Amends the Internal Revenue Code to allow a business tax credit for the production and use of biodiesel fuel. Specifies the required mixture rate for biodiesel fuel eligible for the credit. Requires, for purposes of the credit: (1) certification from the producer identifying the product; (2) sale of the fuel for use in a trade or business; and (3) sale of the fuel for use in a vehicle that is not registered for highway use. Imposes a tax for biodiesel mixture which is not used as fuel, but for which a credit was taken.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4165 Introduced in House (IH)]
108th CONGRESS
2d Session
H. R. 4165
To amend the Internal Revenue Code of 1986 to provide tax incentives to
encourage the use of biodiesel as fuel.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 2, 2004
Mr. Smith of Michigan introduced the following bill; which was referred
to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide tax incentives to
encourage the use of biodiesel as fuel.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. INCENTIVES FOR BIODIESEL.
(a) Credit for Biodiesel Used as a Fuel.--Subpart D of part IV of
subchapter A of chapter 1 of the Internal Revenue Code of 1986
(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
qualified biodiesel mixture and the number of gallons
of such mixture of the taxpayer for the taxable year.
``(B) Biodiesel mixture rate.--For purposes of
subparagraph (A), the biodiesel mixture rate for each
qualified biodiesel mixture shall be--
``(i) in the case of a mixture with only
biodiesel V, 1 cent for each whole percentage
point (not exceeding 10 percentage points) of
biodiesel V in such mixture, and
``(ii) in the case of a mixture with
biodiesel NV, or a combination of biodiesel V
and biodiesel NV, 0.5 cent for each whole
percentage point (not exceeding 10 percentage
points) of such biodiesel in such mixture.
``(2) Qualified biodiesel mixture.--
``(A) In general.--The term `qualified biodiesel
mixture' means a mixture of diesel and biodiesel V or
biodiesel NV 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, in
off-highway use, etc.--
``(i) In general.--Biodiesel V or biodiesel
NV 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,
``(II) for the taxable year in
which such sale or use occurs, and
``(III) only if the sale or use
described in subparagraph (A) is
ultimately for use in a vehicle which
at the time of use will not be
registered and is not required to be
registered for highway use under the
laws of any State or foreign country.
``(ii) Certification for biodiesel v.--
Biodiesel V used in the production of a
qualified biodiesel mixture shall be taken into
account only if the taxpayer described in
subparagraph (A) obtains a certification from
the producer of the biodiesel V which
identifies the product produced.
``(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) Definitions and Special Rules.--For purposes of this
section--
``(1) Biodiesel v defined.--The term `biodiesel V' means
the monoalkyl esters of long chain fatty acids derived solely
from virgin 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,
rice bran, and mustard seeds.
``(2) Biodiesel nv defined.--The term `biodiesel nv' means
the monoalkyl esters of long chain fatty acids derived from
nonvirgin vegetable oils or animal fats for use in
compressional-ignition (diesel) engines.
``(3) Registration requirements.--The terms `biodiesel V'
and `biodiesel NV' shall only include a biodiesel which meets--
``(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.
``(4) 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 V or
biodiesel NV used in the production of any
qualified biodiesel mixture, and
``(ii) any person--
``(I) separates such 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.
``(5) 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.
``(d) 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) of such Code 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) of such Code is amended by adding at the
end the following new paragraph:
``(11) No carryback of biodiesel fuels credit before
january 1, 2004.--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, 2004.''.
(2) Section 196(c) of such Code 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 new paragraph:
``(11) the biodiesel fuels credit determined under section
40A(a).''.
(3) Section 6501(m) of such Code is amended by inserting
``40A(e),'' after ``40(f),''.
(4) The table of sections for subpart D of part IV of
subchapter A of chapter 1 of such Code 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 subsection shall
apply to taxable years beginning after December 31, 2003.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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