Amends the Internal Revenue Code to revise the income and excise tax credits for biodiesel used as fuel to: (1) allow a $1.00 tax credit for each gallon of biodiesel produced; (2) provide for an increased income tax credit for small biodiesel producers; (3) revise the definitions of "biodiesel" and "small biodiesel producer"; (4) treat renewable diesel in the same manner as biodiesel for income tax purposes; and (5) treat biodiesel as a taxable fuel for excise tax purposes. Extends the biodiesel income and excise tax credits through December 31, 2014.
[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4070 Introduced in House (IH)]
111th CONGRESS
1st Session
H. R. 4070
To amend the Internal Revenue Code of 1986 to modify the incentives for
the production of biodiesel.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 16, 2009
Mr. Pomeroy (for himself and Mr. Shimkus) 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 modify the incentives for
the production of biodiesel.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. REFORM OF BIODIESEL INCOME TAX INCENTIVES.
(a) In General.--Section 40A of the Internal Revenue Code of 1986
is amended to read as follows:
``SEC. 40A. BIODIESEL PRODUCTION.
``(a) In General.--For purposes of section 38, the biodiesel fuels
credit determined under this section for the taxable year is $1.00 for
each gallon of biodiesel produced by the taxpayer and which during the
taxable year--
``(1) is sold by such producer to another person--
``(A) for use by such other person's trade or
business (other than casual off-farm production),
``(B) for use by such other person as a fuel in a
trade or business, or
``(C) who sells such biodiesel at retail to another
person and places such biodiesel in the fuel tank of
such other person, or
``(2) is used or sold by such producer for any purpose
described in paragraph (1).
``(b) Increased Credit for Small Producers.--
``(1) In general.--In the case of any eligible small
biodiesel producer, subsection (a) shall be applied by
increasing the dollar amount contained therein by 10 cents.
``(2) Limitation.--Paragraph (1) shall only apply with
respect to the first 15,000,000 gallons of biodiesel produced
by any eligible small biodiesel producer during any taxable
year.
``(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 liquid fuel
derived from biomass 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.
Such term shall not include any liquid with respect to which a
credit may be determined under section 40.
``(2) Biodiesel not used as fuel.--If--
``(A) any credit was determined with respect to any
biodiesel under this section, and
``(B) any person does not use such fuel for the
purpose described in subsection (a),
then there is hereby imposed on such person a tax equal to the
product of the rate applicable under subsection (a) and the
number of gallons of such biodiesel.
``(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.
``(4) Limitation to biodiesel produced in the united
states.--No credit shall be determined under this section with
respect to any biodiesel unless such biodiesel is produced in
the United States from raw feedstock. For purposes of this
paragraph, the term `United States' includes any possession of
the United States.
``(5) Limitation to biodiesel with connection to the united
states.--No credit shall be determined under this section with
respect to any biodiesel which is produced outside the United
States for use as a fuel outside the United States. For
purposes of this paragraph, the term `United States' includes
any possession of the United States.
``(6) Biodiesel transfers from an irs registered biodiesel
production facility to an irs registered terminal or
refinery.--Credit allowed under subsection (a) shall be allowed
to the terminal or refinery referred to in section
4081(a)(1)(B)(i) in instances where section 4081(a)(1)(B)(iii)
is applicable. Credit allowed under subsection (a) cannot be
claimed by a terminal or refinery on fuel upon which the credit
was previously claimed by a biodiesel producer.
``(e) Definitions and Special Rules for Small Biodiesel
Producers.--
``(1) Eligible small biodiesel producer.--The term
`eligible small biodiesel producer' means a person who, at all
times during the taxable year, has a productive capacity for
biodiesel not in excess of 60,000,000 gallons.
``(2) Aggregation rule.--For purposes of the 15,000,000
gallon limitation under subsection (b)(2) and the 60,000,000
gallon limitation under paragraph (1), all members of the same
controlled group of corporations (within the meaning of section
267(f)) and all persons under common control (within the
meaning of section 52(b) but determined by treating an interest
of more than 50 percent as a controlling interest) shall be
treated as 1 person.
``(3) Partnership, s corporation, and other pass-thru
entities.--In the case of a partnership, trust, S corporation,
or other pass-thru entity, the limitations contained in
subsection (b)(2) and paragraph (1) shall be applied at the
entity level and at the partner or similar level.
