End Oil and Gas Tax Subsidies Act of 2023

To amend the Internal Revenue Code of 1986 to repeal fossil fuel subsidies for oil companies, and for other purposes. 1. Short title This Act may be cited as the End Oil and Gas Tax Subsidies Act of 2023 2. Amortization of geological and geophysical expenditures (a) In general Section 167(h) (1) by striking 24-month period 7-year period (2) by striking paragraph (5). (b) Effective date The amendment made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2022. 3. Producing oil and gas from marginal wells (a) In general Subpart D of part IV of subchapter A of chapter 1 (b) Conforming amendment Section 38(b) of such Code is amended by striking paragraph (19). (c) Effective date The amendment made by subsection (a) shall apply to credits determined for taxable years beginning after December 31, 2022. 4. Enhanced oil recovery credit (a) In general Subpart D of part IV of subchapter A of chapter 1 (b) Conforming amendment Section 38(b) of such Code is amended by striking paragraph (6). (c) Effective date The amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2022. 5. Intangible drilling and development costs in the case of oil and gas wells (a) In general Subsection (c) of section 263 This subsection shall not apply to amounts paid or incurred by a taxpayer with respect to an oil or gas well after December 31, 2022. (b) Effective date The amendment made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2022. 6. Repeal of percentage depletion for oil and gas wells (a) In general Part I of subchapter I of chapter 1 (b) Conforming amendments (1) Subsection (d) of section 45H of such Code is amended— (A) by striking For purposes of this section (1) In general For purposes of this section , (B) by striking (within the meaning of section 613A(d)(3)) (C) by adding at the end the following new paragraph: (2) Related person For purposes of this subsection, a person is a related person with respect to the taxpayer if a significant ownership interest in either the taxpayer or such person is held by the other, or if a third person has a significant ownership interest in both the taxpayer and such person. For purposes of the preceding sentence, the term significant ownership interest (A) with respect to any corporation, 5 percent or more in value of the outstanding stock of such corporation, (B) with respect to a partnership, 5 percent or more interest in the profits or capital of such partnership, and (C) with respect to an estate or trust, 5 percent or more of the beneficial interests in such estate or trust. For purposes of determining a significant ownership interest, an interest owned by or for a corporation, partnership, trust, or estate shall be considered as owned directly both by itself and proportionately by its shareholders, partners, or beneficiaries, as the case may be. . (2) Section 57(a)(1) of such Code is amended by striking the last sentence. (3) Section 291(b)(4) of such Code is amended by adding at the end the following: Any reference in the preceding sentence to section 613A shall be treated as a reference to such section as in effect prior to the date of the enactment of the End Oil and Gas Tax Subsidies Act of 2023 (4) Section 613(d) of such Code is amended by striking Except as provided in section 613A, in the case of In the case of (5) Section 613(e) of such Code is amended— (A) by striking or section 613A (B) by striking any amount described in section 613A(d)(5) any lease bonus, advance royalty, or other amount payable without regard to production from property (6) Section 705(a) of such Code is amended— (A) by inserting and (B) by striking ; and (C) by striking paragraph (3). (7) Section 993(c)(2)(C) of such Code is amended by striking section 613 or 613A section 613 (determined without regard to subsection (d) thereof) (8) Section 1202(e)(3)(D) of such Code is amended by striking section 613 or 613A section 613 (determined without regard to subsection (d) thereof) (9) Section 1367(a)(2) of such Code is amended by inserting and , and (10) Section 1446(c) of such Code is amended by striking paragraph (2) and by redesignating paragraph (3) as paragraph (2). (c) Effective date The amendments made by this section shall apply to property placed in service after December 31, 2022. 7. Repeal of deduction for tertiary injectants (a) In general Part VI of subchapter B of chapter 1 (b) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2022. 8. Repeal of exception to passive loss limitations for working interests in oil and gas properties (a) In general Section 469(c)(3) (C) Termination Subparagraph (A) shall not apply with respect to any taxable year beginning after the date of the enactment of this Act. . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2022. 9. Deduction for qualified business income not allowed with respect to oil and gas activities (a) In general Section 199A(c)(3)(B) (vii) The production, refining, processing, transportation, or distribution of oil, gas, or any primary product thereof. . (b) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2022. 