EXEMPTION FROM CERTAIN EXCISE TAXES FOR MOBILE MACHINERY.

SEC. 851. EXEMPTION FROM CERTAIN EXCISE TAXES FOR MOBILE MACHINERY.(a) Exemption From Tax on Heavy Trucks and Trailers Sold at Retail.—(1) In general.—Section 4053 (relating to exemptions) is amended by adding at the end the following new paragraph:“(8) Mobile machinery.—Any vehicle which consists of a chassis—“(A) to which there has been permanently mounted (by welding, bolting, riveting, or other means) machinery or equipment to perform a construction, manufacturing, processing, farming, mining, drilling, timbering, or similar operation if the operation of the machinery or equipment is unrelated to transportation on or off the public highways,“(B) which has been specially designed to serve only as a mobile carriage and mount (and a power source, where applicable) for the particular machinery or equipment involved, whether or not such machinery or equipment is in operation, and“(C) which, by reason of such special design, could not, without substantial structural modification, be used as a component of a vehicle designed to perform a function of transporting any load other than that particular machinery or equipment or similar machinery or equipment requiring such a specially designed chassis.”.(2) Effective date.—The amendment made by this subsection shall take effect on the day after the date of the enactment of this Act.(b) Exemption From Tax on Use of Certain Vehicles.—(1) In general.—Section 4483 (relating to exemptions) is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:“(g) Exemption for Mobile Machinery.—No tax shall be imposed by section 4481 on the use of any vehicle described in section 4053(8).”.118 STAT. 1608(2) Effective date.—The amendments made by this subsection shall take effect on the day after the date of the enactment of this Act.(c) Exemption From Tax on Tires.—(1) In General.—Section 4072(b)(2) is amended by adding at the end the following flush sentence: “Such term shall not include tires of a type used exclusively on vehicles described in section 4053(8).”.(2) Effective date.—The amendment made by this subsection shall take effect on the day after the date of the enactment of this Act.(d) Refund of Fuel Taxes.—(1) In general.—Section 6421(e)(2) (defining off-highway business use) is amended by adding at the end the following new subparagraph:“(C) Uses in mobile machinery.—“(i) In general.—The term ‘off-highway business use’ shall include any use in a vehicle which meets the requirements described in clause (ii).“(ii) Requirements for mobile machinery.—The requirements described in this clause are—“(I) the design-based test, and“(II) the use-based test.“(iii) Design-based test.—For purposes of clause (ii)(I), the design-based test is met if the vehicle consists of a chassis—“(I) to which there has been permanently mounted (by welding, bolting, riveting, or other means) machinery or equipment to perform a construction, manufacturing, processing, farming, mining, drilling, timbering, or similar operation if the operation of the machinery or equipment is unrelated to transportation on or off the public highways,“(II) which has been specially designed to serve only as a mobile carriage and mount (and a power source, where applicable) for the particular machinery or equipment involved, whether or not such machinery or equipment is in operation, and“(III) which, by reason of such special design, could not, without substantial structural modification, be used as a component of a vehicle designed to perform a function of transporting any load other than that particular machinery or equipment or similar machinery or equipment requiring such a specially designed chassis.“(iv) Use-based test.—For purposes of clause (ii)(II), the use-based test is met if the use of the vehicle on public highways was less than 7,500 miles during the taxpayer’s taxable year. This clause shall be applied without regard to use of the vehicle by any organization which is described in section 501(c) and exempt from tax under section 501(a).”.(2) No tax-free sales.—Subsection (b) of section 4082 is amended by inserting before the period at the end the following: “and such term shall not include any use described in section 6421(e)(2)(C)”.118 STAT. 1609(3) Annual refund of tax paid.—Section 6427(i)(2) (relating to exceptions) is amended by adding at the end the following new subparagraph:“(C) Nonapplication of paragraph.—This paragraph shall not apply to any fuel used solely in any off-highway business use described in section 6421(e)(2)(C).”.(4) Effective date.—The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act.