Energy Tax Incentives in the 108th Congress: A Comparison of the House and Senate Versions of H.R. 6 and the Senate Finance Committee Amendment

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CRS Report for Congress

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Energy Tax Incentives in the 108th Congress:

A Comparison of the House and

Senate Versions of H.R. 6 and the

Senate Finance Committee Amendment

August 19, 2003

Salvatore Lazzari

Specialist in Public Finance

Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

Energy Tax Incentives in the 108th Congress:

A Comparison of the House and Senate Versions of

H.R. 6 and the Senate Finance Committee Amendment

Summary

The 108th Congress is considering three bills to provide tax incentives to

increase the supply of, and reduce the demand for, fossil fuels and electricity: the

House version of H.R. 6, introduced as H.R. 1531 and approved by the House by a

vote of 247-175 on April 11, 2003; the Senate version of H.R. 6, passed by the

Senate on July 31, which is the same as the energy bill H.R. 4 approved by the Senate

in 2002; and S.Amdt. 1424, a Senate Finance Committee (SFC) amendment to H.R.

6 that is a slightly modified version of S. 1149, the Energy Tax Incentives Act of

2003 approved by the SFC on May 23, 2003.

Each of the three bills provides a ten-year tax cut of about $18 billion, although

the mix of energy tax incentives differs. H.R. 6 as passed by the House provides

about $18.2 billion of energy tax incentives and includes just under $0.1 billion

($100 million) of non-energy tax increases, or offsets. The apportionment of tax

savings in the House-passed H.R. 6 among the three categories — fossil fuels, energy

efficiency, and alternative/renewable fuels — is the same as the House bill in the last

Congress (H.R. 4), but the absolute amounts of dollar cuts are much smaller. The

Senate version of H.R. 6 is the same as the Senate version of H.R. 4, the omnibus

energy measure approved by the Senate in 2002, but on which no conference

agreement was reached. This version of H.R. 6 included about $13.2 billion in

energy tax incentives over ten years, plus an additional $5.1 billion in energy tax cuts

(or revenue losses) due to mandates that would have further reduced energy tax

receipts: the renewable portfolio standard and the renewable fuels standard. S. 1149,

which was approved by the Senate Finance Committee on April 2, 2003, but not

included in the Senate version of H.R. 6, would provide about $19.5 billion in energy

tax cuts, offset by about $5 billion of non-energy tax increases — additional curbs

on corporate tax shelters, limits on corporate and individual expatriates, and an

extension of Internal Revenue Service user fees. Thus the net, ten-year tax cut under

S. 1149 would be just over $14.6 billion.

In general, the House version of H.R. 6 confers a larger tax cut, in both absolute

and relative terms, for fossil fuels production — particularly the oil and gas industry

— and for electricity restructuring (or the production of electricity), and a smaller tax

cut for energy efficiency and renewable/alternative fuels development than the other

two bills. Also, the downstream tax incentives for oil and gas refining, distribution,

and transportation are both absolutely and relatively larger in the House bill than in

either of the other two bills. In contrast, the Senate bills are absolutely and relatively

more generous to renewable and alternative fuels. The Senate bills also include

substantial new tax breaks for investment in clean-coal technologies and for the

generation of electricity from these technologies; the House version of H.R. 6

includes no incentives for clean coal technologies — these were dropped from the

2002 bill. Finally, with regard to ethanol fuel, the House version of H.R. 6 has no

additional incentives for that renewable transportation fuel, while the other two bills

would expand existing tax incentives.

Contents

Brief Summary of the Three Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

House Version of H.R. 6 (108th Congress) . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Senate Version of H.R. 6 (108th Congress) . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Senate Version of H.R. 4 (107th Congress) . . . . . . . . . . . . . . . . . . . . . . 2

Summary of S. 1149 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Brief Comparison of the Three Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Caveats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Fossil Fuels Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Oil/Gas Exploration, Development, and Production . . . . . . . . . . . . . . . . . . . 9

Refining and Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Coal Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Electricity Restructuring Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Energy Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Business Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Residential Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Transportation Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Renewable and Alternative Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Business Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Residential Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Transportation Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Revenue Offsets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

List of Tables

Table 1. Energy Tax Provisions: Comparison of Ten-Year Estimated

Revenue Loss by Type of Incentive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Table 2. Side-by-Side Comparison of the Provisions in Three Energy Tax Bills

in the 108th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Energy Tax Incentives in the

108th Congress: A Comparison of the

House and Senate Versions of H.R. 6 and

the Senate Finance Committee Amendment

Energy taxes incentives have long been an integral component of this nation’s

energy policy. Efforts to significantly expand existing energy tax subsidies have

been undertaken since the 106th Congress, but controversy over various non-tax

energy policy provisions — corporate average fuel economy standards, the Alaskan

National Wildlife Refuge, etc. — have helped stall the legislation.

At this time, the 108th Congress is considering three bills with energy tax

provisions: the House version of energy policy legislation H.R. 6, the Senate version

of H.R. 6 (which is the same as the Senate’s version of H.R. 4, the energy policy

legislation that died in conference at the end of the 107th Congress), and S.Amdt.

1424, the Senate Finance Committee (SFC) substitute amendment that, with some

minor amendments, is the same as S. 1149, approved by the SFC in April 2003. This

report provides a summary of the energy tax provisions of these three bills, presented

as a side-by-side comparison in Table 2.

Table 2 has six major headings (four with several subheadings) organized

according to topics, rather than by either Senate or House bill section number. Thus,

a tax provision is classified according to whether it is (1) an incentive for fossil fuel

supply (including coal output incentives), (2) an incentive to facilitate electricity

industry restructuring (which is also an energy supply incentive), (3) an incentive to

reduce fossil fuel demand through enhanced energy efficiency, (4) an incentive to

reduce fossil fuel demand through alternative and renewable fuels output, (5) in a

miscellaneous category, which describes energy tax provisions not easily categorized

according to the schema, or (6) in the revenue offsets category, which compares tax

increase provisions in each of the three bills.

The fossil fuels supply category is further subdivided according to whether a

particular provision affects oil/gas exploration and production, refining and

distribution, or coal output. Similarly, the energy efficiency and renewable fuels tax

incentives are further categorized, as closely as possible, according to the energy

consuming sector that would be primarily affected, that is, the business (including

commercial and industry), residential, or transportation sector.

CRS-2

Brief Summary of the Three Bills

Upon returning from its August 2003 recess, a House and Senate conference

committee is to negotiate the differences in energy policy legislation, the House and

Senate versions of H.R. 6. This legislation includes approximately $18 billion of

energy tax incentives over ten years — incentives to both stimulate domestic

production and distribution of fossil fuels, and reduce the demand for these fuels

through energy efficiency and alternative and renewable fuels. In addition, several

Republican and Democratic Senators, including some committee leaders, have

introduced a substitute to the SFC committee bill, a modified (or amended) version

of S. 1149. That bill is to be substituted in conference as S.Amdt. 1424 and S.Amdt.

1431; it also provides for about $18 billion of energy tax cuts over ten years.

House Version of H.R. 6 (108th Congress)

On the House side, on April 3, 2003, the House Ways and Means Committee

(WMC) voted 24-12 for a bill (H.R. 1531) that would provide about $18 billion in

energy tax incentives. These incentives have been incorporated into H.R. 6, the

House’s comprehensive energy policy legislation, which was approved by the House

on April 11, 2003 by a vote of 247-175. This bill is a substantially scaled down

version of the House energy tax bill H.R. 2511 (107th Congress), which was

incorporated into H.R. 4, the House energy bill of the 107th Congress which never

became law.

H.R. 6 provides about $18.2 billion of energy tax incentives and includes just

under $0.1 billion ($100 million) of non-energy tax increases, or offsets. The

apportionment of tax savings in H.R. 6 among the three categories — fossil fuels,

energy efficiency, and alternative/renewable fuels — is the same as in the House bill

in the last Congress, but the absolute amounts of dollar cuts are much smaller.1

Senate Version of H.R. 6 (108th Congress)

As a result of disagreements in the 108th Congress over the Senate’s omnibus

energy bill (S. 14), the Senate leadership decided to resuscitate last year’s energy

policy legislation (the Senate version of H.R. 4), including last year’s energy tax

provisions. This was done in order to break the Senate deadlock and pass an energy

policy reform bill prior to the August recess and avoid a long and contentious floor

debate in the Senate (where there was little progress on the roughly 300

amendments). And so, on July 31, 2003, the Senate approved its version of H.R. 6

by a vote of 84-14. This omnibus energy bill replaces S. 14 and therefore includes

last year’s energy tax provisions as well.

Senate Version of H.R. 4 (107th Congress). The Senate version of H.R.

4 originated on February 26, 2001, when Senator Murkowski introduced S. 389, the

comprehensive energy bill that included significant expansion of tax incentives for

1

The House version of H.R. 4 of the 107th Congress provided about $37 billion of energy

tax cuts.

