I 
112TH CONGRESS 
1ST SESSION H. R. 2003 
To amend the Internal Revenue Code of 1986 to impose a tax on transactions 
in oil futures, options, and swaps, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 26, 2011 
Mr. DEFAZIO (for himself, Mr. BRALEY of Iowa, and Mr. HOLT) introduced 
the following bill; which was referred to the Committee on Ways and 
Means, and in addition to the Committee on Agriculture, for a period to 
be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to impose 
a tax on transactions in oil futures, options, and swaps, 
and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; FINDINGS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Taxing Speculators out of the Oil Market Act’’. 
(b) FINDINGS.—Congress finds the following: 
VerDate Mar 15 2010 
00:05 Jun 02, 2011
Jkt 099200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H2003.IH
H2003
jbell on DSKDVH8Z91PROD with BILLS
(1) The price of oil has risen and fallen dra-
matically over the last decade without a clear con-
nection to the laws of supply and demand. 
(2) The price of a barrel of oil predictably 
stayed beneath $20 a barrel of oil for decades. In 
the beginning of 1999, the price was under $10 a 
barrel of oil, but since then the oil market has been 
plagued by speculation and fluctuated wildly. 
(3) In late 2004, the price of oil exceeded $40 
a barrel of oil, up 400 percent in 5 years. 
(4) In late 2007, the price exceeded $80 a bar-
rel of oil, up 800 percent in 8 years. 
(5) In mid 2008, the price of oil peaked at 
$145 a barrel, up 1,450 percent in under ten years. 
(6) The price of oil collapsed in 2008 to just 
over $30 a barrel of oil. 
(7) By early 2011, the price of oil rebounded to 
almost $115 per barrel of oil. 
(8) These large price swings coincide with drop 
in demand since 2005. In 2010, the United States 
consumed 2.1 million barrels of oil per day less than 
it did 6 years ago. 
(9) Many economists have attributed this irra-
tional behavior of the oil market to the large in-
crease in speculative trading in oil derivatives. 
VerDate Mar 15 2010 
05:32 Jun 02, 2011
Jkt 099200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H2003.IH
H2003
jbell on DSKDVH8Z91PROD with BILLS
(10) A transaction tax on speculative trading 
can deter short-term speculation which will reduce 
the volatility and price of oil. 
SEC. 2. TAX ON TRANSACTIONS IN OIL FUTURES, OPTIONS, 
AND SWAPS. 
(a) IN GENERAL.—Chapter 36 of the Internal Rev-
enue Code of 1986 is amended by inserting after sub-
chapter B the following new subchapter: 
‘‘Subchapter C—Tax on Transactions in Oil 
Futures, Options, and Swaps 
‘‘Sec. 4475. Tax on transactions in oil futures, options, and swaps. 
‘‘SEC. 4475. TAX ON TRANSACTIONS IN OIL FUTURES, OP-
TIONS, AND SWAPS. 
‘‘(a) IMPOSITION OF TAX.— 
‘‘(1) FUTURES.—There is hereby imposed a tax 
on each covered transaction in an oil futures con-
tract of 0.01 percent of the value of the futures in-
struments involved in such transaction. 
‘‘(2) OPTIONS.—There is hereby imposed a tax 
on each covered transaction in an oil option of 0.01 
percent of the premium paid on the option for a fu-
tures instruments involved in such transaction. 
‘‘(3) SWAPS.—There is hereby imposed a tax on 
each covered transaction in an oil swap of 0.01 per-
cent of the value of the underlying assets involved in 
VerDate Mar 15 2010 
00:05 Jun 02, 2011
Jkt 099200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H2003.IH
H2003
jbell on DSKDVH8Z91PROD with BILLS
such transaction for each year until the swap con-
tact maturity. 
‘‘(b) BY WHOM PAID.— 
‘‘(1) IN GENERAL.—The tax imposed by this 
section shall be paid by— 
‘‘(A) the trading facility on which the 
transaction occurs, or 
‘‘(B) if such transaction does not occur on 
a trading facility, by the buyer of the trans-
action. 
‘‘(2) WITHHOLDING
IF
BUYER
NOT
UNITED 
STATES PERSON.—See section 1447 for withholding 
by seller if buyer is a foreign person. 
‘‘(c) EXCEPTION FOR COMMERCIAL TRADERS.—The 
tax imposed by this section shall not apply to any trans-
action if— 
‘‘(1) either party to the transaction is— 
‘‘(A) classified by the Commodity Futures 
Trading Commission as a commercial trader 
with respect to oil, or 
‘‘(B) a financial institution acting on be-
half of such a party (but only if the financial 
institution does not at any time acquire owner-
ship of the security), and 
VerDate Mar 15 2010 
05:32 Jun 02, 2011
Jkt 099200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H2003.IH
H2003
jbell on DSKDVH8Z91PROD with BILLS
‘‘(2) the transaction is a bona fide hedging 
transaction (within the meaning of section 4a(c) of 
the Commodity Exchange Act). 
‘‘(d) DEFINITIONS.—For purposes of this section— 
‘‘(1) COVERED TRANSACTION.—The term ‘cov-
ered transaction’ means any purchase or sale of an 
oil futures contract, an oil option or oil swap con-
tract if— 
‘‘(A) such purchase or sale on a trading fa-
cility is located in the United States, or 
‘‘(B) the purchaser or seller is a United 
States person. 