``(4) Allocation.--For purposes of this subsection, in the
case of a facility in which more than 1 person has an interest,
productive capacity shall be allocated among such persons in
such manner as the Secretary may prescribe.
``(5) Regulations.--The Secretary may prescribe such
regulations as may be necessary--
``(A) to prevent the credit provided for in
subsection (b) from directly or indirectly benefitting
any person with a direct or indirect productive
capacity of more than 60,000,000 gallons of biodiesel
during the taxable year, or
``(B) to prevent any person from directly or
indirectly benefitting with respect to more than
15,000,000 gallons during the taxable year.
``(6) Allocation of small biodiesel credit to patrons of
cooperative.--
``(A) Election to allocate.--
``(i) In general.--In the case of a
cooperative organization described in section
1381(a), any portion of the increase determined
under subsection (b) for the taxable year may,
at the election of the organization, be
apportioned pro rata among patrons of the
organization on the basis of the quantity or
value of business done with or for such patrons
for the taxable year.
``(ii) Form and effect of election.--An
election under clause (i) for any taxable year
shall be made on a timely filed return for such
year. Such election, once made, shall be
irrevocable for such taxable year. Such
election shall not take effect unless the
organization designates the apportionment as
such in a written notice mailed to its patrons
during the payment period described in section
1382(d).
``(B) Treatment of organizations and patrons.--
``(i) Organizations.--The amount of the
credit not apportioned to patrons pursuant to
subparagraph (A) shall be included in the
amount determined under subsection (b) for the
taxable year of the organization.
``(ii) Patrons.--The amount of the credit
apportioned to patrons pursuant to subparagraph
(A) shall be included in the amount determined
under such subsection for the first taxable
year of each patron ending on or after the last
day of the payment period (as defined in
section 1382(d)) for the taxable year of the
organization or, if earlier, for the taxable
year of each patron ending on or after the date
on which the patron receives notice from the
cooperative of the apportionment.
``(iii) Special rules for decrease in
credits for taxable year.--If the amount of the
credit of the organization determined under
such subsection for a taxable year is less than
the amount of such credit shown on the return
of the organization for such year, an amount
equal to the excess of--
``(I) such reduction, over
``(II) the amount not apportioned
to such patrons under subparagraph (A)
for the taxable year, shall be treated
as an increase in tax imposed by this
chapter on the organization.
Such increase shall not be treated as tax
imposed by this chapter for purposes of
determining the amount of any credit under this
chapter or for purposes of section 55.
``(f) Renewable Diesel.--For purposes of this title--
``(1) Treatment in the same manner as biodiesel.--Except as
provided in paragraph (2), renewable diesel shall be treated in
the same manner as biodiesel.
``(2) Exception.--Subsection (b) shall not apply with
respect to renewable diesel.
``(3) Renewable diesel defined.--The term `renewable
diesel' means liquid fuel derived from biomass 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 D975 or D396, or other equivalent
standard approved by the Secretary.
Such term shall not include any liquid with respect to which a
credit may be determined under section 40. Such term does not
include any fuel derived from coprocessing biomass with a
feedstock which is not biomass. For purposes of this paragraph,
the term `biomass' has the meaning given such term by section
45K(c)(3).
``(4) Certain aviation fuel.--Except as provided in the
last 3 sentences of paragraph (3), the term `renewable diesel'
shall include fuel derived from biomass which meets the
requirements of a Department of Defense specification for
military jet fuel or an American Society of Testing and
Materials specification for aviation turbine fuel.
``(g) Termination.--This section shall not apply to any sale or use
after December 31, 2014.''.
(b) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such Code is amended by
striking the item relating to section 40A and inserting the following
new item:
``Sec. 40A. Biodiesel production.''.
(c) Effective Date.--The amendments made by this section shall
apply to biodiesel sold or used after December 31, 2009.
SEC. 2. REFORM OF BIODIESEL EXCISE TAX INCENTIVES.
