The text of the bill below is as of April 2, 1980 (Passed Congress).
You are reading a bill enacted 16,589 days ago. In the intervening time subsequent legislation may have amended or repealed the provisions below.
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 229
Public Law 96-223
96th Congress
An Act
To impose a windfall profit tax on domestic crude oil, and for other purposes. HI:—?
[H.R. 3919]
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, 9,^^?. 9,^1, ^
' ^ Windfall Profit
SECTION 1. SHORT TITLE; AMENDMENT OF 1954 CODE; TABLE OF CON- Tax Act of 1980.
TENTS.
(a) SHORT TITLE.—This Act may be cited as the "Crude Oil Windfall 26 use i note.
Profit Tax Act of 1980".
(b) AMENDMENT OF 1954 CODE.—Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed
in terms of an amendment to, or repeal of, a section or other
provision, the reference shall be considered to be made to a section or
other provision of the Internal Revenue Code of 1954. 26 use i et seq.
(c) TABLE OF CONTENTS.—
Sec. 1. Short title; amendment of 1954 Code; table of contents.
TITLE I—WINDFALL PROFIT TAX ON DOMESTIC CRUDE OIL
Sec. 101. Windfall profit tax.
Sec. 102. Allocation of net revenues from windfall profit tax to certain uses.
Sec. 103. Study of effects of decontrol of oil prices and of windfall profit tax.
TITLE II—ENERGY CONSERVATION AND PRODUCTION INCENTIVES
PART I—RESIDENTIAL ENERGY CREDIT
Sec. 201. General provisions relating to credit.
Sec. 202. Renewable energy source expenditures.
Sec. 203. Provisions to prevent double benefits.
PART II—BUSINESS ENERGY INVESTMENT CREDITS
Sec. 221. Changes in amount and period of application of energy percentage.
Sec. 222. Changes in energy property item descriptions.
Sec. 223. Other changes with respect to the investment credit for investment in
energy property.
PART III—PRODUCTION OF FUEL FROM NONCONVENTIONAL SOURCES; ALCOHOL FUELS
Sec. 231. Production tax credit.
Sec. 232. Alcohol fuels.
PART IV—ENERGY-RELATED USES OF TAX EXEMPT BONDS
Sec. 241. Solid waste disposal facilities.
Sec. 242. Qualified hydroelectric generating facilities.
Sec. 243. Renewable energy property.
Sec. 244. Certain obligations must be in registered form and not guaranteed or sub-
sidized under an energy program.-
PART V—TERTIARY INJECTANTS
Sec. 251. Tertiary injectants.
94 STAT. 230 PUBLIC LAW 96-223—APR. 2, 1980
TITLE m—LOW-INCX)ME ENERGY ASSISTANCE
Sec. 301. Short title.
Sec. 302. Statement of findings and purpose.
Sec. 303. Definitions.
Sec. 304. Home energy grants authorized.
Sec. 305. Eligible households.
Sec. 306. Allotments.
Sec. 307. Uses of home energy grants.
Sec. 308. State plans.
Sec. 309. Uniform data collection.
Sec. 310. Payments.
Sec. 311. Withholding.
Sec. 312. Criminal penalties.
Sec. 313. Administration.
TITLE IV—MISCELLANEOUS PROVISIONS
Sec. 401. Repeal of carryover basis.
Sec. 402. Disapproval of Presidential actions adjusting oil imports.
Sec. 403. Qualified liquidations of LIFO inventories.
Sec. 404. Exemption of certain interest income from tax.
TITLE I—WINDFALL PROFIT TAX ON
DOMESTIC CRUDE OIL
SEC. 101. WINDFALL PROFIT TAX.
(a) I N GENERAL.—
(1) AMENDMENT OF SUBTITLE D.—Subtitle D (relating to miscel-
laneous excise taxes) is amended by adding at the end thereof the
following new chapter:
"CHAPTER 45—WINDFALL PROFIT TAX ON
DOMESTIC CRUDE OIL
"SUBCHAPTER A. Imposition and amount of tax.
"SUBCHAPTER B. Categories of oil.
"SUBCHAPTER C. Miscellaneous provisions.
"Subchapter A—Imposition and Amount of Tax
"Sec. 4986. Imposition of tax.
"Sec. 4987. Amount of tax.
"Sec. 4988. Windfall profit; removal price.
"Sec. 4989. Adjusted base price.
"Sec. 4990. Phaseout of tax.
26 u s e 4986. "SEC. 4986. IMPOSITION OF TAX.
"(a) IMPOSITION OF TAX.—An excise tax is hereby imposed on the
windfall profit from taxable crude oil removed from the premises
during each taxable period.
"G)) TAX PAID BY PRODUCER.—The t«uc imposed by this section shall
be paid by the producer of the crude oil.
26 u s e 4987. "SEC. 4987. AMOUNT OF TAX.
"(a) I N GENERAL.—The amount of tax imposed by section 4986 with
respect to any barrel of taxable crude oil shall be the applicable
percentage of the windfall profit on such barrel.
"(b) APPLICABLE PERCENTAGE.—For purposes of subsection (a)—
"(1) GENERAL RULE FOR TIERS i AND 2.—The applicable percent-
age for tier 1 oil and tier 2 oil which is not independent producer
oil is—
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 231
"Tierl 70
"Tier 2 60
"(2) INDEPENDENT PRODUCER OIL.—The applicable percentage
for independent producer oil which is tier 1 oil or tier 2 oil is—
"Tierl 50
"Tier 2 30
"(3) TIER 3 OIL.—The applicable percentage for tier 3 oil is 30
percent.
"(c) FRACTIONAL PART OF BARREL.—In the case of a fraction of a
barrel, the tax imposed by section 4986 shall be the same fraction of
the amount of such tax imposed on the whole barrel.
"SEC. 4988. WINDFALL PROFIT; REMOVAL PRICE. 26 USC 4988.
"(a) GENERAL RULE.—For purposes of this chapter, the term 'wind-
fall profit' means the excess of the removal price of the barrel of
crude oil over the sum of^
"(1) the adjusted base price of such barrel, and
"(2) the amount of the severance tax adjustment with respect
to such barrel provided by section 4996(c).
"(b) N E T INCOME LIMITATION ON WINDFALL PROFIT.—
"(1) IN GENERAL.—The windfall profit on any barrel of crude oil
shall not exceed 90 percent of the net income attributable to such
barrel.
"(2) DETERMINATION OF NET INCOME.—For purposes of para-
graph (1), the net income attributable to a barrel shall be
determined by dividing—
"(A) the taxable income from the property for the taxable
year attributable to taxable crude oil, by
"(B) the number of barrels of taxable crude oil from such
property taken into account for such taxable year.
"(3) TAXABLE INCOME FROM THE PROPERTY.—For purposes of
paragraph (2)—
"(A) I N GENERAL.—Except as otherwise provided in this
paragraph, the taxable income from the property shall be
determined under section 613(a). 26 USC 613.
"(B) CERTAIN DEDUCTIONS NOT ALLOWED.—No deduction
shall be allowed for—
"(i) depletion,
"(ii) the tax imposed by section 4986,
"(iii) section 263(c) costs, or 26 USC 263.
"(iv) qualified tertiary injectant expenses to which an
election under subparagraph (E) applies.
"(C) TAXABLE INCOME REDUCED BY COST DEPLETION.—Tax-
able income shall be reduced by the cost depletion which
would have been allowable for the taxable year with respect
to the property if—
"(i)all-
"(l) section 263(c) costs, and
"(II) qualified tertiary injectant expenses to
which an election under subparagraph (E) applies,
incurred by the taxpayer had been capitalized and taken
into account in computing cost depletion, and
"(ii) cost depletion had been used by the taxpayer with
respect to such property for all taxable periods.
"(D) SECTION 263(C) COSTS.—For purposes of this para-
graph, the term 'section 263(c) costs' means intangible drill-
ing and development costs incurred by the taxpayer which
(by reason of an election under section 263(c)) may be
94 STAT. 232 PUBLIC LAW 96-223—APR. 2, 1980
deducted as expenses for purposes of this title (other than
this paragraph). Such term shall not include costs incurred
in drilling a nonproductive well.
"(E) ELECTION TO CAPITAUZE QUAUFIED TERTIARY INJEC-
TANT EXPENSES.^
"(i) I N GENERAL.—Any taxpayer may elect, with re-
spect to any property, to capitalize qualified tertiary
injectant expenses for purposes of this paragraph. Any
such election shall apply to all qualified tertiary injec-
tant expenses allocable to the property for which the
election is made, and may be revoked only with the
consent of the Secretary. Any such election shall be
made at such time and in such manner as the Secretary
shall by regulations prescribe.
"(ii) QUAUFIED TERTIARY INJECTANT EXPENSES.—The
term 'qualified tertiary injectant expenses' means any
Post, p. 286. expense allowable as a deduction under section 193.
"(4) SPECIAL RULE FOR APPLYING PARAGRAPH (3)(C) TO CERTAIN
TRANSFERS OF PROVEN OIL OR GAS PROPERTIES.—
"(A) IN GENERAL.—In the case of any proven oil or gas
property transfer which (but for this subparagraph), would
result in an increase in the amount determined under
paragraph (3)(C) with respect to the transferee, paragraph
(3)(C) shall be applied with respect to the transferee by
taking into account only those amounts which would have
been allowable with respect to the transferor under para-
graph (3)(C) and those costs incurred during periods after
such transfer.
"(B) PROVEN OIL OR GAS PROPERTY TRANSFER.—For pur-
poses of subparagraph (A), the term 'proven oil or gas
property transfer' means any transfer (including the sub-
leasing of a lease or the creation of a production payment
which gives the transferee an economic interest in the
property) after 1978 of an interest (including an interest in a
partnership or trust) in any proven oil or gas property
26 use 613A. (within the meaning of section 613A(c)(9)(A)).
"(5) SPECIAL RULE WHERE THERE IS PRODUCTION PAYMENT.—For
purposes of paragraph (2), if any portion of the taxable crude oil
removed from the property is applied in discharge of a produc-
tion payment, the gross income from such portion shall be
included in the gross income from the property of both the person
holding such production payment and the person holding the
interest from which such production payment was created.
"(c) REMOVAL PRICE.—For purposes of this chapter—
"(1) IN GENERAL.—Except as otherwise provided in this subsec-
tion, the term 'removal price' means the amount for which the
barrel is sold.
"(2) SALES BETWEEN RELATED PERSONS.—In the case of a sale
between related persons (within the meaning of section
26 use 103. 103(b)(6)(C)), the removal price shall not be less than the con-
structive sales price for purposes of determining gross income
26 use 613. from the property under section 613.
"(3) OIL REMOVED FROM PREMISES BEFORE SALE.—If crude oil is
removed from the premises before it is sold, the removal price
shall be the constructive ssdes price for purposes of determining
gross income from the property under section 613.
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 233
"(4) REFINING BEGUN ON PREMISES.—If the manufacture or
conversion of crude oil into refined products begins before such
oil is removed from the premises—
"(A) such oil shall be treated as removed on the day such
manufacture or conversion begins, and
"(B) the removal price shall be the constructive sales price
for purposes of determining gross income from the property
under section 613. 26 USC 613.
"(5) MEANING OF TERMS.—The terms 'premises' and 'refined
product' have the same meaning as when used for purposes of
determining gross income from the property under section 613.
"SEC. 4989. ADJUSTED BASE PRICE. 26 USC 4989.
"(a) ADJUSTED BASE PRICE DEFINED.—For purposes of this chapter,
the term 'adjusted base price' means the base price for the barrel of
crude oil plus an amount equal to—
"(1) such base price, multiplied by
"(2) the inflation adjustment for the calendar quarter in which
the crude oil is removed from the premises.
The amount determined under the preceding sentence shall be
rounded to the nearest cent.
"(b) INFLATION ADJUSTMENT.—
"(1) IN GENERAL.—For purposes of subsection (a), the inflation
adjustment for any calendar quarter is the percentage by
which—
"(A) the implicit price deflator for the gross national
product for the second preceding calendar quarter, exceeds
"(B) such deflator for the calendar quarter ending June 30,
1979.
"(2) ADDITIONAL ADJUSTMENT FOR TIER 3 OIL.—The adjusted
base price for tier 3 oil shall be determined by substituting for the
implicit price deflator referred to in paragraph (1)(A) an amount
equal to such deflator multiplied by 1.005 to the nth power where
'n equals the number of calendar quarters beginning after
September 1979 and before the calendar quarter in which the oil
is removed from the premises.
"(3) FIRST REVISION OF PRICE DEFLATOR USED.—For purposes of
paragraphs (1) and (2), the first revision of the price deflator shall
be used.
"(c) BASE PRICE FOR TIER 1 OIL.—For purposes of this chapter, the
base price for tier 1 oil is—
"(1) the ceiling price which would have applied to such oil
under the March 1979 energy regulations if it had been produced
and sold in May 1979 as upper tier oil, reduced by
"(2) 21 cents.
"(d) BASE PRICES FOR TIER 2 OIL AND TIER 3 OIL.—For purposes of
this chapter—
"(1) GENERAL RULE.—Except as provided in paragraph (2), the
base prices for tier 2 oil and tier 3 oil shall be prices determined
pursuant to the method prescribed by the Secretary by regula-
tions. Any method so prescribed shall be designed so as to yield,
with respect to oil of any grade, quality, and field, a base price
which approximates the price at which such oil would have sold
in December 1979 if—
"(A) all domestic crude oil were uncontrolled, and
"(B) the average removal price for all domestic crude oil
(other than Sadlerochit oil) were—
94 STAT. 234 PUBLIC LAW 96-223—APR. 2, 1980
"(i) $15,20 a barrel for purposes of determining base
prices for tier 2 oil, and
"(ii) $16.55 a barrel for purposes of determining base
prices for tier 3 oil.
"(2) INTERIM RULE.—For months beginning before October 1980
(or such earlier date as may be provided in regulations taking
effect before such earlier date), the base prices for tier 2 oil and
tier 3 oil, respectively, shall be the product of—
"(AXi) the highest posted price for December 31, 1979, for
uncontrolled crude oil of the same grade, quality, and field,
or
"(ii) if there is no posted price described in clause (i), the
highest posted price for such date for uncontrolled crude oil
at the nearest domestic field for which prices for oil of the
same grade and quality were posted for such date, multiplied
by
"(B) a fraction the denominator of which is $35, and the
numerator of which is—
"(i) $15.20 for purposes of determining base prices for
tier 2 oil, and
"(ii) $16.55 for purposes of determining base prices for
tier 3 oil.
For purposes of the preceding sentence, no price which was
posted after January 14, 1980, shall be taken into account.
"(3) MINIMUM INTERIM BASE PRICE.—The base price determined
under paragraph (2) for tier 2 oil or tier 3 oil shall not be less than
the sum of^
"(A) the ceiling price which would have applied to such oil
under the March 1979 energy regulations if it had been
produced and sold in May 1979 as upper tier oil, plus
"(BXi) $1 in the case of tier 2 oil, or
"(ii) $2 in the case of tier 3 oil.
26 u s e 4990. "SEC. 4990. PHASEOUT OF TAX.
"(a) PHASEOUT.—Notwithstanding any other provision of this chap-
ter, the tax imposed by this chapter with respect to any crude oil
removed from the premises during any month during the phaseout
period shall not exceed—
"(1) the amount of tax which would have been imposed by this
chapter with respect to such crude oil but for this subsection,
multiplied by
"(2) the phaseout percentage for such month.
"(b) TERMINATION OF TAX.—Notwithstanding any other provision
of this chapter, no tax shall be imposed by this chapter with respect to
any crude oil removed from the premises after the phaseout period.
"(c) DEFINITIONS.—For purposes of this section—
"(1) PHASEOUT PERIOD.—The term 'phaseout period' means the
33-month period beginning with the month following the target
month.
"(2) PHASEOUT PERCENTAGE.—The phaseout percentage for any
month is 100 percent reduced by 3 percentage points for each
month after the target month and before the month following the
month for which the phaseout percentage is being determined.
"(3) TARGET MONTH.—The term 'target month' means the later
of—
"(A) December 1987, or
"(B) the first month for which the Secretary publishes an
estimate under subsection (dX2).
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 235
In no event shall the target month be later than December 1990.
"(d) DETERMINATION OF AGGREGATE NET WINDFALL REVENUE.—
"(1) ESTIMATE BY THE SECRETARY.—For each month after 1986,
the Secretary shall make an estimate of the aggregate net
windfall revenue as of the close of such month. Any such
estimate shall be made during the preceding month and shall be
made on the basis of the best available data £is of the date of
making such estimate.
"(2) PUBLICATION.—If the Secretary estimates under para- Publication in
graph (1) that the aggregate net windfall revenue as of the close federal
of any month will exceed $227,300,000,000, the Secretary shall "agister,
(not later than the last day of the preceding month) publish
notice in the Federal Register that he has made such an estimate
for such month.
"(3) AGGREGATE NET WINDFALL REVENUE DEFINED.—For pur-
poses of this subsection, the term 'aggregate net windfall reve-
nue' means the amount which the Secretary estimates to be the
excess of—
"(A) the gross revenues from the tax imposed by section
4986 during the period beginning on March 1, 1980, and
ending on the last day of the month for which the estimate is
being made, over
"(B) the sum of—
"(i) the refunds of and other adjustments to such tax
for such period, plus
"(ii) the decrease in the income taxes imposed by
chapter 1 resulting from the tax imposed by section
4986.
For purposes of subparagraph (A), there shall not be taken into
account any revenue attributable to an economic interest in
crude oil held by the United States.
"Subchapter B—Categories of Oil
"Sec. 4991. Taxable crude oil; categories of oil.
"Sec. 4992. Independent producer oil.
"Sec. 4993. Incremental tertiary oil.
"Sec. 4994. Definitions and special rules relating to exemptions.
"SEC. 4991. TAXABLE CRUDE OIL; CATEGORIES OF OIL. 26 USC 4991.
"(a) TAXABLE CRUDE OIL.—For purposes of this chapter, the term
'taxable crude oil' means all domestic crude oil other than exempt oil.
"(b) EXEMPT OIL.—For purposes of this chapter, the term 'exempt
oil' means—
"(1) any crude oil from a qualified governmental interest or a
qualified charitable interest,
"(2) any exempt Indian oil,
"(3) any exempt Alaskan oil, and
"(4) any exempt front-end oil.
"(c) TIER 1 OIL.—For purposes of this chapter, the term 'tier 1 oil*
means any taxable crude oil other than—
"(1) tier 2 oil, and
"(2) tier 3 oil.
"(d) TIER 2 OIL.—For purposes of this chapter—
"(1) I N GENERAL.—Except as provided in paragraph (2), the
term 'tier 2 oil' means—
"(A) any oil which is from a stripper well property within
the meaning of the June 1979 energy regulations, and
94 STAT. 236 PUBLIC LAW 96-223—APR. 2, 1980
"(B) any oil from an economic interest in a National
Petroleum Reserve held by the United States.
"(2) EXCLUSION OF CERTAIN OIL.—The term 'tier 2 oil* does not
include tier 3 oil.
"(e) TIER 3 OIL.—For purposes of this chapter—
"(1) IN GENERAL.—The term 'tier 3 oil' means—
"(A) newly discovered oil,
"(B) heavy oil, and
"(C) incremental tertiary oil.
"(2) NEWLY DISCOVERED OIL.—The term 'newly discovered oil'
has the meaning given to such term by the June 1979 energy
regulations.
"(3) HEAVY OIL.—The term 'heavy oil' means all crude oil
which is produced from a property if crude oil produced and sold
from such property during—
"(A) the last month before July 1979 in which crude oil was
produced and sold from such property, or
"(B) the taxable period,
had a weighted average gravity of 16 degrees API or less
(corrected to 60 degrees Fahrenheit).
"(4) INCREMENTAL TERTIARY OIL.—
"For definition of incremental tertiary oil, see section 4993.
26 u s e 4992. "SEC. 4992. INDEPENDENT PRODUCER OIL.
"(a) GENERAL RULE.—For purposes of this chapter, the term 'inde-
pendent producer oil' means that portion of an independent pro-
ducer's qualified production for the quarter which does not exceed
such person's independent producer amount for such quarter.
"Ot)) INDEPENDENT PRODUCER DEFINED.—For purposes of this sec-
tion—
"(1) IN GENERAL.—The term 'independent producer' means,
with respect to any quarter, any person other than a person to
26 use 613A. whom subsection (c) of section 613A does not apply by reason of
paragraph (2) (relating to certain retailers) or paragraph (4)
(relating to certain refiners) of section 613A(d).
"(2) RULES FOR APPLYING PARAGRAPHS (2) AND (4) OF SECTION
6i3A(d).—For purposes of paragraph (1), paragraphs (2) and (4) of
section 613A(d) shall be applied—
"(A) by substituting 'quarter* for 'taxable year' each place
it appears in such paragraphs, and
"(B) by substituting '$1,250,000' for '$5,000,000' in para-
graph (2) of section 613A(d).
"(c) INDEPENDENT PRODUCER AMOUNT.—For purposes of this sec-
tion—
"(1) I N GENERAL.—A person's independent producer amount
for any quarter is the product of—
"(A) 1,000 barrels, multiplied by
"(B) the number of days in such quarter (31 in the case of
the first quarter of 1980).
"(2) PRODUCTION EXCEEDS AMOUNT.—If a person's qualified
production for any quarter exceeds such person's independent
producer amount for such quarter, the independent producer
amount shall be allocated—
"(A) between tiers 1 and 2 in proportion to such person's
production for such quarter of domestic crude oil in each
such tier, and
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 237
"(B) within any tier, on the basis of the removal prices for
such person's domestic crude oil in such tier removed during
such quarter, beginning with the highest of such prices.
"(d) QUALIFIED PRODUCTION OF OIL DEFINED.—For purposes of this
section—
"(1) IN GENERAL.—An independent producer's qualified pro-
duction of oil for any quarter is the number of barrels of taxable
crude oil—
"(A) of which such person is the producer,
"(B) which is removed during such quarter,
"(C) which is tier 1 oil or tier 2 oil, and
"(D) which is attributable to the independent producer's
working interest in a property.
"(2) WORKING INTEREST DEFINED.—
"(A) IN GENERAL.—The term 'working interest' means an
operating mineral interest (within the meaning of section
614(d))— 26 use 614.
"(i) which was in existence as such an interest on
January 1,1980, or
"(ii) which is attributable to a qualified overriding
royalty interest.
"(B) QUAUFIED OVERRIDING ROYALTY INTEREST.—For pur-
poses of subparagraph (A)(ii), the term 'qualified overriding
royalty interest' means an overriding royalty interest in
existence as such an interest on January 1,1980, but only if
on February 20, 1980, there was in existence a binding
contract under which such interest was to be converted into
an operating mineral interest (within the meaning of section
614(d)).
"(3) PRODUCTION FROM TRANSFERRED PROPERTY.—
"(A) IN GENERAL.—Except as otherwise provided in this
paragraph, in the case of a transfer on or after January 1,
1980, of an interest in any property, the qualified production
of the transferee shall not include any production attributa-
ble to such interest.
"(B) SMALL PRODUCER TRANSFER EXEMPTION.—
"(i) IN GENERAL.—Subparagraph (A) shall not apply to
any transfer of an interest in property if the transferee
establishes (in such manner as may be prescribed by the
Secretary by regulations) that at no time after Decem-
ber 31,1979, has the property been held by a person who
was a disqualified transferor for any quarter ending
after September 30, 1979, and ending before the date
such person transferred the interest.
"(ii) DISQUALIFIED TRANSFEROR.—The term 'disquali-
fied transferor' means, with respect to any quarter, any
person who—
"(I) had qualified production for such quarter
which exceeded sucn person's independent pro-
ducer amount for such quarter, or
"(II) was not an independent producer for such
quarter,
"(iii) SPECIAL RULES.—For purposes of this para-
graph—
"(I) PROPERTY HELD BY PARTNERSHIPS.—Property
held by a partnership at any time shall be treated as
owned proportionately by the partners of such part-
nership at such time.
94 STAT. 238 PUBLIC LAW 96-223—APR. 2, 1980
"(11) PROPERTY HELD BY TRUST OR ESTATE.—Prop-
erty held by any trust or estate shall be treated as
owned both by such trust or estate and proportion-
ately by its beneficiaries.
"(Ill) CONSTRUCTIVE APPLICATION.—This chapter
shall be treated as having been in effect for periods
after September 30, 1979, for purposes of making
any determination under subclause (I) or (II) of
clause (ii).
"(C) OTHER EXCEPTIONS.—Subparagraph (A) shall not
apply in the case of—
"(i) a transfer of property at death,
"(ii) a change of beneficiaries of a trust which qualifies
26 use 613A. under clause (iii) of section 613A(c)(9)(B) (determined
without regard to the exception at the end of such
clause), and
"(iii) any transfer so long as the transferor and trans-
feree are required by subsection (e) to share the 1,000
barrel amount contained in subsection (c)(1)(A).
The preceding sentence shall apply in the case of any
property only if the production from the property was
qualified production for the transferor.
"(D) TRANSFERS INCLUDE SUBLEASES, ETC.—For purposes of
this paragraph—
"(i) a sublease shall be treated as a transfer, and
"(ii) an interest in a partnership or trust shall be
treated as an interest in property held by the partner-
ship or trust.
"(e) ALLOCATION WITHIN RELATED GROUP.—
"(1) IN GENERAL.—In the case of persons who are members of
the same related group at any time during any quarter, the
1,000 barrel amount contained in subsection (c)(1)(A) for days
during such quarter shall be reduced for each such person by
allocating such amount among all such persons in proportion to
their respective qualified production for such quarter.
"(2) RELATED GROUP.—For purposes of this subsection, persons
shall be treated as members of a related group if they are
described in any of the following clauses:
"(A) a family,
"(B) a controlled group of corporations,
"(C) a group of entities under common control, or
"(D) if 50 percent or more of the beneficial interest in 1 or
more corporations, trusts, or estates is owned by the same
family, all such entities and such family.
"(3) DEFINITIONS AND SPECIAL RULES.—For purposes of this
subsection—
"(A) CONTROLLED GROUP OF CORPORATIONS.—The term 'con-
trolled group of corporations' has the meaning given such
term by section 613A(c)(8)(D)(i).
"(B) GROUP OF ENTITIES UNDER COMMON CONTROL.—The
term 'group of entities under common control' means any
group of corporations, trusts, or estates which (as deter-
mined under regulations prescribed by the Secretary) are
under common control. Such regulations shall be based on
principles similar to the principles which apply under sub-
pareigraph (A).
"(C) FAMILY.—The term 'family' means an individual and
the spouse and minor children of such individual.
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 239
"(D) CONSTRUCTIVE OWNERSHIP.—For purposes of para-
graph (2)(D), an interest owned by or for a corporation,
partnership, trust, or estate shall be considered as owned
directly by the entity and proportionately by its share-
holders, partners, or beneficiaries, as the case may be.
"(E) MEMBERS OF MORE THAN i RELATED GROUP.—If a
person is a member of more than 1 related group during any
quarter, the determination of such person's allocation under
paragraph (1) shall be made by reference to the related
group which results in the smallest allocation for such
person.
"SEC. 4993. INCREMENTAL TERTIARY OIL. 26 USC 4993.
"(a) IN GENERAL.—For purposes of this chapter, the term 'incre-
mental tertiary oil' means the excess of—
"(1) the amount of crude oil which is removed from a property
during any month and which is produced on or after the project
beginning date and during the period for which a qualified
tertiary recovery project is in effect on the property, over
"(2) the base level for such property for such month.
"(b) DETERMINATION OF AMOUNT.—For purposes of this section—
"(1) BASE LEVEL.—The base level for any property for any
month is the average monthly amount (determined under rules
similar to rules used in determining the base production control
level under the June 1979 energy regulations) of crude oil
removed from such property during the 6-month period ending
March 31, 1979, reduced (but not below zero) by the sum of—
"(A) 1 percent of such amount for each month which
begins after 1978 and before the first month beginning after
the project beginning date, and
"(B) 2y2 percent of such amount for each month which
begins after the project beginning date (or after 1978 if the
project beginning date is before 1979) and before the month
for which the base level is being determined.
