[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1058 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 1058
To amend the Internal Revenue Code of 1986 to provide tax relief for
farmers and the producers of biodiesel, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 19, 2001
Mr. Hutchinson (for himself and Mr. Dayton) introduced the following
bill; which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide tax relief for
farmers and the producers of biodiesel, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Biodiesel
Renewable Fuels Act''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to or a repeal of a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
SEC. 2. CREDIT FOR BIODIESEL USED AS FUEL.
(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 biodiesel mixture credit.
``(b) Definition of Biodiesel Mixture 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 the sum of the
products of the biodiesel mixture rate for each blend
of qualified biodiesel mixture and the number of
gallons of the blend of the taxpayer for the taxable
year.
``(B) Biodiesel mixture rate.--For purposes of
subparagraph (A), the biodiesel mixture rate shall be--
``(i) the applicable amount for a B-1
blend,
``(ii) 3.0 cents for a B-2 blend, and
``(iii) 20.0 cents for a B-20 blend.
``(C) Blends.--For purposes of this paragraph--
``(i) B-1 blend.--The term `B-1 blend'
means a qualified biodiesel mixture if at least
0.5 percent but less than 2.0 percent of the
mixture is biodiesel.
``(ii) B-2 blend.--The term `B-2 blend'
means a qualified biodiesel mixture if at least
2.0 percent but less than 20 percent of the
mixture is biodiesel.
``(iii) B-20 blend.--The term `B-20 blend'
means a qualified biodiesel mixture if at least
20 percent of the mixture is biodiesel.
``(D) Applicable amount.--For purposes of this
paragraph, the term `applicable amount' means, in the
case of a B-1 blend, the amount equal to 1.5 cents
multiplied by a fraction the numerator of which is the
percentage of biodiesel in the B-1 blend and the
denominator of which is 1 percent.
``(2) Qualified biodiesel mixture.--
``(A) In general.--The term `qualified biodiesel
mixture' means a mixture of diesel and biodiesel
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.
``(B) 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 (A) is in a trade or business of
the taxpayer; and
``(ii) for the taxable year in which such
sale or use occurs.
``(C) 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.
``(c) Coordination With Exemption From Excise Tax.--The amount of
the credit determined under this section with respect to any biodiesel
shall, under regulations prescribed by the Secretary, be properly
reduced to take into account any benefit provided with respect to such
biodiesel solely by reason of the application of section 4041(n) or
section 4081(f).
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Biodiesel defined.--
``(A) In general.--The term `biodiesel' means the
monoalkyl esters of long chain fatty acids derived from
vegetable oils for use in compressional-ignition
(diesel) engines. Such term shall include esters
derived from vegetable oils from corn, soybeans,
sunflower seeds, cottonseeds, canola, crambe,
rapeseeds, safflowers, flaxseeds, and mustard seeds.
``(B) Registration requirements.--Such term shall
only include a biodiesel which meets 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).
``(2) Biodiesel mixture not used as a fuel, etc.--
``(A) Imposition of tax.--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 biodiesel
mixture rate applicable under subsection
(b)(1)(B) and the number of gallons of the
mixture.
``(B) 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) as if such tax
were imposed by section 4081 and not by this chapter.
``(3) 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) Election To Have Biodiesel Fuels Credit Not Apply.--
``(1) In general.--A taxpayer may elect to have this
section not apply for any taxable year.
``(2) Time for making election.--An election under
paragraph (1) for any taxable year may be made (or revoked) at
any time before the expiration of the 3-year period beginning
on the last date prescribed by law for filing the return for
such taxable year (determined without regard to extensions).
``(3) Manner of making election.--An election under
paragraph (1) (or revocation thereof) shall be made in such
manner as the Secretary may by regulations prescribe.''
(b) Credit Treated as Part of General Business Credit.--Section
38(b) 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:
``(16) the biodiesel fuels credit determined under section
40A.''
(c) Conforming Amendments.--
(1) Section 39(d) is amended by adding at the end the
following:
``(11) No carryback of biodiesel fuels credit before
january 1, 2003.--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 beginning before January 1, 2003.''
(2) 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 by adding at the end the following:
``(11) the biodiesel fuels credit determined under section
40A.''
(3) 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 taxable years beginning after December 31, 2001.
SEC. 3. REDUCTION OF MOTOR FUEL EXCISE TAXES ON BIODIESEL MIXTURES.
(a) In General.--Section 4081 (relating to manufacturers tax on
petroleum products) is amended by adding at the end the following new
subsection:
``(f) Biodiesel Mixtures.--Under regulations prescribed by the
Secretary--
``(1) In general.--In the case of the removal or entry of a
qualified biodiesel mixture, the rate of tax under subsection
(a) shall be the otherwise applicable rate reduced by the
biodiesel mixture rate (if any) applicable to the mixture.
``(2) Tax prior to mixing.--
``(A) In general.--In the case of the removal or
entry of diesel fuel for use in producing at the time
of such removal or entry a qualified biodiesel mixture,
the rate of tax under subsection (a) shall be the
otherwise applicable rate, reduced by the amount
determined under subparagraph (B).
``(B) Applicable reduction.--For purposes of
subparagraph (A), the amount determined under this
subparagraph is an amount equal to the biodiesel
mixture rate for the qualified biodiesel mixture to be
produced from the diesel fuel, divided by a percentage
equal to 100 percent minus the percentage of biodiesel
which will be in the mixture.
``(3) Definitions.--For purposes of this subsection, any
term used in this subsection which is also used in section 40A
shall have the meaning given such term by section 40A.
``(4) Certain rules to apply.--Rules similar to the rules
of paragraphs (6) and (7) of subsection (c) shall apply for
purposes of this subsection.''.
(b) Conforming Amendments.--
(1) Section 4041 is amended by adding at the end the
following new subsection:
``(n) Biodiesel Mixtures.--Under regulations prescribed by the
Secretary, in the case of the sale or use of a qualified biodiesel
mixture (as defined in section 40A(b)(2)), the rates under paragraphs
(1) and (2) of subsection (a) shall be the otherwise applicable rates,
reduced by any applicable biodiesel mixture rate (as defined in section
40A(b)(1)(B)).''.
(2) Section 6427 is amended by redesignating subsection (p)
as subsection (q) and by inserting after subsection (o) the
following new subsection:
``(p) Biodiesel Mixtures.--Except as provided in subsection (k), if
any diesel fuel on which tax was imposed by section 4081 at a rate not
determined under section 4081(f) is used by any person in producing a
qualified biodiesel mixture (as defined in section 40A(b)(2)) which is
sold or used in such person's trade or business, the Secretary shall
pay (without interest) to such person an amount equal to the per gallon
applicable biodiesel mixture rate (as defined in section 40A(b)(1)(B))
with respect to such fuel.''.
(c) Effective Date.--The amendments made by this section shall take
effect on January 1, 2002.
SEC. 4. HIGHWAY TRUST FUND HELD HARMLESS.
There are hereby transferred (from time to time) from the funds of
the Commodity Credit Corporation amounts equivalent to the reductions
that would occur (but for this section) in the receipts of the Highway
Trust Fund by reason of the amendments made by this Act. Such transfers
shall be made on the basis of estimates made by the Secretary of the
Treasury and adjustments shall be made to subsequent transfers to
reflect any errors in the estimates.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S6450-6451)
Read twice and referred to the Committee on Finance. (text of measure as introduced: CR S6451-6452)
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