HR2925-119

What This Bill Does

The Maritime Fuel Tax Parity Act amends Internal Revenue Code section 4041(g). It extends the existing alternative motorboat fuel exemption to fuel sold or used by vessels that are described in section 4042(c)(1) and are actually engaged in trade between Atlantic or Pacific ports of the United States, including territories and possessions. The amendment applies to sales after December 31, 2023, so the practical effect is targeted tax relief for qualifying coastwise vessel fuel rather than a broad maritime tax rewrite.

Who Benefits and How

Coastwise vessel operators using alternative fuels benefit because qualifying fuel sales can receive the motorboat-fuel excise tax exemption. Maritime shipping companies serving Atlantic or Pacific ports benefit from lower fuel tax costs on eligible vessel operations. Port customers may benefit indirectly if lower fuel-tax costs reduce shipping expenses for eligible coastwise trade. Alternative maritime fuel suppliers benefit if the tax exemption makes eligible fuel more attractive to vessel operators.

Who Bears the Burden and How

The Internal Revenue Service must update guidance and administration for qualifying coastwise vessel fuel sales. Federal taxpayers bear the revenue loss from exempting additional maritime fuel sales. Nonqualifying vessel operators remain outside the exemption and may face competitive pressure from eligible coastwise operators. Fuel sellers must determine whether sales after December 31, 2023 meet the statutory vessel and route requirements.

Key Provisions

• Amends section 4041(g) to extend the alternative motorboat fuel exemption to certain coastwise vessels.
• Limits eligibility to vessels engaged in trade between Atlantic or Pacific ports of the United States.
• Includes territories and possessions in the covered port routes.
• Applies the exemption to qualifying fuel sales after December 31, 2023.