S.Amdt. 2454

1. Adds Subtitle H--Incentives for Alternative Motor Vehicles on page 1298, line 24

   Adds a sectionPrinted page

   Inserted: Subtitle H--Incentives for Alternative Motor Vehicles

   Inserted: PART I--INCENTIVES

   Inserted: SEC. 5671. ALTERNATIVE MOTOR VEHICLE CREDIT.

   Inserted: (a) In General.--Subpart B of part IV of subchapter A of chapter 1 (relating to foreign tax credit, etc.) is amended by adding at the end the following new section:

   Inserted: "SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT.

   Inserted: "(a) Allowance of Credit.--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--

   Inserted: "(1) the new qualified fuel cell motor vehicle credit determined under subsection (b),

   Inserted: "(2) the new qualified hybrid motor vehicle credit determined under subsection (c), and

   Inserted: "(3) the new qualified advanced lean burn technology motor vehicle credit determined under subsection (f).

   Inserted: "(b) New Qualified Fuel Cell Motor Vehicle Credit.--

   Inserted: "(1) In general.--For purposes of subsection (a), the new qualified fuel cell motor vehicle credit determined under this subsection with respect to a new qualified fuel cell motor vehicle placed in service by the taxpayer during the taxable year is--

   Inserted: "(A) $4,000, if such vehicle has a gross vehicle weight rating of not more than 8,500 pounds, and

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   Inserted: "(B) $10,000, if such vehicle has a gross vehicle weight rating of more than 8,500 pounds but not more than 14,000 pounds.

   Inserted: "(2) Increase for fuel efficiency.--

   Inserted: "(A) In general.--The amount determined under paragraph (1)(A) with respect to a new qualified fuel cell motor vehicle which is a passenger automobile or light truck shall be increased by--

   Inserted: "(i) $1,000, if such vehicle achieves at least 150 percent but less than 175 percent of the 2002 model year city fuel economy,

   Inserted: "(ii) $1,500, if such vehicle achieves at least 175 percent but less than 200 percent of the 2002 model year city fuel economy,

   Inserted: "(iii) $2,000, if such vehicle achieves at least 200 percent but less than 225 percent of the 2002 model year city fuel economy,

   Inserted: "(iv) $2,500, if such vehicle achieves at least 225 percent but less than 250 percent of the 2002 model year city fuel economy,

   Inserted: "(v) $3,000, if such vehicle achieves at least 250 percent but less than 275 percent of the 2002 model year city fuel economy,

   Inserted: "(vi) $3,500, if such vehicle achieves at least 275 percent but less than 300 percent of the 2002 model year city fuel economy, and

   Inserted: "(vii) $4,000, if such vehicle achieves at least 300 percent of the 2002 model year city fuel economy.

   Inserted: "(B) 2002 model year city fuel economy.--For purposes of subparagraph (A), the 2002 model year city fuel economy with respect to a vehicle shall be determined in accordance with the following tables:

   Inserted: "(i) In the case of a passenger automobile:

   Inserted: "If vehicle inertia weight clThe 2002 model year city fuel economy is:

   Inserted: 1,500 or 1,750 lbs..........................................45.2 mpg 2,000 lbs...................................................39.6 mpg 2,250 lbs...................................................35.2 mpg 2,500 lbs...................................................31.7 mpg 2,750 lbs...................................................28.8 mpg 3,000 lbs...................................................26.4 mpg 3,500 lbs...................................................22.6 mpg 4,000 lbs...................................................19.8 mpg 4,500 lbs...................................................17.6 mpg 5,000 lbs...................................................15.9 mpg 5,500 lbs...................................................14.4 mpg 6,000 lbs...................................................13.2 mpg 6,500 lbs...................................................12.2 mpg 7,000 to 8,500 lbs..........................................11.3 mpg.

   Inserted: "(ii) In the case of a light truck:

   Inserted: "If vehicle inertia weight clThe 2002 model year city fuel economy is:

   Inserted: 1,500 or 1,750 lbs..........................................39.4 mpg 2,000 lbs...................................................35.2 mpg 2,250 lbs...................................................31.8 mpg 2,500 lbs...................................................29.0 mpg 2,750 lbs...................................................26.8 mpg 3,000 lbs...................................................24.9 mpg 3,500 lbs...................................................21.8 mpg 4,000 lbs...................................................19.4 mpg 4,500 lbs...................................................17.6 mpg 5,000 lbs...................................................16.1 mpg 5,500 lbs...................................................14.8 mpg 6,000 lbs...................................................13.7 mpg 6,500 lbs...................................................12.8 mpg 7,000 to 8,500 lbs..........................................12.1 mpg.

   Inserted: "(C) Vehicle inertia weight class.--For purposes of subparagraph (B), the term 'vehicle inertia weight class' has the same meaning as when defined in regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et seq.).

   Inserted: "(3) New qualified fuel cell motor vehicle.--For purposes of this subsection, the term 'new qualified fuel cell motor vehicle' means a motor vehicle--

   Inserted: "(A) which is propelled by power derived from 1 or more cells which convert chemical energy directly into electricity by combining oxygen with hydrogen fuel which is stored on board the vehicle in any form and may or may not require reformation prior to use,

   Inserted: "(B) which, in the case of a passenger automobile or light truck for 2004 and later model vehicles, has received a certificate that such vehicle meets or exceeds the Bin 5 Tier II emission level established in regulations prescribed by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act for that make and model year vehicle,

   Inserted: "(C) the original use of which commences with the taxpayer,

   Inserted: "(D) which is acquired for use or lease by the taxpayer and not for resale, and

   Inserted: "(E) which is made by a manufacturer.

   Inserted: "(c) New Qualified Hybrid Motor Vehicle Credit.--

   Inserted: "(1) In general.--For purposes of subsection (a), the new qualified hybrid motor vehicle credit determined under this subsection with respect to a new qualified hybrid motor vehicle placed in service by the taxpayer during the taxable year is the credit amount determined under paragraph (2).

   Inserted: "(2) Credit amount.--

   Inserted: "(A) In general.--The credit amount determined under this paragraph shall be determined in accordance with the following table:

   Inserted: "In the case of a new qualified hybrid motor vehicle which is a passenger automobile, medium duty passenger vehicle, or light truck and which provides the following percentage of the maximum available power:

   Inserted: "If percentage of the maximum available power is:The credit amount is:

   Inserted: At least 4 percent but less than 10 percent.................$350 ....

   Inserted: At least 10 percent but less than 20 percent................$600 ....

   Inserted: At least 20 percent but less than 30 percent................$850 ....

   Inserted: At least 30 percent.......................................$1,100.....

   Inserted: "(B) Increase for fuel efficiency.--

   Inserted: "(i) Amount.--The amount determined under subparagraph (A) with respect to a new qualified hybrid motor vehicle which is a passenger automobile or light truck shall be increased by--

   Inserted: "(I) $600, if such vehicle achieves at least 125 percent but less than 150 percent of the 2002 model year city fuel economy,

   Inserted: "(II) $1,100, if such vehicle achieves at least 150 percent but less than 175 percent of the 2002 model year city fuel economy,

   Inserted: "(III) $1,600, if such vehicle achieves at least 175 percent but less than 200 percent of the 2002 model year city fuel economy,

   Inserted: "(IV) $2,100, if such vehicle achieves at least 200 percent but less than 225 percent of the 2002 model year city fuel economy,

   Inserted: "(V) $2,600, if such vehicle achieves at least 225 percent but less than 250 percent of the 2002 model year city fuel economy, and

   Inserted: "(VI) $3,100, if such vehicle achieves at least 250 percent of the 2002 model year city fuel economy.