"(2) MINIMUM AMOUNT IN CASE OF PROJECTS CERTIFIED BY DOE.—
In the case of a project described in subsection (c)(1)(A), for the
period during which the project is in effect, the amount of the
incremental tertiary oil shall not be less than the incremental
production determined under the June 1979 energy regulations.
"(3) ALLOCATION RULES.—The determination of which barrels
of crude oil removed during any month are incremental tertiary
oil shall be made—
"(A) first by allocating the amount of incremental tertiary
oil between—
"(i) oil which (but for this subsection) would be tier 1
oil, and
"(ii) oil which (but for this subsection) would be tier 2
oil,
in proportion to the respective amounts of each such oil
removed from the property during such month, and
"(B) then by taking into account barrels of crude oil so
removed in the order of their respective removal prices,
beginning with the highest of such prices.
"(c) QUAUFIED TERTIARY RECOVERY PROJECT.—For purposes of this
section—
"(1) I N GENERAL.—The term 'qualified tertiary recovery proj-
ect' means—
79-194 O—81—pt. 1 19 : QL3
94 STAT. 240 PUBLIC LAW 96-223—APR. 2, 1980
"(A) a qualified tertiary enhanced recovery project with
respect to which a certification as such has been approved
and is in effect under the June 1979 energy regulations, or
"(B) any project for enhancing recovery of crude oil which
meets the requirements of paragraph (2).
"(2) REQUIREMENTS.—A project meets the requirements of this
paragraph if—
"(A) the project involves the application (in accordance
with sound engineering principles) of 1 or more tertiary
recovery methods which can reasonably be expected to
result in more than an insignificant increase in the amount
of crude oil which will ultimately be recovered,
"(B) the project beginning date is after May 1979,
"(C) the portion of the property to be affected by the
project is adequately delineated,
"(D) the operator submits (at such time and in such
manner as the Secretary may by regulations prescribe) to
the Secretary—
"(i) a certification from a petroleum engineer that the
project meets the requirements of subparagraphs (A),
(B),and(C),or
"(ii) a certification that a jurisdictional agency (within
the meaning of subsection (d)(5)) has approved the proj-
ect as meeting the requirements of subparagraphs (A),
(B), and (C), and that such approval is still in effect, and
"(E) the operator submits (at such time and such manner
as the Secretary may by regulations prescribe) to the Secre-
tary a certification from a petroleum engineer that the
project continues to meet the requirements of subpara-
graphs (A), (B), and (C).
"(d) DEFINITIONS AND SPECIAL RULES.—For purposes of this sec-
tion—
"(1) TERTIARY RECOVERY METTHOD.—The term 'tertiary recovery
method' means—
"(A) any method which is described in subparagraphs (1)
10 CFR 212.78. through (9) of section 212.78(c) of the June 1979 energy
regulations, or
"(B) any other method to provide tertiary enhanced recov-
ery which is approved by the Secretary for purposes of this
chapter.
"(2) PROJECT BEGINNING DATE.—The term 'project beginning
date' means the later of—
"(A) the date on which the injection of liquids, gases, or
other matter begins, or
"(B) the date on which—
"(i) in the case of a project described in subsection
(c)(1)(A), the project is certified as a qualified tertiary
enhanced recovery project under the June 1979 energy
regulations, or
"(ii) in the case of a project described in subsection
(c)(1)(B), a petroleum engineer certifies, or a jurisdic-
tional agency approves, the project as meeting the
requirements of subpara^aphs (A), (B), and (C) of sub-
section (c)(2).
"(3) PROJECT ONLY AFFECTS PORTION OF PROPERTY.—If a quali-
fied tertiary recovery project can reasonably be expected to
increase the ultimate recovery of crude oil from only a portion of
a property, such portion shall be treated as a separate property.
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 241
"(4) SIGNIFICANT EXPANSION TREATED AS SEPARATE PROJECT.—A
significant expansion of any project shall be treated as a separate
project.
"(5) JURISDICTIONAL AGENCY.—The term 'jurisdictional agency'
means—
"(A) in the case of an application involving a tertiary
recovery project on lands not under Federal jurisdiction—
"(i) the appropriate State agency in the State in which
such lands are located which is designated by the
Governor of such State in a written notification submit-
ted to the Secretary as the agency which will approve
projects under this subsection, or
"(ii) if the Governor of such State does not submit such
written notification within 180 days after the date of the
enactment of the Crude Oil Windfall Profit Tax Act of
1980, the United States Geological Survey (until such Ante, p. 229.
time as the Governor submits such notification), or
"(B) in the case of an application involving a tertiary
recovery project on lands under Federal jurisdiction, the
United States Geological Survey.
"(6) BASIS OF REVIEW OF CERTAIN QUAUFIED TERTIARY RECOVERY
PROJECTS.—In the case of any project which is approved under
subsection (c)(2XDXii) and for which a certification is submitted
to the Secretary, the project shall be considered as meeting the
requirements of subparagraphs (A), (B), and (C) of subsection
(c)(2) unless the Secretary determines that—
"(A) the approval of the jurisdictional agency was not
supported by substantial evidence on the record upon which
such approval was based, or
"(B) additional evidence not contained in the record upon
which such approval was based demonstrates that such
project does not meet the requirements of subparagraph (A),
(B), or (C) of subsection (cX2).
If the Secretary makes a determination described in subpara-
graph (A) or (B) of the preceding sentence, the determination of
whether the project meets the requirements of subparagraphs
(A), (B), and (C) of subsection (c)(2) shall be made without regard
to the preceding sentence.
"(7) RuuNGS RELATING TO CERTAIN QUALIFIED TERTIARY RECOV-
ERY PROJECTS.—In the case of any tertiary recovery project for
which a certification is submitted to the Secretary under subsec-
tion (c)(2)(DXii), a taxpayer may request a ruling from the
Secretary with respect to whether such project is a qualified
tertiary recovery project. The Secretary shall issue such ruling
within 180 days of the date after he receives the request and such
information as may be necessary to make a determination.
"SEC. 4994. DEFINITIONS AND SPECIAL RULES RELATING TO EXEMP- 26 USC 4994.
TIONS.
"(a) QUAUFIED GOVERNMENTAL INTEREST.—For purposes of section
49910t))—
"(1) IN GENERAL.—The term 'qualified governmental interest'
means an economic interest in crude oil if—
"(A) such interest is held by a State or political subdivision
thereof or by an agency or instrumentality of a State or
political subdivision thereof, and
94 STAT. 242 PUBLIC LAW 96-223—APR. 2, 1980
"(B) under the applicable State or local law, all of the net
income received pursuant to such interest is dedicated to a
public purpose.
"(2) NET INCOME.—For purposes of this paragraph, the term
'net income' means gross income reduced by production costs,
and severance taxes of general application, allocable to the
interest.
"(3) AMOUNTS PLACED IN CERTAIN PERMANENT FUNDS TREATED
AS DEDICATED TO PUBUC PURPOSE.—The requirements of para-
graph (1)(B) shall be treated as met with respect to any net
income which, under the applicable State or local law, is placed
in a permanent fund the earnings on which are dedicated to a
public purpose.
"(b) QUALIFIED CHARITABLE INTEREST.—For purposes of section
4991(b)—
"(1) I N GENERAL.—The term 'qualified charitable interest'
means an economic interest in crude oil if—
"(A) such interest is—
"(i) held by an organization described in clause (ii),
26 use 170. (iii)^ or (iv) of section 170(b)(1)(A) which is also described
in section 170(c)(2), or
"(ii)held—
"(I) by an organization described in clause (i) of
section 170(b)(1)(A) which is also described in section
170(c)(2), and
"(II) for the benefit of an organization described
in clause (i) of this subparagraph, and
"(B) such interest was held by the organization described
in clause (i) or subclause (I) of clause (ii) of subparagraph (A)
on January 21, 1980, and at all times thereafter before the
last day of the taxable period.
"(2) SPECIAL RULE.—For purposes of paragraph (l)(A)(ii), an
interest shall be treated as held for the benefit of an organization
described in paragraph (l)(A)(i) only if all the proceeds from such
interest were dedicated on January 21, 1980, and at all times
thereafter before the last day of the taxable period, to the
organization described in paragraph (lXA)(i).
"(c) FRONT-END TERTIARY OIL.—
"(1) EXEMPTION FOR TERTIARY PROJECTS OF INDEPENDENTS.—For
purposes of this chapter, the term 'exempt front-end oil' means
any domestic crude oil—
"(A) which is removed from the premises before October 1,
1981, and
"(B) which is treated as front-end oil by reason of a front-
end tertiary project on one or more properties each of which
is a qualified property.
"(2) REFUNDS FOR TERTIARY PROJECTS OF INTEGRATED PRO-
DUCERS.—
"(A) I N GENERAL,—In the case of any front-end tertiary
project which does not meet the requirements of paragraph
(1)(B), the excess of—
"(i) the allowed expenses of the taxpayer with respect
to such project, over
"(ii) the tertiary incentive revenue,
shall be treated as a payment by the taxpayer with respect to
the tax imposed by this chapter made on September 30,1981.
"(B) LIMITATION BASED ON AMOUNT OF TAX.—The amount
of the payment determined under subparagraph (A) with
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 243
respect to any producer shall not exceed the aggregate tax
imposed by section 4986 with respect to front-end oil of that
producer removed after February 1980 and before October
1981.
"(C) TERTIARY INCENTIVE REVENUE.—For purposes of this
paragraph, the term 'tertiary incentive revenue' has the
meaning given such term by the front-end tertiary provi-
sions of the energy regulations.
"(3) DEFINITION OF ALLOWED EXPENSES; PREPAID EXPENSES NOT
TAKEN INTO ACCOUNT.—For purposes of this subsection (including
the application of the front-end tertiary provisions for purposes
of this subsection)—
"(A) ALLOWED EXPENSES.—Except as provided in subpara-
graph (B), allowed expenses shall be determined under the
front-end tertiary provisions of the energy regulations.
"(B) PREPAID EXPENSES NOT TAKEN INTO ACCOUNT.—The
term 'allowed expenses' shall not include any amount attrib-
utable to periods after September 30,1981.
"(C) PERIOD TO WHICH ITEM IS ATTRIBUTABLE.—For pur-
poses of subparagraph (B)—
"(i) any injectant and any fuel shall be treated as
attributable to periods before October 1, 1981, if the
injectant is injected, or the fuel is used, before October 1,
1981, and
"(ii) any other item shall be treated as attributable to
periods before October 1, 1981, only to the extent that
under chapter 1 deductions for such item (including
depreciation in respect of such item) are properly alloca-
ble to periods before October 1,1981.
For purposes of the preceding sentence, an act shall be treated as
taken before a date if it would have been taken before such date
but for an act of God, a severe mechanical breakdown, or an
injunction.
"(4) DEFINITIONS AND SPECIAL RULES.—For purposes of this
subsection—
"(A) FRONT-END TERTIARY PROVISIONS.—The term 'front-
end tertiary provisions' means—
"(i) the provisions of section 212.78 of the energy 10 CFR 212.78.
regulations which exempt crude oil from ceiling price
limitations to provide financing for tertiary projects (as
such provisions took effect on October 1, 1979), and
"(ii) any modification of such provisions, but only to
the extent that such modification is for purposes of
coordinating such provisions with the tax imposed by
this chapter.
"(B) FRONT-END OIL.—The term 'front-end oil' means any
domestic crude oil which is not subject to a first sale ceiling
price under the energy regulations solely by reason of the
front-end tertiary provisions of such regulations.
"(C) QUALIFIED PROPERTY.—The term 'qualified property'
means any property if, on January 1, 1980, 50 percent or
more of the operating mineral interest in such property is
held by persons who were independent producers (within the
meaning of section 4992(b)) for the last quarter of 1979.
"(D) FRONT-END TERTIARY PROJECT.—The term ^ront-end
tertiary project' means any project which qualifies under the
front-end tertiary provisions of the energy regulations.
94 STAT. 244 PUBLIC LAW 96-223—APR. 2, 1980
"(E) ORDERING RULE.—Front-end oil of any taxpayer shall
be treated as attributable first to projects which meet the
requirements of paragraph (1)(B).
"(d) EXEMPT INDIAN OIL.—For purposes of this chapter, the term
'exempt Indian oil' means any domestic crude oil—
"(1) the producer of which is an Indian tribe, an individual
member of an Indian tribe, or an Indian tribal organization
under an economic interest held by such a tribe, member, or
organization on January 21, 1980, and which is produced from
mineral interests which are—
"(A) held in trust by the United States for the tribe,
member, or organization, or
"(B) held by the tribe, member, or organization subject to a
restriction on alienation imposed by the United States
because it is held by an Indian tribe, an individual member
of an Indian tribe, or an Indian tribal organization,
"(2) the producer of which is a native corporation organized
43 use 1601 under the Alaska Native Claims Settlement Act (£is in effect on
note- January 21,1980), and which—
"(A) is produced from mineral interests held by the corpo-
ration which were received under that Act, and
"(B) is removed from the premises before 1992, or
"(3) the proceeds from the sale of which are deposited in the
Treasury of the United States to the credit of tribal or native
trust funds pursuant to a provision of law in effect on January 21,
1980.
"(e) EXEMPT ALASKAN OIL.—For purposes of this chapter, the term
'exempt Alaskan oil' means any crude oil (other than Sadlerochit oil)
which is produced—
"(1) from a reservoir from which oil has been produced in
commercial quantities through a well located north of the Arctic
Circle, or
"(2) from a well located on the northerly side of the divide of
the Alaska-Aleutian Range and at least 75 miles from the
nearest point on the Trans-Alaska Pipeline System.
"Subchapter C—Miscellaneous Provisions
"Sec. 4995. Withholding; depositary requirements.
"Sec. 4996. Other definitions and special rules.
"Sec. 4997. Records and information; regulations.
"Sec. 4998. Cross references.
26 u s e 4995. "SEC. 4995. WITHHOLDING; DEPOSITARY REQUIREMENTS.
"(a) WITHHOLDING BY PURCHASER.—
"(1) WITHHOLDING REQUIRED.—Except to the extent provided in
regulations prescribed by the Secretary—
"(A) the first purchaser of any domestic crude oil shall
withhold a tax equal to the amount of the tax imposed by
section 4986 with respect to such oil from amounts payable
by such purchaser to the producer of such oil, and
"(B) the first purchaser of such oil shall be liable for the
payment of the tax required to be withheld under subpara-
graph (A) and shall not be liable to any person for the
amount of any such payment.
"(2) DETERMINATION OP AMOUNT TO BE WITHHELD.—
"(A) I N GENERAL.—The purchaser shall determine the
amount to be withheld under paragraph (1)—
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 245
"(i) on the basis of the certification furnished to the
purchaser under section 6050C, unless the purchaser ^^^> P- 251.
has reason to believe that any information contained in
such certification is not correct, or
"(ii) if clause (i) does not apply, under regulations
prescribed by the Secretary.
"(B) N E T INCOME UMITATION NOT TO BE APPLIED.—For
purposes of determining the amount to be withheld under
paragraph (1), subsection (b) of section 4988 shall not apply.
"(3) ADJUSTMENTS FOR WITHHOLDING ERRORS.—
"(A) IN GENERAL.—To the extent provided in regulations
prescribed by the Secretary, withholding errors made by a
purchaser with respect to the crude oil of a producer re-
moved during any calendar year shall be corrected by that
purchaser by making proper adjustments in the amounts
withheld from subsequent payments to such producer for
crude oil removed during the same calendar year.
"(B) WITHHOLDING ERROR.—For purposes of subparagraph
(A), there is a withholding error if the amount withheld by
the purchaser under paragraph (1) with respect to any
payment for any crude oil exceeds (or is less than) the tax
imposed by section 4986 with respect to such oil (determined
without regard to section 4988(b)).
"(C) LIMITATION ON AMOUNT OF ADJUSTMENTS.—No adjust-
ment shall be required under subparagraph (A) with respect
to any payment for any crude oil to the extent that such
adjustment would result in amounts withheld from such
payment in excess of the windfall profit from such crude oil.
"(D) VOLUNTARY WITHHOLDING.—The Secretary may by
regulations provide for withholding under this subsection of
additional amounts from payments by any purchaser to any
producer if the purchaser and producer agree to such with-
holding. For purposes of this title, any amount withheld
pursuant to such an agreement shall be treated as an
amount required to be withheld under paragraph (1).
"(4) PRODUCER TREATED AS HAVING PAID WITHHELD AMOUNT.—
"(A) IN GENERAL.—The producer of any domestic crude oil
shall be treated as having paid any amount withheld with
respect to such oil under this subsection.
"(B) TIME PAYMENT DEEMED MADE.—The producer shall be
treated as having made any payment described in subpara-
graph (A) on the last day of the first February after the
calendar year in which the oil is removed from the premises.
"(5) PRODUCER REQUIRED TO FILE RETURN ONLY TO EXTENT
PROVIDED IN REGULATIONS.—Except to the extent provided in
regulations, the producer of crude oil with respect to which
withholding is required under paragraph (1) shall not be required
to file a return of the tax imposed by section 4986 with respect to
such oil.
"(6) PURCHASER'S QUARTERLY RETURNS TO CONTAIN SUMMARY.—
The purchaser's return of tax under this chapter for any calen-
dar quarter of any calendar year shall contain such information
(with respect to such quarter and the prior quarters of such
calendar year) as may be necessary to facilitate the coordination
of the withholding of tax by such purchaser with respect to each
producer with the determination of the tax imposed by section
4986 with respect to such producer.
94 STAT. 246 PUBLIC LAW 96-223—APR. 2, 1980
"(7) ELECTION FOR PURCHASER AND OPERATOR TO HAVE OPERATOR
TAKE PLACE OF PURCHASER.—
"(A) I N GENERAL.—If the purchaser of domestic crude oil
and the operator of the property from which the crude oil
was produced make a joint election under this paragraph
with respect to such property (or portion thereof)—
"(i) the operator shall be substituted for the purchaser
for purposes of applying this subsection and subsection
26 use 6001. (b) (and so much of subtitle F as relates to such subsec-
tions), and
"(ii) if the operator is not an integrated oil company,
the operator shall be treated as having the same status
as the purchaser for purposes of applying subsection (b)
with respect to amounts withheld by the operator by
reason of such election.
"(B) REGULATIONS MAY UMIT ELECTION.—The Secretary
may by regulations limit the circumstances under which an
election under this paragraph may be made to situations
where substituting the operator for the purchaser is admin-
istratively more practicable.
"(8) No ASSESSMENTS OR REFUNDS BEFORE CLOSE OF THE YEAR.—
Except to the extent provided in regulations prescribed by the
Secretary, in the case of any oil subject to withholding under this
subsection—
"(A) no notice of any deficiency with respect to the tax
26 use 6212. imposed by section 4986 may be mailed under section 6212,
and
"(B) no proceeding in any court for the refund of the tax
imposed by section 4986 may be begun,
before the last day of the first February after the calendar year
in which such oil was removed from the premises.
"(b) DEPOSITARY REQUIREMENTS.—
"(1) INTEGRATED OIL COMPANIES.—In the case of an integrated
oil company, deposit of the estimated amount of—
"(A) withholding under subsection (a) by such company,
and
"(B) such company's liability for the tax imposed by
section 4986 with respect to oil for which withholding is not
required,
shall be made twice a month.
"(2) PERSONS WHO ARE NOT INTEGRATED OIL COMPANIES.—In the
case of a person, other than an integrated oil company—
"(A) DEPOSITS OF WITHHELD AMOUNTS.—Deposit of the
amounts required to be withheld under subsection (a) shall
be made not later than—
"(i) except as provided in clause (ii), 45 days after the
close of the month in which the oil was removed, or
"(ii) in the case of oil purchased under a contract
therefor by an independent refiner under which no
payment is required to be made before the 46th day after
the close of the month in which the oil is purchased,
before the first day of the 3rd month which begins after
the close of the month in which such oil was removed.
"(B) ESTIMATED SECTION 4986 TAX.—Deposits of the esti-
mated amount of such person's liability for the tax imposed
by section 4986 with respect to oil for which withholding is
not required shall be made not later than 45 days after the
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 247
close of the month in which the oil was removed from the
premises.
"(3) INTEGRATED OIL COMPANY DEFINED.—For purposes of this
subsection, the term 'integrated oil company' means a taxpayer
described in paragraph (2) or (4) of section 613A(d) who is not an 26 use 613A.
independent refiner.
"(4) INDEPENDENT REFINER.—For purposes of this subsection,
the term 'independent refiner' has the same meaning as in
paragraph (3) of section 3 of the Emergency Petroleum Alloca-
tion Act of 1973 (as in effect on January 1,1980), except that 'the 15 USC 752.
preceding calendar quarter' shall be substituted for 'November
27, 1973' in applying such paragraph for purposes of this
paragraph.
"(c) CROSS REFERENCE.—
"For provision authorizing the Secretary to establish by regulations the
mode and time for collecting the tax imposed by section 4986 (to the
extent not otherwise provided in this chapter), see section 6302(a).
"SEC. 4996. OTHER DEFINITIONS AND SPECIAL RULES. 26 USC 4996.
"(a) PRODUCER AND OPERATOR.—For purposes of this chapter—
"(1) PRODUCER.—
"(A) IN GENERAL.—Except as provided in subparagraph
(B), the term 'producer' means the holder of the economic
interest with respect to the crude oil.
"(B) PARTNERSHIPS.—
"(i) I N GENERAL.—If (but for this subparagraph) a
partnership would be treated as the producer of any
crude oil—
"(I) such crude oil shall be allocated among the
partners of such partnership, and
"(II) any partner to whom such crude oil is allo-
cated (and not the partnership) shall be treated as
the producer of such crude oil.
"(ii) ALLOCATION.—Except to the extent otherwise
provided in regulations, any allocation under clause (i)(I)
shall be determined on the basis of a person's propor-
tionate share of the income oi'the partnership.
"(2) OPERATOR,—
"(A) I N GENERAL.—Except as provided in subparagraph
(B), the term 'operator' means the person primarily responsi-
ble for the management and operation of crude oil produc-
tion on a property.
"(B) DESIGNATION OP OTHER PERSON.—Under regulations
prescribed by the Secretary, the term 'operator' means the
person (or persons) designated with respect to a property (or
portion thereof) as the operator for purposes of this chapter
by persons holding operating mineral interests in the
property.
"Ot>) OTHER DEFINITIONS.—For purposes of this chapter—
"(1) CRUDE OIL.—The term 'crude oil' has the meaning given to
such term by the June 1979 energy regulations.
"(2) BARREL.—The term 'barrel' means 42 United States
gallons.
"(3) DOMESTIC.—The term 'domestic', when used with respect
to crude oil, means crude oil produced from an oil well located in
the United States or in a possession of the United States.
94 STAT. 248 PUBLIC LAW 96-223—APR. 2, 1980
"(4) UNITED STATES.—The term 'United States' has the mean-
26 use 638. ing given to such term by paragraph (1) of section 638 (relating to
Continental Shelf areas).
"(5) POSSESSION OP THE UNITED STATES.—The term 'possession of
the United States' has the meaning given to such term by
paragraph (2) of section 638.
"(6) INDIAN TRIBE.—The term 'Indian tribe' has the meaning
given to such term by section 106(b)(2)(CXii) of the Natural Gas
Policy Act of 1978 (15 U.S.C. 3316(bX2)(C)(ii)).
"(7) TAXABLE PERIOD.—The term 'taxable period' means—
"(A) March 1980, and
"(B) each calendar quarter beginning after March 1980.
"(8) ENERGY REGULATIONS.—
"(A) IN GENERAL.—The term 'energy regulations' means
regulations prescribed under section 4(a) of the Emergency
Petroleum Allocation Act of 1973 (15 U.S.C. 753(a)).
"(B) MARCH 1979 ENERGY REGULATIONS.—The March 1979
energy regulations shall be the terms of the energy regula-
tions as such terms existed on March 1,1979.
"(C) JUNE 1979 ENERGY REGULATIONS.—The June 1979
energy regulations—
"(i) shall be the terms of the energy regulations as
such terms existed on June 1,1979, and
"(ii) shall be treated as including final action taken
pursuant thereto before June 1,1979, and as including
action taken before, on, or after such date with respect
to incremental production from qualified tertiary
enhanced recovery projects.
"(D) CONTINUED APPUCATION OP REGULATIONS AFTER DE-
CONTROL.—Energy regulations shall be treated as continuing
in effect without regaJd to decontrol of oil prices or any other
termination of the application of such regulations.
"(c) SEVERANCE TAX ADJUSTMENT.—For purposes of this chapter—
"(1) IN GENERAL.—The severance tax adjustment with respect
to any barrel of crude oil shall be the amount by which—
"(A) any severance tax imposed with respect to such
barrel, exceeds
"(B) the severance tax which would have been imposed if
the barrel had been valued at its adjusted base price.
"(2) SEVERANCE TAX DEFINED.—For purposes of this subsection,
the term 'severance tax' means a tax—
"(A) imposed by a State with respect to the extraction of
oil, and
"(B) determined on the basis of the gross value of the
extracted oil.
"(3) LIMITATIONS.—
"(A) 15 PERCENT LIMITATION.—A severance tax shall not be
taken into account to the extent that the rate thereof
exceeds 15 percent.
"(B) INCREASES AFTER MARCH 3I, 1979, MUST APPLY
EQUALLY.—The amount of the severance tax taken into
account under paragraph (1) shall not exceed the amount
which would have been imposed under a State severance tax
in effect on March 31,1979, unless such excess is attributable
to an increase in the rate of the severance tax (or to the
imposition of a severance tax) which applies equally to all
portions of the gross value of each barrel of oil subject to
such tax.
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 249
"(d) ALASKAN OIL FROM SADLEROCHIT RESERVOIR.—For purposes of
this chapter—
"(1) IN GENERAL.—In the case of Sadlerochit oil—
"(A) ADJUSTED BASE PRICE INCREASED BY TAPS ADJUST-
MENT.—The adjusted base price for any calendar quarter
(determined without regard to this subsection) shall be
increased by the TAPS adjustment (if any) for such quarter
provided by paragraph (2).
"(B) REMOVAL PRICE DETERMINED ON MONTHLY BASIS.—The
removal price of such oil removed during any calendar
month shall be the average of the producer's removal prices
for such month.
"(2) TAPS ADJUSTMENT.—
"(A) IN GENERAL.—The TAPS adjustment for any calendar
quarter is the excess (if any) of—
"(i) $6.26 over
"(ii) the TAPS tariff for the preceding calendar
quarter.
"(B) TAPS TARIFF.—For purposes of subparagraph (A), the
TAPS tariff for the preceding calendar quarter is the aver-
age per barrel amount paid for all transportation (ending in
such quarter) of crude oil through the TAPS.
"(C) TAPS DEFINED.—For purposes of this paragraph, the
term 'TAPS' means the Trans-Alaska Pipeline System.
"(3) SADLEROCHIT OIL DEFINED.—The term 'Sadlerochit oil'
means crude oil produced from the Sadlerochit reservoir in the
Prudhoe Bay oilfield.
"(e) SPECIAL RULES FOR POST-1978 TRANSFERS OF PROPERTY.—In the
case of a transfer after 1978 of any portion of a property, for purposes
of this chapter (including the application of the June 1979 energy
regulations for purposes of this chapter), after such transfer crude oil
produced from any portion of such property shall not constitute oil
from a stripper well property, newly discovered oil, or heavy oil, if
such oil would not be so classified if the property had not been
transferred.
"(f) ADJUSTMENT OF REMOVAL PRICE.—In determining the removal
price of oil from a property in the case of any transaction, the
Secretary may adjust the removal price to reflect clearly the fair
market value of oil removed.
"(g) No EXEMPTIONS FROM TAX.—No taxable crude oil, and no
producer of such crude oil, shall be exempt from the tax imposed by
this chapter except to the extent provided in this chapter or in any
provision of law enacted after the date of the enactment of this
chapter which grants a specific exemption, by reference to this
chapter, from the tax imposed by this chapter.
"(h) CROSS REFERENCE.—
"For the holder of the economic interest in the case of a production
payment, see section 636.
