113 S307 IS: Close Big Oil Tax Loopholes Act
U.S. Senate
2013-02-13
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.Short
title; table of contents
(a)This Act may be cited
as the Close Big Oil Tax Loopholes
Act
.
(b)The table of contents of this Act is as follows:
Sec. 1. Short title; table of
contents.
TITLE I—Close big oil tax loopholes
Sec. 101. Modifications of foreign tax credit rules applicable
to major integrated oil companies which are dual capacity
taxpayers.
Sec. 102. Limitation on section 199 deduction attributable to
oil, natural gas, or primary products thereof.
Sec. 103. Limitation on deduction for intangible drilling and
development costs; amortization of disallowed amounts.
Sec. 104. Limitation on percentage depletion allowance for oil
and gas wells.
Sec. 105. Limitation on deduction for tertiary
injectants.
Sec. 106. Modification of definition of major integrated oil
company.
TITLE II—Outer Continental Shelf oil and natural gas
Sec. 201. Repeal of outer Continental Shelf deep water and deep
gas royalty relief.
TITLE III—Miscellaneous
Sec. 301. Deficit reduction.
Sec. 302. Budgetary effects.
<enum>I</enum><header>Close big oil tax
loopholes</header>
<section commented="no" display-inline="no-display-inline" id="id85C40D5C4E7C454E86A56B984305EA75"><enum>101.</enum><header>Modifications
of foreign tax credit rules applicable to major integrated oil companies which
are dual capacity taxpayers</header>
<subsection commented="no" display-inline="no-display-inline" id="id870C10B6A3A9401B8D2647B1A0E15EC0"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 901 of the
Internal Revenue Code of 1986 is amended by redesignating subsection (n) as
subsection (o) and by inserting after subsection (m) the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="id59B4564047054D9F8EFB25B05BC5AF1E" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="id832013D669AB496E9217A5D70E41E716"><enum>(n)</enum><header>Special rules
relating to major integrated oil companies which are dual capacity
taxpayers</header>
<paragraph commented="no" display-inline="no-display-inline" id="idA86BDC3205EF48378545D9D088E03443"><enum>(1)</enum><header>General
rule</header><text display-inline="yes-display-inline">Notwithstanding any
other provision of this chapter, any amount paid or accrued by a dual capacity
taxpayer which is a major integrated oil company (within the meaning of section
167(h)(5)) to a foreign country or possession of the United States for any
period shall not be considered a tax—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="idCE1206A91A254CEFA030EAF1D94F610A"><enum>(A)</enum><text display-inline="yes-display-inline">if, for such period, the foreign country or
possession does not impose a generally applicable income tax, or</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id1430720C4FEC4AF1BAEDD845D4A2DE7E"><enum>(B)</enum><text display-inline="yes-display-inline">to the extent such amount exceeds the
amount (determined in accordance with regulations) which—</text>
<clause commented="no" display-inline="no-display-inline" id="id3616EAF2E4174061B78DB6C614CBB2C4"><enum>(i)</enum><text display-inline="yes-display-inline">is paid by such dual capacity taxpayer
pursuant to the generally applicable income tax imposed by the country or
possession, or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idBBD48C80AE584E7AAE22BC2F3F750626"><enum>(ii)</enum><text display-inline="yes-display-inline">would be paid if the generally applicable
income tax imposed by the country or possession were applicable to such dual
capacity taxpayer.</text>
</clause></subparagraph><continuation-text commented="no" continuation-text-level="paragraph">Nothing in this paragraph shall be
construed to imply the proper treatment of any such amount not in excess of the
amount determined under subparagraph (B).</continuation-text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id2BE54CFB0E9F46AEABB5E04C1E1553D1"><enum>(2)</enum><header>Dual capacity
taxpayer</header><text display-inline="yes-display-inline">For purposes of this
subsection, the term <term>dual capacity taxpayer</term> means, with respect to
any foreign country or possession of the United States, a person who—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id114FA007ACB04E589C34FD9AE707FF40"><enum>(A)</enum><text display-inline="yes-display-inline">is subject to a levy of such country or
possession, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idB48A3E58EACB4262A062681509EBC2D3"><enum>(B)</enum><text display-inline="yes-display-inline">receives (or will receive) directly or