CRS-3

energy supply, energy efficiency, and alternative fuels. On March 22, 2001, Senator

Bingaman introduced a Democratic version of comprehensive energy policy

legislation comprising two bills: S. 596, the Energy Security Tax and Policy Act of

2001 (essentially the tax component of the comprehensive legislation), and S. 597,

the Comprehensive and Balanced Energy Policy Act of 2001 (the non-tax component

of the legislation). S. 596 was based largely on Senator Bingaman’s energy tax bill

in the 106th Congress (S. 2904).

On December 5, 2001, the Democratic leadership in the Senate introduced S.

1766, a newer version of comprehensive energy legislation, without tax provisions,

which was basically to be a revised version of Senator Bingaman’s bill, S. 597. S.

1766 was replaced by a substitute bill, S. 517, which was largely the same as the

original bill but which included dramatic increases in fuel economy standards. The

Energy Tax Incentives Act was approved by SFC February 13, 2002 and added as an

amendment (S.Amdt. 2917) to S. 517 on the floor. The Senate approved S. 517 on

April 25, 2002 as an amendment in the nature of a substitute to the House counterpart

H.R. 4. The conference committee ended its consideration of H.R. 4 on November

13, 2002, after eight sessions did not reconcile major differences.

The Senate version of H.R. 4 is the measure resuscitated and approved as H.R.

6 by the Senate on July 31, 2003. This version of H.R. 6 includes about $13.2 billion

in energy tax incentives over ten years, plus an additional $5.1 in energy tax cuts (or

revenue losses) due to mandates that would have further reduced energy tax receipts:

the renewable portfolio standard and the renewable fuels standard.2

Summary of S. 1149

The third energy tax bill that may be considered by the House-Senate

Conference this fall is an amended version of S. 1149, which was approved by the

SFC but dropped by the Senate leadership during passage of H.R. 6. This bill

originated on March 11, 2003, when a bipartisan group of four Senate committee

leaders — Senator Grassley, chairman of the Committee on Finance; Senator

Baucus, ranking Democrat of the Committee on Finance; Senator Domenici,

chairman of the Committee on Energy and Natural Resources; and Senator

Bingaman, Energy Committee ranking Democrat — introduced S. 597, the Energy

Tax Incentives Act of 2003. This bill was approved by the Senate Finance

Committee on April 2, 2003, by a vote of 18-2. On May 23, 2003, the Senate

Finance Committee approved the Energy Tax Incentives Act of 2003 (S. 1149),

which superseded S. 597 (S.Rept. 108-54) and was incorporated into S. 14, the

omnibus energy bill.

2

Note that the revenue losses estimated for this bill were $15.5 billion for the eleven-year

period from 2002 to 2012. The corresponding revenue loss including the mandates was

$20.6 ($15.5 + $5.1). However, the reader is cautioned that the revenue losses for the

Senate’s version of H.R. 6 presented in this report were estimated for H.R. 4 in 2002. The

Joint Committee on Taxation has not re-estimated the revenue losses for this bill as of this

writing.

CRS-4

S. 1149 would provide a series of energy tax breaks amounting to about $19.5

billion in cuts. These energy tax reductions would be partially offset through about

$5 billion in tax increases — additional curbs on corporate tax shelters, limits on

corporate and individual expatriates, and an extension of Internal Revenue Service

user fees. Thus the net, ten-year tax cut under S. 1149 would be just over $15.3

billion.

As was just noted, S. 1149 was not adopted by the Senate. As a result of

disagreements over the omnibus energy bill, S. 14, the Senate leadership decided to

resuscitate last year’s energy policy legislation (H.R. 4), in order to break the Senate

deadlock. However, under an agreement between the SFC leadership of both parties,

the SFC bill (S. 1149) will be reintroduced as S.Amdt. 1424 (to be further amended

by S.Amdt. 1431) and substituted for S. 1149 in the forthcoming conference on

omnibus energy policy reform bill H.R. 6, should a conference take place.3

The amendments to the SFC-approved S. 1149 involve (1) an expansion of the

biodiesel tax credit, including an expansion of the rate of credit for agri-biodiesel

from $0.50/gallon to $1.00/gallon; (2) clarification and elaboration with respect to

the tax credit for construction of more energy-efficient new homes; (3) changes —

some increases, some decreases — to the amount of tax credits for different types of

energy-efficient heating and cooling equipment, and insulation property for existing

homes; (4) some minor modifications to the clean coal tax incentives; and (5)

extension of the enhanced oil recovery tax credit to certain oil production facilities

in Alaska.

Brief Comparison of the Three Bills

One way to briefly compare the three bills is to compare revenue losses from the

energy tax incentives and the percentage distribution by type of incentive as

discussed above. This is done in Table 1. The odd-numbered columns, (1) and (3),

show the revenue losses resulting from the House and Senate versions of H.R. 6 over

the ten-year period from FY2003 to FY2012; column (5) shows the ten-year revenue

loss resulting from the SFC amendment over the period 2004-2013. Thus, while the

revenue losses are each estimated over the same time frame, the exact ten-year period

differs among the bills. The percentage distribution of total revenue losses by type

of incentive is shown for each bill in the even-numbered columns.

The total revenue losses are reported in two ways. First, the net energy tax cuts

are in row (12) of Table 1. This shows how the energy tax cuts differ among the

three bills, exclusive of non-energy tax increases (or offsets). The grand total

revenue loss, inclusive of any non-energy tax increases, appears in row (14), which

is row (12) + row (13). Row (14) figures are the same as those reported by the Joint

Committee on Taxation for the two congressional tax-writing committees.

3

Congressional floor statements made by Senators Grassley and Baucus. See Congressional

Record, July 31, 2003.

CRS-5

Table 1. Energy Tax Provisions: Comparison of Ten-Year

Estimated Revenue Loss by Type of Incentive

($ millions; % of total revenue losses)

House H.R. 6

Senate H.R. 6

SFC Amendment

INCENTIVES FOR FOSSIL FUELS SUPPLY

(1)

(2)

(3)

(4)

(5)

(6)

(1) Oil & Gas Production

-$6,485

35.6%

-$3,583

19.5%

-$5,401

28.7%

(2) Oil & Gas Refining and

Distribution

-3,725

20.4%

-1,509

8.2%

-3,391

17.4%

0

0%

-1,907

10.4%

-2,167

11.1%

-10,210

56.0%

-6,999

38.2%

-10,959

56.3%

(3) Coal

(4) Subtotal

ELECTRICITY RESTRUCTURING PROVISIONS

(5) Nuclear

-1,462

8.0%

-1,052

5.7%

-1,000

5.1%

(6) Other

-1,614

8.9%

-499

2.7%

+80

- 0.4%a

(7) Subtotal

-3,066

16.8%

-1,551

8.5%

-920

4.7%

INCENTIVES FOR EFFICIENCY, RENEWABLES, AND ALTERNATIVE FUELS

(8) Energy Efficiency

-1,348

7.4%

-2,147

11.7%

-2,231

11.5%

(9) Renewable Energy &

Alternative Fuels

-3,564

19.6%

-4,433

24.2%

-5,352

27.5%

(10) Subtotal

-4,912

27.0%

-6,610

36.1%

-7,583

38.9%

(11) MISCELLANEOUS

-33

0.2%

-5,138

28.0%

-18

0.1%

(12) NET ENERGY TAX

CUTS: TOTAL

-18,221

100.0%

-18,328

100.0%

-19,480

100%

(13) REVENUE OFFSETS

+83

0

+4,877

-18,138

-18,328

-14,603

(14) GRAND TOTAL

Source: CRS estimates based on Joint Tax Committee reports.

Notes: Note that “grand total” measures the net proposed energy tax cuts defined as gross energy tax cuts less

any energy tax increases, and excluding any non-energy tax increases. See text for important caveats that must

be observed when using this table.

a

Note the negative sign, which indicates revenue losses, and the positive sign, which indicates revenue gains.

CRS-6

Note first the similarities among the three bills. Each reduces energy taxes by

about $18-$19 billion, and the House and Senate versions of H.R. 6 would generate

a nearly identical revenue loss. Also, each bill apportions the tax cuts to the various

energy sectors as discussed above: increased supply incentives for fossil fuels and

coal production (including refining, distribution, and transportation), increased

supply incentives for electricity production and transmission under the rubric of

restructuring provisions, and energy conservation incentives both through the more

efficient consumption of energy and through the substitution of alternative and

renewable fuels.

There are, however, several differences among the three bills.

4

!

First, the mix of tax incentives — the distribution of the total dollars

of cuts among these three broad categories of energy incentives —

differs among the three bills. In general, the House-approved H.R.

6 confers a larger tax cut, in both absolute and relative terms, for

fossil fuels production and for electricity restructuring (or the

production of electricity), and a smaller tax cut for energy efficiency

and renewable/alternative fuels development than the other two bills.

