117 S5216 IS: Close Big Oil Tax Loopholes Act
U.S. Senate
2022-12-08
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 deduction for intangible drilling and development costs; amortization of disallowed amounts.
Sec. 103. Limitation on percentage depletion allowance for oil and gas wells.
Sec. 104. Limitation on deduction for tertiary injectants.
Sec. 105. Limitation on enhanced oil recovery credit.
Sec. 106. Limitation on credit for carbon oxide sequestration.
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"><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 commented="no" display-inline="no-display-inline" id="id403D99C1C16848C48F5209F4984C4B56"><enum>102.</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 an applicable large taxpayer.</text></subparagraph> <subparagraph commented="no" display-inline="no-display-inline" id="id14D61F63986149B19FF2FE44E555185E"><enum>(B)</enum><header>Applicable large taxpayer</header><text>For purposes of this paragraph—</text>
<clause commented="no" display-inline="no-display-inline" id="idDC94C2C9000446B2AC1E892C1C3D09BD"><enum>(i)</enum><header>In general</header><text>The term <term>applicable large taxpayer</term> means, with respect to any taxable year, any taxpayer with gross receipts (within the meaning of section 448(c)) for such taxable year in excess of $50,000,000.</text></clause> <clause id="idd57daaeda4884d46beb42ca20a52b032"><enum>(ii)</enum><header>Aggregation rule</header><text>All persons treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as one person for purposes of clause (i).</text></clause></subparagraph>
<subparagraph commented="no" display-inline="no-display-inline" id="id9CF7249F8526447D9C0C1DD3293DAFCB"><enum>(C)</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, 2022.</text></subsection></section>
<section commented="no" display-inline="no-display-inline" id="idEBDA974B3B2449F6AD96FC529404DCFC"><enum>103.</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 certain large taxpayers</header><text display-inline="yes-display-inline">In the case of any taxable year in which the taxpayer is an applicable large taxpayer (as defined in section 263(c)(2)), 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, 2022.</text></subsection></section> <section commented="no" display-inline="no-display-inline" id="id2F1FB5D5F7E346B98CBBC0EA3C1E3FBC"><enum>104.</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 certain large taxpayers</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 an applicable large taxpayer (as defined in section 263(c)(2)).</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, 2022.</text></subsection></section> <section commented="no" display-inline="no-display-inline" id="idDD2781FB0CBE40BB975998D53094F692"><enum>105.</enum><header>Limitation on enhanced oil recovery credit</header> <subsection commented="no" display-inline="no-display-inline" id="idD21BEEB46B464367A8770FD1C3B5E997"><enum>(a)</enum><header>In general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/43">Section 43</external-xref> of the Internal Revenue Code of 1986 is amended by redesignating subsections (d) and (e) as subsections (e) and (f), respectively, and by inserting after subsection (c) the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="id89D284472BF047E29EB2567E28079973" style="OLC">
<subsection commented="no" display-inline="no-display-inline" id="id35AB93E4B261405ABFCD68054B59B43A"><enum>(d)</enum><header display-inline="yes-display-inline">Application with respect to certain large taxpayers</header><text display-inline="yes-display-inline">In the case of any taxable year in which the taxpayer is an applicable large taxpayer (as defined in section 263(c)(2)), subsection (a) shall be applied by substituting <quote>0 percent</quote> for <quote>15 percent</quote>.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection commented="no" display-inline="no-display-inline" id="idEC2EB4FA628E4EF28EA6AC7B02DF83B3"><enum>(b)</enum><header>Effective date</header><text display-inline="yes-display-inline">The amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2022.</text></subsection></section>
<section commented="no" display-inline="no-display-inline" id="id5B9843F1ACA34113A4540B6D21509D32"><enum>106.</enum><header>Limitation on credit for carbon oxide sequestration</header>
<subsection id="idd42644a35e4b4454b738751784e5d49b"><enum>(a)</enum><header>In general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/45Q">Section 45Q(f)</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:</text> <quoted-block style="OLC" display-inline="no-display-inline" id="id10fb695f3b2440b986b3ac3f510fc83e"> <paragraph id="id40061e6df5474eef8730a983fcb4731f"><enum>(10)</enum><header>Elimination of use of carbon oxide as tertiary injectant</header><text>In the case of any qualified facility the construction of which begins after the date of the enactment of the <short-title>Close Big Oil Tax Loopholes Act</short-title>, subsection (a)(4)(B)(i) shall not apply.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection>
<subsection commented="no" display-inline="no-display-inline" id="id72159E3489CB4989B7FEB0AEB24334CA"><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, 2022.</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>With respect to any lease described in section 344 or 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) (as in effect on the day before the date of enactment of this Act), beginning with the first lease sale held on or after that date of enactment for which a final notice of sale has not been published, the Secretary of the Interior shall not be required to provide for royalty relief in the lease sale terms.</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>