To amend the Internal Revenue Code of 1986 to permanently extend the tax treatment for certain build America bonds, and for other purposes.

Summary: Build America Bonds Act of 2012 - Amends the Internal Revenue Code to: (1) make permanent the issuance authority for Build America Bonds and the authority for payments to issuers of such bonds; (2) make phased reductions in the credit percentage to bondholders and the percentage of payments to issuers of such bonds; (3) allow refundings of currently issued bonds; (4) allow the use of Build America bonds to fund capital expenditures for levees and flood control projects; and (5) deny a tax deduction to major integrated oil companies for income attributable to the production, refining, processing, transportation, or distribution of oil, gas, or any primary product thereof.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Build America Bonds Act of 2012''.

SEC. 2. BUILD AMERICA BONDS MADE PERMANENT.

    (a) In General.--Subparagraph (B) of section 54AA(d)(1) of the 
Internal Revenue Code of 1986 is amended by inserting ``or during a 
period beginning on or after the date of the enactment of the Build 
America Bonds Act of 2012,'' after ``January 1, 2011,''.
    (b) Reduction in Credit Percentage to Bondholders.--Subsection (b) 
of section 54AA of such Code is amended to read as follows:
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any interest payment date 
        for a build America bond is the applicable percentage of the 
        amount of interest payable by the issuer with respect to such 
        date.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage shall be determined under the 
        following table:

``In the case of a bond issued                           The applicable
  during calendar year:                                  percentage is:
        2009 or 2010...........................................     35 
        2012...................................................     32 
        2013...................................................     31 
        2014...................................................     30 
        2015...................................................     29 
        2016 and thereafter....................................  28.''.
    (c) Extension of Payments to Issuers.--
            (1) In general.--Section 6431 of such Code is amended--
                    (A) by inserting ``or during a period beginning on 
                or after the date of the enactment of the Build America 
                Bonds Act of 2012,'' after ``January 1, 2011,'' in 
                subsection (a), and
                    (B) by striking ``before January 1, 2011'' in 
                subsection (f)(1)(B) and inserting ``during a 
                particular period''.
            (2) Conforming amendments.--Subsection (g) of section 54AA 
        of such Code is amended--
                    (A) by inserting ``or during a period beginning on 
                or after the date of the enactment of the Build America 
                Bonds Act of 2012,'' after ``January 1, 2011,'', and
                    (B) by striking ``qualified Bonds Issued Before 
                2011'' in the heading and inserting ``certain Qualified 
                Bonds''.
    (d) Reduction in Percentage of Payments to Issuers.--Subsection (b) 
of section 6431 of such Code is amended--
            (1) by striking ``The Secretary'' and inserting the 
        following:
            ``(1) In general.--The Secretary'',
            (2) by striking ``35 percent'' and inserting ``the 
        applicable percentage'', and
            (3) by adding at the end the following new paragraph:
            ``(2) Applicable percentage.--For purposes of this 
        subsection, the term `applicable percentage' means the 
        percentage determined in accordance with the following table:

``In the case of a qualified bond                        The applicable
  issued during calendar year:                           percentage is:
        2009 or 2010...........................................     35 
        2012...................................................     32 
        2013...................................................     31 
        2014...................................................     30 
        2015...................................................     29 
        2016 and thereafter....................................  28.''.
    (e) Current Refundings Permitted.--Subsection (g) of section 54AA 
of such Code is amended by adding at the end the following new 
paragraph:
            ``(3) Treatment of current refunding bonds.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `qualified bond' includes any bond (or series 
                of bonds) issued to refund a qualified bond if--
                            ``(i) the average maturity date of the 
                        issue of which the refunding bond is a part is 
                        not later than the average maturity date of the 
                        bonds to be refunded by such issue,
                            ``(ii) the amount of the refunding bond 
                        does not exceed the outstanding amount of the 
                        refunded bond, and
                            ``(iii) the refunded bond is redeemed not 
                        later than 90 days after the date of the 
                        issuance of the refunding bond.
                    ``(B) Applicable percentage.--In the case of a 
                refunding bond referred to in subparagraph (A), the 
                applicable percentage with respect to such bond under 
                section 6431(b) shall be the lowest percentage 
                specified in paragraph (2) of such section.
                    ``(C) Determination of average maturity.--For 
                purposes of subparagraph (A)(i), average maturity shall 
                be determined in accordance with section 147(b)(2)(A).
                    ``(D) Issuance restriction not applicable.--
                Subsection (d)(1)(B) shall not apply to a refunding 
                bond referred to in subparagraph (A).''.
    (f) Clarification Related to Levees and Flood Control Projects.--
Subparagraph (A) of section 54AA(g)(2) of such Code is amended by 
inserting ``(including capital expenditures for levees and other flood 
control projects)'' after ``capital expenditures''.
    (g) Effective Date.--The amendments made by this section shall 
apply to obligations issued on or after the date of the enactment of 
this Act.

SEC. 3. 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 (as defined in section 
                167(h)(5)(B)) 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 ending after the date of the enactment of this Act.