In particular, the House bill is more generous to the oil and gas

industry and much more generous to the electric utility industry than

either Senate bill; in contrast, the Senate bills are absolutely and

relatively more generous to renewable and alternative fuels. Also,

the downstream tax incentives for oil and gas refining, distribution,

and transportation are both absolutely and relatively larger in the

House bill than in either of the other two bills.

!

Second, the House version of H.R. 6 includes no coal incentives

(production and investment incentives for clean coal technologies)

— these were dropped from the 2002 bill.

!

Third, the SFC Amendment (amended version of S. 1149) includes

about $5 billion of non-energy tax increases or offsets (row (13),

column (5) of Table 1), which reduces the net cost of the bill. By

contrast, the House version of H.R. 6 provides only $83 million of

tax increases, and the Senate version of H.R. 6 provides none.4

!

Fourth, as shown in row (11), column (3), the Senate version of H.R.

6 has much larger miscellaneous revenue losses from several energy

tax provisions. The larger of these result from the combined effect

of existing and proposed energy tax incentives with proposed

regulatory incentives for renewable fuels: the renewable portfolio

standard for electricity providers and the renewable fuels mandate.

It should be noted, however, that some of the energy tax incentive provisions raise revenue

over the ten-year period under consideration. These revenue gains may not be shown when

the figures are aggregated as they are in Table 1.

CRS-7

!

Fifth, as between the two Senate bills, the SFC amendment is more

generous to renewable and alternative fuels when only the tax

incentives are compared; however, if the regulatory incentives in

Senate H.R. 6 are taken into account, it is by far more generous than

the SFC amendment.

!

Finally, with regard to ethanol fuel, the House version of H.R. 6 has

no additional incentives for that renewable transportation fuel, while

the other two bills significantly expand existing incentives.

Other notable differences between the three bills are (1) the tax incentives for

electricity restructuring are significantly larger in the House bill (both in absolute

dollar terms and relative to the total tax cut); and (2) the two Senate bills provide

much larger tax incentives for alternative fuel vehicles (including advanced

technology vehicles) and for alternative fuels production than the House bill.

Caveats

Several caveats should be noted. First, the table is primarily a comparison of

the proposed changes to energy tax provisions. While these changes involve

primarily tax cuts, they also include some minor energy tax increases, and some

major non-energy tax increases, as noted earlier. In the latter case, revenue offsets are

clearly shown in column (13) of Table 1. In the former case, however, the revenue

gains are not separately shown, but are subsumed in the losses corresponding to other

provisions. In some of these cases still, there are gains in some years followed by

losses in other and vice versa.

Second, as was noted above, the estimates cover two different ten-year periods:

FY2003-FY2012 for both the House and Senate versions of H.R. 6, and FY2004FY2013 for the SFC amendment.

Third, not all of the provisions fall into neat, separate categories. The §29 tax

credit, for example, promotes both fossil fuels (shale oil, coal, unconventional gases)

and renewable biogases (such as landfill gas), although in Table 1, this item is

categorized as a fossil fuel supply incentive only. This is done because (1) the

available data indicate that the §29 credit primarily benefits unconventional gases

such as coalbed methane, tight sands gas, and, more recently, coal; and (2) there are

insufficient official data to permit estimates of how much of the total projected

revenue loss from the provision accrues to fossil as compared with renewable fuels.

There are other tax incentive provisions where this is true. For example, fuel cells

improve the energy efficiency of electricity generation, but can be powered by a

number of different fuels, including natural gas, hydrogen, and others. It is difficult

to determine, therefore, whether to categorize the tax incentive for residential and

business fuel cells as a fossil fuel incentive, a renewable incentive, or even an energy

efficiency incentive. However, since the Department of Energy funds its fuel cell

research in its energy efficiency budgets, Table 1 categorizes the fuel cell tax

CRS-8

incentives, where the separate figures were available, as an energy efficiency

incentive.5

The total revenue losses are reported in two ways. First the net energy tax cuts

are row (12) of Table 1. This is presented to indicate how the energy tax cuts differ

among the three bills, exclusive of nonenergy tax increases (or offsets). The grand

total revenue loss, inclusive of any nonenergy tax increases, appears in row (14),

which is basically row (12) + row (13). Row (14) figures are the same as those

reported by the Joint Committee on Taxation for the two congressional tax-writing

committees.

Fourth, some of the provisions appear to be miscategorized in the bills. Some

provisions are characterized as conservation incentives when they are in fact supplyoriented incentives. Other provisions are production incentives but are subsumed

under the heading of reliability incentives, rather than production incentives.

Finally, the side-by-side comparison in Table 2 is a summary of complex and

extensive tax code provisions. For brevity, much detail is necessarily omitted.

5

This is only true for the House bill, H.R. 6. The two Senate bills do not provide a

disaggregated revenue loss figure for fuel cells and solar technology, so that it is impossible

to precisely allocate the corresponding revenue loss in terms of energy efficiency and

renewables respectively. Using available information, Table 1 assumes that half of the

revenue loss of this provision accrues as renewable incentives and half accrues as energy

efficiency incentives.

CRS-9

Table 2. Side-by-Side Comparison of the Provisions in Three Energy Tax Bills in the 108th Congress

Fossil Fuels Supply

Oil/Gas Exploration, Development, and Production

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

MARGINAL OIL AND GAS

WELLS

Independent producers can claim a

higher depletion rate (up to 25%,

rather than the normal 15%) for up

to 15 barrels per day (bpd) of oil (or

the equivalent amount of gas) from

marginal wells (“stripper” oil/gas

and heavy oil). [IRC§613A(c)(6)]

Sec. 43001. A $3 tax credit is

provided per barrel of oil

($0.50/thousand cubic feet

(mcf) of gas from marginal

wells, and for heavy oil). The

credit phases out as oil prices

rise from $15 to $18 per barrel

(and as gas prices rise from

$1.67 to $2.00/thousand cubic

feet.) The credit is limited to 25

bpd or equivalent amount of

gas and to 1,095 barrels per

year or equivalent.

Sec. 2301. This provision is

the same as the House bill

with the exception of 1) the

House bill has no carry

back provision (while the

Senate bill allows the credit

to be carried back up to 10

years), and 2) the House

bill goes into effect on

January 1, 2004, while the

Senate bill goes into effect

on the date the bill is

enacted.

Sec. 501. Same as Senate bill H.R.

6.

ALASKAN NATURAL GAS

No special tax incentive is provided

for natural gas produced from

Alaska’s North Slope.

No provision.

Sec. 2503. The Senate’s

energy tax bill would

provide a credit equal to

the difference between

$3.25/mcf (adjusted for

inflation) and the average

monthly price for such gas

sold in the Alberta,

Canada, market. In effect,

the tax provision would

establish a price floor of

$3.25 for such gas.

Sec. 511. The SFC’s amendment

would create a new tax credit of

$0.52 per million Btu of gas (about

$0.50/mcf) for the production of

natural gas from Alaska’s North

Slope area. The credit would be

phased out for wellhead prices

between $0.83 and $1.35 per

million Btu. Both the credit and

phase-out thresholds would be

adjusted for inflation.

CRS-10

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

ENHANCED OIL

RECOVERY

A 15% tax credit is provided for the

costs of recovering oil by one of

several selected tertiary recovery

techniques. The credit is part of the

general business credit and is limited

by the minimum tax. No tax credits

are allowed against the minimum

liability. Further, the law states that

the sum of allowable credits must be

less than the difference between the

regular tax and the minimum

liability (it cannot be larger than the

difference between the two).

[IRC§43]

Sec. 43008. The House bill

repeals the minimum tax

limitation on the enhanced oil

recovery credit, thus allowing

more of it to be claimed.

No provision.

Sec. 514. S.Amdt. 1431 amends

the SFC amendment (i.e., S. 1149)

to extend the enhanced oil

recovery tax credit to certain

Alaskan facilities. (The original

SFC-approved bill had no such

provision. This is one of several

provisions added as an amendment

to S. 1149, which is expected be

offered in conference.)

PERCENTAGE

DEPLETION:

a) 100% Net Income

Limitation

The percentage depletion allowance

is limited to 100% of taxable income

from each property, but this

limitation is suspended through

December 31, 2003, for marginal oil

and gas. The Job Creation and

Worker Assistance Act of 2002 (P.L.

107-147), enacted on March 9, 2002,

retroactively extended the

suspension for marginal oil and gas

(which had expired on December 31,

2001) through December 31, 2003.

[IRC§613A(c)(6)(H), A(d)]

Sec. 4302. The suspension for

marginal oil and gas is

extended through December

31, 2006.

Sec. 2306. Same as the

House bill.

Same as the other two bills.

b) 65% Taxable Income

Limitation

The percentage depletion allowance

is also limited to 65% of taxpayer’s

overall taxable income from all

properties. [IRC§613A(c)(6)(H),

A(d)]

Sec. 4302. The 65% limitation

on percentage depletion for oil

and gas is suspended through

December 31, 2006.

No provision.