   Inserted: "(ii) 2002 model year city fuel economy.--For purposes of clause (i), the 2002 model year city fuel economy with respect to a vehicle shall be determined on a gasoline gallon equivalent basis as determined by the Administrator of the Environmental Protection Agency using the tables provided in subsection (b)(2)(B) with respect to such vehicle.

   Inserted: "(iii) Option to use like vehicle.--For purposes of clause (i), at the option of the vehicle manufacturer, the increase for fuel efficiency may be calculated by comparing the new qualified hybrid motor vehicle to a 'like vehicle'.

   Inserted: "(C) Conservation credit.--

   Inserted: "(i) Amount.--The amount determined under subparagraph (A) with respect to a passenger automobile, medium duty passenger vehicle, or light truck shall be increased by--

   Inserted: "(I) $350, if such vehicle achieves a lifetime fuel savings of at least 1,200 but less than 1,800 gallons of gasoline,

   Inserted: "(II) $600, if such vehicle achieves a lifetime fuel savings of at least 1,800 but less than 2,400 gallons of gasoline,

   Inserted: "(III) $850, if such vehicle achieves a lifetime fuel savings of at least 2,400 but less than 3,000 gallons of gasoline, and

   Inserted: "(IV) $1,100, if such vehicle achieves a lifetime fuel savings of at least 3,000 gallons of gasoline.

   Inserted: "(ii) Lifetime fuel savings for like vehicle.--For purposes of clause (i), at the option of the vehicle manufacturer, the lifetime fuel savings fuel may be calculated by comparing the new qualified hybrid motor vehicle to a 'like vehicle'.

   Inserted: "(D) Definitions relating to credit amount.--

   Inserted: "(i) Maximum available power.--For purposes of subparagraph (A), the term 'maximum available power' means the maximum power available from the rechargeable energy storage system, during a standard 10 second pulse power or equivalent test, divided by such maximum power and the SAE net power of the heat engine.

   Inserted: "(ii) Like vehicle.--For purposes of subparagraph (B)(iii), the term 'like vehicle' for a new qualified hybrid motor vehicle derived from a conventional production vehicle produced in the same model year means a model that is equivalent in the following areas:

   Inserted: "(I) Body style (2-door or 4-door).

   Inserted: "(II) Transmission (automatic or manual).

   Inserted: "(III) Acceleration performance ( 0.05 seconds).

   Inserted: "(IV) Drivetrain (2-wheel drive or 4-wheel drive).

   Inserted: "(V) Certification by the Administrator of the Environmental Protection Agency.

   Inserted: "(iii) Lifetime fuel savings.--For purposes of subparagraph (C), the term 'lifetime fuel savings' shall be calculated by dividing 120,000 by the difference between the 2002 model year city fuel economy for the vehicle inertia weight class (as defined in subsection (b)(2)(C)) and the city fuel economy for the new qualified hybrid motor vehicle.

   Inserted: "(3) New qualified hybrid motor vehicle.--For purposes of this subsection--

   Inserted: "(A) In general.--The term 'new qualified hybrid motor vehicle' means a motor vehicle--

   Inserted: "(i) which draws propulsion energy from onboard sources of stored energy which are both--

   Inserted: "(I) an internal combustion or heat engine using consumable fuel, and

   Inserted: "(II) a rechargeable energy storage system,

   Inserted: "(ii) which, in the case of a passenger automobile, medium duty passenger vehicle, or light truck--

   Inserted: "(I) for 2002 and later model vehicles, has received a certificate of conformity under the Clean Air Act and meets or exceeds the equivalent qualifying California low emission vehicle standard under section 243(e)(2) of the Clean Air Act for that make and model year, and

   Inserted: "(II) for 2004 and later model vehicles, has received a certificate that such vehicle meets or exceeds the Bin 5 Tier II emission level established in regulations prescribed by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act for that make and model year vehicle,

   Inserted: "(iii) the original use of which commences with the taxpayer,

   Inserted: "(iv) which is acquired for use or lease by the taxpayer and not for resale, and

   Inserted: "(v) which is made by a manufacturer.

   Inserted: "(B) Consumable fuel.--For purposes of subparagraph (A)(i)(I), the term 'consumable fuel' means any solid, liquid, or gaseous matter which releases energy when consumed by an auxiliary power unit.

   Inserted: "(d) New Qualified Advanced Lean Burn Technology Motor Vehicle Credit.--

   Inserted: "(1) In general.--For purposes of subsection (a), the new qualified advanced lean burn technology motor vehicle credit determined under this subsection with respect to a new qualified advanced lean burn technology motor vehicle placed in service by the taxpayer during the taxable year is the credit amount determined under paragraph (2).

   Inserted: "(2) Credit amount.--

   Inserted: "(A) Increase for fuel efficiency.--The credit amount determined under this paragraph shall be--

   Inserted: "(i) $350, if such vehicle achieves at least 125 percent but less than 150 percent of the 2002 model year city fuel economy,

   Inserted: "(ii) $600, if such vehicle achieves at least 150 percent but less than 175 percent of the 2002 model year city fuel economy,

   Inserted: "(iii) $850, if such vehicle achieves at least 175 percent but less than 200 percent of the 2002 model year city fuel economy, and

   Inserted: "(iv) $1,100, if such vehicle achieves at least 200 percent of the 2002 model year city fuel economy.

   Inserted: For purposes of clause (i), the 2002 model year city fuel economy with respect to a vehicle shall be determined using the tables provided in subsection (b)(2)(B) with respect to such vehicle.

   Inserted: "(B) Conservation credit.--The amount determined under subparagraph (A) with respect to a new qualified advanced lean burn technology motor vehicle shall be increased by--

   Inserted: "(i) $350, if such vehicle achieves a lifetime fuel savings of at least 1,200 but less than 1,800 gallons of gasoline,

   Inserted: "(ii) $600, if such vehicle achieves a lifetime fuel savings of at least 1,800 but less than 2,400 gallons of gasoline,

   Inserted: "(iii) $850, if such vehicle achieves a lifetime fuel savings of at least 2,400 but less than 3,000 gallons of gasoline, and

   Inserted: "(iv) $1,100, if such vehicle achieves a lifetime fuel savings of at least 3,000 gallons of gasoline.

   Inserted: "(C) Option to use like vehicle.--At the option of the vehicle manufacturer, the increase for fuel efficiency and conservation credit may be calculated by comparing the new qualified advanced lean burn technology motor vehicle to a like vehicle.

   Inserted: "(3) Definitions.--For purposes of this subsection--

   Inserted: "(A) New qualified advanced lean burn technology motor vehicle.--The term 'new qualified advanced lean burn technology motor vehicle' means a motor vehicle with an internal combustion engine--

   Inserted: "(i) which is designed to operate primarily using more air than is necessary for complete combustion of the fuel,

   Inserted: "(ii) which incorporates direct injection,

   Inserted: "(iii) which achieves at least 125 percent of the 2002 model year city fuel economy,

   Inserted: "(iv) which, for 2005 and later model vehicles, has received a certificate that such vehicle meets or exceeds the Bin 5 Tier II emission levels for passenger vehicles established in regulations prescribed by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act for that make and model year vehicle, except any manufacturer may provide not to exceed 5,000 passenger vehicles per year which are Tier II compliant,

   Inserted: "(v) the original use of which commences with the taxpayer,

   Inserted: "(vi) which is acquired for use or lease by the taxpayer and not for resale, and

   Inserted: "(vii) which is made by a manufacturer.