"SEC. 4997. RECORDS AND INFORMATION; REGULATIONS. 26 USC 4997.
"(a) RECORDS AND INFORMATION.—Each taxpayer liable for tax
under section 4986, each partnership, trust, or estate producing
domestic crude oil, each purchaser of domestic crude oil, and each
operator of a well from which domestic crude oil was produced, shall
keep such records, make such returns, and furnish such information
(to the Secretary and to other persons having an interest in the oil)
with respect to such oil as the Secretary may by regulations
prescribe.
94 STAT. 250 PUBLIC LAW 96-223—APR. 2, 1980
"(b) REGULATIONS.—The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
chapter, including such changes in the application of the energy
regulations for purposes of this chapter as may be necessary or
appropriate to carry out such purposes.
26 u s e 4998. "SEC. 4998. CROSS REFERENCES.
"(1) For additions to the tax and additional amount for failure to file
tax return or to pay tax, see section 6651.
"(2) For additions to the tax and additional amounts for failure to file
certain information returns, registration statements, etc., see section 6652.
"(3) For additions to the tax and additional amounts for negligence and
fraud, see section 6653.
"(4) For additions to the tax and additional amounts for failure to
make deposit of taxes, see section 6656.
"(5) For additions to the tax and additional amounts for failure to col-
lect and pay over tax, or attempt to evade or defeat tax, see section 6672.
"(6) For criminal penalties for attempt to evade or defeat tax, willful
failure to collect or pay over tax, willful failure to file return, supply in-
formation, or pay tax, and for fraud and false statements, see sections
7201,7202,7203, and 7206.
"(7) For criminal penalties for failure to furnish certain information re-
garding windf^l profit tax on domestic crude oil, see section 7241."
(2) CLERICAL AMENDMENT.—The table of chapters for subtitle D
is amended by adding at the end thereof the following new item:
"CHAPTER 45. Windfall profit tax on domestic crude oil."
Qoi) DEDUCTIBIUTY OP WINDFALL PROFIT TAX.—The first sentence of
26 use 164. section 164(a) (relating to deduction for taxes) is amended by insert-
ing after paragraph (4) the following new paragraph:
Ante, p. 230. "(5) The windfall profit tax imposed by section 4986."
(c) TIME FOR FIUNG RETURN OF WINDFALL PROFIT TAX; DEPOSITARY
REQUIREMENTS.—
(1) TIME FOR FILING RETURN OF WINDFALL PROFIT TAX.—
(A) Part V of subchapter A of chapter 61 (relating to time
for filing returns and other documents) is amended by
adding at the end thereof the following new section:
26 use 6076. "SEC. 6076. TIME FOR FILING RETURN OF WINDFALL PROFIT TAX.
"(a) GENERAL RULE.—Except in the case of a return required by
Ante. p. 244. regulations prescribed under section 4995(a)(5), each return—
Ante, p. 230. "(1) of the tax imposed by section 4986 (relating to windfall
profit tax) for any taxable period (within the meaning of section
4996(bX7)),or
"(2) by a person required under section 4995(a) to withhold the
windfall profit tax for any taxable period,
shall be filed not later than the last day of the second month following
the close of the taxable period.
"(b) CROSS REFERENCE.—
"For depositary requirements applicable to the tax imposed by section
4986, see section 4995(b)."
(B) The table of sections for such part V is amended by
adding at the end thereof the following new item:
"Sec. 6076. Time for filing return of windfall profit tax."
26 use 6302. (2) CROSS REFERENCE.—Subsection (d) of section 6302 is
amended to read as follows:
"(d) CROSS REFERENCES.—
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 251
"(1) For treatment of earned income advance amounts as payment of
withholding and FICA taxes, see section 3507(d).
"(2) For depositary requirements applicable to the windfall profit tax
imposed by section 4986, see section 4995(b)."
(3) TECHNICAL AMENDMENT.—Section 7512 (relating to separate 26 use 7512.
accounting for certain collected taxes, etc.) is amended—
(A) by striking out "or by chapter 33" in subsections (a)
and (b) and inserting in lieu thereof ", by chapter 33, or by
section 4986", and
(B) by striking out "or chapter 33" in subsections (b) and (c)
and inserting in lieu thereof ", chapter 33, or section 4986".
(d) CERTAIN INFORMATION REQUIRED TO B E FURNISHED.—
(1) GENERAL RULE.—Subpart B of part III of subchapter A of
chapter 61 (relating to information concerning transactions with
other persons) is amended by adding at the end thereof the
following new section:
"SEC. 6050C. INFORMATION REGARDING WINDFALL PROFIT TAX ON DO- 26 USC 6050C.
MESTIC CRUDE OIL.
"(a) CERTIFICATION FURNISHED BY OPERATOR.—Under regulations
prescribed by the Secretary, the operator of a property from which
domestic crude oil was produced shall certify (at such time and in
such manner as the Secretary shall by regulations prescribe) to the
purchaser—
"(1) the adjusted base price (within the meaning of section
4989) with respect to such crude oil. Ante, p. 233.
"(2) the tier and category of such crude oil for purposes of the
tax imposed by section 4986, Ante, p. 230.
"(3) if any certification is furnished to the operator by the
producer with respect to whether such oil is exempt oil or
independent producer oil, a copy of such certification,
"(4) the amount of such crude oil, and
"(5) such other information as the Secretary by regulations
may require.
"(b) AGREEMENT BETWEEN OPERATOR AND PURCHASER.—The Secre-
tary may by regulations provide that, if the operator and purchaser
agree thereto, the operator shall be relieved of the duty of furnishing
some or all of the information required under subsection (a),
"(c) SPECIAL RULE FOR OIL NOT SUBJECT TO WITHHOLDING.—If the
tax imposed by section 4986 with respect to any oil for which
withholding is not required under section 4995(a)— Ante, p. 244.
"(1) subsections (a) and (b) shall be applied by substituting
'producer' for 'purchaser', and
"(2) paragraph (3) of subsection (a) shall not apply.
"(d) CROSS REFERENCES.—
"(1) For additions to tax for failure to furnish information required
under this section, see section 6652(b).
"(2) For penalty for willful failure to supply information required under
this section, see section 7241."
(2) TECHNICAL AND CONFORMING AMENDMENTS.—
(A) Section 6652(b) is amended— 26 USC 6652.
(i) by striking out "or section 6050A" and inserting in
lieu thereof the following: ", section 6050A", and
(ii) by inserting ", or section 6050C (relating to infor-
mation regarding windfall profit tax on crude oil)" after
"fishing boat operators)".
(B) The table of sections for subpart B of part III of
subchapter A of chapter 61 is amended by adding at the end
thereof the following new item:
94 STAT. 252 PUBLIC LAW 96-223—APR. 2, 1980
"Sec. 6050C. Information regarding windfall profit tax on domestic crude
oil."
(e) CRIMINAL PENALTY FOR FAILURE TO FURNISH CERTAIN INFORMA-
TION.—
(1) IN GENERAL.—Part II of subchapter A of chapter 75 (relating
to penalties applicable to certain taxes) is amended by adding at
the end thereof the following new section:
26 use 7241. "SEC. 7241. WILLFUL FAILURE TO FURNISH CERTAIN INFORMATION RE-
GARDING WINDFALL PROFIT TAX ON DOMESTIC CRUDE OIL.
Ante, p. 251. "Any person who is required under section 6050C (or regulations
thereunder) to furnish any information or certification to any other
person and who willfully fails to furnish such information or certifi-
cation at the time or times required by law or regulations, shall, in
addition to other penalties provided by law, be guilty of a misde-
meanor and upon conviction thereof, shall be fined not more than
$10,000, or imprisoned not more than 1 year, or both, together with
the costs of prosecution."
(2) CLERICAL AMENDMENT.—The table of sections for such part
II is amended by adding at the end thereof the following new
item:
"Sec. 7241. Willful failure to furnish certain information regarding wind-
fall profit tax on domestic crude oil."
(f) DEFICIENCY PROCEDURES.—
(1) The following provisions are each amended by striking out
"or 44" each place it appears and inserting in lieu thereof "44, or
45":
26 use 6211. (A) section 6211(a),
(B) section 6211(b)(2),
26 use 6212. (C) section 6212(a),
26 use 6213. (D) section 6213(a),
(E) section 6213(0,
26 use 6214. (F) section 6214(c),
(G) section 6214(d),
26 use 6161. (H) section 6161(b)(1),
26 use 6344. (I) section 6844(aXl), and
26 use 7422. (J) section 7422(e).
26 use 6211. (2) Subsection (a) of section 6211 is amended by striking out
"and 44" and inserting in lieu thereof "44, and 45".
(3) Subsection (b) of section 6211 is amended by adding at the
end thereof the following new paragraphs:
Ante, p. 244. "(5) The amount withheld under section 4995(a) from amounts
payable to any producer for crude oil removed during any
Ante, p. 247. taxable period (as defined in section 49960t>)(7)) which is not
otherwise shown on a return by such producer shall be treated as
tax shown by the producer on a return for the taxable period.
"(6) Anv liability to pay amounts required to be withheld under
section 4995(a) shall not be treated as a tax imposed by chapter
Ante, p. 230. 45."
26 use 6212. (4) Paragraph (1) of section 6212(b) is amended—
(A) by striking out "or chapter 44" and inserting in lieu
thereof "chapter 44, or chapter 45",
(B) by striking out "chapter 44, and this chapter" and
inserting in lieu thereof "chapter 44, chapter 45, and this
chapter , and
(C) by striking out "TAXES IMPOSED BY CHAPTER 42" in the
paragraph heading and inserting in lieu thereof "CERTAIN
EXCISE TAXES".
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 253
(5) Paragraph (1) of section 6212(c) is amended— 26 use 6212.
(A) by striking out "or of chapter 42 tax" and inserting in
lieu thereof "of chapter 42 tax", and
(B) by inserting ", or of chapter 45 tax for the same taxable
period after "to which such petition relates".
(6XA) Subsection (a) of section 6512 is amended— 26 use 6512.
(i) by striking out "chapter 41, 42, 43, or 44 taxes" and
inserting in lieu thereof "certain excise taxes",
(ii) by striking out "or of tax imposed by chapter 41" and
inserting in lieu thereof "of tax imposed by chapter 41", and
(iii) by inserting ", or of tax imposed by chapter 45 for the
same taxable period" after "to which such petition relates".
(B) Paragraph (1) of section 6512(b) is amended—
(i) by striking out "or of tax imposed by chapter 41" and
inserting in lieu thereof "of tax imposed by chapter 41", and
(ii) by inserting ", or of tax imposed by chapter 45 for the
same taxable period" after "to which such petition relates".
(7) The subsection heading for subsection (c) of section 6601 is 26 use 6601.
amended by striking out "CHAPTER 41, 42, 43, OR 44 T A X " and
inserting in lieu thereof "CERTAIN EXCISE TAX".
(8) Subsection (a) of section 6653 is amended— 26 use 6653.
(A) by striking out "or by chapter 12" and inserting in lieu
thereof ", by chapter 12",
(B) by striking out "is due" and inserting in lieu thereof ",
or by chapter 45 (relating to windfall profit tax) is due", and
(C) by striking out "OR GIFT" in the subsection heading and
inserting in lieu thereof ", GIFT, OR WINDFALL PROFIT".
(9) Subsection (a) of section 6862 is amended by striking out 26 use 6862.
"certain excise taxes" and inserting in lieu thereof "the excise
taxes imposed by chapters 41,42,43,44, and 45".
(g) SPECIAL RULES FOR STATUTE OF LIMITATIONS.—
(1) ASSESSMENT.—Section 6501 (relating to limitations on as- 26 use 6501.
sessment and collection) is amended by adding at the end thereof
the following new subsection:
"(q) SPECIAL RULES FOR WINDFALL PROFIT TAX.—
"(1) OIL SUBJECT TO WITHHOLDING.—
"(A) I N GENERAL.—In the case of any oil to which section
4995(a) applies and with respect to which no return is
required, the return referred to in this section shall be the
return (of the person liable for the tax imposed by section
4986) of the taxes imposed by subtitle A for the taxable year Ante, p. 230.
in which the removal year ends.
"(B) REMOVAL YEAR.—For purposes of subparagraph (A),
the term 'removal year' means the calendar year in which
the oil is removed from the premises.
"(2) EXTENSION OF UABILITY ATTRIBUTABLE TO DOE RECLASSIFICA-
TION.—
"(A) I N GENERAL.—In the case of the tax imposed by
chapter 45, if a Department of Energy change becomes final, Ante, p. 230.
the period for assessing any deficiency attributable to such
change shall not expire before the date which is 1 year after
the date on which such change becomes final.
"(B) DEPARTMENT OF ENERGY CHANGE.—For purposes of
subparagraph (A) and section 6511(hX2), the term Depart- Post, p. 254.
ment of Energy change' means any change by the Depart-
ment of Energy in the classification under the June 1979
energy regulations (as defined in section 49960t)X8XC)) of a
property or of domestic crude oil from a property.
94 STAT. 254 PUBLIC LAW 96-223—APR. 2, 1980
"(3) PARTNERSHIP ITEMS OF FEDERALLY REGISTERED PARTNER-
SHIPS.—Under regulations prescribed by the Secretary, rules
similar to the rules of subsection (o) shall apply to the tax
Ante, p. 230. imposed by section 4986."
26 use 6511. (2) REFUND.—Section 6511 (relating to limitations on credit or
refund) is amended by redesignating subsection (h) as (i) and by
inserting after subsection (g) the following new subsection:
"(h) SPECIAL RULES FOR WINDFALL PROFIT TAXES.—
"(1) OIL SUBJECT TO WITHHOLDING.—In the case of any oil to
which section 4995(a) applies and with respect to which no return
is required, the return referred to in subsection (a) shall be the
return (of the person liable for the tax imposed by section 4986) of
the taxes imposed by subtitle A for the taxable year in which the
Ante, p. 253. removal year (as defined in section 6501(q)(l)(B)) ends.
"(2) SPECIAL RULE FOR DOE RECLASSIFICATION.—In the case of
Ante, p. 230. any tax imposed by chapter 45, if a Department of Energy change
(as defined in section 6501(q)(2)(B)) becomes final, the period for
filing a claim for credit or refund for any overpayment attributa-
ble to such change shall not expire before the date which is 1 year
after the date on which such change becomes final.
"(3) PARTNERSHIP ITEMS OF FEDERALLY REGISTERED PARTNER-
SHIPS.—Under regulations prescribed by the Secretary, rules
similar to the rules of subsection (g) shall apply to the tax
imposed by section 4986."
(h) INTEREST ON OVERPAYMENTS.—Section 6611 (relating to interest
26 use 6611. on overpayment) is amended by redesignating subsection (h) as
subsection (i) and by inserting after subsection (g) the following new
subsection:
"(h) SPECIAL RULE FOR WINDFALL PROFIT TAX.—
"(1) I N GENERAL.—If any overpayment of tax imposed by
section 4986 is refunded within 45 days after—
"(A) the last date (determined without regard to any
extension of time for filing the return) prescribed for filing
the return of the tax imposed by section 4986 for the taxable
period with respect to which the overpayment was made, or
"(B) if such return is filed after such last date, the date on
which the return is filed,
no interest shall be allowed under subsection (a) on such overpay-
ment.
"(2) SPECIAL RULE WHERE NO RETURN IS REQUIRED.—In the case
of any oil for which no return of the tax imposed by section 4986
is required, the return referred to in paragraph (1) shall be the
return of the tax imposed by subtitle A for the taxable year of the
producer in which the removal year (with respect to which the
overpayment was made) ends. For purposes of the preceding
sentence, the term 'removal year' means the calendar year in
which the oil is removed from the premises."
26 u s e 4986 (i) EFFECTIVE D A T E . —
^°^- (1) IN GENERAL.—The amendments made by this section shall
apply to periods after February 29,1980.
(2) TRANSITIONAL RULES.—For the period ending June 30,1980,
the Secretary of the Treasury or his delegate shall prescribe
rules relating to the administration of chapter 45 of the Internal
Revenue Code of 1954. To the extent provided in such rules, such
rules shall supplement or supplant for such period the adminis-
trative provisions contained in chapter 45 of such Code (or in so
26 use 6001. much of subtitle F of such Code as relates to such chapter 45).
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 255
SEC. 102. ALLOCATION OF NET REVENUES FROM WINDFALL PROFIT TAX 31 USC 555.
TO CERTAIN USES.
(a) SEPARATE ACCOUNT IN TREASURY ESTABLISHED.—The net rev-
enues from the windfall profit tax for each fiscal year beginning after
September 30,1980, and before October 1,1990, are hereby allocated
for accounting purposes to a separate account in the Treasury to be
known as the Windfall Profit Tax Account (hereinafter in this section
referred to as the "Account")-
(b) SPECIFIED USES FOR AMOUNTS IN THE ACCOUNT.—
(1) BASIC NET REVENUES.—In the case of the amount of basic net
revenues allocated to the Account for any fiscal year, there shall
be a further allocation to subaccounts for the following uses:
Use for Percent
Income tax reductions 60
Low-income assistance 25
Energy and transportation programs 15
(2) ADDITIONAL NET REVENUES.—In the case of the amount of
additional net revenues allocated to the Account for any fiscal
year, there shall be a further allocation to subaccounts for the
following uses:
Use for Percent
Income tax reductions 66%
Low-income assistance 33 Va
(3) SPECIAL RULE FOR LOW-INCOME ASSISTANCE FOR I 9 8 2 AND
SUBSEQUENT YEARS.—In the case of any amount allocated under
paragraph (1) to the subaccount for low-income assistance for the
fiscal year beginning October 1, 1981, or any subsequent fiscal
year—
(A) 50 percent shall be allocated to a program to assist
AFDC and SSI recipients under the Social Security Act, and 42 use 1305.
(B) 50 percent shall be allocated to a program of emer-
gency energy assistance.
(c) NET REVENUES DEFINED.—For purposes of this section—
(1) I N GENERAL.—The term "net revenues of the windfall profit
tax" means, for any fiscal year, the amount which the Secretary
estimates to be the excess of—
(A) the gross revenues from the tax imposed by section
4986 for the fiscal year, over ^"^e, p. 230.
(B) the sum of—
(i) the refunds of and other adjustments to such tax for
such fiscal year, plus
(ii) the decrease in the income taxes imposed by
chapter 1 resulting from the tax imposed by section 26 use i et seq.
4986.
For purposes of subparagraph (A), there shall not be taken into
account any revenue attributable to an economic interest in
crude oil held by the United States.
(2) BASIC NET REVENUES.—The term "basic net revenues"
means the estimated net revenues which would result for any
period under the assumptions for such period which were made
in enacting the Crude Oil Windfall Profit Tax Act of 1980. Ante, p. 229.
(3) ADDITIONAL NET REVENUES.—The term "additional net
revenues" means for any period the net revenues in excess of the
basic net revenues for such period.
(d) PRESIDENT TO PROPOSE ALLOCATION OF NET REVENUES.—
79-194 O—81—pt. 1 20 : QL3
94 STAT. 256 PUBLIC LAW 96-223—APR. 2, 1980
(1) I N GENERAL.—The President shall propose for each fiscal
year to which this section applies an allocation of the net
revenues among the uses set forth in subsection (b).
(2) TIME AND MANNER FOR PROPOSING.—Except for the fiscal
year beginning October 1,1980, the proposal for each fiscal year
shall be contained in the annual budget for such fiscal year. The
proposal for the fiscal year beginning October 1, 1980, shall be
submitted by the President within 90 days after the date of the
enactment of this Act.
Reports to (e) REPORTS.—The Secretary of the Treasury shall report to the
Congress. Congress not later than January 1 of 1982 and of each calendar year
thereafter before 1992—
(1) the net revenues derived from the windfall profit tax for the
fiscal year ending on September 30 of the preceding year, and
(2) the actual disposition for such fiscal year of such revenues
among the uses specified in subsection Ob).
26 u s e 4986 SEC. 103. STUDY OF EFFECTS OF DECONTROL OF OIL PRICES AND OF
note. WINDFALL PROFIT TAX.
Report to (a) GENERAL RULE.—The President shall, not later than January 1,
Congress. 1983, submit to the Congress a report on the effect of decontrol of oil
prices and the windfall profit tax on—
(1) domestic oil production,
(2) foreign oil imports,
(3) profits of the oil industry,
(4) inflation,
(5) employment,
(6) economic growth,
(7) Federal revenues, and
(8) national security.
Ob) REPORT TO INCLUDE RECOMMENDATIONS.—The report required
under subsection (a) shall include such legislative recommendations
as the President determines to be advisable.
TITLE II—ENERGY CONSERVATION AND
PRODUCTION INCENTIVES
PART I—RESIDENTIAL ENERGY CREDIT
SEC. 201. GENERAL PROVISIONS RELATING TO CREDIT.
26 use 44C. (a) JOINT OWNERSHIP OF ENERGY ITEMS.—Section 44C(d) (relating to
special rules) is amended by redesignating paragraph (4) as para-
^ a p h (5) and by inserting after paragraph (3) the following new
paragraph:
"(4) JOINT OWNERSHIP OF ENERGY ITEMS.—
"(A) I N GENERAL.—Any expenditure otherwise qualifying
as an energy conservation expenditure or a renewable
energy source expenditure shall not be treated as failing to
so qualify merely because such expenditure was made with
respect to 2 or more dwelling units.
"(B) LIMITS APPUED SEPARATELY.—In the case of any ex-
penditure described in subparagraph (A), the amount of the
credit allowable under subsection (a) shall (subject to para-
graph (D) be computed separately with respect to the
amount of the expenditure made by each individual."
(b) SECRETARIAL AUTHORITY.—
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 257
(1) I N GENERAL.—Section 44C(c) (relating to definitions and 26USC44C.
special rules) is amended by adding at the end thereof the
following new paragraph:
"(9) LIMITATIONS ON SECRETARIAL AUTHORITY.—
"(A) I N GENERAL.—The Secretary shall not specify any
item under paragraph (4)(A)(viii) or any form of renewable
energy under paragraph (5XAXi) unless the Secretary deter-
mines that—
"(i) there will be a reduction in oil or natural gas
consumption as a result of such specification, and such
reduction is sufficient to justify any resulting decrease
in Federal revenues,
"(ii) such specification will not result in an increased
use of any item which is known to be, or reasonably
suspected to be, environmentally hazardous or a threat
to public health or safety, and
"(iii) available Federal subsidies do not make such
specification unnecessary or inappropriate (in the light
of the most advantageous allocation of economic
resources).
"(B) FACTORS TAKEN INTO ACCOUNT.—In making any deter-
mination under subparagraph (A)(i), the Secretary (after
consultation with the Secretary of Energy)—
"(i) shall make an estimate of the amount by which
the specification will reduce oil and natural gas con-
sumption, and
"(ii) shall determine whether such specification com-
pares favorably, on the basis of the reduction in oil and
natural gas consumption per dollar of cost to the Fed-
eral Government (including revenue loss), with other
Federal programs in existence or being proposed,
"(C) FACTORS TAKEN INTO ACCOUNT IN MAKING ESTI-
MATES.—In making any estimate under subparagraph (BXi),
the Secretary shall take into account (among other factors)—
"(i) the extent to which the use of any item will be
increased as a result of the specification,
"(ii) whether sufficient capacity is available to in-
crease production to meet any increase in demand
caused by such specification,
"(iii) the amount of oil and natural gas used directly or
indirectly in the manufacture of such item and other
items necessary for its use, and
"(iv) the estimated useful life of such item."
(2) PERIOD FOR SPECIFYING ITEMS.—Paragraph (6) of section
44C(c) (relating to definitions and special rules) is amended by
adding at the end thereof the following new subparagraphs:
"(C) ACTION ON REQUESTS.—
"(i) I N GENERAL.—The Secretary shall make a final
determination with respect to any request filed under
subparagraph (A)(ii) for specifying an item under para-
graph (4XA)(viii) or for specifjdng a form of renewable
energy under paragraph (5)(A)(i) within 1 year after the
filing of the request, together with any information
required to be filed with such request under subpara-
graph (A)(ii).
"(ii) REPORTS.—Each month the Secretary shall pub-
lish a report of any request which has been denied
94 STAT. 258 PUBLIC LAW 96-223—APR. 2, 1980
during the preceding month and the reasons for the
denial.
"(D) EFFECTIVE DATE.—
"(i) I N GENERAL.—In the case of any item or energy
source specified under paragraph (4)(A)(viii) or (5)(A)(i),
the credit allowed by subsection (a) shall apply with
respect to expenditures which are made on or after the
date on which final notice of such specification is pub-
lished in the Federal Register.
"(ii) EXPENDITURES TAKEN INTO ACCOUNT IN FOLLOW-
ING TAXABLE YEARS.—The Secretary may prescribe by
regulations that expenditures made on or after the date
referred to in clause (i) and before the close of the
taxable year in which such date occurs shall be taken
into account in the following taxable year."
SEC. 202. RENEWABLE ENERGY SOURCE EXPENDITURES.
26 use 440. (a) AMOUNT OF CREDIT.—Paragraph (2) of section 44C(b) (relating to
qualified renewable energy source expenditures) is amended to read
as follows:
"(2) RENEWABLE ENERGY SOURCE.—In the case of any dwelling
unit, the qualified renewable energy source expenditures are 40
percent of so much of the renewable energy source expenditures
made by the taxpayer during the taxable year with respect to
such unit as does not exceed $10,000."
(b) SOLAR ELECTRIC ENERGY.—Clause (i) of section 44C(c)(5)(A)
(defining renewable energy source property) is amended by striking
out "providing hot water' and inserting in lieu thereof "providing
hot water or electricity".
(c) COSTS OF DRILLING GEOTHERMAL WELL.—Subparagraph (B) of
section 44C(c)(2) (relating to renewable energy source expenditure) is
amended to read as follows:
"(B) CERTAIN LABOR AND OTHER COSTS INCLUDED.—The
term 'renewable energy source expenditure' includes—
"(i) expenditures for labor costs properly allocable to
the onsite preparation, assembly, or original installa-
tion of renewable energy source property, and
"(ii) expenditures for an onsite well drilled for any
26 use 613. geothermal deposit (as defined in section 613(e)(3)), but
26 use 263. only if the taxpayer has not elected under section 263(c)
to deduct any portion of such expenditures."
(d) SOLAR PANELS INSTALLED ON ROOFS.—Paragraph (2) of section
44C(c) (relating to renewable energy source expenditure) is amended
by adding at the end thereof the following new subparagraph:
"(D) CERTAIN SOLAR PANELS.—No solar panel installed as a
roof (or portion thereof) shall fail to be treated as renewable
energy source property solely because it constitutes a struc-
tural component of the dwelling on which it is installed."
26 u s e 44e note. (e) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendment made by subsection (a)
shall apply to taxable years beginning after December 31, 1979.
(2) SUBSECTIONS (b), (c), AND (d).—The amendments made by
subsections (b), (c), and (d) shall apply to expenditures made after
December 31, 1979, in taxable years ending after such date.
SEC. 203. PROVISIONS TO PREVENT DOUBLE BENEFITS.
(a) CREDIT T O B E REDUCED WHERE CERTAIN FINANCING IS USED.—
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 259
(1) I N GENERAL.—Section 44C(c) (relating to definitions and 26USC44C.
special rules) is amended by adding at the end thereof the
following new paragraph:
"(10) PROPERTY FINANCED BY SUBSIDIZED ENERGY FINANCING.—
"(A) REDUCTION OF QUAUFIED EXPENDITURES.—For pur-
poses of determining the amount of energy conservation or
renewable energy source expenditures made by any individ-
ual with respect to any dwelling unit, there shall not be
taken into account expenditures which are made from subsi-
dized energy financing.
"(B) DOLLAR LIMITS REDUCED.—Paragraph (1) or (2) of
subsection (b) (whichever is appropriate) shall be applied
with respect to such dwelling unit for any taxable year of
such taxpayer by reducing each dollar amount contained in
such paragraph (reduced as provided in subsection (b)(3)) by
an amount equal to the sum of—
"(i) the amount of the expenditures which were made
by the taxpayer during such taxable year or any prior
taxable year with respect to such dwelling unit and
which were not taken into account by reason of subpara-
graph (A), and
"(ii) the amount of any Federal, State, or local grant
received by the taxpayer during such taxable year or
any prior taxable year which was used to make energy
conservation or renewable energy source expenditures
with respect to the dwelling unit and which was not
included in the gross income of such taxpayer.
