A bill to amend the Internal Revenue Code of 1986 to provide a tax credit against residential heating costs.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Home Energy Assistance Act of 
2005''.

SEC. 2. TAX CREDIT AGAINST RESIDENTIAL HEATING COSTS.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after section 25D the 
following new section:

``SEC. 25E. CREDIT AGAINST RESIDENTIAL HEATING COSTS.

    ``(a) General Rule.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this chapter for the 
taxable year an amount equal to the amount paid or incurred during such 
taxable year for residential heating costs.
    ``(b) Limitations.--
            ``(1) Dollar limitation.--The amount of the credit allowed 
        to under subsection (a) to any taxpayer shall not exceed $500 
        for any taxable year.
            ``(2) Limitation based on adjusted gross income.--
                    ``(A) In general.--The amount of the credit which 
                would (but for this paragraph) be taken into account 
                under subsection (a) for the taxable year shall be 
                reduced (but not below zero) by the amount determined 
                under subparagraph (B).
                    ``(B) Amount of reduction.--The amount determined 
                under this subparagraph is the amount which bears the 
                same ratio to the amount which would be so taken into 
                account as--
                            ``(i) the excess of--
                                    ``(I) the taxpayers adjusted gross 
                                income for such taxable year, over
                                    ``(II) the threshold amount, bears 
                                to
                            ``(ii) the phaseout amount.
                    ``(C) Threshold amount.--For purposes of this 
                paragraph, the term `threshold amount' means--
                            ``(i) $80,000 in the case of a joint 
                        return,
                            ``(ii) $65,000 in the case of a head of a 
                        household, and
                            ``(iii) $40,000 in any other case.
                    ``(D) Phaseout amount.--For purposes of this 
                paragraph, the term `phaseout amount' means--
                            ``(i) $20,000 in the case of a joint return 
                        or a head of a household, and
                            ``(ii) $10,000 in any other case.
            ``(3) Maximum credit per household.--
                    ``(A) In general.--In the case of any household, 
                the credit under subsection (a) shall be allowed only 
                to the individual residing in such household who 
                furnishes the largest portion (whether or not more than 
                one-half) of the cost of maintaining such household.
                    ``(B) Determination of amount.--In the case of an 
                individual described in subparagraph (A), such 
                individual shall, for purposes of determining the 
                amount of the credit allowed under subsection (a), be 
                treated as having paid or incurred during such taxable 
                year for increased residential heating costs an amount 
                equal to the sum of the amounts paid or incurred for 
                such heating costs by all individuals residing in such 
                household (including any amount allocable to any such 
                individual under subsection (d) or (e)).
    ``(c) Carryback of Credit.--
            ``(1) In general.--If the credit allowable under subsection 
        (a) for a taxable year exceeds the limitation under subsection 
        (b)(1) for such taxable year, such excess shall be allowed--
                    ``(A) as a credit carryback to each of the 2 
                taxable years preceding such taxable year, and
                    ``(B) as a credit carryforward to each of the 20 
                taxable years following such taxable year.
            ``(2) Amount carried to each year.--Rules similar to the 
        rules of section 39(b)(2) shall apply for purposes of this 
        section.
            ``(3) Limitation.--The amount of unused credit which may be 
        taken into account under paragraph (1) for any taxable year 
        shall not exceed the limitation under subsection (b)(1).
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Residential heating costs.--The term `residential 
        heating costs' means costs incurred in connection with an 
        energy source used to heat a principal residence of the 
        taxpayer located in the United States.
            ``(2) Principal residence.--The term `principal residence' 
        has the same meaning as in section 121, except that--
                    ``(A) no ownership requirement shall be imposed, 
                and
                    ``(B) the principal residence must be used by the 
                taxpayer as the taxpayer's residence during the taxable 
                year.
            ``(3) No credit for married individuals filing separate 
        returns.--If the taxpayer is a married individual (within the 
        meaning of section 7703), this section shall apply only if the 
        taxpayer and the taxpayer's spouse file a joint return for the 
        taxable year.
            ``(4) Treatment of expenses paid by dependent.--If a 
        deduction under section 151 with respect to an individual is 
        allowed to another taxpayer for a taxable year beginning in the 
        calendar year in which such individual's taxable year begins--
                    ``(A) no credit shall be allowed under subsection 
                (a) to such individual for such individual's taxable 
                year, and
                    ``(B) residential heating costs paid by such 
                individual during such individual's taxable year shall 
                be treated for purposes of this section as paid by such 
                other taxpayer.
    ``(e) Homeowners Associations.--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 increased residential heating cost so 
incurred.
    ``(f) Applicability of Section.--This section shall apply to 
taxable years beginning after December 31, 2005, and before January 1, 
2007.''.
    (b) Reduction in Withholding.--The Secretary of the Treasury--
            (1) shall educate taxpayers on adjusting withholding of 
        taxes to reflect any anticipated tax credit under section 25E 
        of the Internal Revenue Code of 1986, and
            (2) may adjust the wage withholding tables prescribed under 
        section 3402(a)(1) of such Code to take into account the credit 
        allowed under section 25E of such Code.
    (c) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by striking the item relating to section 35 and by 
adding at the end the following new items:

``Sec. 25E. Credit against residential heating costs.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 3. DISALLOWANCE OF USE OF LIFO METHOD OF ACCOUNTING BY LARGE 
              INTEGRATED OIL COMPANIES FOR LAST TAXABLE YEAR ENDING 
              BEFORE OCTOBER 1, 2005.

    (a) General Rule.--Notwithstanding any other provision of law, an 
applicable integrated oil company shall, in determining the amount of 
Federal income tax imposed on such company for its most recent taxable 
year ending on or before September 30, 2005, use the first-in, first-
out (FIFO) method of accounting rather than the last-in, last-out 
(LIFO) method of accounting with respect to its crude oil inventories.
    (b) Application of Requirement.--The requirement to use the first-
in, first-out (FIFO) method of accounting under subsection (a)--
            (1) shall not be treated as a change in method of 
        accounting, and
            (2) shall be disregarded in determining the method of 
        accounting required to be used in any succeeding taxable year.
    (c) 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--
            (1) had gross receipts in excess of $1,000,000,000 for its 
        most recent taxable year ending on or before September 30, 
        2005, and
            (2) would, without regard to this section, use the last-in, 
        first-out (LIFO) method of accounting with respect to its crude 
        oil inventories for such taxable year.
For purposes of paragraph (1), 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.

Summary: Home Energy Assistance Act of 2005 - Amends the Internal Revenue Code to allow a tax credit for residential heating costs paid in 2006. Allows a maximum credit of $500, but reduces or eliminates such credit for taxpayers at higher income levels. Requires integrated oil companies with gross receipts in excess of $1 billion to use the first-in, first-out (FIFO) inventory accounting method for purposes of determining their current federal income tax liabilities.