text: SECTION 1. TERMINATION AFTER 1997 OF TAX SUBSIDIES FOR LARGE PRODUCERS 
                OF ETHANOL USED AS A FUEL.
  
      (a) General Rule--Subsection (e) of section 40 of the Internal 
  Revenue Code of 1986 is amended by adding at the end the following 
  flush sentence:
          ``Except in the case of the credit determined under subsection 
          (a)(3), the preceding sentence shall be applied by substituting 
          `1997' for `2000' and `1998' for `2001'.''
      (b) Denial of Credit for Alcohol Used To Produce Ether.--Subsection 
  (b) of section 40 of such Code is amended by adding at the end the 
  following new paragraph:
              ``(6) Denial of credit for alcohol used to produce ether.--
          No credit shall be allowed under this section for alcohol used 
          to produce any ether.''
      (c) Conforming Reductions of Other Incentives for Ethanol Fuel.--
              (1) Repeal of reduced rate on ethanol fuel produced other 
          than from petroleum or natural gas.--Subsection (b) of section 
          4041 of such Code is amended to read as follows:
      ``(b) Exemption for Off-Highway Business Use.--
              ``(1) In general.--No tax shall be imposed by subsection 
          (a) or (d)(1) on liquids sold for use or used in an off-highway 
          business use.
              ``(2) Tax where other use.--If a liquid on which no tax was 
          imposed by reason of paragraph (1) is used otherwise than in an 
          off-highway business use, a tax shall be imposed by paragraph 
          (1)(B), (2)(B), or (3)(A)(ii) of subsection (a) (whichever is 
          appropriate) and by the corresponding provision of subsection 
          (d)(1) (if any).
              ``(3) Off-highway business use defined.--For purposes of 
          this subsection, the term `off-highway business use' has the 
          meaning given to such term by section 6421(e)(2); except that 
          such term shall not, for purposes of subsection (a)(1), include 
          use in a diesel-powered train.''
              (2) Repeal of reduced rate on ethanol fuel produced from 
          natural gas.--Subsection (m) of section 4041 of such Code is 
          amended--
                      (A) by striking ``or ethanol'' each place it 
                  appears (including the heading of paragraph (2)), and
                      (B) by striking ``, ethanol, or other alcohol'' in 
                  paragraph (2) and inserting ``or other alcohol (other 
                  than ethanol)''.
      (d) Conforming Amendments To Excise Taxes; Fuel Alcohol Taxed in 
  Same Manner as Other Motor Fuels.--
              (1) In general.--Paragraph (1) of section 4083(a) of such 
          Code (defining taxable fuel) is amended by striking ``and'' at 
          the end of subparagraph (A), by striking the period at the end 
          of subparagraph (B) and inserting ``, and'', and by adding at 
          the end the following:
                      ``(C) fuel alcohol.''
              (2) Fuel alcohol.--Subsection (a) of section 4083 of such 
          Code is amended by adding at the end the following new 
          paragraph:
              ``(4) Fuel alcohol.--The term `fuel alcohol' means any 
          alcohol (including ethanol and methanol)--
                      ``(A) which is produced other than from petroleum, 
                  natural gas, or coal (including peat), and
                      ``(B) which is withdrawn from the distillery where 
                  produced free of tax under chapter 51 by reason of 
                  section 5181 or so much of section 5214(a)(1) as 
                  relates to fuel use.''
              (3) Rate of tax.--Clause (i) of section 4081(a)(2)(A) of 
          such Code is amended by inserting ``or fuel alcohol'' after 
          ``gasoline''.
              (4) Special rules for imposition of tax.--Paragraph (1) of 
          section 4081(a) of such Code is amended by adding at the end 
          the following new subparagraph:
                      ``(C) Special rules for fuel alcohol.--In the case 
                  of fuel alcohol--
                              ``(i) the distillery where produced shall 
                          be treated as a refinery, and
                              ``(ii) subparagraph (B) shall be applied by 
                          including transfers by truck or rail in excess 
                          of such minimum quantities as the Secretary 
                          shall prescribe.''
              (5) Repeal of reduced rates on alcohol fuels.--
                      (A) Section 4041 of such Code is amended by 
                  striking subsection (k).