(a) In General.--Subsection (c) of section 6426 of the Internal
Revenue Code of 1986 is amended to read as follows:
``(c) Biodiesel Credit.--
``(1) In general.--For purposes of this section, the
biodiesel credit is $1.00 for each gallon of biodiesel produced
by the taxpayer and which--
``(A) is sold by such producer to another person--
``(i) for use by such other person's trade
or business (other than casual off-farm
production),
``(ii) for use by such other person as a
fuel in a trade or business, or
``(iii) who sells such biodiesel at retail
to another person and places such biodiesel in
the fuel tank of such other person, or
``(B) is used or sold by such producer for any
purpose described in subparagraph (A).
``(2) Definitions.--Any term used in this subsection which
is also used in section 40A shall have the meaning given such
term by section 40A.
``(3) Biodiesel transfers from an irs registered biodiesel
production facility to an irs registered terminal.--Credit
allowed under this subsection can be claimed by a registered
terminal or refinery in instances where section 4081(a)(1)(B)
is applicable. Credit allowed under this subsection cannot be
claimed by a terminal or refinery on fuel upon which the credit
was previously claimed by a biodiesel producer.
``(4) Termination.--This subsection shall not apply to any
sale, use, or removal for any period after December 31,
2014.''.
(b) Payment of Credit.--Subsection (e) of section 6427 of such Code
is amended--
(1) by striking ``or the biodiesel mixture credit'' in
paragraph (1),
(2) by redesignating paragraphs (3) through (6) as
paragraphs (4) through (7), respectively, and by inserting
after paragraph (2) the following new paragraph:
``(3) Biodiesel credit.--If any person produces biodiesel
and sells or uses such biodiesel as provided in section
6426(c), the Secretary shall pay (without interest) to such
person an amount equal to the biodiesel credit with respect to
such biodiesel.'',
(3) by striking ``paragraph (1) or (2)'' each place it
appears in paragraphs (4) and (6), as redesignated by paragraph
(2), and inserting ``paragraph (1), (2), or (3)'',
(4) by striking ``alternative fuel'' each place it appears
in paragraphs (4) and (6), as redesignated by paragraph (2),
and inserting ``fuel'', and
(5) by striking ``biodiesel mixture (as defined in section
6426(c)(3))'' in paragraph (7)(B), as so redesignated, and
inserting ``biodiesel (within the meaning of section 40A)''.
(c) Exemption for Transfers Between Registered Facilities.--
Subparagraph (B) of section 4081(a)(1) of such Code is amended by
adding at the end the following new clause:
``(iii) The tax imposed by this paragraph
shall not apply to biodiesel that is removed
from a registered IRS biodiesel plant and is
transferred to a IRS registered terminal or
refinery.''.
(d) Producer Registration Requirement.--Subsection (a) of section
6426 of such Code is amended by striking ``subsections (d) and (e)'' in
the flush sentence at the end and inserting ``subsections (c), (d), and
(e)''.
(e) Recapture.--Subsection (f) of section 6426 of such Code is
amended to read as follows:
``(f) Recapture.--
``(1) Alcohol fuel mixtures.--If--
``(A) any credit was determined under this section
with respect to alcohol used in the production of any
alcohol fuel mixture, and
``(B) any person--
``(i) separates the alcohol 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.
``(2) Biodiesel.--If any credit was determined under this
section with respect to the production of any biodiesel and any
person does not use such biodiesel for a purpose described in
subsection (c)(1), then there is hereby imposed on such person
a tax equal to $1 for each gallon of such biodiesel.
``(3) 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) or (2) as if such tax were imposed by section
4081 and not by this section.''.
(f) Clerical Amendment.--The heading of section 6426 of such Code
(and the item relating to such section in the table of sections for
subchapter B of chapter 65 of such Code) is amended by striking
``alcohol fuel, biodiesel, and alternative fuel mixtures'' and
inserting ``alcohol fuel mixtures, biodiesel production, and
alternative fuel mixtures''.
(g) Effective Date.--The amendments made by this section shall
apply to biodiesel sold or used after December 31, 2009.
SEC. 3. BIODIESEL TREATED AS TAXABLE FUEL.
(a) Biodiesel Treated as Taxable Fuel.--Clause (i) of section
4083(a)(3)(A) of such Code is amended by inserting ``, including
biodiesel (as defined in section 6426(c)(3)),'' after ``(other than
gasoline)''.
(b) Effective Date.--The amendment made by this section shall apply
to biodiesel removed, entered, or sold after the date which is 6 months
after the date of the enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line