[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5285 Introduced in House (IH)]








109th CONGRESS
  2d Session
                                H. R. 5285

 To provide a highway fuel tax holiday funded by the repeal of certain 
             production incentives, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 3, 2006

Ms. Loretta Sanchez of California introduced the following bill; which 
was referred to the Committee on Ways and Means, and in addition to the 
 Committees on Resources and Science, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
 To provide a highway fuel tax holiday funded by the repeal of certain 
             production incentives, and for other purposes.

    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 ``Gas Tax Equity Act of 2006''.

SEC. 2. HIGHWAY FUEL TAX HOLIDAY.

    (a) Temporary Elimination of Highway Fuel Taxes on Gasoline, Diesel 
Fuel, and Kerosene.--
            (1) In general.--Section 4081 of the Internal Revenue Code 
        of 1986 (relating to imposition of tax on gasoline, diesel 
        fuel, and kerosene) is amended by adding at the end the 
        following new subsection:
    ``(f) Temporary Reduction in Taxes on Gasoline, Diesel Fuel, and 
Kerosene.--
            ``(1) In general.--During the applicable period, each rate 
        of tax referred to in paragraph (2) shall be reduced to zero 
        cents per gallon.
            ``(2) Rates of tax.--The rates of tax referred to in this 
        paragraph are the rates of tax otherwise applicable under--
                    ``(A) clauses (i) and (iii) of subsection (a)(2)(A) 
                (relating to gasoline, diesel fuel, and kerosene), 
                determined with regard to subsection (a)(2)(B) and 
                without regard to subsection (a)(2)(C), and
                    ``(B) paragraph (1) of section 4041(a) (relating to 
                diesel fuel and kerosene) with respect to fuel sold for 
                use or used in a diesel-powered highway vehicle.
            ``(3) Applicable period.--For purposes of this subsection, 
        the term `applicable period' means the 60-day period beginning 
        with the day after the date of the enactment of this 
        subsection.
            ``(4) Maintenance of trust fund deposits.--In determining 
        the amounts to be appropriated to the Highway Trust Fund under 
        section 9503 and to the Leaking Underground Storage Tank Trust 
        Fund under 9508, an amount equal to the reduction in revenues 
        to the Treasury by reason of this subsection shall be treated 
        as taxes received in the Treasury under this section or section 
        4041.''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect on the date of the enactment of this Act.
    (b) Floor Stock Refunds.--
            (1) In general.--If--
                    (A) before the tax reduction date, tax has been 
                imposed under section 4081 of the Internal Revenue Code 
                of 1986 on any liquid, and
                    (B) on such date such liquid is held by a dealer 
                and has not been used and is intended for sale, there 
                shall be credited or refunded (without interest) to the 
                person who paid such tax (hereafter in this subsection 
                referred to as the ``taxpayer'') an amount equal to the 
                excess of the tax paid by the taxpayer over the amount 
                of such tax which would be imposed on such liquid had 
                the taxable event occurred on the tax reduction date.
            (2) Time for filing claims.--No credit or refund shall be 
        allowed or made under this subsection unless--
                    (A) claim therefor is filed with the Secretary of 
                the Treasury before the date which is 6 months after 
                the tax reduction date, and
                    (B) in any case where liquid is held by a dealer 
                (other than the taxpayer) on the tax reduction date--
                            (i) the dealer submits a request for refund 
                        or credit to the taxpayer before the date which 
                        is 3 months after the tax reduction date, and
                            (ii) the taxpayer has repaid or agreed to 
                        repay the amount so claimed to such dealer or 
                        has obtained the written consent of such dealer 
                        to the allowance of the credit or the making of 
                        the refund.
            (3) Definitions.--For purposes of this subsection--
                    (A) the terms ``dealer'' and ``held by a dealer'' 
                have the respective meanings given to such terms by 
                section 6412 of such Code; except that the term 
                ``dealer'' includes a producer, and
                    (B) the term ``tax reduction date'' means the day 
                after the date of the enactment of this Act.
            (4) Certain rules to apply.--Rules similar to the rules of 