"(C) SUBSIDIZED ENERGY FINANCING.—For purposes of sub-
paragraph (A), the term 'subsidized energy financing' means
financing provided under a Federal, State, or local program
a principal purpose of which is to provide subsidized financ-
ing for projects designed to conserve or produce energy."
Ot>) RETURN REQUIREMENT.—
(1) IN GENERAL.—Subpart B of part III of subchapter A of
chapter 61 (relating to information returns) is amended by
adding at the end thereof the following new section:
"SEC. 6050D. RETURNS RELATING TO ENERGY GRANTS AND FINANCING. 26 USC 6050D.
"(a) IN GENERAL.—Every person who administers a Federal, State,
or local program a principal purpose of which is to provide subsidized
financing or grants for projects to conserve or produce energy shall,
to the extent required under regulations prescribed by the Secretary,
make a return setting forth the name and address of each taxpayer
receiving financing or a grant under such program and the aggregate
amount so received by such individual.
"(b) DEFINITION OF PERSON.—For purposes of this section, the term
'person' means the officer or employee having control of the program,
or the person appropriately designated for purposes of this section."
(2) CONFORMING AMENDMENT.—The table of sections for such
subpart B is amended by adding at the end thereof the following
new item:
"Sec. 6050D. Returns relating to energy grants and financing."
(c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 44C note,
apply to taxable years beginning after December 31, 1980, but only
with respect to financing or grants made after such date.
94 STAT. 260 PUBLIC LAW 96-223—APR. 2, 1980
PART II—BUSINESS ENERGY INVESTMENT CREDITS
SEC. 221. CHANGES IN AMOUNT AND PERIOD OF APPLICATION OF
ENERGY PERCENTAGE.
26 use 46. (a) I N GENERAL.—Subparagraph (C) of section 46(a)(2) (relating to
energy percentage) is amended to read as follows:
"(C) ENERGY PERCENTAGE.—For purposes of this para-
graph—
"(i) I N GENERAL.—The energy percentage shall be
determined in accordance with the following table:
"Column A—Description Column B—Percentage Column C—Period
The energy percentage For the period:
is: Beginning on: And ending on:
I. GENERAL RULE.—Property
not described in any of the
following provisions of this
column Oct. 1, 1978 Dec. 31, 1982.
II. SOLAR, WIND, OR GEOTHER-
MAL PROPERTY.—Property
described in section
48(lK2KAKii) or 48(1X3KA)
(viii) Oct. 1, 1978 Dec 31, 1979
B. 15 percent Jan. 1, 1980 Dec. 31, 1985.
III. OCEAN THERMAL PROPER-
TY.—Property described in
section 48(lK3KAXix) Jan. 1, 1980 Dec. 31,1985.
IV. QUALIFIED HYDROELEC-
TRIC GENERATING PROPER-
TY.—Property described in
section 48(lK2KAKvii) .. 11 percent Jan.1,1980 Dec. 31,1985.
V. QUALIFIED INTERCITY
BUSES.—Property described
in section 48(lX2XAXix) Jan. 1, 1980 Dec. 31,1985.
VI. BiOMASS PROPERTY.—Prop-
erty described in section
48(1X15) Oct. 1, 1978 Dec. 31,1985.
"(ii) PERIODS FOR WHICH PERCENTAGE NOT SPECIFIED.—
In the case of any energy property, the energy percent-
age shall be zero for any period for which an energy
percentage is not specified for such property under
clause (i) (as modified by clauses (iii) and (iv)).
"(iii) LONGER PERIOD FOR CERTAIN LONG-TERM PROJ-
ECTS.—For the purpose of applying the energy percent-
age contained in subclause (I) of clause (i) with respect to
property which is a part of a project with a normal
construction period of 2 years or more (within the
meaning of section 46(dX2XAXi)), 'December 31, 1990'
shall be substituted for 'December 31,1982' if—
"(I) before January 1, 1983, the taxpayer has
completed all engineering studies in connection
with the commencement of the construction of the
project, and has applied for all environmental and
construction permits required under Federal, State,
or local law in connection with the commencement
of the construction of the project, and
"(II) before January 1, 1986, the taxpayer has
entered into binding contracts for the acquisition,
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 261
construction, reconstruction, or erection of equip-
ment specially designed for the project and the
aggregate cost to the taxpayer of that equipment is
at least 50 percent of the reasonably estimated cost
for all such equipment which is to be placed in
service as part of the project upon its completion.
**(iv) LONGER PERIOD FOR CERTAIN HYDROELECTRIC GEN-
ERATING PROPERTY.—If an application has been docketed
by the Federal Energy Regulatory Commission before
January 1, 1986, with respect to the installation of any
qualified hydroelectric generating property, for pur-
poses of applying the energy percentage contained in
subclause (IV) of clause (i) with respect to such property,
'December 31, 1988' shall be substituted for 'December
31,1985'."
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (1) of section 48(1) (relating to treatment as 26 USC 48.
section 38 property) is amended to read as follows:
"(1) TREATMENT AS SECTION 38 PROPERTY.—For any period for
which the energy percentage determined under section
46(a)(2)(C) for any energy property is greater than zero— 26 use 46.
"(A) such energy property shall be treated as meeting the
requirements of paragraph (1) of subsection (a), and
"(B) paragraph (3) of subsection (a) shall not apply to such
property."
(2) Paragraph (11) of section 48(1) (relating to special rule for Post, p. 266.
property financed by industrial development bonds) is amended
by striking out "5 percent" and inserting in lieu thereof "one-
half of the energy percentage determined under section
46(a)(2)(C)".
SEC. 222. CHANGES IN ENERGY PROPERTY ITEM DESCRIPTIONS.
(a) I N GENERAL.—Subparagraph (A) of section 48(1)(2) (defining
energy property) is amended—
(1) by striking out "or" at the end of clause (v), and
(2) by adding at the end thereof the following new clauses:
"(vii) qualified hydroelectric generating property,
"(viii) cogeneration equipment, or
"(ix) qualified intercity buses,".
(b) ALTERNATIVE ENERGY PROPERTY.—Subparagraph (A) of section
48(1)(3) (defining alternative energy property) is amended—
(1) by striking out "(other than coke or coke gas)" in clause (iii),
(2) by striking out clause (v) and inserting in lieu thereof the
following:
"(v) equipment to convert—
"(I) coal (including lignite), or any nonmarketable
substance derived therefrom, into a substitute for a
petroleum or natural gas derived feedstock for the
manufacture of chemicals or other products, or
"(II) coal (including lignite), or any substance
derived therefrom, into methanol, ammonia, or a
hydroprocessed coalliquid or solid,",
(3) by striking out "and" at the end of clause (vii),
(4) by striking out the period at the end of clause (viii) and
inserting in lieu thereof ", and", and
(5) by adding at the end thereof the following new clause:
"(ix) equipment, placed in service at either of 2 loca-
tions designated by the Secretary after consultation
94 STAT. 262 PUBLIC LAW 96-223—APR. 2, 1980
with the Secretary of Energy, which converts ocean
thermal energy to usable energy."
(c) SOLAR OR WIND ENERGY PROPERTY.—Paragraph (4) of section
26 use 48. 48(1) (defining solar or wind energy property) is amended—
(1) by striking out "or" at the end of subparagraph (A),
(2) by striking out the period at the end of subparagraph (B)
and inserting in lieu thereof ", or", and
(3) by adding at the end thereof the following new subpara-
graph:
"(C) to provide solar process heat."
(d) SPECIALLY DEFINED ENERGY PROPERTY.—
(1) ALUMINA ELECTROLYTIC CELLS.—Paragraph (5) of section
48(1) (defining specially defined energy property) is amended—
(A) by striking out "or" at the end of subparagraph (K),
and
(B) by redesignating subparagraph (L) as subparagraph
(M) and by inserting after subparagraph (K) the following
new subparagraph:
"(L) modifications to alumina electrolytic cells, or".
(2) STANDARDS FOR SECRETARIAL DISCRETION.—Paragraph (5) of
section 48(1) is amended by adding at the end thereof the
following new sentence: "The Secretary shall not specify any
property under subparagraph (M) unless he determines that such
specification meets the requirements of paragraph (9) of section
Ante, p. 257. 44C(c) for specification of items under section 44C(c)(4)(A)(viii)."
(e) QUALIFIED HYDROELECTRIC GENERATING PROPERTY.—
(1) I N GENERAL.—Subsection (1) of section 48 (relating to energy
property) is amended by adding at the end thereof the following
new paragraph:
"(13) QUALIFIED HYDROELECTRIC GENERATING PROPERTY.—
"(A) I N GENERAL.—The term 'qualified hydroelectric gen-
erating property' means property installed at a qualified
hydroelectric site which is—
"(i) equipment for increased capacity to generate
electricity by water (up to, but not including, the electri-
cal transmission stage), and
"(ii) structures for housing such generating equip-
ment, fish passageways, and dam rehabilitation prop-
erty, required by reason of the installation of equipment
described in clause (i).
"(B) QUALIFIED HYDROELECTRIC SITE.—The term 'qualified
hydroelectric site' means any site—
"(i) at which—
"(I) there is a dam the construction of which was
completed before October 18, 1979, and which was
not significantly enlarged after such date, or
"(II) electricity is to be generated without any
dam or other impoundment of water, and
"(ii) the installed capacity of which is less than 125
megawatts.
"(C) LIMITATION ON CREDIT WHEN INSTALLED CAPACITY
EXCEEDS 25 MEGAWATTS.—For purposes of applying the
energy percentage to any qualified hydroelectric generating
property placed in service in connection with a site the
installed capacity of which exceeds 25 megawatts, the
amount taken into account as qualified investment shall not
exceed the amount which (but for this subparagraph) would
be the qualified investment multiplied by a fraction—
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 263
"(i) the numerator of which is 25 reduced by 1 for each
whole megawatt by which such installed capacity ex-
ceeds 100 megawatts, and
"(ii) the denominator of which is the number of
megawatts of such installed capacity but not in excess of
100.
"(D) DAM REHABILITATION PROPERTY.—For purposes of this
paragraph, the term 'dam rehabilitation property' means
any amount properly chargeable to capital account for
property (or additions or improvements to property) in
connection with the rehabilitation of a dam.
"(E) INSTALLED CAPACITY.—The term 'installed capacity'
means, with respect to any site, the installed capacity of all
electrical generating equipment placed in service at such
site. Such term includes the capacity of equipment installed
during the 3 taxable years following the taxable year in
which the equipment is placed in service."
(2) REGULAR INVESTMENT CREDIT TO APPLY TO FISH PASSAGE-
WAYS.—Subparagraph (D) of section 46(a)(2) (relating to special 26 USC 46.
rule for certain energy property) is amended by adding at the end
thereof the following new sentence: "In the case of any qualified
hydroelectric generating property which is a fish passageway,
the preceding sentence shall not apply to any period after 1979
for which the energy percentage for such property is greater
than zero."
(f) COGENERATION PROPERTY.—Subsection (1) of section 48 (relating 26 use 48.
to energy property) is amended by adding at the end thereof the
following new paragraph:
"(14) COGENERATION EQUIPMENT.—
"(A) I N GENERAL.—The term 'cogeneration equipment*
means property which is an integral part of a system for
using the same fuel to produce both qualified energy and
electricity at an industrial or commercial facility at which,
as of January 1, 1980, electricity or qualified energy was
produced.
"(B) ONLY COGENERATION INCREASES TAKEN INTO AC-
COUNT.—The term 'cogeneration equipment' includes prop-
erty only to the extent that such property increases the
capacity of the system to produce qualified energy or elec-
tricity, whichever is the secondary energy product of the
system.
"(C) LIMITATION ON USE OF OIL OR GAS.—The term 'cogener-
ation equipment' does not include any property which is part
of a system if—
"(i) such system uses oil or natural gas (or a product of
oil or natural gas) as a fuel for any purpose other than—
"(I) start-up,
"(II) flame control, or
"(III) back-up, or
"(ii) more than 20 percent (determined on a Btu basis)
of the fuel for such system for any taxable year consists
of oil or natural gas (or a product of oil or natural gas).
"(D) QUALIFIED ENERGY.—The term 'qualified energy'
means steam, heat, or other forms of useful energy (other
than electric energy) to be used for industrial, commercial,
or space-heating purposes (other than in the production of
electricity).
94 STAT. 264 PUBLIC LAW 96-223—APR. 2, 1980
"(E) INDUSTRIAL INCLUDES PURIFICATION AND DESALINIZA-
TiON OF WATER.—The term 'industrial' includes the purifica-
tion of water and the desalinization of water."
(g) BiOMASS PROPERTY.—
26 use 48. (1) IN GENERAL.—Subsection (1) of section 48 (relating to energy
property) is amended by adding at the end thereof the following
new paragraph:
"(15) BiOMASS PROPERTY.—
"(A) I N GENERAL.—The term 'biomass property' means—
"(i) any property described in clause (i), (ii), or (iii) of
paragraph (3)(A), as modified by the last sentence of
paragraph (3)(A) and by subparagraph (B) of this para-
graph, and
"(ii) any equipment described in so much of clause (vi)
or (vii) of paragraph (3)(A) as relates to property de-
scribed in clause (i) of this subparagraph.
"(B) MODIFICATIONS.—For purposes of subparagraph (A)—
"(i) the term 'alternate substance' has the meaning
given to such term by paragraph (3)(B), except that such
term does not include any inorganic substance and does
not include coal (including lignite) or any product of
such coal, and
"(ii) clause (iii) of paragraph (3)(A) shall be applied by
substituting 'a qualified fuel' for 'a synthetic liquid,
gaseous, or solid fuel'.
"(C) QUALIFIED FUEL.—For purposes of subparagraph (B),
the term 'qualified fuel' means—
"(i) any S5nithetic solid fuel, and
"(ii) alcohol for fuel purposes if the primary source of
energy for the facility producing the alcohol is not oil or
natural gas or a product of oil or natural gas."
(2) STORAGE OF FUEL DERIVED FROM GARBAGE.—Subparagraph
Ante, p. 261. (A) of Section 48(1)(3) (defining alternative energy property) is
amended by adding at the end thereof the following new
sentence:
"The equipment described in clause (vii) includes equipment
used for the storage of fuel derived from garbage at the site
at which such fuel was produced from garbage."
(h) QUAUFIED INTERCITY BUSES.—Subsection (1) of section 48 (relat-
ing to energy property) is amended by adding at the end thereof the
following new paragraph:
"(16) QUAUFIED INTERCITY BUSES.—
"(A) I N GENERAL.—Paragraph (2)(A)(ix) shall apply only
with respect to the qualified investment in qualified inter-
city buses of a taxpayer—
"(i) which is a common carrier regulated by the
Interstate Commerce Commission or an appropriate
State agency (as determined by the Secretary), and
"(ii) which is engaged in the trade or business of
furnishing intercity passenger transportation or inter-
city charter service by bus.
"(B) QUAUFIED INTERCITY BUS.—The term 'qualified inter-
city bus means an automobile bus—
"(i) the chassis and body of which is exempt under
26 use 4063. section 4063(a)(6) from the tax imposed by section
26 use 4061. 4061(a),
"(ii) which has—
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 265
"(I) a seating capacity of more than 35 passengers
(in addition to the driver), and
"(11) 1 or more baggage compartments, separated
from the passenger area, with a capacity of at least
200 cubic feet, and
"(iii) which is used predominantly by the taxpayer in
the trade or business of furnishing intercity passenger
transportation or intercity charter service.
"(C) OPERATING CAPACITY MUST INCREASE.—Under regula-
tions prescribed by the Secretary—
"(i) IN GENERAL.—The amount of qualified investment
taken into account under paragraph (2XAXix) for any
taxable year shall not exceed the amount of the quali-
fied investment which is attributable to an increase in
the taxpayer's total operating^ seating capacity for the
taxable year over such capacity as of the close of the
preceding taxable year.
"(ii) SPECIAL RULES.—The regulations prescribed
under this subparagraph—
"(I) shall provide that only buses used predomi-
nantly on a full-time basis in the trade or business
of furnishing intercity passenger or intercity
charter service shall be taken into account in deter-
mining the taxpayer's total operating seating capac-
ity, and
"(II) shall provide rules treating related tax-
payers as 1 person."
(i) TECHNICAL AMENDMENTS.—
(1) PUBLIC UTILITY PROPERTY.—
(A) Paragraph (3) of section 48(1) is amended by striking 26 use 48.
out subparagraph (B) and by redesignating subparagraphs
(C) and (D) as subparagraphs (B) and (C), respectively.
(B) Subsection (1) of section 48 is amended by adding at the
end thereof the following new paragraph:
"(17) EXCLUSION FOR PUBLIC UTILITY PROPERTY.—The terms
'alternative energy property', 'biomass property', 'solar or wind
energy property', recycling equipment', and 'cogeneration prop-
erty* do not include property which is public utility property
(within the meaning of section 46(fK5))." 26 use 46.
(2) OCEAN THERMAL PROPERTY.—Section 48(aX2XB) (relating to
property used outside the United States) is amended—
(A) by striking out "and" at the end of clause (ix),
(B) by striking out the period at the end of clause (x) and
inserting in lieu thereof", and", and
(C) by inserting immediately after clause (x) the following
new clause:
"(xi) any property described in subsection (lX3XAXix)
which is owned by a United States person and which is
used in international or territorial waters to generate
energy for use in the United States."
(3) POLLUTION CONTROL EQUIPMENT.—Subparagraph (C) of sec-
tion 48(1X3) (as redesignated by paragraph (1)) is amended by Supra.
adding at the end thereof the following new sentence:
"For purposes of the preceding sentence, in the case of
property which is alternative energy property solely by
reason of the amendments made by section 2z2(b) of the
Crude Oil Windfall Profit Tax Act of 1980, 'January 1,1980' Ante, p. 26i.
shall be substituted for 'October 1,1978'."
94 STAT. 266 PUBLIC LAW 96-223—APR. 2, 1980
26 u s e 48 note. (j) EFFECTIVE D A T E S . —
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall apply to periods after
December 31, 1979, under rules similar to the rules of section
26 use 48. 48(m) of the Internal Revenue Code of 1954.
(2) ALUMINA ELECTROLYTIC CELLS.—The amendments made by
subsection (dXl) shall apply to periods after September 30,1978,
under rules similar to the rules of section 48(m) of such Code.
SEC. 223. OTHER CHANGES WITH RESPECT TO THE INVESTMENT CREDIT
FOR INVESTMENT IN ENERGY PROPERTY.
(a) BOILERS FUELED BY PETROLEUM COKE OR PETROLEUM PITCH.—
(1) IN GENERAL.—Paragraph (10) of section 48(a) (relating to
boilers fueled by oil or gas) is amended by adding at the end
thereof the following new sentence: "For purposes of the preced-
ing sentence, the term 'petroleum or petroleum products' does
not include petroleum coke or petroleum pitch."
26 use 48 note. (2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply to periods after December 31, 1979, under rules
similar to the rules of section 48(m) of the Internal Revenue Code
of 1954.
(b) REPEAL OF REFUNDABLE CREDIT FOR SOLAR OR WIND PROPERTY.—
26 use 46. (1) IN GENERAL.—Paragraph (10) of section 46(a) (relating to
special rules in case of energy property) is amended—
(A) in subparagraph (A)—
(i) by inserting "and" at the end of clause (i),
(ii) by striking out "(other than solar or wind energy
property), and" and inserting in lieu thereof a period in
clause (ii), and
(iii) by striking out clause (iii);
(B) by striking out "OTHER THAN SOLAR OR WIND ENERGY
PROPERTY" in the heading of subparagraph (B); and
(C) by striking out subparagraph (C).
26 use 6401. (2) CONFORMING AMENDMENT.—Section 6401 (relating to
amounts treated as overpa3rments) is amended by striking out
subsection (d).
26 use 46 note. (3) EFFECTIVE DATE.—The amendments made by this subsection
shall apply to qualified investment for taxable years beginning
after December 31,1979.
(c) CREDIT TO B E REDUCED WHERE CERTAIN FINANCING IS USED.—
Ante, p. 261. (1) I N GENERAL.—Paragraph (11) of section 48(1) (relating to
special rule for property financed by industrial development
bonds), as amended by section 221(bX2), is amended to read as
follows:
"(11) SPECIAL RULE FOR PROPERTY FINANCED BY SUBSIDIZED
ENERGY FINANCING OR INDUSTRIAL DEVELOPMENT BONDS.—
"(A) REDUCTION OF QUAUFIED INVESTMENT.—For purposes
of applying the energy percentage to any property, if such
property is financed in whole or in part by—
"(i) subsidized energy financing, or
"(ii) the proceeds of an industrial development bond
26 use 103. (within the meaning of section 103(bX2)) the interest on
which is exempt from tax under section 103,
the amount taken into account as qualified investment shall
not exceed the amount which (but for this subparagraph)
would be the qualified investment multiplied by the fraction
determined under subparagraph (B).
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 267
"(B) DETERMINATION OF FRACTION.—For purposes of sub-
paragraph (A), the fraction determined under this subpara-
graph is 1 reduced by a fraction—
"(i) the numerator of which is that portion of the
quaUfied investment in the property which is allocable
to such financing or proceeds, and
"(ii) the denominator of which is the qualified invest-
ment in the property.
"(C) SUBSIDIZED ENERGY FINANCING.—For purposes of sub-
paragraph (A), the term 'subsidized energy financing' means
financing provided under a Federal, State, or local program
a principal purpose of which is to provide subsidized financ-
ing for projects designed to conserve or produce energy."
(2) EFFECTIVE DATES.— 26 use 48 note.
(A) I N GENERAL.—Except as provided in subparagraph (B),
the amendment made by paragraph (1) shall apply to periods
after December 31, 1982, under rules similar to the rules of
section 48(m) of the Internal Revenue Code of 1954. 26 use 48.
(B) EARLIER APPLICATION FOR CERTAIN PROPERTY.—In the
case of property which is—
(i) qualified hydroelectric generating property (de-
scribed in section 48(l)(2)(A)(vii) of such Code),
(ii) cogeneration equipment (described in section
48(l)(2)(A)(viii) of such Code),
(iii) qualified intercity buses (described in section
48(l)(2)(A)(ix) of such Code),
(iv) ocean thermal property (described in section
48(l)(3XA)(ix) of such Code), or
(v) expanded energy credit property,
the amendment made by paragraph (1) shall apply to periods
after December 31,1979, under rules similar to the rules of
section 48(m) of the Internal Revenue Code of 1954.
(C) EXPANDED ENERGY CREDIT PROPERTY.—For purposes of
subparagraph (B), the term "expanded energy credit prop-
erty" means—
(i) property to which section 48(1)(3XA) of such Code
applies because of the amendments made by paragraphs
(1) and (2) of section 222(b), ^"*«' P- 261.
(ii) property described in section 48(1)(4)(C) of such
Code (relating to solar process heat). Ante, p. 262.
(iii) property described in section 48(1X5)(L) of such
Code (relating to alumina electrolytic cells), and Ante, p. 262.
(iv) property described in the last sentence of section
48(1X3)(A) of such Code (relating to storage equipment Ante, p. 264.
for refuse-derived fuel).
(D) FINANCING TAKEN INTO ACCOUNT.—For the purpose of
applying the provisions of section 48(1X11) of such Code in the Ante, p. 266.
case of property financed in whole or in part by subsidized
energy financing (within the meaning of section 48(1X1 IXC)
of such Code), no financing made before January 1, 1980,
shall be taken into account. The preceding sentence shall not
apply to financing provided from the proceeds of any tax-
exempt industrial development bond (within the meaning of
section 103(bX2) of such Code). 26 use 103.
94 STAT. 268 PUBLIC LAW 96-223—APR. 2, 1980
PART III—PRODUCTION OF FUEL FROM NONCON-
VENTIONAL SOURCES; ALCOHOL FUELS
SEC. 231. PRODUCTION TAX CREDIT.
(a) I N GENERAL.—Subpart A of part IV of subchapter A of chapter 1
(relating to credits against tax) is amended by inserting after section
44C the following new section:
26 use 440. "SEC. 44D. CREDIT FOR PRODUCING FUEL FROM A NONCONVENTIONAL
SOURCE.
"(a) ALLOWANCE OP CREDIT.—There shall be allowed as a credit
against the tax imposed by this chapter for the taxable year an
amount equal to—
"(1) $3, multiplied by
"(2) the barrel-of-oil equivalent of qualified fuels—
"(A) sold by the taxpayer to an unrelated person during
the taxable year, and
"(B) the production of which is attributable to the
taxpayer.
"(b) LIMITATIONS AND ADJUSTMENTS.—
"(1) PHASEOUT OF CREDIT.—The amount of the credit allowable
under subsection (a) shall be reduced by an amount which bears
the same ratio to the amount of the credit (determined without
regard to this paragraph) as—
"(A) the amount by which the reference price for the
calendar year in which the taxable year begins exceeds
$23.50, bears to
"(B) $6.
"(2) CREDIT AND PHASEOUT ADJUSTMENT BASED ON INFLATION.—
The $3 amount in subsection (a) and the $23.50 and $6 amounts in
paragraph (1) shall each be adjusted by multiplying such amount
by the inflation adjustment factor for the calendar year in which
a t£ixable year begins. In the case of gas from a tight formation,
the $3 amount in subsection (a) shall not be adjusted.
"(3) CREDIT REDUCED FOR GRANTS, TAX-EXEMPT BONDS, AND
SUBSIDIZED ENERGY FINANCTNG.—
"(A) I N GENERAL.—The amount of the credit allowable
under subsection (a) with respect to any project for any
taxable year (determined after the application of paragraphs
(1) and (2)) shall be reduced by the amount which is the
product of the amount so determined for such year and a
fraction—
"(i) the numerator of which is the sum, for the taxable
year and all prior taxable years, of—
"(I) grants provided by the United States, a State,
or a political subdivision of a State for use in
connection with the project,
"(II) proceeds of any issue of State or local govern-
ment obligations used to provide financing for the
project the interest on which is exempt from tax
26 use 103. under section 103, and
"(III) the aggregate amount of subsidized energy
Ante, p. 266. financing (within the meaning of section 48(1)(11)(C))
provided in connection with the project, and
"(ii) the denominator of which is the aggregate
amount of additions to the capital account for the
project for the taxable year and all prior taxable years.
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 269
"(B) AMOUNTS DETERMINED AT CLOSE OP YEAR.—The
amounts under subparagraph (A) for any taxable year shall
be determined as of the close of the taxable year.
"(4) CREDIT REDUCED FOR ENERGY CREDIT.—The amount allow-
able as a credit under subsection (a) with respect to any project
for any taxable year (determined after the application of para-
graphs (1), (2), and (3)) shall be reduced by the excess of—
"(A) the aggregate amount allowed under section 38 for 26 use 38.
the taxable year or any prior taxable year by reason of the
energy percentage with respect to property used in the
project, over
"(B) the aggregate amount recaptured with respect to the
amount described in subparagraph (A)—
"(i) under section 47 for the taxable year or any prior 26 use 47.
taxable year, or
"(ii) under this paragraph for any prior taxable year.
The amount recaptured under section 47 with respect to any
property shall be appropriately reduced to take into account any
reduction in the credit allowed by this section by reason of the
preceding sentence.
"(5) APPLICATION WITH OTHER CREDITS.—The credit allowed by
subsection (a) for a taxable year shall not exceed the tax imposed
by this chapter for such taxable year, reduced by the sum of the
credits allowable under a section of this subpart having a lower
number or letter designation than this section, other than the
credits allowable by sections 31, 39, and 43. For purposes of the 26 use 3i, 39,43.
preceding sentence, the term 'tax imposed by this chapter' shall
not include any tax treated as not imposed by this chapter under
the last sentence of section 53(a). 26 use 53.
