purposes of this
subsection, the term `alcohol fuel mixture' means a mixture
of alcohol and a taxable fuel which--
``(A) is sold by the taxpayer producing such mixture to any
person for use as a fuel,
``(B) is used as a fuel by the taxpayer producing such
mixture, or
``(C) is removed from the refinery by a person producing
such mixture.
``(4) Other definitions.--For purposes of this subsection--
``(A) Alcohol.--The term `alcohol' includes methanol and
ethanol but does not include--
``(i) alcohol produced from petroleum, natural gas, or coal
(including peat), or
``(ii) alcohol with a proof of less than 190 (determined
without regard to any added denaturants).
Such term also includes an alcohol gallon equivalent of ethyl
tertiary butyl ether or other ethers produced from such
alcohol.
``(B) Taxable fuel.--The term `taxable fuel' has the
meaning given such term by section 4083(a)(1).
``(5) Termination.--This subsection shall not apply to any
sale, use, or removal for any period after December 31, 2010.
``(c) Biodiesel Mixture Credit.--
``(1) In general.--For purposes of this section, the
biodiesel mixture credit is the product of the applicable
amount and the number of gallons of biodiesel used by the
taxpayer in producing any biodiesel mixture for sale or use
in a trade or business of the taxpayer.
``(2) Applicable amount.--For purposes of this subsection--
``(A) In general.--Except as provided in subparagraph (B),
the applicable amount is 50 cents.
``(B) Amount for agri-biodiesel.--In the case of any
biodiesel which is agri-biodiesel, the applicable amount is
$1.00.
``(3) Biodiesel mixture.--For purposes of this section, the
term `biodiesel mixture' means a mixture of biodiesel and
diesel fuel (as defined in section 4083(a)(3)), determined
without regard to any use of kerosene, which--
``(A) is sold by the taxpayer producing such mixture to any
person for use as a fuel,
``(B) is used as a fuel by the taxpayer producing such
mixture, or
``(C) is removed from the refinery by a person producing
such mixture.
``(4) Certification for biodiesel.--No credit shall be
allowed under this section unless the taxpayer obtains a
certification (in such form and manner as prescribed by the
Secretary) from the producer of the biodiesel which
identifies the product produced and the percentage of
biodiesel and agri-biodiesel in the product.
``(5) Other definitions.--Any term used in this subsection
which is also used in section 40A shall have the meaning
given such term by section 40A.
``(6) Termination.--This subsection shall not apply to any
sale, use, or removal for any period after December 31, 2006.
``(d) Mixture not Used as a Fuel, Etc.--
``(1) Imposition of tax.--If--
``(A) any credit was determined under this section with
respect to alcohol or biodiesel used in the production of any
alcohol fuel mixture or biodiesel mixture, respectively, and
``(B) any person--
``(i) separates the alcohol or biodiesel from the mixture,
or
``(ii) without separation, uses the mixture other than as a
fuel,
then there is hereby imposed on such person a tax equal to
the product of the applicable amount and the number of
gallons of such alcohol or biodiesel.
``(2) Applicable laws.--All provisions of law, including
penalties, shall, insofar as applicable and not inconsistent
with this section, apply in respect of any tax imposed under
paragraph (1) as if such tax were imposed by section 4081 and
not by this section.
``(e) Coordination With Exemption From Excise Tax.--Rules
similar to the rules under section 40(c) shall apply for
purposes of this section.''.
(b) Registration Requirement.--Section 4101(a)(1) (relating
to registration), as amended by sections 9211 and 9242 of
this Act, is amended by inserting ``and every person
producing or importing biodiesel (as defined in section
40A(d)(1)) or alcohol (as defined in section 6426(b)(4)(A))''
after ``4081''.
(c) Additional Amendments.--
(1) Section 40(c) is amended by striking ``subsection
(b)(2), (k), or (m) of section 4041, section 4081(c), or
section 4091(c)'' and inserting ``section 4041(b)(2), section
6426, or section 6427(e)''.
(2) Paragraph (4) of section 40(d) is amended to read as
follows:
``(4) Volume of alcohol.--For purposes of determining under
subsection (a) the number of gallons of alcohol with respect
to which a credit is allowable under subsection (a), the
volume of alcohol shall include the volume of any denaturant
(including gasoline) which is added under any formulas
approved by the Secretary to the extent that such denaturants
do not exceed 5 percent of the volume of such alcohol
(including denaturants).''.
(3) Section 40(e)(1) is amended--
(A) by striking ``2007'' in subparagraph (A) and inserting
``2010'', and
(B) by striking ``2008'' in subparagraph (B) and inserting
``2011''.
(4) Section 40(h) is amended--
(A) by striking ``2007'' in paragraph (1) and inserting
``2010'', and
(B) by striking ``, 2006, or 2007'' in the table contained
in paragraph (2) and inserting ``through 2010''.
(5) Section 4041(b)(2)(B) is amended by striking ``a
substance other than petroleum or natural gas'' and inserting
``coal (including peat)''.
(6) Section 4041 is amended by striking subsection (k).
(7) Section 4081 is amended by striking subsection (c).
(8) Paragraph (2) of section 4083(a) is amended to read as
follows:
``(2) Gasoline.--The term `gasoline'--
``(A) includes any gasoline blend, other than qualified
methanol or ethanol fuel (as defined in section
4041(b)(2)(B)), partially exempt methanol or ethanol fuel (as
defined in section 4041(m)(2)), or a denatured alcohol, and
``(B) includes, to the extent prescribed in regulations--
``(i) any gasoline blend stock, and
``(ii) any product commonly used as an additive in gasoline
(other than alcohol).
For purposes of subparagraph (B)(i), the term `gasoline blend
stock' means any petroleum product component of gasoline.''.
(9) Section 6427 is amended by inserting after subsection
(d) the following new subsection:
``(e) Alcohol or Biodiesel Used to Produce Alcohol Fuel and
Biodiesel Mixtures or Used as Fuels.--Except as provided in
subsection (k)--
``(1) Used to produce a mixture.--If any person produces a
mixture described in section 6426 in such person's trade or
business, the Secretary shall pay (without interest) to such
person an amount equal to the alcohol fuel mixture credit or
the biodiesel mixture credit with respect to such mixture.
``(2) Used as fuel.--If alcohol (as defined in section
40(d)(1)) or biodiesel (as defined in section 40A(d)(1)) or
agri-biodiesel (as defined in section 40A(d)(2)) which is not
in a mixture described in section 6426--
``(A) is used by any person as a fuel in a trade or
business, or
``(B) is sold by any person at retail to another person and
placed in the fuel tank of such person's vehicle,
the Secretary shall pay (without interest) to such person an
amount equal to the alcohol credit (as determined under
section 40(b)(2)) or the biodiesel credit (as determined
under section 40A(b)(2)) with respect to such fuel.
``(3) Coordination with other repayment provisions.--No
amount shall be payable under paragraph (1) with respect to
any mixture with respect to which an amount is allowed as a
credit under section 6426.
``(4) Termination.--This subsection shall not apply with
respect to--
``(A) any alcohol fuel mixture (as defined in section
6426(b)(3)) or alcohol (as so defined) sold or used after
December 31, 2010, and
``(B) any biodiesel mixture (as defined in section
6426(c)(3)) or biodiesel (as so defined) or agri-biodiesel
(as so defined) sold or used after December 31, 2006.''.
(10) Section 6427(i)(3) is amended--
(A) by striking ``subsection (f)'' both places it appears
in subparagraph (A) and inserting ``subsection (e)(1)'',
(B) by striking ``gasoline, diesel fuel, or kerosene used
to produce a qualified alcohol mixture (as defined in section
4081(c)(3))'' in subparagraph (A) and inserting ``a mixture
described in section 6426'',
(C) by adding at the end of subparagraph (A) the following
new flush sentence: ``In the case of an electronic claim,
this subparagraph shall be applied without regard to clause
(i).'',
(D) by striking ``subsection (f)(1)'' in subparagraph (B)
and inserting ``subsection (e)(1)'',
(E) by striking ``20 days of the date of the filing of such
claim'' in subparagraph (B) and inserting ``45 days of the
date of the filing of such claim (20 days in the case of an
electronic claim)'', and
(F) by striking ``alcohol mixture'' in the heading and
inserting ``alcohol fuel and biodiesel mixture''.
(11) Section 9503(b)(1) is amended by adding at the end the
following new flush sentence: ``For purposes of this
paragraph, taxes received under sections 4041 and 4081 shall
be determined without reduction for credits under section
6426.''.
(12) Section 9503(b)(4), as amended by section 9101 of this
Act, is amended--
(A) by adding ``or'' at the end of subparagraph (C),
(B) by striking the comma at the end of subparagraph
(D)(iii) and inserting a period, and
(C) by striking subparagraphs (E) and (F).
(13) The table of sections for subchapter B of chapter 65
is amended by inserting after the item relating to section
6425 the following new item:
``Sec. 6426. Credit for alcohol fuel and biodiesel mixtures.''.
(d) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to fuel sold or used after September 30, 2004.
[[Page H2104]]
(2) Registration requirement.--The amendment made by
subsection (b) shall take effect on April 1, 2005.
(3) Extension of alcohol fuels credit.--The amendments made
by paragraphs (3), (4), and (14) of subsection (c) shall take
effect on the date of the enactment of this Act.
(4) Repeal of general fund retention of certain alcohol
fuels taxes.--The amendments made by subsection (c)(12) shall
apply to fuel sold or used after September 30, 2003.
(e) Format for Filing.--The Secretary of the Treasury shall
describe the electronic format for filing claims described in
section 6427(i)(3)(B) of the Internal Revenue Code of 1986
(as amended by subsection (c)(10)(C)) not later than
September 30, 2004.
SEC. 9103. BIODIESEL INCOME TAX CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business related credits) is amended
by inserting after section 40 the following new section:
``SEC. 40A. BIODIESEL USED AS FUEL.
``(a) General Rule.--For purposes of section 38, the
biodiesel fuels credit determined under this section for the
taxable year is an amount equal to the sum of--
``(1) the biodiesel mixture credit, plus
``(2) the biodiesel credit.
``(b) Definition of Biodiesel Mixture Credit and Biodiesel
Credit.--For purposes of this section--
``(1) Biodiesel mixture credit.--
``(A) In general.--The biodiesel mixture credit of any
taxpayer for any taxable year is 50 cents for each gallon of
biodiesel used by the taxpayer in the production of a
qualified biodiesel mixture.
``(B) Qualified biodiesel mixture.--The term `qualified
biodiesel mixture' means a mixture of biodiesel and diesel
fuel (as defined in section 4083(a)(3)), determined without
regard to any use of kerosene, which--
``(i) is sold by the taxpayer producing such mixture to any
person for use as a fuel, or
``(ii) is used as a fuel by the taxpayer producing such
mixture.
``(C) Sale or use must be in trade or business, etc.--
Biodiesel used in the production of a qualified biodiesel
mixture shall be taken into account--
``(i) only if the sale or use described in subparagraph (B)
is in a trade or business of the taxpayer, and
``(ii) for the taxable year in which such sale or use
occurs.
``(D) Casual off-farm production not eligible.--No credit
shall be allowed under this section with respect to any
casual off-farm production of a qualified biodiesel mixture.
``(2) Biodiesel credit.--
``(A) In general.--The biodiesel credit of any taxpayer for
any taxable year is 50 cents for each gallon of biodiesel
which is not in a mixture with diesel fuel and which during
the taxable year--
``(i) is used by the taxpayer as a fuel in a trade or
business, or
``(ii) is sold by the taxpayer at retail to a person and
placed in the fuel tank of such person's vehicle.
``(B) User credit not to apply to biodiesel sold at
retail.--No credit shall be allowed under subparagraph (A)(i)
with respect to any biodiesel which was sold in a retail sale
described in subparagraph (A)(ii).
``(3) Credit for agri-biodiesel.--In the case of any
biodiesel which is agri-biodiesel, paragraphs (1)(A) and
(2)(A) shall be applied by substituting `$1.00' for `50
cents'.
``(4) Certification for biodiesel.--No credit shall be
allowed under this section unless the taxpayer obtains a
certification (in such form and manner as prescribed by the
Secretary) from the producer or importer of the biodiesel
which identifies the product produced and the percentage of
biodiesel and agri-biodiesel in the product.
``(c) Coordination With Credit Against Excise Tax.--The
amount of the credit determined under this section with
respect to any biodiesel shall be properly reduced to take
into account any benefit provided with respect to such
biodiesel solely by reason of the application of section 6426
or 6427(e).
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Biodiesel.--The term `biodiesel' means the monoalkyl
esters of long chain fatty acids derived from plant or animal
matter which meet--
``(A) the registration requirements for fuels and fuel
additives established by the Environmental Protection Agency
under section 211 of the Clean Air Act (42 U.S.C. 7545), and
``(B) the requirements of the American Society of Testing
and Materials D6751.
``(2) Agri-biodiesel.--The term `agri-biodiesel' means
biodiesel derived solely from virgin oils, including esters
derived from virgin vegetable oils from corn, soybeans,
sunflower seeds, cottonseeds, canola, crambe, rapeseeds,
safflowers, flaxseeds, rice bran, and mustard seeds, and from
animal fats.
``(3) Mixture or biodiesel not used as a fuel, etc.--
``(A) Mixtures.--If--
``(i) any credit was determined under this section with
respect to biodiesel used in the production of any qualified
biodiesel mixture, and
``(ii) any person--
``(I) separates the biodiesel from the mixture, or
``(II) without separation, uses the mixture other than as a
fuel,
then there is hereby imposed on such person a tax equal to
the product of the rate applicable under subsection (b)(1)(A)
and the number of gallons of such biodiesel in such mixture.
``(B) Biodiesel.--If--
``(i) any credit was determined under this section with
respect to the retail sale of any biodiesel, and
``(ii) any person mixes such biodiesel or uses such
biodiesel other than as a fuel,
then there is hereby imposed on such person a tax equal to
the product of the rate applicable under subsection (b)(2)(A)
and the number of gallons of such biodiesel.
``(C) Applicable laws.--All provisions of law, including
penalties, shall, insofar as applicable and not inconsistent
with this section, apply in respect of any tax imposed under
subparagraph (A) or (B) as if such tax were imposed by
section 4081 and not by this chapter.
``(4) Pass-thru in the case of estates and trusts.--Under
regulations prescribed by the Secretary, rules similar to the
rules of subsection (d) of section 52 shall apply.
``(e) Termination.--This section shall not apply to any
sale or use after December 31, 2006.''.
(b) Credit Treated as Part of General Business Credit.--
Section 38(b) (relating to current year business credit) is
amended by striking ``plus'' at the end of paragraph (14), by
striking the period at the end of paragraph (15) and
inserting ``, plus'', and by adding at the end the following
new paragraph:
``(16) the biodiesel fuels credit determined under section
40A(a).''.
(c) Conforming Amendments.--
(1) Section 39(d) is amended by adding at the end the
following new paragraph:
``(11) No carryback of biodiesel fuels credit before
effective date.--No portion of the unused business credit for
any taxable year which is attributable to the biodiesel fuels
credit determined under section 40A may be carried back to a
taxable year ending on or before September 30, 2004.''.
(2)(A) Section 87 is amended to read as follows:
``SEC. 87. ALCOHOL AND BIODIESEL FUELS CREDITS.
``Gross income includes--
``(1) the amount of the alcohol fuels credit determined
with respect to the taxpayer for the taxable year under
section 40(a), and
``(2) the biodiesel fuels credit determined with respect to
the taxpayer for the taxable year under section 40A(a).''.
(B) The item relating to section 87 in the table of
sections for part II of subchapter B of chapter 1 is amended
by striking ``fuel credit'' and inserting ``and biodiesel
fuels credits''.
(3) Section 196(c) is amended by striking ``and'' at the
end of paragraph (9), by striking the period at the end of
paragraph (10) and inserting ``, and'', and by adding at the
end the following new paragraph:
``(11) the biodiesel fuels credit determined under section
40A(a).''.
(4) The table of sections for subpart D of part IV of
subchapter A of chapter 1 is amended by adding after the item
relating to section 40 the following new item:
``Sec. 40A. Biodiesel used as fuel.''
(d) Effective Date.--The amendments made by this section
shall apply to fuel produced, and sold or used, after
September 30, 2004, in taxable years ending after such date.
Subtitle C--Fuel Fraud Prevention
SEC. 9200. SHORT TITLE.
This subtitle may be cited as the ``Fuel Fraud Prevention
Act of 2004''.
PART I--AVIATION JET FUEL
SEC. 9211. TAXATION OF AVIATION-GRADE KEROSENE.
(a) Rate of Tax.--
(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, 21.8 cents
per gallon.''.
(2) Commercial aviation.--Paragraph (2) of section 4081(a)
is amended by adding at the end the following new
subparagraph:
``(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, the rate of tax
under subparagraph (A)(iv) shall be 4.3 cents per gallon.''.
(3) Nontaxable uses.--
(A) In general.--Section 4082 is amended by redesignating
subsections (e) and (f) as subsections (f) and (g),
respectively, and by inserting after subsection (d) the
following new subsection:
``(e) Aviation-Grade Kerosene.--In the case of aviation-
grade kerosene which is exempt from the tax imposed by
section 4041(c) (other than by reason of a prior imposition
of tax) and which is removed from any refinery or terminal
directly into the fuel tank of an aircraft, the rate of tax
under section 4081(a)(2)(A)(iv) shall be zero.''.
(B) Conforming amendments.--
(i) Subsection (b) of section 4082 is amended by adding at
the end the following new flush sentence: ``The term
`nontaxable use' does not include the use of aviation-grade
kerosene in an aircraft.''.
(ii) Section 4082(d) is amended by striking paragraph (1)
and by redesignating paragraphs (2) and (3) as paragraphs (1)
and (2), respectively.
(4) Nonaircraft use of aviation-grade kerosene.--
(A) In general.--Subparagraph (B) of section 4041(a)(1) is
amended by adding at the
[[Page H2105]]
end the following new sentence: ``This subparagraph shall not
apply to aviation-grade kerosene.''.
(B) Conforming amendment.--The heading for paragraph (1) of
section 4041(a) is amended by inserting ``and kerosene''
after ``diesel fuel''.
(b) Commercial Aviation.--Section 4083 is amended
redesignating subsections (b) and (c) as subsections (c) and
(d), respectively, and by inserting after subsection (a) the
following new subsection:
``(b) Commercial Aviation.--For purposes of this subpart,
the term `commercial aviation' means any use of an aircraft
in a business of transporting persons or property for
compensation or hire by air, unless properly allocable to any
transportation exempt from the taxes imposed by section 4261
and 4271 by reason of section 4281 or 4282 or by reason of
section 4261(h).''.
(c) Refunds.--
(1) In general.--Paragraph (4) of section 6427(l) is
amended to read as follows:
``(4) Refunds for aviation-grade kerosene.--
``(A) No refund of certain taxes on fuel used in commercial
aviation.--In the case of aviation-grade kerosene used in
commercial aviation (as defined in section 4083(b)) (other
than supplies for vessels or aircraft within the meaning of
section 4221(d)(3)), paragraph (1) shall not apply to so much
of the tax imposed by section 4081 as is attributable to--
``(i) the Leaking Underground Storage Tank Trust Fund
financing rate imposed by such section, and
``(ii) so much of the rate of tax specified in section
4081(a)(2)(A)(iv) as does not exceed 4.3 cents per gallon.
``(B) Payment to ultimate, registered vendor.--With respect
to aviation-grade kerosene, 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 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).''.
(2) Time for filing claims.--Paragraph (4) of section
6427(i) is amended by striking ``subsection (l)(5)'' and
inserting ``paragraph (4)(B) or (5) of subsection (l)''.
(3) Conforming amendment.--Subparagraph (B) of section
6427(l)(2) is amended to read as follows:
``(B) in the case of aviation-grade kerosene--
``(i) any use which is exempt from the tax imposed by
section 4041(c) other than by reason of a prior imposition of
tax, or
``(ii) any use in commercial aviation (within the meaning
of section 4083(b)).''.
(d) Repeal of Prior Taxation of Aviation Fuel.--
(1) In general.--Part III of subchapter A of chapter 32 is
amended by striking subpart B and by redesignating subpart C
as subpart B.
