II
109th CONGRESS
1st Session
S. 1631
IN THE SENATE OF THE UNITED STATES
September 7, 2005
Mr. Dorgan (for himself, Mr. Dodd, and Mrs. Boxer) introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to impose a temporary windfall profit tax on crude oil and to rebate the tax collected back to the American consumer, and for other purposes.
Short title
This Act may be cited as the
Windfall Profits Rebate Act of
2005
.
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 thereof the following new chapter:
Windfall profits on crude oil
Sec. 5896. Imposition of tax.
Sec. 5897. Windfall profit; removal price; adjusted 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; adjusted 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 adjusted 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.
Adjusted base price defined
In general
For purposes of this chapter, the term adjusted base price means $40 for each barrel of taxable crude oil plus an amount equal to—
such base price, multiplied by
the inflation adjustment for the calendar year in which the taxable crude oil is removed from the property.
Inflation adjustment
In general
For purposes of paragraph (1), the inflation adjustment for any calendar year after 2006 is the percentage by which—
the implicit price deflator for the gross national product for the preceding calendar year, exceeds
such deflator for the calendar year ending December 31, 2005.
First revision of price deflator used
For purposes of subparagraph (A), the first revision of the price deflator shall be used.
Qualified investment
For purposes of this chapter—
In general
The term qualified investment means any amount paid or incurred with respect to—
section 263(c) costs,
qualified refinery property (as defined in section 179C(c) and determined without regard to any termination date),
any qualified facility described in paragraph (1), (2), (3), or (4) of section 45(d) (determined without regard to any placed in service date),
any facility for the production of alcohol used as a fuel (within the meaning of section 40) or biodiesel or agri-biodiesel used as a fuel (within the meaning of section 40A).
Section 263(c) costs
For purposes of this subsection, the term section 263(c) costs means intangible drilling and development costs incurred by the taxpayer which (by reason of an election under section 263(c)) may be deducted as expenses for purposes of this title (other than this paragraph). Such term shall not include costs incurred in drilling a nonproductive well.
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 Windfall Profits Rebate 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 section shall not apply to taxable crude oil removed after the date which is 3 years after the date of the enactment of this section.
.
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.
.
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.
.
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).
Energy consumer rebate
In general
Subchapter B of chapter 65 of the Internal Revenue Code of 1986 (relating to rules of special application in the case of abatements, credits, and refunds) is amended by adding at the end the following new section:
Energy consumer rebate
General rule
Except as otherwise provided in this section, each individual shall be treated as having made a payment against the tax imposed by chapter 1 for each taxable year beginning after December 31, 2005, in an amount equal to the lesser of—
the amount of the taxpayer’s liability for tax for such taxpayer’s preceding taxable year, or
the applicable amount.
Liability for tax
For purposes of this section, the liability for tax for any taxable year shall be the excess (if any) of—
the sum of—
the taxpayer’s regular tax liability (within the meaning of section 26(b)) for the taxable year,
the tax imposed by section 55(a) with respect to such taxpayer for the taxable year, and
the taxpayer’s social security taxes (within the meaning of section 24(d)(2)) for the taxable year, over
the sum of the credits allowable under part IV of subchapter A of chapter 1 (other than the credits allowable under subpart C thereof, relating to refundable credits) for the taxable year.
Applicable amount
For purposes of this section, the applicable amount for any taxpayer shall be determined by the Secretary not later than the date specified in subsection (d)(1) taking into account the number of such taxpayers and the amount of revenues in the Treasury resulting from the tax imposed by section 5896 for the calendar year preceding the taxable year.
Date payment deemed made
In general
The payment provided by this section shall be deemed made on February 1 of the calendar year ending with or within the taxable year.
Remittance of payment
The Secretary shall remit to each taxpayer the payment described in paragraph (1) not later that the date which is 30 days after the date specified in paragraph (1).
Certain persons not eligible
This section shall not apply to—
any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins,
any estate or trust, or
any nonresident alien individual.
.
Conforming amendment
Section 1324(b)(2)
of title 31, United States Code, is amended by inserting before the period
, or enacted by the Windfall Profits
Rebate Act of 2005
.
Clerical amendment
The table of sections for subchapter B of chapter 65 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Sec. 6430. Energy consumer rebate.
.
Effective date
The amendments made by this section shall take effect on the date of the enactment of this Act.