What This Bill Does
This bill creates a new tax on crude oil profits for large oil companies. The tax money collected gets returned to individual American taxpayers as rebates. The bill amends the tax code to establish this windfall profits tax and set up a system to distribute the collected money back to eligible individuals.
##
Who It Affects
Large oil companies that extract or import significant amounts of crude oil
Individual taxpayers filing federal income taxes
The U.S. Treasury Department
U.S. territories with certain tax systems
##
Key Provisions
- Oil companies extracting or importing more than 300,000 barrels per day must pay an excise tax (a tax on specific goods) equal to 50 percent of the amount that crude oil prices exceed the average price from 2015-2019, adjusted for inflation (Sec. 2(a), Sec. 5896)
- The tax applies to each barrel of crude oil removed from U.S. property or imported into the U.S. each calendar quarter (Sec. 2(a), Sec. 5896)
- Individual taxpayers receive a credit against their income taxes equal to their share of the rebate amount, calculated quarterly based on how much tax money was collected (Sec. 3, Sec. 6434)
- The credit amount reduces by 5 percent for every dollar of adjusted gross income (the amount used to calculate taxes) above set limits: $150,000 for joint returns, $112,500 for head of household, and $75,000 for others (Sec. 3, Sec. 6434)
- All tax money collected from oil companies goes into a special fund called the "Protect Consumers from Gas Hikes Fund" that pays out the individual rebates (Sec. 4, Sec. 9512)
##
What Changes
If this bill becomes law, oil companies with large production volumes must pay quarterly taxes on crude oil based on price increases compared to 2015-2019 levels. Individual income taxpayers become eligible to receive rebates calculated from that tax revenue. The Internal Revenue Code gets two new tax chapters plus new rebate provisions. The Treasury Department must establish procedures for collecting the oil tax and distributing rebates to eligible individuals.
##
Important Definitions
- **Covered taxpayer**: An oil company that extracted and imported more than an average of 300,000 barrels of crude oil per day in 2019 or in the current quarter (Sec. 2(a), Sec. 5897)
- **Taxable crude oil**: Crude oil, crude oil condensates, and natural gasoline (Sec. 2(a), Sec. 5897)
- **Barrel**: 42 U.S. gallons (Sec. 2(a), Sec. 5897)
- **Eligible individual**: Any person filing taxes who is not a nonresident alien (someone not legally residing in the U.S.), not claimed as a dependent by another taxpayer, and not an estate or trust (Sec. 3, Sec. 6434)
- **Valid identification number**: A social security number issued by the Social Security Administration on or before the tax return due date (Sec. 3, Sec. 6434)
##
Effective Date
The tax applies to crude oil removed or entered after December 31, 2021, in calendar quarters ending after that date. For calendar quarters in 2022, the tax is not due until March 31, 2023. Refunds for taxable years ending during 2022 must be provided by June 30, 2023 (Sec. 2(c) and Sec. 3(d)).
II
118TH CONGRESS
1ST SESSION
S. 408
To amend the Internal Revenue Code of 1986 to impose a windfall profits
excise tax on crude oil and to rebate the tax collected back to individual
taxpayers, and for other purposes.
IN THE SENATE OF THE UNITED STATES
FEBRUARY 14, 2023
Mr. WHITEHOUSE (for himself, Mr. PADILLA, Mr. MERKLEY, Mr. BROWN,
Mr. CASEY, Ms. WARREN, Mr. MARKEY, Mr. BLUMENTHAL, Mr. BEN-
NET, Mr. MURPHY, Mr. KAINE, Mr. WARNOCK, Ms. BALDWIN, Mr.
BOOKER, Ms. STABENOW, Mr. SANDERS, Mr. REED, and Mrs. FEIN-
STEIN) 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 impose
a windfall profits excise tax on crude oil and to rebate
the tax collected back to individual taxpayers, and for
other purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Big Oil Windfall Prof-
4
its Tax Act’’.
5
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•S 408 IS
SEC. 2. WINDFALL PROFITS TAX.
1
(a) IN GENERAL.—Subtitle E of the Internal Rev-
2
enue Code of 1986 is amended by adding at the end there-
3
of the following new chapter:
4
‘‘CHAPTER 56—WINDFALL PROFITS ON
5
CRUDE OIL
6
‘‘Sec. 5896. Imposition of tax.
