H.R. 5775 – Reading Mode

109th CONGRESS

2d Session

H. R. 5775

IN THE HOUSE OF REPRESENTATIVES

July 12, 2006

Mr. Osborne introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide a credit to certain concentrated animal feeding operations for the cost of complying with environmental protection regulations.

Short title

This Act may be cited as the CAFO Tax Credit Act.

Credit for concentrated animal feeding operations

(a)

In General

Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business related credits) is amended by adding at the end the following new section:

45N.

Credit for EPA compliance costs for concentrated animal feeding operations

(a)

Allowance of credit

(1)

In general

For purposes of section 38, in the case of an eligible taxpayer, the EPA compliance credit determined under this section for the taxable year is an amount equal to the applicable percentage of the qualified compliance costs paid or incurred by the eligible taxpayer during the taxable year.

(2)

Applicable percentage

For purposes of paragraph (1), the applicable percentage shall be determined as follows:

If the amount of qualified	The applicable
compliance costs paid or incurred during the taxable year is:	percentage is:
Not over $100,000	100
Over $100,000 but not over $200,000	80
Over $200,000 but not over $400,000	60
Over $400,000	40.

(b)

Limitation

The amount of credit allowed under subsection (a) for any taxable year shall not exceed $500,000.

(c)

Eligible taxpayer

For purposes of this section, the term eligible taxpayer means an owner or operator of a concentrated animal feeding operation (as defined under section 122.23 of title 40, Code of Federal Regulations).

(d)

Qualified compliance costs

For purposes of this section—

(1)

In general

The term qualified compliance costs means costs paid or incurred for compliance with a national pollutant discharge elimination system permit issued under section 402 of the Federal Water Pollution Control Act (33 U.S.C. 1342).

(2)

Exclusion for amounts funded by grants, etc

The term qualified compliance costs shall not include any amount to the extent such amount is funded by any grant, contract, or otherwise by another person (or any governmental entity).

(e)

Special rules

(1)

Reduction in basis

For purposes of this subtitle, if a credit is determined under this section for any expenditure with respect to any property, the increase in basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so determined.

(2)

When costs paid or incurred

For purposes of this section, a cost shall be treated as paid or incurred in the year in which the taxpayer achieves compliance with the national pollutant discharge elimination system permit issued under section 402 of the Federal Water Pollution Control Act (33 U.S.C. 1342).

(3)

Denial of double benefit

No deduction or other credit shall be allowed under this chapter for any amount taken into account in determining the credit under this section.

(f)

Termination

This section shall not apply to expenditures paid or incurred after December 31, 2010.

(b)

Credit Made Part of General Business Credit

Section 38(b) of the Internal Revenue Code of 1986 is amended by striking and at the end of paragraph (29), by striking the period at the end of paragraph (30) and inserting , plus, and by adding at the end the following new paragraph:

(31)

the EPA compliance credit determined under section 45N(a).

(c)

Conforming amendments

(1)

Section 1016(a) of the Internal Revenue Code of 1986 is amended by striking and at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting , and, and by inserting after paragraph (37) the following new paragraph:

(38)

to the extent provided in section 45N(e)(1).

(2)

The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

Sec. 45N. Credit for compliance costs for concentrated animal feeding operations.

(d)

Effective Date

The amendments made by this section shall apply to expenditures incurred after December 31, 2002.