(2) Conforming amendments.--
(A) Section 4041(c) is amended to read as follows:
``(c) Aviation-Grade Kerosene.--
``(1) In general.--There is hereby imposed a tax upon
aviation-grade kerosene--
``(A) sold by any person to an owner, lessee, or other
operator of an aircraft for use in such aircraft, or
``(B) used by any person in an aircraft unless there was a
taxable sale of such fuel under subparagraph (A).
``(2) Exemption for previously taxed fuel.--No tax shall be
imposed by this subsection on the sale or use of any
aviation-grade kerosene if tax was imposed on such liquid
under section 4081 and the tax thereon was not credited or
refunded.
``(3) Rate of tax.--The rate of tax imposed by this
subsection shall be the rate of tax specified in section
4081(a)(2)(A)(iv) which is in effect at the time of such sale
or use.''.
(B) Section 4041(d)(2) is amended by striking ``section
4091'' and inserting ``section 4081''.
(C) Section 4041 is amended by striking subsection (e).
(D) Section 4041 is amended by striking subsection (i).
(E) Section 4041(m)(1) is amended to read as follows:
``(1) In general.--In the case of the sale or use of any
partially exempt methanol or ethanol fuel, the rate of the
tax imposed by subsection (a)(2) shall be--
``(A) after September 30, 1997, and before September 30,
2009--
``(i) in the case of fuel none of the alcohol in which
consists of ethanol, 9.15 cents per gallon, and
``(ii) in any other case, 11.3 cents per gallon, and
``(B) after September 30, 2009--
``(i) in the case of fuel none of the alcohol in which
consists of ethanol, 2.15 cents per gallon, and
``(ii) in any other case, 4.3 cents per gallon.''.
(F) Sections 4101(a), 4103, 4221(a), and 6206 are each
amended by striking ``, 4081, or 4091'' and inserting ``or
4081''.
(G) Section 6416(b)(2) is amended by striking ``4091 or''.
(H) Section 6416(b)(3) is amended by striking ``or 4091''
each place it appears.
(I) Section 6416(d) is amended by striking ``or to the tax
imposed by section 4091 in the case of refunds described in
section 4091(d)''.
(J) Section 6427 is amended by striking subsection (f).
(K) Section 6427(j)(1) is amended by striking ``, 4081, and
4091'' and inserting ``and 4081''.
(L)(i) Section 6427(l)(1) is amended to read as follows:
``(1) In general.--Except as otherwise provided in this
subsection and in subsection (k), if any diesel fuel or
kerosene on which tax has been imposed by section 4041 or
4081 is used by any person in a nontaxable use, the Secretary
shall pay (without interest) to the ultimate purchaser of
such fuel an amount equal to the aggregate amount of tax
imposed on such fuel under section 4041 or 4081, as the case
may be, reduced by any refund paid to the ultimate vendor
under paragraph (4)(B).''.
(ii) Paragraph (5)(B) of section 6427(l) is amended by
striking ``Paragraph (1)(A) shall not apply to kerosene'' and
inserting ``Paragraph (1) shall not apply to kerosene (other
than aviation-grade kerosene)''.
(M) Subparagraph (B) of section 6724(d)(1) is amended by
striking clause (xv) and by redesignating the succeeding
clauses accordingly.
(N) Paragraph (2) of section 6724(d) is amended by striking
subparagraph (W) and by redesignating the succeeding
subparagraphs accordingly.
(O) Paragraph (1) of section 9502(b) is amended by adding
``and'' at the end of subparagraph (B) and by striking
subparagraphs (C) and (D) and inserting the following new
subparagraph:
``(C) section 4081 with respect to aviation gasoline and
aviation-grade kerosene, and''.
(P) The last sentence of section 9502(b) is amended to read
as follows: ``There shall not be taken into account under
paragraph (1) so much of the taxes imposed by section 4081 as
are determined at the rate specified in section
4081(a)(2)(B).''.
(Q) Subsection (b) of section 9508 is amended by striking
paragraph (3) and by redesignating paragraphs (4) and (5) as
paragraphs (3) and (4), respectively.
(R) Section 9508(c)(2)(A) is amended by striking ``sections
4081 and 4091'' and inserting ``section 4081''.
(S) The table of subparts for part III of subchapter A of
chapter 32 is amended to read as follows:
``Subpart A. motor and aviation fuels
``Subpart B. special provisions applicable to fuels tax''.
(T) The heading for subpart A of part III of subchapter A
of chapter 32 is amended to read as follows:
``Subpart A--Motor and Aviation Fuels''.
(U) The heading for subpart B of part III of subchapter A
of chapter 32 is amended to read as follows:
``Subpart B--Special Provisions Applicable to Fuels Tax''.
(e) Effective Date.--The amendments made by this section
shall apply to aviation-grade kerosene removed, entered, or
sold after September 30, 2004.
(f) Floor Stocks Tax.--
(1) In general.--There is hereby imposed on aviation-grade
kerosene held on October 1, 2004, by any person a tax 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 under section 4091 of
the Internal Revenue Code of 1986, as in effect on the day
before the date of the enactment of this Act.
(2) Liability for tax and method of payment.--
(A) Liability for tax.--The person holding the kerosene on
October 1, 2004, to which the tax imposed by paragraph (1)
applies shall be liable for such tax.
(B) Method and time for 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, including
the nonapplication of such tax on de minimis amounts of
kerosene.
(3) Transfer of floor stock tax revenues to trust funds.--
For purposes of determining the amount transferred to any
trust fund, the tax imposed by this subsection shall be
treated as imposed by section 4081 of the Internal Revenue
Code of 1986--
(A) at the Leaking Underground Storage Tank Trust Fund
financing rate under such section to the extent of 0.1 cents
per gallon, and
(B) at the rate under section 4081(a)(2)(A)(iv) to the
extent of the remainder.
(4) Held by a person.--For purposes of this section,
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).
(5) Other laws applicable.--All provisions of law,
including penalties, applicable with respect to the tax
imposed by section 4081 of such Code shall, insofar as
applicable and not inconsistent with the provisions of this
subsection, apply with respect to the floor stock tax imposed
by paragraph (1) to the same extent as if such tax were
imposed by such section.
SEC. 9212. TRANSFER OF CERTAIN AMOUNTS FROM THE AIRPORT AND
AIRWAY TRUST FUND TO THE HIGHWAY TRUST FUND TO
REFLECT HIGHWAY USE OF JET FUEL.
(a) In General.--Section 9502(d) is amended by adding at
the end the following new paragraph:
[[Page H2106]]
``(7) Transfers from the trust fund to the highway trust
fund.--
``(A) In general.--The Secretary shall pay annually from
the Airport and Airway Trust Fund into the Highway Trust Fund
an amount (as determined by him) equivalent to amounts
received in the Airport and Airway Trust Fund which are
attributable to fuel that is used primarily for highway
transportation purposes.
``(B) Amounts transferred to mass transit account.--The
Secretary shall transfer 11 percent of the amounts paid into
the Highway Trust Fund under subparagraph (A) to the Mass
Transit Account established under section 9503(e).''.
(b) Conforming Amendments.--
(1) Subsection (a) of section 9503 is amended--
(A) by striking ``appropriated or credited'' and inserting
``paid, appropriated, or credited'', and
(B) by striking ``or section 9602(b)'' and inserting ``,
section 9502(d)(7), or section 9602(b)''.
(2) Subsection (e)(1) of section 9503 is amended by
striking ``or section 9602(b)'' and inserting ``, section
9502(d)(7), or section 9602(b)''.
(c) Effective Date.--The amendments made by this section
shall take effect on October 1, 2004.
PART II--DYED FUEL
SEC. 9221. DYE INJECTION EQUIPMENT.
(a) In General.--Section 4082(a)(2) (relating to exemptions
for diesel fuel and kerosene) is amended by inserting ``by
mechanical injection'' after ``indelibly dyed''.
(b) Dye Injector Security.--Not later than June 30, 2004,
the Secretary of the Treasury shall issue regulations
regarding mechanical dye injection systems described in the
amendment made by subsection (a), and such regulations shall
include standards for making such systems tamper resistant.
(c) Penalty for Tampering With or Failing to Maintain
Security Requirements for Mechanical Dye Injection Systems.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by adding after
section 6715 the following new section:
``SEC. 6715A. TAMPERING WITH OR FAILING TO MAINTAIN SECURITY
REQUIREMENTS FOR MECHANICAL DYE INJECTION
SYSTEMS.
``(a) Imposition of Penalty.--
``(1) Tampering.--If any person tampers with a mechanical
dye injection system used to indelibly dye fuel for purposes
of section 4082, then such person shall pay a penalty in
addition to the tax (if any).
``(2) Failure to maintain security requirements.--If any
operator of a mechanical dye injection system used to
indelibly dye fuel for purposes of section 4082 fails to
maintain the security standards for such system as
established by the Secretary, then such operator shall pay a
penalty.
``(b) Amount of Penalty.--The amount of the penalty under
subsection (a) shall be--
``(1) for each violation described in paragraph (1), the
greater of--
``(A) $25,000, or
``(B) $10 for each gallon of fuel involved, and
``(2) for each--
``(A) failure to maintain security standards described in
paragraph (2), $1,000, and
``(B) failure to correct a violation described in paragraph
(2), $1,000 per day for each day after which such violation
was discovered or such person should have reasonably known of
such violation.
``(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 I
of subchapter B of chapter 68 is amended by adding after the
item related to section 6715 the following new item:
``Sec. 6715A. Tampering with or failing to maintain security
requirements for mechanical dye injection systems.''.
(d) Effective Date.--The amendments made by subsections (a)
and (c) shall take effect 180 days after the date on which
the Secretary issues the regulations described in subsection
(b).
SEC. 9222. ELIMINATION OF ADMINISTRATIVE REVIEW FOR TAXABLE
USE OF DYED FUEL.
(a) In General.--Section 6715 is amended by inserting at
the end the following new subsection:
``(e) No Administrative Appeal for Third and Subsequent
Violations.--In the case of any person who is found to be
subject to the penalty under this section after a chemical
analysis of such fuel and who has been penalized under this
section at least twice after the date of the enactment of
this subsection, no administrative appeal or review shall be
allowed with respect to such finding except in the case of a
claim regarding--
``(1) fraud or mistake in the chemical analysis, or
``(2) mathematical calculation of the amount of the
penalty.''.
(b) Effective Date.--The amendment made by this section
shall apply to penalties assessed after the date of the
enactment of this Act.
SEC. 9223. PENALTY ON UNTAXED CHEMICALLY ALTERED DYED FUEL
MIXTURES.
(a) In General.--Section 6715(a) (relating to dyed fuel
sold for use or used in taxable use, etc.) is amended by
striking ``or'' in paragraph (2), by inserting ``or'' at the
end of paragraph (3), and by inserting after paragraph (3)
the following new paragraph:
``(4) any person who has knowledge that a dyed fuel which
has been altered as described in paragraph (3) sells or holds
for sale such fuel for any use which the person knows or has
reason to know is not a nontaxable use of such fuel,''.
(b) Conforming Amendment.--Section 6715(a)(3) is amended by
striking ``alters, or attempts to alter,'' and inserting
``alters, chemically or otherwise, or attempts to so
alter,''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 9224. TERMINATION OF DYED DIESEL USE BY INTERCITY BUSES.
(a) In General.--Paragraph (3) of section 4082(b) (relating
to nontaxable use) is amended to read as follows:
``(3) any use described in section
4041(a)(1)(C)(iii)(II).''.
(b) Ultimate Vendor Refund.--Subsection (b) of section 6427
is amended by adding at the end the following new paragraph:
``(4) Refunds for use of diesel fuel in certain intercity
buses.--
``(A) In general.--With respect to any fuel to which
paragraph (2)(A) applies, if the ultimate purchaser of such
fuel 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 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).
``(B) Credit cards.--For purposes of this paragraph, if the
sale of such fuel is made by means of a credit card, the
person extending credit to the ultimate purchaser shall be
deemed to be the ultimate vendor.''.
(c) Payment of Refunds.--Subparagraph (A) of section
6427(i)(4), as amended by section 9211 of this Act, is
amended by inserting ``subsections (b)(4) and'' after ``filed
under''.
(b) Effective Date.--The amendments made by this section
shall apply to fuel sold after September 30, 2004.
PART III--MODIFICATION OF INSPECTION OF RECORDS PROVISIONS
SEC. 9231. AUTHORITY TO INSPECT ON-SITE RECORDS.
(a) In General.--Section 4083(d)(1)(A) (relating to
administrative authority), as amended by section 9211 of this
Act, 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 and any shipping
papers pertaining to 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. 9232. ASSESSABLE PENALTY FOR REFUSAL OF ENTRY.
(a) In General.--Part I of subchapter B of chapter 68
(relating to assessable penalties), as amended by section
9221 of this Act, is amended by adding at the end the
following new section:
``SEC. 6717. REFUSAL OF ENTRY.
``(a) In General.--In addition to any other penalty
provided by law, any person who refuses to admit entry or
refuses to permit any other action by the Secretary
authorized by section 4083(d)(1) shall pay a penalty of
$1,000 for such refusal.
``(b) 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.
``(c) Reasonable Cause Exception.--No penalty shall be
imposed under this section with respect to any failure if it
is shown that such failure is due to reasonable cause.''.
(b) Conforming Amendments.--
(1) Section 4083(d)(3), as amended by section 9211 of this
Act, 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) Assessable penalty.--For additional assessable
penalty for the refusal to admit entry or other refusal to
permit an action by the Secretary authorized by paragraph
(1), see section 6717.''.
(2) The table of sections for part I of subchapter B of
chapter 68, as amended by section 9221 of this Act, is
amended by adding at the end the following new item:
``Sec. 6717. Refusal of entry.''.
[[Page H2107]]
(c) Effective Date.--The amendments made by this section
shall take effect on October 1, 2004.
PART IV--REGISTRATION AND REPORTING REQUIREMENTS
SEC. 9241. REGISTRATION OF PIPELINE OR VESSEL OPERATORS
REQUIRED FOR EXEMPTION OF BULK TRANSFERS TO
REGISTERED TERMINALS OR REFINERIES.
(a) In General.--Section 4081(a)(1)(B) (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 such pipeline or
vessel,'' after ``the taxable fuel''.
(b) Civil Penalty for Carrying Taxable Fuels by
Nonregistered Pipelines or Vessels.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties), as amended by section
9232 of this Act, is amended by adding at the end the
following new section:
``SEC. 6718. CARRYING TAXABLE FUELS BY NONREGISTERED
PIPELINES OR VESSELS.
``(a) Imposition of Penalty.--If any person knowingly
transfers any taxable fuel (as defined in section 4083(a)(1))
in bulk pursuant to section 4081(a)(1)(B) to an unregistered,
such person 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 an amount equal to the greater of--
``(A) $10,000, or
``(B) $1 per gallon.
``(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.
``(d) Reasonable Cause Exception.--No penalty shall be
imposed under this section with respect to any failure if it
is shown that such failure is due to reasonable cause.''.
(2) Clerical amendment.--The table of sections for part I
of subchapter B of chapter 68, as amended by section 9232 of
this Act, is amended by adding at the end the following new
item:
``Sec. 6718. Carrying taxable fuels by nonregistered pipelines or
vessels.''.
(c) Publication of Registered Persons.--Not later than June
30, 2004, the Secretary of the Treasury shall publish a list
of persons required to be registered under section 4101 of
the Internal Revenue Code of 1986.
(d) Effective Date.--The amendments made by subsections (a)
and (b) shall take effect on October 1, 2004.
SEC. 9242. DISPLAY OF REGISTRATION.
(a) In General.--Subsection (a) of section 4101 (relating
to registration) is amended--
(1) by striking ``Every'' and inserting the following:
``(1) In general.--Every'', and
(2) by adding at the end the following new paragraph:
``(2) Display of registration.--Every operator of a vessel
required by the Secretary to register under this section
shall display proof of registration through an electronic
identification device prescribed by the Secretary on each
vessel used by such operator to transport any taxable
fuel.''.
(b) Civil Penalty for Failure to Display Registration.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties), as amended by section
9241 of this Act, is amended by adding at the end the
following new section:
``SEC. 6719. FAILURE TO DISPLAY REGISTRATION OF VESSEL.
``(a) Failure to Display Registration.--Every operator of a
vessel who fails to display proof of registration pursuant to
section 4101(a)(2) shall pay a penalty of $500 for each such
failure. With respect to any vessel, only one penalty shall
be imposed by this section during any calendar month.
``(b) Multiple Violations.--In determining the penalty
under subsection (a) on any person, subsection (a) shall be
applied by increasing the amount in subsection (a) 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) Reasonable Cause Exception.--No penalty shall be
imposed under this section with respect to any failure if it
is shown that such failure is due to reasonable cause.''.
(2) Clerical amendment.--The table of sections for part I
of subchapter B of chapter 68, as amended by section 9241 of
this Act, is amended by adding at the end the following new
item:
``Sec. 6719. Failure to display registration of vessel.''.
(c) Effective Date.--The amendments made by this section
shall take effect on October 1, 2004.
SEC. 9243. REGISTRATION OF PERSONS WITHIN FOREIGN TRADE
ZONES, ETC.
(a) In General.--Section 4101(a), as amended by section
9242 of this Act, is amended by redesignating paragraph (2)
as paragraph (3), and by inserting after paragraph (1) the
following new paragraph:
``(2) Registration of persons within foreign trade zones,
etc.--The Secretary shall require registration by any person
which--
``(A) operates a terminal or refinery within a foreign
trade zone or within a customs bonded storage facility, or
``(B) holds an inventory position with respect to a taxable
fuel in such a terminal.''.
(b) Effective Date.--The amendments made by this section
shall take effect on October 1, 2004.
SEC. 9244. PENALTIES FOR FAILURE TO REGISTER AND FAILURE TO
REPORT.
(a) Increased Penalty.--Subsection (a) of section 7272
(relating to penalty for failure to register) is amended by
inserting ``($10,000 in the case of a failure to register
under section 4101)'' after ``$50''.
(b) Increased Criminal Penalty.--Section 7232 (relating to
failure to register under section 4101, false representations
of registration status, etc.) is amended by striking
``$5,000'' and inserting ``$10,000''.
(c) Assessable Penalty for Failure to Register.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties), as amended by section
9242 of this Act, is amended by adding at the end the
following new section:
``SEC. 6720. FAILURE TO REGISTER.
``(a) Failure to Register.--Every person who is required to
register under section 4101 and fails to do so shall pay a
penalty in addition to the tax (if any).
``(b) Amount of Penalty.--The amount of the penalty under
subsection (a) shall be--
``(1) $10,000 for each initial failure to register, and
``(2) $1,000 for each day thereafter such person fails to
register.
``(c) Reasonable Cause Exception.--No penalty shall be
imposed under this section with respect to any failure if it
is shown that such failure is due to reasonable cause.''.
(2) Clerical amendment.--The table of sections for part I
of subchapter B of chapter 68, as amended by section 9242 of
this Act, is amended by adding at the end the following new
item:
``Sec. 6720. Failure to register.''.
(d) Assessable Penalty for Failure to Report.--
(1) In general.--Part II of subchapter B of chapter 68
(relating to assessable penalties) is amended by adding at
the end the following new section:
``SEC. 6725. FAILURE TO REPORT INFORMATION UNDER SECTION
4101.
``(a) In General.--In the case of each failure described in
subsection (b) by any person with respect to a vessel or
facility, such person shall pay a penalty of $10,000 in
addition to the tax (if any).
``(b) Failures Subject to Penalty.--For purposes of
subsection (a), the failures described in this subsection
are--
``(1) any failure to make a report under section 4101(d) on
or before the date prescribed therefor, and
``(2) any failure to include all of the information
required to be shown on such report or the inclusion of
incorrect information.
``(c) Reasonable Cause Exception.--No penalty shall be
imposed under this section with respect to any failure if it
is shown that such failure is due to reasonable cause.''.
(2) Clerical amendment.--The table of sections for part II
of subchapter B of chapter 68 is amended by adding at the end
the following new item:
``Sec. 6725. Failure to report information under section 4101.''.
(e) Effective Date.--The amendments made by this section
shall apply to failures pending or occurring after September
30, 2004.
