H.R.2146 - To amend the Internal Revenue Code of 1986 to provide refunds with respect to certain dyed fuels that are exempt from tax and with respect to which tax was previously paid. (119th Congress)
Summary
H.R.2146 aims to amend the Internal Revenue Code of 1986, specifically targeting refunds for certain dyed fuels that are exempt from tax but for which tax was previously paid. The bill introduces Section 6434 to the code, which allows individuals who removed eligible indelibly dyed diesel fuel or kerosene from a terminal to receive a refund equal to the tax previously paid on that fuel.
This refund applies only if the fuel is exempt from taxation under section 4082(a) and a tax under section 4081 was previously paid and not credited or refunded. The bill also includes conforming amendments to other sections of the Internal Revenue Code to accommodate the new refund provision.
The effective date for these amendments is set to be 180 days after the enactment of the Act, applying to eligible dyed fuels removed on or after that date.
Expected Effects
The primary effect of this bill will be to provide financial relief to individuals and businesses that use dyed diesel fuel or kerosene for tax-exempt purposes, such as off-highway use. By refunding the tax previously paid on these fuels, the bill aims to reduce the cost of operations for these entities.
This could lead to increased economic activity in sectors that rely heavily on dyed fuels, such as agriculture, construction, and transportation. The refunds could also simplify tax compliance for these businesses, as they would no longer need to seek credits or other means of recovering the tax paid on exempt fuels.
Potential Benefits
- Reduced operational costs: Businesses using dyed fuels for exempt purposes will see reduced expenses due to tax refunds.
- Simplified tax compliance: The refund mechanism streamlines the process of recovering taxes paid on exempt fuels.
- Economic stimulus: The financial relief could spur increased activity in sectors reliant on dyed fuels.
- Increased competitiveness: Lower fuel costs could make businesses more competitive in their respective markets.
- Targeted relief: The bill specifically addresses situations where tax was paid on fuel that should have been exempt.
Potential Disadvantages
- Potential for fraud: The refund mechanism could be susceptible to fraudulent claims, requiring robust oversight.
- Administrative burden: The IRS will need to establish procedures for processing and verifying refund claims, increasing administrative costs.
- Revenue loss: The refunds will reduce federal tax revenue, potentially impacting other government programs.
- Complexity: The changes to the tax code could create confusion and require additional guidance for taxpayers.
- Limited scope: The bill only addresses dyed fuels, potentially overlooking other areas where tax exemptions are not properly implemented.
Constitutional Alignment
The bill appears to align with the general welfare clause of the US Constitution, as it aims to promote economic activity and reduce the tax burden on specific sectors. Article I, Section 8 grants Congress the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States.
This bill falls under Congress's power to modify and adjust the tax code to achieve specific economic goals. There are no apparent violations of individual rights or freedoms guaranteed by the Constitution or its amendments.
However, the fairness and equity of the tax system are ongoing concerns, and any changes should be carefully considered to ensure they do not disproportionately benefit specific groups or regions.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).