[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 4768 Introduced in Senate (IS)]
<DOC>
117th CONGRESS
2d Session
S. 4768
To amend the Internal Revenue Code of 1986 to tax excess profits of
large oil and gas companies, to impose a tax on the repurchase of stock
by large oil and gas companies, to end the use of the LIFO method of
accounting by large oil and gas trades or businesses, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
August 4, 2022
Mr. Wyden (for himself, Mr. Schumer, Mrs. Murray, Ms. Stabenow, Mr.
Casey, Mr. Padilla, Ms. Hirono, Mr. Booker, Ms. Klobuchar, Mr. Reed,
Mr. Warnock, Mrs. Feinstein, Mr. Blumenthal, and Mr. Van Hollen)
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 tax excess profits of
large oil and gas companies, to impose a tax on the repurchase of stock
by large oil and gas companies, to end the use of the LIFO method of
accounting by large oil and gas trades or businesses, 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 ``Taxing Big Oil Profiteers Act''.
SEC. 2. TAX ON EXCESS PROFITS OF CERTAIN TAXPAYERS FROM OIL AND GAS.
(a) In General.--Subchapter A of chapter 1 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new part:
``PART VIII--WINDFALL PROFITS FROM OIL AND GAS
``Sec. 59B. Tax on oil and gas excess profits.
``SEC. 59B. TAX ON OIL AND GAS EXCESS PROFITS.
``(a) Imposition of Tax.--
``(1) In general.--In addition to any other tax imposed
under this chapter, there is hereby imposed on each applicable
taxpayer for any taxable year a tax equal to 21 percent of the
excess profits of such taxpayer for such taxable year.
``(2) Excess profits.--For purposes of this subsection, the
term `excess profits' means, with respect to any taxable year,
the excess of--
``(A) the current profits of the taxpayer for the
taxable year, over
``(B) the normal return of the taxpayer for the
taxable year.
``(b) Applicable Taxpayer.--For purposes of this section--
``(1) In general.--The term `applicable taxpayer' means,
with respect to any taxable year, any person if--
``(A) the average annual gross receipts of such
person for the 3-taxable-year period ending with the
taxable year which precedes such taxable year equals or
exceeds $1,000,000,000, and
``(B) such person is primarily engaged in 1 or more
oil or natural gas trades or businesses during the
taxable year.
``(2) Special rules for applicable entities.--
``(A) In general.--If an entity is an applicable
entity (as defined in subsection (e)) for any taxable
year--
``(i) except as provided in paragraphs
(1)(A) and (2)(B) of subsection (e), such
entity shall not be treated as an applicable
taxpayer for purposes of this section, but
``(ii) any allocable share of a covered
taxpayer of any excess profits of such entity
for such taxable year (as determined under
subsection (e)) shall be taken into account by
such taxpayer under subsection (a)(1)--
``(I) as excess profits of such
taxpayer for the taxable year of such
taxpayer with or within which such
taxable year of such entity ends, and
``(II) in the same manner as if
such taxpayer were an applicable
taxpayer.
``(B) Covered taxpayer.--For purposes of this
section, the term `covered taxpayer' means, with
respect to any taxable year--
``(i) a taxpayer who is an individual
(other than an estate or trust) and whose
adjusted gross income for such taxable year
exceeds $400,000 ($200,000 in the case of a
married individual filing separately),
``(ii) an estate or trust, or
``(iii) a C corporation which is not an
applicable taxpayer.
``(3) Oil or natural gas trade or business.--The term `oil
or natural gas trade or business' means any trade or business
that consists of one or more of the following:
``(A) The production of oil or natural gas.
``(B) The refining of oil or natural gas.
``(C) The processing of oil or natural gas.
``(D) The transportation of oil or natural gas.
``(E) The distribution of oil or natural gas.
``(4) Applicable rules relating to gross receipts.--For
purposes of paragraph (1)(A)--
``(A) except as provided in subsection (f), there
shall be taken into account only gross receipts which
are effectively connected with the conduct of a trade
or business within the United States, the Commonwealth
of Puerto Rico, or any possession of the United States,
and
``(B) rules similar to the rules of paragraphs (2)
and (3) of section 448(c) shall apply.