SEC. 9245. INFORMATION REPORTING FOR PERSONS CLAIMING CERTAIN
TAX BENEFITS.
(a) In General.--Subpart C of part III of subchapter A of
chapter 32 is amended by adding at the end the following new
section:
``SEC. 4104. INFORMATION REPORTING FOR PERSONS CLAIMING
CERTAIN TAX BENEFITS.
``(a) In General.--The Secretary shall require any person
claiming tax benefits--
``(1) under the provisions of section 34, 40, and 40A to
file a return at the time such person claims such benefits
(in such manner as the Secretary may prescribe), and
``(2) under the provisions of section 4041(b)(2), 6426, or
6427(e) to file a monthly return (in such manner as the
Secretary may prescribe).
``(b) Contents of Return.--Any return filed under this
section shall provide such information relating to such
benefits and the coordination of such benefits as the
Secretary may require to ensure the proper administration and
use of such benefits.
``(c) Enforcement.--With respect to any person described in
subsection (a) and subject to registration requirements under
this title, rules similar to rules of section 4222(c) shall
apply with respect to any requirement under this section.''.
[[Page H2108]]
(b) Conforming Amendment.--The table of sections for
subpart C of part III of subchapter A of chapter 32 is
amended by adding at the end the following new item:
``Sec. 4104. Information reporting for persons claiming certain tax
benefits.''.
(c) Effective Date.--The amendments made by this section
shall take effect on October 1, 2004.
SEC. 9246. ELECTRONIC REPORTING.
(a) In General.--Section 4101(d), as amended by section
9273 of this Act, is amended by adding at the end the
following new sentence: ``Any person who is required to
report under this subsection and who has 25 or more
reportable transactions in a month shall file such report in
electronic format.''.
(b) Effective Date.--The amendments made by this section
shall apply on October 1, 2004.
PART V--IMPORTS
SEC. 9251. TAX AT POINT OF ENTRY WHERE IMPORTER NOT
REGISTERED.
(a) Tax at Point of Entry Where Importer not Registered.--
(1) In general.--Subpart C of part III of subchapter A of
chapter 31, as amended by section 9245 of this Act, is
amended by adding at the end the following new section:
``SEC. 4105. TAX AT ENTRY WHERE IMPORTER NOT REGISTERED.
``(a) In General.--Any tax imposed under this part on any
person not registered under section 4101 for the entry of a
fuel into the United States shall be imposed at the time and
point of entry.
``(b) Enforcement of Assessment.--If any person liable for
any tax described under subsection (a) has not paid the tax
or posted a bond, the Secretary may--
``(1) seize the fuel on which the tax is due, or
``(2) detain any vehicle transporting such fuel,
until such tax is paid or such bond is filed.
``(c) Levy of Fuel.--If no tax has been paid or no bond has
been filed within 5 days from the date the Secretary seized
fuel pursuant to subsection (b), the Secretary may sell such
fuel as provided under section 6336.''.
(2) Conforming amendment.--The table of sections for
subpart C of part III of subchapter A of chapter 31 of the
Internal Revenue Code of 1986, as amended by section 9245 of
this Act, is amended by adding after the last item the
following new item:
``Sec. 4105. Tax at entry where importer not registered.''.
(b) Denial of Entry Where Tax not Paid.--The Secretary of
Homeland Security is authorized to deny entry into the United
States of any shipment of a fuel which is taxable under
section 4081 of the Internal Revenue Code of 1986 if the
person entering such shipment fails to pay the tax imposed
under such section or post a bond in accordance with the
provisions of section 4105 of such Code.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
PART VI--MISCELLANEOUS PROVISIONS
SEC. 9261. 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) is amended--
(1) by striking ``The term'' and inserting the following:
``(A) In general.--The term'', and
(2) by inserting at the end the following new subparagraph:
``(B) Liquid sold as diesel fuel.--The term `diesel fuel'
includes any liquid which is sold as or offered for sale as a
fuel in a diesel-powered highway vehicle or a diesel-powered
train.''.
(b) Conforming Amendments.--
(1) Section 40A(b)(1)(B), as amended by section 9103 of
this Act, is amended by striking ``4083(a)(3)'' and inserting
``4083(a)(3)(A)''.
(2) Section 6426(c)(3), as added by section 5102 of this
Act, is amended by striking ``4083(a)(3)'' and inserting
``4083(a)(3)(A)''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 9262. MODIFICATION OF ULTIMATE VENDOR REFUND CLAIMS WITH
RESPECT TO FARMING.
(a) In General.--
(1) Refunds.--Section 6427(l) is amended by adding at the
end the following new paragraph:
``(6) Registered vendors permitted to administer certain
claims for refund of diesel fuel and kerosene sold to
farmers.--
``(A) In general.--In the case of diesel fuel or kerosene
used on a farm for farming purposes (within the meaning of
section 6420(c)), paragraph (1) shall not apply to the
aggregate amount of such diesel fuel or kerosene if such
amount does not exceed 500 gallons (as determined under
subsection (i)(5)(A)(iii)).
``(B) Payment to ultimate vendor.--The amount which would
(but for subparagraph (A)) have been paid under paragraph (1)
with respect to any fuel shall be paid to the ultimate vendor
of such fuel, if such vendor--
``(i) is registered under section 4101, and
``(ii) meets the requirements of subparagraph (A), (B), or
(D) of section 6416(a)(1).''.
(2) Filing of claims.--Section 6427(i) is amended by
inserting at the end the following new paragraph:
``(5) Special rule for vendor refunds with respect to
farmers.--
``(A) In general.--A claim may be filed under subsection
(l)(6) by any person with respect to fuel sold by such person
for any period--
``(i) for which $200 or more ($100 or more in the case of
kerosene) is payable under subsection (l)(6),
``(ii) which is not less than 1 week, and
``(iii) which is for not more than 500 gallons for each
farmer for which there is a claim.
Notwithstanding subsection (l)(1), paragraph (3)(B) shall
apply to claims filed under the preceding sentence.
``(B) Time for filing claim.--No claim filed under this
paragraph shall be allowed unless filed on or before the last
day of the first quarter following the earliest quarter
included in the claim.''.
(3) Conforming amendments.--
(A) Section 6427(l)(5)(A) is amended to read as follows:
``(A) In general.--Paragraph (1) shall not apply to diesel
fuel or kerosene used by a State or local government.''.
(B) The heading for section 6427(l)(5) is amended by
striking ``farmers and''.
(b) Effective Date.--The amendment made by this section
shall apply to fuels sold for nontaxable use after the date
of the enactment of this Act.
SEC. 9263. TAXABLE FUEL REFUNDS FOR CERTAIN ULTIMATE VENDORS.
(a) In General.--Paragraph (4) of section 6416(a) (relating
to abatements, credits, and refunds) is amended to read as
follows:
``(4) Registered ultimate vendor to administer credits and
refunds of gasoline tax.--
``(A) In general.--For purposes of this subsection, if an
ultimate vendor purchases any gasoline on which tax imposed
by section 4081 has been paid and sells such gasoline to an
ultimate purchaser described in subparagraph (C) or (D) of
subsection (b)(2) (and such gasoline is for a use described
in such subparagraph), such ultimate vendor shall be treated
as the person (and the only person) who paid such tax, but
only if such ultimate vendor is registered under section
4101. For purposes of this subparagraph, if the sale of
gasoline is made by means of a credit card, the person
extending the credit to the ultimate purchaser shall be
deemed to be the ultimate vendor.
``(B) Timing of claims.--The procedure and timing of any
claim under subparagraph (A) shall be the same as for claims
under section 6427(i)(4), except that the rules of section
6427(i)(3)(B) regarding electronic claims shall not apply
unless the ultimate vendor has certified to the Secretary for
the most recent quarter of the taxable year that all ultimate
purchasers of the vendor are certified and entitled to a
refund under subparagraph (C) or (D) of subsection (b)(2).''.
(b) Credit Card Purchases of Diesel Fuel or Kerosene by
State and Local Governments.--Section 6427(l)(5)(C) (relating
to nontaxable uses of diesel fuel, kerosene, and aviation
fuel), as amended by section 9252 of this Act, is amended by
adding at the end the following new sentence: ``For purposes
of this subparagraph, if the sale of diesel fuel or kerosene
is made by means of a credit card, the person extending the
credit to the ultimate purchaser shall be deemed to be the
ultimate vendor.''.
(c) Effective Date.--The amendments made by this section
shall take effect on October 1, 2004.
SEC. 9264. TWO-PARTY EXCHANGES.
(a) In General.--Subpart C of part III of subchapter A of
chapter 32, as amended by section 9251 of this Act, is
amended by adding at the end the following new section:
``SEC. 4106. TWO-PARTY EXCHANGES.
``(a) In General.--In a two-party exchange, the delivering
person shall not be liable for the tax imposed under of
section 4081(a)(1)(A)(ii).
``(b) Two-Party Exchange.--The term `two-party exchange'
means a transaction, other than a sale, in which taxable fuel
is transferred from a delivering person registered under
section 4101 as a taxable fuel registrant to a receiving
person who is so registered where all of the following occur:
``(1) The transaction includes a transfer from the
delivering person, who holds the inventory position for
taxable fuel in the terminal as reflected in the records of
the terminal operator.
``(2) The exchange transaction occurs before or
contemporaneous with completion of removal across the rack
from the terminal by the receiving person.
``(3) The terminal operator in its books and records treats
the receiving person as the person that removes the product
across the terminal rack for purposes of reporting the
transaction to the Secretary.
``(4) The transaction is the subject of a written
contract.''.
(b) Conforming Amendment.--The table of sections for
subpart C of part III of subchapter A of chapter 32, as
amended by section 9251 of this Act, is amended by adding
after the last item the following new item:
``Sec. 4106. Two-party exchanges.''.
(c) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 9265. MODIFICATIONS OF TAX ON USE OF CERTAIN VEHICLES.
(a) No Proration of Tax Unless Vehicle Is Destroyed or
Stolen.--
(1) In general.--Section 4481(c) (relating to proration of
tax) is amended to read as follows:
``(c) Proration of Tax Where Vehicle Sold, Destroyed, or
Stolen.--
[[Page H2109]]
``(1) In general.--If in any taxable period a highway motor
vehicle is sold, 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 sold, 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) Conforming amendments.--
(A) Section 6156 (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 is
amended by striking the item relating to section 6156.
(b) Display of Tax Certificate.--Paragraph (2) of section
4481(d) (relating to one tax liability for period) is amended
to read as follows:
``(2) Display of tax certificate.--Every taxpayer which
pays the tax imposed under this section with respect to a
highway motor vehicle shall, not later than 1 month after the
due date of the return of tax with respect to each taxable
period, receive and display on such vehicle an electronic
identification device prescribed by the Secretary.''.
(c) Electronic Filing.--Section 4481, as amended by section
9001 of this Act, is amended by redesignating subsection (e)
as subsection (f) and by inserting after subsection (d) the
following new subsection:
``(e) Electronic Filing.--Any taxpayer who files a return
under this section with respect to 25 or more vehicles for
any taxable period shall file such return electronically.''.
(d) Repeal of Reduction in Tax for Certain Trucks.--Section
4483 of the Internal Revenue Code of 1986 is amended by
striking subsection (f).
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable
periods beginning after the date of the enactment of this
Act.
(2) Subsection (b).--The amendment made by subsection (b)
shall take effect on October 1, 2005.
SEC. 9266. DEDICATION OF REVENUES FROM CERTAIN PENALTIES TO
THE HIGHWAY TRUST FUND.
(a) In General.--Subsection (b) of section 9503 (relating
to transfer to Highway Trust Fund of amounts equivalent to
certain taxes), as amended by section 9001 of this Act, is
amended by redesignating paragraph (5) as paragraph (6) and
inserting after paragraph (4) the following new paragraph:
``(5) Certain penalties.--There are hereby appropriated to
the Highway Trust Fund amounts equivalent to the penalties
assessed under sections 6715, 6715A, 6717, 6718, 6719, 6720,
6725, 7232, and 7272 (but only with regard to penalties under
such section related to failure to register under section
4101).''.
(b) Conforming Amendments.--
(1) The heading of subsection (b) of section 9503 is
amended by inserting ``and Penalties'' after ``Taxes''.
(2) The heading of paragraph (1) of section 9503(b) is
amended by striking ``In general'' and inserting ``Certain
taxes''.
(c) Effective Date.--The amendments made by this section
shall apply to penalties assessed after October 1, 2004.
SEC. 9267. NONAPPLICATION OF EXPORT EXEMPTION TO DELIVERY OF
FUEL TO MOTOR VEHICLES REMOVED FROM UNITED
STATES.
(a) In General.--Section 4221(d)(2) (defining export) is
amended by adding at the end the following new sentence:
``Such term does not include the delivery of a taxable fuel
(as defined in section 4083(a)(1)) into a fuel tank of a
motor vehicle which is shipped or driven out of the United
States.''.
(b) Conforming Amendments.--
(1) Section 4041(g) (relating to other exemptions) is
amended by adding at the end the following new sentence:
``Paragraph (3) shall not apply to the sale for delivery of a
liquid into a fuel tank of a motor vehicle which is shipped
or driven out of the United States.''.
(2) Clause (iv) of section 4081(a)(1)(A) (relating to tax
on removal, entry, or sale) is amended by inserting ``or at a
duty-free sales enterprise (as defined in section 555(b)(8)
of the Tariff Act of 1930)'' after ``section 4101''.
(c) Effective Date.--The amendments made by this section
shall apply to sales or deliveries made after the date of the
enactment of this Act.
PART VII--TOTAL ACCOUNTABILITY
SEC. 9271. TOTAL ACCOUNTABILITY.
(a) Taxation of Reportable Liquids.--
(1) In general.--Section 4081(a), as amended by this Act,
is amended--
(A) by inserting ``or reportable liquid'' after ``taxable
fuel'' each place it appears, and
(B) by inserting ``such liquid'' after ``such fuel'' in
paragraph (1)(A)(iv).
(2) Rate of tax.--Subparagraph (A) of section 4081(a)(2),
as amended by section 9211 of this Act, is amended by
striking ``and'' at the end of clause (iii), by striking the
period at the end of clause (iv) and inserting ``, and'', and
by adding at the end the following new clause:
``(v) in the case of reportable liquids, the rate
determined under section 4083(c)(2).''.
(3) Exemption.--Section 4081(a)(1) is amended by adding at
the end the following new subparagraph:
``(C) Exemption for registered transfers of reportable
liquids.--The tax imposed by this paragraph shall not apply
to any removal, entry, or sale of a reportable liquid if--
``(i) such removal, entry, or sale is to a registered
person who certifies that such liquid will not be used as a
fuel or in the production of a fuel, or
``(ii) the sale is to the ultimate purchaser of such
liquid.''.
(4) Reportable liquids.--Section 4083, as amended by this
Act, is amended by redesignating subsections (c) and (d) (as
redesignated by section 5211 of this Act) as subsections (d)
and (e), respectively, and by inserting after subsection (b)
the following new section:
``(c) Reportable Liquid.--For purposes of this subpart--
``(1) In general.--The term `reportable liquid' means any
petroleum-based liquid other than a taxable fuel.
``(2) Taxation.--
``(A) Gasoline blend stocks and additives.--Gasoline blend
stocks and additives which are reportable liquids (as defined
in paragraph (1)) shall be subject to the rate of tax under
clause (i) of section 4081(a)(2)(A).
``(B) Other reportable liquids.--Any reportable liquid (as
defined in paragraph (1)) not described in subparagraph (A)
shall be subject to the rate of tax under clause (iii) of
section 4081(a)(2)(A).''.
(5) Conforming amendments.--
(A) Section 4081(e) is amended by inserting ``or reportable
liquid'' after ``taxable fuel''.
(B) Section 4083(d) (relating to certain use defined as
removal), as redesignated by paragraph (4), is amended by
inserting ``or reportable liquid'' after ``taxable fuel''.
(C) Section 4083(e)(1) (relating to administrative
authority), as redesignated by paragraph (4), is amended--
(i) in subparagraph (A)--
(I) by inserting ``or reportable liquid'' after ``taxable
fuel'', and
(II) by inserting ``or such liquid'' after ``such fuel''
each place it appears, and
(ii) in subparagraph (B), by inserting ``or any reportable
liquid'' after ``any taxable fuel''.
(D) Section 4101(a)(2), as added by section 5243 of this
Act, is amended by inserting ``or a reportable liquid'' after
``taxable fuel''.
(E) Section 4101(a)(3), as added by section 5242 of this
Act and redesignated by section 5243 of this Act, is amended
by inserting ``or any reportable liquid'' before the period
at the end.
(F) Section 4102 is amended by inserting ``or any
reportable liquid'' before the period at the end.
(G)(i) Section 6718, as added by section 5241 of this Act,
is amended--
(I) in subsection (a), by inserting ``or any reportable
liquid (as defined in section 4083(c)(1))'' after `` section
4083(a)(1))'', and
(II) in the heading, by inserting ``or reportable liquids''
after ``taxable fuel''.
(ii) The item relating to section 6718 in table of sections
for part I of subchapter B of chapter 68, as added by section
5241 of this Act, is amended by inserting ``or reportable
liquids'' after ``taxable fuels''.
(H) Section 6427(h) is amended to read as follows:
``(h) Gasoline Blend Stocks or Additives and Reportable
Liquids.--Except as provided in subsection (k)--
``(1) if any gasoline blend stock or additive (within the
meaning of section 4083(a)(2)) is not used by any person to
produce gasoline and such person establishes that the
ultimate use of such gasoline blend stock or additive is not
to produce gasoline, or
``(2) if any reportable liquid (within the meaning of
section 4083(c)(1)) is not used by any person to produce a
taxable fuel and such person establishes that the ultimate
use of such reportable liquid is not to produce a taxable
fuel,
then the Secretary shall pay (without interest) to such
person an amount equal to the aggregate amount of the tax
imposed on such person with respect to such gasoline blend
stock or additive or such reportable fuel.''.
(I) Section 7232, as amended by this Act, is amended by
inserting ``or reportable liquid (within the meaning of
section 4083(c)(1))'' after ``section 4083)''.
(b) Dyed Diesel.--Section 4082(a) is amended by striking
``and'' at the end of paragraph (2), by striking the period
at the end of paragraph (3) and inserting ``and'', and by
inserting after paragraph (3) the following new paragraph:
``(4) which is removed, entered, or sold by a person
registered under section 4101.''.
(c) Effective Date.--The amendments made by this section
shall apply to reportable liquids (as defined in section
4083(c) of the Internal Revenue Code) and fuel sold or used
after September 30, 2004.
SEC. 9272. EXCISE TAX REPORTING.
(a) In General.--Part II of subchapter A of chapter 61 is
amended by adding at the end the following new subpart:
``Subpart E--Excise Tax Reporting
``SEC. 6025. RETURNS RELATING TO FUEL TAXES.
``(a) In General.--The Secretary shall require any person
liable for the tax imposed under Part III of subchapter A of
chapter 32
[[Page H2110]]
to file a return of such tax on a monthly basis.
``(b) Information Included With Return.--The Secretary
shall require any person filing a return under subsection (a)
to provide information regarding any refined product (whether
or not such product is taxable under this title) removed from
a terminal during the period for which such return
applies.''.
(b) Conforming Amendment.--The table of parts for
subchapter A of chapter 61 is amended by adding at the end
the following new item:
``Subpart E--Excise tax reporting''.
(c) Effective Date.--The amendments made by this section
shall apply to fuel sold or used after September 30, 2004.
SEC. 9273. INFORMATION REPORTING.
(a) In General.--Section 4101(d) is amended by adding at
the end the following new flush sentence: ``The Secretary
shall require reporting under the previous sentence with
respect to taxable fuels removed, entered, or transferred
from any refinery, pipeline, or vessel which is registered
under this section.''.
(b) Effective Date.--The amendment made by this section
shall apply on October 1, 2004.
Subtitle D--Definition of Highway Vehicle
SEC. 9301. EXEMPTION FROM CERTAIN EXCISE TAXES FOR MOBILE
MACHINERY.
