I
109th CONGRESS
1st Session
H. R. 3752
IN THE HOUSE OF REPRESENTATIVES
September 13, 2005
Mr. Menendez introduced the following bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to impose a windfall profit tax on crude oil and to ease gas prices for consumers, and for other purposes.
Short title
This Act may be cited as the Gas Price Relief Act of 2005
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Windfall profits tax
In general
Subtitle E of the Internal Revenue Code of 1986 (relating to alcohol, tobacco, and certain other excise taxes) is amended by adding at the end the following new chapter:
Windfall profits on crude oil
Sec. 5896. Imposition of tax.
Sec. 5897. Windfall profit; removal price; base price; qualified investment.
Sec. 5898. Special rules and definitions.
Imposition of tax
In general
In addition to any other tax imposed under this title, there is hereby imposed on any integrated oil company (as defined in section 291(b)(4)) an excise tax equal to the excess of—
the amount equal to 50 percent of the windfall profit from all barrels of taxable crude oil removed from the property during each taxable year, over
the amount of qualified investment by such company during such taxable year.
Fractional part of barrel
In the case of a fraction of a barrel, the tax imposed by subsection (a) shall be the same fraction of the amount of such tax imposed on the whole barrel.
Tax paid by producer
The tax imposed by this section shall be paid by the producer of the taxable crude oil.
Windfall profit; removal price; base price; qualified investment
General rule
For purposes of this chapter, the term windfall profit means the excess of the removal price of the barrel of taxable crude oil over the base price of such barrel.
Removal price
For purposes of this chapter—
In general
Except as otherwise provided in this subsection, the term removal price means the amount for which the barrel of taxable crude oil is sold.
Sales between related persons
In the case of a sale between related persons, the removal price shall not be less than the constructive sales price for purposes of determining gross income from the property under section 613.
Oil removed from property before sale
If crude oil is removed from the property before it is sold, the removal price shall be the constructive sales price for purposes of determining gross income from the property under section 613.
Refining begun on property
If the manufacture or conversion of crude oil into refined products begins before such oil is removed from the property—
such oil shall be treated as removed on the day such manufacture or conversion begins, and
the removal price shall be the constructive sales price for purposes of determining gross income from the property under section 613.
Property
The term property has the meaning given such term by section 614.
Base price defined
For purposes of this chapter, the term base price means $40 for each barrel of taxable crude oil.
Qualified investment
For purposes of this chapter, the term qualified investment means any amount paid or incurred with respect to any qualified facility described in paragraph (1), (2), (3), or (4) of section 45(d) (determined without regard to any placed in service date).
Special rules and definitions
Withholding and deposit of tax
The Secretary shall provide such rules as are necessary for the withholding and deposit of the tax imposed under section 5896 on any taxable crude oil.
Records and information
Each taxpayer liable for tax under section 5896 shall keep such records, make such returns, and furnish such information (to the Secretary and to other persons having an interest in the taxable crude oil) with respect to such oil as the Secretary may by regulations prescribe.
Return of windfall profit tax
The Secretary shall provide for the filing and the time of such filing of the return of the tax imposed under section 5896.
Definitions
For purposes of this chapter—
Producer
The term producer means the holder of the economic interest with respect to the crude oil.
Crude oil
In general
The term crude oil includes crude oil condensates and natural gasoline.
Exclusion of newly discovered oil
Such term shall not include any oil produced from a well drilled after the date of the enactment of the Gas Price Relief Act of 2005, except with respect to any oil produced from a well drilled after such date on any proven oil or gas property (within the meaning of section 613A(c)(9)(A)).
Barrel
The term barrel means 42 United States gallons.
Adjustment of removal price
In determining the removal price of oil from a property in the case of any transaction, the Secretary may adjust the removal price to reflect clearly the fair market value of oil removed.
Regulations
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this chapter.
Termination
This chapter shall not apply to taxable crude oil removed after the date which is 1 year after the date of the enactment of this section.
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Transfer of windfall profit tax receipts to highway trust fund
Paragraph (1) of section 9503(b) of the Internal Revenue Code of 1986 is amended by striking and
at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting , and
, and by inserting after subparagraph (E) the following new subparagraph:
section 5896 (relating to windfall profits tax on crude oil).
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Deductibility of windfall profit tax
The first sentence of section 164(a) of the Internal Revenue Code of 1986 (relating to deduction for taxes) is amended by inserting after paragraph (5) the following new paragraph:
The windfall profit tax imposed by section 5896.
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Clerical amendment
The table of chapters for subtitle E of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Chapter 56. Windfall profit on crude oil.
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Effective date
In general
The amendments made by this section shall apply to crude oil removed after the date of the enactment of this Act, in taxable years ending after such date.
Transitional rules
For the period ending December 31, 2005, the Secretary of the Treasury or the Secretary's delegate shall prescribe rules relating to the administration of chapter 56 of the Internal Revenue Code of 1986. To the extent provided in such rules, such rules shall supplement or supplant for such period the administrative provisions contained in chapter 56 of such Code (or in so much of subtitle F of such Code as relates to such chapter 56).