``(c) Current Profits.--For purposes of this section, the term
`current profits' means, with respect to any applicable taxpayer for
any taxable year, the taxable income of the taxpayer computed under
this chapter for such taxable year, determined with the following
modifications:
``(1) No net operating loss deduction.--No net operating
loss deduction shall be allowed.
``(2) Deduction for employee remuneration.--
``(A) In general.--Section 162(m) shall be
applied--
``(i) by substituting `In the case of any
applicable taxpayer (as defined in section
59B)' for `In the case of any publicly held
corporation' in paragraph (1) thereof,
``(ii) by substituting `covered individual
(as defined in section 59B(c)(2)(B))' for
`covered employee' each place it appears in
paragraphs (1) and (4) thereof, and
``(iii) by treating any reference to an
`employee' in paragraphs (1) and (4) thereof as
a reference to an `individual'.
``(B) Covered individual.--For purposes of applying
this paragraph to section 162(m), the term `covered
individual' means any individual who--
``(i) is an officer, director, or employee
of the applicable taxpayer for the taxable
year, or
``(ii) performed services for the
applicable taxpayer during the taxable year.
For purposes of clause (i), any employee who is treated
as an employee of the applicable taxpayer under
subsection (b) or (c) of section 414 shall be treated
as an employee for purposes of this subparagraph.
``(3) Certain foreign income.--Except as provided in
subsection (f)--
``(A) Certain income excluded.--In determining
gross income--
``(i) subpart F income and global
intangible low-taxed income included in gross
income under sections 951 and 951A shall not be
taken into account, and
``(ii) foreign-derived intangible income
(as defined in section 250) shall not be taken
into account unless such income is domestic
oil-related income which is derived from oil or
gas which is exported from the United States.
For purposes of clause (ii), the term `domestic oil-
related income' means income (other than dividend or
interest income which is passive income (as defined in
section 904(d)(2)(A)) derived from sources within the
United States or its possessions from activities
described in subparagraphs (A) through (E) of section
907(c)(2).
``(B) Denial of section 250 deduction.--No
deduction shall be allowed under section 250.
``(d) Normal Return.--For purposes of this section, the term
`normal return' means, with respect to any applicable taxpayer for any
taxable year, an amount equal to 10 percent of the excess of--
``(1) the gross receipts of the taxpayer taken into account
in computing the taxpayer's current profits for the taxable
year, including the taxpayer's allocable share of any gross
receipts of a partnership, S corporation, or other pass-thru
entity specified by the Secretary under subsection (e)(2)(A),
over
``(2) the current profits of the taxpayer for the taxable
year.
``(e) Definitions and Rules Relating to Applicable Entities.--For
purposes of this section--
``(1) In general.--An applicable entity for any taxable
year shall--
``(A) compute the current profits, normal return,
and excess profits of such entity for such taxable year
in the same manner as if such entity were an applicable
taxpayer, except that subsection (c) shall be applied
by substituting the entity's `non-separately stated
taxable income' for the entity's `taxable income', and
``(B) report to each partner, shareholder, or other
holder of an ownership interest in such entity its
allocable share of the entity's excess profits.
``(2) Applicable entity.--The term `applicable entity'
means, with respect to any taxable year, an entity--
``(A) which is a partnership, S corporation, or
other pass-thru entity specified by the Secretary, and
``(B) with respect to which the requirements of
subparagraphs (A) and (B) of subsection (b)(1) are met
for such taxable year, determined in the same manner as
if such entity were an applicable taxpayer.
``(3) Allocable share.--A person's allocable share of the
excess profits shall be determined in the same manner as--
``(A) in the case of a partnership, such person's
distributive share of the non-separately stated taxable
income of the partnership,
``(B) in the case of an S corporation, such
person's pro rata share of the non-separately stated
taxable income of the S corporation, and
``(C) in the case of any other pass-thru entity,
such person's share (as determined under rules
prescribed by the Secretary) of the non-separately
stated taxable income of the entity.