                      (B) Section 4081 of such Code is amended by 
                  striking subsection (c).
                      (C) Section 4091 of such Code is amended by 
                  striking subsection (c).
              (6) Conforming amendments.--
                      (A) Section 40 of such Code is amended by striking 
                  subsection (c).
                      (B) Paragraph (4) of section 40(d) of such Code is 
                  amended to read as follows:
              ``(4) Volume of alcohol.--For purposes of determining under 
          subsection (a) the number of gallons of alcohol with respect to 
          which a credit is allowable under subsection (a), the volume of 
          alcohol shall include the volume of any denaturant (including 
          gasoline) which is added under any formulas approved by the 
          Secretary to the extent that such denaturants do not exceed 5 
          percent of the volume of such alcohol (including 
          denaturants).''
                      (C) Paragraph (2) of section 4041(a) of such Code 
                  is amended by adding at the end the following: ``No tax 
                  shall be imposed by this paragraph on the sale or use 
                  of any liquid if tax was imposed on such liquid under 
                  section 4081 and the tax thereon was not credited or 
                  refunded.''
                      (D) Section 6427 of such Code is amended by 
                  striking subsection (f).
                      (E) Subsection (i) of section 6427 of such Code is 
                  amended by striking paragraph (3).
                      (F) Paragraph (2) of section 6427(k) of such Code 
                  is amended by striking ``(3)''.
                      (G)(i) Paragraph (1) of section 6427(l) of such 
                  Code is amended by striking ``or'' at the end of 
                  subparagraph (A), by redesignating subparagraph (B) as 
                  subparagraph (C), and by inserting after subparagraph 
                  (A) the following new subparagraph:
                      ``(B) any fuel alcohol (as defined in section 4083) 
                  on which tax has been imposed by section 4081, or''.
                      (ii) Paragraph (2) of section 6427(l) of such Code 
                  is amended by striking ``and'' at the end of 
                  subparagraph (A), by redesignating subparagraph (B) as 
                  subparagraph (C), and by inserting after subparagraph 
                  (A) the following new subparagraph:
                      ``(B) in the case of fuel alcohol (as so defined), 
                  any use which is exempt from the tax imposed by section 
                  4041(a)(2) other than by reason of a prior imposition 
                  of tax, and''.
                      (iii) The heading of subsection (l) of section 6427 
                  of such Code is amended by inserting ``, Fuel 
                  Alcohol,'' after ``Diesel Fuel''.
                      (H) Sections 9503(b)(1)(E) and 9508(b)(2) of such 
                  Code are each amended by striking ``and diesel fuel'' 
                  and inserting ``diesel fuel, and fuel alcohol''.
                      (I) Section 9502 of such Code is amended by 
                  striking subsection (e) and by redesignating subsection 
                  (f) as subsection (e).
                      (J) Subsection (e) of section 9502 of such Code (as 
                  redesignated by subparagraph (I)) is amended by 
                  striking paragraph (2) and by redesignating paragraph 
                  (3) as paragraph (2).
                      (K) Subsection (b) of section 9503 of such Code is 
                  amended by striking paragraph (5).
                      (L) Paragraph (3) of section 9503(f) of such Code 
                  is amended to read as follows:
              ``(3) Partially exempt methanol or ethanol fuel.--In the 
          case of a rate of tax determined under section 4041(m), the 
          Highway Trust Fund financing rate is the excess (if any) of the 
          rate so determined over--
                      ``(A) 5.55 cents per gallon after September 30, 
                  1993, and before October 1, 1995, and
                      ``(B) 4.3 cents per gallon after September 30, 
                  1995.''
      (e) Effective Date.--The amendments made by this section shall take 
  effect on January 1, 1998.
      (f) Floor Stock Taxes.--
              (1) Imposition of tax.--In the case of fuel alcohol which 
          is held on January 1, 1998, by any person, there is hereby 
          imposed a floor stocks tax of 18.4 cents per gallon.
              (2) Liability for tax and method of payment.--
                      (A) Liability for tax.--A person holding fuel 
                  alcohol on January 1, 1998, to which the tax imposed by 
                  paragraph (1) applies shall be liable for such tax.
