[Congressional Record Volume 151, Number 148 (Wednesday, November 9, 2005)]
[Senate]
[Pages S12613-S12614]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE:
  S. 1982. A bill to amend the Internal Revenue Code of 1986 to provide 
a tax credit against residential heating costs; to the Committee on 
Finance.
  Ms. SNOWE. Mr. President, today I rise to introduce legislation that 
would provide a tax credit for home energy costs to low- and middle-
income taxpayers. This legislation will help those who are struggling 
to simply heat their homes as winter approaches and while fuel prices 
remain so high.
  Home heating oil in Maine is $2.52 per gallon, up 59 cents from a 
year ago. Kerosene prices average $2.95 a gallon, 75 cents higher than 
this time last year. Some projections have a gallon of heating oil 
reaching $3.00! And I am told that rolling blackouts on cold days this 
winter may be a possibility because of a high demand for electricity.
  According to the National Energy Assistance Directors Association, 
heating costs for the average family using heating oil are projected to 
hit $1,666 for the upcoming winter. This represents an increase of $403 
over last winter's prices and $714 over the winter heating season of 
2003-2004. Should colder weather prevail, these costs will surely 
increase, especially for States like Maine.
  So understandably, my constituents are asking how they will be able 
to afford to pay home heating oil bills that are 30 percent more 
expensive than last year. This is a crisis that has arrived.
  Heating one's home is a necessity of life--so much so that 73 percent 
of households in a recent survey reported they would cut back on, and 
even go without, other necessities such as food, prescription drugs, 
and mortgage and rent payments. Churches, food pantries, local service 
organizations--they are all deeply concerned, and the leaves have 
barely fallen from the trees.
  In order to help low- and middle-income families heat their homes 
this winter, I am proposing a tax credit for home energy costs up to 
$500. The credit would be available to married couples earning less 
than $100,000 and single taxpayers making less than $50,000.
  My legislation also directs the Treasury Department to assist 
individuals to adjust their withholding amounts for 2006, which will 
immediately increase take home pay. Without adjusting their 
withholding, taxpayers would not benefit from the credit until they 
file their taxes sometime in 2007, possibly long after energy prices 
have returned to a normal level. As a result, this is a crucial 
provision to ensure that these individuals and families get a helping 
hand exactly when they need it most. Finally, any unused credit amount 
could be carried back to the prior two taxable years or carried forward 
to future taxable years.
  It is critical that those who would benefit from the home energy 
credit are not at the same time required to shoulder the burden of the 
cost of the credit through an increase in the national debt. This 
credit should be paid for, and it makes sense to me that costs of the 
credit should be financed by those who profit the most by high energy 
prices, namely large oil companies. I am concerned that while many 
individuals are forced to make the choice of heating one's home or 
meeting the other basic necessities of life, large oil companies are 
showing record profits. Therefore, the Home Energy Cost Tax Assistance 
Act includes an offset provision to disallow the tax benefit that large 
oil companies with

[[Page S12614]]

revenues in excess of $1 billion in 2005 receive by use of the Last-In, 
First-Out (LIFO) tax accounting method. Instead, these companies would 
be required to use the First-In, First-Out (FIFO) method of accounting 
for 2005. Put another way, the proposal would scale back a tax 
provision that allows oil companies to take an enormous tax deduction 
when prices are sky high and allows them to boost after-tax profits 
even further. As big oil companies show record profits on the backs of 
ordinary Americans, they have less of a need for such a tax break, and 
I believe it is fair to scale back this tax break in order to lend a 
helping hand to low- and middle-income workers.
  It is critical that Congress act to help low and middle income 
Americans absorb the increased home energy costs associated with the 
drastic increase in price of fuel. Temperatures are falling, prices are 
rising and we must move swiftly.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1982

       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 ``Home Energy Assistance Act 
     of 2005''.

     SEC. 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:

     ``SEC. 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.

     SEC. 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.
                                 ______