II 

109TH CONGRESS 

1ST SESSION S. 2103 

To impose a temporary windfall profits tax on crude oil and provide a 

rebate to each household from the revenues resulting from such tax. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 14, 2005 

Mr. REID (for Mr. LIEBERMAN) introduced the following bill; which was read 

twice and referred to the Committee on Finance 

A BILL 

To impose a temporary windfall profits tax on crude oil 

and provide a rebate to each household from the revenues 

resulting from such tax. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. TEMPORARY WINDFALL PROFITS TAX. 

4 (a) IN GENERAL.—Subtitle E of the Internal Rev5 enue Code of 1986 (relating to alcohol, tobacco, and cer6 tain other excise taxes) is amended by adding at the end 

7 thereof the following new chapter: 

8 ‘‘CHAPTER 56—TEMPORARY WINDFALL 

9 PROFITS ON CRUDE OIL 

‘‘Sec. 5896. Imposition of tax. 
2 

•S 2103 IS

‘‘Sec. 5897. Windfall profit; removal price; adjusted base price; qualified investment. 

‘‘Sec. 5898. Special rules and definitions. 

1 ‘‘SEC. 5896. IMPOSITION OF TAX. 

2 ‘‘(a) IN GENERAL.—In addition to any other tax im3 posed under this title, there is hereby imposed on any inte4 grated oil company (as defined in section 291(b)(4)) an 

5 excise tax equal to 50 percent of the windfall profit from 

6 all barrels of taxable crude oil removed from the property 

7 during taxable years beginning in 2005. 

8 ‘‘(b) FRACTIONAL PART OF BARREL.—In the case of 

9 a fraction of a barrel, the tax imposed by subsection (a) 

10 shall be the same fraction of the amount of such tax im11 posed on the whole barrel. 

12 ‘‘(c) TAX PAID BY PRODUCER.—The tax imposed by 

13 this section shall be paid by the producer of the taxable 

14 crude oil. 

15 ‘‘SEC. 5897. WINDFALL PROFIT; REMOVAL PRICE; AD16 JUSTED BASE PRICE. 

17 ‘‘(a) GENERAL RULE.—For purposes of this chapter, 

18 the term ‘windfall profit’ means the excess of the removal 

19 price of the barrel of taxable crude oil over the adjusted 

20 base price of such barrel. 

21 ‘‘(b) REMOVAL PRICE.—For purposes of this chap22 ter— 

23 ‘‘(1) IN GENERAL.—Except as otherwise pro24 vided in this subsection, the term ‘removal price’ 
3 

•S 2103 IS

1 means the amount for which the barrel of taxable 

2 crude oil is sold. 

3 ‘‘(2) SALES BETWEEN RELATED PERSONS.—In 

4 the case of a sale between related persons, the re5 moval price shall not be less than the constructive 

6 sales price for purposes of determining gross income 

7 from the property under section 613. 

8 ‘‘(3) OIL REMOVED FROM PROPERTY BEFORE

9 SALE.—If crude oil is removed from the property be10 fore it is sold, the removal price shall be the con11 structive sales price for purposes of determining 

12 gross income from the property under section 613. 

13 ‘‘(4) REFINING BEGUN ON PROPERTY.—If the 

14 manufacture or conversion of crude oil into refined 

15 products begins before such oil is removed from the 

16 property— 

17 ‘‘(A) such oil shall be treated as removed 

18 on the day such manufacture or conversion be19 gins, and 

20 ‘‘(B) the removal price shall be the con21 structive sales price for purposes of determining 

22 gross income from the property under section 

23 613. 

24 ‘‘(5) PROPERTY.—The term ‘property’ has the 

25 meaning given such term by section 614. 
4 

•S 2103 IS

1 ‘‘(c) ADJUSTED BASE PRICE DEFINED.—For pur2 poses of this chapter, the term ‘adjusted base price’ means 

3 $40 for each barrel of taxable crude oil. 

4 ‘‘SEC. 5898. SPECIAL RULES AND DEFINITIONS . 

5 ‘‘(a) WITHHOLDING AND DEPOSIT OF TAX.—The 

6 Secretary shall provide such rules as are necessary for the 

7 withholding and deposit of the tax imposed under section 

8 5896 on any taxable crude oil. 

9 ‘‘(b) RECORDS AND INFORMATION.—Each taxpayer 

10 liable for tax under section 5896 shall keep such records, 

11 make such returns, and furnish such information (to the 

12 Secretary and to other persons having an interest in the 

13 taxable crude oil) with respect to such oil as the Secretary 

14 may by regulations prescribe. 

