To amend the Internal Revenue Code of 1986 to suspend all motor fuel taxes for six months, and to permanently repeal the 4.3-cent per gallon increases in motor fuel taxes enacted in 1993.

January 29, 2003

Mr. SENSENBRENNER (for himself and Mr. SMITH of Michigan) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to suspend all motor fuel taxes for six months, and to permanently repeal the 4.3-cent per gallon increases in motor fuel taxes enacted in 1993.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Freedom from Unfair Energy Levy Act'.

SEC. 2. SIX-MONTH SUSPENSION OF FUEL TAXES.

(a) SIX-MONTH SUSPENSION OF FUEL TAXES- Section 4081 of the Internal Revenue Code of 1986 (relating to imposition of tax on gasoline, diesel fuel, and kerosene) is amended by adding at the end the following new subsection:

`(f) TEMPORARY SUSPENSION OF FUEL TAXES-

`(1) IN GENERAL- During the suspension period, each rate of tax referred to in paragraph (2) shall be reduced to zero.

`(2) RATES OF TAX- The rates of tax referred to in this paragraph are the rates of tax otherwise applicable under--

`(A) subsection (a)(2)(A) (relating to gasoline, diesel fuel, and kerosene),

`(B) sections 4091(b)(3)(A) (relating to aviation fuel),

`(C) section 4042(b)(2)(C) (relating to fuel used on inland waterways),

`(D) paragraph (1), (2), or (3) of section 4041(a) (relating to diesel fuel, special fuels, and compressed natural gas), and

`(E) section 4041(m)(1)(A)(i) (relating to certain methanol or ethanol fuels).

`(3) SUSPENSION PERIOD- For purposes of this subsection, the term `suspension period' means the 180-day period beginning on the 30th day after the date of the enactment of this subsection.'

(b) EFFECTIVE DATE- The amendment made by this section shall take effect on the date of the enactment of this Act.

SEC. 3. REPEAL OF 1993 INCREASES IN MOTOR FUEL TAXES.

(a) HIGHWAY GASOLINE- Clause (i) of section 4081(a)(2)(A) of the Internal Revenue Code of 1986 is amended by striking `18.3 cents' and inserting `14 cents'.

(b) AVIATION GASOLINE- Clause (ii) of section 4081(a)(2)(A) of such Code is amended by striking `19.3 cents' and inserting `15 cents'.

(c) DIESEL FUEL AND KEROSENE- Clause (iii) of section 4081(a)(2)(A) of such Code is amended by striking `24.3 cents' and inserting `20 cents'.

(d) AVIATION FUEL- Paragraph (1) of section 4091(b) of such Code is amended by striking `21.8 cents' and inserting `17.5 cents'.

(e) FUEL USED ON INLAND WATERWAYS-

(1) Paragraph (1) of section 4042(b) of such Code is amended by adding `and' at the end of subparagraph (A), by striking `, and' at the end of subparagraph (B) and inserting a period, and by striking subparagraph (C).

(2) Paragraph (2) of section 4042(b) of such Code is amended by striking subparagraph (C).

(f) TECHNICAL AMENDMENTS-

(1) Subparagraph (B) of section 40(e)(1) of such Code is amended by striking `during which the rates of tax under section 4081(a)(2)(A) are 4.3 cents per gallon' and inserting `during which the rate of tax under section 4081(a)(2)(A)(i) does not apply'.

(2) Subparagraph (A) of section 4041(a)(1) of such Code is amended by striking `or a diesel-powered train' each place it appears and by striking `or train'.

(3) Subparagraph (C) of section 4041(a)(1) of such Code is amended by striking clause (ii) and by redesignating clause (iii) as clause (ii).

(4) Subclause (I) of section 4041(a)(1)(C)(ii) of such Code, as redesignated by paragraph (3), is amended by striking `7.3 cents' and inserting `3 cents' and by striking `4.3 cents per gallon' and inserting `zero'.

(5) Subsection (a) of section 4041 of such Code is amended by striking paragraph (3).

(6) Subparagraph (C) of section 4041(b)(1) of such Code is amended by striking all that follows `section 6421(e)(2)' and inserting a period.

(7) Subparagraph (B) of section 4041(a)(2) of such Code is amended by striking all that follows clause (i) and inserting the following new clauses:

`(ii) 10.4 cents per gallon in the case of liquefied petroleum gas, and

`(iii) 9.1 cents per gallon in the case of liquefied natural gas.'

(8) Paragraph (3) of section 4041(c) of such Code is amended to read as follows:

`(3) TERMINATION- The rate of the taxes imposed by paragraph (1) shall be zero after September 30, 2007.'

(9) Subsection (d) of section 4041 of such Code is amended by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph:

`(3) DIESEL FUEL USED IN TRAINS- There is hereby imposed a tax of 0.1 cent per gallon on any liquid other than gasoline (as defined in section 4083)--

`(A) sold by any person to an owner, lessee, or other operator of a diesel-powered train for use as a fuel in such train, or

`(B) used by any person as a fuel in a diesel-powered train unless there was a taxable sale of such fuel under subparagraph (A).