``(4) Non-separately stated taxable income.--The term `non-
separately stated taxable income' means taxable income computed
under--
``(A) section 703(a) in the case of a partnership,
``(B) section 1366(a)(1)(B) in the case of an S
corporation, and
``(C) rules prescribed by the Secretary in the case
of any other pass-thru entity.
``(f) Rules for Certain Foreign Income Attributable to Imports Into
the United States.--For purposes of this section--
``(1) In general.--In the case of any oil and gas import
income of an applicable taxpayer for any taxable year--
``(A) in computing such taxpayer's current profits
for such taxable year--
``(i) such oil and gas import income (and
any deductions allocable to such income) shall
be taken into account, and
``(ii) subsection (c)(3) shall not apply to
any subpart F income, global intangible low-
taxed income, or foreign-derived intangible
income of such taxpayer to the extent such
income is attributable to such oil and gas
import income, and
``(B) gross receipts taken into account in
computing such oil and gas import income shall be taken
into account in computing the gross receipts of such
taxpayer for purposes of subsection (b)(1)(A) .
``(2) Oil and gas import income.--
``(A) Controlled foreign corporations.--In the case
of a United States shareholder of a controlled foreign
corporation, the term `oil and gas import income'
means, with respect to such shareholder for such
taxable year, such shareholder's pro rata share of
combined foreign oil and gas income of the controlled
foreign corporation which is derived from oil and gas
imported into the United States.
``(B) Authority to include other income.--The
Secretary may prescribe such regulations or other
guidance to include in oil and gas import income of an
applicable taxpayer its pro rata share of any combined
foreign oil and gas income of any person related to the
taxpayer (other than a controlled foreign corporation)
which is derived from oil and gas imported into the
United States if the Secretary determines such
inclusion is necessary to prevent the avoidance of the
tax imposed by this section.
``(3) Definitions and special rules.--
``(A) In general.--The term `combined foreign oil
and gas income' has the meaning given such term by
section 907(b)(1), except that in applying paragraphs
(1) and (2) of section 907(c) for purposes of section
907(b)(1), the term `income' shall be substituted for
`taxable income' each place it appears.
``(B) Pro rata share.--An applicable taxpayer's pro
rata share of any oil and gas import income shall be
determined under rules similar to the rules under
section 951(a)(2).
``(C) Prevention of double counting.--Oil and gas
import income (and any deductions allocable to such
income) shall not be taken into account under paragraph
(1) to the extent already taken into account.
``(g) Regulations or Other Guidance.--The Secretary shall prescribe
such regulations or other guidance as is necessary to carry out this
section, including regulations or other guidance for the application of
subsections (b)(2) and (e), including regulations or other guidance--
``(1) for the application of such subsections in the case
of tiered entities,
``(2) for determining a person's allocable share where the
non-separately stated taxable income of an entity is a loss,
and
``(3) providing rules for the reporting, including through
tiered entities, of excess profits.
``(h) Termination.--This section shall not apply to any taxable
year beginning after December 31, 2025.''.
(b) Tax Not Taken Into Account in Computing Estimated Tax.--
Paragraph (1) of section 6654(f) of the Internal Revenue Code of 1986
is amended by inserting ``59B or'' before ``143(m)''.
(c) Conforming Amendment.--The table of subchapters for subchapter
A of chapter 1 of the Internal Revenue Code of 1986 is amended by
adding at the end the following new item:
``PART VIII--Windfall Profits From Oil and Gas''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.
(e) Tax Treated as Rate Change.--For purposes of section 15(a) of
the Internal Revenue Code of 1986, the tax imposed by the amendments
made by this section shall be treated in the same manner as a change in
the rate of tax under chapter 1 of such Code.
SEC. 3. EXCISE TAX ON REPURCHASE OF CORPORATE STOCK.
(a) In General.--Subtitle D of the Internal Revenue Code of 1986 is
amended by inserting after chapter 36 the following new chapter:
``CHAPTER 37--REPURCHASE OF CORPORATE STOCK
``Sec. 4502. Repurchase of corporate stock by oil and gas companies.
