MODIFICATION OF REFUNDS FOR KEROSENE USED IN AVIATION.

SEC. 420. MODIFICATION OF REFUNDS FOR KEROSENE USED IN AVIATION.(a) In General.—Paragraph (4) of section 6427(l) (relating to nontaxable uses of diesel fuel and kerosene) is amended to read as follows:“(4) Refunds for kerosene used in aviation.—“(A) Kerosene used in commercial aviation.—In the case of kerosene used in commercial aviation (as defined in section 4083(b)) (other than supplies for vessels or aircraft within the meaning of section 4221(d)(3)), paragraph (1) shall not apply to so much of the tax imposed by section 4041 or 4081, as the case may be, as is attributable to—“(i) the Leaking Underground Storage Tank Trust Fund financing rate imposed by such section, and“(ii) so much of the rate of tax specified in section 4041(c) or 4081(a)(2)(A)(iii), as the case may be, as does not exceed 4.3 cents per gallon.120 STAT. 2969“(B) Kerosene used in noncommercial aviation.—In the case of kerosene used in aviation that is not commercial aviation (as so defined) (other than any use which is exempt from the tax imposed by section 4041(c) other than by reason of a prior imposition of tax), paragraph (1) shall not apply to—“(i) any tax imposed by subsection (c) or (d)(2) of section 4041, and“(ii) so much of the tax imposed by section 4081 as is attributable to—“(I) the Leaking Underground Storage Tank Trust Fund financing rate imposed by such section, and“(II) so much of the rate of tax specified in section 4081(a)(2)(A)(iii) as does not exceed the rate specified in section 4081(a)(2)(C)(ii).“(C) Payments to ultimate, registered vendor.—“(i) In general.—With respect to any kerosene used in aviation (other than kerosene described in clause (ii) or kerosene to which paragraph (5) applies), if the ultimate purchaser of such kerosene waives (at such time and in such form and manner as the Secretary shall prescribe) the right to payment under paragraph (1) and assigns such right to the ultimate vendor, then the Secretary shall pay the amount which would be paid under paragraph (1) to such ultimate vendor, but only if such ultimate vendor—“(I) is registered under section 4101, and“(II) meets the requirements of subparagraph (A), (B), or (D) of section 6416(a)(1).“(ii) Payments for kerosene used in noncommercial aviation.—The amount which would be paid under paragraph (1) with respect to any kerosene to which subparagraph (B) applies shall be paid only to the ultimate vendor of such kerosene. A payment shall be made to such vendor if such vendor—“(I) is registered under section 4101, and“(II) meets the requirements of subparagraph (A), (B), or (D) of section 6416(a)(1).”.(b) Conforming Amendments.—(1) Section 6427(l) is amended by striking paragraph (5) and by redesignating paragraph (6) as paragraph (5).(2) Section 4082(d)(2)(B) is amended by striking “section 6427(l)(6)(B)” and inserting “section 6427(l)(5)(B)”.(3) Section 6427(i)(4)(A) is amended—(A) by striking “paragraph (4)(B), (5), or (6)” each place it appears and inserting “paragraph (4)(C) or (5)”, and(B) by striking “(l)(5), and (l)(6)” and inserting “(l)(4)(C)(ii), and (l)(5)”.(4) Section 6427(l)(1) is amended by striking “paragraph (4)(B)” and inserting “paragraph (4)(C)(i)”.(5) Section 9502(d) is amended—(A) in paragraph (2), by striking “and (l)(5)”, and(B) in paragraph (3), by striking “or (5)”.(6) Section 9503(c)(7) is amended—(A) by amending subparagraphs (A) and (B) to read as follows:120 STAT. 2970 “(A) 4.3 cents per gallon of kerosene subject to section 6427(l)(4)(A) with respect to which a payment has been made by the Secretary under section 6427(l), and“(B) 21.8 cents per gallon of kerosene subject to section 6427(l)(4)(B) with respect to which a payment has been made by the Secretary under section 6427(l).”, and(B) in the matter following subparagraph (B), by striking “or (5)”.(c) Effective Date.—(1) In general.—The amendments made by this section shall apply to kerosene sold after September 30, 2005.(2) Special rule for pending claims.—In the case of kerosene sold for use in aviation (other than kerosene to which section 6427(l)(4)(C)(ii) of the Internal Revenue Code of 1986 (as added by subsection (a)) applies or kerosene to which section 6427(l)(5) of such Code (as redesignated by subsection (b)) applies) after September 30, 2005, and before the date of the enactment of this Act, the ultimate purchaser shall be treated as having waived the right to payment under section 6427(l)(1) of such Code and as having assigned such right to the ultimate vendor if such ultimate vendor has met the requirements of subparagraph (A), (B), or (D) of section 6416(a)(1) of such Code.(d) Special Rule for Kerosene Used in Aviation on a Farm for Farming Purposes.—(1) Refunds for purchases after december 31, 2004, and before october 1, 2005.—The Secretary of the Treasury shall pay to the ultimate purchaser of any kerosene which is used in aviation on a farm for farming purposes and which was purchased after December 31, 2004, and before October 1, 2005, an amount equal to the aggregate amount of tax imposed on such fuel under section 4041 or 4081 of the Internal Revenue Code of 1986, as the case may be, reduced by any payment to the ultimate vendor under section 6427(l)(5)(C) of such Code (as in effect on the day before the date of the enactment of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users).(2) Use on a farm for farming purposes.—For purposes of paragraph (1), kerosene shall be treated as used on a farm for farming purposes if such kerosene is used for farming purposes (within the meaning of section 6420(c)(3) of the Internal Revenue Code of 1986) in carrying on a trade or business on a farm situated in the United States. For purposes of the preceding sentence, rules similar to the rules of section 6420(c)(4) of such Code shall apply.(3) Time for filing claims.—No claim shall be allowed under paragraph (1) unless the ultimate purchaser files such claim before the date that is 3 months after the date of the enactment of this Act.(4) No double benefit.—No amount shall be paid under paragraph (1) or section 6427(l) of the Internal Revenue Code of 1986 with respect to any kerosene described in paragraph (1) to the extent that such amount is in excess of the tax imposed on such kerosene under section 4041 or 4081 of such Code, as the case may be.120 STAT. 2971(5) Applicable laws.—For purposes of this subsection, rules similar to the rules of section 6427(j) of the Internal Revenue Code of 1986 shall apply.