        subsections (b) and (c) of section 6412 of such Code shall 
        apply for purposes of this subsection.
    (c) Floor Stocks Tax.--
            (1) Imposition of tax.--In the case of any liquid on which 
        tax would have been imposed under section 4081 of the Internal 
        Revenue Code of 1986 during the applicable period but for the 
        amendments made by subsection (a), and which is held on the 
        floor stocks tax date by any person, there is hereby imposed a 
        floor stocks tax in an amount equal to the tax which would be 
        imposed on such liquid had the taxable event occurred on the 
        floor stocks tax date.
            (2) Liability for tax and method of payment.--
                    (A) Liability for tax.--A person holding a liquid 
                on the floor stocks tax date 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 the date which is 6 
                months after the floor stocks tax date.
            (3) Definitions.--For purposes of this subsection--
                    (A) Held by a person.--A liquid 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).
                    (B) Gasoline and diesel fuel.--The terms 
                ``gasoline'' and ``diesel fuel'' have the respective 
                meanings given such terms by section 4083 of such Code.
                    (C) Floor stocks tax date.--The term ``floor stocks 
                tax date'' means the day after the date determined by 
                the Secretary under section 4081(f)(3) of such Code.
                    (D) Applicable period.--The term ``applicable 
                period'' means the period described in section 
                4081(f)(3) of such Code.
                    (E) Secretary.--The term ``Secretary'' means the 
                Secretary of the Treasury or the Secretary's delegate.
            (4) Exception for exempt uses.--The tax imposed by 
        paragraph (1) shall not apply to gasoline, diesel fuel, or 
        kerosene held by any person exclusively for any use to the 
        extent a credit or refund of the tax imposed by section 4081 of 
        such Code is allowable for such use.
            (5) Exception for fuel held in vehicle tank.--No tax shall 
        be imposed by paragraph (1) on gasoline, diesel fuel, or 
        kerosene held in the tank of a motor vehicle.
            (6) Exception for certain amounts of fuel.--
                    (A) In general.--No tax shall be imposed by 
                paragraph (1)--
                            (i) on gasoline (other than aviation 
                        gasoline) held on the floor stocks tax date by 
                        any person if the aggregate amount of gasoline 
                        held by such person on such date does not 
                        exceed 4,000 gallons, and
                            (ii) on diesel fuel or kerosene held on 
                        such date by any person if the aggregate amount 
                        of diesel fuel or kerosene 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 
                subparagraph.
                    (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 law 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 paragraph, 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.
    (d) Benefits of Tax Reduction Should Be Passed on to Consumers.--
            (1) Passthrough to consumers.--
                    (A) Sense of congress.--It is the sense of Congress 
                that--
                            (i) consumers immediately receive the 
                        benefit of the reduction in taxes under this 
                        section, and
                            (ii) transportation motor fuels producers 
                        and other dealers take such actions as 
                        necessary to reduce transportation motor fuels 
                        prices to reflect such reduction, including 
                        immediate credits to customer accounts 
                        representing tax refunds allowed as credits 
                        against excise tax deposit payments under the 
                        floor stocks refund provisions of this section.
                    (B) Study.--
                            (i) In general.--The Comptroller General of 
                        the United States shall conduct a study of the 
                        reduction of taxes under this section to 
                        determine whether there has been a passthrough 
                        of such reduction.
                            (ii) Report.--Not later than 30 days after 
                        the date of the enactment of this Act, the 
                        Comptroller General of the United States shall 
                        report to the Committee on Finance of the 
                        Senate and the Committee on Ways and Means of 
                        the House of Representatives the results of the 
                        study conducted under clause (i).