   Inserted: "(B) Like vehicle.--The term 'like vehicle' for a new qualified advanced lean burn technology motor vehicle derived from a conventional production vehicle produced in the same model year means a model that is equivalent in the following areas:

   Inserted: "(i) Body style (2-door or 4-door),

   Inserted: "(ii) Transmission (automatic or manual),

   Inserted: "(iii) Acceleration performance ( 0.05 seconds).

   Inserted: "(iv) Drivetrain (2-wheel drive or 4-wheel drive).

   Inserted: "(v) Certification by the Administrator of the Environmental Protection Agency.

   Inserted: "(C) Lifetime fuel savings.--The term 'lifetime fuel savings' shall be calculated by dividing 120,000 by the difference between the 2002 model year city fuel economy for the vehicle inertia weight class (as defined in subsection (b)(2)(C)) and the city fuel economy for the new qualified hybrid motor vehicle.

   Inserted: "(e) Application With Other Credits.--The credit allowed under subsection (a) for any taxable year shall not exceed the excess (if any) of--

   Inserted: "(1) the regular tax for the taxable year reduced by the sum of the credits allowable under subpart A and sections 27, 29, and 30, over

   Inserted: "(2) the tentative minimum tax for the taxable year.

   Inserted: "(f) Limitation on Number of New Qualified Hybrid and Advanced Lean-Burn Technology Vehicles Eligible for Credit.--

   Inserted: "(1) In general.--In the case of a qualified vehicle sold during the phaseout period, only the applicable percentage of the credit otherwise allowable under subsection (c) or (d) shall be allowed.

   Inserted: "(2) Phaseout period.--For purposes of this subsection, the phaseout period is the period beginning with the second calendar quarter following the calendar quarter which includes the first date on which the number of qualified vehicles manufactured by the manufacturer of the vehicle referred to in paragraph (1) sold for use in the United States after the date of the enactment of this section is at least 80,000.

   Inserted: "(3) Applicable percentage.--For purposes of paragraph (1), the applicable percentage is--

   Inserted: "(A) 50 percent for the first 2 calendar quarters of the phaseout period,

   Inserted: "(B) 25 percent for the 3d and 4th calendar quarters of the phaseout period, and

   Inserted: "(C) 0 percent for each calendar quarter thereafter.

   Inserted: "(4) Controlled groups.--

   Inserted: "(A) In general.--For purposes of this subsection, all persons treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as a single manufacturer.

   Inserted: "(B) Inclusion of foreign corporations.--For purposes of subparagraph (A), in applying subsections (a) and (b) of section 52 to this section, section 1563 shall be applied without regard to subsection (b)(2)(C) thereof.

   Inserted: "(5) Qualified vehicle.--For purposes of this subsection, the term 'qualified vehicle' means any new qualified hybrid motor vehicle and any new advanced lean burn technology motor vehicle.

   Inserted: "(g) Other Definitions and Special Rules.--For purposes of this section--

   Inserted: "(1) Motor vehicle.--The term 'motor vehicle' has the meaning given such term by section 30(c)(2).

   Inserted: "(2) City fuel economy.--The city fuel economy with respect to any vehicle shall be measured in a manner which is substantially similar to the manner city fuel economy is measured in accordance with procedures under part 600 of subchapter Q of chapter I of title 40, Code of Federal Regulations, as in effect on the date of the enactment of this section.

   Inserted: "(3) Other terms.--The terms 'automobile', 'passenger automobile', 'medium duty passenger vehicle', 'light truck', and 'manufacturer' have the meanings given such terms in regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et seq.).

   Inserted: "(4) Reduction in basis.--For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed (determined without regard to subsection (e)).

   Inserted: "(5) No double benefit.--The amount of any deduction or other credit allowable under this chapter with respect to a vehicle described under subsection (b) or (c), shall be reduced by the amount of credit allowed under subsection (a) for such vehicle for the taxable year.

   Inserted: "(6) Property used by tax-exempt entities.--In the case of a credit amount which is allowable with respect to a motor vehicle which is acquired by an entity exempt from tax under this chapter, the person which sells or leases such vehicle to the entity shall be treated as the taxpayer with respect to the vehicle for purposes of this section and the credit shall be allowed to such person, but only if the person clearly discloses to the entity at the time of any sale or lease the specific amount of any credit otherwise allowable to the entity under this section.

   Inserted: "(7) Recapture.--The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any property which ceases to be property eligible for such credit (including recapture in the case of a lease period of less than the economic life of a vehicle).

   Inserted: "(8) Property used outside united states, etc., not qualified.--No credit shall be allowed under subsection (a) with respect to any property referred to in section 50(b) or with respect to the portion of the cost of any property taken into account under section 179.

   Inserted: "(9) Election to not take credit.--No credit shall be allowed under subsection (a) for any vehicle if the taxpayer elects to not have this section apply to such vehicle.

   Inserted: "(10) Carryback and carryforward allowed.--

   Inserted: "(A) In general.--If the credit allowable under subsection (a) for a taxable year exceeds the amount of the limitation under subsection (e) for such taxable year (in this paragraph referred to as the 'unused credit year'), such excess shall be a credit carryback to each of the 3 taxable years preceding the unused credit year and a credit carryforward to each of the 20 taxable years following the unused credit year, except that no excess may be carried to a taxable year beginning before the date of the enactment of this paragraph.

   Inserted: "(B) Rules.--Rules similar to the rules of section 39 shall apply with respect to the credit carryback and credit carryforward under subparagraph (A).

   Inserted: "(11) Interaction with air quality and motor vehicle safety standards.--Unless otherwise provided in this section, a motor vehicle shall not be considered eligible for a credit under this section unless such vehicle is in compliance with--

   Inserted: "(A) the applicable provisions of the Clean Air Act for the applicable make and model year of the vehicle (or applicable air quality provisions of State law in the case of a State which has adopted such provision under a waiver under section 209(b) of the Clean Air Act), and

   Inserted: "(B) the motor vehicle safety provisions of sections 30101 through 30169 of title 49, United States Code.

   Inserted: "(h) Regulations.--

   Inserted: "(1) In general.--Except as provided in paragraph (2), the Secretary shall promulgate such regulations as necessary to carry out the provisions of this section.

   Inserted: "(2) Coordination in prescription of certain regulations.--The Secretary of the Treasury, in coordination with the Secretary of Transportation and the Administrator of the Environmental Protection Agency, shall prescribe such regulations as necessary to determine whether a motor vehicle meets the requirements to be eligible for a credit under this section.

   Inserted: "(i) Application of Section.--This section shall apply to----

   Inserted: "(1) any new qualified fuel cell motor vehicle (as described in subsection (b)) placed in service after December 31, 2004, and purchased before January 1, 2015, and

   Inserted: "(2) any new qualified hybrid motor vehicle (as described in subsection (c)) or new qualified advanced lean burn technology motor vehicle (as described in subsection (d)) placed in service after December 31, 2004, and purchased before January 1, 2010.".