No provision.

CRS-11

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

c) Independent Producer

Status

For purposes of percentage

depletion, an independent oil

producer is a) one that, on any given

day, does not refine more than

50,000 barrels of oil, and b) does not

have a retail operation grossing more

than $5 million/year. [IRC§613A(d)]

Sec. 42006. The 50,000 barrel

daily limit is raised to 75,000,

and it applies to the average

over an entire taxable year,

rather than on any day during

the taxable year.

Sec. 2305. This provision is

generally the same as in the

House bill, except that the

limit is raised to 60,000.

Sec. 505. These provisions are the

same as in the Senate’s version of

H.R. 6.

INTANGIBLE DRILLING

COSTS (IDCs)

Oil and gas producers are allowed to

expense, rather than capitalize,

certain intangible drilling and

development costs. With certain

limitations, this deduction is a tax

preference item subject to the

alternative minimum tax.

[IRC§293(c), 57(a)(2)(e)]

Sec.43007. The alternative

minimum tax on IDCs is

repealed through December 31,

2004. Integrated oil companies

are excluded from the repeal.

No provision.

No provision.

GEOLOGIC &

GEOPHYSICAL COSTS

(G&G)

G&G costs for retained properties

must be capitalized (via depletion).

Dry hole costs are expensed.

[IRC§263]

Sec. 43004. G&G costs for

retained properties are

amortizable (deducted evenly)

over 2 years.

Sec. 2307. Same as the

House bill.

Sec. 508. Same as the House and

Senate versions of H.R. 6.

DELAY RENTALS

Under the uniform capitalization

rules, delay rental payments must be

capitalized (via depletion).

[IRC§263,263A

Sec. 43003. Delay rental

payments are deducted evenly

(amortizable) over 2 years.

Sec. 2308. Same as the

House bill.

Sec. 508. Same as the House and

Senate versions of H.R. 6.

CRS-12

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

§29 CREDIT FOR FUELS

FROM

UNCONVENTIONAL

SOURCES

A $3 tax credit ($1979) is available

for each barrel (or equivalent) of

fuels produced from unconventional

sources or mined from

unconventional locations. For most

fuels, the credit ended in 2002 for

facilities and mines placed in service

by 12-31-92; for biogases, the credit

ends in 2007 for facilities placed in

service by 6-30-98. No credit is

available for facilities placed in

service after these cut-off dates

(which apply to different fuels). The

credit is phased out when oil prices

exceed certain limits (currently

$49.75/barrel). The credit in 2002

was $6.35/barrel of oil equivalent.

Although biogases, such as landfill

gas, have qualified for the credit,

most of the benefits from this tax

credit have accrued to coalbed

methane and to other unconventional

fossil gases. (See CRS Report 97679 E.)

[IRC §29]

Sec. 43005. The House bill

also extends the credit and

placed-in-service dates, and

broadens the types of

qualifying fuels, but these

differ from the Senate bill. For

new projects producing most

types of the preexisting

qualifying fuels, the credit is

extended by 4 years for

facilities placed in service

through 12-31-2006. For

existing “older” facilities, a

lower credit is extended from

2002 to 12-31-2005 to build a

facility (instead of 2004 in the

Senate bill). For any

production that would qualify

for a credit as a result of the

broadening of the provision

under this bill, the quantity of

fuel qualifying for a tax credit

would be limited to 200,000

cubic ft./day of gas or

equivalent.

Sec. 2310. The credit is

extended by 3 years for

new facilities for producing

most of the preexisting

qualifying fuels and

placed-in-service through

12-31-2004. For biofuels

from certain wastes, the

placed-in-service date is

extended to 12-31-2004.

For “older” facilities that

produce coke and other

fuels from lignite, the

placed-in-service date is

extended by 2 years

through 12-31-2004. The

Senate bill also expands the

list of qualifying fuels to

include: refined coal that

meets emissions reduction

targets, heavy oil, and gas

from a coal mine that will

be mined for coal.

Sec. 509. The placed-in-service

date for most fuels is extended to

12-31-2006. The credit is

rebaselined at $3, but without

inflation adjustments. The Senate

bill also expands the list of

qualifying fuels to include: refined

coal that meets emissions

reduction targets, heavy oil, and

gas from a coal mine that will be

mined for coal. For facilities that

produce coke and other fuels from

lignite, the placed-in-service date

is extended by 2 more years

through 12-31-2006, and the credit

is available for 5 years after the

facility is placed in service.

TAX BENEFITS TO

AMERICAN INDIANS

Present tax law provides accelerated

depreciation of business property

located on Indian reservations, and

an employment tax credit for wages

paid to American Indians. Both of

these tax subsidies expire at the end

of 2004.

[IRC§45A, 168(j)]

No provision.

Sec. 2501. The Senate bill

extends both subsidies

through December 31,

2005.

Sec. 701. Same as the Senate

version of H.R. 6.

CRS-13

Refining and Distribution

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

OIL AND GAS PIPELINES

The recovery period for the

depreciation of oil and gas pipelines is

15 years; for natural gas gathering

lines, it could be either 7 or 15 years,

depending upon whether they are

classified as exploration or

transportation equipment. Recent

court cases reflect the ambiguous tax

treatment.

[IRC§168(e)(3)]

Sec. 42001,42002. This

provision clarifies the

statute concerning

recovery periods by

assigning natural gas

gathering lines a 7-year

recovery period, and

natural gas distribution

lines a 15-year recovery

period.

Sec. 2302, 2311. Same as the

House bill.

Sec. 502, 510, and 512. Same as

the House and Senate bills.

LOW SULFUR DIESEL

FUEL

There are no special tax incentives for

refining of low sulfur diesel fuel.

Investments are recovered through

depreciation, generally over 10 years.

New, stricter Environmental

Protection Agency (EPA) sulfur

standards will go into effect in 2006.

[IRC§168]

Sec.42004, 42005. Small

refiners are permitted to

expense (deduct in the year

incurred), rather than

depreciate, 3/4 of the costs

of complying with the new

EPA sulfur regulations. A

tax credit of $2.10/barrel

of low sulfur diesel fuel is

also provided for small

refiners, limited to 25% of

the capital costs.

Sec. 2303,2304. The Senate

provision is generally the

same as in the House bill.

Both bills reduce the fraction

of expensable costs for

taxpayers refining between

155,000 and 205,000 barrels

per day. A similar limitation

is provided with respect to the

per-barrel tax credit. The

Senate bill would also (unlike

the House bill) allow

cooperatives to pass through

the credits to patrons.

Sec. 503 and 504. Same as the

Senate version of H.R. 6.

EXCISE TAX ON TRAIN

DIESEL

Diesel used in train engines is taxed at

4.4¢/gal., comprising 4.3¢, which

goes into the general fund, and 0.1¢,

which goes into the LUST (Leaking

Underground Storage Tank) trust

fund.

[IRC§4041(a)(d)]

Sec. 41008. The 4.3¢

portion of the tax on train

diesel would be repealed

on 1-1-2004. The 0.1¢

LUST component remains.

No provision.

Sec. 703. Same as the House

version of H.R. 6.

CRS-14

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

Diesel used in barges is taxed at

24.4¢/gal., comprising 1) 20.1¢ that

goes into the Inland Waterways Trust

Fund, 2) 4.3¢, which goes into the

general fund, and 3) 0.1¢, which goes

into the LUST trust fund.

[IRC§4042]

Sec. 41008. The 4.3¢

portion of the tax on barge

diesel would be repealed

on 1-1-2004. The LUST

tax remains.

No provision.

Sec. 703. Same as the House

version of H.R. 6.

EXCISE TAXES ON

TRANSPORTATION BY AIR

For virtually all domestic flights, the

airlines assess a 7.5% ad-valorem tax

on the ticket price of all commercial

airline passenger tickets, plus a tax

surcharge of $2.75/passenger assessed

on each passenger’s segment of a

domestic flight. Transportation by

helicopter for certain specific uses is

exempt. If a segment is to or from a

rural airport, the domestic segment tax

does not apply. Commercial airlines

that transport property rather than

people are assessed an ad-valorem tax,

known as the cargo waybill tax, of

6.25% of the amount charged for

shipping the property or freight.

[IRC§4261, 4271]

No provision.

Sec. 2507,2508. The list of

exempt uses for purposes of

the passenger ticket tax and

the domestic segment tax, is

expanded to include

transportation by fixed wing

aircraft used for forestry

purposes. The definition of

rural airport for purposes of

the domestic segment tax is

also modified.

No provision.

BLEND OF DIESEL/WATER

EMULSION FUEL

Diesel fuel used in highway vehicles is

generally taxed at 24.4¢/gal.,

comprising the 24.3¢ Highway Trust

Fund (HTF) rate, and the 0.1¢ LUST

trust fund rate. [IRC§4081]

Sec. 41009. The 24.3¢

HTF component of the tax

on emulsified blends of

diesel and water fuels is

reduced to 19.7¢,

reflecting the lower Btu

value of the blended fuel.

