Volumetric Ethanol Excise Tax Credit (VEETC) Act of 2003 - Amends the Internal Revenue Code to establish, for a limited period of time: (1) a biodiesel fuels credit business credit; and (2) as a credit against the gasoline and diesel fuel excise tax, a credit equal to the sum of the alcohol fuel mixture credit plus the biodiesel mixture credit.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1548 Introduced in Senate (IS)]
1st Session
S. 1548
To amend the Internal Revenue Code of 1986 to provide incentives for
the production of renewable fuels and to simplify the administration of
the Highway Trust Fund fuel excise taxes, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 31 (legislative day, July 21), 2003
Mr. Grassley (for himself, Mr. Baucus, Mr. Frist, Mr. Daschle, Mr.
Domenici, Mr. Bingaman, Mr. Inhofe, Mr. Jeffords, Mr. Thomas, Mr.
Voinovich, Mr. Conrad, Mrs. Lincoln, Mr. Coleman, Mr. Dorgan, Mr. Bond,
Mr. Harkin, Mr. Dayton, Mr. Durbin, Mr. Talent, Mr. Nelson of Nebraska,
and Mr. Brownback) 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 incentives for
the production of renewable fuels and to simplify the administration of
the Highway Trust Fund fuel excise taxes, 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 ``Volumetric Ethanol
Excise Tax Credit (VEETC) Act of 2003''.
(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 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. INCENTIVES FOR BIODIESEL.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
(relating to business related credits), as amended by this Act, is
amended by inserting after section 40A the following new section:
``SEC. 40B. 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 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.--
``(A) In general.--Subject to subparagraph (B), 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'.
``(B) Certification for agri-biodiesel.--
Subparagraph (A) shall apply only if the taxpayer
described in paragraph (1)(A) or (2)(A) obtains a
certification (in such form and manner as prescribed by
the Secretary) from the producer of the agri-biodiesel
which identifies the product produced.
``(c) Coordination With Credit Against Excise Tax.--The amount of
the credit determined under this section with respect to any agri-
biodiesel shall, under regulations prescribed by the Secretary, be
properly reduced to take into account any benefit provided with respect
to such agri-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 for use in diesel-powered engines 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. 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, and from
animal fats.
``(3) 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 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 rate applicable
under subsection (b)(1)(A) 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.
``(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 fuel sold
after December 31, 2005.''.
(b) Credit Treated as Part of General Business Credit.--Section
38(b) (relating to current year business credit), as amended by this
Act, is amended by striking ``plus'' at the end of paragraph (15), by
striking the period at the end of paragraph (16) and inserting ``,
plus'', and by adding at the end the following new paragraph:
``(17) the biodiesel fuels credit determined under section
40B(a).''.
(c) Conforming Amendments.--
(1) Section 39(d), as amended by this Act, is amended by
adding at the end the following new paragraph:
``(12) 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 40B may be carried back to a
taxable year ending on or before the date of the enactment of
section 40B.''.
(2)(A) Section 87, as amended by this Act, is amended--
(i) by striking ``and'' at the end of paragraph
(1),
(ii) by striking the period at the end of paragraph
(2) and inserting ``, and'',
(iii) by adding at the end the following new
paragraph:
``(3) the biodiesel fuels credit determined with respect to
the taxpayer for the taxable year under section 40B(a).'', and
(iv) by striking ``fuel credit'' in the heading and
inserting ``and biodiesel fuels credits''.
(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
40B(a).''.
(4) The table of sections for subpart D of part IV of
subchapter A of chapter 1, as amended by this Act, is amended
by adding after the item relating to section 40A the following
new item:
``Sec. 40B. Biodiesel used as fuel.''.
(d) Effective Date.--The amendments made by this section shall
apply to fuel sold after the date of the enactment of this Act, in
taxable years ending after such date.
SEC. 3. ALCOHOL FUEL AND BIODIESEL MIXTURES EXCISE 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 applicable amount for each
gallon of alcohol used by the taxpayer in producing an alcohol
fuel mixture.
``(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' is a mixture
which--
``(A) consists of alcohol and a taxable fuel, and
``(B) is sold for use or used as a fuel by the
taxpayer producing the 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 or use 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 qualified biodiesel mixture.
``(2) Applicable amount.--
``(A) In general.--Except as provided in
subparagraph (B), the applicable amount is 50 cents.
``(B) Amount for agri-biodiesel.--
``(i) In general.--Subject to clause (ii),
in the case of any biodiesel which is agri-
biodiesel, the applicable amount is $1.00.