(a) Exemption From Tax on Heavy Trucks and Trailers Sold at
Retail.--
(1) In general.--Section 4053 (relating to exemptions) is
amended by adding at the end the following new paragraph:
``(8) Mobile machinery.--Any vehicle which consists of a
chassis--
``(A) to which there has been permanently mounted (by
welding, bolting, riveting, or other means) machinery or
equipment to perform a construction, manufacturing,
processing, farming, mining, drilling, timbering, or similar
operation if the operation of the machinery or equipment is
unrelated to transportation on or off the public highways,
``(B) which has been specially designed to serve only as a
mobile carriage and mount (and a power source, where
applicable) for the particular machinery or equipment
involved, whether or not such machinery or equipment is in
operation, and
``(C) which, by reason of such special design, could not,
without substantial structural modification, be used as a
component of a vehicle designed to perform a function of
transporting any load other than that particular machinery or
equipment or similar machinery or equipment requiring such a
specially designed chassis.''.
(2) Effective date.--The amendment made by this subsection
shall take effect on the day after the date of the enactment
of this Act.
(b) Exemption From Tax on Use of Certain Vehicles.--
(1) In general.--Section 4483 (relating to exemptions) is
amended by redesignating subsection (g) as subsection (h) and
by inserting after subsection (f) the following new
subsection:
``(g) Exemption for Mobile Machinery.--No tax shall be
imposed by section 4481 on the use of any vehicle described
in section 4053(8).''.
(2) Effective date.--The amendments made by this subsection
shall take effect on the day after the date of the enactment
of this Act.
(d) Exemption From Fuel Taxes.--
(1) In general.--Section 6421(e)(2) (defining off-highway
business use) is amended by adding at the end the following
new subparagraph:
``(C) Uses in mobile machinery.--
``(i) In general.--The term `off-highway business use'
shall include any use in a vehicle which meets the
requirements described in clause (ii).
``(ii) Requirements for mobile machinery.--The requirements
described in this clause are--
``(I) the design-based test, and
``(II) the use-based test.
``(iii) Design-based test.--For purposes of clause (ii)(I),
the design-based test is met if the vehicle consists of a
chassis--
``(I) to which there has been permanently mounted (by
welding, bolting, riveting, or other means) machinery or
equipment to perform a construction, manufacturing,
processing, farming, mining, drilling, timbering, or similar
operation if the operation of the machinery or equipment is
unrelated to transportation on or off the public highways,
``(II) which has been specially designed to serve only as a
mobile carriage and mount (and a power source, where
applicable) for the particular machinery or equipment
involved, whether or not such machinery or equipment is in
operation, and
``(III) which, by reason of such special design, could not,
without substantial structural modification, be used as a
component of a vehicle designed to perform a function of
transporting any load other than that particular machinery or
equipment or similar machinery or equipment requiring such a
specially designed chassis.
``(iv) Use-based test.--For purposes of clause (ii)(II),
the use-based test is met if the use of the vehicle on public
highways was less than 5,000 miles during the taxpayer's
taxable year.
``(v) Special rule for use by certain tax-exempt
organizations.--In the case of any use in a vehicle by an
organization which is described in section 501(c) and exempt
from tax under section 501(a), clause (ii) shall be applied
without regard to subclause (II) thereof.''.
(2) Annual refund of tax paid.--Section 6427(i)(2)
(relating to exceptions) is amended by adding at the end the
following new subparagraph:
``(C) Nonapplication of paragraph.--This paragraph shall
not apply to any fuel used in any off-highway business use
described in section 6421(e)(2)(C).''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 9302. MODIFICATION OF DEFINITION OF OFF-HIGHWAY VEHICLE.
(a) In General.--Section 7701(a) (relating to definitions)
is amended by adding at the end the following new paragraph:
``(48) Off-highway vehicles.--
``(A) Off-highway transportation vehicles.--
``(i) In general.--A vehicle shall not be treated as a
highway vehicle if such vehicle is specially designed for the
primary function of transporting a particular type of load
other than over the public highway and because of this
special design such vehicle's capability to transport a load
over the public highway is substantially limited or impaired.
``(ii) Determination of vehicle's design.--For purposes of
clause (i), a vehicle's design is determined solely on the
basis of its physical characteristics.
``(iii) Determination of substantial limitation or
impairment.--For purposes of clause (i), in determining
whether substantial limitation or impairment exists, account
may be taken of factors such as the size of the vehicle,
whether such vehicle is subject to the licensing, safety, and
other requirements applicable to highway vehicles, and
whether such vehicle can transport a load at a sustained
speed of at least 25 miles per hour. It is immaterial that a
vehicle can transport a greater load off the public highway
than such vehicle is permitted to transport over the public
highway.
``(B) Nontransportation trailers and semitrailers.--A
trailer or semitrailer shall not be treated as a highway
vehicle if it is specially designed to function only as an
enclosed stationary shelter for the carrying on of an off-
highway function at an off-highway site.''.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendment made by this section shall take effect on the date
of the enactment of this Act.
(2) Fuel taxes.--With respect to taxes imposed under
subchapter B of chapter 31 and part III of subchapter A of
chapter 32, the amendment made by this section shall apply to
taxable periods beginning after the date of the enactment of
this Act.
Subtitle E--Miscellaneous Provisions
SEC. 9401. DEDICATION OF GAS GUZZLER TAX TO HIGHWAY TRUST
FUND.
(a) In General.--Section 9503(b)(1) (relating to transfer
to Highway Trust Fund of amounts equivalent to certain
taxes), as amended by section 9101 of this Act, is amended by
redesignating subparagraphs (C), (D), and (E) as
subparagraphs (D), (E), and (F), respectively, and by
inserting after subparagraph (B) the following new
subparagraph:
``(C) section 4064 (relating to gas guzzler tax),''.
(b) Uniform Application of Tax.--Subparagraph (A) of
section 4064(b)(1) (defining automobile) is amended by
striking the second sentence.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 9402. MOTOR FUEL TAX ENFORCEMENT ADVISORY COMMISSION.
(a) Establishment.--There is established a Motor Fuel Tax
Enforcement Advisory Commission (in this section referred to
as the ``Commission'').
(b) Function.--The Commission shall--
(1) review motor fuel revenue collections, historical and
current;
(2) review the progress of investigations;
(3) develop and review legislative proposals with respect
to motor fuel taxes;
(4) monitor the progress of administrative regulation
projects relating to motor fuel taxes;
(5) review the results of Federal and State agency
cooperative efforts regarding motor fuel taxes;
(6) review the results of Federal interagency cooperative
efforts regarding motor fuel taxes; and
(7) evaluate and make recommendations regarding--
(A) the effectiveness of existing Federal enforcement
programs regarding motor fuel taxes,
(B) enforcement personnel allocation, and
(C) proposals for regulatory projects, legislation, and
funding.
(c) Membership.--
(1) Appointment.--The Commission shall be composed of the
following representatives appointed by the Chairmen and the
Ranking Members of the Committee on Finance of the Senate and
the Committee on Ways and Means of the House of
Representatives:
(A) At least 1 representative from each of the following
Federal entities: the Department of Homeland Security, the
Department of Transportation--Office of Inspector General,
the Federal Highway Administration,
[[Page H2111]]
the Department of Defense, and the Department of Justice.
(B) At least 1 representative from the Federation of State
Tax Administrators.
(C) At least 1 representative from any State department of
transportation.
(D) 2 representatives from the highway construction
industry.
(E) 5 representatives from industries relating to fuel
distribution -- refiners (2 representatives), distributors (1
representative), pipelines (1 representative), and terminal
operators (2 representatives).
(F) 1 representative from the retail fuel industry.
(G) 2 representatives from the staff of the Committee on
Finance of the Senate and 2 representatives from the staff of
the Committee on Ways and Means of the House of
Representatives.
(2) Terms.--Members shall be appointed for the life of the
Commission.
(3) Vacancies.--A vacancy in the Commission shall be filled
in the manner in which the original appointment was made.
(4) Travel expenses.--Members shall serve without pay but
shall receive travel expenses, including per diem in lieu of
subsistence, in accordance with sections 5702 and 5703 of
title 5, United States Code.
(5) Chairman.--The Chairman of the Commission shall be
elected by the members.
(d) Funding.--Such sums as are necessary shall be available
from the Highway Trust fund for the expenses of the
Commission.
(e) Consultation.--Upon request of the Commission,
representatives of the Department of the Treasury and the
Internal Revenue Service shall be available for consultation
to assist the Commission in carrying out its duties under
this section.
(f) Obtaining Data.--The Commission may secure directly
from any department or agency of the United States,
information (other than information required by any law to be
kept confidential by such department or agency) necessary for
the Commission to carry out its duties under this section.
Upon request of the Commission, the head of that department
or agency shall furnish such nonconfidential information to
the Commission. The Commission shall also gather evidence
through such means as it may deem appropriate, including
through holding hearings and soliciting comments by means of
Federal Register notices.
(g) Termination.--The Commission shall terminate after
September 30, 2009.
SEC. 9403. TREASURY STUDY OF FUEL TAX COMPLIANCE AND
INTERAGENCY COOPERATION.
(a) In General.--Not later than January 31, 2006, the
Secretary of the Treasury shall submit to the Committee on
Finance of the Senate and the Committee on Ways and Means of
the House of Representatives a report regarding fuel tax
enforcement which shall include the information and analysis
specified in subsections (b) and (c) and any other
information and recommendations the Secretary of the Treasury
may deem appropriate.
(b) Audits.--With respect to audits conducted by the
Internal Revenue Service, the report required under
subsection (a) shall include--
(1) the number and geographic distribution of audits
conducted annually, by fiscal year, between October 1, 2001,
and September 30, 2005;
(2) the total volume involved for each of the taxable fuels
covered by such audits and a comparison to the annual
production of such fuels;
(3) the staff hours and number of personnel devoted to the
audits per year; and
(4) the results of such audits by year, including total tax
collected, total penalties collected, and number of referrals
for criminal prosecution.
(c) Enforcement Activities.--With respect to enforcement
activities, the report required under subsection (a) shall
include--
(1) the number and geographic distribution of criminal
investigations and prosecutions annually, by fiscal year,
between October 1, 2001, and September 30, 2005, and the
results of such investigations and prosecutions;
(2) to the extent such investigations and prosecutions
involved other agencies, State or Federal, a breakdown by
agency of the number of joint investigations involved;
(3) an assessment of the effectiveness of joint action and
cooperation between the Department of the Treasury and other
Federal and State agencies, including a discussion of the
ability and need to share information across agencies for
both civil and criminal Federal tax enforcement and
enforcement of State or Federal laws relating to fuels;
(4) the staff hours and number of personnel devoted to
criminal investigations and prosecutions per year;
(5) the staff hours and number of personnel devoted to
administrative collection of fuel taxes; and
(6) the results of administrative collection efforts
annually, by fiscal year, between October 1, 2001, and
September 30, 2005.
SEC. 9404. TREASURY STUDY OF HIGHWAY FUELS USED BY TRUCKS FOR
NON-TRANSPORTATION PURPOSES.
(a) Study.--The Secretary of the Treasury shall conduct a
study regarding the use of highway motor fuel by trucks that
is not used for the propulsion of the vehicle. As part of
such study--
(1) in the case of vehicles carrying equipment that is
unrelated to the transportation function of the vehicle--
(A) the Secretary of the Treasury, in consultation with the
Secretary of Transportation, and with public notice and
comment, shall determine the average annual amount of tax
paid fuel consumed per vehicle, by type of vehicle, used by
the propulsion engine to provide the power to operate the
equipment attached to the highway vehicle, and
(B) the Secretary of the Treasury shall review the
technical and administrative feasibility of exempting such
nonpropulsive use of highway fuels for the highway motor
fuels excise taxes,
(2) in the case where non-transportation equipment is run
by a separate motor--
(A) the Secretary of the Treasury shall determine the
annual average amount of fuel exempted from tax in the use of
such equipment by equipment type, and
(B) the Secretary of the Treasury shall review issues of
administration and compliance related to the present-law
exemption provided for such fuel use, and
(3) the Secretary of the Treasury shall--
(A) estimate the amount of taxable fuel consumed by trucks
and the emissions of various pollutants due to the long-term
idling of diesel engines, and
(B) determine the cost of reducing such long-term idling
through the use of plug-ins at truck stops, auxiliary power
units, or other technologies.
(b) Report.--Not later than January 1, 2006, the Secretary
of the Treasury shall report the findings of the study
required under subsection (a) to the Committee on Finance of
the Senate and the Committee on Ways and Means of the House
of Representatives.
SEC. 9405. TREATMENT OF EMPLOYER-PROVIDED TRANSIT AND VAN
POOLING BENEFITS.
(a) In General.--Subparagraph (A) of section 132(f)(2)
(relating to limitation on exclusion) is amended by striking
``$100'' and inserting ``$120''.
(b) Inflation Adjustment Conforming Amendments.--The last
sentence of section 132(f)(6)(A) (relating to inflation
adjustment) is amended--
(1) by striking ``2002'' and inserting ``2005'', and
(2) by striking ``2001'' and inserting ``2004''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2004.
SEC. 9406. STUDY OF INCENTIVES FOR PRODUCTION OF BIODIESEL.
(a) Study.--The General Comptroller of the United States
shall conduct a study related to biodiesel fuels and the tax
credit for biodiesel fuels established under this Act. Such
study shall include--
(1) an assessment on whether such credit provides
sufficient assistance to the producers of biodiesel fuel to
establish the fuel as a viable energy alternative in the
current market place,
(2) an assessment on how long such credit or similar
subsidy would have to remain in effect before biodiesel fuel
can compete in the market place without such assistance,
(3) a cost-benefit analysis of such credit, comparing the
cost of the credit in forgone revenue to the benefits of
lower fuel costs for consumers, increased profitability for
the biodiesel industry, increased farm income, reduced
program outlays from the Department of Agriculture, and the
improved environmental conditions through the use of
biodiesel fuel, and
(4) an assessment on whether such credit results in any
unintended consequences for unrelated industries, including
the impact, if any, on the glycerin market.
(b) Report.--Not later than 2 years after the date of the
enactment of this Act, the Comptroller General of the United
States shall report the findings of the study required under
subsection (a) to the Committee on Finance of the Senate and
the Committee on Ways and Means of the House of
Representatives.
Subtitle F--Provisions Designed to Curtail Tax Shelters
SEC. 9501. CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.
(a) In General.--Section 7701 is amended by redesignating
subsection (m) as subsection (n) and by inserting after
subsection (l) the following new subsection:
``(m) Clarification of Economic Substance Doctrine; Etc.--
``(1) General rules.--
``(A) In general.--In applying the economic substance
doctrine, the determination of whether a transaction has
economic substance shall be made as provided in this
paragraph.
``(B) Definition of economic substance.--For purposes of
subparagraph (A)--
``(i) In general.--A transaction has economic substance
only if--
``(I) the transaction changes in a meaningful way (apart
from Federal tax effects and, if there are any Federal tax
effects, also apart from any foreign, State, or local tax
effects) the taxpayer's economic position, and
``(II) the taxpayer has a substantial nontax purpose for
entering into such transaction and the transaction is a
reasonable means of accomplishing such purpose.
``(ii) Special rule where taxpayer relies on profit
potential.--A transaction shall not be treated as having
economic substance by reason of having a potential for profit
unless--
``(I) the present value of the reasonably expected pre-tax
profit from the transaction is substantial in relation to the
present value of the expected net tax benefits that would be
allowed if the transaction were respected, and
[[Page H2112]]
``(II) the reasonably expected pre-tax profit from the
transaction exceeds a risk-free rate of return.
``(C) Treatment of fees and foreign taxes.--Fees and other
transaction expenses and foreign taxes shall be taken into
account as expenses in determining pre-tax profit under
subparagraph (B)(ii).
``(2) Special rules for transactions with tax-indifferent
parties.--
``(A) Special rules for financing transactions.--The form
of a transaction which is in substance the borrowing of money
or the acquisition of financial capital directly or
indirectly from a tax-indifferent party shall not be
respected if the present value of the deductions to be
claimed with respect to the transaction is substantially in
excess of the present value of the anticipated economic
returns of the person lending the money or providing the
financial capital. A public offering shall be treated as a
borrowing, or an acquisition of financial capital, from a
tax-indifferent party if it is reasonably expected that at
least 50 percent of the offering will be placed with tax-
indifferent parties.
``(B) Artificial income shifting and basis adjustments.--
The form of a transaction with a tax-indifferent party shall
not be respected if--
``(i) it results in an allocation of income or gain to the
tax-indifferent party in excess of such party's economic
income or gain, or
``(ii) it results in a basis adjustment or shifting of
basis on account of overstating the income or gain of the
tax-indifferent party.
``(3) Definitions and special rules.--For purposes of this
subsection--
``(A) Economic substance doctrine.--The term `economic
substance doctrine' means the common law doctrine under which
tax benefits under subtitle A with respect to a transaction
are not allowable if the transaction does not have economic
substance or lacks a business purpose.
``(B) Tax-indifferent party.--The term `tax-indifferent
party' means any person or entity not subject to tax imposed
by subtitle A. A person shall be treated as a tax-indifferent
party with respect to a transaction if the items taken into
account with respect to the transaction have no substantial
impact on such person's liability under subtitle A.
``(C) Substantial nontax purpose.--In applying subclause
(II) of paragraph (1)(B)(i), a purpose of achieving a
financial accounting benefit shall not be taken into account
in determining whether a transaction has a substantial nontax
purpose if the origin of such financial accounting benefit is
a reduction of income tax.
``(D) Exception for personal transactions of individuals.--
In the case of an individual, this subsection shall apply
only to transactions entered into in connection with a trade
or business or an activity engaged in for the production of
income.
``(E) Treatment of lessors.--In applying subclause (I) of
paragraph (1)(B)(ii) to the lessor of tangible property
subject to a lease, the expected net tax benefits shall not
include the benefits of depreciation, or any tax credit, with
respect to the leased property and subclause (II) of
paragraph (1)(B)(ii) shall be disregarded in determining
whether any of such benefits are allowable.
``(4) Other common law doctrines not affected.--Except as
specifically provided in this subsection, the provisions of
this subsection shall not be construed as altering or
supplanting any other rule of law, and the requirements of
this subsection shall be construed as being in addition to
any such other rule of law.
``(5) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this subsection. Such regulations may include
exemptions from the application of this subsection.''
(b) Effective Date.--The amendments made by this section
shall apply to transactions entered into after February 13,
2003.
SEC. 9502. PENALTY FOR FAILING TO DISCLOSE REPORTABLE
TRANSACTION.
(a) In General.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6707 the following new section:
``SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE REPORTABLE
TRANSACTION INFORMATION WITH RETURN OR
STATEMENT.
``(a) Imposition of Penalty.--Any person who fails to
include on any return or statement any information with
respect to a reportable transaction which is required under
section 6011 to be included with such return or statement
shall pay a penalty in the amount determined under subsection
(b).
``(b) Amount of Penalty.--
``(1) In general.--Except as provided in paragraphs (2) and
(3), the amount of the penalty under subsection (a) shall be
$50,000.
``(2) Listed transaction.--The amount of the penalty under
subsection (a) with respect to a listed transaction shall be
$100,000.
``(3) Increase in penalty for large entities and high net
worth individuals.--
``(A) In general.--In the case of a failure under
subsection (a) by--
``(i) a large entity, or
``(ii) a high net worth individual,
the penalty under paragraph (1) or (2) shall be twice the
amount determined without regard to this paragraph.
``(B) Large entity.--For purposes of subparagraph (A), the
term `large entity' means, with respect to any taxable year,
a person (other than a natural person) with gross receipts in
excess of $10,000,000 for the taxable year in which the
reportable transaction occurs or the preceding taxable year.
Rules similar to the rules of paragraph (2) and subparagraphs
(B), (C), and (D) of paragraph (3) of section 448(c) shall
apply for purposes of this subparagraph.
``(C) High net worth individual.--For purposes of
subparagraph (A), the term `high net worth individual' means,
with respect to a reportable transaction, a natural person
whose net worth exceeds $2,000,000 immediately before the
transaction.
``(c) Definitions.--For purposes of this section--
``(1) Reportable transaction.--The term `reportable
transaction' means any transaction with respect to which
information is required to be included with a return or
statement because, as determined under regulations prescribed
under section 6011, such transaction is of a type which the
Secretary determines as having a potential for tax avoidance
or evasion.