No provision.

No provision.

EXCISE TAX ON BARGE

DIESEL

CRS-15

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

UTILITY PURCHASES OF

NATURAL GAS

State and local governments cannot

use the proceeds from tax-exempt

bonds to profit from arbitrage on

natural gas purchases.

[IRC§148]

Sec. 42010. Public power

utilities are exempt from

the arbitrage restrictions of

the tax-exempt bond rules.

No provision.

Sec. 513. The Senate provision is

the same as in the House bill.

GASOLINE USED ON

FARMS

Gasoline (and diesel) used on farms is

exempt from the motor fuels excise

taxes (as are most other “off-highway”

uses of motor fuels). The gasoline

used in crop-spraying aircraft is

exempt only to the extent it is used

while actually spraying the crops —

gasoline used from the airport to the

farm is not exempt. Further, the

farmer must waive the right to claim

the exemption in order for the

“sprayer” to claim the exemption.

[IRC§6420(c)]

No provision.

Sec 2506. The Senate bill

repeals the waiver

requirement and permits the

aerial consumer of the fuel to

claim the exemption if it is the

purchaser of the gasoline.

Also, the Senate bill treats the

gasoline consumed from the

airport and the farm as onfarm use, thus qualifying for

the exemption.

No provision.

COMMERCIAL POWER

TAKEOFF VEHICLES

No special tax credit is available to

businesses that own refuse collection

trucks or cement mixing trucks. Such

equipment is depreciable property.

Fuel excise taxes are not generally

imposed on off-highway fuel use such

as in construction equipment. But

there is no mechanism for crediting

the excise tax paid by businesses on

that portion of the fuel used by the

trucks to power either the load

compactor or the mixer drum.

No provision

Sec. 2009. Through 2004, a

$250 tax credit is provided for

each refuse truck with a load

compactor and each cement

truck with a mixer drum.

After 2004, the Treasury

Department will issue

regulations that will reduce

the excise taxes on the fuel

used to power the load

compactor or the drum, as the

case may be.

No provision.

CRS-16

Coal Provisions

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

CLEAN COAL

TECHNOLOGIES

There are no special tax breaks for clean

coal technologies, either for the

investments nor the electricity produced

therefrom. Conventional electricity

generating equipment is generally

depreciable over 15 or 20 years; renewable

generally over 5 years. Pollution control

equipment is amortizable over 5 years

(rather than depreciated over 20 years).

[IRC§169]

No provision.

Sec. 2201, 2211,2212,

2221. Two new tax credits

are created: 1) a variable

tax credit for investments

in selected types of

advanced clean coal

technologies, and 2) a

production tax credit for

electricity generated from

either advanced clean coal

technologies, or existing

coal-fired steam generators

retrofitted with more

energy efficient and cleaner

coal technologies.

Sec. 401, 411,412, 421. Two new

tax credits are created: 1) a 10% tax

credit for investments in selected

types of advanced clean coal

technologies, and 2) a production

tax credit for electricity generated

from either advanced clean coal

technologies, or existing coal-fired

steam generators retrofitted with

more energy efficient and cleaner

coal technologies. Tax-exempt

entities would be allowed to sell,

trade, or assign any of the credits.

CRS-17

Electricity Restructuring Provisions

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

OPEN ACCESS AND TAXEXEMPT BONDS

Current federal tax provisions

relating to the use of tax-exempt

bonds effectively preclude public

power entities with outstanding

bonds from participating in openaccess restructuring plans because of

the tax code’s private-use

restrictions.

[IRC§103, 141-147]

No provision.

Sec. 2405. This provision

eases somewhat the

restrictions in IRS temporary

regulations with respect to

issuers of tax-exempt bonds

qualifying under the “output

facilities” provisions and

participating in open access

plans.

No provision.

SALE OR DISPOSITION OF

TRANSMISSION ASSETS

Under present tax law, the sale of

electricity transmission or

distribution facilities is generally not

considered to be an involuntary

conversion, thus such sales generally

trigger a tax, which could inhibit procompetitive sales of transmission and

distribution lines and facilities to

independent companies, for example

to create regional transmission

organizations (RTOs). Income is

generally recognized in the year in

which it is constructively received,

unless there is an explicit exception

or the taxpayer uses the accrual

method of accounting. [IRC§451,

1033, 1245, 1250]

Sec. 42007. Gain from the sale or

disposition of transmission assets

before December 31, 2006 is

recognized over 8 years.

Sec. 2404. Generally the

same as in the House bill, but

with fewer restrictions.

Sec. 603. Same as the

Senate version of H.R. 6,

but applies to sales through

December 31, 2007.

RECOVERY PERIOD FOR

TRANSMISSION

PROPERTY UNDER

DEPRECIATION

PROVISIONS

The current law recovery period for

transmission property is generally 20

years.

[IRC §168(e)(3)]

Sec. 42003. Shortens the recovery

period for transmission property

from 20 to 15 years.

Sec. 2404. Gain from the sale

or disposition of transmission

assets is recognized over 8

years.

No provision.

CRS-18

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

NUCLEAR

DECOMMISSIONING

FUNDS

Deductions into a nuclear

decommissioning fund are limited to

the lesser of the amounts relating to

the cost of service regulations or the

IRS’s ruling amount. Funds may be

transferred tax-free in connection

with a change in ownership of the

nuclear facility to which they relate,

but the transferee generally has to be

a regulated utility eligible to

maintain such a fund. In a

deregulated and restructured

industry, ambiguity regarding the tax

treatment of decommissioning fund

transfers may make such transactions

taxable.

[IRC§468A]

Sec. 42008. In addition to the

amendments made by the Senate

bill, the House provision further

liberalizes the tax treatment of

nuclear decommissioning costs.

Unlike the Senate bill, the House

provision allows a utility to make

contributions into the fund in

excess of the maximum amount

established by the Internal Revenue

Service in certain circumstances.

Sec. 2402. The Senate bill

repeals provisions that limited

the deduction to regulated

utilities, thus liberalizing the

deduction in the context of

utility restructuring and

deregulation. It clarifies that

transfers of funds do not

trigger a tax, and that the

actual decommissioning costs

are deductible when paid

rather than when the actual

decommissioning begins.

Sec. 601. The Senate

substitute amendment is the

same as the Senate’s

version of H.R. 6.

ELECTRIC

COOPERATIVES

In general, cooperatives are exempt

from tax although patrons must pay

tax on any distributed profits as

“patronage dividend.” Rural electric

cooperatives are also exempt from

tax and patrons do not have to report

dividends, provided that no more

than 15% of the cooperative’s

income is from services to

nonmembers.

[IRC§501,512]

Sec. 42009. The provision in the

House bill is generally the same as

the Senate bill, except that it limits

the types of income not counted

against the 15% test.

Sec. 2403, 2406. The income

received by a rural electric

cooperative from any open

access (or nuclear

decommissioning) transaction

with a nonmember, and from

certain other transactions, is

excluded from the 15% test.

Thus, participating in open

access restructuring plans

would not jeopardize

cooperatives’ tax exemption.

Certain gross income from

any electricity to be used to

develop unconventional fuels

is also excluded.

Sec. 602. The Senate’s

substitute amendment is the

same as the Senate’s

version of H.R. 6.

CRS-19

Energy Efficiency

Business Sector

Provision

COMBINED HEAT AND

POWER SYSTEMS

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

No special tax subsidies are

provided to combined heat and

power (cogeneration) systems; the

recovery period for purposes of

depreciation is generally 15 years.

Sec. 41006. Combined heat and

power systems larger than 50

kilowatts (kW) would be treated

as business energy property, thus

qualifying for the 10%

investment tax credit; the

recovery period is increased to

22 years. Property using backpressure steam turbines is also

eligible.

Sec. 2108. Generally the same

as the House bill.

Sec. 308. Generally the same

as the House and Senate bills.

CRS-20

Provision

Current Law

ENERGY EFFICIENCY IN

COMMERCIAL

BUILDINGS

Energy efficiency property that is

installed as part of a structure is

depreciable over 39 years — it has

the same recovery period as the

structure.

[IRC§168(c)]

House Bill (H.R. 6)

No provision.

Senate Bill (H.R. 6)

SFC Amendment

Sec. 2105. Expenditures on

energy efficiency property

made with respect to a

commercial building are tax

deductible (rather than

depreciable), subject to a limit

equal to $2.25 x sq.ft. of the

building. The property must

reduce the building’s annual

energy costs by at least 50% as

compared to a reference

building. Commercial buildings

include residential rental

property. The Senate bill allows

designers of commercial

buildings to claim this

deduction if the energy

efficiency items are installed in

the buildings of nontaxable

entities.

Sec. 305. Same as the Senate

bill.

CRS-21

Residential Sector

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

ENERGYEFFICIENCY ITEMS

IN EXISTING

HOMES

No special tax treatment is

accorded to homeowners for

purchases of more energy

efficient water heaters,

furnaces, and air conditioners.

