H.R. 4254 - Low Carbon Biofuel Act

117TH CONGRESS
1ST SESSION

H.R. 4254

To amend the Internal Revenue Code of 1986 to establish an income tax credit for the sale or blending of certain fuels containing ethanol.

IN THE HOUSE OF REPRESENTATIVES

JUNE 30, 2021

Mrs. AXNE (for herself, Mr. SMITH of Nebraska, Mrs. BUSTOS, and Ms. CRAIG) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to establish an income tax credit for the sale or blending of certain fuels containing ethanol.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the "Low Carbon Biofuel Act".

SEC. 2. CREDIT FOR SALE OR BLENDING OF ETHANOL FUELS.

(a) IN GENERAL. — Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

"SEC. 45U. CREDIT FOR SALE OR BLENDING OF ETHANOL FUELS.

"(a) IN GENERAL. — For purposes of section 38, the ethanol fuel credit determined under this section for any taxable year is an amount equal to —

"(1) in the case of an applicable taxpayer which is described in subsection (b)(1)(A) —

"(A) for each gallon of E15 blended by such taxpayer, 5 cents, and

"(B) for each gallon of fuel blended by such taxpayer which contains more than 15 volume percent ethanol, 10 cents, and

"(2) subject to subsection (c), in the case of an applicable taxpayer which is described in subsection (b)(1)(B) —

"(A) for each gallon of E15 sold by such taxpayer, 5 cents, and

"(B) for each gallon of fuel sold by such taxpayer which contains more than 15 volume percent ethanol, 10 cents.

"(b) DEFINITIONS. — For purposes of this section —

"(1) APPLICABLE TAXPAYER. — The term 'applicable taxpayer' means —

"(A) an oxygenate blender (as defined in section 1090.80 of title 40, Code of Federal Regulations), and

"(B) a retailer (as defined in paragraph (7) of section 101 of the Petroleum Marketing Practices Act (15 U.S.C. 2801)).

"(2) E15. — The term 'E15' means gasoline that contains more than 13, and not more than 15, volume percent ethanol.

"(c) ELECTION. —

"(1) IN GENERAL. —

"(A) ELECTION BY OXYGENATE BLENDER. — Subsection (a)(1) shall apply with respect to any gallon of fuel described in such subsection only if the applicable taxpayer described in subsection (b)(1)(A) elects to have such subsection apply with respect to such gallon of fuel.

"(B) NOTIFICATION. — The applicable taxpayer described in subparagraph (A) shall provide notice of their election with respect to any gallon of fuel described in such subparagraph to any applicable taxpayer described in subsection (b)(1)(B) to which such fuel is sold, with such notice to be provided on or before the date of such sale.

"(2) CREDIT FOR RETAILER AVAILABLE ONLY IF NOT CLAIMED BY OXYGENATE BLENDER. — Subsection (a)(2) shall apply with respect to any gallon of fuel described in such subsection only if the applicable taxpayer described in subsection (b)(1)(A) has not elected (pursuant to paragraph (1)) to apply subsection (a)(1) with respect to such gallon of fuel.

"(d) REFUNDABLE CREDIT FOR SMALL RETAILERS. — For purposes of this title, in the case of a retailer with not greater than 5 retail locations at the close of the taxable year, the credit allowed under subsection (a)(2) for such taxable year shall be treated as a credit allowable under subpart C (and not allowable under this subpart) for such taxable year.

"(e) TRANSFER OF CREDIT. —

"(1) IN GENERAL. — Subject to such regulations or other guidance as the Secretary determines necessary or appropriate, if, with respect to the credit allowed under subsection (a) for any taxable year, the applicable taxpayer elects the application of this subsection for such taxable year with respect to all (or any portion specified in such election) of such credit, the eligible entity specified in such election, and not the applicable taxpayer, shall be treated as the taxpayer for purposes of this title with respect to such credit (or such portion thereof).

"(2) ELIGIBLE ENTITY. — For purposes of this subsection, the term 'eligible entity' means any person within the supply chain for fuel described in such section (a).".

(b) CREDIT TO BE PART OF GENERAL BUSINESS CREDIT. — Subsection (b) of section 38 of the Internal Revenue Code of 1986 is amended by striking "plus" at the end of paragraph (32), by striking the period at the end of paragraph (33) and inserting ", plus", and by adding at the end the following new paragraph:

"(34) the credit for sale or blending of ethanol fuels under section 45U to which subsection (d) of such section does not apply.".

(c) CONFORMING AMENDMENT. — The table of sections for subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

"Sec. 45U. Credit for sale or blending of ethanol fuels.".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to fuel blended or sold after December 31, 2021.