,,ii #aacth ,,congress #b;d ,session ,s4 #bjba ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,february #ab1 #bjad ,ms4 ,cantwell 7for herself and ,mr4 ,grassley7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to modify the incentives for the production of biodiesel4 #a4 ,short title ,this ,act may be cited as the ,biodiesel ,tax ,incentive ,reform and ,extension ,act of #bjad4 #b4 ,reform of biodiesel income tax incentives 7a7 ,in general ,section #dj;,a of the ,internal ,revenue ,code of #aihf is amended to read as follows3 #dj;,a4 ,biodiesel production 7a7 ,in general ,for purposes of section #ch1 the biodiesel fuels credit determined under this section for the taxable year is #a4jj for each gallon of biodiesel produced by the taxpayer which during the taxable year-- 7#a7 is sold by such producer to another person-- 7,a7 for use by such other person's trade or business 7other than casual off-farm production71 7,b7 for use by such other person as a fuel in a trade or business1 or 7,c7 who sells such biodiesel at retail to another person and places such biodiesel in the fuel tank of such other person1 or 7#b7 is used or sold by such producer for any purpose described in paragraph 7#a74 7b7 ,increased credit for small producers 7#a7 ,in general ,in the case of any eligible small biodiesel producer1 subsection 7a7 shall be applied by increasing the dollar amount contained therein by #aj cents4 7#b7 ,limitation ,paragraph 7#a7 shall only apply with respect to the first #ae1jjj1jjj gallons of biodiesel produced by any eligible small biodiesel producer during any taxable year4 7c7 ,coordination with credit against excise tax ,the amount of the credit determined under this section with respect to any biodiesel shall be reduced to take into account any benefit provided with respect to such biodiesel solely by reason of the application of section #fdbf or #fdbg7;e74 7d7 ,definitions and special rules ,for purposes of this section-- 7#a7 ,biodiesel ,the term biodiesel means liquid fuel derived from biomass which meets-- 7,a7 the registration requirements for fuels and fuel additives established by the ,environmental ,protection ,agency under section #baa of the ,clean ,air ,act 7#db ,u4,s4,c4 #gede71 and 7,b7 the requirements of the ,american ,society for ,testing and ,materials ,d#fgea4 ,such term shall not include any liquid with respect to which a credit may be determined under section #dj4 7#b7 ,biodiesel not used for a qualified purpose ,if-- 7,a7 any credit was determined with respect to any biodiesel under this section1 and 7,b7 any person does not use such biodiesel for the purpose described in subsection 7a71 then there is hereby imposed on such person a tax equal to the product of the rate applicable under subsection 7a7 and the number of gallons of such biodiesel4 7#c7 ,pass-thru in the case of estates and trusts ,under regulations prescribed by the ,secretary1 rules similar to the rules of subsection 7d7 of section #eb shall apply4 7#d7 ,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 feedstock4 ,for purposes of this paragraph1 the term ,united ,states includes any possession of the ,united ,states4 7#e7 ,biodiesel transfers from an ,,irs registered biodiesel production facility to an ,,irs registered terminal or refinery ,the credit allowed under subsection 7a7 shall be allowed to the terminal or refinery referred to in section #djha7;a77#a77;,b77i7 in instances where section #djha7;a77#a77;,b77iii7 is applicable4 ,the credit allowed under subsection 7a7 cannot be claimed by a terminal or refinery on fuel upon which the credit was previously claimed by a biodiesel producer4 7e7 ,definitions and special rules for small biodiesel producers 7#a7 ,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 #fj1jjj1jjj gallons4 7#b7 ,aggregation rule ,for purposes of the #ae1jjj1jjj gallon limitation under subsection 7b77#b7 and the #fj1jjj1jjj gallon limitation under paragraph 7#a71 all members of the same controlled group of corporations 7within the meaning of section #bfg7;f77 and all persons under common control 7within the meaning of section #eb7;b7 but determined by treating an interest of more than #ej percent as a controlling interest7 shall be treated as #a person4 7#c7 ,partnership1 s corporation1 and other pass-thru entities ,in the case of a partnership1 trust1 ,s corporation1 or other pass-thru entity1 the limitations contained in subsection 7b77#b7 and paragraph 7#a7 shall be applied at the entity level and at the partner or similar level4 7#d7 ,allocation ,for purposes of this subsection1 in the case of a facility in which more than #a person has an interest1 productive capacity shall be allocated among such persons in such manner as the ,secretary may prescribe4 7#e7 ,regulations ,the ,secretary may prescribe such regulations as may be necessary-- 7,a7 to prevent the credit provided for in subsection 7b7 from directly or indirectly benefitting any person with a direct or indirect productive capacity of more than #fj1jjj1jjj gallons of biodiesel during the taxable year1 or 7,b7 to prevent any person from directly or indirectly benefitting with respect to more than #ae1jjj1jjj gallons during the taxable year4 7#f7 ,allocation of small biodiesel credit to patrons of cooperative 7,a7 ,election to allocate 7i7 ,in general ,in the case of a cooperative organization described in section #acha7;a71 any portion of the increase determined under subsection 7b7 for the taxable year may1 at the election of the organization1 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 year4 7ii7 ,form and effect of election ,an election under clause 7i7 for any taxable year shall be made on a timely filed return for such year4 ,such election1 once made1 shall be irrevocable for such taxable year4 ,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 #achb7;d74 7,b7 ,treatment of organizations and patrons 7i7 ,organizations ,the amount of the credit not apportioned to patrons pursuant to subparagraph 7,a7 shall be included in the amount determined under subsection 7b7 for the taxable year of the organization4 7ii7 ,patrons ,the amount of the credit apportioned to patrons pursuant to subparagraph 7,a7 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 7as defined in section #achb7;d77 for the taxable year of the organization or1 if earlier1 for the taxable year of each patron ending on or after the date on which the patron receives notice from the cooperative of the apportionment4 7iii7 ,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 year1 an amount equal to the excess of-- 7,i7 such reduction1 over 7,,ii7 the amount not apportioned to such patrons under subparagraph 7,a7 for the taxable year1 shall be treated as an increase in tax imposed by this chapter on the organization4 ,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 #ee4 7f7 ,renewable diesel ,for purposes of this title-- 7#a7 ,treatment in the same manner as biodiesel ,renewable diesel shall be treated in the same manner as biodiesel4 7#b7 ,renewable diesel defined ,the term renewable diesel means liquid fuel derived from biomass which meets-- 7,a7 the registration requirements for fuels and fuel additives established by the ,environmental ,protection ,agency under section #baa of the ,clean ,air ,act 7#db ,u4,s4,c4 #gede71 and 7,b7 the requirements of the ,american ,society for ,testing and ,materials ,d#ige or ,d#cif1 or other equivalent standard approved by the ,secretary4 ,such term shall not include any liquid with respect to which a credit may be determined under section #dj4 ,such term does not include any fuel derived from coprocessing biomass with a feedstock which is not biomass4 ,for purposes of this paragraph1 the term biomass has the meaning given such term by section #de,k7c77#c74 7#c7 ,certain aviation fuel ,except as provided in the last #c sentences of paragraph 7#b71 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 for ,testing and ,materials specification for aviation turbine fuel4 7g7 ,termination ,this section shall not apply to any sale or use after ,december #ca1 #bjag4 4 7b7 ,clerical amendment ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by striking the item relating to section #dj;,a and inserting the following new item3 ,sec4 #dj;,a4 ,biodiesel production4 4 7c7 ,effective date ,the amendments made by this section shall apply to biodiesel sold or used after ,december #ca1 #bjac4 #c4 ,reform of biodiesel excise tax incentives 7a7 ,in general ,subsection 7c7 of section #fdbf of the ,internal ,revenue ,code of #aihf is amended to read as follows3 7c7 ,biodiesel credit 7#a7 ,in general ,for purposes of this section1 the biodiesel credit is #a4jj for each gallon of biodiesel produced by the taxpayer and which-- 7,a7 is sold by such producer to another person-- 7i7 for use by such other person's trade or business 7other than casual off-farm production71 7ii7 for use by such other person as a fuel in a trade or business1 or 7iii7 who sells such biodiesel at retail to another person and places such biodiesel in the fuel tank of such other person1 or 7,b7 is used or sold by such producer for any purpose described in subparagraph 7,a74 7#b7 ,definitions ,any term used in this subsection which is also used in section #dj;,a shall have the meaning given such term by section #dj;,a4 7#c7 ,biodiesel transfers from an ,,irs registered biodiesel production facility to an ,,irs registered terminal ,the credit allowed under