Sponsors (11)
The bill lowers fuel tax costs and simplifies tax treatment for qualifying coastwise vessels and their fuel sellers, benefiting smaller maritime operators, while reducing federal excise revenue and creating uneven treatment and additional compliance burdens for non-qualifying parties and tax administrators.
Owners, lessees, and operators of qualifying U.S. coastwise vessels pay lower excise tax on alternative motorboat fuel used in eligible trade, reducing operating fuel costs for small commercial vessel operators and crew.
Fuel sellers who sell alternative motorboat fuel to qualifying vessels avoid excise tax liability after Dec 31, 2023, simplifying tax treatment and reducing filing/liability burdens for those sellers.
All taxpayers face reduced federal excise tax receipts because the exemption lowers federal revenue from these fuel taxes, which could shrink funding available for programs financed by those receipts.
Small commercial vessel operators who do not meet the qualifying criteria receive no tax relief, creating unequal tax treatment between similar maritime operators.
The IRS and Treasury may face increased compliance and enforcement complexity as operators or carriers could seek to re-route or re-classify activity to qualify for the exemption, raising administrative burdens.
Based on analysis of 2 sections of legislative text.
Broadens the federal alternative motorboat fuel tax exemption to cover qualifying vessels engaged in trade between Atlantic or Pacific U.S. ports (including territories) for sales after Dec 31, 2023.
Official title: To amend the Internal Revenue Code of 1986 to extend the exemption from the excise tax on alternative motorboat fuels sold as supplies for vessels or aircraft to include certain vessels serving only one coast.
Introduced April 17, 2025 by Aaron Bean · Last progress April 17, 2025
Expands a federal fuel-tax exemption so certain vessels engaged in trade between U.S. Atlantic or Pacific ports (including territories and possessions) qualify for the alternative motorboat fuel exemption. The change is applied to fuel sales after December 31, 2023, and effectively reduces federal excise tax liability for qualifying maritime fuel sales.