Sec. 41004. A tax credit of 20% is

provided for expenditures on energy

efficient improvements (more

heating & cooling units and more

energy efficient envelope

components) retrofitted to existing

homes. The maximum lifetime credit

would be $2,000. Units and

materials must meet Energy

efficiency guidelines, but there is no

criteria for a certified reduction in

energy costs as in the Senate version

of H.R. 6.

Sec. 2103, 2109. Expenditures on

selected types of energy-efficient

heating/cooling technologies

(furnaces, water heaters, AC units,

heat pumps) made either on existing or

new homes are allowed a tax credit

ranging from $75-$250/unit if they

meet certain energy efficiency

guidelines. Other energy-efficiency

improvements to existing homes

qualify for a credit equal to 10% of the

costs ($300 maximum) if a certified

reduction in heating and cooling costs

of at least 30% is achieved.

Sec. 303, 309. Generally the

same as the Senate bill.

ENERGY-EFFICIENT

NEW HOMES

No special tax break is

available to builders who

construct more energy

efficient new homes.

Sec. 41005. A tax credit is provided

to a builder for the costs of energyefficiency property (insulation,

windows/doors, new roofs, and

heating/cooling equipment), which

reduce home energy use by 30%.

The maximum credit is $2,000. The

30% reduction must be below a

comparable reference dwelling must

certified.

Sec 2101 Generally the same as the

House bill, except that the maximum

credit for property that reduces energy

use by 30% is $1,250 ($2,000 for

“50% property.”) Energy efficiency

improvements must also be certified as

meeting certain standards and that

they reduce a home’s heat loss or gain

by the required fractions. Eligible

property includes heating and cooling

equipment.

Sec. 301. Generally the same

as the House and Senate bills,

except that the maximum credit

is $1,000 for “30% property,”

and $2,000 for “50% property.”

CRS-22

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

HOME APPLIANCES

There is no special tax

incentive for either the

production or purchase of

energy efficient appliances

(although regulations set

standards for energy use

efficiency and labeling).

No provision.

Sec. 2102. Increased production of

more energy-efficient clothes washers

would qualify for $50 tax credit per

washer ($100 for refrigerators.) The

total credit for any manufacturer is

subject to certain limits, including an

annual gross receipts limit, and a

cumulative lifetime credit limit per

manufacturer of $30 million for

washers, and $60 billion for both

appliances.

Sec. 302. Very similar to the

Senate bill, except that the

efficiency standards are stricter

and there is provision for a

$150 tax credit for still more

energy-efficient refrigerators.

The amount depends on the

degree of improvements in

energy efficiency.

ENERGY

MANAGEMENT AND

WATER

SUBMETERING

DEVICES

Current law provides no

special tax incentives for

meters, thermostats, and other

energy management devices

that allow utilities or

consumers to monitor,

control, and thereby possibly

conserve electricity or natural

gas. Such property is

depreciable if used in a

business.

No provision.

Sec. 2106,2107. A tax deduction is

provided to utilities for the cost, up to

$30/unit, of energy management

devices installed in residences or

businesses; the recovery period for

depreciation purposes would be 3

years.

Sec. 306, 307. The three-year

recovery period applies to both

energy management and water

submetering devices — the tax

deduction provision is dropped.

CRS-23

Transportation Sector

Provision

NEW HYBRID

VEHICLES

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

Under current law there is no

tax credit for hybrid vehicles,

but they may qualify for a

deduction of up to $2,000 as

clean-fuel vehicles.

[IRC§179A]

Sec. 41010. No additional tax

incentives for hybrid vehicles, but

existing clean-fuel vehicle tax

deduction phase-out, which begins in

2004 and ends in 2006, is repealed.

Thus, the current tax deduction

would be made permanent.

Sec. 2001, 2010. A tax credit is

provided to purchasers of hybrid

vehicles, ranging from $250-$9,000 for

cars and light trucks, and $4,000$13,000 for heavy trucks. The precise

credit depends upon vehicle weight,

power, and fuel efficiency. For heavy

trucks, the credit is increased further if

they meet emissions performance

standards.

Sec. 201. A base tax credit is

provided to purchasers of

hybrid vehicles, ranging from

$250-$1,000 for cars and light

trucks, and $1,000-$10,000

for heavy trucks. An

additional tax credit ranging

from $500-$3,000 for cars and

light trucks, and from $400$4,000 for heavy duty trucks

is provided depending on

vehicle weight, power, and

fuel-efficiency. The credit is

increased further for early

adoption of extra-fuel

efficient hybrid heavy trucks.

CRS-24

Renewable and Alternative Fuels

Business Sector

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

ELECTRICITY FROM

RENEWABLE FUELS

Electricity producers may claim a

tax credit of 1.5¢/kWh (in 1992

dollars) for electricity produced

from wind energy, “closed-loop”

biomass, or poultry waste. The

credit for 2003 is 1.8¢/kWh.

Investments have to be made, and

the facility has to commence

production, by December 31, 2003.

A 10% tax credit is provided for

investment in 1) solar and

geothermal equipment used to

generate electricity (including

photovoltaic systems), 2) solar

energy used to heat or cool a

structure, and 3) solar energy used

for process heat. Geothermal

energy reservoirs qualify for a 15%

percentage depletion allowance.

The recovery period for renewable

technologies is 5 years.

[IRC§45,46,48, 613(e)] [IRC§45]

Sec. 41002. The House bill expands

the list of renewables to include

open-loop biomass, landfill gas,

and trash combustion facilities.

Extends placed-in-service deadline

to 12-31-2006. The credit for openloop biomass and landfill gas

applies retroactively but is reduced

to 1.0¢/kWh. instead of 1.5¢, and is

available for 5 years instead of the

normal 10 years.

Sec. 1901-1906. The Senate bill

expands the list of qualifying

renewables to include coal co-fired

with closed-loop biomass, openloop biomass (at 1¢ instead of

1.5¢), swine & bovine waste,

geothermal, solar energy, small

irrigation power facilities,

municipal biosolids, and recycled

sludge. The placed-in-service

deadline is extended by three years

from 12-31-2003 to 12-31-2006

(12-31-2004 for open-loop

biomass, which has 3 years to

receive the credit instead of the

normal 10 years). The Senate

provision also allows 1) lesseeoperators (rather than owners) to

qualify for the tax credit; 2) taxexempt entities to sell or trade any

unused tax credits; and 3) rural

electric coops to use the tax credits

to pay back government subsidized

loans. Other limitations are also

liberalized or repealed.

Sec. 101-106. Very similar to

the Senate bill but generally

a broader expansion of the

tax credit. Raises the credit

rate on new facilities to 1.8¢

(but without inflation

adjustment); defines

agricultural waste nutrients

more broadly than in the

Senate bill; and reduces the

tax credit for open-loop to

1.2¢ rather than 1.0¢.

CRS-25

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

SMALL ETHANOL

PRODUCER TAX

CREDIT

Present law provides small fuel

ethanol producers (ones that

produce less than 15 million

gallons/year, and have less than 30

mil. gal. in production capacity)

with 10¢/gal. tax credit. Any credit

claimed must be reported as income

subject to tax. Cooperatives are taxexempt and therefore do not benefit

from the producer credit, which

cannot flow through to patrons.

[IRC§40, 87]

No provision.

Sec. 2005. This provision 1) allows

patrons of farmers’ cooperatives to

qualify for the 10¢ small producer

credit; 2) defines a small producer

as one with <60 mil. gal. capacity;

3) exempts the credit from the

passive activity rules; 4) allows the

credit against the alternative

minimum tax; and 5) exempts the

credit from the regular income tax

under IRC§87.

Sec. 205. This provision is

the same as the Senate

version of H.R. 6.

EXCISE TAX

EXEMPTION OR

BLENDER’S TAX

CREDIT FOR FUEL

ETHANOL

In addition to the small ethanol

producers credit, fuel ethanol

benefits from a 5.2¢ excise tax

exemption on 90-10 blends from

the gasoline tax of 18.4¢/gal. and

the diesel tax of 24.4¢/gal. In lieu

of the exemption, an equivalent 52¢

blender’s tax credit is available per

gallon of the pure ethanol.)

Proportionate tax benefits are

available to 5.7% and 7.7% fuel

ethanol blends. The credit is taxable

as gross income and subject to the

alternative minimum tax.[IRC§40,

87 4081]

No provision.

No provision.

Sec. 208. The exemption for

fuel ethanol would be

replaced with a refundable

tax credit of 52¢/gal.

immediately available

against the new higher excise

taxes for all fuel ethanol

blends.

CRS-26

Provision

Current Law

FUEL ETHANOL AND

THE HIGHWAY

TRUST FUND

Present tax law on fuel ethanol

blends results in revenue losses to

the Highway Trust Fund (HTF) of

7.7¢/gal., comprising for 90/10

blends the 5.2¢ exemption, and the

2.5¢ of the 13.2¢ taxable portion

that is allocated into the general

fund. [IRC§4081, 9503 (b)(4)]

ETBE USED TO

PRODUCE GASOHOL

BIODIESEL

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

No provision.