``(2) Listed transaction.--Except as provided in
regulations, the term `listed transaction' means a reportable
transaction which is the same as, or substantially similar
to, a transaction specifically identified by the Secretary as
a tax avoidance transaction for purposes of section 6011.
``(d) Authority to Rescind Penalty.--
``(1) In general.--The Commissioner of Internal Revenue may
rescind all or any portion of any penalty imposed by this
section with respect to any violation if--
``(A) the violation is with respect to a reportable
transaction other than a listed transaction,
``(B) the person on whom the penalty is imposed has a
history of complying with the requirements of this title,
``(C) it is shown that the violation is due to an
unintentional mistake of fact;
``(D) imposing the penalty would be against equity and good
conscience, and
``(E) rescinding the penalty would promote compliance with
the requirements of this title and effective tax
administration.
``(2) Discretion.--The exercise of authority under
paragraph (1) shall be at the sole discretion of the
Commissioner and may be delegated only to the head of the
Office of Tax Shelter Analysis. The Commissioner, in the
Commissioner's sole discretion, may establish a procedure to
determine if a penalty should be referred to the Commissioner
or the head of such Office for a determination under
paragraph (1).
``(3) No appeal.--Notwithstanding any other provision of
law, any determination under this subsection may not be
reviewed in any administrative or judicial proceeding.
``(4) Records.--If a penalty is rescinded under paragraph
(1), the Commissioner shall place in the file in the Office
of the Commissioner the opinion of the Commissioner or the
head of the Office of Tax Shelter Analysis with respect to
the determination, including--
``(A) the facts and circumstances of the transaction,
``(B) the reasons for the rescission, and
``(C) the amount of the penalty rescinded.
``(5) Report.--The Commissioner shall each year report to
the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate--
``(A) a summary of the total number and aggregate amount of
penalties imposed, and rescinded, under this section, and
``(B) a description of each penalty rescinded under this
subsection and the reasons therefor.
``(e) Penalty Reported to SEC.--In the case of a person--
``(1) which is required to file periodic reports under
section 13 or 15(d) of the Securities Exchange Act of 1934 or
is required to be consolidated with another person for
purposes of such reports, and
``(2) which--
``(A) is required to pay a penalty under this section with
respect to a listed transaction,
``(B) is required to pay a penalty under section 6662A with
respect to any reportable transaction at a rate prescribed
under section 6662A(c), or
``(C) is required to pay a penalty under section 6662B with
respect to any noneconomic substance transaction,
the requirement to pay such penalty shall be disclosed in
such reports filed by such person for such periods as the
Secretary shall specify. Failure to make a disclosure in
accordance with the preceding sentence shall be treated as a
failure to which the penalty under subsection (b)(2) applies.
``(f) Coordination With Other Penalties.--The penalty
imposed by this section is in addition to any penalty imposed
under this title.''.
(b) Conforming Amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by inserting after
the item relating to section 6707 the following:
``Sec. 6707A. Penalty for failure to include reportable transaction
information with return or statement.''.
(c) Effective Date.--The amendments made by this section
shall apply to returns and statements the due date for which
is after the date of the enactment of this Act.
SEC. 9503. ACCURACY-RELATED PENALTY FOR LISTED TRANSACTIONS
AND OTHER REPORTABLE TRANSACTIONS HAVING A
SIGNIFICANT TAX AVOIDANCE PURPOSE.
(a) In General.--Subchapter A of chapter 68 is amended by
inserting after section 6662 the following new section:
[[Page H2113]]
``SEC. 6662A. IMPOSITION OF ACCURACY-RELATED PENALTY ON
UNDERSTATEMENTS WITH RESPECT TO REPORTABLE
TRANSACTIONS.
``(a) Imposition of Penalty.--If a taxpayer has a
reportable transaction understatement for any taxable year,
there shall be added to the tax an amount equal to 20 percent
of the amount of such understatement.
``(b) Reportable Transaction Understatement.--For purposes
of this section--
``(1) In general.--The term `reportable transaction
understatement' means the sum of--
``(A) the product of--
``(i) the amount of the increase (if any) in taxable income
which results from a difference between the proper tax
treatment of an item to which this section applies and the
taxpayer's treatment of such item (as shown on the taxpayer's
return of tax), and
``(ii) the highest rate of tax imposed by section 1
(section 11 in the case of a taxpayer which is a
corporation), and
``(B) the amount of the decrease (if any) in the aggregate
amount of credits determined under subtitle A which results
from a difference between the taxpayer's treatment of an item
to which this section applies (as shown on the taxpayer's
return of tax) and the proper tax treatment of such item.
For purposes of subparagraph (A), any reduction of the excess
of deductions allowed for the taxable year over gross income
for such year, and any reduction in the amount of capital
losses which would (without regard to section 1211) be
allowed for such year, shall be treated as an increase in
taxable income.
``(2) Items to which section applies.--This section shall
apply to any item which is attributable to--
``(A) any listed transaction, and
``(B) any reportable transaction (other than a listed
transaction) if a significant purpose of such transaction is
the avoidance or evasion of Federal income tax.
``(c) Higher Penalty for Nondisclosed Listed and Other
Avoidance Transactions.--
``(1) In general.--Subsection (a) shall be applied by
substituting `30 percent' for `20 percent' with respect to
the portion of any reportable transaction understatement with
respect to which the requirement of section 6664(d)(2)(A) is
not met.
``(2) Rules applicable to compromise of penalty.--
``(A) In general.--If the 1st letter of proposed deficiency
which allows the taxpayer an opportunity for administrative
review in the Internal Revenue Service Office of Appeals has
been sent with respect to a penalty to which paragraph (1)
applies, only the Commissioner of Internal Revenue may
compromise all or any portion of such penalty.
``(B) Applicable rules.--The rules of paragraphs (3), (4),
and (5) of section 6707A(d) shall apply for purposes of
subparagraph (A).
``(d) Definitions of Reportable and Listed Transactions.--
For purposes of this section, the terms `reportable
transaction' and `listed transaction' have the respective
meanings given to such terms by section 6707A(c).
``(e) Special Rules.--
``(1) Coordination with penalties, etc., on other
understatements.--In the case of an understatement (as
defined in section 6662(d)(2))--
``(A) the amount of such understatement (determined without
regard to this paragraph) shall be increased by the aggregate
amount of reportable transaction understatements and
noneconomic substance transaction understatements for
purposes of determining whether such understatement is a
substantial understatement under section 6662(d)(1), and
``(B) the addition to tax under section 6662(a) shall apply
only to the excess of the amount of the substantial
understatement (if any) after the application of subparagraph
(A) over the aggregate amount of reportable transaction
understatements and noneconomic substance transaction
understatements.
``(2) Coordination with other penalties.--
``(A) Application of fraud penalty.--References to an
underpayment in section 6663 shall be treated as including
references to a reportable transaction understatement and a
noneconomic substance transaction understatement.
``(B) No double penalty.--This section shall not apply to
any portion of an understatement on which a penalty is
imposed under section 6662B or 6663.
``(3) Special rule for amended returns.--Except as provided
in regulations, in no event shall any tax treatment included
with an amendment or supplement to a return of tax be taken
into account in determining the amount of any reportable
transaction understatement or noneconomic substance
transaction understatement if the amendment or supplement is
filed after the earlier of the date the taxpayer is first
contacted by the Secretary regarding the examination of the
return or such other date as is specified by the Secretary.
``(4) Noneconomic substance transaction understatement.--
For purposes of this subsection, the term `noneconomic
substance transaction understatement' has the meaning given
such term by section 6662B(c).
``(5) Cross reference.--
``For reporting of section 6662A(c) penalty to the Securities and
Exchange Commission, see section 6707A(e).''
(b) Determination of Other Understatements.--Subparagraph
(A) of section 6662(d)(2) is amended by adding at the end the
following flush sentence: ``The excess under the preceding
sentence shall be determined without regard to items to which
section 6662A applies and without regard to items with
respect to which a penalty is imposed by section 6662B.''
(c) Reasonable Cause Exception.--
(1) In general.--Section 6664 is amended by adding at the
end the following new subsection:
``(d) Reasonable Cause Exception for Reportable Transaction
Understatements.--
``(1) In general.--No penalty shall be imposed under
section 6662A with respect to any portion of a reportable
transaction understatement if it is shown that there was a
reasonable cause for such portion and that the taxpayer acted
in good faith with respect to such portion.
``(2) Special rules.--Paragraph (1) shall not apply to any
reportable transaction understatement unless--
``(A) the relevant facts affecting the tax treatment of the
item are adequately disclosed in accordance with the
regulations prescribed under section 6011,
``(B) there is or was substantial authority for such
treatment, and
``(C) the taxpayer reasonably believed that such treatment
was more likely than not the proper treatment.
A taxpayer failing to adequately disclose in accordance with
section 6011 shall be treated as meeting the requirements of
subparagraph (A) if the penalty for such failure was
rescinded under section 6707A(d).
``(3) Rules relating to reasonable belief.--For purposes of
paragraph (2)(C)--
``(A) In general.--A taxpayer shall be treated as having a
reasonable belief with respect to the tax treatment of an
item only if such belief--
``(i) is based on the facts and law that exist at the time
the return of tax which includes such tax treatment is filed,
and
``(ii) relates solely to the taxpayer's chances of success
on the merits of such treatment and does not take into
account the possibility that a return will not be audited,
such treatment will not be raised on audit, or such treatment
will be resolved through settlement if it is raised.
``(B) Certain opinions may not be relied upon.--
``(i) In general.--An opinion of a tax advisor may not be
relied upon to establish the reasonable belief of a taxpayer
if--
``(I) the tax advisor is described in clause (ii), or
``(II) the opinion is described in clause (iii).
``(ii) Disqualified tax advisors.--A tax advisor is
described in this clause if the tax advisor--
``(I) is a material advisor (within the meaning of section
6111(b)(1)) who participates in the organization, management,
promotion, or sale of the transaction or who is related
(within the meaning of section 267(b) or 707(b)(1)) to any
person who so participates,
``(II) is compensated directly or indirectly by a material
advisor with respect to the transaction,
``(III) has a fee arrangement with respect to the
transaction which is contingent on all or part of the
intended tax benefits from the transaction being sustained,
or
``(IV) as determined under regulations prescribed by the
Secretary, has a continuing financial interest with respect
to the transaction.
``(iii) Disqualified opinions.--For purposes of clause (i),
an opinion is disqualified if the opinion--
``(I) is based on unreasonable factual or legal assumptions
(including assumptions as to future events),
``(II) unreasonably relies on representations, statements,
findings, or agreements of the taxpayer or any other person,
``(III) does not identify and consider all relevant facts,
or
``(IV) fails to meet any other requirement as the Secretary
may prescribe.''
(2) Conforming amendment.--The heading for subsection (c)
of section 6664 is amended by inserting ``for Underpayments''
after ``Exception''.
(d) Conforming Amendments.--
(1) Subparagraph (C) of section 461(i)(3) is amended by
striking ``section 6662(d)(2)(C)(iii)'' and inserting
``section 1274(b)(3)(C)''.
(2) Paragraph (3) of section 1274(b) is amended--
(A) by striking ``(as defined in section
6662(d)(2)(C)(iii))'' in subparagraph (B)(i), and
(B) by adding at the end the following new subparagraph:
``(C) Tax shelter.--For purposes of subparagraph (B), the
term `tax shelter' means--
``(i) a partnership or other entity,
``(ii) any investment plan or arrangement, or
``(iii) any other plan or arrangement,
if a significant purpose of such partnership, entity, plan,
or arrangement is the avoidance or evasion of Federal income
tax.''
(3) Section 6662(d)(2) is amended by striking subparagraphs
(C) and (D).
(4) Section 6664(c)(1) is amended by striking ``this part''
and inserting ``section 6662 or 6663''.
(5) Subsection (b) of section 7525 is amended by striking
``section 6662(d)(2)(C)(iii)'' and inserting ``section
1274(b)(3)(C)''.
(6)(A) The heading for section 6662 is amended to read as
follows:
[[Page H2114]]
``SEC. 6662. IMPOSITION OF ACCURACY-RELATED PENALTY ON
UNDERPAYMENTS. ''
(B) The table of sections for part II of subchapter A of
chapter 68 is amended by striking the item relating to
section 6662 and inserting the following new items:
``Sec. 6662. Imposition of accuracy-related penalty on underpayments.
``Sec. 6662A. Imposition of accuracy-related penalty on understatements
with respect to reportable transactions.''
(e) Effective Date.--The amendments made by this section
shall apply to taxable years ending after the date of the
enactment of this Act.
SEC. 9504. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO
TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.
(a) In General.--Subchapter A of chapter 68 is amended by
inserting after section 6662A the following new section:
``SEC. 6662B. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO
TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.
``(a) Imposition of Penalty.--If a taxpayer has an
noneconomic substance transaction understatement for any
taxable year, there shall be added to the tax an amount equal
to 40 percent of the amount of such understatement.
``(b) Reduction of Penalty for Disclosed Transactions.--
Subsection (a) shall be applied by substituting `20 percent'
for `40 percent' with respect to the portion of any
noneconomic substance transaction understatement with respect
to which the relevant facts affecting the tax treatment of
the item are adequately disclosed in the return or a
statement attached to the return.
``(c) Noneconomic Substance Transaction Understatement.--
For purposes of this section--
``(1) In general.--The term `noneconomic substance
transaction understatement' means any amount which would be
an understatement under section 6662A(b)(1) if section 6662A
were applied by taking into account items attributable to
noneconomic substance transactions rather than items to which
section 6662A would apply without regard to this paragraph.
``(2) Noneconomic substance transaction.--The term
`noneconomic substance transaction' means any transaction
if--
``(A) there is a lack of economic substance (within the
meaning of section 7701(m)(1)) for the transaction giving
rise to the claimed tax benefit or the transaction was not
respected under section 7701(m)(2), or
``(B) the transaction fails to meet the requirements of any
similar rule of law.
``(d) Rules Applicable to Compromise of Penalty.--
``(1) In general.--If the 1st letter of proposed deficiency
which allows the taxpayer an opportunity for administrative
review in the Internal Revenue Service Office of Appeals has
been sent with respect to a penalty to which this section
applies, only the Commissioner of Internal Revenue may
compromise all or any portion of such penalty.
``(2) Applicable rules.--The rules of paragraphs (3), (4),
and (5) of section 6707A(d) shall apply for purposes of
paragraph (1).
``(e) Coordination With Other Penalties.--Except as
otherwise provided in this part, the penalty imposed by this
section shall be in addition to any other penalty imposed by
this title.
``(f) Cross References.--
``(1) For coordination of penalty with understatements
under section 6662 and other special rules, see section
6662A(e).
``(2) For reporting of penalty imposed under this section
to the Securities and Exchange Commission, see section
6707A(e).''
(b) Clerical Amendment.--The table of sections for part II
of subchapter A of chapter 68 is amended by inserting after
the item relating to section 6662A the following new item:
``Sec. 6662B. Penalty for understatements attributable to
transactions lacking economic substance, etc.''
(c) Effective Date.--The amendments made by this section
shall apply to transactions entered into after February 13,
2003.
SEC. 9505. MODIFICATIONS OF SUBSTANTIAL UNDERSTATEMENT
PENALTY FOR NONREPORTABLE TRANSACTIONS.
(a) Substantial Understatement of Corporations.--Section
6662(d)(1)(B) (relating to special rule for corporations) is
amended to read as follows:
``(B) Special rule for corporations.--In the case of a
corporation other than an S corporation or a personal holding
company (as defined in section 542), there is a substantial
understatement of income tax for any taxable year if the
amount of the understatement for the taxable year exceeds the
lesser of--
``(i) 10 percent of the tax required to be shown on the
return for the taxable year (or, if greater, $10,000), or
``(ii) $10,000,000.''
(b) Reduction for Understatement of Taxpayer Due to
Position of Taxpayer or Disclosed Item.--
(1) In general.--Section 6662(d)(2)(B)(i) (relating to
substantial authority) is amended to read as follows:
``(i) the tax treatment of any item by the taxpayer if the
taxpayer had reasonable belief that the tax treatment was
more likely than not the proper treatment, or''.
(2) Conforming amendment.--Section 6662(d) is amended by
adding at the end the following new paragraph:
``(3) Secretarial list.--For purposes of this subsection,
section 6664(d)(2), and section 6694(a)(1), the Secretary may
prescribe a list of positions for which the Secretary
believes there is not substantial authority or there is no
reasonable belief that the tax treatment is more likely than
not the proper tax treatment. Such list (and any revisions
thereof) shall be published in the Federal Register or the
Internal Revenue Bulletin.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 9506. TAX SHELTER EXCEPTION TO CONFIDENTIALITY
PRIVILEGES RELATING TO TAXPAYER COMMUNICATIONS.
(a) In General.--Section 7525(b) (relating to section not
to apply to communications regarding corporate tax shelters)
is amended to read as follows:
``(b) Section not to Apply to Communications Regarding Tax
Shelters.--The privilege under subsection (a) shall not apply
to any written communication which is--
``(1) between a federally authorized tax practitioner and--
``(A) any person,
``(B) any director, officer, employee, agent, or
representative of the person, or
``(C) any other person holding a capital or profits
interest in the person, and
``(2) in connection with the promotion of the direct or
indirect participation of the person in any tax shelter (as
defined in section 1274(b)(3)(C)).''
(b) Effective Date.--The amendment made by this section
shall apply to communications made on or after the date of
the enactment of this Act.
SEC. 9507. DISCLOSURE OF REPORTABLE TRANSACTIONS.
(a) In General.--Section 6111 (relating to registration of
tax shelters) is amended to read as follows:
``SEC. 6111. DISCLOSURE OF REPORTABLE TRANSACTIONS.
``(a) In General.--Each material advisor with respect to
any reportable transaction shall make a return (in such form
as the Secretary may prescribe) setting forth--
``(1) information identifying and describing the
transaction,
``(2) information describing any potential tax benefits
expected to result from the transaction, and
``(3) such other information as the Secretary may
prescribe.
Such return shall be filed not later than the date specified
by the Secretary.
``(b) Definitions.--For purposes of this section--
``(1) Material advisor.--
``(A) In general.--The term `material advisor' means any
person--
``(i) who provides any material aid, assistance, or advice
with respect to organizing, promoting, selling, implementing,
or carrying out any reportable transaction, and
``(ii) who directly or indirectly derives gross income in
excess of the threshold amount for such aid, assistance, or
advice.
``(B) Threshold amount.--For purposes of subparagraph (A),
the threshold amount is--
``(i) $50,000 in the case of a reportable transaction
substantially all of the tax benefits from which are provided
to natural persons, and
``(ii) $250,000 in any other case.
``(2) Reportable transaction.--The term `reportable
transaction' has the meaning given to such term by section
6707A(c).
``(c) Regulations.--The Secretary may prescribe regulations
which provide--
``(1) that only 1 person shall be required to meet the
requirements of subsection (a) in cases in which 2 or more
persons would otherwise be required to meet such
requirements,
``(2) exemptions from the requirements of this section, and
``(3) such rules as may be necessary or appropriate to
carry out the purposes of this section.''
(b) Conforming Amendments.--
(1) The item relating to section 6111 in the table of
sections for subchapter B of chapter 61 is amended to read as
follows:
``Sec. 6111. Disclosure of reportable transactions.''
(2)(A) So much of section 6112 as precedes subsection (c)
thereof is amended to read as follows:
``SEC. 6112. MATERIAL ADVISORS OF REPORTABLE TRANSACTIONS
MUST KEEP LISTS OF ADVISEES.
``(a) In General.--Each material advisor (as defined in
section 6111) with respect to any reportable transaction (as
defined in section 6707A(c)) shall maintain, in such manner
as the Secretary may by regulations prescribe, a list--
``(1) identifying each person with respect to whom such
advisor acted as such a material advisor with respect to such
transaction, and
``(2) containing such other information as the Secretary
may by regulations require.
This section shall apply without regard to whether a material
advisor is required to file a return under section 6111 with
respect to such transaction.''
(B) Section 6112 is amended by redesignating subsection (c)
as subsection (b).
(C) Section 6112(b), as redesignated by subparagraph (B),
is amended--
(i) by inserting ``written'' before ``request'' in
paragraph (1)(A), and
(ii) by striking ``shall prescribe'' in paragraph (2) and
inserting ``may prescribe''.
