INCOME TAX CREDIT IN LIEU OF PAYMENTS WITH RESPECT TO CERTAIN USES OF GASOLINE AND LUBRICATING OIL

SEC. 809. INCOME TAX CREDIT IN LIEU OF PAYMENTS WITH RESPECT TO CERTAIN USES OF GASOLINE AND LUBRICATING OIL (a) Gasoline Used on Farms.— (1) In general.— Section 6420 (relating to gasoline used on farms) is amended— (A) by striking out “If” in subsection (a) and inserting in lieu thereof “Except as provided in subsection (h), if”; and (B) by redesignating subsection (h) as (i), and by inserting after subsection (g) the following new subsection: “(h) Income Tax Credit in Lieu of Payment.— “(1) Persons not subject to income tax.— Payment shall be made under subsection (a) with respect to gasoline used after June 30, 1965, only to— “(A) the United States or an agency or instrumentality thereof, a State, a political subdivision of a State, or an agency or instrumentality of one or more States or political subdivisions, or “(B) an organization exempt from tax under section 501 (a) (other than an organization required to make a return of the tax imposed under subtitle A for its taxable year). “(2) Allowance of credit against income tax.— “For allowance of credit against the tax imposed by subtitle A for gasoline used after June 30, 1965, see section 39.” (2) Time for filing claims; period covered.— Subsection (b) of section 6420 (relating to time for filing claims; period covered) is amended to read as follows: “(b) Time for Filing Claim; Period Covered.— “(1) Gasoline used before july 1, 1965.—Except as provided in paragraph (2), not more than one claim may be filed under this section by any person with respect to gasoline used during the one-year period ending on June 30 of any year. No claim shall be allowed under this paragraph with respect to any one-year period unless filed on or before September 30 of the year in which such one-year period ends. “(2) Gasoline used after june 30, 1965.— In the case of gasoline used after June 30, 1965— “(A) not more than one claim may be filed under this section by any person with respect to gasoline used during his taxable year; and “(B) no claim shall be allowed under this section with respect to gasoline used during any taxable year unless filed by such person not later than the time prescribed by law for filing an income tax return for such taxable year. 79 Stat. 166 For purposes of this paragraph, a person’s taxable year shall be his taxable year for purposes of subtitle A, except that a person’s first taxable year beginning after June 30, 1966, shall include the period after June 30, 1965, and before the beginning of such first taxable year.” (3) Technical amendment.—Subsection (d) of section 6420 (relating to exempt sales, etc.) is amended by striking out “paid” in the first sentence and inserting in lieu thereof “payable”. (b) Gasoline Used for Certain Nonhighway Purposes or by Local Transit Systems.— (1) In general.— Section 6421 (relating to gasoline used for certain nonhighway purposes or by local transit systems) is amended— (A) by striking out “If” in subsections (a) and (b) and inserting in lieu thereof “Except as provided in subsection (i), if”; and (B) by redesignating subsection (i) as (j), and by inserting after subsection (h) the following new subsection: “(i) Income Tax Credit in Lieu of Payment.— “(1) Persons not subject to income tax.— Payment shall be made under subsections (a) and (b) with respect to gasoline used after June 30, 1965, only to— “(A) the United States or an agency or instrumentality thereof, a State, a political subdivision of a State, or an agency or instrumentality of one or more States or political subdivisions, or “(B) an organization exempt from tax under section 501(a) (other than an organization required to make a return of the tax imposed under subtitle A for its taxable year). “(2) Exception.— Paragraph (1) shall not apply to a payment of a claim filed under subsection (c)(8)(B). “(3) Allowance of credit against income tax.— “For allowance of credit against the tax imposed by subtitle A for gasoline used after June 30, 1965, see section 39.” (2) Time for filing claims; period covered.— Subsection (c) of section 6421 (relating to time for filing claim; period covered) is amended— (A) by striking out “General rule.—Except as provided in paragraph (2)” in paragraph (1) and inserting in lieu thereof “Gasoline used before July 1, 1965.—Except as provided in paragraphs (2) and (3)”; (B) by striking out “If” in paragraph (2) and inserting in lieu thereof “Except as provided in paragraph (3), if”; and (C) by adding at the end thereof the following new paragraph: “(3) Gasoline used after june 30, 1965.— “(A) In general.— In the case of gasoline used after June 30, 1965— “(i) except as provided in subparagraph (B), not more than one claim may be filed under subsection (a), and not more than one claim may be filed under subsection (b), by any person with respect to gasoline used during his taxable year; and “(ii) no claim shall be allowed under this subparagraph with respect to gasoline used during any taxable year unless filed by such person not later than the time prescribed by law for filing an income tax return for such taxable year.79 Stat. 167 For purposes of this paragraph, a person’s taxable year shall be his taxable year for purposes of subtitle A, except that a person’s first taxable year beginning after June 30, 1965, shall include the period after June 30, 1965, and before the beginning of such first taxable year. “(B) Exception.—If $1,000 or more is payable under this section to any person with respect to gasoline used during any of the first three quarters of his taxable year, a claim may be filed under this section by such person with respect to gasoline used during such quarter. No claim filed under this subparagraph shall be allowed unless filed on or before the last day of the first quarter following the quarter for which the claim is filed.” (3) Technical amendment.