Sec. 2006. Beginning on 10-12003, the 2.5¢ component of the tax

on fuel ethanol blends will be

allocated into the HTF.

Sec. 208. Same as the Senate

version of H.R. 6.

Under IRS regulations, the ether

ETBE (ethyl tertiary butyl ether)

blended with gasoline qualifies for

the same tax advantages as ethanol

blended with gasoline, but the

blender’s credit on ethanol used to

produce ETBE can be claimed only

by blenders.

[IRC§40,4081]

No provision

Sec. 2007. The Senate bill permits

refiners to claim the blender’s tax

credit as a credit against excise

taxes otherwise due on the ETBE

blended fuel. The bill allows the

transfer of such credit to any

taxpayer with any gasoline excise

tax liability

Sec. 207. The Senate

amendment is the same as

the Senate bill. Both bills

clarify statutes and IRS

regulations.

Under present law, biodiesel has no

special tax break, and, as a

transportation fuel, it is taxed at the

same rate as petroleum diesel: 4.4¢

for trains, and 24.4¢ for barges and

trucks.

[IRC§4041, 4042, 4081]

No provision.

Sec. 2008. The bill provides an

income tax credit for biodiesel

mixtures used as a fuel. The credit

is 1¢ for each 1% of biodiesel made

from virgin vegetable oil and

blended petroleum diesel. The

maximum credit is 20¢/gal. The tax

credit for recycled vegetable oil is

½ the credit for virgin biodiesel.

The excise tax otherwise due on

highway biodiesel is reduced by the

amount of the tax credit.

Sec. 208. The bill provides a

tax credit — in the amount

of 1¢ for each 1% of

biodiesel made from virgin

vegetable oil and blended

with petroleum diesel. The

maximum credit is 20¢/gal.

The tax credit for recycled

vegetable oil is ½ the credit

for virgin biodiesel. In

addition, a new biodiesel

mixture tax credit would be

created in the amount of

$1/gal. of agri- biodiesel in a

1-to-5 blend. The credit is

taken against the excise

taxes.

CRS-27

Provision

BUSINESS USE OF

RENEWABLE

TECHNOLOGIES

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

A 10% tax credit is provided for

investment in solar equipment used

to 1) generate electricity (including

photovoltaic systems), 2) used to

heat or cool a structure, and 3) used

for process heat. Geothermal

energy reservoirs qualify for a 15%

depletion allowance. Electricity

from wind technologies receives

the §45 tax credit. The recovery

period for renewable technologies

is 5 years. Fuel cells do not qualify

for tax subsidies.

[IRC§45,46,48, 613(e)]

Sec. 41003. A 10% tax credit is

provided for investments in

stationary fuel cells, subject to a

maximum credit of $1,000/kW of

capacity.

Sec. 2104. Business investments in

fuel cells would qualify for a 30%

tax credit subject to a limit of

$1,000/kW of capacity; investments

in stationary microturbine power

plants would qualify for a 10% tax

credit and the limit would be

$200/kW of capacity.

Sec. 304. The Senate

amendment is the same as

the Senate bill.

Residential Sector

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

RENEWABLE ENERGY

TECHNOLOGIES

There are no tax subsidies for

residential applications of solar,

wind, and other renewable energy

technologies. The 1978 energy tax

credits for solar and wind expired

in 1985.

Sec. 41001, 41003. A 10% tax

credit (up to $2,000) is provided

for residential applications of

solar technologies (10% credit to

residential fuel cells, up to

$1,000/kW of capacity).

Sec. 2103. A 15% tax

credit is provided for

residential applications of

solar technologies (30% for

wind, and 20% for fuel

cells subject to a maximum

credit of $1,000 for fuel

cells, and $2,000 for other

technologies).

Sec. 303. A tax credit is provided

for residential applications of

renewable technologies: 15% credit

for solar (including photovoltaics),

and 30% for wind and fuel cells.

The maximum credit is $2,000

except for fuel cells, which are

limited to $1,000/kW of capacity.

CRS-28

Transportation Sector

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

ALTERNATIVE-FUEL

VEHICLES

The incremental costs of an

alternative fuel vehicle are tax

deductible, up to $2,000 for a

car, and $50,000 for a truck.

This applies to vehicles

powered by LPG, LNG, CNG,

hydrogen, E85 and M85. The

credit phases out beginning in

2004 and ending in 2006.

[IRC§179A]

Sec. 41011. Provides a base tax credit for

fuel cell vehicles ranging from $4,000 to

$40,000 per vehicle depending on the

vehicles weight; provides additional tax

credits depending on fuel efficiency

guidelines. Provides a tax credit for

“advanced lean-burn technology

vehicles,” ranging from a base of $500 to

$3,000 depending on fuel efficiency, and

an additional tax credit depending on fuel

savings. There are no other tax credits

for alternative fuel vehicles. The credits

in the House bill may be carried forward

for up to 20 years.

Sec. 2001. For fuel cell vehicles the

credit is generally the same as the

House bill. But also provides a

40% tax credit for the incremental

costs of an alternative fuel vehicle.

An additional 30% tax credit is

available if the vehicle meets

certain Clean Air Act standards.

The maximum credit would be

$5,000-$40,000, depending on

vehicle weight. The latter credit is

not in the House bill.

Sec. 201. Generally the same

as the Senate bill. Under

both bills, lessors (under

safe harbor leasing rules)

may qualify for the tax

credit, thereby benefitting

state and local governments,

and other tax-exempt

entities.

NEW FUEL CELL

VEHICLES

Fuel cell vehicles may qualify

for the $4,000 electric vehicle

tax credit (discussed below).

[IRC§30]

Sec. 41011. For fuel cell vehicles, the

House provision is generally the same as

the Senate bill, except for differences in

the base (or reference vehicle) fuel

economy for purposes of the additional

tax credit. The House bill also covers

“advanced clean-burn technology

vehicles,” which are not in the Senate

bill. The credits in the House bill for fuel

cell vehicles may be carried forward for

up to 20 years.

Sec. 2001. A tax credit is provided

to purchasers of fuel cell vehicles,

ranging from $4,000-$10,000 for

cars and light trucks (depending

upon vehicle weight, and fuel

efficiency), and $20,000- $40,000

for heavy fuel cell trucks. An

additional credit for cars and light

trucks powered by fuel cells is

provided, ranging from $1,000$4,000 depending on percentage

improvements in fuel efficiency

relative to a reference conventional

vehicle.

Sec. 201. Generally the same

as the Senate bill.

CRS-29

Provision

Current Law

ALTERNATIVE-FUEL

REFUELING

STATIONS

A maximum lifetime tax

deduction, up to $100,000, is

provided for the costs of

alternative fuel refueling

property (excluding

installation costs). This

deduction expires in 2006.

[IRC§179A]

RETAIL SALE OF

ALTERNATIVE

FUELS

Fuel ethanol (and methanol)

qualifies for an excise tax

exemption. Fuel ethanol also

qualifies for blender’s and

production tax credits. CNG

and other alternative fuels are

taxed at lower rates, as

measured against the Btu

equivalence of gasoline.

Electricity used in vehicles is

not taxed. There is a tax

break for the retail sale of

alternative motor fuels.

[IRC§40, 4041, 4081]

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

No provision.

Sec. 2003,2010. The Senate bill

replaces the current deduction with

a 50% tax credit, through 2007, for

the costs of clean-fuel refueling

equipment (subject to a maximum

tax credit of $30,000). It adds

“residential clean-refueling

property” to qualifying property,

subject to a maximum credit of

$1,000. For hydrogen refueling

stations, the credit is available

through 2011.

Sec. 203. Both the Senate

bill and the Senate

amendment also would

permit businesses that install

refueling equipment on

property owned by taxexempt entities to qualify for

the tax credit.

No provision.

Sec. 2004. A 30¢/gal. tax credit

(rising to 50¢/gal. by 2005) is

provided for the retail sale of an

alternative fuel (CNG, LNG, LPG,

hydrogen, E85, and M85). The

credit is based on the gasoline

equivalent of alternative fuel, rated

at 114,000 Btu/gal. of gasoline.

Sec. 204. This provision is

the same as in the Senate

bill.

CRS-30

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

ELECTRIC VEHICLES

A 10% tax credit, up to

$4,000, is available for the

costs of an electric vehicle.

The credit phases out from

2004-2006. The Job Creation

and Worker Relief Act of

2002 (P.L. 107-147)

retroactively extended the

phase-out dates from 20022004 to 2004-2006.

[IRC§30]

Sec. 41010. Repeals the phase-out of the

existing tax credit. No additional

incentives are provided.

