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[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 4768 Introduced in Senate (IS)]

<DOC>

117th CONGRESS
  2d Session
                                S. 4768

  To amend the Internal Revenue Code of 1986 to tax excess profits of 
large oil and gas companies, to impose a tax on the repurchase of stock 
 by large oil and gas companies, to end the use of the LIFO method of 
  accounting by large oil and gas trades or businesses, and for other 
                               purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             August 4, 2022

  Mr. Wyden (for himself, Mr. Schumer, Mrs. Murray, Ms. Stabenow, Mr. 
 Casey, Mr. Padilla, Ms. Hirono, Mr. Booker, Ms. Klobuchar, Mr. Reed, 
   Mr. Warnock, Mrs. Feinstein, Mr. Blumenthal, and Mr. Van Hollen) 
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 tax excess profits of 
large oil and gas companies, to impose a tax on the repurchase of stock 
 by large oil and gas companies, to end the use of the LIFO method of 
  accounting by large oil and gas trades or businesses, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Taxing Big Oil Profiteers Act''.

SEC. 2. TAX ON EXCESS PROFITS OF CERTAIN TAXPAYERS FROM OIL AND GAS.

    (a) In General.--Subchapter A of chapter 1 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new part:

             ``PART VIII--WINDFALL PROFITS FROM OIL AND GAS

``Sec. 59B. Tax on oil and gas excess profits.

``SEC. 59B. TAX ON OIL AND GAS EXCESS PROFITS.

