114 S1907 IS: Close Big Oil Tax Loopholes Act
U.S. Senate
2015-07-30
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 loopholesSec. 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 gasSec. 201. Repeal of outer Continental Shelf deep water and deep gas royalty relief.TITLE III—MiscellaneousSec. 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"><external-xref legal-doc="usc" parsable-cite="usc/26/901">Section 901</external-xref> 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 <external-xref legal-doc="usc" parsable-cite="usc/26/199">section 199(c)</external-xref> 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, 2015.</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"><external-xref legal-doc="usc" parsable-cite="usc/26/263">Section 263(c)</external-xref> 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, 2015.</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"><external-xref legal-doc="usc" parsable-cite="usc/26/613A">Section 613A</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="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, 2015.</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, 2015.</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 <external-xref legal-doc="usc" parsable-cite="usc/26/167">section 167(h)</external-xref> 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 <external-xref legal-doc="usc" parsable-cite="usc/26/167">section 167(h)(5)</external-xref> 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, 2015.</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 (<external-xref legal-doc="usc" parsable-cite="usc/42/15904">42 U.S.C. 15904</external-xref>, 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>