   Inserted: (b) Conforming Amendments.--

   Inserted: (1) Section 1016(a) is amended by striking "and" at the end of paragraph (27), by striking the period at the end of paragraph (28) and inserting ", and", and by adding at the end the following new paragraph:

   Inserted: "(29) to the extent provided in section 30B(g)(4).".

   Inserted: (2) Section 55(c)(2) is amended by inserting "30B(e)," after "30(b)(3),".

   Inserted: (3) Section 6501(m) is amended by inserting "30B(g)(9)," after "30(d)(4),".

   Inserted: (4) The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 30A the following new item:

   Inserted: "Sec. 30B. Alternative motor vehicle credit.".

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.

   Inserted: SEC. 5672. CREDIT FOR INSTALLATION OF ALTERNATIVE FUELING STATIONS.

   Inserted: (a) In General.--Subpart B of part IV of subchapter A of chapter 1 (relating to foreign tax credit, etc.), as amended by this Act, is amended by adding at the end the following new section:

   Inserted: "SEC. 30C. CLEAN-FUEL VEHICLE REFUELING PROPERTY CREDIT.

   Inserted: "(a) Credit Allowed.--There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 50 percent of the amount paid or incurred by the taxpayer during the taxable year for the installation of qualified clean-fuel vehicle refueling property.

   Inserted: "(b) Limitation.--The credit allowed under subsection (a)--

   Inserted: "(1) with respect to any retail clean-fuel vehicle refueling property, shall not exceed $30,000, and

   Inserted: "(2) with respect to any residential clean-fuel vehicle refueling property, shall not exceed $1,000.

   Inserted: "(c) Year Credit Allowed.--Notwithstanding subsection (a), no credit shall be allowed under subsection (a) with respect to any qualified clean-fuel vehicle refueling property before the taxable year in which the property is placed in service by the taxpayer.

   Inserted: "(d) Definitions.--For purposes of this section--

   Inserted: "(1) Qualified clean-fuel vehicle refueling property.--The term 'qualified clean-fuel vehicle refueling property' has the same meaning given such term by section 179A(d).

   Inserted: "(2) Residential clean-fuel vehicle refueling property.--The term 'residential clean-fuel vehicle refueling property' means qualified clean-fuel vehicle refueling property which is installed on property which is used as the principal residence (within the meaning of section 121) of the taxpayer.

   Inserted: "(3) Retail clean-fuel vehicle refueling property.--The term 'retail clean-fuel vehicle refueling property' means qualified clean-fuel vehicle refueling property which is installed on property (other than property described in paragraph (2)) used in a trade or business of the taxpayer.

   Inserted: "(e) Application With Other Credits.--The credit allowed under subsection (a) for any taxable year shall not exceed the excess (if any) of--

   Inserted: "(1) the regular tax for the taxable year reduced by the sum of the credits allowable under subpart A and sections 27, 29, 30, and 30B, over

   Inserted: "(2) the tentative minimum tax for the taxable year.

   Inserted: "(f) Basis Reduction.--For purposes of this title, the basis of any property shall be reduced by the portion of the cost of such property taken into account under subsection (a).

   Inserted: "(g) No Double Benefit.--

   Inserted: "(1) Coordination with other deductions and credits.--Except as provided in paragraph (2), the amount of any deduction or other credit allowable under this chapter for any cost taken into account in computing the amount of the credit determined under subsection (a) shall be reduced by the amount of such credit attributable to such cost.

   Inserted: "(2) No deduction allowed under section 179a.--No deduction shall be allowed under section 179A with respect to any property with respect to which a credit is allowed under subsection (a).

   Inserted: "(h) Refueling Property Installed for Tax-Exempt Entities.--In the case of qualified clean-fuel vehicle refueling property installed on property owned or used by an entity exempt from tax under this chapter, the person which installs such refueling property for the entity shall be treated as the taxpayer with respect to the refueling property for purposes of this section (and such refueling property shall be treated as retail clean-fuel vehicle refueling property) and the credit shall be allowed to such person, but only if the person clearly discloses to the entity in any installation contract the specific amount of the credit allowable under this section.

   Inserted: "(i) Carryforward Allowed.--

   Inserted: "(1) In general.--If the credit allowable under subsection (a) for a taxable year exceeds the amount of the limitation under subsection (e) for such taxable year, such excess shall be a credit carryforward to each of the 20 taxable years following such taxable year.

   Inserted: "(2) Rules.--Rules similar to the rules of section 39 shall apply with respect to the credit carryforward under paragraph (1).

   Inserted: "(j) Special Rules.--Rules similar to the rules of paragraphs (4) and (5) of section 179A(e) shall apply.

   Inserted: "(k) Regulations.--The Secretary shall prescribe such regulations as necessary to carry out the provisions of this section.

   Inserted: "(l) Termination.--This section shall not apply to any property placed in service--

   Inserted: "(1) in the case of property relating to hydrogen, after December 31, 2011, and

   Inserted: "(2) in the case of any other property, after December 31, 2007.".

   Inserted: (b) Modifications to Extension of Deduction for Certain Refueling Property.--

   Inserted: (1) Increase in deduction for hydrogen infrastructure.--Section 179A(b)(2)(A)(i) is amended by inserting "($200,000 in the case of property relating to hydrogen)" after "$100,000".

   Inserted: (2) Extension of deduction.--Subsection (f) of section 179A is amended to read as follows:

   Inserted: "(f) Termination.--This section shall not apply to any property placed in service--

   Inserted: "(1) in the case of property relating to hydrogen, after December 31, 2011, and

   Inserted: "(2) in the case of any other property, after December 31, 2007.".

   Inserted: (3) Extension of phaseout.--Section 179A(b)(1)(B) is amended--

   Inserted: (A) by striking "calendar year 2004" in clause (i) and inserting "calendar years 2004 and 2005 (calendar years 2004 through 2009 in the case of property relating to hydrogen)",

   Inserted: (B) by striking "2005" in clause (ii) and inserting "2006 (calendar year 2010 in the case of property relating to hydrogen)", and

   Inserted: (C) by striking "2006" in clause (iii) and inserting "2007 (calendar year 2011 in the case of property relating to hydrogen)".

   Inserted: (c) Incentive for Production of Hydrogen at Qualified Clean-Fuel Vehicle Refueling Property.--Section 179A(d) (defining qualified clean-fuel vehicle refueling property) is amended by adding at the end the following new flush sentence:

   Inserted: "In the case of clean-burning fuel which is hydrogen produced from another clean-burning fuel, paragraph (3)(A) shall be applied by substituting 'production, storage, or dispensing' for 'storage or dispensing' both places it appears.".

   Inserted: (d) Conforming Amendments.--

   Inserted: (1) Section 1016(a), as amended by this Act, is amended by striking "and" at the end of paragraph (28), by striking the period at the end of paragraph (29) and inserting ", and", and by adding at the end the following new paragraph:

   Inserted: "(30) to the extent provided in section 30C(f).".

   Inserted: (2) Section 55(c)(2), as amended by this Act, is amended by inserting "30C(e)," after "30B(e),".

   Inserted: (3) The table of sections for subpart B of part IV of subchapter A of chapter 1, as amended by this Act, is amended by inserting after the item relating to section 30B the following new item:

   Inserted: "Sec. 30C. Clean-fuel vehicle refueling property credit.".