(D) The item relating to section 6112 in the table of
sections for subchapter B of chapter 61 is amended to read as
follows:
[[Page H2115]]
``Sec. 6112. Material advisors of reportable transactions must keep
lists of advisees.''
(3)(A) The heading for section 6708 is amended to read as
follows:
``SEC. 6708. FAILURE TO MAINTAIN LISTS OF ADVISEES WITH
RESPECT TO REPORTABLE TRANSACTIONS. ''
(B) The item relating to section 6708 in the table of
sections for part I of subchapter B of chapter 68 is amended
to read as follows:
``Sec. 6708. Failure to maintain lists of advisees with respect to
reportable transactions.''
(c) Effective Date.--The amendments made by this section
shall apply to transactions with respect to which material
aid, assistance, or advice referred to in section
6111(b)(1)(A)(i) of the Internal Revenue Code of 1986 (as
added by this section) is provided after the date of the
enactment of this Act.
SEC. 9508. MODIFICATIONS TO PENALTY FOR FAILURE TO REGISTER
TAX SHELTERS.
(a) In General.--Section 6707 (relating to failure to
furnish information regarding tax shelters) is amended to
read as follows:
``SEC. 6707. FAILURE TO FURNISH INFORMATION REGARDING
REPORTABLE TRANSACTIONS.
``(a) In General.--If a person who is required to file a
return under section 6111(a) with respect to any reportable
transaction--
``(1) fails to file such return on or before the date
prescribed therefor, or
``(2) files false or incomplete information with the
Secretary with respect to such transaction,
such person shall pay a penalty with respect to such return
in the amount determined under subsection (b).
``(b) Amount of Penalty.--
``(1) In general.--Except as provided in paragraph (2), the
penalty imposed under subsection (a) with respect to any
failure shall be $50,000.
``(2) Listed transactions.--The penalty imposed under
subsection (a) with respect to any listed transaction shall
be an amount equal to the greater of--
``(A) $200,000, or
``(B) 50 percent of the gross income derived by such person
with respect to aid, assistance, or advice which is provided
with respect to the reportable transaction before the date
the return including the transaction is filed under section
6111.
Subparagraph (B) shall be applied by substituting `75
percent' for `50 percent' in the case of an intentional
failure or act described in subsection (a).
``(c) Rescission Authority.--The provisions of section
6707A(d) (relating to authority of Commissioner to rescind
penalty) shall apply to any penalty imposed under this
section.
``(d) Reportable and Listed Transactions.--The terms
`reportable transaction' and `listed transaction' have the
respective meanings given to such terms by section
6707A(c).''.
(b) Clerical Amendment.--The item relating to section 6707
in the table of sections for part I of subchapter B of
chapter 68 is amended by striking ``tax shelters'' and
inserting ``reportable transactions''.
(c) Effective Date.--The amendments made by this section
shall apply to returns the due date for which is after the
date of the enactment of this Act.
SEC. 9509. MODIFICATION OF PENALTY FOR FAILURE TO MAINTAIN
LISTS OF INVESTORS.
(a) In General.--Subsection (a) of section 6708 is amended
to read as follows:
``(a) Imposition of Penalty.--
``(1) In general.--If any person who is required to
maintain a list under section 6112(a) fails to make such list
available upon written request to the Secretary in accordance
with section 6112(b)(1)(A) within 20 business days after the
date of the Secretary's request, such person shall pay a
penalty of $10,000 for each day of such failure after such
20th day.
``(2) Reasonable cause exception.--No penalty shall be
imposed by paragraph (1) with respect to the failure on any
day if such failure is due to reasonable cause.''
(b) Effective Date.--The amendment made by this section
shall apply to requests made after the date of the enactment
of this Act.
SEC. 9510. MODIFICATION OF ACTIONS TO ENJOIN CERTAIN CONDUCT
RELATED TO TAX SHELTERS AND REPORTABLE
TRANSACTIONS.
(a) In General.--Section 7408 (relating to action to enjoin
promoters of abusive tax shelters, etc.) is amended by
redesignating subsection (c) as subsection (d) and by
striking subsections (a) and (b) and inserting the following
new subsections:
``(a) Authority to Seek Injunction.--A civil action in the
name of the United States to enjoin any person from further
engaging in specified conduct may be commenced at the request
of the Secretary. Any action under this section shall be
brought in the district court of the United States for the
district in which such person resides, has his principal
place of business, or has engaged in specified conduct. The
court may exercise its jurisdiction over such action (as
provided in section 7402(a)) separate and apart from any
other action brought by the United States against such
person.
``(b) Adjudication and Decree.--In any action under
subsection (a), if the court finds--
``(1) that the person has engaged in any specified conduct,
and
``(2) that injunctive relief is appropriate to prevent
recurrence of such conduct,
the court may enjoin such person from engaging in such
conduct or in any other activity subject to penalty under
this title.
``(c) Specified Conduct.--For purposes of this section, the
term `specified conduct' means any action, or failure to take
action, subject to penalty under section 6700, 6701, 6707, or
6708.''
(b) Conforming Amendments.--
(1) The heading for section 7408 is amended to read as
follows:
``SEC. 7408. ACTIONS TO ENJOIN SPECIFIED CONDUCT RELATED TO
TAX SHELTERS AND REPORTABLE TRANSACTIONS. ''
(2) The table of sections for subchapter A of chapter 67 is
amended by striking the item relating to section 7408 and
inserting the following new item:
``Sec. 7408. Actions to enjoin specified conduct related to tax
shelters and reportable transactions.''
(c) Effective Date.--The amendment made by this section
shall take effect on the day after the date of the enactment
of this Act.
SEC. 9511. UNDERSTATEMENT OF TAXPAYER'S LIABILITY BY INCOME
TAX RETURN PREPARER.
(a) Standards Conformed to Taxpayer Standards.--Section
6694(a) (relating to understatements due to unrealistic
positions) is amended--
(1) by striking ``realistic possibility of being sustained
on its merits'' in paragraph (1) and inserting ``reasonable
belief that the tax treatment in such position was more
likely than not the proper treatment'',
(2) by striking ``or was frivolous'' in paragraph (3) and
inserting ``or there was no reasonable basis for the tax
treatment of such position'', and
(3) by striking ``Unrealistic'' in the heading and
inserting ``Improper''.
(b) Amount of Penalty.--Section 6694 is amended--
(1) by striking ``$250'' in subsection (a) and inserting
``$1,000'', and
(2) by striking ``$1,000'' in subsection (b) and inserting
``$5,000''.
(c) Effective Date.--The amendments made by this section
shall apply to documents prepared after the date of the
enactment of this Act.
SEC. 9512. PENALTY ON FAILURE TO REPORT INTERESTS IN FOREIGN
FINANCIAL ACCOUNTS.
(a) In General.--Section 5321(a)(5) of title 31, United
States Code, is amended to read as follows:
``(5) Foreign financial agency transaction violation.--
``(A) Penalty authorized.--The Secretary of the Treasury
may impose a civil money penalty on any person who violates,
or causes any violation of, any provision of section 5314.
``(B) Amount of penalty.--
``(i) In general.--Except as provided in subparagraph (C),
the amount of any civil penalty imposed under subparagraph
(A) shall not exceed $5,000.
``(ii) Reasonable cause exception.--No penalty shall be
imposed under subparagraph (A) with respect to any violation
if--
``(I) such violation was due to reasonable cause, and
``(II) the amount of the transaction or the balance in the
account at the time of the transaction was properly reported.
``(C) Willful violations.--In the case of any person
willfully violating, or willfully causing any violation of,
any provision of section 5314--
``(i) the maximum penalty under subparagraph (B)(i) shall
be increased to the greater of--
``(I) $25,000, or
``(II) the amount (not exceeding $100,000) determined under
subparagraph (D), and
``(ii) subparagraph (B)(ii) shall not apply.
``(D) Amount.--The amount determined under this
subparagraph is--
``(i) in the case of a violation involving a transaction,
the amount of the transaction, or
``(ii) in the case of a violation involving a failure to
report the existence of an account or any identifying
information required to be provided with respect to an
account, the balance in the account at the time of the
violation.''
(b) Effective Date.--The amendment made by this section
shall apply to violations occurring after the date of the
enactment of this Act.
SEC. 9513. FRIVOLOUS TAX SUBMISSIONS.
(a) Civil Penalties.--Section 6702 is amended to read as
follows:
``SEC. 6702. FRIVOLOUS TAX SUBMISSIONS.
``(a) Civil Penalty for Frivolous Tax Returns.--A person
shall pay a penalty of $5,000 if--
``(1) such person files what purports to be a return of a
tax imposed by this title but which--
``(A) does not contain information on which the substantial
correctness of the self-assessment may be judged, or
``(B) contains information that on its face indicates that
the self-assessment is substantially incorrect; and
``(2) the conduct referred to in paragraph (1)--
``(A) is based on a position which the Secretary has
identified as frivolous under subsection (c), or
``(B) reflects a desire to delay or impede the
administration of Federal tax laws.
[[Page H2116]]
``(b) Civil Penalty for Specified Frivolous Submissions.--
``(1) Imposition of penalty.--Except as provided in
paragraph (3), any person who submits a specified frivolous
submission shall pay a penalty of $5,000.
``(2) Specified frivolous submission.--For purposes of this
section--
``(A) Specified frivolous submission.--The term `specified
frivolous submission' means a specified submission if any
portion of such submission--
``(i) is based on a position which the Secretary has
identified as frivolous under subsection (c), or
``(ii) reflects a desire to delay or impede the
administration of Federal tax laws.
``(B) Specified submission.--The term `specified
submission' means--
``(i) a request for a hearing under--
``(I) section 6320 (relating to notice and opportunity for
hearing upon filing of notice of lien), or
``(II) section 6330 (relating to notice and opportunity for
hearing before levy), and
``(ii) an application under--
``(I) section 6159 (relating to agreements for payment of
tax liability in installments),
``(II) section 7122 (relating to compromises), or
``(III) section 7811 (relating to taxpayer assistance
orders).
``(3) Opportunity to withdraw submission.--If the Secretary
provides a person with notice that a submission is a
specified frivolous submission and such person withdraws such
submission within 30 days after such notice, the penalty
imposed under paragraph (1) shall not apply with respect to
such submission.
``(c) Listing of Frivolous Positions.--The Secretary shall
prescribe (and periodically revise) a list of positions which
the Secretary has identified as being frivolous for purposes
of this subsection. The Secretary shall not include in such
list any position that the Secretary determines meets the
requirement of section 6662(d)(2)(B)(ii)(II).
``(d) Reduction of Penalty.--The Secretary may reduce the
amount of any penalty imposed under this section if the
Secretary determines that such reduction would promote
compliance with and administration of the Federal tax laws.
``(e) Penalties in Addition to Other Penalties.--The
penalties imposed by this section shall be in addition to any
other penalty provided by law.''
(b) Treatment of Frivolous Requests for Hearings Before
Levy.--
(1) Frivolous requests disregarded.--Section 6330 (relating
to notice and opportunity for hearing before levy) is amended
by adding at the end the following new subsection:
``(g) Frivolous Requests for Hearing, Etc.--Notwithstanding
any other provision of this section, if the Secretary
determines that any portion of a request for a hearing under
this section or section 6320 meets the requirement of clause
(i) or (ii) of section 6702(b)(2)(A), then the Secretary may
treat such portion as if it were never submitted and such
portion shall not be subject to any further administrative or
judicial review.''
(2) Preclusion from raising frivolous issues at hearing.--
Section 6330(c)(4) is amended--
(A) by striking ``(A)'' and inserting ``(A)(i)'';
(B) by striking ``(B)'' and inserting ``(ii)'';
(C) by striking the period at the end of the first sentence
and inserting ``; or''; and
(D) by inserting after subparagraph (A)(ii) (as so
redesignated) the following:
``(B) the issue meets the requirement of clause (i) or (ii)
of section 6702(b)(2)(A).''
(3) Statement of grounds.--Section 6330(b)(1) is amended by
striking ``under subsection (a)(3)(B)'' and inserting ``in
writing under subsection (a)(3)(B) and states the grounds for
the requested hearing''.
(c) Treatment of Frivolous Requests for Hearings Upon
Filing of Notice of Lien.--Section 6320 is amended--
(1) in subsection (b)(1), by striking ``under subsection
(a)(3)(B)'' and inserting ``in writing under subsection
(a)(3)(B) and states the grounds for the requested hearing'',
and
(2) in subsection (c), by striking ``and (e)'' and
inserting ``(e), and (g)''.
(d) Treatment of Frivolous Applications for Offers-In-
Compromise and Installment Agreements.--Section 7122 is
amended by adding at the end the following new subsection:
``(e) Frivolous Submissions, Etc.--Notwithstanding any
other provision of this section, if the Secretary determines
that any portion of an application for an offer-in-compromise
or installment agreement submitted under this section or
section 6159 meets the requirement of clause (i) or (ii) of
section 6702(b)(2)(A), then the Secretary may treat such
portion as if it were never submitted and such portion shall
not be subject to any further administrative or judicial
review.''
(e) Clerical Amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by striking the item
relating to section 6702 and inserting the following new
item:
``Sec. 6702. Frivolous tax submissions.''
(f) Effective Date.--The amendments made by this section
shall apply to submissions made and issues raised after the
date on which the Secretary first prescribes a list under
section 6702(c) of the Internal Revenue Code of 1986, as
amended by subsection (a).
SEC. 9514. REGULATION OF INDIVIDUALS PRACTICING BEFORE THE
DEPARTMENT OF TREASURY.
(a) Censure; Imposition of Penalty.--
(1) In general.--Section 330(b) of title 31, United States
Code, is amended--
(A) by inserting ``, or censure,'' after ``Department'',
and
(B) by adding at the end the following new flush sentence:
``The Secretary may impose a monetary penalty on any
representative described in the preceding sentence. If the
representative was acting on behalf of an employer or any
firm or other entity in connection with the conduct giving
rise to such penalty, the Secretary may impose a monetary
penalty on such employer, firm, or entity if it knew, or
reasonably should have known, of such conduct. Such penalty
shall not exceed the gross income derived (or to be derived)
from the conduct giving rise to the penalty and may be in
addition to, or in lieu of, any suspension, disbarment, or
censure.''
(2) Effective date.--The amendments made by this subsection
shall apply to actions taken after the date of the enactment
of this Act.
(b) Tax Shelter Opinions, Etc.--Section 330 of such title
31 is amended by adding at the end the following new
subsection:
``(d) Nothing in this section or in any other provision of
law shall be construed to limit the authority of the
Secretary of the Treasury to impose standards applicable to
the rendering of written advice with respect to any entity,
transaction plan or arrangement, or other plan or
arrangement, which is of a type which the Secretary
determines as having a potential for tax avoidance or
evasion.''
SEC. 9515. PENALTY ON PROMOTERS OF TAX SHELTERS.
(a) Penalty on Promoting Abusive Tax Shelters.--Section
6700(a) is amended by adding at the end the following new
sentence: ``Notwithstanding the first sentence, if an
activity with respect to which a penalty imposed under this
subsection involves a statement described in paragraph
(2)(A), the amount of the penalty shall be equal to 50
percent of the gross income derived (or to be derived) from
such activity by the person on which the penalty is
imposed.''
(b) Effective Date.--The amendment made by this section
shall apply to activities after the date of the enactment of
this Act.
SEC. 9516. STATUTE OF LIMITATIONS FOR TAXABLE YEARS FOR WHICH
LISTED TRANSACTIONS NOT REPORTED.
(a) In General.--Section 6501(e)(1) (relating to
substantial omission of items for income taxes) is amended by
adding at the end the following new subparagraph:
``(C) Listed transactions.--If a taxpayer fails to include
on any return or statement for any taxable year any
information with respect to a listed transaction (as defined
in section 6707A(c)(2)) which is required under section 6011
to be included with such return or statement, the tax for
such taxable year may be assessed, or a proceeding in court
for collection of such tax may be begun without assessment,
at any time within 6 years after the time the return is
filed. This subparagraph shall not apply to any taxable year
if the time for assessment or beginning the proceeding in
court has expired before the time a transaction is treated as
a listed transaction under section 6011.''
(b) Effective Date.--The amendment made by this section
shall apply to transactions after the date of the enactment
of this Act in taxable years ending after such date.
SEC. 9517. DENIAL OF DEDUCTION FOR INTEREST ON UNDERPAYMENTS
ATTRIBUTABLE TO NONDISCLOSED REPORTABLE AND
NONECONOMIC SUBSTANCE TRANSACTIONS.
(a) In General.--Section 163 (relating to deduction for
interest) is amended by redesignating subsection (m) as
subsection (n) and by inserting after subsection (l) the
following new subsection:
``(m) Interest on Unpaid Taxes Attributable to Nondisclosed
Reportable Transactions and Noneconomic Substance
Transactions.--No deduction shall be allowed under this
chapter for any interest paid or accrued under section 6601
on any underpayment of tax which is attributable to--
``(1) the portion of any reportable transaction
understatement (as defined in section 6662A(b)) with respect
to which the requirement of section 6664(d)(2)(A) is not met,
or
``(2) any noneconomic substance transaction understatement
(as defined in section 6662B(c)).''
(b) Effective Date.--The amendments made by this section
shall apply to transactions after the date of the enactment
of this Act in taxable years ending after such date.
Subtitle G--Other Provisions
SEC. 9601. LIMITATION ON TRANSFER OR IMPORTATION OF BUILT-IN
LOSSES.
(a) In General.--Section 362 (relating to basis to
corporations) is amended by adding at the end the following
new subsection:
``(e) Limitations on Built-In Losses.--
``(1) Limitation on importation of built-in losses.--
``(A) In general.--If in any transaction described in
subsection (a) or (b) there would (but for this subsection)
be an importation of a net built-in loss, the basis of each
property described in subparagraph (B) which is acquired in
such transaction shall (notwithstanding subsections (a) and
(b)) be its fair market value immediately after such
transaction.
``(B) Property described.--For purposes of subparagraph
(A), property is described in this paragraph if--
[[Page H2117]]
``(i) gain or loss with respect to such property is not
subject to tax under this subtitle in the hands of the
transferor immediately before the transfer, and
``(ii) gain or loss with respect to such property is
subject to such tax in the hands of the transferee
immediately after such transfer.
In any case in which the transferor is a partnership, the
preceding sentence shall be applied by treating each partner
in such partnership as holding such partner's proportionate
share of the property of such partnership.
``(C) Importation of net built-in loss.--For purposes of
subparagraph (A), there is an importation of a net built-in
loss in a transaction if the transferee's aggregate adjusted
bases of property described in subparagraph (B) which is
transferred in such transaction would (but for this
paragraph) exceed the fair market value of such property
immediately after such transaction.''
``(2) Limitation on transfer of built-in losses in section
351 transactions.--
``(A) In general.--If--
``(i) property is transferred in any transaction which is
described in subsection (a) and which is not described in
paragraph (1) of this subsection, and
``(ii) the transferee's aggregate adjusted bases of the
property so transferred would (but for this paragraph) exceed
the fair market value of such property immediately after such
transaction,
then, notwithstanding subsection (a), the transferee's
aggregate adjusted bases of the property so transferred shall
not exceed the fair market value of such property immediately
after such transaction.
``(B) Allocation of basis reduction.--The aggregate
reduction in basis by reason of subparagraph (A) shall be
allocated among the property so transferred in proportion to
their respective built-in losses immediately before the
transaction.
``(C) Exception for transfers within affiliated group.--
Subparagraph (A) shall not apply to any transaction if the
transferor owns stock in the transferee meeting the
requirements of section 1504(a)(2). In the case of property
to which subparagraph (A) does not apply by reason of the
preceding sentence, the transferor's basis in the stock
received for such property shall not exceed its fair market
value immediately after the transfer.''
(b) Comparable Treatment Where Liquidation.--Paragraph (1)
of section 334(b) (relating to liquidation of subsidiary) is
amended to read as follows:
``(1) In general.--If property is received by a corporate
distributee in a distribution in a complete liquidation to
which section 332 applies (or in a transfer described in
section 337(b)(1)), the basis of such property in the hands
of such distributee shall be the same as it would be in the
hands of the transferor; except that the basis of such
property in the hands of such distributee shall be the fair
market value of the property at the time of the
distribution--
``(A) in any case in which gain or loss is recognized by
the liquidating corporation with respect to such property, or
``(B) in any case in which the liquidating corporation is a
foreign corporation, the corporate distributee is a domestic
corporation, and the corporate distributee's aggregate
adjusted bases of property described in section 362(e)(1)(B)
which is distributed in such liquidation would (but for this
subparagraph) exceed the fair market value of such property
immediately after such liquidation.''