Reduction of fuel taxes on highway motor fuels
In general
Section 4081 of the Internal Revenue Code of 1986 (relating to imposition of tax on motor and aviation fuels) is amended by adding at the end the following new subsection:
Reduction of highway motor fuel taxes
In general
During the reduction period, the rate of tax imposed by section 4041 (other than subsection (d) thereof) or 4081(a)(2)(A) on highway motor fuel shall be reduced by 10 cents per gallon.
Definitions and special rule
For purposes of this subsection—
Reduction period
The term reduction period means the 1-year period beginning on the date of enactment of the Gas Price Relief Act of 2005.
Highway motor fuel
The term highway motor fuel means any fuel subject to tax under section 4041 or 4081 other than aviation gasoline and aviation-grade kerosene.
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Effective date
The amendment made by subsection (a) shall take effect on the date of the enactment of this Act.
Maintenance of trust funds deposits; amounts appropriated to trust funds treated as taxes
In general
There is hereby appropriated (out of any money in the Treasury not otherwise appropriated) to the Highway Trust Fund an amount equal to the excess (if any) of—
the amount (but for this subsection) of reduced revenues received in the Highway Trust Fund as a result of a reduction in a rate of tax by reason of section 4081(f)(1) of the Internal Revenue Code of 1986 (as added by section 3 of this Act), over
amounts appropriated to the Highway Trust Fund by section 9503(b)(1)(F) of the Internal Revenue Code of 1986 (relating to windfall profits tax on crude oil).
Special rules
Amounts appropriated by subsection (a) to the Highway Trust Fund—
shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred had section 3 of this Act not been enacted, and
shall be treated for all purposes of Federal law as taxes received under the appropriate section referred to in such section 4081(f)(1).
Floor stock refunds
In general
If—
before the tax rate reduction date, tax has been imposed under section 4081 of the Internal Revenue Code of 1986 on any highway motor fuel, and
on such date such fuel is held by a dealer and has not been used and is intended for sale,
taxpayer) an amount equal to the excess of the tax paid by the taxpayer over the tax which would be imposed on such fuel had the taxable event occurred on such date.
Time for filing claims
No credit or refund shall be allowed or made under this section unless—
claim therefor is filed with the Secretary of the Treasury before the date which is 6 months after the tax rate reduction date based on a request submitted to the taxpayer before the date which is 3 months after the tax rate reduction date by the dealer who held the highway motor fuel on such date, and
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.
Exception for fuel held in retail stocks
No credit or refund shall be allowed under this section with respect to any highway motor fuel in retail stocks held at the place where intended to be sold at retail.
Definitions
For purposes of this section—
Tax rate reduction date
The term tax rate reduction date means the first day of the reduction period (as defined in section 4081(f) of the Internal Revenue Code of 1986 (as added by section 3 of this Act)).
Other terms
The terms dealer and held by a dealer have the respective meanings given to such terms by section 6412 of such Code.
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 section.
Floor stocks tax
Imposition of tax
In the case of any highway motor fuel which is held on the tax restoration date by any person, there is hereby imposed a floor stocks tax equal to the excess of the tax which would be imposed on such fuel had the taxable event occurred on such date over the tax (if any) previously paid (and not credited or refunded) on such fuel.
Liability for tax and method of payment
Liability for tax
The person holding highway motor fuel on the tax restoration date to which the tax imposed by subsection (a) applies shall be liable for such tax.
Method of payment
The tax imposed by subsection (a) shall be paid in such manner as the Secretary shall prescribe.
Time for payment
The tax imposed by subsection (a) shall be paid on or before the 45th day after the tax restoration date.
Definitions
For purposes of this section—
Tax restoration date
The term tax restoration date means the first day after the reduction period (as defined in section 4081(f) of the Internal Revenue Code of 1986).
Highway motor fuel
The term highway motor fuel has the meaning given to such term by section 4081(f) of such Code.
Held by a person
A highway motor fuel 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).
Secretary
The term Secretary means the Secretary of the Treasury or the Secretary’s delegate.
Exception for exempt uses
The tax imposed by subsection (a) shall not apply to any highway motor fuel held by any person exclusively for any use to the extent a credit or refund of the tax is allowable for such use.
Exception for certain amounts of fuel
In general
No tax shall be imposed by subsection (a) on any highway motor fuel held on the tax restoration date by any person if the aggregate amount of such highway motor fuel 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 paragraph.
Exempt fuel
For purposes of paragraph (1), there shall not be taken into account any highway motor fuel held by any person which is exempt from the tax imposed by subsection (a) by reason of subsection (d).
Controlled groups
For purposes of this section—
Corporations
In general
All persons treated as a controlled group shall be treated as 1 person.
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.
Nonincorporated persons under common control
Under regulations prescribed by the Secretary, principles similar to the principles of subparagraph (A) shall apply to a group of persons under common control if 1 or more of such persons is not a corporation.
Other laws 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 section, apply with respect to the floor stock taxes imposed by subsection (a) to the same extent as if such taxes were imposed by such sections.