   Inserted: (e) Effective Date.--The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.

   Inserted: SEC. 5673. BIODIESEL CREDIT EXPANSION.

   Inserted: Section 312(b) of the Energy Policy Act of 1992 (42 U.S.C. 13220(b)) is amended--

   Inserted: (1) by striking "Credits.--" and all that follows through "At the request" and inserting "Credits.--At the request"; and

   Inserted: (2) by striking paragraph (2).

   Inserted: PART II--REVENUE PROVISIONS

   Inserted: SEC. 5675. PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS.

   Inserted: (a) Penalty for Promoting Abusive Tax Shelters.--Section 6700 (relating to promoting abusive tax shelters, etc.) is amended--

   Inserted: (1) by redesignating subsections (b) and (c) as subsections (d) and (e), respectively,

   Inserted: (2) by striking "a penalty" and all that follows through the period in the first sentence of subsection (a) and inserting "a penalty determined under subsection (b)", and

   Inserted: (3) by inserting after subsection (a) the following new subsections:

   Inserted: "(b) Amount of Penalty; Calculation of Penalty; Liability for Penalty.--

   Inserted: "(1) Amount of penalty.--The amount of the penalty imposed by subsection (a) shall not exceed the greater of--

   Inserted: "(A) 150 percent of the gross income derived (or to be derived) from such activity by the person or persons subject to such penalty, and

   Inserted: "(B) if readily subject to calculation, the total amount of underpayment by the taxpayer (including penalties, interest, and taxes) in connection with such activity.

   Inserted: "(2) Calculation of penalty.--The penalty amount determined under paragraph (1) shall be calculated with respect to each instance of an activity described in subsection (a), each instance in which income was derived by the person or persons subject to such penalty, and each person who participated in such an activity.

   Inserted: "(3) Liability for penalty.--If more than 1 person is liable under subsection (a) with respect to such activity, all such persons shall be jointly and severally liable for the penalty under such subsection.

   Inserted: "(c) Penalty Not Deductible.--The payment of any penalty imposed under this section or the payment of any amount to settle or avoid the imposition of such penalty shall not be considered an ordinary and necessary expense in carrying on a trade or business for purposes of this title and shall not be deductible by the person who is subject to such penalty or who makes such payment.".

   Inserted: (b) Effective Date.--The amendments made by this section shall apply to activities after the date of the enactment of this Act.

   Inserted: (c) Prior Section To Have No Effect.--Notwithstanding section 5625 of this Act, such section, and the amendments made by such section, shall not take effect.

   Inserted: SEC. 5676. PENALTY FOR AIDING AND ABETTING THE UNDERSTATEMENT OF TAX LIABILITY.

   Inserted: (a) In General.--Section 6701(a) (relating to imposition of penalty) is amended--

   Inserted: (1) by inserting "the tax liability or" after "respect to," in paragraph (1),

   Inserted: (2) by inserting "aid, assistance, procurement, or advice with respect to such" before "portion" both places it appears in paragraphs (2) and (3), and

   Inserted: (3) by inserting "instance of aid, assistance, procurement, or advice or each such" before "document" in the matter following paragraph (3).

   Inserted: (b) Amount of Penalty.--Subsection (b) of section 6701 (relating to penalties for aiding and abetting understatement of tax liability) is amended to read as follows:

   Inserted: "(b) Amount of Penalty; Calculation of Penalty; Liability for Penalty.--

   Inserted: "(1) Amount of penalty.--The amount of the penalty imposed by subsection (a) shall not exceed the greater of--

   Inserted: "(i) 150 percent of the gross income derived (or to be derived) from such aid, assistance, procurement, or advice provided by the person or persons subject to such penalty, and

   Inserted: "(ii) if readily subject to calculation, the total amount of underpayment by the taxpayer (including penalties, interest, and taxes) in connection with the understatement of the liability for tax.

   Inserted: "(2) Calculation of penalty.--The penalty amount determined under paragraph (1) shall be calculated with respect to each instance of aid, assistance, procurement, or advice described in subsection (a), each instance in which income was derived by the person or persons subject to such penalty, and each person who made such an understatement of the liability for tax.

   Inserted: "(3) Liability for penalty.--If more than 1 person is liable under subsection (a) with respect to providing such aid, assistance, procurement, or advice, all such persons shall be jointly and severally liable for the penalty under such subsection.".

   Inserted: (c) Penalty Not Deductible.--Section 6701 is amended by adding at the end the following new subsection:

   Inserted: "(g) Penalty Not Deductible.--The payment of any penalty imposed under this section or the payment of any amount to settle or avoid the imposition of such penalty shall not be considered an ordinary and necessary expense in carrying on a trade or business for purposes of this title and shall not be deductible by the person who is subject to such penalty or who makes such payment.".

   Inserted: (d) Effective Date.--The amendments made by this section shall apply to activities after the date of the enactment of this Act.

   Inserted: SEC. 5677. PENALTY FOR FAILURE TO REGISTER TAX SHELTER.

   Inserted: (a) In General.--Section 6707 (relating to failure to furnish information regarding tax shelters) is amended to read as follows:

   Inserted: "SEC. 6707. FAILURE TO FURNISH INFORMATION ON POTENTIALLY ABUSIVE TAX SHELTER OR LISTED TRANSACTION.

   Inserted: "(a) In General.--If a person who is required to file a return under section 6111 with respect to any potentially abusive tax shelter--

   Inserted: "(1) fails to file such return on or before the date prescribed therefor, or

   Inserted: "(2) files false or incomplete information with the Secretary with respect to such shelter, such person shall pay a penalty with respect to such return in the amount determined under subsection (b).

   Inserted: "(b) Amount of Penalty.--

   Inserted: "(1) In general.--Except as provided in paragraph (2), the penalty imposed under subsection (a) with respect to any failure shall be not less than $50,000 and not more than $100,000.

   Inserted: "(2) Listed transactions.--The penalty imposed under subsection (a) with respect to any listed transaction shall be an amount equal to the greater of--

   Inserted: "(A) $200,000, or

   Inserted: "(B) 100 percent of the gross income derived by such person for providing aid, assistance, procurement, advice, or other services with respect to the listed transaction before the date the return including the transaction is filed under section 6111. Subparagraph (B) shall be applied by substituting '150 percent' for '100 percent' in the case of an intentional failure or act described in subsection (a).

   Inserted: "(c) Certain Rules To Apply.--The provisions of section 6707A(d) allowing the Commissioner of Internal Revenue to rescind a penalty under certain circumstances shall apply to any penalty imposed under this section.

   Inserted: "(d) Potentially Abusive Tax Shelters and Listed Transactions.--The terms 'potentially abusive tax shelter' and 'listed transaction' have the respective meanings given to such terms by section 6707A(c).

   Inserted: "(e) Penalty Not Deductible.--The payment of any penalty imposed under this section or the payment of any amount to settle or avoid the imposition of such penalty shall not be considered an ordinary and necessary expense in carrying on a trade or business for purposes of this title and shall not be deductible by the person who is subject to such penalty or who makes such payment.".

   Inserted: (b) Clerical Amendment.--The item relating to section 6707 in the table of sections for part I of subchapter B of chapter 68 is amended by striking "regarding tax shelters" and inserting "on potentially abusive tax shelter or listed transaction".