"(c) DEFINITION OF QUALIFIED FUELS.—For purposes of this sec-
tion—
"(1) IN GENERAL.—The term 'qualified fuels' means—
"(A) oil produced from shale and tar sands,
"(B) gas produced from—
"(i) geopressured brine, Devonian shale, coal seams, or
a tight formation, or
"(ii) biomass,
"(C) liquid, gaseous, or solid synthetic fuels produced from
coal (including lignite), including such fuels when used as
feedstocks,
"(D) qualifying processed wood fuels, and
"(E) steam produced from solid agricultural byproducts
(not including timber byproducts).
"(2) GAS FROM GEOPRESSURED BRINE, ETC.—
"(A) IN GENERAL.—Except as provided in subparagraph
(B), the determination of whether any gas is produced from
geopressured brine, Devonian shale, coal seams, or a tight
formation shall be made in accordance with section 503 of
the Natural Gas Policy Act of 1978. is use 3413.
"(B) SPECIAL RULES FOR GAS FROM TIGHT FORMATIONS.—The
term *gas produced from a tight formation' shall only
include—
"(i) gas the price of which is regulated by the United
States, and
"(ii) gas for which the maximum lawful price applica-
ble under the Natural Gas Policy Act of 1978 is at least is use 330i
150 percent of the then applicable price under section note.
103 of such Act. 15 use 3313.
94 STAT. 270 PUBLIC LAW 96-223—APR. 2, 1980
"(3) BiOMASS.—The term 'biomass' means any organic material
26 use 48. which is an alternate substance (as defined in section 48(1)(3)(B))
other than coal (including lignite) or any product of such coal.
"(4) QUALIFYING PROCESSED WOOD FUEL.—
"(A) IN GENERAL.—The term 'qualifying processed wood
fuel' means any processed solid wood fuel (other than char-
coal, fireplace products, or a product used for ornamental or
recreational purposes) which has a Btu content per unit of
volume or weight, determined without regard to any non-
wood elements, which is at least 40 percent greater per unit
of volume or weight than the Btu content of the wood from
which it is produced (determined immediately before the
processing).
"(B) ELECTION.—A taxpayer shall elect, at such time and
in such manner as the Secretary by regulations may pre-
scribe, as to whether Btu content per unit shall be deter-
mined for purposes of this paragraph on a volume or weight
basis. Any such election—
"(i) shall apply to all production from a facility; and
"(ii) shall be effective for the taxable year with respect
to which it is made and for all subsequent taxable years
and, once made, may be revoked only with the consent of
the Secretary.
"(5) AGRICULTURAL BYPRODUCT STEAM.—Steam produced from
solid agricultural byproducts which is used by the taxpayer in his
trade or business shall be treated as having been sold by the
taxpayer to an unrelated person on the date on which it is used.
"(d) OTHER DEFINITIONS AND SPECIAL RULES.—For purposes of this
section—
"(1) ONLY PRODUCTION WITHIN THE UNITED STATES TAKEN INTO
ACCOUNT.—Sales shall be taken into account under this section
only with respect to qualified fuels the production of which is
within—
"(A) the United States (within the meaning of section
26 use 638. 638(1)), or
"(B) a possession of the United States (within the meaning
of section 638(2)).
"(2) COMPUTATION OF INFLATION ADJUSTMENT FACTOR AND REF-
ERENCE PRICE.—
Publication in "(A) IN GENERAL.—The Secretary shall, not later than
^^'^^^ April 1 of each calendar year, determine and publish in the
^ ^' Federal Register the inflation adjustment factor and the
reference price for the preceding calendar year in accord-
ance with this paragraph.
"(B) INFLATION ADJUSTMENT FACTOR.—The term 'inflation
adjustment factor' means, with respect to a calendar year, a
fraction the numerator of which is, the GNP implicit price
deflator for the calendar year and the denominator of which
is the GNP implicit price deflator for calendar year 1979.
The term 'GNP implicit price deflator* means the first
revision of the implicit price deflator for the gross national
product as computed and published by the Department of
Commerce.
"(C) REFERENCE PRICE.—The term 'reference price' means
with respect to a calendar year the Secretary's estimate of
the annual average wellhead price per barrel for all domes-
tic crude oil the price of which is not subject to regulation by
the United States.
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 271
"(3) PRODUCTION ATTRIBUTABLE TO THE TAXPAYER.—In the case
of a property or facility in which more than 1 person has an
interest, except to the extent provided in regulations prescribed
by the Secretary, production from the property or facility (as the
case may be) shall be allocated among such persons in proportion
to their respective interests in the gross sales from such property
or facility.
"(4) SPECIAL RULES APPUCABLE TO GAS FROM GEOPRESSURED
BRINE, DEVONIAN SHALE, COAL SEAMS, OR A TIGHT FORMATION.—
"(A) CREDIT ALLOWED ONLY FOR NEW PRODUCTION.—The
amount of the credit allowable under subsection (a) shall be
determined without regard to any production attributable to
a property from which gas from Devonian shale, coal seams,
geopressured brine, or a tight formation was produced in
marketable quantities before January 1,1980.
"(B) REFERENCE PRICE AND APPUCATION OF PHASEOUT FOR
DEVONIAN SHALE.—
"(i) REFERENCE PRICE FOR DEVONIAN SHALE.—For pur-
poses of this section, the term 'reference price' for gas
from Devonian shale sold during calendar years 1980,
1981, and 1982 shall be the average wellhead price per
thousand cubic feet for such year of high cost natural
gas (as defined in section 107(c) (2), (3), and (4) of the
Natural Gas Policy Act of 1978 and determined under 15 use 3317.
section 503 of that Act) as estimated by the Secretary 15 use 3413.
after consultation with the Federal Energy Regulatory
Commission.
"(ii) DIFFERENT PHASEOUT TO APPLY FOR 1980, 1981, AND
1982.—For purposes of applying paragraphs (1) and (2) of
subsection (b) with respect to sales during calendar
years 1980, 1981, and 1982 of gas from Devonian shale,
'$4.05' shall be substituted for '$23.50' and '$1.03' shall
be substituted for '$6.00'.
"(5) PHASEOUT DOES NOT APPLY FOR FIRST 3 YEARS OF PRODUC-
TION FROM FACIUTY PRODUCING QUAUFYING PROCESSED WOOD OR
STEAM FROM SOLID AGRICULTURAL BYPRODUCTS.—In the case of a
facility for the production of—
"(A) qualifying processed wood fuel,
or
"(B) steam from solid agricultural byproducts,
paragraph (1) of subsection (b) shall not apply with respect to the
amount of the credit allowable under subsection (a) for fuels sold
during the 3-year period beginning on the date the facility is
placed in service.
"(6) BARREL-OF-OIL EQUIVALENT.—The term 'barrel-of-oil equiv-
alent' with respect to any fuel means that amount of such fuel
which has a Btu content of 5.8 million; except that in the case of
qualified fuels described in subparagraph (C), (D), or (E) of
subsection (c)(1), the Btu content shall be determined without
regard to any material from a source not described in such
subparagraph.
"(7) BARREL DEFINED.—The term 'barrel' means 42 United
States gallons.
"(8) RELATED PERSONS.—Persons shall be treated as related to
each other if such persons would be treated as a single employer
under the regulations prescribed under section 520b). 26 use 52.
79-194 O—81—pt. 1 21: QL3
94 STAT. 272 PUBLIC LAW 96-223—APR. 2, 1980
26 u s e 1371. "(9) PASS-THROUGH IN THE CASE OF SUBCHAPTER S CORPORATIONS,
ETC.—Under regulations prescribed by the Secretary, rules simi-
26 use 52. lar to the rules of subsections (d) and (e) of section 52 shall apply.
"(e) CREDIT NOT ALLOWABLE I F TAXPAYER MAKES ELECTION UNDER
15 use 3301 NATURAL GAS POUCY ACT OF 1978.—If the taxpayer makes an
^^^frco 0O1 -7 election under section 107(d) of the Natural Gas Policy Act of 1978 to
15 use 3317. jjg^^g subsections (a) and (b) of section 107 of that Act, and subtitle B of
15 use 3331. title I of that Act, apply with respect to gas described in subsection
(c)(lXB)(i) produced from any well on a property, then the credit
allowable by subsection (a) shall not be allowed with respect to any
gas produced on that property.
"(f) APPUCATION OF SECTION.—
"(1) I N GENERAL.—Except as provided in paragraph (2), this
section shall apply with respect to qualified fuels—
"(A) which are—
"(i) produced from a well drilled after December 31,
1979, and before January 1,1990, or
"(ii) produced in a facility placed in service after
December 31, 1979, and before January 1, 1990, and
"(B) which are sold after December 3, 1979, and before
January 1,2001.
"(2) SPECIAL RULES APPUCABLE TO QUALIFIED PROCESSED WOOD
AND SOUD AGRICULTURAL BYPRODUCT STEAM.—
"(A) CREDIT ALLOWED ONLY FOR CERTAIN PRODUCTION.—In
the case of qualif5dng processed wood fuel and steam from
solid agricultural byproducts, this section shall apply only
with respect to—
"(i) qualifying processed wood fuel produced in facili-
ties placed in service after December 3,1979, and before
January 1, 1982, which is sold before the later of—
"(D October 1,1983, or
"(ID the date which is 3 years after the date on
which the facility is placed in service; and
"(ii) steam produced in facilities placed in service after
December 31, 1979, from solid agricultural bj^roducts
which is sold before January 1,1985.
"(B) EXPANDED PRODUCTION OF STEAM TREATED AS NEW
FACiUTY PRODUCTION.—For purposes of this subsection and
subsection (dX5), in the case of a facility for the production of
steam from solid agricultural byproducts which was placed
in service before January 1, 1980, any production of steam
attributable to an expansion of the capacity of the facility to
produce such steam through placing additional or replace-
ment equipment in service after December 31,1979, shall be
treated as if it were produced by a facility placed in service
on the date on which such equipment is placed in service."
(b) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) The table of sections for subpart A of part IV of subchapter
A of chapter 1 is amended by inserting after the item relating to
section 44C the following new item:
"Sec. 44D. Credit for producing fuel from a nonconventional source."
26 use 6096. (2) Subsection (b) of section 6096 (relating to designation of
income tax payments to Presidential Election Campaign Fund) is
amended by striking out "and 44C" and inserting in lieu thereof
"44C,and44D".
26 use 44D note. (c) EFFECTIVE DATES.—The amendments made by this section shall
apply to tgixable years ending after December 31,1979.
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 273
SEC. 232. ALCOHOL FUELS.
(a) EXTENSION OF EXEMPTION THROUGH 1992.—
(1) GASOUNE.—Subsection (c) of section 4081 (relating to gaso- 26 use 4081.
line mixed with alcohol) is amended by adding at the end thereof
the following new paragraph:
"(4) TERMINATION.—Paragraph (1) shall not apply to any sale
after December 31,1992."
(2) SPECIAL FUELS.—Subsection (k) of section 4041 (relating to 26 use 404i.
fuels containing alcohol) is amended by adding at the end thereof
the following new paragraph:
"(3) TERMINATION.—Paragraph (1) shall not apply to any sale
or use after December 31,1992.
(3) TECHNICAL AMENDMENT.—Subsections (aX2) and (bX2) of the
Energy Tax Act of 1978 are each amended by striking out ", and 26 use 4041
before October 1,1984". '^°^' ^^^^ "°*^-
(b) CREDIT AGAINST INCOME TAX.—
(1) I N GENERAL.—Subpart A of part IV of subchapter A of
chapter 1 (relating to credits allowed) is amended by inserting
before section 45 the following new section:
"SEC. 44E. ALCOHOL USED AS FUEL. 26 USC 44E.
"(a) GENERAL RULE.—There shall be allowed as a credit against the
tax imposed by this chapter for the taxable year an amount equal to
the sum of—
"(1) the alcohol mixture credit, plus
"(2) the alcohol credit.
"(b) DEFINITION OF ALCOHOL MIXTURE CREDIT AND ALCOHOL
CREDIT.—For purposes of this section—
"(1) ALCOHOL MIXTURE CREDFT.—
"(A) I N GENERAL.—The alcohol mixture credit of any
taxpayer for any taxable year is 40 cents for each gallon of
alcohol used by the taxpayer in the production of a qualified
mixture.
"(B) QUALIFIED MIXTURE.—The term 'qualified mixture'
means a mixture of alcohol and gasoline or of alcohol and a
special fuel which—
"(i) is sold by the taxpayer producing such mixture to
any person for use as a fuel, or
"(ii) is used as a fuel by the taxpayer producing such
mixture.
"(C) SALE OR USE MUST BE IN TRADE OR BUSINESS, ETC.—
Alcohol used in the production of a qualified mixture shall
be taken into account—
"(i) only if the sale or use described in subparagraph
(B) is in a trade or business of the taxpayer, and
"(ii) for the taxable year in which such sale or use
occurs.
"(D) CASUAL OFF-FARM PRODUCTION NOT EUGIBLE.—No
credit shall be allowed under this section with respect to any
casual off-farm production of a qualified mixture.
"(2) ALCOHOL CREDIT.—
"(A) IN GENERAL.—The alcohol credit of any taxpayer for
any taxable year is 40 cents for each gallon of alcohol which
is not in a mixture with gasoline or a special fuel (other than
any denaturant) and which during the taxable year—
"(i) is used by the taxpayer as a fuel in a trade or
business, or
94 STAT. 274 PUBLIC LAW 96-223—APR. 2, 1980
"(ii) is sold by the taxpayer at retail to a person and
placed in the fuel tank of such person's vehicle.
"(B) USER CREDIT NOT TO APPLY TO ALCOHOL SOLD AT
RETAIL.—No credit shall be allowed under subparagraph
(A)(i) with respect to any alcohol which was sold in a retail
sale described in subparagraph (AXii).
"(3) SMALLER CREDIT FOR LOWER PROOF ALCOHOL.—In the case of
any alcohol with a proof which is at least 150 but less than 190,
paragraphs (1)(A) and (2)(A) shall be applied by substituting "30
cents" for "40 cents".
"(4) ADDING OF DENATURANTS NOT TREATED AS MIXTURE.—The
adding of any denaturant to alcohol shall not be treated as the
production of a mixture.
"(c) COORDINATION WITH EXEMPTION FROM EXCISE TAX.—The
amount of the credit allowable under this section with respect to any
alcohol shall, under regulations prescribed by the Secretary, be
properly reduced to take into account any benefit provided with
respect to such alcohol solely by reason of the application of section
Ante. p. 273. 4041(k) or 4081(c).
"(d) DEFINITIONS AND SPECIAL RULES.—For purposes of this sec-
tion—
"(1) ALCOHOL DEFINED.—
"(A) I N GENERAL.—The term 'alcohol' includes methanol
and ethanol but does not include—
"(i) alcohol produced from petroleum, natural gas, or
coal, or
"(ii) alcohol with a proof of less than 150.
"(B) DETERMINATION OF PROOF.—The determination of the
proof of any alcohol shall be made without regard to any
added denaturants.
"(2) SPECIAL FUEL DEFINED.—The term 'special fuel' includes
any liquid fuel (other than gasoline) which is suitable for use in
an internal combustion engine.
"(3) MIXTURE OR ALCOHOL NOT USED AS A FUEL, ETC.—
"(A) MIXTURES.—If^
"(i) any credit was allowable under this section with
respect to alcohol used in the production of any qualified
mixture, and
"(ii) any person—
"(I) separates the alcohol from the mixture, or
"(II) without separation, uses the mixture other
than as a fuel,
then there is hereby imposed on such person a tax equal to
40 cents a gallon (30 cents in the case of alcohol with a proof
less than 190) for each gallon of alcohol in such mixture.
"(B) ALCOHOL.—If—
"(i) any credit was allowable under this section with
respect to the retail sale of any alcohol, and
"(ii) any person mixes such alcohol or uses such
alcohol other than as a fuel,
then there is hereby imposed on such person a tax equal to
40 cents a gallon (30 cents in the case of alcohol with a proof
less than 190) for each gallon of such alcohol.
"(C) APPUCABLE LAWS.—All provisions of law, including
penalties, shall, insofar as applicable and not inconsistent
with this section, apply in respect of any tax imposed under
subparagraph (A) or (B) as if such tax were imposed by
26 use 4081. section 4081 and not by this chapter.
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 275
"(4) VOLUME OF ALCOHOL.—For purposes of determining—
"(A) under subsection (a) the number of gallons of alcohol
with respect to which a credit is allowable under subsection
(a), or
"(B) under section 4041(k) or 4081(c) the percentage of any ^«<e. P- 273.
mixture which consists of alcohol,
the volume of alcohol shall include the volume of any denaturant
(including gasoline) which is added under any formulas approved
by the Secretary to the extent that such denaturants do not
exceed 5 percent of the volume of such alcohol (including dena-
turants).
"(5) PASS-THROUGH IN THE CASE OF SUBCHAPTER S CORPORATIONS, 26 use i37i.
ETC.—Under regulations prescribed by the Secretary, rules simi-
lar to the rules of subsections (d) and (e) of section 52 shall apply. 26 USC 52.
'(e) LIMITATION BASED ON AMOUNT OF TAX.—
"(1) I N GENERAL.—The amount of the credit allowed by this
section for the taxable year shall not exceed the tax imposed by
this chapter for the taxable year, reduced by the sum of the
credits allowed under a section of this subpart having a lower
number designation than this section, other than credits allow-
able by sections 31, 39, and 43. For purposes of the preceding 26 USC 31,39,43.
sentence, the term 'tax imposed by this chapter' shall not include
any tax treated as not imposed by this chapter under the last
sentence of section 53(a). 26 USC 53.
"(2) CARRYOVER OF UNUSED CREDIT.—
"(A) IN GENERAL.—If the amount of the credit determined
under subsection (a) for any taxable year exceeds the limita-
tion provided by paragraph (1) for such taxable year (herein-
after in this paragraph referred to as the 'unused credit
year'), such excess shall be an alcohol fuel credit carryover to
each of the 7 taxable years following the unused credit year,
and shall be added to the amount allowable as credit under
subsection (a) for such years. The entire amount of the
unused credit for an unused credit year shall be carried to
the earliest of the 7 taxable years to which (by reason of the
preceding sentence) such credit may be carried, and then to
each of the other 6 taxable years to the extent that, because
of the limitation contained in subparagraph (B), such unused
credit may not be added for a prior taxable year to which
such unused credit may be carried.
"(B) LIMITATION.—The amount of the unused credit which
may be added under subparagraph (A) for any succeeding
taxable year shall not exceed the amount by which the
limitation provided by paragraph (1) for such succeeding
taxable year exceeds the sum of—
"(i) the credit allowable under subsection (a) for such
taxable year, and
"(ii) the amounts which, by reason of this paragraph,
are added to the amount allowable for such taxable year
and which are attributable to taxable years preceding
the unused credit year.
'(f) TERMINATION.—
"(1) I N GENERAL.—This section shall not apply to any sale or
use after December 31,1992.
"(2) No CARRYOVERS TO YEARS AFTER 1994.—No amount may be
carried under subsection (e)(2) to any taxable year beginning
after December 31,1994."
94 STAT. 276 PUBLIC LAW 96-223—APR. 2, 1980
(2) TECHNICAL AMENDMENTS RELATED TO CARRYOVER OF
CREDIT.—
26 use 55. (A) Paragraph (3) of section 55(c) is amended by adding at
the end thereof the following new sentence:
Ante, p. 273. "In determining any carryover under section 44E(e)(2), a rule
similar to the rule set forth in subparagraph (A) shall be treated
as inserted in this paragraph before subparagraph (A), and the
applications of subparagraphs (A), (B), and (C) shall be adjusted
accordingly."
26 use 381. (B) Subsection (c) of section 381 (relating to items of the
distributor or transferor corporation) is amended by adding
at the end thereof the following new paragraph:
"(27) CREDIT UNDER SECTION 44E FOR ALCOHOL USED AS FUEL.—
The acquiring corporation shall take into account (to the extent
proper to carry out the purposes of this section and section 44E,
and under such regulations as may be prescribed by the Secre-
tary) the items required to be taken into account for purposes of
section 44E in respect of the distributor or transferor corpora-
tion."
26 use 383. (C) Section 383 (relating to special limitations on unused
investment credits, work incentive credits, new employee
credits, foreign taxes, and capital losses), as in effect for
taxable years beginning after June 30, 1982, is amended—
(i) by inserting "to any unused credit of the corpora-
tion under section 44E(e)(2)," after "section 53(c),", and
(ii) by striking out "NEW EMPLOYEE CREDITS"
in the section heading and inserting in lieu thereof
"NEW EMPLOYEE CREDITS, ALCOHOL FUEL
CREDITS".
(D) Section 383 (as in effect on the day before the date of
26 use 1 note. the enactment of the Tax Reform Act of 1976) is amended—
(i) by inserting "to any unused credit of the corpora-
tion which could otherwise be carried forward under
section 44E(e)(2)," after "section 53(c),", and
(ii) by striking out "NEW EMPLOYEE CREDITS"
in the section heading and inserting in lieu thereof
"NEW EMPLOYEE CREDITS. ALCOHOL FUEL
CREDITS".
(3) OTHER TECHNICAL AND CONFORMING AMENDMENTS.—
26 use 4081. (A) Paragraph (3) of section 4081(c) (defining alcohol) is
amended by adding at the end thereof the following new
sentence: "Such term does not include alcohol with a proof of
less than 190 (determined without regard to any added
denaturants)."
(B) The table of sections for subpart A of part IV of
subchapter A of chapter 1 is amended by inserting immedi-
ately after the item relating to section 44D the following new
item:
"Sec. 44E. Alcohol used as fuel."
26 use 6096. (C) Section 6096(b) (relating to designation of income tax
payments to Presidential Election Campaign Fund), as
amended by section 231, is amended by striking out "and
44D" and inserting "44D, and 44E".
(c) CREDIT T O B E INCLUDED IN INCOME.—
(1) IN GENERAL.—Part II of subchapter B of chapter 1 (relating
to items specifically included in gross income) is amended by
adding at the end thereof the following new section:
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 277
"SEC. 86. ALCOHOL FUEL CREDIT. 26 USC 86.
"Gross income includes an amount equal to the amount of the
credit allowable to the taxpayer under section 44E for the taxable ^"^«' P- 273.
year (determined without regard to subsection (e) thereof)."
(2) TECHNICAL AMENDMENT.—Subparagraph (B) of section
55(b)(1) (defining alternative minimum taxable income) is 26 use 55.
amended by striking out "section 667" and inserting in lieu
thereof "section 86 or 667".
(3) CONFORMING AMENDMENT.—The table of sections for such
part II is amended by inserting at the end thereof the following
new item:
"Sec. 86. Alcohol fuel credit."
(d) REFUND OF TAX ON GASOUNE USED TO PRODUCE CERTAIN
ALCOHOL FUELS.—
(1) GENERAL RULE.—Section 6427 (relating to fuels not used for 26 USC 6427.
taxable purposes) is amended—
(A) by redesignating subsections (f), (g), (h), (i), and 0') as
subsections (g), (h), (i), (j), and (k), respectively; and
(B) by inserting after subsection (e) the following new
subsection:
"(f) GASOUNE USED TO PRODUCE CERTAIN ALCOHOL FUELS.—
"(1) I N GENERAL.—Except as provided in subsection (i), if any
gasoline on which tax is imposed by section 4081 is used by any 26 USC 4081.
person in producing a mixture described in section 4081(c) which Ante, pp. 273,
is sold or used in such person's trade or business, the Secretary f^%^
Infra.
shall pay (without interest) to such person an amount equal to
the aggregate amount of the tax imposed on such geisoline. The
preceding sentence shall not apply with respect to any mixture
sold or used after December 31,1992.
"(2) COORDINATION WITH OTHER REPAYMENT PROVISIONS.—No
amount shall be payable under subsection (d) or (e) of this section
or under section 6420 or 6421 with respect to any gasoline with 26 USC 6420,
respect to which an amount is payable under paragraph (1)." ^'*^^-
(2) QUARTERLY REFUND ALLOWED WHERE $200 OR MORE IS PAY-
ABLE.—
(A) Subparagraph (A) of section 6427(gX2) (as redesignated 26 USC 6427.
by paragraph (1)) is amended by striking out "or" at the end
of clause (i), by inserting "or" at the end of clause (ii), and by
inserting after clause (ii) the following new clause:
"(iii) $200 or more is payable under subsection (f),".
(B) Subparagraph (B) of section 6427(gX2) (as redesignated
by paragraph (1)) is amended to read as follows:
"(B) SPECIAL RULE.—If the requirements of clause (ii) or
clause (iii) of s u b p a r s ^ a p h (A) are met by any person for any
quarter but the requirements of subparagraph (A)(i) are not
met by such person for such quarter, such person may file a
claim under subparagraph (A) for such quarter only with
respect to amounts referred to in the clause (or clauses) of
subparagraph (A) the requirements of which are met by such
person for such quarter.
(3) TREATMENT OF SUBSEQUENT SEPARATION.—Paragraph (2) of
section 4081(c) (relating to later separation of gasoline) is 26 use 4081.
amended by inserting "(or with respect to which a credit or
payment was allowed or made by reason of section 6427(fXl))"
after "this subsection".
(4) TECHNICAL AMENDMENTS.—
94 STAT. 278 PUBLIC LAW 96-223—APR. 2, 1980
26 use 39. (A) Subsections (a)(4) and (b) of section 39 are each
amended by striking out "6427(h)" and inserting in lieu
thereof "6427(i)".
26 use 6427. (B) Subsections (a), (b)(1), (c), (d), and (e)(1) of section 6427
are each amended by striking out "(h)" and inserting in lieu
thereof "(i)".
Ante, p. 277. (Q Subsection (g)(1) of such section 6427 (as redesignated
by paragraph (1)(A)) is amended by striking out "(a), (b), (c),
(d), or (e)" and inserting in lieu thereof "(a), (b), (c), (d), (e), or
(f)".
(D) Subsection (i)(2) of such section 6427 (as redesignated
by paragraph (1)(A)) is amended by striking out "(f)(2)" and
inserting in lieu thereof "(g)(2)".
(E) Sections 7210, 7603, 7604(b), 7604(c)(2), 7605(a),
26 use 7210, 7609(c)(1), and 7610(c) are each amended by striking out
^603,7604,7605, "6427(g)(2)" each place it appears and inserting in lieu
^^^^' ^^^^- thereof "6427(h)(2)'\
(e) EXEMPTION FROM DISTILLED SPIRITS RULES.—
(1) I N GENERAL.—Subchapter B of chapter 51 (relating to
distilled spirits, wines, and beers) is amended by redesignating
26 use 5182. section 5181 as section 5182 and by inserting after section 5180
the following new section:
26 u s e 5181. "SEC. 5181. DISTILLED SPIRITS FOR FUEL USE.
"(a) IN GENERAL.—
"(1) PURPOSES FOR WHICH PLANT MAY BE ESTABUSHED.—On such
application and bond and in such manner as the Secretary may
prescribe by regulation, a person may establish a distilled spirits
plant solely for the purpose of^
"(A) producing, processing, and storing, and
"(B) using or distributing,
distilled spirits to be used exclusively for fuel use.
"(2) REGULATIONS.—In prescribing regulations under para-
graph (1) and in carrying out the provisions of this section, the
Secretary shall, to the greatest extent possible, take steps to—
"(A) expedite all applications;
"(B) establish a minimum bond; and
"(C) generally encourage and promote (through regulation
or otherwise) the production of alcohol for fuel purposes.
"(b) AUTHORITY TO EXEMPT.—The Secretary may by regulation
provide for the waiver of any provision of this chapter (other than
this section or any provision requiring the payment of tax) for any
distilled spirits plant described in subsection (a) if the Secretary finds
it necessary to carry out the provisions of this section.
"(c) SPECIAL RULES FOR SMALL PLANT PRODUCTION.—
"(1) APPUCATIONS.—
"(A) IN GENERAL.—An application for an operating permit
for an eligible distilled spirits plant shall be in such a form
and manner, and contain such information, as the Secretary
may by regulations prescribe; except that the Secretary
shall, to the greatest extent possible, take steps to simplify
the application so as to expedite the issuance of such per-
mits.