10. Prohibition on using last-in, first-out accounting for oil and gas companies (a) In general Section 472 (h) Oil and gas companies (1) In general Notwithstanding any other provision of this section, a major integrated oil company may not use the method provided in subsection (b) in inventorying of any goods. (2) Major integrated oil company For purposes of this subsection, the term major integrated oil company (A) which has an average daily worldwide production of crude oil of at least 500,000 barrels for the taxable year, (B) which has gross receipts in excess of $1,000,000,000 for the taxable year, and (C) the average daily refinery runs of the taxpayer and related persons for the taxable year exceed 75,000 barrels. (3) Special rules (A) Crude production and gross receipts For purposes of subparagraphs (A) and (B) of paragraph (2)— (i) Controlled groups and common control All persons treated as a single employer under subsections (a) and (b) of section 52 shall be treated as 1 person. (ii) Short taxable years In case of a short taxable year, the rule under section 448(c)(3)(B) shall apply. (B) Average daily refinery runs For purposes of paragraph (2)(C)— (i) In general The average daily refinery runs for any taxable year shall be determined by dividing the aggregate refinery runs for the taxable year by the number of days in the taxable year. (ii) Related persons A person is a related person with respect to the taxpayer if a significant ownership interest in either the taxpayer or such person is held by the other, or if a third person has a significant ownership interest in both the taxpayer and such person. (iii) Significant ownership interest For purposes of clause (ii), the term significant ownership interest (I) with respect to any corporation, 15 percent or more in value of the outstanding stock of such corporation, (II) with respect to a partnership, 15 percent or more interest in the profits or capital of such partnership, and (III) with respect to an estate or trust, 15 percent or more of the beneficial interests in such estate or trust. For purposes of determining a significant ownership interest, an interest owned by or for a corporation, partnership, trust, or estate shall be considered as owned directly both by itself and proportionately by its shareholders, partners, or beneficiaries, as the case may be. . (b) Effective date and special rule (1) In general The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2022. (2) Change in method of accounting In the case of any taxpayer required by the amendment made by this section to change its method of accounting for its first taxable year beginning after the date of the enactment of this Act— (A) such change shall be treated as initiated by the taxpayer, (B) such change shall be treated as made with the consent of the Secretary of the Treasury, and (C) the net amount of the adjustments required to be taken into account by the taxpayer under section 481 11. Modifications of foreign tax credit rules applicable to dual capacity taxpayers (a) In general Section 901 (n) Special rules relating to dual capacity taxpayers (1) General rule Notwithstanding any other provision of this chapter, any amount paid or accrued by a dual capacity taxpayer to a foreign country or possession of the United States for any period with respect to combined foreign oil and gas income (as defined in section 907(b)(1)) shall not be considered a tax to the extent such amount exceeds the amount (determined in accordance with regulations) which would have been required to be paid if the taxpayer were not a dual capacity taxpayer. (2) Dual capacity taxpayer For purposes of this subsection, the term dual capacity taxpayer (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. . (b) Effective date (1) In general The amendments made by this section shall apply to taxes paid or accrued in taxable years beginning after December 31, 2022. (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. 12. Clarification of tar sands as crude oil for excise tax purposes (a) In general Paragraph (1) of section 4612(a) (1) Crude oil The term crude oil . (b) Regulatory authority To address other types of crude oil and petroleum products Subsection (a) of section 4612 of such Code is amended by adding at the end the following new paragraph: (10) Regulatory authority to address other types of crude oil and petroleum products Under such regulations as the Secretary may prescribe, the Secretary may include as crude oil or as a petroleum product subject to tax under section 4611, any fuel feedstock or finished fuel product customarily transported by pipeline, vessel, railcar, or tanker truck if the Secretary determines that— (A) the classification of such fuel feedstock or finished fuel product is consistent with the definition of oil under the Oil Pollution Act of 1990, and (B) such fuel feedstock or finished fuel product is produced in sufficient commercial quantities as to pose a significant risk of hazard in the event of a discharge. . (c) Technical amendment Paragraph (2) of section 4612(a) of such Code is amended by striking from a well located (d) Effective date The amendments made by this section shall take effect on the date of the enactment of this Act.

Summary: End Oil and Gas Tax Subsidies Act of 2023 This bill limits or repeals certain fossil fuel oil and gas subsidies for oil companies. Specifically, it increases to seven years the amortization period for geological and geophysical expenditures; repeals the tax credits for producing oil and gas from marginal wells and for enhanced oil recovery; repeals the tax deduction for the intangible drilling and development costs of oil and gas wells; repeals percentage depletion; repeals the tax deduction for tertiary injectant expenses; repeals the passive loss exception for working interests in oil and gas property; denies the tax deduction for income attributable to domestic production activities for oil and gas activities; prohibits the use of the last-in, first-out (LIFO) accounting method by major integrated oil companies; limits the foreign tax credit for dual capacity taxpayers (i.e., taxpayers who are subject to a levy of a foreign country or U.S. possession and receive specific economic benefits from such country or possession); and expands the definition of crude oil for purposes of the excise tax on petroleum and petroleum products to include any oil derived from a bitumen or bituminous mixture (tar sands), and any oil derived from kerogen-bearing sources (oil shale).