‘‘Sec. 5897. Definitions and special rules.
‘‘SEC. 5896. IMPOSITION OF TAX.
7
‘‘(a) IN GENERAL.—In addition to any other tax im-
8
posed under this title, in each calendar quarter there is
9
hereby imposed on any covered taxpayer an excise tax at
10
the rate determined under subsection (b) on—
11
‘‘(1) each barrel of taxable crude oil extracted
12
by the taxpayer within the United States and re-
13
moved from the property of such taxpayer during
14
the calendar quarter, and
15
‘‘(2) each barrel of taxable crude oil entered
16
into the United States during the calendar quarter
17
by
the
taxpayer
for
consumption,
use,
or
18
warehousing.
19
‘‘(b) RATE OF TAX.—
20
‘‘(1) IN GENERAL.—The rate of tax imposed by
21
this section on any barrel of taxable crude oil for
22
any calendar quarter is the product of—
23
‘‘(A) 50 percent, and
24
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•S 408 IS
‘‘(B) the excess (if any) of—
1
‘‘(i) the average price of a barrel of
2
Brent crude oil over the covered calendar
3
quarter, over
4
‘‘(ii) the average price of a barrel of
5
Brent crude oil over the period beginning
6
on January 1, 2015, and ending on De-
7
cember 31, 2019.
8
‘‘(2) INFLATION ADJUSTMENT.—
9
‘‘(A) IN GENERAL.—In the case of a cal-
10
endar quarter beginning in any taxable year be-
11
ginning after 2022, the amount determined
12
under paragraph (1)(B)(ii) shall be increased
13
by an amount equal to—
14
‘‘(i) such dollar amount, multiplied by
15
‘‘(ii) the cost-of-living adjustment de-
16
termined under section 1(f)(3) for the cal-
17
endar year in which the taxable year be-
18
gins, determined by substituting ‘2021’ for
19
‘2016’ in subparagraph (A)(ii) thereof.
20
‘‘(B) ROUNDING.—If any dollar amount,
21
after being increased under subparagraph (A),
22
is not a multiple of $0.50, such dollar amount
23
shall be rounded to the next lowest multiple of
24
$0.01.
25
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•S 408 IS
‘‘(c) FRACTIONAL PART OF BARREL.—In the case of
1
a fraction of a barrel, the tax imposed by subsection (a)
2
shall be the same fraction of the amount of such tax im-
3
posed on the whole barrel.
4
‘‘SEC. 5897. DEFINITIONS AND SPECIAL RULES.
5
‘‘(a) DEFINITIONS.—For purposes of this chapter—
6
‘‘(1) COVERED TAXPAYER.—
7
‘‘(A) IN
GENERAL.—The term ‘covered
8
taxpayer’ means, with respect to any calendar
9
quarter, any taxpayer if—
10
‘‘(i) the average daily number of bar-
11
rels of taxable crude oil extracted and im-
12
ported by the taxpayer for calendar year
13
2019 exceeded 300,000 barrels, or
14
‘‘(ii) the average daily number of bar-
15
rels of taxable crude oil extracted and im-
16
ported by the taxpayer for the calendar
17
quarter exceeds 300,000.
18
‘‘(B) AGGREGATION
RULES.—All persons
19
treated as a single employer under subsection
20
(a) or (b) of section 52 or subsection (m) or (o)
21
of section 414 shall be treated as one person for
22
purposes of paragraph (1).
23
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•S 408 IS
‘‘(2) TAXABLE CRUDE OIL.—The term ‘taxable
1
crude oil’ includes crude oil, crude oil condensates,
2
and natural gasoline.
3
‘‘(3) BARREL.—The term ‘barrel’ means 42
4
United States gallons.
5
‘‘(4) UNITED
STATES.—The term ‘United
6
States’ has the same meaning given such term under
7
section 4612.
8
‘‘(b) WITHHOLDING AND DEPOSIT OF TAX.—The
9
Secretary shall provide such rules as are necessary for the
10
withholding and deposit of the tax imposed under section
11
5896 on any taxable crude oil.