this subsection can be claimed by a registered terminal or refinery in instances where section #djha7;a77#a77;,b77iii7 is applicable4 ,the 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 producer4 7#d7 ,termination ,this subsection shall not apply to any sale1 use1 or removal for any period after ,december #ca1 #bjag4 4 7b7 ,payment of credit ,subsection 7e7 of section #fdbg of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by striking or the biodiesel mixture credit in paragraph 7#a71 7#b7 by redesignating paragraphs 7#c7 through 7#f7 as paragraphs 7#d7 through 7#g71 respectively1 and by inserting after paragraph 7#b7 the following new paragraph3 7#c7 ,biodiesel credit ,if any person produces biodiesel and sells or uses such biodiesel as provided in section #fdbf7;c71 the ,secretary shall pay 7without interest7 to such person an amount equal to the biodiesel credit with respect to such biodiesel4 1 7#c7 by striking paragraph 7#a7 or 7#b7 each place it appears in paragraphs 7#d7 and 7#f71 as redesignated by paragraph 7#b71 and inserting paragraph 7#a71 7#b71 or 7#c71 7#d7 by striking alternative fuel each place it appears in paragraphs 7#d7 and 7#f71 as redesignated by paragraph 7#b71 and inserting fuel1 7#e7 by striking biodiesel mixture 7as defined in section #fdbf7;c77#c77 in paragraph 7#g77;,b71 as so redesignated1 and inserting biodiesel 7within the meaning of section #dj;,a71 and 7#f7 by striking #bjac in paragraph 7#g77;,b71 as so redesignated1 and inserting #bjag4 7c7 ,exemption for biodiesel transferred from a registered producer to a registered terminal ,subparagraph 7,b7 of section #djha7;a77#a7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by striking clause 7ii7 in clause 7i7 and inserting clauses 7ii7 and 7iii71 and 7#b7 by adding at the end the following new clause3 7iii7 ,exemptions for biodiesel transferred from a registered producer to a registered terminal ,the tax imposed by this paragraph shall not apply to any removal or entry of biodiesel 7as defined in section #dj;,a7d77#a77 transferred in bulk 7without regard to the manner of such transfer7 to a terminal or refinery if-- 7,i7 such biodiesel was produced by a person who is registered under section #daja as a producer of biodiesel and who provides reporting under the ,ex,stars fuel reporting system of the ,internal ,revenue ,service1 and 7,,ii7 the operator of such terminal or refinery is registered under section #daja4 4 7d7 ,producer registration requirement ,subsection 7a7 of section #fdbf of the ,internal ,revenue ,code of #aihf is amended by striking subsections 7d7 and 7e7 in the flush sentence at the end and inserting subsections 7c71 7d71 and 7e74 7e7 ,recapture ,subsection 7f7 of section #fdbf of the ,internal ,revenue ,code of #aihf is amended to read as follows3 7f7 ,recapture 7#a7 ,alcohol fuel mixtures ,if-- 7,a7 any credit was determined under this section with respect to alcohol used in the production of any alcohol fuel mixture1 and 7,b7 any person-- 7i7 separates the alcohol from the mixture1 or 7ii7 without separation1 uses the mixture other than as a fuel1 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 alcohol4 7#b7 ,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 7c77#a71 then there is hereby imposed on such person a tax equal to #a for each gallon of such biodiesel4 7#c7 ,applicable laws ,all provisions of law1 including penalties1 shall1 insofar as applicable and not inconsistent with this section1 apply in respect of any tax imposed under paragraph 7#a7 or 7#b7 as if such tax were imposed by section #djha and not by this section4 4 7f7 ,clerical amendments 7#a7 ,the heading of section #fdbf of the ,internal ,revenue ,code of #aihf is amended by striking alcohol fuel1 biodiesel1 and alternative fuel mixtures and inserting alcohol fuel mixtures1 biodiesel production1 and alternative fuel mixtures4 7#b7 ,the item relating to section #fdbf in the table of sections for subchapter ,b of chapter #fe of such ,code is amended by striking alcohol fuel1 biodiesel1 and alternative fuel mixtures and inserting alcohol fuel mixtures1 biodiesel production1 and alternative fuel mixtures4 7g7 ,effective date ,the amendments made by this section shall apply to biodiesel sold or used after ,december #ca1 #bjac4 #d4 ,biodiesel treated as taxable fuel 7a7 ,biodiesel treated as taxable fuel ,clause 7i7 of section #djhc7;a77#c77;,a7 of the ,internal ,revenue ,code of #aihf is amended by inserting 1 including biodiesel 7as defined in section #fdbf7;c77#c771 after 7other than gasoline74 7b7 ,effective date ,the amendment made by this section shall apply to biodiesel removed1 entered1 or sold after the date which is #f months after the date of the enactment of this ,act4