(c) Effective Date.--The amendments made by this section
shall apply to transactions after the date of the enactment
of this Act.
SEC. 9602. DISALLOWANCE OF CERTAIN PARTNERSHIP LOSS
TRANSFERS.
(a) Treatment of Contributed Property With Built-In Loss.--
Paragraph (1) of section 704(c) is amended by striking
``and'' at the end of subparagraph (A), by striking the
period at the end of subparagraph (B) and inserting ``,
and'', and by adding at the end the following:
``(C) if any property so contributed has a built-in loss--
``(i) such built-in loss shall be taken into account only
in determining the amount of items allocated to the
contributing partner, and
``(ii) except as provided in regulations, in determining
the amount of items allocated to other partners, the basis of
the contributed property in the hands of the partnership
shall be treated as being equal to its fair market value
immediately after the contribution.
For purposes of subparagraph (C), the term `built-in loss'
means the excess of the adjusted basis of the property
(determined without regard to subparagraph (C)(ii)) over its
fair market value immediately after the contribution.''
(b) Adjustment to Basis of Partnership Property on Transfer
of Partnership Interest If There Is Substantial Built-In
Loss.--
(1) Adjustment required.--Subsection (a) of section 743
(relating to optional adjustment to basis of partnership
property) is amended by inserting before the period ``or
unless the partnership has a substantial built-in loss
immediately after such transfer''.
(2) Adjustment.--Subsection (b) of section 743 is amended
by inserting ``or with respect to which there is a
substantial built-in loss immediately after such transfer''
after ``section 754 is in effect''.
(3) Substantial built-in loss.--Section 743 is amended by
adding at the end the following new subsection:
``(d) Substantial Built-In Loss.--
``(1) In general.--For purposes of this section, a
partnership has a substantial built-in loss with respect to a
transfer of an interest in a partnership if the transferee
partner's proportionate share of the adjusted basis of the
partnership property exceeds by more than $250,000 the basis
of such partner's interest in the partnership.
``(2) Regulations.--The Secretary shall prescribe such
regulations as may be appropriate to carry out the purposes
of paragraph (1) and section 734(d), including regulations
aggregating related partnerships and disregarding property
acquired by the partnership in an attempt to avoid such
purposes.''
(4) Clerical amendments.--
(A) The section heading for section 743 is amended to read
as follows:
``SEC. 743. ADJUSTMENT TO BASIS OF PARTNERSHIP PROPERTY WHERE
SECTION 754 ELECTION OR SUBSTANTIAL BUILT-IN
LOSS. ''
(B) The table of sections for subpart C of part II of
subchapter K of chapter 1 is amended by striking the item
relating to section 743 and inserting the following new item:
``Sec. 743. Adjustment to basis of partnership property where section
754 election or substantial built-in loss.''
(c) Adjustment to Basis of Undistributed Partnership
Property If There Is Substantial Basis Reduction.--
(1) Adjustment required.--Subsection (a) of section 734
(relating to optional adjustment to basis of undistributed
partnership property) is amended by inserting before the
period ``or unless there is a substantial basis reduction''.
(2) Adjustment.--Subsection (b) of section 734 is amended
by inserting ``or unless there is a substantial basis
reduction'' after ``section 754 is in effect''.
(3) Substantial basis reduction.--Section 734 is amended by
adding at the end the following new subsection:
``(d) Substantial Basis Reduction.--
``(1) In general.--For purposes of this section, there is a
substantial basis reduction with respect to a distribution if
the sum of the amounts described in subparagraphs (A) and (B)
of subsection (b)(2) exceeds $250,000.
``(2) Regulations.--For regulations to carry out this
subsection, see section 743(d)(2).''
(4) Clerical amendments.--
(A) The section heading for section 734 is amended to read
as follows:
``SEC. 734. ADJUSTMENT TO BASIS OF UNDISTRIBUTED PARTNERSHIP
PROPERTY WHERE SECTION 754 ELECTION OR
SUBSTANTIAL BASIS REDUCTION. ''
(B) The table of sections for subpart B of part II of
subchapter K of chapter 1 is amended by striking the item
relating to section 734 and inserting the following new item:
``Sec. 734. Adjustment to basis of undistributed partnership property
where section 754 election or substantial basis
reduction.''
(d) Effective Dates.--
(1) Subsection (a).--The amendment made by subsection (a)
shall apply to contributions made after the date of the
enactment of this Act.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to transfers after the date of the enactment of
this Act.
(3) Subsection (c).--The amendments made by subsection (c)
shall apply to distributions after the date of the enactment
of this Act.
SEC. 9603. NO REDUCTION OF BASIS UNDER SECTION 734 IN STOCK
HELD BY PARTNERSHIP IN CORPORATE PARTNER.
(a) In General.--Section 755 is amended by adding at the
end the following new subsection:
``(c) No Allocation of Basis Decrease to Stock of Corporate
Partner.--In making an allocation under subsection (a) of any
decrease in the adjusted basis of partnership property under
section 734(b)--
``(1) no allocation may be made to stock in a corporation
which is a partner in the partnership, and
``(2) any amount not allocable to stock by reason of
paragraph (1) shall be allocated under subsection (a) to
other partnership property.
Gain shall be recognized to the partnership to the extent
that the amount required to be allocated under paragraph (2)
to other partnership property exceeds the aggregate adjusted
basis of such other property immediately before the
allocation required by paragraph (2).''
(b) Effective Date.--The amendment made by this section
shall apply to distributions after the date of the enactment
of this Act.
SEC. 9604. REPEAL OF SPECIAL RULES FOR FASITS.
(a) In General.--Part V of subchapter M of chapter 1
(relating to financial asset securitization investment
trusts) is hereby repealed.
(b) Conforming Amendments.--
(1) Paragraph (6) of section 56(g) is amended by striking
``REMIC, or FASIT'' and inserting ``or REMIC''.
(2) Clause (ii) of section 382(l)(4)(B) is amended by
striking ``a REMIC to which part IV of subchapter M applies,
or a FASIT to which part V of subchapter M applies,'' and
inserting ``or a REMIC to which part IV of subchapter M
applies,''.
[[Page H2118]]
(3) Paragraph (1) of section 582(c) is amended by striking
``, and any regular interest in a FASIT,''.
(4) Subparagraph (E) of section 856(c)(5) is amended by
striking the last sentence.
(5) Paragraph (5) of section 860G(a) is amended by adding
``and'' at the end of subparagraph (B), by striking ``, and''
at the end of subparagraph (C) and inserting a period, and by
striking subparagraph (D).
(6) Subparagraph (C) of section 1202(e)(4) is amended by
striking ``REMIC, or FASIT'' and inserting ``or REMIC''.
(7) Subparagraph (C) of section 7701(a)(19) is amended by
adding ``and'' at the end of clause (ix), by striking ``,
and'' at the end of clause (x) and inserting a period, and by
striking clause (xi).
(8) The table of parts for subchapter M of chapter 1 is
amended by striking the item relating to part V.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2003.
(2) Exception for existing FASITs.--
(A) In general.--Paragraph (1) shall not apply to any FASIT
in existence on the date of the enactment of this Act.
(B) Transfer of additional assets not permitted.--Except as
provided in regulations prescribed by the Secretary of the
Treasury or the Secretary's delegate, subparagraph (A) shall
cease to apply as of the earliest date after the date of the
enactment of this Act that any property is transferred to the
FASIT.
SEC. 9605. EXPANDED DISALLOWANCE OF DEDUCTION FOR INTEREST ON
CONVERTIBLE DEBT.
(a) In General.--Paragraph (2) of section 163(l) is amended
by striking ``or a related party'' and inserting ``or equity
held by the issuer (or any related party) in any other
person''.
(b) Conforming Amendment.--Paragraph (3) of section 163(l)
is amended by striking ``or a related party'' in the material
preceding subparagraph (A) and inserting ``or any other
person''.
(c) Effective Date.--The amendments made by this section
shall apply to debt instruments issued after the date of the
enactment of this Act.
SEC. 9606. EXPANDED AUTHORITY TO DISALLOW TAX BENEFITS UNDER
SECTION 269.
(a) In General.--Subsection (a) of section 269 (relating to
acquisitions made to evade or avoid income tax) is amended to
read as follows:
``(a) In General.--If--
``(1)(A) any person acquires stock in a corporation, or
``(B) any corporation acquires, directly or indirectly,
property of another corporation and the basis of such
property, in the hands of the acquiring corporation, is
determined by reference to the basis in the hands of the
transferor corporation, and
``(2) the principal purpose for which such acquisition was
made is evasion or avoidance of Federal income tax by
securing the benefit of a deduction, credit, or other
allowance,
then the Secretary may disallow such deduction, credit, or
other allowance.''
(b) Effective Date.--The amendment made by this section
shall apply to stock and property acquired after February 13,
2003.
SEC. 9607. MODIFICATIONS OF CERTAIN RULES RELATING TO
CONTROLLED FOREIGN CORPORATIONS.
(a) Limitation on Exception From PFIC Rules for United
States Shareholders of Controlled Foreign Corporations.--
Paragraph (2) of section 1297(e) (relating to passive
investment company) is amended by adding at the end the
following flush sentence: ``Such term shall not include any
period if there is only a remote likelihood of an inclusion
in gross income under section 951(a)(1)(A)(i) of subpart F
income of such corporation for such period.''
(b) Determination of Pro Rata Share of Subpart F Income.--
Subsection (a) of section 951 (relating to amounts included
in gross income of United States shareholders) is amended by
adding at the end the following new paragraph:
``(4) Special rules for determining pro rata share of
subpart f income.--The pro rata share under paragraph (2)
shall be determined by disregarding--
``(A) any rights lacking substantial economic effect, and
``(B) stock owned by a shareholder who is a tax-indifferent
party (as defined in section 7701(m)(3)) if the amount which
would (but for this paragraph) be allocated to such
shareholder does not reflect such shareholder's economic
share of the earnings and profits of the corporation.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years on controlled foreign
corporation beginning after February 13, 2003, and to taxable
years of United States shareholder in which or with which
such taxable years of controlled foreign corporations end.
SEC. 9608. BASIS FOR DETERMINING LOSS ALWAYS REDUCED BY
NONTAXED PORTION OF DIVIDENDS.
(a) In General.--Section 1059 (relating to corporate
shareholder's basis in stock reduced by nontaxed portion of
extraordinary dividends) is amended by redesignating
subsection (g) as subsection (h) and by inserting after
subsection (f) the following new subsection:
``(g) Basis for Determining Loss Always Reduced by Nontaxed
Portion of Dividends.--The basis of stock in a corporation
(for purposes of determining loss) shall be reduced by the
nontaxed portion of any dividend received with respect to
such stock if this section does not otherwise apply to such
dividend.''
(b) Effective Date.--The amendment made by this section
shall apply to dividends received after the date of the
enactment of this Act.
SEC. 9609. AFFIRMATION OF CONSOLIDATED RETURN REGULATION
AUTHORITY.
(a) In General.--Section 1502 (relating to consolidated
return regulations) is amended by adding at the end the
following new sentence: ``In prescribing such regulations,
the Secretary may prescribe rules applicable to corporations
filing consolidated returns under section 1501 that are
different from other provisions of this title that would
apply if such corporations filed separate returns.''
(b) Result not Overturned.--Notwithstanding subsection (a),
the Internal Revenue Code of 1986 shall be construed by
treating Treasury regulation section 1.1502-20(c)(1)(iii) (as
in effect on January 1, 2001) as being inapplicable to the
type of factual situation in 255 F.3d 1357 (Fed. Cir. 2001).
(c) Effective Date.--The provisions of this section shall
apply to taxable years beginning before, on, or after the
date of the enactment of this Act.
SEC. 9610. FEES FOR CERTAIN CUSTOMS SERVICES.
(a) In General.--Subtitle A of the Internal Revenue Code of
1986 is amended by inserting after chapter 55 the following
new chapter:
``CHAPTER 56--FEES FOR CERTAIN CUSTOMS SERVICES
``Sec. 5896. Imposition of fees.
``SEC. 5896. IMPOSITION OF FEES.
``(a) In General.--The Secretary shall charge and collect
fees under this title which are equivalent to the fees which
would be imposed by section 13031 of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (19 U.S.C. 58c) were such
section in effect after March 1, 2005.
``(b) Collection and Disposition of Fees, Etc.--References
in such section 13031 to fees thereunder shall be treated as
including references to the fees charged under this
section.''
(b) Clerical Amendment.--The table of chapters for subtitle
A of such Code is amended by adding at the end the following
new item:
``Chapter 56. Fees for certain customs services.''
(c) Effective date.--The amendments made by this section
shall take effect on March 1, 2005.
Subtitle H--Prevention of Corporate Expatriation to Avoid United States
Income Tax
SEC. 9701. PREVENTION OF CORPORATE EXPATRIATION TO AVOID
UNITED STATES INCOME TAX.
(a) In General.--Paragraph (4) of section 7701(a) (defining
domestic) is amended to read as follows:
``(4) Domestic.--
``(A) In general.--Except as provided in subparagraph (B),
the term `domestic' when applied to a corporation or
partnership means created or organized in the United States
or under the law of the United States or of any State unless,
in the case of a partnership, the Secretary provides
otherwise by regulations.
``(B) Certain corporations treated as domestic.--
``(i) In general.--The acquiring corporation in a corporate
expatriation transaction shall be treated as a domestic
corporation.
``(ii) Corporate expatriation transaction.--For purposes of
this subparagraph, the term `corporate expatriation
transaction' means any transaction if--
``(I) a nominally foreign corporation (referred to in this
subparagraph as the `acquiring corporation') acquires, as a
result of such transaction, directly or indirectly
substantially all of the properties held directly or
indirectly by a domestic corporation, and
``(II) immediately after the transaction, more than 80
percent of the stock (by vote or value) of the acquiring
corporation is held by former shareholders of the domestic
corporation by reason of holding stock in the domestic
corporation.
``(iii) Lower stock ownership requirement in certain
cases.--Subclause (II) of clause (ii) shall be applied by
substituting `50 percent' for `80 percent' with respect to
any nominally foreign corporation if--
``(I) such corporation does not have substantial business
activities (when compared to the total business activities of
the expanded affiliated group) in the foreign country in
which or under the law of which the corporation is created or
organized, and
``(II) the stock of the corporation is publicly traded and
the principal market for the public trading of such stock is
in the United States.
``(iv) Partnership transactions.--The term `corporate
expatriation transaction' includes any transaction if--
``(I) a nominally foreign corporation (referred to in this
subparagraph as the `acquiring corporation') acquires, as a
result of such transaction, directly or indirectly properties
constituting a trade or business of a domestic partnership,
``(II) immediately after the transaction, more than 80
percent of the stock (by vote or value) of the acquiring
corporation is held by former partners of the domestic
partnership or related foreign partnerships (determined
[[Page H2119]]
without regard to stock of the acquiring corporation which is
sold in a public offering related to the transaction), and
``(III) the acquiring corporation meets the requirements of
subclauses (I) and (II) of clause (iii).
``(v) Special rules.--For purposes of this subparagraph--
``(I) a series of related transactions shall be treated as
1 transaction, and
``(II) stock held by members of the expanded affiliated
group which includes the acquiring corporation shall not be
taken into account in determining ownership.
``(vi) Other definitions.--For purposes of this
subparagraph--
``(I) Nominally foreign corporation.--The term `nominally
foreign corporation' means any corporation which would (but
for this subparagraph) be treated as a foreign corporation.
``(II) Expanded affiliated group.--The term `expanded
affiliated group' means an affiliated group (as defined in
section 1504(a) without regard to section 1504(b)).
``(III) Related foreign partnership.--A foreign partnership
is related to a domestic partnership if they are under common
control (within the meaning of section 482), or they shared
the same trademark or tradename.''
(b) Effective Dates.--
(1) In general.--The amendment made by this section shall
apply to corporate expatriation transactions completed after
September 11, 2001.
(2) Special rule.--The amendment made by this section shall
also apply to corporate expatriation transactions completed
on or before September 11, 2001, but only with respect to
taxable years of the acquiring corporation beginning after
December 31, 2003.
Mr. DAVIS of Tennessee (during the reading). Mr. Speaker, I ask
unanimous consent that the motion to recommit be considered as read and
printed in the Record.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Tennessee?
Mr. NUSSLE. Mr. Speaker, reserving the right to object, my
understanding is that the only difference between the motion to
recommit that the gentleman just offered and we struck with a point of
order and the one that he is now offering is the difference between the
words ``forthwith'' and ``promptly.''
Is that the gentleman's understanding?
Mr. DAVIS of Tennessee. Mr. Speaker, will the gentleman yield?
Mr. NUSSLE. I yield to the gentleman from Tennessee.
Mr. DAVIS of Tennessee. No, there are other changes and they have
been cleared by the Parliamentarian.
Mr. NUSSLE. Mr. Speaker, then, continuing to reserve the right to
object, I would ask what the gentleman's changes are. Because my
understanding is that the only difference is between ``forthwith'' and
``promptly.'' The first four pages are increases in spending to the
level purported to be the level of the Senate, and then from page 4, 5,
6, 7, 8, 9, 10, 11 and on and on and on and on are increases in taxes,
on and on from page 4 all the way, increasing taxes, not gas taxes, but
all the way to page 174 are increases in taxes.
I would ask the gentleman, did he strike the tax increases from page
4 all the way to 174 in the motion to recommit?
Mr. DAVIS of Tennessee. One of the differences in this bill is that
it changes the part where we would report back promptly changes in this
bill.
Mr. NUSSLE. Mr. Speaker, I will not object to the dispensing of the
reading, but at this point I would like certainly to hear from the
gentleman why it is that there are four pages of spending and then 170
pages of tax increases in this motion to recommit.
Mr. Speaker, I withdraw my reservation of objection.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Tennessee?
There was no objection.
The SPEAKER pro tempore. The gentleman from Tennessee is recognized
for 5 minutes in support of his motion to recommit.
Mr. DAVIS of Tennessee. Mr. Speaker, I include for the Record a State
by State chart of the total highway/transit investment increases and
new jobs that would be created under this new motion to recommit.
