Gas Tax Equity Act of 2006 - Amends the Internal Revenue Code to suspend the excise tax on gasoline, diesel fuel, and kerosene for a 60-day period beginning after the enactment of this Act (suspension period). Requires reimbursement to the Highway Trust Fund and the Leaking Underground Storage Tank Trust Fund for tax revenues lost during the suspension period.
Expresses the sense of Congress that the reduction of taxes under this Act should immediately benefit consumers.
Repeals provisions of the Energy Policy Act of 2005 relating to: (1) the program on oil and gas royalties in-kind; (2) incentives for natural gas production from deep wells in the Gulf of Mexico; (3) suspension of royalty payments under federal leases in the Gulf of Mexico, Alaska, and the Outer Continental Shelf; and (4) exploration incentives in the National Petroleum Reserve in Alaska.
Requires certain integrated oil companies (defined as having an average daily worldwide crude oil production level of at least 500,000 barrels and more than $1 billion in gross receipts in 2005) to revalue their LIFO inventories of crude oil, natural gas, or other petroleum products according to a specified formula. Denies such oil companies: (1) two-year amortization of geological and geophysical expenditures; and (2) foreign tax credits for payments to certain foreign countries from which such oil companies receive a specified economic benefit as a dual capacity taxpayer.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5285 Introduced in House (IH)]
109th CONGRESS
2d Session
H. R. 5285
To provide a highway fuel tax holiday funded by the repeal of certain
production incentives, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 3, 2006
Ms. Loretta Sanchez of California introduced the following bill; which
was referred to the Committee on Ways and Means, and in addition to the
Committees on Resources and Science, for a period to be subsequently
determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To provide a highway fuel tax holiday funded by the repeal of certain
production incentives, 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 ``Gas Tax Equity Act of 2006''.
SEC. 2. HIGHWAY FUEL TAX HOLIDAY.
(a) Temporary Elimination of Highway Fuel Taxes on Gasoline, Diesel
Fuel, and Kerosene.--
(1) In general.--Section 4081 of the Internal Revenue Code
of 1986 (relating to imposition of tax on gasoline, diesel
fuel, and kerosene) is amended by adding at the end the
following new subsection:
``(f) Temporary Reduction in Taxes on Gasoline, Diesel Fuel, and
Kerosene.--
``(1) In general.--During the applicable period, each rate
of tax referred to in paragraph (2) shall be reduced to zero
cents per gallon.
``(2) Rates of tax.--The rates of tax referred to in this
paragraph are the rates of tax otherwise applicable under--
``(A) clauses (i) and (iii) of subsection (a)(2)(A)
(relating to gasoline, diesel fuel, and kerosene),
determined with regard to subsection (a)(2)(B) and
without regard to subsection (a)(2)(C), and
``(B) paragraph (1) of section 4041(a) (relating to
diesel fuel and kerosene) with respect to fuel sold for
use or used in a diesel-powered highway vehicle.
``(3) Applicable period.--For purposes of this subsection,
the term `applicable period' means the 60-day period beginning
with the day after the date of the enactment of this
subsection.
``(4) Maintenance of trust fund deposits.--In determining
the amounts to be appropriated to the Highway Trust Fund under
section 9503 and to the Leaking Underground Storage Tank Trust
Fund under 9508, an amount equal to the reduction in revenues
to the Treasury by reason of this subsection shall be treated
as taxes received in the Treasury under this section or section
4041.''.
(2) Effective date.--The amendment made by this subsection
shall take effect on the date of the enactment of this Act.
(b) Floor Stock Refunds.--
(1) In general.--If--
(A) before the tax reduction date, tax has been
imposed under section 4081 of the Internal Revenue Code
of 1986 on any liquid, and
(B) on such date such liquid is held by a dealer
and has not been used and is intended for sale, there
shall be credited or refunded (without interest) to the
person who paid such tax (hereafter in this subsection
referred to as the ``taxpayer'') an amount equal to the
excess of the tax paid by the taxpayer over the amount
of such tax which would be imposed on such liquid had
the taxable event occurred on the tax reduction date.
(2) Time for filing claims.--No credit or refund shall be
allowed or made under this subsection unless--
(A) claim therefor is filed with the Secretary of
the Treasury before the date which is 6 months after
the tax reduction date, and
(B) in any case where liquid is held by a dealer
(other than the taxpayer) on the tax reduction date--
(i) the dealer submits a request for refund
or credit to the taxpayer before the date which
is 3 months after the tax reduction date, and
(ii) the taxpayer has repaid or agreed to
repay the amount so claimed to such dealer or
has obtained the written consent of such dealer
to the allowance of the credit or the making of
the refund.
(3) Definitions.--For purposes of this subsection--
(A) the terms ``dealer'' and ``held by a dealer''
have the respective meanings given to such terms by
section 6412 of such Code; except that the term
``dealer'' includes a producer, and
(B) the term ``tax reduction date'' means the day
after the date of the enactment of this Act.