No tax shall be imposed by this paragraph on the sale or use of any liquid if tax was imposed on such liquid under section 4081.'

(10) Clauses (i) and (ii) of section 4041(m)(1)(A) of such Code are amended to read as follows:

`(i) 7 cents per gallon on and after the date of the enactment of this clause and before October 1, 2005, and

`(ii) zero after September 30, 2005, and'.

(11) Subsection (c) of section 4081 of such Code is amended by striking paragraph (6) and by redesignating paragraphs (7) and (8) as paragraphs (6) and (7), respectively.

(12) Paragraphs (1) and (2) of section 4081(d) of such Code are amended to read as follows:

`(1) IN GENERAL- The rates of tax specified in clauses (i) and (iii) of subsection (a)(2)(A) shall be zero after September 30, 2005.

`(2) AVIATION GASOLINE- The rate of tax specified in subsection (a)(2)(A)(ii) shall be zero after September 30, 2007.'

(13) Subsection (f) of section 4082 of such Code is amended by striking `section 4041(a)(1)' and inserting `subsections (d)(3) and (a)(1) of section 4041, respectively'.

(14) Paragraph (3) of section 4083(a) of such Code is amended by striking `or a diesel-powered train'.

(15) Subparagraph (A) of section 4091(b)(3) of such Code is amended to read as follows:

`(A) The rate of tax specified in paragraph (1) shall be zero after September 30, 2007.'

(16) Paragraph (1) of section 4091(c) of such Code is amended--

(A) by striking `14 cents' and inserting `9.7 cents',

(B) by striking `13.3 cents' and inserting `9 cents',

(C) by striking `13.2 cents' and inserting `8.9 cents',

(D) by striking `13.1 cents' and inserting `8.8 cents', and

(E) by striking `13.4 cents' and inserting `9.1 cents'.

(17) Subsection (c) of section 4091 of such Code is amended by striking paragraph (4), and by redesignating paragraph (5) as paragraph (4).

(18) Subsection (b) of section 4092 of such Code is amended by striking `attributable to' and all that follows and inserting `attributable to the Leaking Underground Storage Tank Trust Fund financing rate imposed by such section. For purposes of the preceding sentence, the term `commercial aviation' means any use of an aircraft other than in noncommercial aviation (as defined in section 4041(c)(2)).'

(19) Subparagraph (B) of section 6421(f)(2) of such Code is amended by striking `and,' and all that follows and inserting a period.

(20) Paragraph (3) of section 6421(f) of such Code is amended to read as follows:

`(3) GASOLINE USED IN TRAINS- In the case of gasoline used as a fuel in a train, this section shall not apply with respect to the Leaking Underground Storage Tank Trust Fund financing rate under section 4081.'

(21) Subparagraph (A) of section 6427(b)(2) of such Code is amended by striking `7.4 cents' and inserting `3.1 cents'.

(22) Paragraph (3) of section 6427(l) of such Code is amended to read as follows:

`(3) REFUND OF CERTAIN TAXES ON FUEL USED IN DIESEL-POWERED TRAINS- For purposes of this subsection, the term `nontaxable use' includes fuel used in a diesel-powered train. The preceding sentence shall not apply to the tax imposed by section 4041(d) and the Leaking Underground Storage Tank Trust Fund financing rate under section 4081 except with respect to fuel sold for exclusive use by a State or any political subdivision thereof.'

(23) Paragraph (4) of section 6427(l) of such Code is amended by striking `attributable to' and all that follows through the period and inserting `attributable to the Leaking Underground Storage Tank Trust Fund financing rate imposed by such section.'

(g) EFFECTIVE DATE- The amendments made by this section shall take effect on the day after the suspension period ends under section 4081(f) of the Internal Revenue Code of 1986 (as added by section 2).

SEC. 4. FLOOR STOCK REFUNDS.

(a) IN GENERAL- If--

(1) before the tax suspension date, tax has been imposed under section 4081 or 4091 of the Internal Revenue Code of 1986 on any liquid, and

(2) on such date such liquid is held by a dealer and has not been used and is intended for sale,

there shall be credited or refunded (without interest) to the person who paid such tax (hereafter in this section referred to as the `taxpayer') an amount equal to the excess of the tax paid by the taxpayer over the amount of such tax which would be imposed on such liquid had the taxable event occurred on such date.

(b) TIME FOR FILING CLAIMS- No credit or refund shall be allowed or made under this section unless--

(1) claim therefor is filed with the Secretary of the Treasury before the date which is 6 months after the tax suspension date, and

(2) in any case where liquid is held by a dealer (other than the taxpayer) on the tax suspension date--

(A) the dealer submits a request for refund or credit to the taxpayer before the date which is 3 months after the tax suspension date, and

(B) the taxpayer has repaid or agreed to repay the amount so claimed to such dealer or has obtained the written consent of such dealer to the allowance of the credit or the making of the refund.