TOTAL HIGHWAY/TRANSIT INVESTMENT INCREASES AND NEW JOBS CREATED UNDER DAVIS MOTION TO RECOMMIT
[6-Year Comparison of Funding Levels H.R. 3550 vs. Davis Motion--April 2, 2004]
----------------------------------------------------------------------------------------------------------------
New Jobs
State Highway Transit Total Increase Created
----------------------------------------------------------------------------------------------------------------
Alabama....................................... 641,930,651 32,286,503 674,217,154 32,025
Alaska........................................ 377,354,764 7,453,434 384,808,198 18,278
Arizona....................................... 546,862,745 66,315,929 613,178,674 29,126
Arkansas...................................... 418,494,826 19,120,008 437,614,834 20,787
California.................................... 2,983,161,532 790,817,798 3,773,979,330 179,264
Colorado...................................... 453,677,165 68,286,399 521,963,564 24,793
Connecticut................................... 480,949,177 62,125,892 543,075,069 25,796
Delaware...................................... 140,110,573 9,373,749 149,484,322 7,101
Dist. of Col.................................. 125,288,749 89,914,881 215,203,630 10,222
Florida....................................... 1,496,429,489 234,032,310 1,730,461,799 82,197
Georgia....................................... 1,111,763,461 103,762,256 1,215,525,717 57,737
Hawaii........................................ 163,958,507 36,371,827 200,330,334 9,516
Idaho......................................... 224,433,409 12,426,693 256,860,102 12,201
Illinois...................................... 1,243,912,775 300,674,181 1,544,586,956 73,368
Indiana....................................... 811,474,429 59,165,463 870,639,892 41,355
Iowa.......................................... 390,912,140 25,359,777 416,271,917 19,773
Kansas........................................ 371,083,992 20,121,040 391,205,032 18,582
Kentucky...................................... 549,959,335 36,390,607 586,349,942 27,852
Louisiana..................................... 503,561,959 48,157,903 551,719,862 26,207
Maine......................................... 166,682,176 8,575,838 175,258,014 8,325
Maryland...................................... 508,890,726 95,994,478 604,885,204 28,732
Massachusetts................................. 590,275,962 168,290,084 758,566,046 36,032
Michigan...................................... 1,033,958,948 105,045,881 1,139,004,829 54,103
Minnesota..................................... 627,515,527 66,401,515 693,917,042 32,961
Mississippi................................... 385,937,487 16,939,799 402,877,286 19,137
Missouri...................................... 747,900,357 61,777,797 809,678,154 38,460
Montana....................................... 314,457,025 8,659,265 323,116,290 15,348
Nebraska...................................... 246,016,937 16,462,238 262,479,175 12,468
Nevada........................................ 229,548,244 34,397,627 263,945,871 12,537
New Hampshire................................. 163,515,119 9,350,337 172,865,456 8,211
New Jersey.................................... 834,127,766 285,310,078 1,119,437,844 53,173
New Mexico.................................... 313,031,850 18,897,469 331,929,319 15,767
New York...................................... 1,635,087,852 730,759,129 2,365,846,981 112,378
North Carolina................................ 909,717,121 69,621,070 979,338,191 46,519
North Dakota.................................. 207,537,203 7,340,286 214,877,489 10,207
Ohio.......................................... 1,251,348,467 134,180,702 1,385,529,169 65,813
Oklahoma...................................... 488,328,418 28,477,592 516,806,010 24,548
Oregon........................................ 385,842,475 54,595,630 440,438,195 20,921
Pennsylvania.................................. 1,579,949,401 217,311,252 1,797,260,653 85,370
Rhode Island.................................. 188,693,217 12,832,952 201,526,169 9,572
South Carolina................................ 515,224,483 28,955,485 544,179,968 25,849
South Dakota.................................. 226,412,858 7,484,682 233,897,540 11,110
Tennessee..................................... 717,211,581 50,666,878 767,878,459 36,474
Texas......................................... 2,507,570,916 287,128,089 2,794,699,005 132,748
Utah.......................................... 248,012,183 41,168,296 289,180,479 13,736
Vermont....................................... 144,829,487 3,704,577 148,534,064 7,055
Virginia...................................... 817,694,519 81,898,909 899,593,428 42,731
Washington.................................... 569,305,588 131,298,248 700,603,836 33,279
West Virginia................................. 358,479,108 12,771,895 371,251,003 17,634
Wisconsin..................................... 630,750,942 63,268,811 694,019,753 32,966
Wyoming....................................... 220,142,087 4,665,881 224,807,968 10,678
-----------------------------------------------------------------
[[Page H2120]]
All States................................ 32,177,385,058 4,854,102,917 37,031,487,975 1,758,996
----------------------------------------------------------------------------------------------------------------
Total funding lvels calculated by the Federal Highway Administration and the Federal Transit Administration,
U.S. Department of Transportation.
Mr. Speaker, I yield 2 minutes to the gentleman from New Jersey (Mr.
Menendez).
(Mr. MENENDEZ asked and was given permission to revise and extend his
remarks.)
Mr. MENENDEZ. Mr. Speaker, the Davis motion to recommit increases the
funding in this bill to the Senate level of $318 billion, and it does
something about donor-donee issues which we have heard a lot about
here. Unlike the previous objection that was originally heard, the
Senate bill, which is in essence the way in which the gentleman from
Tennessee has constructed this, is a fiscally responsible bill. There
is no new gas tax in it, so let us not be deceived.
That increase to rise to the 318 is fully offset by what? By cracking
down on abusive tax shelters and by preventing American companies from
avoiding paying U.S. taxes by moving to a foreign country. It is not
only fiscally responsible; it is responsible national economic
development policy. It is going to create 1.8 million more additional
jobs, and God knows we need those jobs in this country. And it is about
national security policy.
The bill is supposed to be about a legacy. Do we want it to be a
legacy of congestion and deteriorating infrastructure? Or do we want it
to be about increased productivity and more good-paying jobs? About a
Nation that has the redundancy and multiplicity of transportation
infrastructure to respond to national emergencies on the scale of what
happened on September 11 where after so many different modes of
transportation were shut down, there is still one available to get
people out of downtown Manhattan over to New Jersey into hospitals?
If you want more money to go to your State, if you do not want just
to stop the decay of the Nation's infrastructure, but dramatically
improve it; if you want to help create good-paying jobs, 1.8 million
more jobs for the people of this country; if you want to have multiple
avenues to evacuate people and for first responders to reach the site,
God forbid, of the next national emergency, then you will vote for the
Davis motion to recommit. It is fiscally responsible. It is about
creating jobs. It is about the national security of the United States.
Mr. DAVIS of Tennessee. Mr. Speaker, as a graduate from my hometown
school, I traveled on an interstate called Interstate 40. It was about
one-third finished. My grandchildren travel that today. With this bill,
with this increase with this motion to recommit and the suggestion of
increasing it to $318 billion, all of our children and grandchildren to
come will have an infrastructure that will be the seed that is needed
for economic growth and investment for the future.
Mr. Speaker, I yield the balance of my time to the gentleman from
Oregon (Mr. Blumenauer).
The SPEAKER pro tempore. The gentleman from Oregon is recognized for
1\1/2\ minutes.
Mr. BLUMENAUER. Mr. Speaker, we have extolled the leadership of our
committee chair and ranking member and the subcommittee chair and
ranking member. I think that is appropriate because they have taken a
difficult task and have given us a good bill. But it falls far short of
the needs that have been identified by our own Department of
Transportation.
One of the reasons we have had the trauma about the donor-donee over
the course of the last 2 weeks is simply because we are not right-
sizing this bill. Every day we are losing the battle to congestion,
pollution, and bridges that are crumbling faster than we can fix them.
This motion will get us one-third of the way that was envisioned by our
committee leadership. It is, in fact, paid for and it will provide
extra money for States large like California, Texas and New York, small
States; and more important than the money in this time of economic
concern are the jobs.
We have seen the good work by the committee leadership and we have
not really acknowledged the leadership of Speaker Hastert and Leader
Pelosi who understand that the President is wrong to draw the line here
for the first time in his administration to exercise fiscal
responsibility, so to speak, at the needs of our infrastructure.
Now it is time for the leadership here. We on this floor have the
opportunity to do our part as Members of Congress. We can vote for this
motion to recommit. We can vote to make sure that the Federal
Government is a better partner with our communities to make them more
livable, to make our families safe, healthy and more economically
secure.
I strongly urge support for the Davis motion.
The SPEAKER pro tempore. The time of the gentleman from Tennessee has
expired.
Mr. YOUNG of Alaska. Mr. Speaker, I claim the time in opposition to
the motion to recommit.
The SPEAKER pro tempore. The gentleman from Alaska is recognized for
5 minutes.
Mr. YOUNG of Alaska. Mr. Speaker, we have spent 2 good days of very
legitimate debate. I was hoping we could avoid some of the things being
said now. Although it may sound clear and true, I can say we face
reality. This bill came out of our committee unanimously with the
gentleman from Minnesota (Mr. Oberstar) supporting it. We want to go
forth. The 318 figure coming from the Senate side, very frankly, I do
not think is true. What we have to do is try to find the real dollars,
and we are going to attempt to do that in conference.
Mr. Speaker, I yield such time as he may consume to the gentleman
from California (Mr. Thomas).
Mr. THOMAS. I thank the gentleman for yielding me this time.
Mr. Speaker, we really do have to decide whether we want to try to
make law or score political points. The first motion that was offered
was obviously a ruse because it would have killed the bill. You then
say changing ``forthwith'' to ``promptly'' makes this a serious offer.
You need to know that the reason they dropped ``forthwith'' to
``promptly'' and dropped various portions of the bill was to make it
germane under the rules. In dropping those portions to make it germane,
we have no idea what the revenue consequences of this bill are. There
is no score available.
I will tell you this, that the old provision was $38 billion in
revenue. If anyone knows how the Senate works, it is very simple. The
way you get the votes to pass anything is to ask whoever would possibly
vote for something, what do they want. It is an additive process. What
we have here is the sum and substance of a bill that passed the Senate,
which means there is no rationale to anything in the revenue portion.
Let me give you one brief example. Turn to page 108 and to raise the
revenue that is in this bill, which is not directly applicable to the
highway bill in about two-thirds of it, the effective date of the
provisions ending on page 108 shall apply to transactions entered into
after February 13, 2003.
{time} 1145
What was good law on February 13 last year, retroactively, will not
be good law if you vote for this measure. And if you think there is
nothing worse than the government's saying one can do something and
then, after they did it when it was legal, saying, no, now it is not,
then understand that is the way the Senate legislates. If you want to
make law, let us stick with the dollar amounts we have.
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. Thornberry). The Chair would first
remind all Members that it is inappropriate to characterize actions in
the
[[Page H2121]]
other body, and all Members should remember that admonishment in making
their comments on the floor.
Mr. THOMAS. Mr. Speaker, I accept that admonition. The other body has
no problem changing the law after the fact. We should not.
Point of Order
Mr. FRANK of Massachusetts. Point of order, Mr. Speaker.
The SPEAKER pro tempore. The gentleman from Massachusetts will state
his point of order.
Mr. FRANK of Massachusetts. Mr. Speaker, simply not using the word
``Senate'' does not alter the impact of the rule. The gentleman is in
violation of the rule.
The SPEAKER pro tempore. The Chair will repeat that it is
inappropriate to characterize actions in the other body, regardless of
what one calls them.
The gentleman from Alaska (Mr. Young) has 2 minutes remaining.
Mr. YOUNG of Alaska. Mr. Speaker, I yield the other body 1 minute.
Mr. THOMAS. Mr. Speaker, in referring to those that I cannot refer
to, in examining the legislation offered as a motion to recommit,
simply look at page 108. What was legal will not be legal. Someone who
took actions by virtue of something that if it were criminal would be
unconstitutional is in this legislation.
Let us make law. Let us not make political points. Vote down this
motion to recommit, and together let us move solid legislation that we
can turn into law, much-needed law, as soon as possible.
I thank the gentleman for yielding me this time.
Mr. YOUNG of Alaska. Mr. Speaker, I thank the gentleman for his
remarks.
Let us move forward. Let us try to legislate. Let us do our job.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Recorded Vote
Mr. DAVIS of Tennessee. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, this 15-
minute vote on the motion to recommit will be followed by a 5-minute
vote, if ordered, on passage and, without objection, by a 5-minute
vote, if ordered, on a nondebatable concurrent resolution to adjourn.
There was no objection.
The vote was taken by electronic device, and there were--ayes 198,
noes 225, not voting 10, as follows:
[Roll No. 113]
AYES--198
Abercrombie
Ackerman
Alexander
Allen
Andrews
Baca
Baird
Baldwin
Ballance
Becerra
Bell
Berkley
Berman
Berry
Bishop (GA)
Bishop (NY)
Blumenauer
Boswell
Boucher
Boyd
Brady (PA)
Brown (OH)
Brown, Corrine
Capps
Capuano
Cardin
Cardoza
Carson (IN)
Carson (OK)
Case
Chandler
Clay
Clyburn
Conyers
Cooper
Costello
Cramer
Crowley
Cummings
Davis (AL)
Davis (CA)
Davis (FL)
Davis (IL)
Davis (TN)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley (CA)
Doyle
Edwards
Emanuel
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank (MA)
Frost
Gephardt
Gonzalez
Gordon
Green (TX)
Grijalva
Gutierrez
Harman
Hastings (FL)
Hill
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley (OR)
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind
Kleczka
Kucinich
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Lucas (KY)
Lynch
Majette
Maloney
Markey
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Michaud
Millender-McDonald
Miller (NC)
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Pomeroy
Price (NC)
Rahall
Rangel
Rodriguez
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Sandlin
Schakowsky
Schiff
Scott (GA)
Scott (VA)
Sherman
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Strickland
Stupak
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Tierney
Towns
Turner (TX)
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Waters
Watson
Watt
Weiner
Wexler
Woolsey
Wu
Wynn
NOES--225
Aderholt
Akin
Bachus
Baker
Ballenger
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Beauprez
Bereuter
Biggert
Bilirakis
Bishop (UT)
Blackburn
Blunt
Boehlert
Boehner
Bonilla
Bonner
Bono
Boozman
Bradley (NH)
Brady (TX)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burns
Burr
Burton (IN)
Buyer
Calvert
Camp
Cannon
Cantor
Capito
Carter
Castle
Chabot
Chocola
Coble
Cole
Collins
Cox
Crane
Crenshaw
Cubin
Cunningham
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeLay
Diaz-Balart, L.
Diaz-Balart, M.
Doolittle
Dreier
Duncan
Dunn
Ehlers
Emerson
English
Everett
Feeney
Ferguson
Flake
Foley
Forbes
Fossella
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Goode
Goodlatte
Goss
Granger
Graves
Green (WI)
Greenwood
Gutknecht
Hall
Harris
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hobson
Hoekstra
Hostettler
Houghton
Hunter
Hyde
Isakson
Istook
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (OK)
Manzullo
Marshall
McCotter
McCrery
McHugh
McInnis
McKeon
Mica
Miller (FL)
Miller (MI)
Miller, Gary
Moran (KS)
Murphy
Musgrave
Myrick
Nethercutt
Neugebauer
Ney
Northup
Norwood
Nunes
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pearce
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Porter
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Stenholm
Sullivan
Sweeney
Tancredo
Taylor (NC)
Terry
Thomas
Thornberry
Tiahrt
Tiberi
Toomey
Turner (OH)
Upton
Vitter
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NOT VOTING--10
Culberson
DeMint
Hulshof
Issa
Miller, George
Reyes
Serrano
Tanner
Tauzin
Waxman
{time} 1207
Mr. GUTIERREZ changed his vote from ``no'' to ``aye.''
So the motion to recommit was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore (Mr. Thornberry). The question is on the
passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. YOUNG of Alaska. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. This will be a 5-minute vote, to be followed
by a 5-minute vote on H. Con. Res. 404, if ordered.
The vote was taken by electronic device, and there were--yeas 357,
nays 65, not voting 11, as follows:
[Roll No. 114]
YEAS--357
Abercrombie
Ackerman
Aderholt
Alexander
Allen
Andrews
Baca
Bachus
Baird
Baker
Baldwin
Ballance
Ballenger
Bartlett (MD)
Bass
Beauprez
Becerra
Bell
Bereuter
Berkley
Berman
Berry
Biggert
Bishop (GA)
Bishop (NY)
Bishop (UT)
Blackburn
Blumenauer
Boehlert
Bonilla
[[Page H2122]]
Bonner
Bono
Boozman
Boswell
Boucher
Bradley (NH)
Brady (PA)
Brown (OH)
Brown (SC)
Brown, Corrine
Burgess
Burr
Burton (IN)
Buyer
Calvert
Camp
Cannon
Capito
Capps
Capuano
Cardin
Cardoza
Carson (IN)
Carson (OK)
Carter
Case
Chabot
Chandler
Chocola
Clay
Clyburn
Coble
Collins
Conyers
Cooper
Costello
Cox
Cramer
Crane
Crowley
Cubin
Cummings
Cunningham
Davis (AL)
Davis (CA)
Davis (IL)
Davis (TN)
Davis, Jo Ann
Davis, Tom
DeFazio
DeGette
Delahunt
DeLauro
DeLay
Dicks
Dingell
Doggett
Dooley (CA)
Doolittle
Doyle
Dreier
Duncan
Dunn
Edwards
Ehlers
Emanuel
Emerson
Engel
English
Eshoo
Etheridge
Evans
Everett
Farr
Fattah
Ferguson
Filner
Forbes
Ford
Fossella
Frank (MA)
Frelinghuysen
Frost
Gallegly
Garrett (NJ)
Gephardt
Gerlach
Gibbons
Gilchrest
Gillmor
Gonzalez
Goode
Goodlatte
Gordon
Granger
Graves
Green (TX)
Greenwood
Grijalva
Gutierrez
Hall
Harman
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hinchey
Hinojosa
Hobson
Hoeffel
Hoekstra
Holden
Holt
Honda
Hooley (OR)
Hostettler
Houghton
Hoyer
Hyde
Inslee
Israel
Issa
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Jenkins
John
Johnson (CT)
Johnson (IL)
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kelly
Kennedy (MN)
Kennedy (RI)
Kildee
Kilpatrick
Kind
King (IA)
King (NY)
Kirk
Kleczka
Knollenberg
Kucinich
LaHood
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Latham
LaTourette
Leach
Lee
Levin
Lewis (CA)
Lewis (GA)
Lewis (KY)
Lipinski
LoBiondo
Lofgren
Lowey
Lucas (KY)
Lynch
Majette
Maloney
Manzullo
Markey
Marshall
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McCotter
McCrery
McDermott
McGovern
McHugh
McInnis
McIntyre
McKeon
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Mica
Michaud
Millender-McDonald
Miller (MI)
Miller (NC)
Miller, Gary
Mollohan
Moore
Moran (KS)
Moran (VA)
Murphy
Murtha
Musgrave
Nadler
Napolitano
Neal (MA)
Nethercutt
Neugebauer
Ney
Northup
Nunes
Nussle
Oberstar
Obey
Olver
Ortiz
Osborne
Ose
Owens
Oxley
Pallone
Pascrell
Pastor
Payne
Pearce
Pelosi
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Pomeroy
Porter
Portman
Price (NC)
Pryce (OH)
Quinn
Radanovich
Rahall
Ramstad
Rangel
Regula
Rehberg
Renzi
Reynolds
Rodriguez
Rogers (AL)
Rogers (KY)
Rohrabacher
Ross
Rothman
Roybal-Allard
Royce
Ruppersberger
Rush
Ryan (OH)
Ryun (KS)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Sandlin
Schakowsky
Schiff
Schrock
Scott (GA)
Scott (VA)
Serrano
Sessions
Shays
Sherman
Sherwood
Shimkus
Shuster
Simmons
Skelton
Slaughter
Smith (NJ)
Smith (TX)
Smith (WA)
Snyder
Solis
Spratt
Stenholm
Strickland
Stupak
Sweeney
Tauscher
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thompson (MS)
Tiahrt
Tiberi
Tierney
Towns
Turner (OH)
Turner (TX)
Udall (CO)
Udall (NM)
Upton
Van Hollen
Velazquez
Visclosky
Vitter
Walden (OR)
Walsh
Wamp
Waters
Watson
Watt
Weiner
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Woolsey
Wu
Wynn
Young (AK)
NAYS--65
Akin
Barrett (SC)
Barton (TX)
Bilirakis
Blunt
Boehner
Boyd
Brady (TX)
Brown-Waite, Ginny
Burns
Cantor
Castle
Cole
Crenshaw
Davis (FL)
Deal (GA)
Deutsch
Diaz-Balart, L.
Diaz-Balart, M.
Feeney
Flake
Foley
Franks (AZ)
Gingrey
Goss
Green (WI)
Gutknecht
Harris
Hastings (FL)
Hensarling
Hill
Isakson
Istook
Johnson, Sam
Jones (NC)
Keller
Kingston
Kline
Kolbe
Linder
Lucas (OK)
Miller (FL)
Myrick
Norwood
Otter
Paul
Pence
Putnam
Rogers (MI)
Ros-Lehtinen
Ryan (WI)
Sensenbrenner
Shadegg
Shaw
Simpson
Smith (MI)
Souder
Stearns
Sullivan
Tancredo
Thornberry
Toomey
Weldon (FL)
Wexler
Young (FL)
NOT VOTING--11
Culberson
DeMint
Hulshof
Hunter
Miller, George
Reyes
Saxton
Stark
Tanner
Tauzin
Waxman
{time} 1215
Mr. DAVIS of Florida changed his vote from ``yea'' to ``nay.''
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
Stated for:
Mr. STARK. Mr. Speaker, earlier today during the vote on final
passage of H.R. 3550, I was called off the floor to receive a phone
call from my office. In my distraction, I thought I had voted in favor
of H.R. 3550 when in actual fact I had not cast my vote. Had I not been
distracted, I would have voted `Aye' on final passage of H.R. 3550.
____________________