"(B) RECEIPT OP APPLICATION.—Within 15 days of receipt of
an application under subparagraph (A), the Secretary shall
send a written notice of receipt to the applicant, together
with a statement as to whether the application meets the
requirements of subparagraph (A). If such a notice is not sent
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 279
and the applicant has a receipt indicating that the Secretary
has received an application, paragraph (2) shall apply as if a
written notice required by the preceding sentence, together
with a statement that the application meets the require-
ments of subparagraph (A), had been sent on the 15th day
after the date the Secretary received the application.
"(C) MULTIPLE APPLICATIONS.—If more than one applica-
tion is submitted with respect to any eligible distilled spirits
plant in any calendar quarter, the provisions of this section
shall apply only to the first application submitted with
respect to such plant during such quarter. For purposes of
the preceding sentence, if a corrected or amended first
application is filed, such application shall not be considered
as a separate application, and the 15-day period referred to
in subparagraph (A) shall commence with receipt of the
corrected or amended application.
"(2) DETERMINATION.—
"(A) I N GENERAL.—In any case in which the Secretary
under paragraph (1)(B) has notified an applicant of receipt of
an application which meets the requirements of paragraph
(1)(A), the Secretary shall make a determination as to
whether such operating permit is to be issued, and shall
notify the applicant of such determination, within 45 days of
the date on which notice was sent under paragraph (1)(B).
"(B) FAILURE TO MAKE DETERMINATION.—If the Secretary
has not notified an applicant within the time prescribed
under subparagraph (A), the application shall be treated as
approved.
"(C) REJECTION OP APPUCATION.—If the Secretary deter-
mines under subparagraph (A) that a permit should not be
issued—
"(i) the Secretary shall include in the notice to the
applicant of such determination under subparagraph
(A) detailed reasons for such determination, and
"(ii) such determination shall not prejudice any fur-
ther application for such operating permit.
"(3) BOND.—No bond shall be required for an eligible distilled
spirits plant. For purposes of section 5212 and subsection (e)(2) of 26 use 5212.
this section, the premises of an eligible distilled spirits plant
shall be treated as bonded premises.
"(4) EuGiBLE DISTILLED SPIRITS PLANT.—The term 'eligible dis-
tilled spirits plant' means a plant which is used to produce
distilled spirits exclusively for fuel use and the production from
which does not exceed 10,000 proof gallons per year.
"(d) WITHDRAWAL FREE OF TAX.—Distilled spirits produced under
this section may be withdrawn free of tax from the bonded premises
(and any premises which are not bonded by reason of subsection (c)(3))
of a distilled spirits plant exclusively for fuel use as provided in
section 5214(a)(12). 26 use 5214.
"(e) PROHIBITED WITHDRAWAL, USE, SALE, OR DISPOSITION.—
"(1) IN GENERAL.—Distilled spirits produced under this section
shall not be withdrawn, used, sold, or disposed of for other than
fuel use.
"(2) RENDERING UNFIT FOR USE.—For protection of the revenue
and under such regulations as the Secretary may prescribe,
distilled spirits produced under this section shall, before with-
drawal from the bonded premises of a distilled spirits plant, be
94 STAT. 280 PUBLIC LAW 96-223—APR. 2, 1980
rendered unfit for beverage use by the addition of substances
which will not impair the quality of the spirits for fuel use.
"(f) DEFINITION OP DISTILLED SPIRITS.—For purposes of this section,
the term 'distilled spirits' does not include distilled spirits produced
from petroleum, natural gas, or coal*'.
(2) TECHNICAL AND CONFORMING AMENDMENTS.—
26 u s e 5601. (A) Section 5601(a) (relating to criminal penalties) is
amended by adding the word "or" at the end of paragraph
(14) and by inserting immediately after paragraph (14) the
following new paragraph:
"(15) UNAUTHORIZED WITHDRAWAL, USE, SALE, OR DISTRIBUTION
OF DISTILLED SPIRITS FOR FUEL USE.—Withdraws, uses, sells, or
otherwise disposes of distilled spirits produced under section
Ante, p. 278. 5181 for other than fuel use;".
26 u s e 5214. (B) Section 5214(a) (relating to withdrawal of distilled
spirits from bonded premises free of tax) is amended by
striking out the period at the end of paragraph (11) and
inserting in lieu thereof a semicolon and the word "or" and
by adding at the end thereof the following new paragraph:
"(12) free of tax in the case of distilled spirits produced under
Ante, p. 278. section 5181."
26 u s e 5004. (C) Section 5004(aX2XB) (relating to lien for tax) is
amended by striking out "or (11)," and inserting "(11), or
(12),".
26 u s e 5005. (D) Section 5005(d) (relating to person liable for tax) is
amended by striking out "or (11), and inserting "(11), or
(12).".
Repeal. (E) Section 221(d) of the Energy Tax Act of 1978 is
26 u s e 4081 repealed.
note.
(F) The table of sections for subchapter B of chapter 51 is
amended by striking out the item relating to section 5181
and by inserting after section 5180 the following new items:
"Sec. 5181. Distilled spirits for fuel use.
"Sec. 5182. Cross references."
Submittal to (f) STUDY OF IMPORTED ALCOHOL.—Within 180 days after the date of
congressional the enactment of this Act, the Secretary of the Treasury shall furnish
committees.
26 u s e 4041 to the Committee on Finance of the United States Senate and to the
note. Committee on Ways and Means of the United States House of
Representatives recommendations as to what methods, if any, may be
used to limit the importing of alcohol into the United States for fuel
purposes, including, but not limited to—
(1) denial of the exemption under sections 4081(c) and 4041(k) of
the Internal Revenue Code of 1954 or of the credit under section
Ante, pp. 273, 44E of such Code to fuels produced from imported alcohol,
276, 277. (2) import quotas and duties on such alcohol, and
(3) strict surveillance of such imports to monitor their effect on
the domestic fuel alcohol industry.
(g) REPORTS.—Subsection (c) of section 221 of the Energy Tax Act of
26 u s e 4041 1978 is amended to read as follows:
note. "(c) REPORTS.—On April 1 of each year, beginning with April 1,
Submittal to
eongress. 1981, and ending with April 1, 1992, the Secretary of Energy, in
consultation with the Secretary of the Treasury and the Secretary of
Transportation, shall submit to the Congress a report on the use of
alcohol in fuel. The report shall include—
"(1) a description of the firms engaged in the alcohol fuel
industry.
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 281
"(2) the amount of alcohol fuel sold in each State, and the
amount of gasoline saved in each State by reason of the use of
alcohol fuels,
"(3) the revenue loss resulting from the exemptions from tax
for alcohol fuels under sections 4041(k) and 4081(c) of the Internal
Revenue Code of 1954 and the credit allowable under section 44E Ante, pp. 273,
of such Code and the impact of such revenue loss on the Highway ^76, 277.
Trust Fund, and
"(4) the cost of production and the retail cost of alcohol fuels as
compared to gasoline and special fuels not mixed with alcohol."
(h) EFFECTIVE DATES.—
(1) SUBSECTIONS (h) AND (C).—The amendments made by subsec- 26 use 44E note.
tions (b) and (c) shall apply to sales or uses after September 30,
1980, in taxable years ending after such date.
(2) SUBSECTION (d).— 26 use 6427
(A) IN GENERAL.—The amendments made by subsection (d) "°*®'
shall take effect on January 1,1979.
(B) TRANSITIONAL RULE.—Any mixture sold or used on or
after January 1,1979, and before the date of the enactment
of this Act which is described in section 6427(fKl) of the
Internal Revenue Code of 1954 (as amended by subsection Ante, p. 277.
(d)) shall, for purposes of section 6427 of such Code, be
treated as sold or used on the date of the enactment of this
Act.
(3) DISTILLED SPIRITS PLANTS.—The amendments made by sub- 26 use 5181
section (e) shall take effect on the first day of the first calendar "°*®-
month beginning more than 60 days after the date of the
enactment of this Act.
PART IV—ENERGY-RELATED USES OF TAX-EXEMPT
BONDS
SEC. 241. SOLID WASTE DISPOSAL FACILITIES.
(a) I N GENERAL.—Section 103 (relating to interest on governmental 26 use 103.
obligations) is amended by redesignating subsection (g) as subsection
(h), and by inserting after subsection (f) the following new subsection:
"(g) QuAUFiED STEAM-GENERATING OR ALCOHOL-PRODUCING FACIU-
TIES.—
"(1) IN GENERAL.—For purposes of subsection (bX4XE), the term Definitions.
'solid w£iste disposal facility' includes—
"(A) a qualified steam-generating facility, and
"(B) a qualified alcohol-producing facility.
"(2) QUALIFIED STEAM-GENERATING FACIUTY DEFINED.—For pur-
poses of paragraph (1), the term 'qualified steam-generating
facility' means a steam-generating facility for which—
"(A) more than half of the fuel (determined on a Btu basis)
is solid waste or fuel derived from solid waste, and
"(B) substantially all of the solid waste derived fuel is
produced at a facility which is—
"(i) located at or adjacent to the site for such steam-
generating facility, and
"(ii) owned and operated by the person who owns and
operates the steam-generating facility.
"(3) QuAUFiED ALCOHOL-PRODUCING FACIUTY.—For purposes of
paragraph (1), the term 'qualified alcohol-producing facility'
means a facility—
"(A) the primary product of which is alcohol,
94 STAT. 282 PUBLIC LAW 96-223—APR. 2, 1980
"(B) more than half of the feedstock for which is solid
waste or a feedstock derived from solid waste, and
"(C) substantially all of the solid waste derived feedstock
for which is produced at a facility which is—
"(i) located at or adjacent to the site for such alcohol-
producing facility, and
"(ii) owned and operated by the person who owns and
operates the alcohol-producing facility.
"(4) SPECIAL RULE IN CASE OF STEAM-GENERATING FACILITY.—A
facility for producing solid waste derived fuel shall be treated as
a facility which meets the requirements of clauses (i) and (ii) of
paragraph (2)(B) if—
"(A) such facility and the steam-generating facility are
owned and operated by or for a State or the same political
subdivision or subdivisions of a State, and
"(B) substantially all of the solid waste used in producing
the solid waste derived fuel at the facility producing such
fuel is collected from the area in which the steam-generating
facility is located."
26 u s e 103 note. (b) CERTAIN SOLID W A S T E AND E N E R G Y - P R O D U C I N G FACILITIES.—
(1) GENERAL RULE.—For purposes of section 103 of the Internal
Ante, p. 281. Revenue Code of 1954, any obligation issued by an authority for 2
Post, p. 286. Qj. more political subdivisions of a State which is part of an issue
substantially all of the proceeds of which are to be used to
provide solid waste-energy producing facilities shall be treated as
an obligation of a political subdivision of a State which meets the
requirements of section 103(b)(4)(E) of such Code (relating to solid
waste disposal, etc., facilities). Nothing in the preceding sentence
shall be construed to override the limitations of section 103(c) of
such Code (relating to arbitrage bonds).
(2) SOLID WASTE-ENERGY PRODUCING FACIUTIES.—For purposes
of paragraph (1), the term "solid waste-energy producing facili-
ties" means any solid waste disposal facility and any facility for
the production of steam and electrical energy if—
(A) substantially all of the fuel for the facility producing
steam and electrical energy is derived from solid waste from
such solid waste disposal facility,
(B) both such solid waste disposal facility and the facility
producing steam and electrical energy are owned and oper-
ated by the authority referred to in paragraph (1), and
(C) all of the electrical energy and steam produced by the
facility for producing steam and electricity which is not used
by such facility is sold, for purposes other than resale, to an
agency or instrumentality of the United States.
(3) SOUD WASTE DISPOSAL FACIUTY.—For purposes of paragraph
(2), the term "solid waste disposal facility" means any solid waste
disposal facility within the meaning of section 103(b)(4)(E) of the
Internal Revenue Code of 1954 (determined without regard to
section 103(g) of such Code).
(4) OBUGATIONS MUST BE IN REGISTERED FORM.—This subsection
shall not apply to any obligation which is not issued in registered
form.
26 u s e 103 note. (c) SPECIAL RULE FOR CERTAIN A L C O H O L - P R O D U C I N G F A C I U T I E S . —
(1) I N GENERAL.—Subparagraph (C) of section 103(gX3) of the
Ante, p. 281. Internal Revenue Code of 1954 (as added by subsection (a)) shall
not apply to any facility for the production of alcohol from solid
waste if—
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 283
(A) substantially all of the solid waste derived feedstock
for such facility is produced at a facility which—
(i) went into full production in 1977,
(ii) is located within the limits of a city, and
(iii) is located in the same metropolitan area as the
alcohol-producing facility, and
(B) before March 1,1980, there were negotiations between
a governmental body and an organization described in sec-
tion 501(c)(3) of the Internal Revenue Code of 1954 with 26 use 50i.
respect to the utilization of a special process for the produc-
tion of alcohol at such alcohol-producing facility.
(2) LIMITATION.—The aggregate amount of obligations which
may be issued by reason of p a r ^ a p h (1) with respect to any
project shall not exceed $30,000,000.
(3) TERMINATION.—This subsection shall not apply to obliga-
tions issued after December 31,1985.
(d) EFFECTIVE DATE.—The amendments made by subsection (a) and 26 use 103 note.
the provisions of subsections (b) and (c) shall apply with respect to
obligations issued after October 18,1979.
SEC. 242. QUALIFIED HYDROELECTRIC GENERATING FACILITIES.
(a) QuAUFiED HYDROELECTRIC GENERATING FACILITIES.—
(1) IN GENERAL.—Paragraph (4) of section 103(b) (relatmg to 26 use 103.
certain exempt activities) is amended—
(A) by striking out "or" at the end of subparagraph (F),
(B) by striking out the period at the end of subparagraph
(G) and inserting in lieu thereof ", or", and
(C) by inserting after subparagraph (G) the following new
subparagraph:
"(H) qualified hydroelectric generating facilities."
(2) DEFINITIONS.—Subsection (b) of section 103 is amended by
redesignating paragraph (8) as paragraph (9) and by inserting
after paragraph (7) the following new paragraph:
"(8) QUAUFIED HYDROELECTRIC GENERATING FACILITIES.—For
purposes of this section—
"(A) QUAUFIED HYDROELECTRIC GENERATING FACILITY.—
The term 'qualified hydroelectric generating facility' means
any qualified hydroelectric generating property which is
owned by a State, political subdivision thereof, or agency or
instrumentality of any of the foregoing.
"(B) QUAUFIED HYDROELECTRIC GENERATING PROPERTY.—
"(i) IN GENERAL.—Except as provided in clause (ii), the
term 'qualified hydroelectric generating property' has
the meaning given to such term by section 48(1)(13). Ante, p. 262.
"(ii) DAM MUST BE OWNED BY GOVERNMENTAL BODY.—
The term 'qualified hydroelectric generating property'
does not include any property installed at the site of any
dam described in section 48(l)(13)(BXi)(I) unless such
dam was owned by one or more governmental bodies
described in subparagraph (A) on October 18,1979, and
at all times thereafter until the obligations are no
longer outstanding.
"(C) LIMITATION.—Paragraph (4XH) of this subsection
shall not apply to any issue of obligations (otherwise qualify-
ing under paragraph (4XH)) if the portion of the proceeds of
such issue which is used to provide qualified hydroelectric
generating facilities exceeds (by more than an insubstantial
amount) the product of—
94 STAT. 284 PUBLIC LAW 96-223—APR. 2, 1980
"(i) the eligible cost of the facilities being provided in
whole or in part from the proceeds of the issue, and
"(ii) the installed capacity fraction.
"(D) INSTALLED CAPACITY FRACTION.—The term 'installed
capacity fraction' means the fraction—
"(i) the numerator of which is 25, reduced by 1 for each
megawatt by which the installed capacity exceeds 100
megawatts, and
"(ii) the denominator of which is the number of
megawatts of the installed capacity (but not in excess of
100).
For purposes of the preceding sentence, the term 'installed
capacity' has the meaning given to such term by section
Ante, p. 262. 48(1)(13)(E).
"(E) ELIGIBLE COST.—
"(i) IN GENERAL.—The eligible cost of any facilities is
that portion of the total cost of such facilities which is
reasonably expected—
"(I) to be the cost to the governmental body
described in subparagraph (A), and
"(II) to be attributable to periods after October 18,
1979, and before 1986 (determined under rules simi-
lar to the rules of section 48(m)).
"(ii) LONGER PERIOD FOR CERTAIN HYDROELECTRIC GEN-
ERATING PROPERTY.—If an application has been docketed
by the Federal Energy Regulatory Commission before
January 1, 1986, with respect to the installation of any
qualified hydroelectric generating property, clause (i)(II)
shall be applied with respect to such property by substi-
tuting '1989' for '1986'.
"(F) CERTAIN PRIOR ISSUES TAKEN INTO ACCOUNT.—If the
proceeds of 2 or more issues (whether or not the issuer of
each issue is the same) are or will be used to finance the same
facilities, then, for purposes of subparagraph (C), in deter-
mining the amount of the proceeds of any later issue used to
finance such facilities, there shall be taken into account the
proceeds used to finance such facilities of all prior such
issues which are outstanding at the time of such later issue
(not including as outstanding any obligation which is to be
redeemed from the proceeds of the later issue)."
26 u s e 103 note. (b) APPLICATION OF SECTION 1030t)X4)(H) TO CERTAIN F A C I U T I E S . —
Ante, p. 283. (1) IN GENERAL.—For purposes of section 103(b)(4)(H) of the
Internal Revenue Code of 1954 (relating to qualified hydroelec-
tric generating facilities), in the case of a hydroelectric generat-
ing facility described in paragraph (2)—
(A) the facility shall be treated as a qualified hydroelectric
generating facility (as defined in section 1030o)(8)(A) of such
Code) without regard to clause (ii) of section 48(1)(13XB) of
such Code (relating to maximum generating capacity), and
(B) the fraction referred to in subparagraph (C) of section
103(b)(8) of such Code shall be deemed to be 1.
(2) FACILITIES TO WHICH PARAGRAPH (1) APPUES.—A facility is
described in this paragraph if—•
(A) it would be a qualified hydroelectric generating facility
(as defined in section 103(bX8)(A) of such Code) if clause (ii) of
section 48(1X13XB) did not apply,
(B) it constitutes an expansion of generating capacity at an
existing hydroelectric generating facility.
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 285
(C) such facility is located at 1 of 2 dams located in the
same county where—
(i) the rated capacity of the hydroelectric generating
facilities at each such dam on October 18, 1979, was
more than 750 megawatts,
(ii) the construction of the first such dam began in
1956, power at such first dam was first generated in
1959, and full power production at such first dam began
in 1961, and
(iii) the construction of the second such dam began in
1959, power at such second dam was first generated in
1963, and full power production at such second dam
began in 1964,
(D) acquisition or construction of the existing facility
referred to in subparagraph (B) was financed with the
proceeds of an obligation described in section 103(aXl) of
such Code, 26 use 103.
(E) the existing facility is owned and operated by a State,
political subdivision of a State, or agency or instrumentality
of any of the foregoing,
(F) no more than 60 percent of the electric power and
energy produced by such existing facility and of the qualified
hydroelectric generating facility is to be sold to anyone other
than an exempt person (within the meaning of section
103(b)(3) of such Code), and
(G) the agency of the State in which the facility is located
which has jurisdiction over water rights had granted, before
October 18,1979, a water right under which expanded power
and energy generating capacity for the facility was contem-
plated.
(c) EFFECTIVE DATE.—The amendments made by subsection (a) and 26 use 103 note,
the provisions of subsection (b) shall apply with respect to obligations
issued after October 18,1979.
SEC, 243. RENEWABLE ENERGY PROPERTY. 26 USe 103 note.
(a) CERTAIN STATE OBLIGATIONS FOR RENEWABLE ENERGY
PROPERTY.—
(1) IN GENERAL.—Paragraph (1) of subsection (b) of section 103
of the Internal Revenue Code of 1954 shall not apply to any
obligation issued as part of an issue substantially all of the
proceeds of which are to be used to provide renewable energy
property, if—
(A) the obligations are general obligations of a State,
(B) the authority for the issuance of the obligations
requires that taxes be levied in sufficient amount to provide
for the payment of principal and interest on such obliga-
tions,
(C) the amount of such obligations, when added to the sum
of the amounts of all such obligations previously issued by
the State which are outstanding, does not exceed the smaller
of—
(i) $500,000,000 or
(ii) one-half of 1 percent of the value of all property in
the State,
(D) such obligations are issued pursuant to a program to
provide financing for small scale energy projects which was
established by a State the legislature of which, before Octo-
94 STAT. 286 PUBLIC LAW 96-223—APR. 2, 1980
ber 18, 1979, approved a constitutional amendment to pro-
vide for such a program, and
(E) such obligations meet the requirements of paragraph
Ante, p. 281. (1) of section 103(h) of the Internal Revenue Code of 1954.
^"^'•°- (2) RENEWABLE ENERGY PROPERTY.—For purposes of t h i s sub-
section, the term "renewable energy property ' means property
used to produce energy (including heat, electricity, and substi-
tute fuels) from renewable energy sources (including wind, solar,
and geothermal energy, waste heat, biomass, and water),
(b) EFFECTIVE DATE.—Subsection (a) shall apply with respect to
obligations issued after the date of enactment of this Act.
SEC. 244. CERTAIN OBLIGATIONS MUST BE IN REGISTERED FORM AND
NOT GUARANTEED OR SUBSIDIZED UNDER AN ENERGY PRO-
GRAM.
(a) GENERAL RULE.—Section 103 (relating to interest on govern-
Ante, p. 281. mental obligations), as amended by section 241, is amended by
redesignating subsection (h) as subsection (i) and by inserting after
subsection (g) the following new subsection:
"(h) CERTAIN OBLIGATIONS MUST B E IN REGISTERED FORM AND NOT
GUARANTEED OR SUBSIDIZED UNDER AN ENERGY PROGRAM.—
"(1) I N GENERAL.—An obligation to which this subsection
applies shall be treated as an obligation not described in subsec-
tion (a) if^
"(A) such obligation is not issued in registered form,
"(B) the payment of principal or interest with respect to
such obligation is guaranteed (in whole or in part) by the
United States under a program a principal purpose of which
is to encourage the production or conservation of energy, or
"(C) the payment of the principal or interest with respect
to such obligation is to be made (in whole or in part) with
funds provided under such a program of the United States, a
State, or a political subdivision of a State.
"(2) OBLIGATIONS TO WHICH THIS SUBSECTION APPLIES.—This
subsection shall apply to any obligations to which paragraph (1)
of subsection (b) does not apply by reason of—
Ante, p. 283. "(A) subsection Ot))(4)(H) (relating to qualified hydroelectric
generating facilities), or
"(B) subsection (g) (relating to qualified steam-generating
or alcohol-producing facilities)."
26USCl03note. (b) EFFECTIVE DATE.—The amendments made by subsection (a)
shall apply to obligations issued on or after October 18, 1979.
PART V—TERTIARY INJECTANTS
SEC. 251. TERTIARY INJECTANTS.
(a) DEDUCTION FOR TERTIARY INJECTANTS.—
(1) I N GENERAL.—Part VI of subchapter B of chapter 1 (relating
to itemized deductions for individuals and corporations) is
amended by adding at the end thereof the following new section:
26 u s e 193. "SEC. 193. TERTIARY INJECTANTS.
"(a) ALLOWANCE OF DEDUCTION.—There shall be allowed as a
deduction for the taxable year an amount equal to the qualified
tertiary injectant expenses of the taxpayer for tertiary injectants
injected during such taxable year.
Definitions. "(b) QUAUFIED TERTIARY INJECTANT EXPENSES.—For purposes of
this section—
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 287
"(1) IN GENERAL.—The term 'qualified tertiary injectant
expenses' means any cost paid or incurred during the taxable
year (whether or not chargeable to capital account) for any
tertiary injectant (other than a hydrocarbon injectant which is
recoverable) which is used as a part of a tertiary recovery
method.
"(2) HYDROCARBON INJECTANT.—The term 'hydrocarbon injec-
tant' includes natural gas, crude oil, and any other injectant
which is comprised of more than an insignificant amount of
natural gas or crude oil. The term does not include any tertiary
injectant which is hydrocarbon-based, or a hydrocarbon-deriva-
tive, and which is comprised of no more than an insignificant
amount of natural gas or crude oil. For purposes of this para-
graph, that portion of a hydrocarbon injectant which is not a
hydrocarbon shall not be treated as a hydrocarbon injectant.
"(3) TERTIARY RECOVERY METHOD.—The term 'tertiary recovery
method' means—
"(A) any method which is described in subparagraphs (1)
through (9) of section 212.78(c) of the June 1979 energy lO CFR 212.78.
regulations (as defined by section 4996(b)(8)(C)), or Ante, p. 247.
"(B) any other method to provide tertiary enhanced recov-
ery which is approved by the Secretary for purposes of this
section.
"(c) APPLICATION WITH OTHER DEDUCTIONS.—No deduction shall be
allowed under subsection (a) with respect to any expenditure—
"(1) with respect to which the taxpayer has made an election
under section 263(c), or 26 USC 263.
"(2) with respect to which a deduction is allowed or allowable
to the taxpayer under any other provision of this chapter."
(2) TECHNICAL AND CONFORMING AMENDMENTS.—
(A) The table of sections for such part VI is amended by
adding at the end thereof the following new item:
"Sec. 193. Tertiary injectants."
(B) Section 263(a)(1) (relating to capital expenditures) is
amended—
(i) by striking out "or" at the end of subparagraph (E),
(ii) by striking out the period at the end of subpara-
graph (F) and inserting in lieu thereof ", or", and
(iii) by adding at the end thereof the following new
subparagraph:
"(G) expenditures for tertiary injectants with respect to
which a deduction is allowed under section 193." Ante, p. 286.
(C) Section 1245(a) (relating to gain from dispositions of 26 USC 1245.
certain depreciable property) is amended—
(i) by striking out "or 190" each place it appears in
paragraphs (2)(D) and (3XD) and inserting in lieu thereof
"190, or 193",
(ii) by inserting "193," after "190," each place it
appears in paragraph (2), and
(iii) by inserting "or 193" after "190" in the last
sentence of paragraph (2).
(D) Section 1250(b)(3) (relating to depreciation adjust- 26 use 1250.
ments) is amended by striking out "or 190" and inserting in
lieu thereof "190, or 193".
Ot)) EFFECTIVE DATE.—The amendments made by this section shall 26 use 193 note.
apply to taxable years beginning after December 31,1979.
79-194 O—81 —pt. 1 22: QL3
94 STAT. 288 PUBLIC LAW 96-223—APR. 2, 1980
SLta'ncSof TITLE III-LOW-INCOME ENERGY
!»««• ASSISTANCE
SHORT TITLE
42 use 8601 SEC. 301. This title may be cited as the "Home Energy Assistance
°°*« Act of 1980".
STATEMENT OP FINDINGS AND PURPOSE
42 use 8601. SEC. 302. (a) The Congress finds that—
(1) recent dramatic increases in the cost of primary energy
sources have caused corresponding sharp increases in the cost of
home energy;
(2) reliable data projections show that the cost of home energy
will continue to climb at excessive rates;
(3) the cost of essential home energy imposes a disproportion-
ately larger burden on fixed-income, lower income, and lower
middle income households and the rising cost of such energy is
beyond the control of such households;
(4) fixed-income, lower-income, and lower-middle-income
households should be protected from disproportionately adverse
effects on their incomes resulting from national energy policy;
(5) adequate home heating is a necessary aspect of shelter and
the lack of home heating poses a threat to life, health, or safety;
(6) adequate home cooling is necessary for certain individuals
to avoid a threat to life, health, or safety;
(7) low-income households often lack access to energy supplies
because of the structure of home energy distribution systems and
prevailing credit practices; and
(8) assistance to households in meeting the burden of rising
energy costs is insufficient from existing State and Federal
sources.
Grants. (b) It is the purpose of this title to make grants to States to provide
assistance to eligible households to offset the rising costs of home
energy that are excessive in relation to household income.