``(ii) Certification for agri-biodiesel.--
Clause (i) shall apply only if the taxpayer
described in paragraph (1) obtains a
certification (in such form and manner as
prescribed by the Secretary) from the producer
of the agri-biodiesel which identifies the
product produced.
``(3) Definitions.--Any term used in this subsection which
is also used in section 40B shall have the meaning given such
term by section 40B.
``(4) Termination.--This subsection shall not apply to any
sale or use for any period after December 31, 2005.
``(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 qualified
biodiesel mixture, respectively, and
``(B) any person--
``(i) separates such 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.''.
(b) Registration Requirement.--Section 4101(a) (relating to
registration) is amended by inserting ``and every person producing
biodiesel (as defined in section 40B(d)(1)) or alcohol (as defined in
section 6426(b)(4)(A))'' after ``4091''.
(c) Conforming Amendments.--
(1) Section 40(c) is amended by striking ``section 4081(c),
or section 4091(c)'' and inserting ``section 4091(c), section
6426, section 6427(e), or section 6427(f)''.
(2) Section 40(d)(4)(B) is amended by striking ``or
4081(c)''.
(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) Paragraph (1) of section 4041(k) is amended to read as
follows:
``(1) In general.--Under regulations prescribed by the
Secretary, in the case of the sale or use of any liquid at
least 10 percent of which consists of alcohol (as defined in
section 6426(b)(4)(A)), the rate of the tax imposed by
subsection (c)(1) shall be the comparable rate under section
4091(c).''.
(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)) or a denaturant of alcohol (as
defined in section 6426(b)(4)(A)), 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.
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 40B(d)(1)) or
agri-biodiesel (as defined in section 40B(d)(2)) which is not
in a mixture with a taxable fuel (as defined in section
4083(a)(1))--
``(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
40B(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 qualified biodiesel mixture (within the
meaning of section 6426(c)(1)) or biodiesel (as so
defined) or agri-biodiesel (as so defined) sold or used
after December 31, 2005.''.
(10) Subsection (f) of section 6427 is amended to read as
follows:
``(f) Aviation Fuel Used to Produce Certain Alcohol Fuels.--
``(1) In general.--Except as provided in subsection (k), if
any aviation fuel on which tax was imposed by section 4091 at
the regular tax rate is used by any person in producing a
mixture described in section 4091(c)(1)(A) 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
excess of the regular tax rate over the incentive tax rate with
respect to such fuel.
``(2) Definitions.--For purposes of paragraph (1)--
``(A) Regular tax rate.--The term `regular tax
rate' means the aggregate rate of tax imposed by
section 4091 determined without regard to subsection
(c) thereof.
``(B) Incentive tax rate.--The term `incentive tax
rate' means the aggregate rate of tax imposed by
section 4091 with respect to fuel described in
subsection (c)(2) thereof.
``(3) Coordination with other repayment provisions.--No
amount shall be payable under paragraph (1) with respect to any
aviation fuel with respect to which an amount is payable under
subsection (d) or (l).
``(4) Termination.--This subsection shall not apply with
respect to any mixture sold or used after September 30,
2007.''.
(11) Paragraphs (1) and (2) of section 6427(i) are amended
by inserting ``(f),'' after ``(d),''.
(12) 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 striking ``subsection (f)(1)'' in
subparagraph (B) and inserting ``subsection (e)(1)'',
(D) 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
(E) by striking ``alcohol mixture'' in the heading
and inserting ``alcohol fuel and biodiesel mixture''.
(13) Section 6427(o) is amended--
(A) by striking paragraph (1) and inserting the
following new paragraph:
``(1) any tax is imposed by section 4081, and'',
(B) by striking ``such gasohol'' in paragraph (2)
and inserting ``the alcohol fuel mixture (as defined in
section 6426(b)(3))'',
(C) by striking ``gasohol'' both places it appears
in the matter following paragraph (2) and inserting
``alcohol fuel mixture'', and
(D) by striking ``Gasohol'' in the heading and
inserting ``Alcohol Fuel Mixture''.
(14) 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.''.
(15) Section 9503(b)(4) 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).
(16) Section 9503(c)(2)(A)(i)(III) is amended by inserting
``(other than subsection (e) thereof)'' after ``section 6427''.
(17) Section 9503(e)(2) is amended by striking subparagraph
(B) and by redesignating subparagraphs (C), (D), and (E) as
subparagraphs (B), (C), and (D), respectively.
(18) 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 Date.--The amendments made by this section 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 (b)(12)(D)) not later than September 30, 2003.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S10680-10681)
Read twice and referred to the Committee on Finance. (text of measure as introduced: CR 8/1/2003 S10681-10683)
Committee on Finance. Ordered to be reported with an amendment in the nature of a substitute favorably.
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