II 109th CONGRESS 1st Session S. 1982 IN THE SENATE OF THE UNITED STATES November 9, 2005 Ms. Snowe introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to provide a tax credit against residential heating costs.

1.

Short title

This Act may be cited as the Home Energy Assistance Act of 2005.

2.

Tax credit against residential heating costs

(a)

In general

Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25D the following new section:

25E.

Credit against residential heating costs

(a)

General rule

In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the amount paid or incurred during such taxable year for residential heating costs. (b)

Limitations

(1)

Dollar limitation

The amount of the credit allowed to under subsection (a) to any taxpayer shall not exceed $500 for any taxable year. (2)

Limitation based on adjusted gross income

(A)

In general

The amount of the credit which would (but for this paragraph) be taken into account under subsection (a) for the taxable year shall be reduced (but not below zero) by the amount determined under subparagraph (B). (B)

Amount of reduction

The amount determined under this subparagraph is the amount which bears the same ratio to the amount which would be so taken into account as— (i)the excess of— (I)the taxpayers adjusted gross income for such taxable year, over (II)the threshold amount, bears to (ii)the phaseout amount. (C)

Threshold amount

For purposes of this paragraph, the term threshold amount means— (i)$80,000 in the case of a joint return, (ii)$65,000 in the case of a head of a household, and (iii)$40,000 in any other case. (D)

Phaseout amount

For purposes of this paragraph, the term phaseout amount means— (i)$20,000 in the case of a joint return or a head of a household, and (ii)$10,000 in any other case. (3)

Maximum credit per household

(A)

In general

In the case of any household, the credit under subsection (a) shall be allowed only to the individual residing in such household who furnishes the largest portion (whether or not more than one-half) of the cost of maintaining such household. (B)

Determination of amount

In the case of an individual described in subparagraph (A), such individual shall, for purposes of determining the amount of the credit allowed under subsection (a), be treated as having paid or incurred during such taxable year for increased residential heating costs an amount equal to the sum of the amounts paid or incurred for such heating costs by all individuals residing in such household (including any amount allocable to any such individual under subsection (d) or (e)). (c)

Carryback of credit

(1)

In general

If the credit allowable under subsection (a) for a taxable year exceeds the limitation under subsection (b)(1) for such taxable year, such excess shall be allowed— (A)as a credit carryback to each of the 2 taxable years preceding such taxable year, and (B)as a credit carryforward to each of the 20 taxable years following such taxable year. (2)

Amount carried to each year

Rules similar to the rules of section 39(b)(2) shall apply for purposes of this section. (3)

Limitation

The amount of unused credit which may be taken into account under paragraph (1) for any taxable year shall not exceed the limitation under subsection (b)(1). (d)

Definitions and special rules

For purposes of this section— (1)

Residential heating costs

The term residential heating costs means costs incurred in connection with an energy source used to heat a principal residence of the taxpayer located in the United States. (2)

Principal residence

The term principal residence has the same meaning as in section 121, except that— (A)no ownership requirement shall be imposed, and (B)the principal residence must be used by the taxpayer as the taxpayer’s residence during the taxable year. (3)

No credit for married individuals filing separate returns

If the taxpayer is a married individual (within the meaning of section 7703), this section shall apply only if the taxpayer and the taxpayer's spouse file a joint return for the taxable year. (4)

Treatment of expenses paid by dependent

If a deduction under section 151 with respect to an individual is allowed to another taxpayer for a taxable year beginning in the calendar year in which such individual's taxable year begins— (A)no credit shall be allowed under subsection (a) to such individual for such individual's taxable year, and (B)residential heating costs paid by such individual during such individual's taxable year shall be treated for purposes of this section as paid by such other taxpayer. (e)

Homeowners associations

The application of this section to homeowners associations (as defined in section 528(c)(1)) or members of such associations, and tenant-stockholders in cooperative housing corporations (as defined in section 216), shall be allowed by allocation, apportionment, or otherwise, to the individuals paying, directly or indirectly, for the increased residential heating cost so incurred. (f)

Applicability of Section

This section shall apply to taxable years beginning after December 31, 2005, and before January 1, 2007.

. (b)

Reduction in withholding

The Secretary of the Treasury— (1)shall educate taxpayers on adjusting withholding of taxes to reflect any anticipated tax credit under section 25E of the Internal Revenue Code of 1986, and (2)may adjust the wage withholding tables prescribed under section 3402(a)(1) of such Code to take into account the credit allowed under section 25E of such Code. (c)

Clerical amendment

The table of sections for subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by striking the item relating to section 35 and by adding at the end the following new items: Sec. 25E. Credit against residential heating costs. . (d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2005.

3.

Disallowance of use of LIFO method of accounting by large integrated oil companies for last taxable year ending before October 1, 2005

(a)

General rule

Notwithstanding any other provision of law, an applicable integrated oil company shall, in determining the amount of Federal income tax imposed on such company for its most recent taxable year ending on or before September 30, 2005, use the first-in, first-out (FIFO) method of accounting rather than the last-in, last-out (LIFO) method of accounting with respect to its crude oil inventories. (b)

Application of requirement

The requirement to use the first-in, first-out (FIFO) method of accounting under subsection (a)— (1)shall not be treated as a change in method of accounting, and (2)shall be disregarded in determining the method of accounting required to be used in any succeeding taxable year. (c)

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— (1)had gross receipts in excess of $1,000,000,000 for its most recent taxable year ending on or before September 30, 2005, and (2)would, without regard to this section, use the last-in, first-out (LIFO) method of accounting with respect to its crude oil inventories for such taxable year. For purposes of paragraph (1), 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.