[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 1907 Introduced in Senate (IS)]
114th CONGRESS
1st Session
S. 1907
To reduce the Federal budget deficit by closing big oil tax loopholes,
and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 30, 2015
Mr. Menendez (for himself, Mr. Markey, Mr. Whitehouse, Mr. Merkley, Ms.
Mikulski, Ms. Klobuchar, Mrs. Shaheen, Mrs. Feinstein, Mr. Reed, Mrs.
Boxer, Ms. Stabenow, Mr. Leahy, Mr. Schumer, Mr. Nelson, Mrs. Murray,
Mr. Franken, Mr. Cardin, Mr. Peters, and Mr. Durbin) introduced the
following bill; which was read twice and referred to the Committee on
Finance
_______________________________________________________________________
A BILL
To reduce the Federal budget deficit by closing big oil tax loopholes,
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; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Close Big Oil Tax
Loopholes Act''.
(b) Table of Contents.--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 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 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.
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.
(a) In General.--Section 901 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:
``(n) Special Rules Relating to Major Integrated Oil Companies
Which Are Dual Capacity Taxpayers.--
``(1) General rule.--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--
``(A) if, for such period, the foreign country or
possession does not impose a generally applicable
income tax, or
``(B) to the extent such amount exceeds the amount
(determined in accordance with regulations) which--
``(i) is paid by such dual capacity
taxpayer pursuant to the generally applicable
income tax imposed by the country or
possession, or
``(ii) would be paid if the generally
applicable income tax imposed by the country or
possession were applicable to such dual
capacity taxpayer.
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).
``(2) Dual capacity taxpayer.--For purposes of this
subsection, the term `dual capacity taxpayer' means, with
respect to any foreign country or possession of the United
States, a person who--
``(A) is subject to a levy of such country or
possession, and
``(B) receives (or will receive) directly or
indirectly a specific economic benefit (as determined
in accordance with regulations) from such country or
possession.
``(3) Generally applicable income tax.--For purposes of
this subsection--
``(A) In general.--The term `generally applicable
income tax' 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.
``(B) Exceptions.--Such term shall not include a
tax unless it has substantial application, by its terms
and in practice, to--
``(i) persons who are not dual capacity
taxpayers, and
``(ii) persons who are citizens or
residents of the foreign country or
possession.''.
(b) Effective Date.--
(1) In general.--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.
(2) Contrary treaty obligations upheld.--The amendments
made by this section shall not apply to the extent contrary to
any treaty obligation of the United States.
SEC. 102. LIMITATION ON SECTION 199 DEDUCTION ATTRIBUTABLE TO OIL,
NATURAL GAS, OR PRIMARY PRODUCTS THEREOF.
(a) Denial of Deduction.--Paragraph (4) of section 199(c) of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new subparagraph:
``(E) Special rule for certain oil and gas
income.--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 `domestic
production gross receipts' 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.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2015.
SEC. 103. LIMITATION ON DEDUCTION FOR INTANGIBLE DRILLING AND
DEVELOPMENT COSTS; AMORTIZATION OF DISALLOWED AMOUNTS.
(a) In General.--Section 263(c) of the Internal Revenue Code of
1986 is amended to read as follows:
``(c) Intangible Drilling and Development Costs in the Case of Oil
and Gas Wells and Geothermal Wells.--
``(1) In general.--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.
``(2) Exclusion.--
``(A) In general.--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)).
``(B) Amortization of amounts not allowable as
deductions under subparagraph (a).--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.''.
(b) Effective Date.--The amendment made by this section shall apply
to amounts paid or incurred in taxable years beginning after December
31, 2015.
SEC. 104. LIMITATION ON PERCENTAGE DEPLETION ALLOWANCE FOR OIL AND GAS
WELLS.
(a) In General.--Section 613A of the Internal Revenue Code of 1986
is amended by adding at the end the following new subsection:
``(f) Application With Respect to Major Integrated Oil Companies.--
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.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2015.
SEC. 105. LIMITATION ON DEDUCTION FOR TERTIARY INJECTANTS.
(a) In General.--Section 193 of the Internal Revenue Code of 1986
is amended by adding at the end the following new subsection:
``(d) Application With Respect to Major Integrated Oil Companies.--
``(1) In general.--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)).
``(2) Amortization of amounts not allowable as deductions
under paragraph (1).--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.''.
(b) Effective Date.--The amendment made by this section shall apply
to amounts paid or incurred in taxable years beginning after December
31, 2015.
SEC. 106. MODIFICATION OF DEFINITION OF MAJOR INTEGRATED OIL COMPANY.
(a) In General.--Paragraph (5) of section 167(h) of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
subparagraph:
``(C) Certain successors in interest.--For purposes
of this paragraph, the term `major integrated oil
company' 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.''.
(b) Conforming Amendments.--
(1) In general.--Subparagraph (B) of section 167(h)(5) of
the Internal Revenue Code of 1986 is amended by inserting
``except as provided in subparagraph (C),'' after ``For
purposes of this paragraph,''.
(2) Taxable years tested.--Clause (iii) of section
167(h)(5)(B) of such Code is amended--
(A) by striking ``does not apply by reason of
paragraph (4) of section 613A(d)'' and inserting ``did
not apply by reason of paragraph (4) of section 613A(d)
for any taxable year after 2004'', and
(B) by striking ``does not apply'' in subclause
(II) and inserting ``did not apply for the taxable
year''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2015.
TITLE II--OUTER CONTINENTAL SHELF OIL AND NATURAL GAS
SEC. 201. REPEAL OF OUTER CONTINENTAL SHELF DEEP WATER AND DEEP GAS
ROYALTY RELIEF.
(a) In General.--Sections 344 and 345 of the Energy Policy Act of
2005 (42 U.S.C. 15904, 15905) are repealed.
(b) Administration.--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.
TITLE III--MISCELLANEOUS
SEC. 301. DEFICIT REDUCTION.
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.
SEC. 302. BUDGETARY EFFECTS.
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 ``Budgetary Effects of PAYGO
Legislation'' 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.
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