                      (B) Method of payment.--The tax imposed by 
                  paragraph (1) shall be paid in such manner as the 
                  Secretary shall prescribe.
                      (C) Time for payment.--The tax imposed by paragraph 
                  (1) shall be paid on or before June 30, 1998.
              (3) Definitions.--For purposes of this subsection--
                      (A) Fuel alcohol.--The term ``fuel alcohol'' has 
                  the meaning given such term by section 4083 of the 
                  Internal Revenue Code of 1986, as amended by this 
                  section.
                      (B) Held by a person.--Fuel alcohol shall be 
                  considered as ``held by a person'' if title thereto has 
                  passed to such person (whether or not delivery to the 
                  person has been made).
                      (C) Secretary.--The term ``Secretary'' means the 
                  Secretary of the Treasury or his delegate.
              (4) Exception for exempt uses.--The tax imposed by 
          paragraph (1) shall not apply to fuel alcohol held by any 
          person exclusively for any use to the extent a credit or refund 
          of the tax imposed by section 4081 of the Internal Revenue Code 
          of 1986 is allowable for such use.
              (5) Exception for fuel held in vehicle tank.--No tax shall 
          be imposed by paragraph (1) on fuel alcohol held in the tank of 
          a motor vehicle or motorboat.
              (6) Exception for certain amounts of fuel.--
                      (A) In general.--No tax shall be imposed by 
                  paragraph (1) on fuel alcohol held on January 1, 1998, 
                  by any person if the aggregate amount of fuel alcohol 
                  held by such person on such date does not exceed 2,000 
                  gallons. The preceding sentence shall apply only if 
                  such person submits to the Secretary (at the time and 
                  in the manner required by the Secretary) such 
                  information as the Secretary shall require for purposes 
                  of this paragraph.
                      (B) Exempt fuel.--For purposes of subparagraph (A), 
                  there shall not be taken into account fuel held by any 
                  person which is exempt from the tax imposed by 
                  paragraph (1) by reason of paragraph (4) or (5).
                      (C) Controlled groups.--For purposes of this 
                  paragraph--
                              (i) Corporations.--
                                      (I) In general.--All persons 
                                  treated as a controlled group shall be 
                                  treated as 1 person.
                                      (II) Controlled group.--The term 
                                  ``controlled group'' has the meaning 
                                  given to such term by subsection (a) of 
                                  section 1563 of such Code; except that 
                                  for such purposes the phrase ``more 
                                  than 50 percent'' shall be substituted 
                                  for the phrase ``at least 80 percent'' 
                                  each place it appears in such 
                                  subsection.
                              (ii) Nonincorporated persons under common 
                          control.--Under regulations prescribed by the 
                          Secretary, principles similar to the principles 
                          of clause (i) shall apply to a group of persons 
                          under common control where 1 or more of such 
                          persons is not a corporation.
              (7) Other laws applicable.--All provisions of law, 
          including penalties, applicable with respect to the taxes 
          imposed by section 4081 of such Code shall, insofar as 
          applicable and not inconsistent with the provisions of this 
          subsection, apply with respect to the floor stock taxes imposed 
          by paragraph (1) to the same extent as if such taxes were 
          imposed by such section 4081.
target: Amends the Internal Revenue Code to terminate the credit for large producers of ethanol used as a fuel after 1997.  Disallows the credit for alcohol used to produce any ether.  Exempts from tax liquids sold for use or used in an off-highway business use.  Repeals the reduced rate on ethanol fuel produced from natural gas.  Provides for the tax treatment of fuel alcohol in the same manner as other motor fuels. Repeals the reduced rates on alcohol fuels.   Exempts partially, in the case of methanol or ethanol, the rate of tax determined under the Highway Trust Fund financing rate. 
  Imposes a floor stock tax on fuel alcohol held by any individual on a specified date and makes such individual liable for such tax. Exempts fuel alcohol held by any individual for any use to the extent a credit or refund of the tax imposed under current law is allowed. Prohibits the imposition of tax on fuel alcohol held in the tank of a motor vehicle or motorboat and for certain amounts of fuel.
feat_title: To amend the Internal Revenue Code of 1986 to terminate the tax subsidies for large producers of ethanol used as a fuel.