A bill to amend the Internal Revenue Code of 1986 to provide a refundable credit against income tax to assist individuals with high residential energy costs, and for other purposes.

Summary: Home Energy Affordability Tax Relief Act of 2008 or the HEATR Act of 2008 - Amends the Internal Revenue Code to allow individual taxpayers an income-based refundable tax credit for residential energy costs. Limits such credit to the lesser of 33% of such costs or $500.

Eliminates for major integrated oil companies: (1) the tax deduction for intangible drilling and development costs in taxable years in which the average price of crude oil is greater than $34.71 per barrel and the average price of natural gas is greater that $4.34 per 1,000 cubic feet; and (2) the tax credit for enhanced oil recovery costs in taxable years in which the average price of crude oil is greater than $34.71 per barrel. Denies such oil companies and certain producers or refiners of crude oil a foreign tax credit for payments to certain foreign countries or U.S. possessions from which they receive a specified economic benefit as a dual capacity taxpayer.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Home Energy Affordability Tax Relief 
Act of 2008'' or the ``HEATR Act of 2008''.

SEC. 2. REFUNDABLE CREDIT FOR RESIDENTIAL ENERGY COSTS.

    (a) In General.--Subchapter B of chapter 65 of the Internal Revenue 
Code of 1986 (relating to rules of special application) is amended by 
adding at the end the following new section:

``SEC. 6431. REFUNDABLE CREDIT FOR RESIDENTIAL ENERGY COSTS.

    ``(a) General Rule.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this subtitle for the 
taxable year an amount equal to the lesser of--
            ``(1) 33 percent of the amount of the taxpayer's 
        residential energy costs for such taxable year, or
            ``(2) $500.
    ``(b) Income Limitation.--
            ``(1) In general.--The amount allowable as a credit under 
        subsection (a) for any taxable year shall be reduced (but not 
        below zero) by an amount which bears the same ratio to the 
        amount so allowable (determined without regard to this 
        paragraph) as--
                    ``(A) the amount (if any) by which the taxpayer's 
                adjusted gross income exceeds $50,000 (twice such 
                amount in the case of a joint return), bears to
                    ``(B) $10,000 (twice such amount in the case of a 
                joint return).
            ``(2) Determination of adjusted gross income.--For purposes 
        of paragraph (1), adjusted gross income shall be determined 
        without regard to sections 911, 931, and 933.
    ``(c) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Residential energy costs.--The term `residential 
        energy costs' means the amount paid or incurred by the taxpayer 
        during the taxable year--
                    ``(A) to any utility for electricity or natural gas 
                used in the principal residence of the taxpayer during 
                the heating season, and
                    ``(B) for any qualified fuel for use in the 
                principal residence of the taxpayer but only if such 
                fuel is the primary fuel for heating such residence.
            ``(2) Principal residence.--
                    ``(A) In general.--The term `principal residence' 
                has the meaning given to such term by section 121; 
                except that no ownership requirement shall be imposed.
                    ``(B) Special rules.--Such term shall not include--
                            ``(i) any residence located outside the 
                        United States, and
                            ``(ii) any residence not used as the 
                        taxpayer's principal place of abode throughout 
                        the heating season.
            ``(3) Heating season.--The term `heating season' means 
        October, November, December, January, February, and March.
            ``(4) Qualified fuel.--The term `qualified fuel' includes 
        propane, heating oil, kerosene, wood, and wood pellets.
    ``(d) Other Special Rules.--
            ``(1) Individuals paying on level payment basis.--Amounts 
        paid for natural gas under a level payment plan for any period 
        shall be treated as paid for natural gas used during the 
        portion (if any) of the heating season during such period to 
        the extent of the amount charged for natural gas used during 
        such portion of the heating season. A similar rule shall apply 
        to electricity and any qualified fuel.
            ``(2) Homeowners associations, etc.--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 residential energy cost so incurred.
            ``(3) Dollar amount in case of joint occupancy.--In the 
        case of a dwelling unit which is the principal residence by 2 
        or more individuals, the dollar limitation under subsection 
        (a)(2) shall be allocated among such individuals under 
        regulations prescribed by the Secretary.
            ``(4) Treatment as refundable credit.--For purposes of this 
        title, the credit allowed by this section shall be treated as a 
        credit allowed under subpart C of part IV of subchapter A of 
        chapter 1 (relating to refundable credits).
    ``(e) Inflation Adjustment.--
            ``(1) In general.--In the case of any taxable year 
        beginning in 2009, each of the dollar amounts contained in 
        subsections (a)(2) and (b)(1)(A) shall be increased by an 
        amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) in the case of--
                            ``(i) the dollar amount contained in 
                        subsection (a)(2), the fuel price inflation 
                        adjustment for 2009, and
                            ``(ii) the dollar amount contained in 
                        subsection (b)(1)(A), the cost-of-living 
                        adjustment determined under section 1(f)(3) for 
                        2009 by substituting `calendar year 2007' for 
                        `calendar year 1992' in subparagraph (B) 
                        thereof.
            ``(2) Fuel price inflation adjustment.--For purposes of 
        paragraph (1)(B)(i)--
                    ``(A) In general.--The fuel price inflation 
                adjustment for 2009 is the percentage (if any) by 
                which--
                            ``(i) the CPI fuel component for October of 
                        2008, exceeds
                            ``(ii) the CPI fuel component for October 
                        of 2007.
                    ``(B) CPI fuel component.--The term `CPI fuel 
                component' means the fuel component of the Consumer 
                Price Index for All Urban Consumers published by the 
                Department of Labor.
            ``(3) Rounding.--
                    ``(A) Credit amount.--
                            ``(i) Credit amount.--If the dollar amount 
                        in subsection (a)(2) (after being increased 
                        under paragraph (1)), is not a multiple of $10, 
                        such dollar amount shall be rounded to the 
                        nearest multiple of $10.
                            ``(ii) Income threshold.--If the dollar 
                        amount in subsection (b)(1)(A) (after being 
                        increased under paragraph (1)), is not a 
                        multiple of $50, such dollar amount shall be 
                        rounded to the next lowest multiple of $50.
    ``(f) Application of Section.--This section shall apply to 
residential energy costs paid or incurred after the date of the 
enactment of this section, in taxable years ending after such date, and 
before January 1, 2010.''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by striking ``or 6428 or'' and 
        inserting ``, 6428, 6431, or''.
            (2) The table of sections for subchapter B of chapter 65 of 
        such Code is amended by adding at the end the following new 
        item:

``Sec. 6431. Refundable credit for residential energy costs.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.

SEC. 3. ELIMINATION OF DEDUCTION FOR INTANGIBLE DRILLING AND 
              DEVELOPMENT COSTS FOR MAJOR OIL COMPANIES.

    (a) In General.--Section 263(c) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new sentences: 
``This subsection shall not apply during any taxable year with respect 
to an applicable taxpayer (as defined in section 901(m)(2)) if during 
the preceding taxable year for the production of oil, the average price 
of crude oil in the United States is greater than $34.71 per barrel, 
and for the production of natural gas, the average wellhead price of 
natural gas in the United States is greater than $4.34 per 1,000 cubic 
feet. For purposes of the preceding sentence, the Secretary shall 
determine average prices, taking into consideration the most recent 
data reported by the Energy Information Administration. For taxable 
years beginning after December 31, 2008, each dollar amount specified 
in this subsection shall be adjusted to reflect changes for the 12-
month period ending the preceding September 30 in the Consumer Price 
Index for All Urban Consumers published by the Bureau of Labor 
Statistics of the Department of Labor.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 4. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE TO MAJOR 
              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 (n) 
and by inserting after subsection (l) the following new subsection:
    ``(m) Special Rules Relating to Major 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 an applicable taxpayer (as defined in section 
        5896(b)) 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) Applicable taxpayer.--For purposes of this 
        subsection, the term `applicable taxpayer' means, with respect 
        to operations in the United States--
                    ``(A) any integrated oil company (as defined in 
                section 291(b)(4)), and
                    ``(B) any other producer or refiner of crude oil 
                with gross receipts from the sale of such crude oil or 
                refined oil products for the taxable year exceeding 
                $100,000,000.
            ``(3) 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.
            ``(4) 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. 5. ELIMINATION OF ENHANCED OIL RECOVERY CREDIT FOR MAJOR OIL 
              COMPANIES.

    (a) In General.--Section 43 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subsection:
    ``(f) Nonapplication of Section.--This section shall not apply 
during any taxable year with respect to an applicable taxpayer (as 
defined in section 901(m)(2)) if during the preceding taxable year for 
the production of oil, the average price of crude oil in the United 
States is greater than $34.71 per barrel. For purposes of the preceding 
sentence, the Secretary shall determine average prices, taking into 
consideration the most recent data reported by the Energy Information 
Administration. For taxable years beginning after December 31, 2008, 
the dollar amount specified in this paragraph shall be adjusted to 
reflect changes for the 12-month period ending the preceding September 
30 in the Consumer Price Index for All Urban Consumers published by the 
Bureau of Labor Statistics of the Department of Labor.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.