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to returns the due date for which is after the date of the enactment of this Act.

   Inserted: (d) Prior Section To Have No Effect.--Notwithstanding section 5618(c) of this Act, such section, and the amendments made by such section, shall not take effect.

   Inserted: SEC. 5678. PENALTY FOR FAILING TO MAINTAIN CLIENT LIST.

   Inserted: (a) In General.--Subsection (a) of section 6708 (relating to failure to maintain lists of investors in potentially abusive tax shelters) is amended to read as follows:

   Inserted: "(a) Imposition of Penalty.--

   Inserted: "(1) In general.--If any person who is required to maintain a list under section 6112(a) fails to make such list available upon written request to the Secretary in accordance with section 6112(b)(1)(A) within 20 business days after the date of the Secretary's request, such person shall pay a penalty of $10,000 for each day of such failure after such 20th day. If such person makes available an incomplete list upon such request, such person shall pay a penalty of $100 per each omitted name for each day of such omission after such 20th day.

   Inserted: "(2) Good cause exception.--No penalty shall be imposed by paragraph (1) with respect to the failure on any day if, in the judgment of the Secretary, such failure is due to good cause.".

   Inserted: (b) Penalty Not Deductible.--Section 6708 is amended by adding at the end the following new subsection:

   Inserted: "(c) Penalty Not Deductible.--The payment of any penalty imposed under this section or the payment of any amount to settle or avoid the imposition of such penalty shall not be considered an ordinary and necessary expense in carrying on a trade or business for purposes of this title and shall not be deductible by the person who is subject to such penalty or who makes such payment.".

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to requests made by the Secretary of the Treasury after the date of the enactment of this Act.

   Inserted: (d) Prior Section To Have No Effect.--Notwithstanding section 5619(b) of this Act, such section, and the amendments made by such section, shall not take effect.

   Inserted: SEC. 5679. PENALTY FOR FAILING TO DISCLOSE POTENTIALLY ABUSIVE TAX SHELTER.

   Inserted: (a) In General.--Part I of subchapter B of chapter 68 (relating to assessable penalties) is amended by inserting after section 6707 the following new section:

   Inserted: "SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE POTENTIALLY ABUSIVE TAX SHELTER INFORMATION WITH RETURN OR STATEMENT.

   Inserted: "(a) Imposition of Penalty.--Any person who fails to include on any return or statement any information with respect to a potentially abusive tax shelter which is required under section 6011 to be included with such return or statement shall pay a penalty in the amount determined under subsection (b).

   Inserted: "(b) Amount of Penalty.--

   Inserted: "(1) In general.--Except as provided in paragraphs (2) and (3), the amount of the penalty under subsection (a) shall be $50,000.

   Inserted: "(2) Listed transaction.--Except as provided in paragraph 3, the amount of the penalty under subsection (a) with respect to a listed transaction shall be $100,000.

   Inserted: "(3) Increase in penalty for intentional nondisclosure.--In the case of an intentional failure by any person under subsection (a), the penalty under paragraph (1) shall be $100,000 and the penalty under paragraph (2) shall be $200,000.

   Inserted: "(c) Definitions.--For purposes of this section--

   Inserted: "(1) Potentially abusive tax shelter.--The term 'potentially abusive tax shelter' means any transaction with respect to which information is required to be included with a return or statement, because the Secretary has determined by regulation or otherwise that such transaction has a potential for tax avoidance or evasion.

   Inserted: "(2) Listed transaction.--Except as provided in regulations, the term 'listed transaction' means a potentially abusive tax shelter which is the same as, or substantially similar to, a transaction specifically identified by the Secretary as a tax avoidance transaction for purposes of section 6011.

   Inserted: "(d) Authority To Rescind Penalty.--

   Inserted: "(1) In general.--The Commissioner of Internal Revenue may rescind all or any portion of a penalty imposed by this section with respect to any violation if--

   Inserted: "(A) the violation is with respect to a potentially abusive tax shelter other than a listed transaction,

   Inserted: "(B) the person on whom the penalty is imposed has a history of complying with the requirements of this title,

   Inserted: "(C) it is shown that the violation is due to an unintentional mistake of fact,

   Inserted: "(D) imposing the penalty would be against equity and good conscience, and

   Inserted: "(E) rescinding the penalty would promote compliance with the requirements of this title and effective tax administration.

   Inserted: "(2) Discretion.--The exercise of authority under paragraph (1) shall be at the sole discretion of the Commissioner and may be delegated only to the head of the Office of Tax Shelter Analysis. The Commissioner, in the Commissioner's sole discretion, may establish a procedure to determine if a penalty should be referred to the Commissioner or the head of such Office for a determination under paragraph (1).

   Inserted: "(3) No appeal.--Notwithstanding any other provision of law, any determination under this subsection may not be reviewed in any administrative or judicial proceeding.

   Inserted: "(4) Records.--If a penalty is rescinded under paragraph (1), the Commissioner shall place in the file in the Office of the Commissioner the opinion of the Commissioner or the head of the Office of Tax Shelter Analysis with respect to the determination, including--

   Inserted: "(A) the facts and circumstances of the transaction,

   Inserted: "(B) the reasons for the rescission, and

   Inserted: "(C) the amount of the penalty rescinded.

   Inserted: A copy of such opinion shall be provided upon written request to the Committee on Ways and Means of the House of Representatives, the Committee on Finance of the Senate, the Joint Committee on Taxation, or the General Accounting Office.

   Inserted: "(5) Report.--The Commissioner shall each year report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate--

   Inserted: "(A) a summary of the total number and aggregate amount of penalties imposed, and rescinded, under this section, and

   Inserted: "(B) a description of each penalty rescinded under this subsection and the reasons therefor.

   Inserted: "(e) Penalty Reported to SEC.--In the case of a person--

   Inserted: "(1) which is required to file periodic reports under section 13 or 15(d) of the Securities Exchange Act of 1934 or is required to be consolidated with another person for purposes of such reports, and

   Inserted: "(2) which--

   Inserted: "(A) is required to pay a penalty under this section with respect to a listed transaction,

   Inserted: "(B) is required to pay a penalty under section 6662A with respect to any potentially abusive tax shelter at a rate prescribed under section 6662A(c), or

   Inserted: "(C) is required to pay a penalty under section 6662B with respect to any noneconomic substance transaction, the requirement to pay such penalty shall be disclosed in such reports filed by such person for such periods as the Secretary shall specify. Failure to make a disclosure in accordance with the preceding sentence shall be treated as a failure to which the penalty under subsection (b)(2) applies.

   Inserted: "(f) Penalty in Addition to Other Penalties.--The penalty imposed by this section shall be in addition to any other penalty provided by law.

   Inserted: "(g) Penalty Not Deductible.--The payment of any penalty imposed under this section or the payment of any amount to settle or avoid the imposition of such penalty shall not be considered an ordinary and necessary expense in carrying on a trade or business for purposes of this title and shall not be deductible by the person who is subject to such penalty or who makes such payment.".

   Inserted: (b) Conforming Amendment.--The table of sections for part I of subchapter B of chapter 68 is amended by inserting after the item relating to section 6707 the following:

   Inserted: "Sec. 6707A. Penalty for failure to include potentially abusive tax shelter information with return or statement.".

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to returns and statements the due date for which is after the date of the enactment of this Act.