DEFINITIONS
42 use 8602. SEC. 303. As used in this title—
(1) "household" means any individual or group of individuals
who are living together as one economic unit for whom residen-
tial energy is customarily purchased in common or who make
undesignated payments for energy in the form of rent;
(2) "home energy" means a source of heating or cooling in
residential dwellings;
(3) "lower living standard income level" means the income
level (adjusted for regional, metropolitan, and nonmetropolitan
differences and family size) determined annually by the Secre-
tary of Labor based upon the most recent "lower living standard
family budget" issued by the Secretary of Labor;
(4) "Secretary" means the Secretary of Health, Education, and
Welfare; and
(5) "State" means each of the several States and the District of
Columbia.
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 289
HOME ENERGY GRANTS AUTHORIZED
SEC. 304. (a) The Secretary is authorized to make grants, in 42 use 8603.
accordance with the provisions of this title, to States on behalf of
eligible households to assist such households to meet the rising costs
of home energy.
(b) There are authorized to be appropriated $3,000,000,000 for the
fiscal year 1981 to carry out the provisions of this title.
(c) For the purpose of affording adequate notice of assistance
available under this title, appropriations under this title are author-
ized to be included in an appropriation Act for the fiscal year
preceding the fiscal year for which they are available for obligation.
Funds appropriated under subsection (b) of this section shall remain
available until expended.
EUGIBLE HOUSEHOLDS
SEC. 305. (a) Eligible household means any household which the ^2 use 8604.
State determines is—
(1) a household in which one or more individuals are eligible
for (A) aid to families with dependent children under the State's
plan approved under part A of title IV of the Social Security Act 42 use 601.
(other than such aid in the form of foster care in accordance with
section 408 of such Act), (B) supplemental security income 42 use 608.
payments under title XVI of the Social Security Act, (C) food 42 use 1381.
stamps under the Food Stamp Act of 1977, or (D) payments under ^ use 2011 note.
section 415, 521, 541, or 542 of title 38, United States Code
(relating to certain veterans' benefits); and
(2) any other household with an income equal to or less than
the lower living standard income level as determined pursuant to
subsection (c) of this section,
(b) Notwithstanding clause (1) of subsection (a), a household which
is eligible for supplemental security income payments under title
XVI of the Social Security Act, but not eligible under subsection
(a)(1)(A), (C), or (D) of this section, shall not be considered eligible for
home energy assistance under this title if the eligibility of a house-
hold is dependent upon—
(1) an individual whose annual supplemental security income
benefit rate is reduced pursuant to section 1611(e)(1) of the Social
Security Act by reason of being in an institution receiving 42 use 1382.
payments (under title XIX of that Act) with respect to that 42 use 1396.
individual,
(2) an individual to whom the reduction specified in section
1612(a)(2)(A)(i) of that Act applies, or 42 use 1382a.
(3) a child described in section 1614(f)(2) of that Act (who is 42 use 1382c.
living together with a parent or the spouse of a parent).
(c) In verifying income eligibility for the purpose of clause (2) of
subsection (a), the State shall apply procedures and policies consist-
ent with procedures and policies used by the State agency administer-
ing programs under part A of title IV of the Social Security Act. 42 use 601.
ALLOTMENTS
SEC. 306. (a)(1) From 95 per centum of the sums appropriated 42 use 8605.
pursuant to section 304(b) for the fiscal year 1981, the Secretary shall
allot to each State an amount which bears the same ratio to one-half
of such 95 per centum as the aggregate residential energy expendi-
ture in such State bears to the aggregate residential energy expendi-
ture for all States.
94 STAT. 290 PUBLIC LAW 96-223—APR. 2, 1980
(2) From 95 per centum of such sums, the Secretary shall allot to
each State an amount which bears the same ratio to one-half of such
95 per centum as the total number of heating degree days in such
State squared, multiplied by the number of households in such State
having incomes equal to or less than the lower living standard income
level, bears to the sum of such products for all States.
(3)(A) If the allotment for any State determined under paragraphs
(1) and (2) of this subsection is less than $100,000,000, the allotment of
such State shall, subject to paragraphs (6) and (8) of this subsection,
be the greater of its allotment as so determined under paragraphs (1)
and (2) or the product of the total amount available for allotment
under paragraphs (1) and (2) of this subsection and such State's
alternative allotment percentage.
(B) If the allotment for any State determined under paragraphs (1)
and (2) of this subsection is equal to or more than $100,000,000, the
allotment of such State shall, subject to paragraphs (6) and (8) of this
subsection and subparagraph (C) of this paragraph, be the greater of
its allotment as so determined under such paragraphs (6) and (8) or
the product of the total amount available for allotment under
paragraphs (1) and (2) of this subsection and such State's alternative
allotment percentage.
Appropriation (C) There is authorized to be appropriated amounts not in excess of
authorization. $90,000,000 for the fiscal year 1981 for the additional amounts to be
allocated pursuant to subparagraph (B) of this paragraph.
(4) The alternative allotment percentage for any State shall be
equal to (A) the percentage of 95 per centum of the total amount
appropriated for the fiscal year pursuant to section 3040t)) which the
State would receive if its allotment were increased from the
$25,000,000 authorized under this subsection to the extent necessary
(as determined by the Secretary on the basis of what he determines to
be the best available information) so that, if such allotment were
divided in a manner such that the amount for all recipient house-
holds in such State consisting of only one individual were equal, and
the amount for all other recipient households in such State were
equal to 150 per centum of such amount for a one-individual house-
hold, sufficient additional amounts would be available to assure that
the amount for each recipient household would be at least $120, or,
unless the percentage determined under subparagraph (A) would be
higher, (B) the percentage of 90 per centum of the total amount
authorized to be appropriated for fiscal year 1981 under section 3040^)
which would be allotted to such State if—
(i) of such 90 per centum (I) one-half was allotted to each State
according to the ratios determined under paragraph (1) of subsec-
tion (a) of this section and (II) one-half was allotted to each State
according to the ratios which would be determined under para-
graph (2) of such subsection (a) if, for purposes of such paragraph,
the word "squared" were deleted and the term "lower living
standard" were defined as 125 per centum of the poverty level as
determined in accordance with the criteria established by the
Office of Management and Budget; and
(ii) the allotment of each State as determined under subdivi-
sion (i) were increased to the extent necessary (as determined by
the Secretary on the basis of what he determines to be the best
available information) so that, if such allotment were divided in a
manner such that the amount for all recipient households in
such State consisting of only one individual were equal, and the
amount for all other recipient households in such State were
equal to 150 per centum of such amount for a one-individual
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 291
household, sufficient additional amounts would be available to
assure that the amount for each recipient household would be at
least $120.
There are authorized to be appropriated $25,000,000 for the fiscal Appropriation
year 1981 for the additional amounts to be allocated to States authorization.
pursuant to the application of subparagraph (A) of this paragraph. In
the event that the aggregate of such additional amounts would
exceed the amount appropriated under the preceding sentence, the
additional amount applicable to each State shall be reduced on a pro
rata basis.
(5) For purposes of this subsection, the term "recipient household" "Recipient
means— household."
(A) a household that is an eligible household under section 3(i)
of the Food Stamp Act of 1977 and participates in the food stamp 7 u s e 2012.
program, but which is not a recipient household under subpara-
graph (B) or (C) of this paragraph;
(B) a household that contains any individual who receives aid
to families with dependent children under a State plan approved
under part A of title IV of the Social Security Act, but which is 42 u s e 601.
not a recipient household under subparagraph (C); and
(C) a household that contains an individual who is an eligible
individual or eligible spouse receiving supplemental security
income benefits under title XVI of the Social Security Act, or an 42 u s e 1381.
individual receiving payments from the Secretary under an
agreement entered into by the Secretary under section 1616 of
such Act or section 212 of Public Law 93-66. 42 u s e 1382e.
For purposes of subparagraphs (B) and (C) the term "household" shall 87 Stat. 155.
be defined by the Secretary, and shall not include an institution.
(6) The allotment of any State shall be increased under paragraph
(3) of this subsection only if the increase is attributable in whole or
part to the provisions of subparagraph (A) or (BXii) of paragraph (4).
(7) If the allotment for any State determined under paragraphs (1)
and (2) of this subsection (without the application of paragraph (8)), is
less than the lower of^
(A) the amount which would be allotted to such State if "one-
h a l f in paragraph (1) of this subsection were replaced by "one-
quarter" and "one-half in paragraph (2) of this subsection were
replaced by "three-quarters , or
(B) the amount which would be allotted to such State if the
word "squared" in paragraph (2) of this subsection were deleted,
then the allotment of such State shall, subject to paragraph (8) of this
subsection, be increased to the lower of the allotment it would receive
under subparagraph (A) or (B).
(8) The allotments for any fiscal year determined under paragraphs
(1) and (2) of this subsection which are not increased pursuant to
paragraphs (3)(A) and (7) of this subsection shall be adjusted to the
extent necessary and on a pro rata basis to assure that the total of
such allotments when added to the allotments which are increased
pursuant to paragraphs (3)(A) and (7) of this subsection do not exceed
the sum of (A) 95 per centum of the sums appropriated for such fiscal
year pursuant to section 30403) plus (B) the amount appropriated
pursuant to the authorization in paragraph (4).
(9) If the amount appropriated for fiscal year 1981 is less than the
sum of $3,000,000,000 plus such additional amounts as are necessary
to carry out paragraphs (3) and (4), then each State's allotment shall
be determined on the basis of an appropriation of such sum and shall
be reduced on a pro rata basis as necessary.
94 STAT. 292 PUBLIC LAW 96-223—APR. 2, 1980
(b)(1) From the remainder of the sums appropriated pursuant to
section 304(b) for each fiscal year, the Secretary shall—
(A) first reserve $2,500,000 to be apportioned on the basis of
need between the Commonwealth of Puerto Rico, Guam, Ameri-
can Samoa, the Virgin Islands, Northern Mariana Islands, and
the Trust Territory of the Pacific Islands, and
(B) then transfer to the Director of the Community Services
Administration $100,000,000, subject to the provisions of the
second sentence of this paragraph for carrying out energy crisis
related activities under section 222(a)(5) of the Economic Oppor-
42 use 2809. tunity Act of 1964.
The percentage of the amount transferred under subparagraph (B) of
this paragraph and available for use in each State shall be the same
percentage as the percentage allotted to such State under this section
for the total amounts available for allotment to States under subsec-
tion (a) of this section. Twenty per centum of the total amount
transferred under subparagraph (B) may be utilized without regard
to the requirements of the preceding sentence.
(2) Each jurisdiction to which paragraph (1)(A) applies may receive
grants under this title upon an application submitted to the Secre-
tary containing provisions which describe the programs for which
£issistance is sought under this title, and which are consistent with
the requirements of section 308(b) of this title.
(3)(A)(i) The remainder of the sums appropriated pursuant to
section 304(b) shall be distributed for home energy assistance pro-
Incentive grants grams in accordance with the provisions of this subparagraph. The
to States. Secretary shall make incentive grants to States to pay a Federal
share of incentive fuel assistance programs for residential energy
costs established by any State to serve the same population as the
population eligible under this title.
(ii) No grant may be made under this subparagraph unless the
State makes an application to the Secretary containing such provi-
sions which the Secretary deems necessary and which describes the
State program for which assistance is sought under this subpara-
graph.
(iii) The Federal share for any fiscal year for Federal assistance
under this subparagraph shall not exceed 25 per centum.
(B) That part of the remainder of the sums appropriated pursuant
to section 304(b) which is not required to carry out the provisions of
subparagraph (A) of this paragraph shall be distributed by the
Secretary in accordance with the allocation formula contained in
subsection (a) of this section.
Outreach (4XA) From the sums appropriated pursuant to section 304(b) and
activities. made available under paragraph (1)(B) of this subsection, the Director
shall reserve a sum not to exceed $3,000,000 in each fiscal year for
outreach activities designed to assure that eligible households with
elderly members are made aware of the assistance available under
this title. The Director shall enter into agreements with national
aging organizations to carry out the provisions of this subparagraph.
(B) No payment may be made by the Director under this paragraph
to any national aging organization unless the Director determines
that such outreach activities will be coordinated with State outreach
activities required under section 308(b)(16).
(c) The portion of any State's allotment under subsection (a) for a
fiscal year, which the Secretary determines will not be required for
the period such allotment is available for carrying out the purposes of
this title, shall be available for reallotment from time to time, on such
dates during such period as the Secretary may fix, to other States
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 293
based on need and ability to expend the funds consistent with the
provisions of this title and taking into account the proportion of the
original allotments made available to such States under subsection
(a) for such year, but with such proportionate amount for any of such
other States being reduced to the extent it exceeds the sum which the
Secretary estimates such State needs and will be able to use for such
period for carrying out such portion of its State application approved
under this title, and the total reduction shall be similarly reallotted
among the States whose proportionate amounts are not so reduced. In
carrying out the requirements of this subsection the Secretary shall
take into account the climatic conditions and such other relevant
factors as may be necessary to assure that no State loses funds
necessary to carry out the purposes of this title. Any amount
reallotted to a State under this subsection during a year shall be
deemed part of its allotment under subsection (a) for such year.
(d)(1) Any allocations to a State may be reallocated only if the Reallocations,
Secretary has provided thirty days advance notice to the chief advance notice
and comment
executive and to the general public. During such period comments period.
may be submitted to the Secretary.
(2) After considering any comments submitted during such period, Publication in
the Secretary shall notify the chief executive of any decision to Federal
Register.
reallocate funds, and shall publish such decision in the Federal
Register.
(e) The aggregate residential energy expenditure for each State and
for all States shall be determined by the Secretary after consulting
with the Secretary of Energy.
(f) The allotments made under this section shall be made on the
basis of the latest reliable data available to the Secretary.
(g)(1) In any State in which the Secretary determines (after having Indian tribe
taken into account the amount of funds available to the State) that members,
benefits
the members of an Indian tribe are not receiving benefits under this provision.
title that are equivalent to benefits provided to other households in
the State, and if the Secretary further determines that the members
of such tribe would be better served by means of grants made directly
to provide such benefits, the Secretary shall reserve from sums that
would otherwise be allotted to such State not less than 100 per
centum of an amount which bears the same ratio to the State's
allotment for the fiscal year involved as the population of all eligible
Indians for whom a determination under this paragraph has been
made bears to the population of all eligible households in such State.
(2) The sums reserved by the Secretary on the basis of a determina-
tion under this subsection shall be granted to the tribal organization
serving the individuals for whom such a determination has been
made, or where there is no tribal organization, to such other entity as
the Secretary determines has the capacity to provide assistance
pursuant to this title.
(3) In order for a tribal organization or other entity to be eligible for Eligibility,
an award for a fiscal year under this subsection, it shall submit to the submittal of
plan.
Secretary a plan for such fiscal year which meets such criteria as the
Secretary may prescribe by regulation.
USES OF HOME ENERGY GRANTS
SEC. 307. Grants for fiscal year 1981 under this title may be used for 42 use 8606.
home energy assistance in accordance with plans approved under
section 308.
94 STAT. 294 PUBLIC LAW 96-223—APR. 2, 1980
STATE PLANS
42 use 8607. SEC. 308. (a) Each State desiring to receive a home energy grant
under this title shall submit a State plan to the Secretary, at such
time, in such manner, and containing or accompanied by such
information as the Secretary deems necessary.
Requirements. (b) Each such State plan shall—
(1) be submitted in accordance with the procedures, timetables,
and standards established by the Secretary pursuant to subsec-
tion (d)(4) of this section;
(2) designate an agency of the State to be determined by the
chief executive to administer the program authorized by this title
and describe local administrative arrangements;
Assistance (3) provide for a State program for furnishing home energy
payments. assistance to eligible households through payments made in
accordance with the provisions of the plan, to—
(A)(i) home energy suppliers,
(ii) eligible households whenever the chief executive deter-
mines such payments to be feasible, or when the eligible
household is making undesignated payments for rising
energy costs in the form of rent increases, or
(iii) any combination of home energy supplier and eligible
household whenever the chief executive determines such
payments to be feasible, and
(B) building operators, in housing projects established
under sections 221(d)(3) and 236 of the National Housing Act
12 use I70iq. of 1968, section 202 of the Housing Act of 1959, section 515 of
42 use 1485. the Housing Act of 1949, low rent housing established by the
42 use 1437 United States Housing Act of 1937, and section 8 of the
"°*®- Housing Act of 1974, and State and local government-
operated projects in an aggregate monthly amount com-
puted on the basis of the number of eligible tenants making
undesignated energy payments in the form of rent times of
quotient of the exact costs of residential fuel costs paid as an
undesignated part of rent divided by the number of tenants,
the amount of such monthly quotient not to exceed a ceiling
amount per eligible tenant as determined under regulations
by the Secretary annually to be comparable to the amount
established for other eligible households, if such operators
give assurances to the State that tenants eligible for assist-
ance under this title are not discriminated against with
respect to rent;
(4) describe with particularity the procedures by which eligible
households in the State are identified and certified as
participants;
(5) describe energy usage and the average cost of home energy
in the State identified by the tjrpe of fuel and by region of the
State;
(6) describe the amount of assistance to be provided to or on
behalf of participating households eissuring (A) that priority is
given to households with lowest incomes and to eligible house-
holds having at least one elderly or handicapped individual, and
(B) that the highest level of assistance is provided to households
with lowest incomes and the highest energy costs in relation to
income, taking into account—
(i) the average home energy expenditure,
(ii) the proportional burden of energy costs in relation to
ranges of income.
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 295
(iii) the variation in degree days in regions of the State in
any State where appropriate, and
(iv) any other relevant consideration selected by the chief
executive including provisions for pa3mtient levels for house-
holds making undesignated payments in the form of rent;
(7) provide, in accordance with clause (3XA), for agreements Home energy
with home energy suppliers under which— suppliers,
agreements.
(A) the State will pay on a timely basis by way of regular
installments, as reimbursements or a line of credit, to the
supplier designated by each participating household the
amount of assistance determined in accordance with clause
(6) and shall notify each participating household of the
amount of assistance paid on its behalf;
(B) the home energy supplier will charge the household
specified in subclause (A), in the normal billing process, the
difference between the actual cost of the home energy and
the amount of the payment made by the State under this
title;
(C) the home energy supplier will provide assurances that
the home energy supplier will not discriminate against any
eligible household in regard to terms and conditions of sale,
credit, delivery and price; and
(D) subject to such subsection (f) of this section the home
energy supplier will provide assurances that any agreement
entered into with a home energy supplier under this clause
will contain provisions to assure that no household receiving
assistance under this title will have home energy terminated
unless—
(i) the household has failed to pay the amount charged
to such household in accordance with subclause (B) for
at least two months,
(ii) the household receives a written termination
notice not less than thirty days prior to the termination,
and
(iii) the household is afforded, in a timely fashion
before termination, an opportunity for a hearing by an
agency designated by the State;
unless the supplier is located in a State in which the
termination policy contains provisions for a longer grace
period, or notification period, than that described in this
clause;
(8) provide for the direct payment to households to which Direct payments,
subclauses (A) (ii) and (iii) of clause (3) applies;
(9) provide for public participation in the development of the Public
plan; participation.
(10) provide assurances that the State will treat owners and Owners and
renters equitably under the program assisted under this title; renters, equal
treatment.
(11) provide that—
(A) the State may use for planning and administering the
plan an amount of the funds received by such State under
this title not to exceed 5 per centum of the cost of carrying
out the plan except that—
(i) upon proof of unusual circumstances and upon
application to the Secretary, the State may use an
additional amount for planning and administering the
plan not to exceed 2y2 per centum of the cost of carrying
out the plan, and
94 STAT. 296 PUBLIC LAW 96-223—APR. 2, 1980
(ii) in no case may the Federal share of the cost of
planning and administering the plan exceed 50 per
centum of such cost, and
(B) the State will pay from non-Federal sources the re-
maining costs of planning and administering the plan and
will not use Federal funds for such remaining costs;
(12) describe the administrative procedures to be used in
carrying out the plan;
Hearing. (13) provide an opportunity for a fair hearing before the State
agency designated under clause (2) to any individual whose claim
for assistance under the plan is denied or is not acted upon with
reasonable promptness;
Weather-related (14) provide that, of the funds the State receives for each fiscal
and supply year, the State may reserve 3 per centum of the funds to be
shortage
emergencies. available for weather related and supply shortage emergencies,
and if the State reserves such funds, the plan shall identify—
(A) the procedures for planning for such emergencies,
(B) the administrative procedures designating the emer-
gency and implementing an emergency plan,
(C) the procedures for determining the assistance to be
provided in such emergencies, and
(D) the procedures for the use of the funds under this
clause for the purposes of this title in the event that there
are no emergencies;
(15) provide assurance that there will be, to the maximum
extent possible, referral of individuals to, and coordination with,
existing Federal, State, and local weatherization and energy
conservation efforts;
Outreach (16) provide for outreach activities designed to assure that all
activities. eligible households, particularly households with elderly or
handicapped individuals, households with individuals who are
unable to leave their residences, households with migrants,
households with individuals with limited English proficiency,
households with working poor individuals, households with chil-
dren, and households in remote areas, are aware of the assistance
available under this title by using community action agencies,
area agencies on aging. State and local welfare agencies, volun-
teer programs carried out under the Domestic Volunteer Service
42 u s e 4951 Act of 1973, and other appropriate agencies and organizations
note. within the State including home energy suppliers together with
provisions for the reimbursement of such agencies, from adminis-
trative funds, for outreach and certification activities;
(17) establish procedures for monitoring the assistance pro-
vided under the plan including monitoring and auditing any
agreements entered into under clause (7) of this subsection and
describe the documentation to be required of energy suppliers
concerning energy supplied to eligible households;
(18) provide assurances that the State will not reduce regular
benefit levels, from the levels of such benefits as of February 26,
1980, in existing federally assisted cash assistance programs,
except that in a State which increases such programs solely for
the purpose of energy assistance, such increase shall not be
considered a part of the regular program for the purposes of this
paragraph;
Fiscal control (19) provide that fiscal control and fund accounting procedures
and fund will be established as may be necessary to assure the proper
accounting.
dispersal of and accounting for Federal funds paid to the State
under this title;
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 297
(20) provide that reports will be furnished in such form and Reports,
contain such information as the Secretary may reasonably
require, particularly for the carrying out of provisions of section
309; and
(21) provide assurances in the case described in section 305(a)(2)
that the State will not establish any standards of eligibility
under this title based on an assets test which counts cars,
household and personal belongings, or primary residences and in
the case of a household which the State determines to be eligible
under section 305(aXl), no such test will be established under this
title.
(c) The State is authorized to make grants to eligible households to Grants.
meet the rising costs of cooling whenever the household establishes
that such cooling is the result of medical need pursuant to standards
established by the Secretary.
(dXD The Secretary shall approve any State plan, or modification Plan approval
thereof, that meets the requirements of subsections (b) and (c) and and disapproval.
shall not finally disapprove, in whole or in part, any plan, or any
notification thereof, for assistance under this title without first
affording the State reasonable notice and opportunity for a hearing
within the State. Whenever the Secretary disapproves a plan the
Secretary shall, on a timely basis, assist the State to overcome the
deficiencies in the plan.
(2) Where the Secretary determines that a waiver is likely to assist Waiver,
in promoting the objectives of this title, the Secretary may waive
compliance with any of the requirements of subsection (b) to the
extent and for the period the Secretary finds necessary to enable any
such State to carry out the program assisted under this title.
(3) The Secretary shall carry out the functions of the Secretary
under this section promptly.
(4) The Secretary, as soon as possible after the date of enactment of
this title, shall establish criteria and standards for the State plan
requirements under subsections (b) and (c) of this section, together
with timetables for carrying out the plan.
(e) Any State which makes advances available for activities relat-
ing to the development of a State plan and for other activities under
this title in substantial compliance with an approved State plan may
be reimbursed for such advances from the allocation made to that
State under section 306(a) when funds are appropriated to carry out
the provisions of this title.
if) A State agency may exempt small home energy suppliers from Exemption,
the requirements of subsection (bX7)(D), of this section if the State
agency determines that compliance with such subsection, will seri-
ously jeopardize the ability of the small home energy supplier to
conduct such business.
(g) A State may use funds available under this title for the purpose Credits against
of providing credits against State tax to energy suppliers who supply State tax.
such energy at reduced rates to lower income households, but such
credit may not exceed the amount of the loss of revenue to such
supplier on account of such reduced rate. Any certifications for such
tax credits shall be made by the State, but such State may utilize
Federal data available to such State with respect to recipients of
supplemental security income benefits if timely delivery of benefits
to eligible household^ and suppliers will not be impeded by the
implementation of such plan.
(h) At the option of the State, any portion of such State's allotment Direct payments,
may be reserved by the Secretary for the purpose of making direct
payments to eligible households (except for individuals described in
94 STAT. 298 PUBLIC LAW 96-223—APR. 2, 1980
section 305(b) (1), (2), and (3)) containii^ a recipient of supplemental
42 u s e 1381. security income benefits under title XVI of the Social Security Act for
home energy assistance in accordance with guidelines issued by the
Secretary.
Form of (i) At the option of the State, payments described in subsection (b) of
pajTnent. this section may be made, without limitation, in the form of a duly
issued coupon, stamp, or certificate.
UNIFORM DATA COLLECTION
42 use 8608. SEC. 309. (a) The Secretary, after consultation with the Secretary of
Energy, shall establish uniform standards for data collection which
shall be used by States in all reports required under this title.
(bXD The standards established by the Secretary under this section
shall apply to (A) information concerning home energy consumption,
(B) the cost and type of fuels used, (C) the type of fuel used by various
income groups, (D) the number and income levels of households
assisted by this title, and (E) any other information which the
Secretary determines to be reasonably necessary to carry out the
provisions of this title.
(2) In carrying out this section, the Secretary shall analyze informa-
tion supplied by the Secretary of Energy on the price structure of
various types of fuel, particularly the increases in such price struc-
ture as it relates to the financial assistance provided under this title.
Report to (c) The Secretary shall report annually to Congress concerning data
Congress. collected under subsection (b).
PAYMENTS
42 use 8609. SEC. 310. (a) From the amount allotted to each State pursuant to
section 306, the Secretary shall pay to the State which has an
application approved under section 308 an amount equal to the
amount needed for the purposes set forth in the State plan.
(b) Payments under this title may be made in installments in
advance or by way of reimbursement, with necesseiry adjustments on
account of overpajrments and underpayments.
WITHHOLDING
42 use 8610. SEC. 311. Whenever the Secretary, after reasonable notice and
opportunity for hearing within the State to any State, finds that
there has been a substantial failure to comply with any provision set
forth in the State plan of that State approved under section 308, the
Secretary shall notify the State that nirther p^ments will not be
made under this title until the Secretary is satisfied that there is no
longer any such failure to comply. Until the Secretary is so satisfied,
no further pajnnents shall be made under this title.
CRIMINAL PENALTIES
42 u s e 8611. SEC. 312. Whoever violates provisions of this title or who knowingly
provides false information in any rejwrt required under this title
shall be fined not more than $10,000 or imprisoned not more them five
years or both.
ADMINISTRATION
Delegation of SEC. 313. (aXD The Secretary may delegate any functions under
authority. this title, except the making of r^ulations, to any officer or
42 u s e 8612.
employee of the Department of Hedth, Education, and Welfare.
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 299
(2) The Secretary shall issue regulations under this title, within Regulations.
sixty days after the date of enactment of this title.
(b) In administering the provisions of this title, the Secretary is Federal agency
services and
authorized to utilize the services and facilities of any agency of the facilities,
Federal Government and of any other public agency or institution, to utilization.
the extent such services and facilities are otherwise authorized to be
made available for such purpose, in accordance with appropriate
agreements, and to pay for such services either in advance or by way
of reimbursement as may be agreed upon.
(c)(1) Notwithstanding any other provision of law, the amount of
any fuel assistance payments or allowances provided to an eligible
household under this title shall not be considered income or resources
of such household (of any member thereof) for any purpose under any
Federal or State law, including any law relating to taxation, public
assistance or welfare program.