‘‘(2) OIL FUTURES CONTRACT.—The term ‘oil 
futures contract’ means any contract of sale of oil 
for future delivery (within the meaning of the Com-
modity Exchange Act). 
‘‘(3) OIL OPTION.—The term ‘oil option’ means 
any option on an oil futures transaction. 
‘‘(4) OIL SWAP CONTRACT.—The term ‘oil swap 
contract’ means any contract of sale of oil involving 
a swap. 
‘‘(5) TRADING
FACILITY.—The term ‘trading 
facility’ has the meaning given to such term by the 
Commodity Exchange Act. 
VerDate Mar 15 2010 
05:32 Jun 02, 2011
Jkt 099200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H2003.IH
H2003
jbell on DSKDVH8Z91PROD with BILLS
‘‘(e) ADMINISTRATION.—The Secretary shall carry 
out this section in consultation with the Commodity Fu-
tures Trading Commission.’’. 
(b) WITHHOLDING.—Subchapter A of chapter 3 of 
such Code is amended by adding at the end the following 
new section: 
‘‘SEC. 1447. WITHHOLDING OF TAX ON TRANSACTIONS IN 
OIL FUTURES, OPTIONS, AND SWAPS. 
‘‘In the case of any acquisition of an oil futures con-
tract, an oil option, or an oil swap contract (as such terms 
are defined in section 4475) by a foreign person, the 
transferor shall be required to deduct and withhold a tax 
equal to the tax which would be imposed on such acquisi-
tion under section 4475 if the transferee were a United 
States person.’’. 
(c) CLERICAL AMENDMENTS.— 
(1) The table of subchapters for chapter 36 of 
such Code is amended by inserting after the item re-
lating to subchapter B the following new item: 
‘‘SUBCHAPTER C. TAX ON TRANSACTIONS IN OIL FUTURES, OPTIONS, AND 
SWAPS.’’. 
(2) The table of sections for subchapter A of 
chapter 3 of such Code is amended by adding at the 
end the following new section: 
‘‘Sec. 1447. Withholding of tax on transactions in oil futures, options, and 
swaps.’’. 
VerDate Mar 15 2010 
00:05 Jun 02, 2011
Jkt 099200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6211
E:\BILLS\H2003.IH
H2003
jbell on DSKDVH8Z91PROD with BILLS
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transactions occurring on or 
after 90 days after the date of the enactment of this Act. 
SEC. 3. AVAILABILITY TO THE COMMODITY FUTURES TRAD-
ING COMMISSION OF REVENUE FROM TAXES 
ON TRANSACTIONS IN OIL FUTURES, OP-
TIONS, AND SWAPS. 
The Commodity Exchange Act (7 U.S.C. 1 et seq.) 
is amended by inserting after section 10 the following: 
‘‘SEC. 11. AVAILABILITY TO THE COMMISSION OF REVENUE 
FROM TAXES ON TRANSACTIONS IN OIL FU-
TURES, OPTIONS, AND SWAPS. 
‘‘(a) TAX REVENUE DEPOSITED
AS OFFSETTING 
COLLECTIONS TO CFTC APPROPRIATIONS ACCOUNT.— 
All taxes collected pursuant to sections 4475 and 1447 
of the Internal Revenue Code of 1986 for any fiscal year 
shall be deposited and credited as offsetting collections to 
the account providing appropriations to the Commission. 
‘‘(b) USE
OF UNEXPENDED FUNDS
FOR PUBLIC 
DEBT REDUCTION.—Any amount credited under para-
graph (1) that remains unexpended as of the end of any 
fiscal year shall be transferred to the Treasury and used 
to reduce the public debt of the United States.’’. 
VerDate Mar 15 2010 
00:05 Jun 02, 2011
Jkt 099200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H2003.IH
H2003
jbell on DSKDVH8Z91PROD with BILLS
SEC. 4. DUTIES OF COMMODITY FUTURES TRADING COM-
MISSION. 
The Commodity Futures Trading Commission (re-
ferred to in this section as the ‘‘Commission’’) shall use 
the authority of the Commission, including the emergency 
authority of the Commission— 
(1) to subject each bank holding company (as 
defined in section 2(a) of the Bank Holding Com-
pany Act of 1956) that engages in trading subject 
to section 4475 of the Internal Revenue Code of 
1986, and each hedge fund (as defined in section 
13(h)(2) of the Bank Holding Company Act of 
1956) that buys or sells a contract of sale of oil for 
future delivery (within the meaning of the Com-
modity Exchange Act) for its own account or on be-
half of a third party, to the rules applicable to non-
commercial participants in the markets for the con-
tracts; and 
(2) to revoke immediately each staff no-action 
letter that covers a foreign board of trade that— 
(A) has established a trading terminal in 
the United States for the purpose of selling the 
contracts to, or buying the contracts from, 
United States investors; and 
VerDate Mar 15 2010 
00:05 Jun 02, 2011
Jkt 099200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H2003.IH
H2003
jbell on DSKDVH8Z91PROD with BILLS
(B) engages in trading subject to such sec-
tion 4475. 
Æ 
VerDate Mar 15 2010 
00:05 Jun 02, 2011
Jkt 099200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6301
E:\BILLS\H2003.IH
H2003
jbell on DSKDVH8Z91PROD with BILLS