``SEC. 4502. REPURCHASE OF CORPORATE STOCK BY OIL AND GAS COMPANIES.
``(a) General Rule.--There is hereby imposed on each covered
corporation a tax equal to 25 percent of the fair market value of any
stock of the corporation which is repurchased by such corporation
during the taxable year.
``(b) Covered Corporation.--For purposes of this section, the term
`covered corporation' means, with respect to any repurchase, any
domestic corporation--
``(1) the stock of which is traded on an established
securities market (within the meaning of section 7704(b)(1)),
and
``(2) which is an applicable taxpayer (as defined in
section 59B) for the taxable year in which such repurchase
occurs.
``(c) Repurchase.--For purposes of this section--
``(1) In general.--The term `repurchase' means--
``(A) a redemption within the meaning of section
317(b) with regard to the stock of a covered
corporation, and
``(B) any transaction determined by the Secretary
to be economically similar to a transaction described
in subparagraph (A).
``(2) Treatment of purchases by specified affiliates.--
``(A) In general.--The acquisition of stock of a
covered corporation by a specified affiliate of such
covered corporation, from a person who is not the
covered corporation or a specified affiliate of such
covered corporation, shall be treated as a repurchase
of the stock of the covered corporation by such covered
corporation.
``(B) Specified affiliate.--For purposes of this
section, the term `specified affiliate' means, with
respect to any corporation--
``(i) any corporation more than 50 percent
of the stock of which is owned (by vote or by
value), directly or indirectly, by such
corporation, and
``(ii) any partnership more than 50 percent
of the capital interests or profits interests
of which is held, directly or indirectly, by
such corporation.
``(3) Adjustment.--The amount taken into account under
subsection (a) with respect to any stock repurchased by a
covered corporation shall be reduced by the fair market value
of any stock issued by the covered corporation during the
taxable year, including the fair market value of any stock
issued or provided to employees of such covered corporation or
a specified affiliate of such covered corporation during the
taxable year, whether or not such stock is issued or provided
in response to the exercise of an option to purchase such
stock.
``(d) Special Rules for Acquisition of Stock of Certain Foreign
Corporations.--
``(1) In general.--In the case of an acquisition of stock
of an applicable foreign corporation by a specified affiliate
of such corporation (other than a foreign corporation or a
foreign partnership (unless such partnership has a domestic
entity as a direct or indirect partner)) from a person who is
not the applicable foreign corporation or a specified affiliate
of such applicable foreign corporation, for purposes of this
section--
``(A) such specified affiliate shall be treated as
a covered corporation with respect to such acquisition,
``(B) such acquisition shall be treated as a
repurchase of stock of a covered corporation by such
covered corporation, and
``(C) the adjustment under subsection (c)(3) shall
be determined only with respect to stock issued or
provided by such specified affiliate to employees of
the specified affiliate.
``(2) Surrogate foreign corporations.--In the case of a
repurchase of stock of a covered surrogate foreign corporation
by such covered surrogate foreign corporation, or an
acquisition of stock of a covered surrogate foreign corporation
by a specified affiliate of such corporation, for purposes of
this section--
``(A) the expatriated entity with respect to such
covered surrogate foreign corporation shall be treated
as a covered corporation with respect to such
repurchase or acquisition,
``(B) such repurchase or acquisition shall be
treated as a repurchase of stock of a covered
corporation by such covered corporation, and
``(C) the adjustment under subsection (c)(3) shall
be determined only with respect to stock issued or
provided by such expatriated entity to employees of the
expatriated entity.
``(3) Definitions.--For purposes of this subsection--
``(A) Applicable foreign corporation.--The term
`applicable foreign corporation' means any foreign
corporation--
``(i) the stock of which is traded on an
established securities market (within the
meaning of section 7704(b)(1)), and
``(ii) with respect to which requirements
of subparagraphs (B) and (C) of subsection
(b)(1) are met with respect such corporation,
except that in applying such subparagraphs, the
taxable year of the acquisition of stock shall
be substituted for the taxable year of purchase
of stock.