(c) EXCEPTION FOR FUEL HELD IN RETAIL STOCKS- No credit or refund shall be allowed under this section with respect to any liquid in retail stocks held at the place where intended to be sold at retail.

(d) DEFINITIONS- For purposes of this section--

(1) the terms `dealer' and `held by a dealer' have the respective meanings given to such terms by section 6412 of such Code; except that the term `dealer' includes a producer, and

(2) the term `tax suspension date' means the date on which the suspension period begins under section 4081(f) of the Internal Revenue Code of 1986 (as added by section 2).

(e) CERTAIN RULES TO APPLY- Rules similar to the rules of subsections (b) and (c) of section 6412 of such Code shall apply for purposes of this section.

SEC. 5. FLOOR STOCKS TAX.

(a) IMPOSITION OF TAX- In the case of any taxable liquid which is held on the floor stocks tax date by any person, there is hereby imposed a floor stocks tax equal to the excess of the tax which would be imposed under section 4041, 4081, or 4091 of the Internal Revenue Code of 1986 on such liquid had the taxable event occurred on the floor stocks tax date over the tax paid under such sections on such liquid.

(b) LIABILITY FOR TAX AND METHOD OF PAYMENT-

(1) LIABILITY FOR TAX- A person holding a liquid on the floor stocks tax date to which the tax imposed by subsection (a) applies shall be liable for such tax.

(2) METHOD OF PAYMENT- The tax imposed by subsection (a) shall be paid in such manner as the Secretary shall prescribe.

(3) TIME FOR PAYMENT- The tax imposed by subsection (a) shall be paid on or before the date which is 6 months after the floor stocks tax date.

(c) DEFINITIONS- For purposes of this section--

(1) HELD BY A PERSON- A liquid 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).

(2) TAXABLE LIQUID- The term `taxable liquid' means any liquid on which tax is imposed under section 4041, 4081, or 4091 of the Internal Revenue Code of 1986 on the floor stocks tax date.

(3) GASOLINE AND DIESEL FUEL- The terms `gasoline' and `diesel fuel' have the respective meanings given such terms by section 4083 of such Code.

(4) AVIATION FUEL- The term `aviation fuel' has the meaning given such term by section 4093 of such Code.

(5) FLOOR STOCKS TAX DATE- The term `floor stocks tax date' means the day after the end of the suspension period under section 4081(f) of such Code (as added by section 2).

(6) SECRETARY- The term `Secretary' means the Secretary of the Treasury or the Secretary's delegate.

(d) EXCEPTION FOR EXEMPT USES- The tax imposed by subsection (a) shall not apply to taxable liquid held by any person exclusively for any use to the extent a credit or refund of the tax imposed by section 4041, 4081, or 4091 of such Code is allowable for such use.

(e) EXCEPTION FOR FUEL HELD IN VEHICLE TANK- No tax shall be imposed by subsection (a) on taxable liquid held in the tank of a motor vehicle or motorboat.

(f) EXCEPTION FOR CERTAIN AMOUNTS OF FUEL-

(1) IN GENERAL- No tax shall be imposed by subsection (a)--

(A) on gasoline held on the floor stocks tax date by any person if the aggregate amount of gasoline held by such person on such date does not exceed 4,000 gallons, and

(B) on diesel fuel, kerosene, or aviation fuel held on such date by any person if the aggregate amount of diesel fuel, kerosene, or aviation fuel held by such person on such date does not exceed 2,000 gallons.

The preceding sentence shall apply only if such person submits to the Secretary (at the time and in the manner required by the Secretary) such information as the Secretary shall require for purposes of this paragraph.

(2) EXEMPT FUEL- For purposes of paragraph (1), there shall not be taken into account fuel held by any person which is exempt from the tax imposed by subsection (a) by reason of subsection (d) or (e).

(3) CONTROLLED GROUPS- For purposes of this subsection--

(A) CORPORATIONS-

(i) IN GENERAL- All persons treated as a controlled group shall be treated as 1 person.

(ii) CONTROLLED GROUP- The term `controlled group' has the meaning given to such term by subsection (a) of section 1563 of such Code; except that for such purposes the phrase `more than 50 percent' shall be substituted for the phrase `at least 80 percent' each place it appears in such subsection.

(B) NONINCORPORATED PERSONS UNDER COMMON CONTROL- Under regulations prescribed by the Secretary, principles similar to the principles of subparagraph (A) shall apply to a group of persons under common control where 1 or more of such persons is not a corporation.

(g) OTHER LAW APPLICABLE- All provisions of law, including penalties, applicable with respect to the taxes imposed by section 4041(a)(2) of such Code in the case of special fuels; by section 4081 of such Code in the case of gasoline, diesel fuel, and kerosene; and by section 4091 of such Code in the case of aviation fuel shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply with respect to the floor stock taxes imposed by subsection (a) to the same extent as if such taxes were imposed by such section 4041, 4081, or 4091.

END