    ``(a) Imposition of Tax.--
            ``(1) In general.--In addition to any other tax imposed 
        under this chapter, there is hereby imposed on each applicable 
        taxpayer for any taxable year a tax equal to 21 percent of the 
        excess profits of such taxpayer for such taxable year.
            ``(2) Excess profits.--For purposes of this subsection, the 
        term `excess profits' means, with respect to any taxable year, 
        the excess of--
                    ``(A) the current profits of the taxpayer for the 
                taxable year, over
                    ``(B) the normal return of the taxpayer for the 
                taxable year.
    ``(b) Applicable Taxpayer.--For purposes of this section--
            ``(1) In general.--The term `applicable taxpayer' means, 
        with respect to any taxable year, any person if--
                    ``(A) the average annual gross receipts of such 
                person for the 3-taxable-year period ending with the 
                taxable year which precedes such taxable year equals or 
                exceeds $1,000,000,000, and
                    ``(B) such person is primarily engaged in 1 or more 
                oil or natural gas trades or businesses during the 
                taxable year.
            ``(2) Special rules for applicable entities.--
                    ``(A) In general.--If an entity is an applicable 
                entity (as defined in subsection (e)) for any taxable 
                year--
                            ``(i) except as provided in paragraphs 
                        (1)(A) and (2)(B) of subsection (e), such 
                        entity shall not be treated as an applicable 
                        taxpayer for purposes of this section, but
                            ``(ii) any allocable share of a covered 
                        taxpayer of any excess profits of such entity 
                        for such taxable year (as determined under 
                        subsection (e)) shall be taken into account by 
                        such taxpayer under subsection (a)(1)--
                                    ``(I) as excess profits of such 
                                taxpayer for the taxable year of such 
                                taxpayer with or within which such 
                                taxable year of such entity ends, and
                                    ``(II) in the same manner as if 
                                such taxpayer were an applicable 
                                taxpayer.
                    ``(B) Covered taxpayer.--For purposes of this 
                section, the term `covered taxpayer' means, with 
                respect to any taxable year--
                            ``(i) a taxpayer who is an individual 
                        (other than an estate or trust) and whose 
                        adjusted gross income for such taxable year 
                        exceeds $400,000 ($200,000 in the case of a 
                        married individual filing separately),
                            ``(ii) an estate or trust, or
                            ``(iii) a C corporation which is not an 
                        applicable taxpayer.
            ``(3) Oil or natural gas trade or business.--The term `oil 
        or natural gas trade or business' means any trade or business 
        that consists of one or more of the following:
                    ``(A) The production of oil or natural gas.
                    ``(B) The refining of oil or natural gas.
                    ``(C) The processing of oil or natural gas.
                    ``(D) The transportation of oil or natural gas.
                    ``(E) The distribution of oil or natural gas.
            ``(4) Applicable rules relating to gross receipts.--For 
        purposes of paragraph (1)(A)--
                    ``(A) except as provided in subsection (f), there 
                shall be taken into account only gross receipts which 
                are effectively connected with the conduct of a trade 
                or business within the United States, the Commonwealth 
                of Puerto Rico, or any possession of the United States, 
                and
                    ``(B) rules similar to the rules of paragraphs (2) 
                and (3) of section 448(c) shall apply.
    ``(c) Current Profits.--For purposes of this section, the term 
`current profits' means, with respect to any applicable taxpayer for 
any taxable year, the taxable income of the taxpayer computed under 
this chapter for such taxable year, determined with the following 
modifications:
            ``(1) No net operating loss deduction.--No net operating 
        loss deduction shall be allowed.
            ``(2) Deduction for employee remuneration.--
                    ``(A) In general.--Section 162(m) shall be 
                applied--
                            ``(i) by substituting `In the case of any 
                        applicable taxpayer (as defined in section 
                        59B)' for `In the case of any publicly held 
                        corporation' in paragraph (1) thereof,
                            ``(ii) by substituting `covered individual 
                        (as defined in section 59B(c)(2)(B))' for 
                        `covered employee' each place it appears in 
                        paragraphs (1) and (4) thereof, and
                            ``(iii) by treating any reference to an 
                        `employee' in paragraphs (1) and (4) thereof as 
                        a reference to an `individual'.
                    ``(B) Covered individual.--For purposes of applying 
                this paragraph to section 162(m), the term `covered 
                individual' means any individual who--
                            ``(i) is an officer, director, or employee 
                        of the applicable taxpayer for the taxable 
                        year, or
                            ``(ii) performed services for the 
                        applicable taxpayer during the taxable year.
                For purposes of clause (i), any employee who is treated 
                as an employee of the applicable taxpayer under 
                subsection (b) or (c) of section 414 shall be treated 
                as an employee for purposes of this subparagraph.
            ``(3) Certain foreign income.--Except as provided in 
        subsection (f)--
                    ``(A) Certain income excluded.--In determining 
                gross income--
                            ``(i) subpart F income and global 
                        intangible low-taxed income included in gross 
                        income under sections 951 and 951A shall not be 
                        taken into account, and
                            ``(ii) foreign-derived intangible income 
                        (as defined in section 250) shall not be taken 
                        into account unless such income is domestic 
                        oil-related income which is derived from oil or 
                        gas which is exported from the United States.
                For purposes of clause (ii), the term `domestic oil-
                related income' means income (other than dividend or 
                interest income which is passive income (as defined in 
                section 904(d)(2)(A)) derived from sources within the 
                United States or its possessions from activities 
                described in subparagraphs (A) through (E) of section 
                907(c)(2).
                    ``(B) Denial of section 250 deduction.--No 
                deduction shall be allowed under section 250.