indirectly a specific economic benefit (as determined in accordance with
regulations) from such country or possession.</text>
</subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id4221398EC1FE4603A1915AC3F6F4FF31"><enum>(3)</enum><header>Generally
applicable income tax</header><text display-inline="yes-display-inline">For
purposes of this subsection—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id9A25BF879E264980B24CFC517824B854"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">The term
<term>generally applicable income tax</term> means an income tax (or a series
of income taxes) which is generally imposed under the laws of a foreign country
or possession on income derived from the conduct of a trade or business within
such country or possession.</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id6008C386B2034848BC16753211264648"><enum>(B)</enum><header>Exceptions</header><text display-inline="yes-display-inline">Such term shall not include a tax unless it
has substantial application, by its terms and in practice, to—</text>
<clause commented="no" display-inline="no-display-inline" id="id8EFBAC16675449C2ABDBF167616DBFA1"><enum>(i)</enum><text display-inline="yes-display-inline">persons who are not dual capacity
taxpayers, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="idFE15C6C70615499EB6717AE075351274"><enum>(ii)</enum><text display-inline="yes-display-inline">persons who are citizens or residents of
the foreign country or
possession.</text>
</clause></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id2003AD9F498E450E87059BCEDDDD5689"><enum>(b)</enum><header>Effective
Date</header>
<paragraph commented="no" display-inline="no-display-inline" id="id2C2A93FA1BB14247A7D590BFFC676441"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">The amendments made
by this section shall apply to taxes paid or accrued in taxable years beginning
after the date of the enactment of this Act.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idF5637FD489954B729A309CFCDB650390"><enum>(2)</enum><header>Contrary treaty
obligations upheld</header><text display-inline="yes-display-inline">The
amendments made by this section shall not apply to the extent contrary to any
treaty obligation of the United States.</text>
</paragraph></subsection></section><section display-inline="no-display-inline" id="idD36DA8177A7144CFBF7A1B681A26FAC2"><enum>102.</enum><header>Limitation on
section 199 deduction attributable to oil, natural gas, or primary products
thereof</header>
<subsection id="id4EDE82BB1896423CAC005CECEA288DF2"><enum>(a)</enum><header>Denial of
deduction</header><text>Paragraph (4) of section 199(c) of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="id2210F32B480A46E2AC61114E84235138" style="OLC">
<subparagraph id="id6407FC188C044D07833FBF6465572FA7"><enum>(E)</enum><header>Special rule
for certain oil and gas income</header><text>In the case of any taxpayer who is
a major integrated oil company (within the meaning of section 167(h)(5)) for
the taxable year, the term <term>domestic production gross receipts</term>
shall not include gross receipts from the production, refining, processing,
transportation, or distribution of oil, gas, or any primary product (within the
meaning of subsection (d)(9))
thereof.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idDBB26ED5A91244F4861028F78CCB4383"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years beginning after December 31, 2013.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id403D99C1C16848C48F5209F4984C4B56"><enum>103.</enum><header>Limitation on
deduction for intangible drilling and development costs; amortization of
disallowed amounts</header>
<subsection commented="no" display-inline="no-display-inline" id="idE1C6CA4AEAFC44B1B4063EF0543F48BC"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 263(c) of the
Internal Revenue Code of 1986 is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="id643B68307E0B4F13BFC94CA5D9E71940" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="P40722D0CADDC4901821FE136AD5A96F2"><enum>(c)</enum><header display-inline="yes-display-inline">Intangible drilling and development costs
in the case of oil and gas wells and geothermal wells</header>
<paragraph commented="no" display-inline="no-display-inline" id="id504921DFBC2F4A70B1E3B1734813B3A7"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Notwithstanding
subsection (a), and except as provided in subsection (i), regulations shall be
prescribed by the Secretary under this subtitle corresponding to the
regulations which granted the option to deduct as expenses intangible drilling