``(B) Covered surrogate foreign corporation.--The
term `covered surrogate foreign corporation' means any
foreign corporation--
``(i) which is a surrogate foreign
corporation (as determined under section
7874(a)(2)(B) by substituting `September 20,
2021' for `March 4, 2003' each place it
appears) the stock of which is traded on an
established securities market (within the
meaning of section 7704(b)(1)), but only with
respect to taxable years which include any
portion of the applicable period with respect
to such corporation under section 7874(d)(1),
and
``(ii) with respect to which requirements
of subparagraphs (B) and (C) of subsection
(b)(1) are met with respect to the taxable year
of the repurchase of stock of such corporation.
``(C) Expatriated entity.--The term `expatriated
entity' has the meaning given such term by section
7874(a)(2)(A).
``(e) Exceptions.--Subsection (a) shall not apply--
``(1) to the extent that the repurchase is part of a
reorganization (within the meaning of section 368(a)) and no
gain or loss is recognized on such repurchase by the
shareholder under chapter 1 by reason of such reorganization,
``(2) in any case in which the stock repurchased is, or an
amount of stock equal to the value of the stock repurchased is,
contributed to an employer-sponsored retirement plan, employee
stock ownership plan, or similar plan,
``(3) in any case in which the total value of the stock
repurchased during the taxable year does not exceed $1,000,000,
``(4) to repurchases by a regulated investment company (as
defined in section 851) or a real estate investment trust, or
``(5) to the extent that the repurchase is treated as a
dividend for purposes of this title.
``(f) Regulations and Guidance.--The Secretary shall prescribe such
regulations and other guidance as are necessary or appropriate to
administer and to prevent the avoidance of the purposes of this
section, including regulations and other guidance--
``(1) to prevent the abuse of the exceptions provided by
subsection (e),
``(2) to address special classes of stock and preferred
stock, and
``(3) for the application of the rules under subsection
(d).
``(g) Termination.--This section shall not apply to repurchases
after December 31, 2025.''.
(b) Tax Not Deductible.--Paragraph (6) of section 275(a) of the
Internal Revenue Code of 1986 is amended by inserting ``37,'' before
``41''.
(c) Clerical Amendment.--The table of chapters for subtitle D of
the Internal Revenue Code of 1986 is amended by inserting after the
item relating to chapter 36 the following new item:
``Chapter 37--Repurchase of Corporate Stock''.
(d) Effective Date.--The amendments made by this section shall
apply to repurchases (within the meaning of section 4502(c) of the
Internal Revenue Code of 1986, as added by this section) of stock after
the date of the enactment of this Act.
SEC. 4. TERMINATION OF LIFO INVENTORIES FOR CERTAIN OIL AND GAS
COMPANIES.
(a) In General.--Section 472 of the Internal Revenue Code of 1986
is amended by adding at the end the following new subsection:
``(h) Termination for Oil and Natural Gas Companies.--
``(1) Termination.--Except as provided in paragraph (2),
subsection (a) shall not apply to any trade or business
primarily consisting of one or more of the following:
``(A) The production of oil or natural gas.
``(B) The refining of oil or natural gas.
``(C) The processing of oil or natural gas.
``(D) The transportation of oil or natural gas.
``(E) The distribution of oil or natural gas.
``(2) Exception.--
``(A) In general.--Paragraph (1) shall not apply to
any trade or business of a person for any taxable year
if the average annual gross receipts of all trades or
businesses of such person for the 3-taxable-year period
ending with the taxable year which precedes such
taxable year does not exceed $1,000,000,000.
``(B) Applicable rules.--For purposes of
subparagraph (A) rules similar to the rules of
paragraphs (2) and (3) of section 448(c) shall
apply.''.
(b) Change in Method of Accounting.--If any taxpayer is required by
the amendments made by this section to change its method of accounting
in taxable years beginning after December 31, 2022, then, for purposes
of section 481 of the Internal Revenue Code of 1986--
(1) such change shall be treated as initiated by the
taxpayer; and
(2) such change shall be treated as made with the consent
of the Secretary of the Treasury.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2022.
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