   Inserted: (d) Prior Section To Have No Effect.--Notwithstanding section 5612(c) of this Act, such section, and the amendments made by such section, shall not take effect.

   Inserted: SEC. 5680. IMPROVED DISCLOSURE OF POTENTIALLY ABUSIVE TAX SHELTERS.

   Inserted: (a) In General.--Section 6111 (relating to registration of tax shelters) is amended to read as follows:

   Inserted: "SEC. 6111. DISCLOSURE OF POTENTIALLY ABUSIVE TAX SHELTERS.

   Inserted: "(a) In General.--Each material advisor with respect to any potentially abusive tax shelter shall make a return (in such form as the Secretary may prescribe) setting forth--

   Inserted: "(1) information identifying and describing such shelter,

   Inserted: "(2) information describing any potential tax benefits expected to result from the shelter, and

   Inserted: "(3) such other information as the Secretary may prescribe.

   Inserted: Such return shall be filed not later than the date which is 30 days before the date on which the first sale of such shelter occurs or on any other date specified by the Secretary.

   Inserted: "(b) Definitions.--For purposes of this section--

   Inserted: "(1) Material advisor.--

   Inserted: "(A) In general.--The term 'material advisor' means any person--

   Inserted: "(i) who provides any material aid, assistance, or advice with respect to designing, organizing, managing, promoting, selling, implementing, or carrying out any potentially abusive tax shelter, and

   Inserted: "(ii) who directly or indirectly derives gross income in excess of the threshold amount for such aid, assistance, or advice.

   Inserted: "(B) Threshold amount.--For purposes of subparagraph (A), the threshold amount is--

   Inserted: "(i) $50,000 in the case of a potentially abusive tax shelter substantially all of the tax benefits from which are provided to natural persons, and

   Inserted: "(ii) $100,000 in any other case.

   Inserted: "(2) Potentially abusive tax shelter.--The term 'potentially abusive tax shelter' has the meaning given to such term by section 6707A(c).

   Inserted: "(c) Regulations.--The Secretary may prescribe regulations which provide--

   Inserted: "(1) that only 1 person shall be required to meet the requirements of subsection (a) in cases in which 2 or more persons would otherwise be required to meet such requirements,

   Inserted: "(2) exemptions from the requirements of this section, and

   Inserted: "(3) such rules as may be necessary or appropriate to carry out the purposes of this section.".

   Inserted: (b) Conforming Amendments.--

   Inserted: (1) The item relating to section 6111 in the table of sections for subchapter B of chapter 61 is amended to read as follows:

   Inserted: "Sec. 6111. Disclosure of potentially abusive tax shelters.".

   Inserted: (2)(A) So much of section 6112 as precedes subsection (c) thereof is amended to read as follows:

   Inserted: "SEC. 6112. MATERIAL ADVISORS OF POTENTIALLY ABUSIVE TAX SHELTERS MUST KEEP CLIENT LISTS.

   Inserted: "(a) In General.--Each material advisor (as defined in section 6111) with respect to any potentially abusive tax shelter (as defined in section 6707A(c)) shall maintain, in such manner as the Secretary may by regulations prescribe, a list--

   Inserted: "(1) identifying each person with respect to whom such advisor acted as such a material advisor with respect to such shelter, and

   Inserted: "(2) containing such other information as the Secretary may by regulations require.

   Inserted: This section shall apply without regard to whether a material advisor is required to file a return under section 6111 with respect to such transaction.".

   Inserted: (B) Section 6112 is amended by redesignating subsection (c) as subsection (b).

   Inserted: (C) Section 6112(b), as redesignated by subparagraph (B), is amended--

   Inserted: (i) by inserting "written" before "request" in paragraph (1)(A), and

   Inserted: (ii) by striking "shall prescribe" in paragraph (2) and inserting "may prescribe".

   Inserted: (D) The item relating to section 6112 in the table of sections for subchapter B of chapter 61 is amended to read as follows:

   Inserted: "Sec. 6112. Material advisors of potentially abusive tax shelters must keep client lists.".

   Inserted: (3)(A) The heading for section 6708 is amended to read as follows:

   Inserted: "SEC. 6708. FAILURE TO MAINTAIN CLIENT LISTS WITH RESPECT TO POTENTIALLY ABUSIVE TAX SHELTERS.".

   Inserted: (B) The item relating to section 6708 in the table of sections for part I of subchapter B of chapter 68 is amended to read as follows:

   Inserted: "Sec. 6708. Failure to maintain client lists with respect to potentially abusive tax shelters.".

   Inserted: (c) Required Disclosure Not Subject to Claim of Confidentiality.--Section 6112(b)(1), as redesignated by subsection (b)(2)(B), is amended by adding at the end the following new flush sentence:

   Inserted: "For purposes of this section, the identity of any person on such list shall not be privileged.".

   Inserted: (d) Effective Date.--

   Inserted: (1) In general.--Except as provided in paragraph (2), the amendments made by this section shall apply to transactions with respect to which material aid, assistance, or advice referred to in section 6111(b)(1)(A)(i) of the Internal Revenue Code of 1986 (as added by this section) is provided after the date of the enactment of this Act.

   Inserted: (2) No claim of confidentiality against disclosure.--The amendment made by subsection (c) shall take effect as if included in the amendments made by section 142 of the Deficit Reduction Act of 1984.

   Inserted: (e) Prior Section To Have No Effect.--Notwithstanding section 5617(d) of this Act, such section, and the amendments made by such section, shall not take effect.

   Inserted: SEC. 5681. EXTENSION OF STATUTE OF LIMITATIONS FOR UNDISCLOSED TAX SHELTER.

   Inserted: (a) In General.--Section 6501(c) (relating to exceptions) is amended by adding at the end the following new paragraph:

   Inserted: "(10) Potentially abusive tax shelters.--If a taxpayer fails to include on any return or statement for any taxable year any information with respect to a potentially abusive tax shelter (as defined in section 6707A(c)) which is required under section 6011 to be included with such return or statement, the time for assessment of any tax imposed by this title with respect to such transaction shall not expire before the date which is 2 years after the earlier of--

   Inserted: "(A) the date on which the Secretary is furnished the information so required; or

   Inserted: "(B) the date that a material advisor (as defined in section 6111) meets the requirements of section 6112 with respect to a request by the Secretary under section 6112(b) relating to such transaction with respect to such taxpayer.".

   Inserted: (b) Effective Date.--The amendment made by this section shall apply to taxable years with respect to which the period for assessing a deficiency did not expire before the date of the enactment of this Act.

   Inserted: (c) Prior Section To Have No Effect.--Notwithstanding section 5626(b) of this Act, such section, and the amendments made by such section, shall not take effect.

   Inserted: SEC. 5682. PENALTY FOR FAILING TO REPORT INTERESTS IN FOREIGN FINANCIAL ACCOUNTS.

   Inserted: (a) In General.--Section 5321(a)(5) of title 31, United States Code, is amended to read as follows:

   Inserted: "(5) Foreign financial agency transaction violation.--

   Inserted: "(A) Penalty authorized.--The Secretary of the Treasury may impose a civil money penalty on any person who violates, or causes any violation of, any provision of section 5314.

   Inserted: "(B) Amount of penalty.--

   Inserted: "(i) In general.--Except as provided in subparagraph (C), the amount of any civil penalty imposed under subparagraph (A) shall not exceed $10,000.