SEC. 3. ELIMINATION OF CERTAIN PRODUCTION INCENTIVES.

    (a) In General.--Sections 342, 344, 345, 346, 353, and 383 and 
subtitle J of title IX of the Energy Policy Act of 2005 and section 
107(k) of the Naval Petroleum Reserves Production Act of 1976 (as added 
by section 347 of the Energy Policy Act of 2005) are repealed.
    (b) Effective Date.--The repeals made by subsection (a) shall take 
effect on the date of the enactment of the Energy Policy Act of 2005.

SEC. 4. REVALUATION OF LIFO INVENTORIES OF LARGE INTEGRATED OIL 
              COMPANIES.

    (a) General Rule.--Notwithstanding any other provision of law, if a 
taxpayer is an applicable integrated oil company for its last taxable 
year ending in calendar year 2005, the taxpayer shall--
            (1) increase, effective as of the close of such taxable 
        year, the value of each historic LIFO layer of inventories of 
        crude oil, natural gas, or any other petroleum product (within 
        the meaning of section 4611) by the layer adjustment amount, 
        and
            (2) decrease its cost of goods sold for such taxable year 
        by the aggregate amount of the increases under paragraph (1).
If the aggregate amount of the increases under paragraph (1) exceed the 
taxpayer's cost of goods sold for such taxable year, the taxpayer's 
gross income for such taxable year shall be increased by the amount of 
such excess.
    (b) Layer Adjustment Amount.--For purposes of this section--
            (1) In general.--The term ``layer adjustment amount'' 
        means, with respect to any historic LIFO layer, the product 
        of--
                    (A) $18.75, and
                    (B) the number of barrels of crude oil (or in the 
                case of natural gas or other petroleum products, the 
                number of barrel-of-oil equivalents) represented by the 
                layer.
            (2) Barrel-of-oil equivalent.--The term ``barrel-of-oil 
        equivalent'' has the meaning given such term by section 
        29(d)(5) (as in effect before its redesignation by the Energy 
        Tax Incentives Act of 2005).
    (c) Application of Requirement.--
            (1) No change in method of accounting.--Any adjustment 
        required by this section shall not be treated as a change in 
        method of accounting.
            (2) Underpayments of estimated tax.--No addition to the tax 
        shall be made under section 6655 of the Internal Revenue Code 
        of 1986 (relating to failure by corporation to pay estimated 
        tax) with respect to any underpayment of an installment 
        required to be paid with respect to the taxable year described 
        in subsection (a) to the extent such underpayment was created 
        or increased by this section.
    (d) Applicable Integrated Oil Company.--For purposes of this 
section, the term ``applicable integrated oil company'' means an 
integrated oil company (as defined in section 291(b)(4) of the Internal 
Revenue Code of 1986) which has an average daily worldwide production 
of crude oil of at least 500,000 barrels for the taxable year and which 
had gross receipts in excess of $1,000,000,000 for its last taxable 
year ending during calendar year 2005. For purposes of this subsection 
all persons treated as a single employer under subsections (a) and (b) 
of section 52 of the Internal Revenue Code of 1986 shall be treated as 
1 person and, in the case of a short taxable year, the rule under 
section 448(c)(3)(B) shall apply.

SEC. 5. ELIMINATION OF AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL 
              EXPENDITURES FOR MAJOR INTEGRATED OIL COMPANIES.

    (a) In General.--Section 167(h) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(5) Nonapplication to major integrated oil companies.--
        This subsection shall not apply with respect to any expenses 
        paid or incurred for any taxable year by any integrated oil 
        company (as defined in section 291(b)(4)) which has an average 
        daily worldwide production of crude oil of at least 500,000 
        barrels for such taxable year.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in the amendment made by section 1329(a) of the 
Energy Policy Act of 2005.

SEC. 6. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE TO LARGE 
              INTEGRATED OIL COMPANIES WHICH ARE DUAL CAPACITY 
              TAXPAYERS.

    (a) In General.--Section 901 of the Internal Revenue Code of 1986 
(relating to credit for taxes of foreign countries and of possessions 
of the United States) is amended by redesignating subsection (m) as 
subsection (n) and by inserting after subsection (l) the following new 
subsection:
    ``(m) Special Rules Relating to Large Integrated Oil Companies 
Which Are Dual Capacity Taxpayers.--
            ``(1) General rule.--Notwithstanding any other provision of 
        this chapter, any amount paid or accrued by a dual capacity 
        taxpayer which is a large integrated oil company to a foreign 
        country or possession of the United States for any period shall 
        not be considered a tax--
                    ``(A) if, for such period, the foreign country or 
                possession does not impose a generally applicable 
                income tax, or
                    ``(B) to the extent such amount exceeds the amount 
                (determined in accordance with regulations) which--
                            ``(i) is paid by such dual capacity 
                        taxpayer pursuant to the generally applicable 
                        income tax imposed by the country or 
                        possession, or
                            ``(ii) would be paid if the generally 
                        applicable income tax imposed by the country or 
                        possession were applicable to such dual 
                        capacity taxpayer.
                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).
            ``(2) Dual capacity taxpayer.--For purposes of this 
        subsection, the term `dual capacity taxpayer' means, with 
        respect to any foreign country or possession of the United 
        States, a person who--
                    ``(A) is subject to a levy of such country or 
                possession, and
                    ``(B) receives (or will receive) directly or 
                indirectly a specific economic benefit (as determined 
                in accordance with regulations) from such country or 
                possession.
            ``(3) Generally applicable income tax.--For purposes of 
        this subsection--
                    ``(A) In general.--The term `generally applicable 
                income tax' 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.
                    ``(B) Exceptions.--Such term shall not include a 
                tax unless it has substantial application, by its terms 
                and in practice, to--
                            ``(i) persons who are not dual capacity 
                        taxpayers, and
                            ``(ii) persons who are citizens or 
                        residents of the foreign country or possession.
            ``(4) Large integrated oil company.--For purposes of this 
        subsection, the term `large integrated oil company' means, with 
        respect to any taxable year, an integrated oil company (as 
        defined in section 291(b)(4)) which--
                    ``(A) had gross receipts in excess of 
                $1,000,000,000 for such taxable year, and
                    ``(B) has an average daily worldwide production of 
                crude oil of at least 500,000 barrels for such taxable 
                year.''
    (b) Effective Date.--
            (1) In general.--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.
            (2) Contrary treaty obligations upheld.--The amendments 
        made by this section shall not apply to the extent contrary to 
        any treaty obligation of the United States.
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