(2) Section 5(d) of the Food Stamp Act of 1977 is amended by 7 u s e 2014.
striking out "and (10)" and inserting in lieu thereof the following:
"(10) during fiscal year 1981, any income attributable to an increase
in State public assistance grants which is intended primarily to meet
the increased cost of home energy, and (11)".
(d) The Secretary shall establish procedures for Federal monitoring Federal
of State administration of programs assisted under this title. monitoring.
42 u s e 8612.
(e) The Secretary shall coordinate the administration of the pro-
gram established under this title with appropriate programs author-
ized by the Economic Opportunity Act of 1964 and any other existing 42 u s e 2701
Federal energy programs which provide related assistance programs. note.
(f) The Secretary, after consultation with the Secretary of the
Department of Energy, the Director of the Community Services
Administration, the Secretary of Housing and Urban Development
and the Secretary of Agriculture, shall establish procedures for
referrals for participation in Federal weatherization programs under
section 308(b)(15).
(g) The Secretary, in cooperation with such other agencies as may Total annual
be appropriate, shall develop and implement the capacity for estimat- energy
expenditure
ing total annual energy expenditures of low-income households in estimates.
each State. The Secretary shall submit to the Congress his estimates Submittal to
pursuant to this subsection together with a description of the manner eongress.
in which they were determined prior to the beginning of each
calendar year starting with 1981.
TITLE IV—MISCELLANEOUS PROVISIONS
SEC. 401. REPEAL OF CARRYOVER BASIS.
(a) I N GENERAL.—Subsections (a), (d), and (e) of section 2005 of the 26 u s e 306 and
Tax Reform Act of 1976 (relating to carryover basis), and subsection note, 691, 1001,
1014, 1016, 1023,
(a), paragraphs (2) through (9) of subsection (c), and paragraphs (1) 1024, 1223, 1246,
and (3) of subsection (r) of section 702 of the Revenue Act of 1978, and 6039A, 6698A.
the amendments made by those subsections or paragraphs are hereby
repealed.
(b) REVIVAL OF PRIOR LAW.—Except to the extent necessary to 26 u s e 1023
carry out subsection (d), the Internal Revenue Code of 1954 shall be note.
applied and administered as if the provisions repealed by subsection
(a), and the amendments made by those provisions, had not been
enacted.
(c) CONFORMING CHANGES.—
94 STAT. 300 PUBLIC LAW 96-223—APR. 2, 1980
26 use 1016. (1) Subsection (c) of section 1016 (relating to increase in basis in
case of certain involuntary conversions) is amended to read as
follows:
"(c) INCREASE IN BASIS IN THE CASE OF CERTAIN INVOLUNTARY
CONVERSIONS.—
"(1) IN GENERAL,—If—
"(A) there is a compulsory or involuntary conversion
26 use 1033. (within the meaning of section 1033) of any property, and
"(B) an additional estate tax is imposed on such conversion
26 use 2032A. under section 2032A(c),
then the adjusted basis of such property shall be increased by the
amount of such tax.
"(2) TIME ADJUSTMENT MADE.—Any adjustment under para-
graph (1) shall be deemed to have occurred immediately before
the compulsory or involuntary conversion.".
(2)(A) Section 1040 (relating to satisfaction of a pecuniary
bequest) is amended to read as follows:
26 use 1040. "SEC. 1040. USE OF FARM, ETC., REAL PROPERTY TO SATISFY PECUNIARY
BEQUEST.
"(a) GENERAL RULE.—If the executor of the estate of any decedent
satisfies the right of a qualified heir (within the meaning of section
2032A(e)(l)) to receive a pecuniary bequest with property with respect
to which an election was made under section 2032A, then gain on
such exchange shall be recognized to the estate only to the extent
that, on the date of such exchange, the fair market value of such
property exceeds the value of such property for purposes of chapter
11 (determined without regard to section 2032A).
"(b) SIMILAR RULE FOR CERTAIN TRUSTS.—To the extent provided in
regulations prescribed by the Secretary, a rule similar to the rule
provided in subsection (a) shall apply where—
"(1) by reason of the death of the decedent, a qualified heir has
a right to receive from a trust a specific dollar amount which is
the equivalent of a pecuniary bequest, and
"(2) the trustee of the trust satisfies such right with property
with respect to which an election was made under section 2032A.
"(c) BASIS OF PROPERTY ACQUIRED IN EXCHANGE DESCRIBED IN
SUBSECTION (a) OR (b).—The basis of property acquired in an exchange
with respect to which gain realized is not recognized by reason of
subsection (a) or Ot)) shall be the basis of such property immediately
before the exchange increased by the amount of the gain recognized
to the estate or trust on the exchange."
(B) The item relating to section 1040 in the table of sections for
part III of subchapter O of chapter 1 is amended to read as
follows:
"Sec. 1040. Use of farm, etc., real property to satisfy pecuniary bequest."
26 use 2614. (3) The second sentence of section 2614(a) (relating to special
rules for generation-skipping transfers) is amended to read as
follows: "If property is transferred in a generation-skipping
transfer subject to tax under this chapter which occurs at the
same time as, or after, the death of the deemed transferor, the
basis of such property shall be adjusted in a manner similar to
the manner provided under section 1014(a)."
26 use 1014 (d) ELECTION OF CARRYOVER BASIS RULES BY CERTAIN ESTATES.—
^°^- Notwithstanding any other provision of law, in the case of a decedent
dying after December 31, 1976, and before November 7, 1978, the
executor (within the meaning of section 2203 of the Internal Revenue
26 use 2203. Code of 1954) of such decedent's estate may irrevocably elect, within
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 301
120 days following the date of enactment of this Act and in such
manner as the Secretary of the Treasury or his delegate shall
prescribe, to have the basis of all property acquired from or passing
from the decedent (within the meaning of section 1014(b) of the
Internal Revenue Code of 1954) determined for all purposes under 26 use ioi4.
such Code as though the provisions of section 2005 of the Tax Reform
Act of 1976 (as amended by the provisions of section 702(c) of the 90 Stat. 1872.
Revenue Act of 1978) applied to such property acquired or passing 92 Stat. 2925.
from such decedent.
(e) EFFECTIVE DATE.—The amendments made by this section shall 26 u s e 1023
apply in respect of decedents dying after December 31,1976. note.
SEC. 402. DISAPPROVAL OF PRESIDENTIAL ACTIONS ADJUSTING OIL
IMPORTS.
Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. 1862) la
amended by adding at the end thereof the following new subsection:
"(eXD An action taken by the President under subsection (b) to
adjust imports of petroleum or petroleum products shall cease to have
force and effect upon the enactment of a disapproval resolution,
provided for in paragraph (2), relating to that action.
"(2XA) This paragraph is enacted by the Congress—
"(i) as an exercise of the rulemaking power of the House of
Representatives and the Senate, respectively, and as such is
deemed a part of the rules of each House, respectively, but
applicable only with respect to the procedures to be followed in
that House in the case of disapproval resolutions and such
procedures supersede other rules only to the extent that they are
inconsistent therewith; and
"(ii) with the full recognition of the constitutional right of
either House to change the rules (so far as relating to the
procedure of that House) at any time, in the same manner, and to
the same extent as any other rule of that House.
"(B) For purposes of this subsection, the term 'disapproval resolu- "Disapproval
tion' means only a joint resolution of either House of Congress the resolution."
matter after the resolving clause of which is as follows: 'That the
Congress disapproves the action taken under section 232 of the Trade
Expansion Act of 1962 with respect to petroleum imports under 19 use 1862
dated .*, the first blank space being filled
with the number of the proclamation, Executive order, or other
Executive act issued under the authority of subsection (b) of such
section 232 for purposes of adjusting imports of petroleum or petro-
leum products and the second blank being filled with the appropriate
date.
"(CXi) AH disapproval resolutions introduced in the House of Resolutions,
Representatives shall be referred to the Committee on Ways and referral to
congressional
Means and all disapproval resolutions introduced in the Senate shall committees.
be referred to the Committee on Finance.
"(ii) No amendment to a disapproval resolution shall be in order in
either the House of Representatives or the Senate, and no motion to
suspend the application of this clause shaJl be in order in either
House nor shall it be in order in either House for the Presiding
Officer to entertain a request to suspend the application of this clause
by unanimous consent."
SEC. 403. QUALIFIED LIQUIDATIONS OF LIFO INVENTORIES.
(a) TREATMENT OF QUAUFIED LIQUIDATIONS.—
94 STAT. 302 PUBLIC LAW 96-223—APR. 2, 1980
(1) I N GENERAL.—Subpart D of part II of subchapter E of
chapter 1 (relating to inventories) is amended by adding at the
end thereof the following new section:
26 u s e 473. "SEC. 473. QUALIFIED LIQUIDATIONS OF LIFO INVENTORIES.
"(a) GENERAL RULE.—If, for any liquidation year—
"(1) there is a qualified liquidation of goods which the taxpayer
inventories under the LIFO method, and
"(2) the taxpayer elects to have the provisions of this section
apply with respect to such liquidation,
then the gross income of the taxpayer for such taxable year shall be
adjusted as provided in subsection (b).
"(b) ADJUSTMENT FOR REPLACEMENTS.—If the liquidated goods are
replaced (in whole or in part) during any replacement year and such
replacement is reflected in the closing inventory for such year, then
the gross income for the liquidation year shall be—
"(1) decreased by an amount equal to the excess of—
"(A) the aggregate replacement cost of the liquidated
goods so replaced during such year, over
"(B) the aggregate cost of such goods reflected in the
opening inventory of the liquidation year, or
"(2) increased by an amount equal to the excess of—
"(A) the aggregate cost reflected in such opening inventory
of the liquidated goods so replaced during such year, over
"(B) such aggregate replacement cost.
"(c) QUALIFIED LIQUIDATION DEFINED.—For purposes of this sec-
tion—
"(1) I N GENERAL.—The term 'qualified liquidation' means—
"(A) a decrease in the closing inventory of the liquidation
year from the opening inventory of such year, but only if
"(B) the taxpayer establishes to the satisfaction of the
Secretary that such decrease is directly and primarily attrib-
utable to a qualified inventory interruption.
"(2) QUAUFIED INVENTORY INTERRUPTION DEFINED.—
"(A) IN GENERAL.—The term 'qualified inventory interrup-
tion' means a regulation, request, or interruption described
in subparagraph (B) but only to the extent provided in the
notice published pursuant to subparagraph (B).
"(B) DETERMINATION BY SECRETARY.—Whenever the Secre-
tary, after consultation with the appropriate Federal offi-
cers, determines—
"(i)that—
"(I) any Department of Energy regulation or
request with respect to energy supplies, or
"(II) any embargo, international boycott, or other
major foreign trade interruption,
has made difficult or impossible the replacement during
the liquidation year of any class of goods for any class of
taxpayers, and
"(ii) that the application of this section to that class of
goods and taxpayers' is necessary to carry out the pur-
poses of this section.
Publication in he shall publish a notice of such determinations in the
Federal Federal Register, together with the period to be affected by
"^^^'•- such notice.
"(d) OTHER DEFINITIONS AND SPECIAL RULES.—For purposes of this
section—
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 303
"(1) LIQUIDATION YEAR.—The term 'liquidation year* means the
taxable year in which occurs the qualified liquidation to which
this section applies.
"(2) REPLACEMENT YEAR.—The term 'replacement year' means
any taxable year in the replacement period; except that such
term shall not include any taxable year after the taxable year in
which replacement of the liquidated goods is completed.
"(3) REPLACEMENT PERIOD.—The term 'replacement period'
means the shorter of—
"(A) the period of the 3 taxable years following the
liquidation year, or
"(B) the period specified by the Secretary in a notice
published in the Federal Register with respect to that
qualified inventory interruption.
Any period specified by the Secretary under subparagraph (B)
may be modified by the Secretary in a subsequent notice pub-
lished in the Federal Register.
"(4) LIFO METHOD.—The term 'LIFO method' means the
method of inventorying goods described in section 472. 26 USC 472.
"(5) ELECTION.—
"(A) IN GENERAL.—An election under subsection (a) shall
be made subject to such conditions, and in such manner and
form and at such time, as the Secretary may prescribe by
regulation.
"(B) IRREVOCABLE ELECTION.—An election under this sec-
tion shall be irrevocable and shall be binding for the liquida-
tion year and for all determinations for prior and subsequent
taxable years insofar as such determinations are affected by
the adjustments under this section.
"(e) REPLACEMENT; INVENTORY BASIS.—For purposes of this chap-
ter—
"(1) REPLACEMENTS.—If the closing inventory of the taxpayer
for any replacement year reflects an increase over the opening
inventory of such goods for such year, the goods reflecting such
increase shall be considered, in the order of their acquisition, as
having been acquired in replacement of the goods most recently
liquidated (whether or not in a qualified liquidation) and not
previously replaced.
"(2) AMOUNT AT WHICH REPLACEMENT GOODS TAKEN INTO
ACCOUNT.—In the case of any qualified liquidation, any goods
considered under paragraph (1) as having been acquired in
replacement of the goods liquidated in such liquidation shall be
taken into purchases and included in the closing inventory of the
taxpayer for the replacement year at the inventory cost basis of
the goods replaced.
"(f) SPECIAL RULES FOR APPUCATION OF ADJUSTMENTS.—
"(1) PERIOD OF UMITATIONS.—If—
"(A) an adjustment is required under this section for any
taxable year by reason of the replacement of liquidated
goods during any replacement year, and
"(B) the assessment of a deficiency, or the allowance of a
credit or refund of an overpayment of tax attributable to
such adjustment, for any taxable year, is otherwise pre-
vented by the operation of any law or rule of law (other than
section 7122, relating to compromises), 26 use 7122.
then such deficiency may be assessed, or credit or refund allowed,
within the period prescribed for assessing a deficiency or allow-
ing a credit or refund for the replacement year if a notice for
79-194 O—81—pt. 1 23 : QL3
94 STAT. 304 PUBLIC LAW 96-223—APR. 2, 1980
deficiency is mailed, or claim for refund is filed, within such
period.
"(2) INTEREST.—Solely for purposes of determining interest on
any overpayment or underpayment attributable to an adjust-
ment made under this section, such overpayment or underpay-
ment shall be treated as an overpayment or underpa5mient (as
the case may be) for the replacement year.
26 use 472. "(g) COORDINATION WITH SECTION 472.—The Secretary shall pre-
scribe such regulations as may be necessary to coordinate the
provisions of this section with the provisions of section 472."
(2) CLERICAL AMENDMENT.—The table of sections for subpart D
of part II of subchapter E of chapter 1 is amended by adding at
the end thereof the following new item:
"Sec. 473. Qualified liquidations of LIFO inventories."
26 use 473 note. (3) EFFECTIVE DATE.—The amendments made by paragraphs (1)
and (2) shall apply to qualified liquidations (within the meaning
Ante, p. 302. of section 473(c) of the Internal Revenue Code of 1954) in taxable
years ending after October 31,1979.
(b) RECOGNITION OF GAIN ON CERTAIN DISPOSITIONS OF LIFO
INVENTORIES.—
(1) AMENDMENT OF SECTION 336.—Section 336 (relating to
general rule for liquidations) is amended to read as follows:
26 use 336. "SEC. 336. DISTRIBUTIONS OF PROPERTY IN LIQUIDATION.
"(a) GENERAL RULE.—Except as provided in subsection (b) of this
26 u s e 453. section and in section 453(d) (relating to disposition of installment
obligations), no gain or loss shall be recognized to a corporation on the
distribution of property in partial or complete liquidation.
"(b) LIFO INVENTORY.—
"(1) I N GENERAL.—If a corporation inventorying goods under
the LIFO method distributes inventory assets in partial or
complete liquidation, then the LIFO recapture amount with
respect to such assets shall be treated as gain to the corporation
recognized from the sale of such inventory assets.
"(2) EXCEPTION WHERE BASIS DETERMINED UNDER SECTION
26 use 334. 334(b)(1).—Paragraph (1) shall not apply to any liquidation
26 use 332. under section 332 for which the basis of property received is
determined under section 334(b)(1).
"(3) LIFO RECAPTURE AMOUNT.—For purposes of this subsec-
tion, the term 'LIFO recapture amount' means the amount (if
any) by which—
"(A) the inventory amount of the inventory assets under
26 use 471. the first-in, first-out method authorized by section 471,
exceeds
"(B) the inventory amount of such assets under the LIFO
method.
"(4) DEFINITIONS.—For purposes of this subsection—
"(A) LIFO METHOD.—The term 'LIFO method' means the
26 use 472. method authorized by section 472 (relating to last-in, first-
out inventories).
"(B) OTHER DEFINITIONS.—The term 'inventory assets' has
the meaning given to such term by subparagraph (A) of
26 use 311. section 311(b)(2), and the term 'inventory amount' has the
meaning given to such term by subparagraph (B) of section
311(b)(2) (as modified by paragraph (3) of section 311(b))."
26 use 337. (2) SECTION 337 UQUIDATIONS.—
(A) Section 337 (relating to gain or loss on sales or
exchanges in connection with certain liquidations) is
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 305
amended by adding at the end thereof the following new
subsection:
"(f) SPECIAL RULE FOR L I F O INVENTORIES.—
"(1) I N GENERAL.—In the case of a corporation inventorying
goods under the LIFO method, this section shall apply to gain
from the sale or exchange of inventory assets (which under
subsection (b)(2) constitute property) only to the extent that such
gain exceeds the LIFO recapture amount with respect to such
assets.
"(2) DEFINITIONS.—The terms used in this subsection shall
have the same meaning as when used in section 336(b). ^nte, p. 304.
"(3) CROSS REFERENCE.—
"For treatment of gain from the sale or exchange of an installment obli-
gation as gain resulting from the sale or exchange of the property in re-
spect of which the obligation was received, see the last sentence of section
453(d)(1)."
(B) Subparagraph (B) of section 453(d)(4) (relating to liqui- 26 use 453.
dations to which section 337 applies) is amended by adding at 26 use 337.
the end thereof the following new sentence: "In the case of
any installment obligation which would have met the
requirements of clauses (i) and (ii) of the first sentence of this
subparagraph but for section 337(f), gain shall be recognized ^nte, p. 304.
to such corporation by reason of such distribution only to the
extent gain would have been recognized under section 337(f)
if such corporation had sold or exchanged such installment
obligation on the day of such distribution."
(3) EFFECTIVE DATE.—The amendments made by paragraphs (1) 26 use 336 note.
and (2) shall apply to distributions and dispositions pursuant to
plans of liquidation adopted after December 31,1981.
SEC. 404. EXEMPTION OF CERTAIN INTEREST INCOME FROM TAX.
(a) I N GENERAL.—Section 116 (relating to partial exclusion of
dividends received by individuals) is amended to read as follows:
"SEC. 116. PARTIAL EXCLUSION OF DIVIDENDS AND INTEREST RECEIVED 26 USC 116.
BY INDIVIDUALS.
"(a) EXCLUSION FROM GROSS INCOME.—Gross income does not
include the sum of the amounts received during the taxable year by
an individual as—
"(1) a dividend from a domestic corporation, or
"(2) interest.
"(b) LIMITATIONS.—
"(1) MAXIMUM DOLLAR AMOUNT.—The aggregate amount
excluded under subsection (a) for any taxable year shall not
exceed $200 ($400 in the case of a joint return under section 6013). 26 use 6013.
"(2) CERTAIN DIVIDENDS EXCLUDED.—Subsection (aXD shall not
apply to any dividend from a corporation which, for the taxable
year of the corporation in which the distribution is made, or for
the next preceding taxable year of the corporation, is a corpora-
tion exempt from tax under section 501 (relating to certain 26 use 501.
charitable, etc., organizations) or section 521 (relating to farmers' 26 use 521.
cooperative associations).
"(c) DEFINITIONS; SPECIAL RULES.—For purposes of this section—
"(1) INTEREST DEFINED.—The term 'interest' means—
"(A) interest on deposits with a bank (as defined in section
581),
"(B) amounts (whether or not designated as interest) paid,
in respect of deposits, investment certificates, or withdrawa-
ble or repurchasable shares, by—
94 STAT. 306 PUBLIC LAW 96-223—APR. 2, 1980
"(i) a mutual savings bank, cooperative bank, domes-
tic building and loan association, industrial loan associ-
ation or bank, or credit union, or
"(ii) any other savings or thrift institution which is
chartered and supervised under Federal or State law,
the deposits or accounts in which are insured under Federal
or State law or which are protected and guaranteed under
State law,
"(C) interest on—
"(i) evidences of indebtedness (including bonds, deben-
tures, notes, and certificates) issued by a domestic corpo-
ration in registered form, and
"(ii) to the extent provided in regulations prescribed
by the Secretary, other evidences of indebtedness issued
by a domestic corporation of a type offered by corpora-
tions to the public,
"(D) interest on obligations of the United States, a State,
or a political subdivision of a State (not excluded from gross
income of the taxpayer under any other provision of law),
and
"(E) interest attributable to participation shares in a trust
established and maintained by a corporation established
pursuant to Federal law.
"(2) DISTRIBUTIONS FROM REGULATED INVESTMENT COMPANIES
AND REAL ESTATE INVESTMENT TRUSTS.—SubsectioD (a) shall apply
with respect to any dividend from—
"(A) a regulated investment company, subject to the limi-
Post, p. 307. tations provided in section 854(b)(2), or
"(B) real estate investment trust, subject to the limitations
Post, p. 307. provided in section 857(c).
"(3) CERTAIN NONRESIDENT AUENS INEUGIBLE FOR EXCLUSION.—
In the case of a nonresident alien individual, subsection (a) shall
apply only—
"(A) in determining the tax imposed for the taxable year
26 use 871. pursuant to section 871(b)(1) and only in respect of dividends
and interest which are effectively connected with the con-
duct of a trade or business within the United States, or
"(B) in determining the tax imposed for the taxable year
26 use 877. pursuant to section 877(b)."
(b) CLERICAL AND CONFORMING AMENDMENTS.—
(1) The table of sections for part III of subchapter B of chapter 1
is amended by inserting "and interest" after "dividends" in the
Ante, p. 305. item relating to section 116.
26 use 265. (2) The first sentence of paragraph (2) of section 265 (relating to
interest) is amended by inserting after "subtitle" the following:
", or to purchase or carry obligations or shares, or to make
deposits or other investments, the interest on which is described
in section 116(c) to the extent such interest is excludable from
gross income under section 116".
26 use 584. (3) Paragraph (2) of section 584(c) (relating to income of
participants in fund) is amended by inserting "or interest" after
dividends" each place it appears in the caption and text
thereof.
26 use 643. (4) Paragraph (7) of section 643(a) (relating to definition of
distributable net income) is amended by inserting "or interest"
after "dividends" each place it appears in the caption or text
thereof.
PUBLIC LAW 96-223—APR. 2, 1980 94 STAT. 307
(5) Paragraph (5) of section 702(a) (relating to income and 26 use 702.
credits of partners) is amended by inserting "or interest" after
"dividends".
(6) Subsection (h) of section 854 (relating to other dividends) is 26 USC 854.
amended—
(A) by inserting "AND TAXABLE INTEREST" in the caption
after "DIVIDENDS",
(B) by striking out the caption of paragraph (1) and
inserting in lieu thereof "DEDUCTION UNDER SECTION 243.—",
(C) by striking out "the exclusion under section 116 and"
in paragraph (1),
(D) by redesignating paragraphs (2) and (3) as (3) and (4),
(E) by inserting after paragraph (1) the following new
paragraph:
"(2) EXCLUSION UNDER SECTION I I 6 . — I n the case of a dividend -Ante, p. 305.
(other than a dividend described in subsection (a)) received from
a regulated investment company—
"(A) which meets the requirements of section 852(a) for the 26 use 852.
taxable year in which it paid the dividend,
"(B) the aggregate interest received by which during the
taxable year is less than 75 percent of its gross income, and
"(C) the aggregate dividends received by which during the
taxable year is less than 75 percent of its gross income,
then, in computing the exclusion under section 116, there shall
be taken into account only that portion of the dividend which
bears the same ratio to the amount of such dividend as the sum of
the aggregate dividends received and aggregate interest received
bears to gross income. For purposes of the preceding sentence,
gross income and aggregate interest received shall each be
reduced by so much of the deduction allowable by section 163 for 26 use 163.
the taxable year as does not exceed aggregate interest received
for the taxable year."
(F) by striking out "section 116(b)" in subparagraph (B) of
paragraph (4) (as redesignated by subparagraph (D) of this
paragraph) and inserting in lieu thereof "section 116(b)(2)",
(G) by striking out "section 116(c)" in subparagraph (B) of
paragraph (4) (as so redesignated) and inserting in lieu
thereof "section 116(c)(2)", and
(H) by adding at the end of paragraph (4) (as redesignated)
the following new subparagraph:
"(C) The term 'aggregate interest received' includes only "Aggregate
interest described in section 116(c)(1)." interest
(7) The table of sections for part I of subchapter M of chapter 1 ^^^^"^
is amended by inserting "and taxable interest' after "dividends"
in the item relating to section 854.
(8) Subsection (c) of section 857 (relating to restrictions applica- 26 use 857.
ble to dividends received from real estate investment trusts) is
amended to read as follows:
"(c) LIMITATIONS APPLICABLE TO DIVIDENDS RECEIVED FROM REAL
ESTATE INVESTMENT TRUSTS.—
"(1) CAPITAL GAIN DIVIDEND.—For purposes of section 116
(relating to exclusion for dividends and interest received by
individuals), a capital gain dividend (as defined in subsection
(b)(3)(C)) received from a real estate investment trust shall not be
considered a dividend.
"(2) OTHER DIVIDENDS.—In the ceise of a dividend received from
a real estate investment trust (other than a dividend described in
paragraph (1)), if—
94 STAT. 308 PUBLIC LAW 96-223—APR. 2, 1980
"(A) the real estate investment trust meets the require-
ments of this part for the taxable year during which it paid
the dividend, and
"(B) the aggregate interest received by the real estate
investment trust for the taxable year is less than 75 percent
of its gross income,
Ante, p. 305. then, in computing the exclusion under section 116, there shall
be taken into account only that portion of the dividend which
bears the same ratio to the amount of such dividend as aggregate
interest received bears to gross income.
"(3) ADJUSTMENTS TO GROSS INCOME AND AGGREGATE INTEREST
RECEIVED.—For purposes of paragraph (2)—
"(A) gross income does not mclude the net capital gain,
"(B) gross income and aggregate interest received shall
each be reduced by so much of the deduction allowable by
26 use 163. section 163 for the taxable year (other than for interest on
mortgages on real property owned by the real estate invest-
ment trust) as does not exceed aggregate interest received
for the taxable year, and
"(C) gross income shall be reduced by the sum of the taxes
26 use 857. imposed by paragraphs (4), (5), and (6) of section 857(b).
"(4) AGGREGATE INTEREST RECEIVED.—For purposes of this
subsection, the term 'aggregate interest received means only
interest described in section 116(cXl)-
"(5) NOTICE TO SHAREHOLDERS.—The amount of any distribu-
tion by a real estate investment trust which may be taken into
account as a dividend for purposes of the exclusion under section
116 shall not exceed the amount so designated by the trust in a
written notice to its shareholders mailed not later than 45 days
after the close of its taxable year.
"(6) CROSS REFERENCE.—
"For restriction on dividends received by a corporation, see section
243(c)(2).'*
26 use 116 note. (c) EFFECTIVE DATE.—The amendments made by this section shall
apply with respect to taxable years beginning after December 31,
1980, and before January 1,1983.
Approved April 2, 1980.
LEGISLATIVE HISTORY:
HOUSE REPORTS: No. 96-304 (eomm. on Ways and Means) and No. 96-817 (eomm.
of eonference).
SENATE REPORT No. 96-394 (Comm. on Finance).
C O N G R E S S I O N A L RECORD:
Vol. 125 (1979): June 28, considered and peissed House.
Nov. 15, 16, 19, 20, 26-30, Dec. 3-7, 10-15, 17, considered and
passed Senate, amended.
Vol. 126 (1980): Mar. 12, 13, House agreed to conference report.
Mar. 19-21, 24-27, Senate agreed to conference report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS:
Vol. 16, No. 14 (1980): Apr. 2, Presidential statement.