and development costs in the case of oil and gas wells and which were
recognized and approved by the Congress in House Concurrent Resolution 50,
Seventy-ninth Congress. Such regulations shall also grant the option to deduct
as expenses intangible drilling and development costs in the case of wells
drilled for any geothermal deposit (as defined in section 613(e)(2)) to the
same extent and in the same manner as such expenses are deductible in the case
of oil and gas wells. This subsection shall not apply with respect to any costs
to which any deduction is allowed under section 59(e) or 291.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id2BF6DD8D152D4590A41C89965BCB1545"><enum>(2)</enum><header>Exclusion</header>
<subparagraph commented="no" display-inline="no-display-inline" id="idEC40B23E57D74A9BB7FDD9E6C383453D"><enum>(A)</enum><header>In
general</header><text>This subsection shall not apply to amounts paid or
incurred by a taxpayer in any taxable year in which such taxpayer is a major
integrated oil company (within the meaning of section 167(h)(5)).</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id9CF7249F8526447D9C0C1DD3293DAFCB"><enum>(B)</enum><header>Amortization of
amounts not allowable as deductions under subparagraph (A)</header><text>The
amount not allowable as a deduction for any taxable year by reason of
subparagraph (A) shall be allowable as a deduction ratably over the 60-month
period beginning with the month in which the costs are paid or incurred. For
purposes of section 1254, any deduction under this subparagraph shall be
treated as a deduction under this
subsection.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idED920A4A6A5B4A26BC8B338B4E7B37D5"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to amounts paid or incurred in taxable years beginning
after December 31, 2013.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="idEBDA974B3B2449F6AD96FC529404DCFC" section-type="subsequent-section"><enum>104.</enum><header display-inline="yes-display-inline">Limitation on percentage depletion
allowance for oil and gas wells</header>
<subsection commented="no" display-inline="no-display-inline" id="idD496B7DFC3B14DF282E5667BF776AB1D"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Section 613A of the Internal Revenue Code
of 1986 is amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="idD45339352F7447D0AA745594CCCAED20" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="idF845C6D7007B4C8E842C3BB31F28E006"><enum>(f)</enum><header display-inline="yes-display-inline">Application with respect to major
integrated oil companies</header><text display-inline="yes-display-inline">In
the case of any taxable year in which the taxpayer is a major integrated oil
company (within the meaning of section 167(h)(5)), the allowance for percentage
depletion shall be
zero.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="id3C74932924574C798E37E2F28D0C565C"><enum>(b)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to taxable years beginning after December 31,
2013.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="id2F1FB5D5F7E346B98CBBC0EA3C1E3FBC"><enum>105.</enum><header>Limitation on
deduction for tertiary injectants</header>
<subsection commented="no" display-inline="no-display-inline" id="idBF9377D05B604E8480EEB031445D9565"><enum>(a)</enum><header>In
general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/193">Section 193</external-xref> of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="id57DA761F659040E3A9495A0210B69564" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="id1C24D288BC784E0594C10F14AA09860C"><enum>(d)</enum><header>Application
with respect to major integrated oil companies</header>
<paragraph commented="no" display-inline="no-display-inline" id="id46C695590D094461AFF7A80B403F693E"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">This section shall
not apply to amounts paid or incurred by a taxpayer in any taxable year in
which such taxpayer is a major integrated oil company (within the meaning of
section 167(h)(5)).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idEF518A0C9556445FA73876A030730B72"><enum>(2)</enum><header display-inline="yes-display-inline">Amortization of amounts not allowable as
deductions under paragraph (1)</header><text display-inline="yes-display-inline">The amount not allowable as a deduction for
any taxable year by reason of paragraph (1) shall be allowable as a deduction
ratably over the 60-month period beginning with the month in which the costs
are paid or
