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HR 5103 IH

To amend the Internal Revenue Code of 1986 to allow a credit against income tax to vehicle fleet operators for purchasing tires made from recycled rubber.

January 23, 2008

Mr. JOHNSON of Georgia (for himself, Mr. CUMMINGS, Ms. CLARKE, Mr. AL GREEN of Texas, Mr. LEWIS of Georgia, Mr. ELLISON, Mr. PERLMUTTER, Mr. CROWLEY, Ms. WATSON, Mr. KAGEN, and Ms. LINDA T. SANCHEZ of California) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to allow a credit against income tax to vehicle fleet operators for purchasing tires made from recycled rubber.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Tire Investment, Recovery and Extension Act of 2007' or the `TIRE Act of 2007'.

SEC. 2. FINDINGS.

(1) The majority of rubber used by industry in the United States is synthetic rubber that has been derived from petroleum.

(2) The tire industry is the largest consumer of rubber in the United States, using over 3 billion pounds of rubber annually to produce over 250 million tires.

(3) Recycled rubber from scrap tires can be used in the production of new tires at loadings exceeding 10 percent of the weight of rubber in the tire if the particle size of the recycled rubber is extremely fine (80 mesh/177 microns or finer) and the particles are free from impurities such as steel and fiber.

(4) On average, the United States can save a gallon of oil for every tire produced incorporating 10 percent recycled rubber.

(5) On average, for every pound of recycled rubber used as an alternative to synthetic rubber, the United States will prevent a pound of carbon dioxide from being released into the atmosphere.

(6) An independent study has determined that air permeability in a standard tire can be reduced by up to 50 percent when using recycled content. If recycled content is used in every passenger car in the United States, it would result in a fuel savings of up to 750 million gallons per year.

SEC. 3. CREDIT FOR PURCHASES BY VEHICLE FLEET OPERATORS OF TIRES MADE FROM RECYCLED RUBBER.

(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:

`SEC. 450. PURCHASES BY VEHICLE FLEET OPERATORS OF TIRES MADE FROM RECYCLED RUBBER.

`(a) Allowance of Credit- For purposes of section 38, in the case of an eligible taxpayer, the recycled rubber tire credit determined under this section is $3 for each qualified tire purchased by the taxpayer during the taxable year for use on a highway motor vehicle used in a trade or business of the taxpayer.

`(b) Dollar Limitation-

`(1) IN GENERAL- The credit determined under this section for any taxable year shall not exceed--

`(A) $10,000,000 in the case of taxable years ending during the first year beginning after the date of the enactment of this section,

`(B) $15,000,000 in the case of taxable years ending during the 2nd such year,

`(C) $25,000,000 in the case of taxable years ending during the 3rd, 4th, or 5th such year, and

`(D) except as provided in paragraph (2), zero thereafter.

`(2) CARRYOVER OF UNUSED LIMITATION- If the limitation under this subsection for any taxable year (after the application of this paragraph) exceeds the credit determined under this section for such year, such limitation for the succeeding taxable year shall be increased by the amount of such excess. No amount may be carried under the preceding sentence to any taxable year ending after the 6th year beginning after the date of the enactment of this section.

`(3) AGGREGATE LIMITATION- In no event shall the aggregate credit determined under this section for a taxpayer for all taxable years exceed $100,000,000.

`(c) Eligible Taxpayer- For purposes of this section, the term `eligible taxpayer' means any person who regularly uses more than 100 vehicles in any trade or business of such person during the taxable year.

`(d) Qualified Tire- For purposes of this section--

`(1) IN GENERAL- The term `qualified tire' means--

`(A) any qualified new tire, and

`(B) any qualified retread tire.

`(2) QUALIFIED NEW TIRE- The term `qualified new tire' means any tire (other than a retread tire) if--

`(A) the tire is manufactured in the United States,

`(B) the original use of the tire begins with the taxpayer, and

`(C) at least the new tire percentage of the total weight of the rubber in the tire is attributable to recycled rubber powder.

`(3) QUALIFIED RETREAD TIRE- The term `qualified retread tire' means any retread tire if--

`(A) the tire is of a type used on highway motor vehicles having a gross vehicle weight rating of at least 2,600 pounds,

`(B) the tire is retreaded in the United States,

`(C) the original use of the tire (after retreading) begins with the taxpayer, and

`(D) at least the retread tire percentage of the total weight of the rubber in the retread portion of the tire is attributable to recycled rubber powder.

`(4) RECYCLED CONTENT PERCENTAGES- The new tire percentage and the retread tire percentage shall be determined in accordance with the following table:

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`If the tire is purchased during--                           The new tire percentage is-- The retread tire percentage is-- 

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the 1st year after the date of the enactment of this section                            8                               10 

the 2nd such year                                                                       9                               11 

the 3rd such year                                                                      10                               12 

the 4th such year                                                                      11                               13 

the 5th such year                                                                      12                               14 

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`(5) RECYCLED RUBBER POWDER- The term `recycled rubber powder' means recycled vulcanizate particulate rubber at a size classification of 80 mesh or finer as defined in the ASTM standard D5603-01.

`(e) Controlled Groups- For purposes of this section, all persons treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as one person, and the dollar limitation applicable under subsection (b) for any taxable year shall be allocated among such persons in proportion to their purchases of qualified tires during such year.

`(f) Basis Adjustment- For purposes of this subtitle, if a credit is determined under this section with respect to any tire, the basis of such tire shall be reduced by the amount of the credit so allowed.

`(g) Application of Section- This section shall apply to tires purchased during the 5-year period beginning on the day after the date of the enactment of this section.'.

(b) Conforming Amendments-

(1) Subsection (b) of section 38 of such Code is amended by striking `plus' at the end of paragraph (30), by striking the period at the end of paragraph (31) and inserting `, plus', and by adding at the end the following new paragraph:

`(32) in the case of an eligible taxpayer (as defined in section 45O(b)), the recycled rubber tire credit determined under section 45O(a).'.

(2) Subsection (a) of section 1016 of such Code is amended by striking `and' at the end of paragraph (35), by striking the period at the end of paragraph (36) and inserting `, and', and by adding at the end the following new paragraph:

`(37) to the extent provided in section 45O(f).'.

(3) 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. 45O. Purchases by vehicle fleet operators of tires made from recycled rubber.'.

(c) Effective Date- The amendments made by this section shall apply to purchases made after the date of the enactment of this Act in taxable years ending after such date.