(4) Certain rules to apply.--Rules similar to the rules of
subsections (b) and (c) of section 6412 of such Code shall
apply for purposes of this subsection.
(c) Floor Stocks Tax.--
(1) Imposition of tax.--In the case of any liquid on which
tax would have been imposed under section 4081 of the Internal
Revenue Code of 1986 during the applicable period but for the
amendments made by subsection (a), and which is held on the
floor stocks tax date by any person, there is hereby imposed a
floor stocks tax in an amount equal to the tax which would be
imposed on such liquid had the taxable event occurred on the
floor stocks tax date.
(2) Liability for tax and method of payment.--
(A) Liability for tax.--A person holding a liquid
on the floor stocks tax date to which the tax imposed
by paragraph (1) applies shall be liable for such tax.
(B) Method of payment.--The tax imposed by
paragraph (1) shall be paid in such manner as the
Secretary shall prescribe.
(C) Time for payment.--The tax imposed by paragraph
(1) shall be paid on or before the date which is 6
months after the floor stocks tax date.
(3) Definitions.--For purposes of this subsection--
(A) Held by a person.--A liquid shall be considered
as ``held by a person'' if title thereto has passed to
such person (whether or not delivery to the person has
been made).
(B) Gasoline and diesel fuel.--The terms
``gasoline'' and ``diesel fuel'' have the respective
meanings given such terms by section 4083 of such Code.
(C) Floor stocks tax date.--The term ``floor stocks
tax date'' means the day after the date determined by
the Secretary under section 4081(f)(3) of such Code.
(D) Applicable period.--The term ``applicable
period'' means the period described in section
4081(f)(3) of such Code.
(E) Secretary.--The term ``Secretary'' means the
Secretary of the Treasury or the Secretary's delegate.
(4) Exception for exempt uses.--The tax imposed by
paragraph (1) shall not apply to gasoline, diesel fuel, or
kerosene held by any person exclusively for any use to the
extent a credit or refund of the tax imposed by section 4081 of
such Code is allowable for such use.
(5) Exception for fuel held in vehicle tank.--No tax shall
be imposed by paragraph (1) on gasoline, diesel fuel, or
kerosene held in the tank of a motor vehicle.
(6) Exception for certain amounts of fuel.--
(A) In general.--No tax shall be imposed by
paragraph (1)--
(i) on gasoline (other than aviation
gasoline) held on the floor stocks tax date by
any person if the aggregate amount of gasoline
held by such person on such date does not
exceed 4,000 gallons, and
(ii) on diesel fuel or kerosene held on
such date by any person if the aggregate amount
of diesel fuel or kerosene held by such person
on such date does not exceed 2,000 gallons.
The preceding sentence shall apply only if such person
submits to the Secretary (at the time and in the manner
required by the Secretary) such information as the
Secretary shall require for purposes of this
subparagraph.
(B) Exempt fuel.--For purposes of subparagraph (A),
there shall not be taken into account fuel held by any
person which is exempt from the tax imposed by
paragraph (1) by reason of paragraph (4) or (5).
(C) Controlled groups.--For purposes of this
paragraph--
(i) Corporations.--
(I) In general.--All persons
treated as a controlled group shall be
treated as 1 person.
(II) Controlled group.--The term
``controlled group'' has the meaning
given to such term by subsection (a) of
section 1563 of such Code; except that
for such purposes the phrase ``more
than 50 percent'' shall be substituted
for the phrase ``at least 80 percent''
each place it appears in such
subsection.
(ii) Nonincorporated persons under common
control.--Under regulations prescribed by the
Secretary, principles similar to the principles
of clause (i) shall apply to a group of persons
under common control where 1 or more of such
persons is not a corporation.
(7) Other law applicable.--All provisions of law, including
penalties, applicable with respect to the taxes imposed by
section 4081 of such Code shall, insofar as applicable and not
inconsistent with the provisions of this paragraph, apply with
respect to the floor stock taxes imposed by paragraph (1) to
the same extent as if such taxes were imposed by such section
4081.
(d) Benefits of Tax Reduction Should Be Passed on to Consumers.--
(1) Passthrough to consumers.--
(A) Sense of congress.--It is the sense of Congress
that--
(i) consumers immediately receive the
benefit of the reduction in taxes under this
section, and
(ii) transportation motor fuels producers
and other dealers take such actions as
necessary to reduce transportation motor fuels
prices to reflect such reduction, including
immediate credits to customer accounts
representing tax refunds allowed as credits
against excise tax deposit payments under the
floor stocks refund provisions of this section.
(B) Study.--
(i) In general.--The Comptroller General of
the United States shall conduct a study of the
reduction of taxes under this section to
determine whether there has been a passthrough
of such reduction.