Sec. 2002. The Senate bill repeals

the existing credit and provides a

new tax credit of between $3,500

and $40,000, depending on vehicle

weight, payload capacity, and

driving range. A smaller tax credit

(10% of costs up to $1,500) is

provided for electric vehicles with a

maximum velocity of between 2025 mph. Leases of electric vehicles

would also qualify for the tax

credit.

Sec. 202. This is generally

the same as in the Senate

bill.

CRS-31

Miscellaneous Provisions

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

STUDY OF COALBED

METHANE

Coalbed methane is one of the

unconventional fuels that qualifies for

the §29 tax credit. There is no provision

in current law for the study of the effects

of the §29 tax credit on coalbed methane.

CRS has analyzed the economic effects

of the §29 tax credit, including the

effects on coalbed methane, through

1997. See An Economic Analysis of the

§29 Tax Credit for Unconventional

Fuels. CRS Report 97-679E.

No provision.

Sec. 2309. The Secretary of

the Treasury shall study the

effects of the §29 tax credit

on the production of coalbed

methane.

Sec 509. This is the

same as in the Senate

bill.

STUDY OF ELECTRICITY

RESTRUCTURING TAX

ISSUES

No part of current tax law directs the

Treasury Department to study, and report

to the Congress, the tax issues related to

the restructuring of the electric utility

industry.

No provision.

Sec. 2401. The Treasury

Secretary shall undertake a

study of the tax issues

resulting from electricity

industry restructuring,

particularly the effects of

tax-exempt bonds on public

power and on corporate

reorganization.

No provision.

STUDY OF CERTAIN TAX

INCENTIVES

There is no provision in the Internal

Revenue Code directing the General

Accounting Office to study the effects of

the tax incentives for alternative motor

fuels and for energy efficiency.

No provision.

Sec. 2502. GAO is directed

to undertake an analysis of

the effectiveness of the tax

incentives for alternative

motor vehicles and

alternative fuels and energy

efficiency investments

proposed in the bill.

Sec. 702. Same as in the

Senate bill.

CRS-32

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

DUTY-FREE SALES OF

GASOLINE AND DIESEL

Customs duties are imposed on the

importation of commodities into the

United States. The duty on gasoline and

diesel imports is 52.5¢/barrel

(1.25¢/gal.). Commodities sold in dutyfree shops may be sold duty-free if the

commodity is not entered into the United

States. In some cases, individuals

purchase motor fuel at a duty free

station, drive briefly outside the U.S.,

and then return to the U.S.

[Harmonized tariff schedules of the U.S.;

19 U.S.C. 1555(b)]

No provision.

Sec. 2504. The Senate bill

provides that any gasoline or

diesel sold in duty-free

shops will be considered

entered for consumption,

and therefore subject to

duty.

Sec. 209. This is exactly

the same as in the Senate

bill.

ENERGY CREDITS AND THE

ALTERNATIVE MINIMUM

TAX

Under current law, energy-related

income tax credits, and many of the nonenergy tax credits, are aggregated and

claimed as one general business credit,

which is also subject to several

limitations, including the alternative

minimum tax limitation.

[IRC§38]

Sec. 43006, 43007. These

sections make the minimum tax

limitation inapplicable to

several of the personal and

business energy tax credits

introduced by the bill.

No provision.

No provision.

ENERGY RESEARCH AND

DEVELOPMENT (R&D) TAX

CREDIT

A 20% tax credit is available on the

amount by which a taxpayer’s qualified

research expenses for a taxable year

exceed its base amount for that year. In

lieu of this credit, a taxpayer may claim

an alternative incremental research

credit. The research credit is scheduled to

expire and generally will not apply to

amounts paid or incurred after June 30,

2004. [IRC§41]

No provision.

No provision.

Sec 704. The 20% credit

is available for all

expenditures on

qualified energy research

undertaken by a research

consortium, and not just

those expenses over a

certain base amount. The

June 30, 2004 deadline

is unchanged.

CRS-33

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

COAL MINER’S HEALTH

BENEFITS FUND

In 1992 the Congress established a health

benefits fund to pay for the medical

expenses of retired miners and their

dependents. Coal operators make annual

contributions for each retired miner

assigned to a particular operator.

[IRC§9704]

Sec. 42011. The proposal

allows assigned coal operators

to be relieved of their liability

to make annual contributions,

provided that the operator’s

parent company prepays the

premiums.

No provision.

No provision.

TAX TREATMENT OF DAIRY

CATTLE

Under present tax law, involuntary

conversions of property or assets — such

as from theft, fire, or actual or threatened

condemnation — are not generally

subject to tax, i.e., any gain or loss is not

recognized, provided that the property is

replaced within a specified period of

time, generally two years.

[IRC§1033]

No provision.

Sec. 2505. The Senate

provision treats the

destruction of dairy cattle

infected with bovine

tuberculosis, as part of

USDA’s eradication

program, as an involuntary

conversion for tax purposes,

thus ensuring that no tax is

triggered, provided that the

cattle are replaced within 4

years. The costs of

disposing of the infected

cattle would be expensed

rather than depreciated.

No provision.

CRS-34

Revenue Offsets

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

ANTI-TAX SHELTERS

PROVISIONS

Numerous provisions of current tax

law and supporting regulations are

designed to encourage compliance

with the tax laws, and impose

penalties on taxpayers that engage in

transactions and behaviors designed to

abuse the tax laws and evade the

payment of taxes through “tax

shelters.” [IRC§ 6111, 6112,6708

6662A,6700,6707, 6707A, 7525]

No provision.

No provision.

Sec. 801-807. The Senate

amendment creates additional

restrictions on behaviors and

transactions that create illegal

or abusive tax shelters.

Additional penalties are

imposed for violating these new

rules, both on the taxpayer and

the tax-shelter promoters.

TAX TREATMENT OF

FOREIGN

REINCORPORATIONS

The inversion of ownership from a

U.S. corporation with a foreign

subsidiary to a foreign corporation

with a U.S. subsidiary has certain tax

benefits for both the corporation and

its shareholders when the parent

corporation is established in a country

with taxes lower than in the United

States.

[IRC§ 367]

Sec. 44001,44002. The

House provision imposes a

moratorium on corporate

inversion transactions

undertaken between March

4, 2003, and January 1,

2005, and expresses the

sense of the Congress that

this section of the tax code

needs to be reformed.

No provision.

Sec 821. Establishes new tax

consequences for each type of

corporate inversion transaction,

generally denying tax benefits

to such transactions.

EXCISE TAX ON STOCK

COMPENSATION OF

INSIDERS OF INVERTED

REINCORPORATIONS

Shareholders generally are required to

recognize any gain from a stock

inversion transaction, but not for

holders of stock options and other

stock-based compensation. [IRC§83]

No provision.

No provision.

Sec 822. Holders of stock

options and other stock-based

compensation are subject to a

20% excise tax on the value of

certain stock compensation if

the corporation reincorporates

as part of an inversion

transaction.

CRS-35

Provision

Current Law

House Bill (H.R. 6)

Senate Bill (H.R. 6)

SFC Amendment

REINSURANCE AGREEMENTS

In the case of a reinsurance

agreement, the Treasury Secretary has

the authority to make adjustments in

order to more properly reflect income.

In cross border transactions, this

procedure is more difficult.

[IRC§ 845]

No provision.

No provision.

Sec. 823. The Senate provision

clarifies the rules relating to the

Secretary’s authority to make it

easier to adjust reinsurance

agreements in order to more

properly reflect and measure

income.

INDIVIDUAL EXPATRIATION

U.S. citizens are taxed on their

worldwide income; a tax credit is

allowed against foreign taxes.

Expatriates intending on avoiding

U.S. taxes are taxed under an

alternative tax regime if it results in

more tax than under the rules

applicable to nonresidents/noncitizens.

[IRC§877,2107,2501,6039]

No provision.

No provision.

Sec. 833. Tightens existing

rules, and adds new more

stringent rules (including

additional information

requirements) on expatriates

intending on terminating

residency or citizenship for the

purpose of evading U.S. taxes.

Imposes more objective criteria

in making such determinations.

IRS USER FEES

The Internal Revenue Service charges

taxpayers fees for certain services it

renders: letter and revenue rulings,

determination and opinion rulings,

and other similar services. The fee

amount depends upon the type of

ruling and the section of the tax code

it pertains to. The authority for these

fees expires on September 30, 2003.

[§10511, P.L. 100-203]

No provision.

No provision.

Sec. 831. The Senate bill

extends the authority to impose

these fees by 10 more years,

through September 30, 2013. It

also authorizes these fees in tax

statutes, in addition to

regulations.

TAXABLE VACCINES

Several vaccines routinely

administered to children are subject to

a manufacturer’s excise tax at the rate

of 75¢/dose. Revenues are deposited

into the Vaccine Injury Compensation

Trust Fund. [IRC§4132]

No provision

No provision.

Sec. 842. The Senate

amendment expands the list of

taxable vaccines to hepatitis A.