   Inserted: "(ii) Reasonable cause exception.--No penalty shall be imposed under subparagraph (A) with respect to any violation if--

   Inserted: "(I) such violation was due to reasonable cause, and

   Inserted: "(II) the amount of the transaction or the balance in the account at the time of the transaction was properly reported.

   Inserted: "(C) Willful violations.--In the case of any person willfully violating, or willfully causing any violation of, any provision of section 5314, the amount of the civil penalty imposed under subparagraph (A) shall be--

   Inserted: "(i) not less than $5,000,

   Inserted: "(ii) not more than 50 percent of the amount determined under subparagraph (D), and

   Inserted: "(iii) subparagraph (B)(ii) shall not apply.

   Inserted: "(D) Amount.--The amount determined under this subparagraph is--

   Inserted: "(i) in the case of a violation involving a transaction, the amount of the transaction, or

   Inserted: "(ii) in the case of a violation involving a failure to report the existence of an account or any identifying information required to be provided with respect to an account, the balance in the account at the time of the violation.".

   Inserted: (b) Effective Date.--The amendment made by this section shall apply to violations occurring after the date of the enactment of this Act.

   Inserted: (c) Prior Section To Have No Effect.--Notwithstanding section 5622(b) of this Act, such section, and the amendments made by such section, shall not take effect.

   Inserted: SEC. 5683. CENSURE, CIVIL FINES, AND TAX OPINION STANDARDS FOR TAX PRACTITIONERS.

   Inserted: (a) Censure; Imposition of Monetary Penalty.--

   Inserted: (1) In general.--Section 330(b) of title 31, United States Code, is amended--

   Inserted: (A) by inserting ", or censure," after "Department", and

   Inserted: (B) by adding at the end the following new flush sentence:

   Inserted: "The Secretary may impose a monetary penalty on any representative described in the preceding sentence. If the representative was acting on behalf of an employer or any firm or other entity in connection with the conduct giving rise to such penalty, the Secretary may impose a monetary penalty on such employer, firm, or entity if it knew, or reasonably should have known, of such conduct. Such penalty may be in addition to, or in lieu of, any suspension, disbarment, or censure of the representative.".

   Inserted: (2) Effective date.--The amendments made by this subsection shall apply to actions taken after the date of the enactment of this Act.

   Inserted: (b) Tax Opinion Standards.--Section 330 of such title 31 is amended by adding at the end the following new subsection:

   Inserted: "(d) The Secretary of the Treasury shall impose standards applicable to the rendering of written advice with respect to any potentially abusive tax shelter or any entity, plan, arrangement, or transaction which has a potential for tax avoidance or evasion. Such standards shall address, but not be limited to, the following issues:

   Inserted: "(1) Independence of the practitioner issuing such written advice from persons promoting, marketing, or recommending the subject of the advice.

   Inserted: "(2) Collaboration among practitioners, or between a practitioner and other party, which could result in such collaborating parties having a joint financial interest in the subject of the advice.

   Inserted: "(3) Avoidance of conflicts of interest which would impair auditor independence.

   Inserted: "(4) For written advice issued by a firm, standards for reviewing the advice and ensuring the consensus support of the firm for positions taken.

   Inserted: "(5) Reliance on reasonable factual representations by the taxpayer and other parties.

   Inserted: "(6) Appropriateness of the fees charged by the practitioner for the written advice.".

   Inserted: (c) Prior Section To Have No Effect.--Notwithstanding section 5624(a)(2) of this Act, such section, and the amendments made by such section, shall not take effect.

   Inserted: SEC. 5684. PREVENTING CORPORATE EXPATRIATION TO AVOID UNITED STATES INCOME TAX.

   Inserted: (a) In General.--Paragraph (4) of section 7701(a) (defining domestic) is amended to read as follows:

   Inserted: "(4) Domestic.--

   Inserted: "(A) In general.--Except as provided in subparagraph (B), the term 'domestic' when applied to a corporation or partnership means created or organized in the United States or under the law of the United States or of any State unless, in the case of a partnership, the Secretary provides otherwise by regulations.

   Inserted: "(B) Certain corporations treated as domestic.--

   Inserted: "(i) In general.--The acquiring corporation in a corporate expatriation transaction shall be treated as a domestic corporation.

   Inserted: "(ii) Corporate expatriation transaction.--For purposes of this subparagraph, the term 'corporate expatriation transaction' means any transaction if--

   Inserted: "(I) a nominally foreign corporation (referred to in this subparagraph as the 'acquiring corporation') acquires, as a result of such transaction, directly or indirectly substantially all of the properties held directly or indirectly by a domestic corporation, and

   Inserted: "(II) immediately after the transaction, more than 80 percent of the stock (by vote or value) of the acquiring corporation is held by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation.

   Inserted: "(iii) Lower stock ownership requirement in certain cases.--Subclause (II) of clause (ii) shall be applied by substituting '50 percent' for '80 percent' with respect to any nominally foreign corporation if--

   Inserted: "(I) such corporation does not have substantial business activities (when compared to the total business activities of the expanded affiliated group) in the foreign country in which or under the law of which the corporation is created or organized, and

   Inserted: "(II) the stock of the corporation is publicly traded and the principal market for the public trading of such stock is in the United States.

   Inserted: "(iv) Partnership transactions.--The term 'corporate expatriation transaction' includes any transaction if--

   Inserted: "(I) a nominally foreign corporation (referred to in this subparagraph as the 'acquiring corporation') acquires, as a result of such transaction, directly or indirectly properties constituting a trade or business of a domestic partnership,

   Inserted: "(II) immediately after the transaction, more than 80 percent of the stock (by vote or value) of the acquiring corporation is held by former partners of the domestic partnership or related foreign partnerships (determined without regard to stock of the acquiring corporation which is sold in a public offering related to the transaction), and

   Inserted: "(III) the acquiring corporation meets the requirements of subclauses (I) and (II) of clause (iii).

   Inserted: "(v) Special rules.--For purposes of this subparagraph--

   Inserted: "(I) a series of related transactions shall be treated as 1 transaction, and

   Inserted: "(II) stock held by members of the expanded affiliated group which includes the acquiring corporation shall not be taken into account in determining ownership.

   Inserted: "(vi) Other definitions.--For purposes of this subparagraph--

   Inserted: "(I) Nominally foreign corporation.--The term 'nominally foreign corporation' means any corporation which would (but for this subparagraph) be treated as a foreign corporation.

   Inserted: "(II) Expanded affiliated group.--The term 'expanded affiliated group' means an affiliated group (as defined in section 1504(a) without regard to section 1504(b)).

   Inserted: "(III) Related foreign partnership.--A foreign partnership is related to a domestic partnership if they are under common control (within the meaning of section 482), or they shared the same trademark or tradename."

   Inserted: (b) Effective Dates.--

   Inserted: (1) In general.--The amendment made by this section shall apply to corporate expatriation transactions completed after September 11, 2001.

   Inserted: (2) Special rule.--The amendment made by this section shall also apply to corporate expatriation transactions completed on or before September 11, 2001, but only with respect to taxable years of the acquiring corporation beginning after December 31, 2003.

   Inserted: (c) Prior Section To Have No Effect.--Section 5651(a)(2) of this Act, and the amendments made by such section, shall not take effect.

   Original wording

   On page 1298, after line 24, add the following:

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As printed