    ``(d) Normal Return.--For purposes of this section, the term 
`normal return' means, with respect to any applicable taxpayer for any 
taxable year, an amount equal to 10 percent of the excess of--
            ``(1) the gross receipts of the taxpayer taken into account 
        in computing the taxpayer's current profits for the taxable 
        year, including the taxpayer's allocable share of any gross 
        receipts of a partnership, S corporation, or other pass-thru 
        entity specified by the Secretary under subsection (e)(2)(A), 
        over
            ``(2) the current profits of the taxpayer for the taxable 
        year.
    ``(e) Definitions and Rules Relating to Applicable Entities.--For 
purposes of this section--
            ``(1) In general.--An applicable entity for any taxable 
        year shall--
                    ``(A) compute the current profits, normal return, 
                and excess profits of such entity for such taxable year 
                in the same manner as if such entity were an applicable 
                taxpayer, except that subsection (c) shall be applied 
                by substituting the entity's `non-separately stated 
                taxable income' for the entity's `taxable income', and
                    ``(B) report to each partner, shareholder, or other 
                holder of an ownership interest in such entity its 
                allocable share of the entity's excess profits.
            ``(2) Applicable entity.--The term `applicable entity' 
        means, with respect to any taxable year, an entity--
                    ``(A) which is a partnership, S corporation, or 
                other pass-thru entity specified by the Secretary, and
                    ``(B) with respect to which the requirements of 
                subparagraphs (A) and (B) of subsection (b)(1) are met 
                for such taxable year, determined in the same manner as 
                if such entity were an applicable taxpayer.
            ``(3) Allocable share.--A person's allocable share of the 
        excess profits shall be determined in the same manner as--
                    ``(A) in the case of a partnership, such person's 
                distributive share of the non-separately stated taxable 
                income of the partnership,
                    ``(B) in the case of an S corporation, such 
                person's pro rata share of the non-separately stated 
                taxable income of the S corporation, and
                    ``(C) in the case of any other pass-thru entity, 
                such person's share (as determined under rules 
                prescribed by the Secretary) of the non-separately 
                stated taxable income of the entity.
            ``(4) Non-separately stated taxable income.--The term `non-
        separately stated taxable income' means taxable income computed 
        under--
                    ``(A) section 703(a) in the case of a partnership,
                    ``(B) section 1366(a)(1)(B) in the case of an S 
                corporation, and
                    ``(C) rules prescribed by the Secretary in the case 
                of any other pass-thru entity.
    ``(f) Rules for Certain Foreign Income Attributable to Imports Into 
the United States.--For purposes of this section--
            ``(1) In general.--In the case of any oil and gas import 
        income of an applicable taxpayer for any taxable year--
                    ``(A) in computing such taxpayer's current profits 
                for such taxable year--
                            ``(i) such oil and gas import income (and 
                        any deductions allocable to such income) shall 
                        be taken into account, and
                            ``(ii) subsection (c)(3) shall not apply to 
                        any subpart F income, global intangible low-
                        taxed income, or foreign-derived intangible 
                        income of such taxpayer to the extent such 
                        income is attributable to such oil and gas 
                        import income, and
                    ``(B) gross receipts taken into account in 
                computing such oil and gas import income shall be taken 
                into account in computing the gross receipts of such 
                taxpayer for purposes of subsection (b)(1)(A) .
            ``(2) Oil and gas import income.--
                    ``(A) Controlled foreign corporations.--In the case 
                of a United States shareholder of a controlled foreign 
                corporation, the term `oil and gas import income' 
                means, with respect to such shareholder for such 
                taxable year, such shareholder's pro rata share of 
                combined foreign oil and gas income of the controlled 
                foreign corporation which is derived from oil and gas 
                imported into the United States.
                    ``(B) Authority to include other income.--The 
                Secretary may prescribe such regulations or other 
                guidance to include in oil and gas import income of an 
                applicable taxpayer its pro rata share of any combined 
                foreign oil and gas income of any person related to the 
                taxpayer (other than a controlled foreign corporation) 
                which is derived from oil and gas imported into the 
                United States if the Secretary determines such 
                inclusion is necessary to prevent the avoidance of the 
                tax imposed by this section.
            ``(3) Definitions and special rules.--
                    ``(A) In general.--The term `combined foreign oil 
                and gas income' has the meaning given such term by 
                section 907(b)(1), except that in applying paragraphs 
                (1) and (2) of section 907(c) for purposes of section 
                907(b)(1), the term `income' shall be substituted for 
                `taxable income' each place it appears.
                    ``(B) Pro rata share.--An applicable taxpayer's pro 
                rata share of any oil and gas import income shall be 
                determined under rules similar to the rules under 
                section 951(a)(2).
                    ``(C) Prevention of double counting.--Oil and gas 
                import income (and any deductions allocable to such 
                income) shall not be taken into account under paragraph 
                (1) to the extent already taken into account.
    ``(g) Regulations or Other Guidance.--The Secretary shall prescribe 
such regulations or other guidance as is necessary to carry out this 
section, including regulations or other guidance for the application of 
subsections (b)(2) and (e), including regulations or other guidance--
            ``(1) for the application of such subsections in the case 
        of tiered entities,
            ``(2) for determining a person's allocable share where the 
        non-separately stated taxable income of an entity is a loss, 
        and
            ``(3) providing rules for the reporting, including through 
        tiered entities, of excess profits.
    ``(h) Termination.--This section shall not apply to any taxable 
year beginning after December 31, 2025.''.
    (b) Tax Not Taken Into Account in Computing Estimated Tax.--
Paragraph (1) of section 6654(f) of the Internal Revenue Code of 1986 
is amended by inserting ``59B or'' before ``143(m)''.
    (c) Conforming Amendment.--The table of subchapters for subchapter 
A of chapter 1 of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new item:

           ``PART VIII--Windfall Profits From Oil and Gas''.

    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.
    (e) Tax Treated as Rate Change.--For purposes of section 15(a) of 
the Internal Revenue Code of 1986, the tax imposed by the amendments 
made by this section shall be treated in the same manner as a change in 
the rate of tax under chapter 1 of such Code.

SEC. 3. EXCISE TAX ON REPURCHASE OF CORPORATE STOCK.

    (a) In General.--Subtitle D of the Internal Revenue Code of 1986 is 
amended by inserting after chapter 36 the following new chapter:

              ``CHAPTER 37--REPURCHASE OF CORPORATE STOCK

``Sec. 4502. Repurchase of corporate stock by oil and gas companies.

``SEC. 4502. REPURCHASE OF CORPORATE STOCK BY OIL AND GAS COMPANIES.

    ``(a) General Rule.--There is hereby imposed on each covered 
corporation a tax equal to 25 percent of the fair market value of any 
stock of the corporation which is repurchased by such corporation 
during the taxable year.
    ``(b) Covered Corporation.--For purposes of this section, the term 
`covered corporation' means, with respect to any repurchase, any 
domestic corporation--
            ``(1) the stock of which is traded on an established 
        securities market (within the meaning of section 7704(b)(1)), 
        and
            ``(2) which is an applicable taxpayer (as defined in 
        section 59B) for the taxable year in which such repurchase 
        occurs.
    ``(c) Repurchase.--For purposes of this section--
            ``(1) In general.--The term `repurchase' means--
                    ``(A) a redemption within the meaning of section 
                317(b) with regard to the stock of a covered 
                corporation, and
                    ``(B) any transaction determined by the Secretary 
                to be economically similar to a transaction described 
                in subparagraph (A).
            ``(2) Treatment of purchases by specified affiliates.--
                    ``(A) In general.--The acquisition of stock of a 
                covered corporation by a specified affiliate of such 
                covered corporation, from a person who is not the 
                covered corporation or a specified affiliate of such 
                covered corporation, shall be treated as a repurchase 
                of the stock of the covered corporation by such covered 
                corporation.
                    ``(B) Specified affiliate.--For purposes of this 
                section, the term `specified affiliate' means, with 
                respect to any corporation--
                            ``(i) any corporation more than 50 percent 
                        of the stock of which is owned (by vote or by 
                        value), directly or indirectly, by such 
                        corporation, and
                            ``(ii) any partnership more than 50 percent 
                        of the capital interests or profits interests 
                        of which is held, directly or indirectly, by 
                        such corporation.
            ``(3) Adjustment.--The amount taken into account under 
        subsection (a) with respect to any stock repurchased by a 
        covered corporation shall be reduced by the fair market value 
        of any stock issued by the covered corporation during the 
        taxable year, including the fair market value of any stock 
        issued or provided to employees of such covered corporation or 
        a specified affiliate of such covered corporation during the 
        taxable year, whether or not such stock is issued or provided 
        in response to the exercise of an option to purchase such 
        stock.
    ``(d) Special Rules for Acquisition of Stock of Certain Foreign 
Corporations.--
            ``(1) In general.--In the case of an acquisition of stock 
        of an applicable foreign corporation by a specified affiliate 
        of such corporation (other than a foreign corporation or a 
        foreign partnership (unless such partnership has a domestic 
        entity as a direct or indirect partner)) from a person who is 
        not the applicable foreign corporation or a specified affiliate 
        of such applicable foreign corporation, for purposes of this 
        section--
                    ``(A) such specified affiliate shall be treated as 
                a covered corporation with respect to such acquisition,
                    ``(B) such acquisition shall be treated as a 
                repurchase of stock of a covered corporation by such 
                covered corporation, and
                    ``(C) the adjustment under subsection (c)(3) shall 
                be determined only with respect to stock issued or 
                provided by such specified affiliate to employees of 
                the specified affiliate.
            ``(2) Surrogate foreign corporations.--In the case of a 
        repurchase of stock of a covered surrogate foreign corporation 
        by such covered surrogate foreign corporation, or an 
        acquisition of stock of a covered surrogate foreign corporation 
        by a specified affiliate of such corporation, for purposes of 
        this section--
                    ``(A) the expatriated entity with respect to such 
                covered surrogate foreign corporation shall be treated 
                as a covered corporation with respect to such 
                repurchase or acquisition,
                    ``(B) such repurchase or acquisition shall be 
                treated as a repurchase of stock of a covered 
                corporation by such covered corporation, and
                    ``(C) the adjustment under subsection (c)(3) shall 
                be determined only with respect to stock issued or 
                provided by such expatriated entity to employees of the 
                expatriated entity.
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) Applicable foreign corporation.--The term 
                `applicable foreign corporation' means any foreign 
                corporation--
                            ``(i) the stock of which is traded on an 
                        established securities market (within the 
                        meaning of section 7704(b)(1)), and
                            ``(ii) with respect to which requirements 
                        of subparagraphs (B) and (C) of subsection 
                        (b)(1) are met with respect such corporation, 
                        except that in applying such subparagraphs, the 
                        taxable year of the acquisition of stock shall 
                        be substituted for the taxable year of purchase 
                        of stock.
                    ``(B) Covered surrogate foreign corporation.--The 
                term `covered surrogate foreign corporation' means any 
                foreign corporation--
                            ``(i) which is a surrogate foreign 
                        corporation (as determined under section 
                        7874(a)(2)(B) by substituting `September 20, 
                        2021' for `March 4, 2003' each place it 
                        appears) the stock of which is traded on an 
                        established securities market (within the 
                        meaning of section 7704(b)(1)), but only with 
                        respect to taxable years which include any 
                        portion of the applicable period with respect 
                        to such corporation under section 7874(d)(1), 
                        and
                            ``(ii) with respect to which requirements 
                        of subparagraphs (B) and (C) of subsection 
                        (b)(1) are met with respect to the taxable year 
                        of the repurchase of stock of such corporation.
                    ``(C) Expatriated entity.--The term `expatriated 
                entity' has the meaning given such term by section 
                7874(a)(2)(A).
    ``(e) Exceptions.--Subsection (a) shall not apply--
            ``(1) to the extent that the repurchase is part of a 
        reorganization (within the meaning of section 368(a)) and no 
        gain or loss is recognized on such repurchase by the 
        shareholder under chapter 1 by reason of such reorganization,
            ``(2) in any case in which the stock repurchased is, or an 
        amount of stock equal to the value of the stock repurchased is, 
        contributed to an employer-sponsored retirement plan, employee 
        stock ownership plan, or similar plan,
            ``(3) in any case in which the total value of the stock 
        repurchased during the taxable year does not exceed $1,000,000,
            ``(4) to repurchases by a regulated investment company (as 
        defined in section 851) or a real estate investment trust, or
            ``(5) to the extent that the repurchase is treated as a 
        dividend for purposes of this title.
    ``(f) Regulations and Guidance.--The Secretary shall prescribe such 
regulations and other guidance as are necessary or appropriate to 
administer and to prevent the avoidance of the purposes of this 
section, including regulations and other guidance--
            ``(1) to prevent the abuse of the exceptions provided by 
        subsection (e),
            ``(2) to address special classes of stock and preferred 
        stock, and
            ``(3) for the application of the rules under subsection 
        (d).
    ``(g) Termination.--This section shall not apply to repurchases 
after December 31, 2025.''.
    (b) Tax Not Deductible.--Paragraph (6) of section 275(a) of the 
Internal Revenue Code of 1986 is amended by inserting ``37,'' before 
``41''.
    (c) Clerical Amendment.--The table of chapters for subtitle D of 
the Internal Revenue Code of 1986 is amended by inserting after the 
item relating to chapter 36 the following new item:

             ``Chapter 37--Repurchase of Corporate Stock''.

    (d) Effective Date.--The amendments made by this section shall 
apply to repurchases (within the meaning of section 4502(c) of the 
Internal Revenue Code of 1986, as added by this section) of stock after 
the date of the enactment of this Act.

SEC. 4. TERMINATION OF LIFO INVENTORIES FOR CERTAIN OIL AND GAS 
              COMPANIES.

    (a) In General.--Section 472 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(h) Termination for Oil and Natural Gas Companies.--
            ``(1) Termination.--Except as provided in paragraph (2), 
        subsection (a) shall not apply to any trade or business 
        primarily consisting of one or more of the following:
                    ``(A) The production of oil or natural gas.
                    ``(B) The refining of oil or natural gas.
                    ``(C) The processing of oil or natural gas.
                    ``(D) The transportation of oil or natural gas.
                    ``(E) The distribution of oil or natural gas.
            ``(2) Exception.--
                    ``(A) In general.--Paragraph (1) shall not apply to 
                any trade or business of a person for any taxable year 
                if the average annual gross receipts of all trades or 
                businesses of such person for the 3-taxable-year period 
                ending with the taxable year which precedes such 
                taxable year does not exceed $1,000,000,000.
                    ``(B) Applicable rules.--For purposes of 
                subparagraph (A) rules similar to the rules of 
                paragraphs (2) and (3) of section 448(c) shall 
                apply.''.
    (b) Change in Method of Accounting.--If any taxpayer is required by 
the amendments made by this section to change its method of accounting 
in taxable years beginning after December 31, 2022, then, for purposes 
of section 481 of the Internal Revenue Code of 1986--
            (1) such change shall be treated as initiated by the 
        taxpayer; and
            (2) such change shall be treated as made with the consent 
        of the Secretary of the Treasury.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2022.
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