incurred.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idD1309F3F5A1E4A838C6DC30FC0B72391"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to amounts paid or incurred in taxable years beginning
after December 31, 2013.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="idBACEC4D707EB411C9DB97F9D7FB5BC4D"><enum>106.</enum><header>Modification
of definition of major integrated oil company</header>
<subsection commented="no" display-inline="no-display-inline" id="id16E72843882C4298B581A3C37E596C5F"><enum>(a)</enum><header>In
general</header><text>Paragraph (5) of section 167(h) of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subparagraph:</text>
<quoted-block act-name="" id="id77CD8D8E5C32466B8BAA354FD390D5D7" style="OLC">
<subparagraph id="id199F25E49E13421E8D8E497290759D9A"><enum>(C)</enum><header>Certain
successors in interest</header><text>For purposes of this paragraph, the term
<term>major integrated oil company</term> includes any successor in interest of
a company that was described in subparagraph (B) in any taxable year, if such
successor controls more than 50 percent of the crude oil production or natural
gas production of such
company.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idC986F579F34443FA8D12BDE01EB64B57"><enum>(b)</enum><header>Conforming
amendments</header>
<paragraph commented="no" display-inline="no-display-inline" id="idB63B61984D6C4B4AB6FF0F4B8E38DED5"><enum>(1)</enum><header>In
general</header><text>Subparagraph (B) of section 167(h)(5) of the Internal
Revenue Code of 1986 is amended by inserting <quote>except as provided in
subparagraph (C), </quote> after <quote>For purposes of this
paragraph,</quote>.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idB5D5CC7E3B2942B39AED1CEB4554C80F"><enum>(2)</enum><header>Taxable years
tested</header><text>Clause (iii) of section 167(h)(5)(B) of such Code is
amended—</text>
<subparagraph commented="no" display-inline="no-display-inline" id="id8175A84195114AA58E886EF8FEEA1FFF"><enum>(A)</enum><text>by striking
<quote>does not apply by reason of paragraph (4) of section 613A(d)</quote> and
inserting <quote>did not apply by reason of paragraph (4) of section 613A(d)
for any taxable year after 2004</quote>, and</text>
</subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id9E324CFE0A1F49CD9D2A6ECE04E907B7"><enum>(B)</enum><text>by striking
<quote>does not apply</quote> in subclause (II) and inserting <quote>did not
apply for the taxable year</quote>.</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idB228177717DF4DF6B878348B8E079A36"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2013.</text>
</subsection></section><enum>II</enum><header>Outer
Continental Shelf oil and natural gas</header>
<section id="idC1DA2680506941FEB12BA0AB7D5BBF45"><enum>201.</enum><header>Repeal of
outer Continental Shelf deep water and deep gas royalty relief</header>
<subsection id="ID88967378382d4559bfe0b6d77e073454"><enum>(a)</enum><header>In
general</header><text>Sections 344 and 345 of the Energy Policy Act of 2005 (42
U.S.C. 15904, 15905) are repealed.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="ID9684bc5301944d2a8a169adf21e1b2b7"><enum>(b)</enum><header>Administration</header><text>The
Secretary of the Interior shall not be required to provide for royalty relief
in the lease sale terms beginning with the first lease sale held on or after
the date of enactment of this Act for which a final notice of sale has not been
published.</text>
</subsection></section><enum>III</enum><header>Miscellaneous</header>
<section id="id7D318FC6A06B4949ABFBBB1E5E022889"><enum>301.</enum><header>Deficit
reduction</header><text display-inline="no-display-inline">The net amount of
any savings realized as a result of the enactment of this Act and the
amendments made by this Act (after any expenditures authorized by this Act and
the amendments made by this Act) shall be deposited in the Treasury and used
for Federal budget deficit reduction or, if there is no Federal budget deficit,
for reducing the Federal debt in such manner as the Secretary of the Treasury
considers appropriate.</text>
</section><section id="id0B662CFB964F41CCBA5D10E88C9D71AD"><enum>302.</enum><header>Budgetary
effects</header><text display-inline="no-display-inline">The budgetary effects
of this Act, for the purpose of complying with the Statutory Pay-As-You-Go Act
of 2010, shall be determined by reference to the latest statement titled
<quote>Budgetary Effects of PAYGO Legislation</quote> for this Act, submitted
for printing in the Congressional Record by the Chairman of the Senate Budget
Committee, provided that such statement has been submitted prior to the vote on
passage.</text>
</section>