15 ‘‘(c) RETURN OF WINDFALL PROFIT TAX.—The Sec16 retary shall provide for the filing and the time of such 

17 filing of the return of the tax imposed under section 5896. 

18 ‘‘(d) DEFINITIONS.—For purposes of this chapter— 

19 ‘‘(1) PRODUCER.—The term ‘producer’ means 

20 the holder of the economic interest with respect to 

21 the crude oil. 

22 ‘‘(2) CRUDE OIL.— 

23 ‘‘(A) IN GENERAL.—The term ‘crude oil’ 

24 includes crude oil condensates and natural gas25 oline. 
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1 ‘‘(B) EXCLUSION OF NEWLY DISCOVERED

2 OIL.—Such term shall not include any oil pro3 duced from a well drilled after the date of the 

4 enactment of the chapter, except with respect to 

5 any oil produced from a well drilled after such 

6 date on any proven oil or gas property (within 

7 the meaning of section 613A(c)(9)(A)). 

8 ‘‘(3) BARREL.—The term ‘barrel’ means 42 

9 United States gallons. 

10 ‘‘(e) ADJUSTMENT OF REMOVAL PRICE.—In deter11 mining the removal price of oil from a property in the case 

12 of any transaction, the Secretary may adjust the removal 

13 price to reflect clearly the fair market value of oil removed. 

14 ‘‘(f) REGULATIONS.—The Secretary shall prescribe 

15 such regulations as may be necessary or appropriate to 

16 carry out the purposes of this chapter.’’. 

17 (b) CLERICAL AMENDMENT.—The table of chapters 

18 for subtitle E of the Internal Revenue Code of 1986 is 

19 amended by adding at the end the following new item: 

‘‘CHAPTER 56. Temporary Windfall Profit on Crude Oil.’’. 

20 (c) DEDUCTIBILITY OF WINDFALL PROFIT TAX.— 

21 The first sentence of section 164(a) of the Internal Rev22 enue Code of 1986 (relating to deduction for taxes) is 

23 amended by inserting after paragraph (5) the following 

24 new paragraph: 
6 

•S 2103 IS

1 ‘‘(6) The windfall profit tax imposed by section 

2 5896.’’. 

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning in 2005. 

5 SEC. 2. HOUSEHOLD REBATE. 

6 (a) IN GENERAL.—Subchapter B of chapter 65 of the 

7 Internal Revenue Code of 1986 (relating to rules of special 

8 application in the case of abatements, credits, and re9 funds) is amended by adding at the end the following new 

10 section: 

11 ‘‘SEC. 6430. HOUSEHOLD REBATE. 

12 ‘‘(a) GENERAL RULE.—Except as otherwise provided 

13 in this section, each individual shall be treated as having 

14 made a payment against the tax imposed by chapter 1 for 

15 the taxable year beginning in 2005 in an amount equal 

16 to $450. 

17 ‘‘(b) REMITTANCE OF PAYMENT.—The Secretary 

18 shall remit to each taxpayer the payment described in sub19 section (a) not later than March 1, 2006. 

20 ‘‘(c) CERTAIN PERSONS NOT ELIGIBLE.—This sec21 tion shall not apply to— 

22 ‘‘(1) any taxpayer who did not have any ad23 justed gross income for the preceding taxable year or 

24 whose adjusted gross income for such preceding tax25 able year exceeded $40,000, 
7 

•S 2103 IS

1 ‘‘(2) any individual with respect to whom a de2 duction under section 151 is allowable to another 

3 taxpayer for the taxable year beginning in 2005, 

4 ‘‘(3) any estate or trust, or 

5 ‘‘(4) any nonresident alien individual.’’. 

6 (b) CONFORMING AMENDMENT.—Section 1324(b)(2) 

7 of title 31, United States Code, is amended by inserting 

8 before the period ‘‘, or from section 6430’’. 

9 (c) CLERICAL AMENDMENT.—The table of sections 

10 for subchapter B of chapter 65 of the Internal Revenue 

11 Code of 1986 is amended by adding at the end the fol12 lowing new item: 

‘‘Sec. 6430. Household rebate.’’. 

13 (d) EFFECTIVE DATE.—The amendments made by 

14 this section shall take effect on the date of the enactment 

15 of this Act. 

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