— Subsection (e)(1) of section 6421 (relating to exempt sales, etc.) is amended by striking out “paid” in the first sentence and inserting in lieu thereof “payable”. (c) Credit Against Income Tax.— Subpart A of part IV of subchapter A of chapter 1 (relating to credits allowable) is amended by renumbering section 39 as 40, and by inserting after section 38 the following new section: “SEC. 39. CERTAIN USES OF GASOLINE AND LUBRICATING OIL. “(a) General Rule.— There shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the sum of the amounts payable to the taxpayer— “(1) under section 6420 with respect to gasoline used during the taxable year on a farm for farming purposes (determined without regard to section 6420(h)), “(2) under section 6421 with respect to gasoline used during the taxable year (A) otherwise than as a fuel in a highway vehicle or (B) in vehicles while engaged in furnishing certain public passenger land transportation service (determined without regard to section 6421 (i)), and “(3) under section 6424 with respect to lubricating oil used during the taxable year otherwise than in a highway motor vehicle (determined without regard to section 6424(g)). “(b) Transitional Rules.—For purposes of paragraphs (1) and (2) of subsection (a), a taxpayer’s first taxable year beginning after June 30, 1965, shall include the period after June 30, 1965, and before the beginning of such first taxable year. For purposes of paragraph (3) or subsection (a), a taxpayer’s first taxable year beginning after December 31, 1965, shall include the period after December 31, 1965, and before the beginning of such first taxable year. “(c) Exception.—Credit shall not be allowed under subsection (a) for any amount payable under section 6421 or 6424, if a claim for such amount is timely filed, and under section 6421 (i) or 6424(g) is payable, under such section.” (d) Technical and Conforming Amendments.— (1) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 39 and inserting in lieu thereof the following: “Sec. 39. Certain uses of gasoline and lubricating oil. “Sec. 40. Overpayments of tax.” (2) Section 72(n)(3) (relating to determination of taxable income for certain purposes) is amended by striking out “section 31” and inserting in lieu thereof “sections 31 and 39”. (3) Section 874(a) (relating to allowance of deduction and credits of nonresident aliens) is amended by inserting before the period at the end thereof “or the credit provided by section 39 for certain uses of gasoline and lubricating oil”. 79 Stat. 168 (4) (A) Section 6201(a) (relating to assessment authority of the Secretary or his delegate) is amended by adding at the end thereof the following new paragraph: “(4) Erroneous credit for use of gasoline.— If on any return or claim for refund of income taxes under subtitle A there is an overstatement of the credit allowable by section 39 (relating to certain uses of gasoline and lubricating oil), the amount so over-stated which is allowed against the tax shown on the return or which is allowed as a credit or refund may be assessed by the Secretary or his delegate in the same manner as in the case of a mathematical error appearing upon the return.” (B) Section 6213(e) is amended by adding at the end thereof the following new paragraph: “(3) For assessment as if a mathematical error on the return, in the case of erroneous claims for credits under section 39, see section 6201(a)(4).” (5) (A) Section 6211(b) (relating to rules for applying the definition of a deficiency) is amended by adding at the end thereof the following new paragraph: “(4) The tax imposed by subtitle A and the tax shown on the return shall both be determined without regard to the credit under section 39, unless, without regard to such credit, the tax imposed by subtitle A exceeds the excess of the amount specified in subsection (a)(1) over the amount specified in subsection (a)(2).” (B) Section 1314(a)(1)(A) (relating to ascertainment of amount of adjustment) and section 1481(b)(2)(A)(i) (relating to credit against repayment on account or renegotiation or allowance) are amended by striking out “(b)(1) and (3)” and inserting in lieu thereof “(b)(1), (3), and (4)”. (6) Section 6401 (relating to amounts treated as overpayments) is amended by striking out subsection (b) and inserting in lieu thereof the following: “(b) Excessive Credits Under Sections 31 and 39.—If the amount allowable as credits under sections 31 (relating to tax withheld on wages) and 39 (relating to certain uses of gasoline and lubricating oil) exceeds the tax imposed by subtitle A (reduced by the credits allowable under subpart A of part IV of subchapter A of chapter 1, other than the credits allowable under sections 31 and 39), the amount of such excess shall be considered an overpayment,” (e) Transfers From Highway Trust Fund.— Section 209(f) of the Highway Revenue Act of 1956 (relating to expenditures from the Highway Trust Fund) is amended by adding at the end thereof the following new paragraph: “(6) Transfers from the trust fund for income tax credits allowed for certain uses of gasoline and lubricating oil.—The Secretary of the Treasury shall pay from time to time from the Trust Fund into the general fund of the Treasury amounts equivalent to the credits allowed under section 39 of the Internal Revenue Code of 1954 (relating to credit for certain uses of gasoline and lubricating oil) with respect to gasoline and lubricating oil used before October 1, 1972. Such amounts shall be transferred on the basis of estimates by the Secretary of the Treasury, and proper adjustments shall be made in amounts subsequently transferred to the extent prior estimates were in excess or less than the credits allowed.” (f) Effective Dates.— The amendments made by subsections (a) and (b) shall apply with respect to gasoline used on or after July 1, 1965. The amendments made by subsections (c) and (d) shall apply to taxable years beginning on or after July 1, 1965.