(ii) Report.--Not later than 30 days after
the date of the enactment of this Act, the
Comptroller General of the United States shall
report to the Committee on Finance of the
Senate and the Committee on Ways and Means of
the House of Representatives the results of the
study conducted under clause (i).
SEC. 3. ELIMINATION OF CERTAIN PRODUCTION INCENTIVES.
(a) In General.--Sections 342, 344, 345, 346, 353, and 383 and
subtitle J of title IX of the Energy Policy Act of 2005 and section
107(k) of the Naval Petroleum Reserves Production Act of 1976 (as added
by section 347 of the Energy Policy Act of 2005) are repealed.
(b) Effective Date.--The repeals made by subsection (a) shall take
effect on the date of the enactment of the Energy Policy Act of 2005.
SEC. 4. REVALUATION OF LIFO INVENTORIES OF LARGE INTEGRATED OIL
COMPANIES.
(a) General Rule.--Notwithstanding any other provision of law, if a
taxpayer is an applicable integrated oil company for its last taxable
year ending in calendar year 2005, the taxpayer shall--
(1) increase, effective as of the close of such taxable
year, the value of each historic LIFO layer of inventories of
crude oil, natural gas, or any other petroleum product (within
the meaning of section 4611) by the layer adjustment amount,
and
(2) decrease its cost of goods sold for such taxable year
by the aggregate amount of the increases under paragraph (1).
If the aggregate amount of the increases under paragraph (1) exceed the
taxpayer's cost of goods sold for such taxable year, the taxpayer's
gross income for such taxable year shall be increased by the amount of
such excess.
(b) Layer Adjustment Amount.--For purposes of this section--
(1) In general.--The term ``layer adjustment amount''
means, with respect to any historic LIFO layer, the product
of--
(A) $18.75, and
(B) the number of barrels of crude oil (or in the
case of natural gas or other petroleum products, the
number of barrel-of-oil equivalents) represented by the
layer.
(2) Barrel-of-oil equivalent.--The term ``barrel-of-oil
equivalent'' has the meaning given such term by section
29(d)(5) (as in effect before its redesignation by the Energy
Tax Incentives Act of 2005).
(c) Application of Requirement.--
(1) No change in method of accounting.--Any adjustment
required by this section shall not be treated as a change in
method of accounting.
(2) Underpayments of estimated tax.--No addition to the tax
shall be made under section 6655 of the Internal Revenue Code
of 1986 (relating to failure by corporation to pay estimated
tax) with respect to any underpayment of an installment
required to be paid with respect to the taxable year described
in subsection (a) to the extent such underpayment was created
or increased by this section.
(d) 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 has an average daily worldwide production
of crude oil of at least 500,000 barrels for the taxable year and which
had gross receipts in excess of $1,000,000,000 for its last taxable
year ending during calendar year 2005. For purposes of this subsection
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 and, in the case of a short taxable year, the rule under
section 448(c)(3)(B) shall apply.
SEC. 5. ELIMINATION OF AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL
EXPENDITURES FOR MAJOR INTEGRATED OIL COMPANIES.
(a) In General.--Section 167(h) of the Internal Revenue Code of
1986 is amended by adding at the end the following new paragraph:
``(5) Nonapplication to major integrated oil companies.--
This subsection shall not apply with respect to any expenses
paid or incurred for any taxable year by any integrated oil
company (as defined in section 291(b)(4)) which has an average
daily worldwide production of crude oil of at least 500,000
barrels for such taxable year.''.
(b) Effective Date.--The amendment made by this section shall take
effect as if included in the amendment made by section 1329(a) of the
Energy Policy Act of 2005.
SEC. 6. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE TO LARGE
INTEGRATED OIL COMPANIES WHICH ARE DUAL CAPACITY
TAXPAYERS.
(a) In General.--Section 901 of the Internal Revenue Code of 1986
(relating to credit for taxes of foreign countries and of possessions
of the United States) is amended by redesignating subsection (m) as
subsection (n) and by inserting after subsection (l) the following new
subsection:
``(m) Special Rules Relating to Large 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 large integrated oil company 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.
``(4) Large integrated oil company.--For purposes of this
subsection, the term `large integrated oil company' means, with
respect to any taxable year, an integrated oil company (as
defined in section 291(b)(4)) which--
``(A) had gross receipts in excess of
$1,000,000,000 for such taxable year, and
``(B) has an average daily worldwide production of
crude oil of at least 500,000 barrels for such taxable
year.''
(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.
<all>
Introduced in House
Introduced in House
Sponsor introductory remarks on measure. (CR H1986)
Referred to the Committee on Ways and Means, and in addition to the Committees on Resources, and Science, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committees on Resources, and Science, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committees on Resources, and Science, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committees on Resources, and Science, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Subcommittee on Energy and Mineral Resources.
Executive Comment Requested from Interior.
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Referred to the Subcommittee on Energy.