12
‘‘(c) RECORDS AND INFORMATION.—Each taxpayer
13
liable for tax under section 5896 shall keep such records,
14
make such returns, and furnish such information (to the
15
Secretary and to other persons having an interest in the
16
taxable crude oil) with respect to such oil as the Secretary
17
may by regulations prescribe.
18
‘‘(d) RETURN OF WINDFALL PROFIT TAX.—The Sec-
19
retary shall provide for the filing and the time of such
20
filing of the return of the tax imposed under section 5896.
21
‘‘(e) REGULATIONS.—The Secretary shall prescribe
22
such regulations as may be necessary or appropriate to
23
carry out the purposes of this chapter.’’.
24
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•S 408 IS
(b) CLERICAL AMENDMENT.—The table of chapters
1
for subtitle E of the Internal Revenue Code of 1986 is
2
amended by adding at the end the following new item:
3
‘‘CHAPTER 56. WINDFALL PROFIT ON CRUDE OIL’’.
(c) EFFECTIVE DATE.—
4
(1) IN GENERAL.—The amendments made by
5
this section shall apply to crude oil removed or en-
6
tered after December 31, 2021, in calendar quarters
7
ending after such date.
8
(2) SPECIAL
RULE
FOR
QUARTERS
DURING
9
2022.—In the case of any calendar quarter ending in
10
calendar year 2022, the tax imposed under section
11
5896 shall not be due before March 31, 2023.
12
SEC. 3. GASOLINE PRICE REBATES.
13
(a) IN GENERAL.—Subchapter B of chapter 65 of the
14
Internal Revenue Code of 1986 is amended by adding at
15
the end the following new section:
16
‘‘SEC. 6434. GASOLINE PRICE REBATES.
17
‘‘(a) IN GENERAL.—In the case of an eligible indi-
18
vidual, there shall be allowed as a credit against the tax
19
imposed by subtitle A for each taxable year beginning
20
after December 31, 2021, an amount equal to the sum
21
of the gasoline price rebate amount for calendar quarters
22
beginning in such taxable year.
23
‘‘(b) GASOLINE PRICE REBATE AMOUNT.—For pur-
24
poses of this section—
25
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•S 408 IS
‘‘(1) IN GENERAL.—The term ‘gasoline price
1
rebate amount’ means, with respect to any taxpayer
2
for any calendar quarter beginning in a taxable year,
3
an amount determined by the Secretary not later
4
than 30 days after the end of such calendar quarter
5
taking into account the number of eligible individ-
6
uals and the amount of revenues in the Protect Con-
7
sumers from Gas Hikes Fund resulting from the tax
8
imposed by section 5896 for the preceding calendar
9
quarter.
10
‘‘(2) SPECIAL RULE FOR JOINT RETURNS.—In
11
the case of an eligible individual filing a joint return,
12
the gasoline price rebate amount shall be 150 per-
13
cent of the amount determined under paragraph (1)
14
with respect to other taxpayers.
15
‘‘(3) LIMITATION BASED ON ADJUSTED GROSS
16
INCOME.—The amount of the credit allowed by sub-
17
section (a) (determined without regard to this sub-
18
section and subsection (e)) shall be reduced (but not
19
below zero) by 5 percent of so much of the eligible
20
individual’s adjusted gross income as exceeds—
21
‘‘(A) $150,000 in the case of a joint re-
22
turn,
23
‘‘(B) $112,500 in the case of a head of
24
household, and
25
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•S 408 IS
‘‘(C) $75,000 in any other case.
1
‘‘(c) ELIGIBLE INDIVIDUAL.—For purposes of this
2
section, the term ‘eligible individual’ means any individual
3
other than—
4
‘‘(1) any nonresident alien individual,
5
‘‘(2) any individual who is a dependent of an-
6
other taxpayer for a taxable year beginning in the
7
calendar year in which the individual’s taxable year
8
begins, and
9
‘‘(3) an estate or trust.
10
‘‘(d) DEFINITIONS AND SPECIAL RULES.—
11
‘‘(1) DEPENDENT DEFINED.—For purposes of
12
this section, the term ‘dependent’ has the meaning
13
given such term by section 152.
14
‘‘(2)
IDENTIFICATION
NUMBER
REQUIRE-
15
MENT.—
16
‘‘(A) IN GENERAL.—In the case of a re-
17
turn other than a joint return, the gasoline
18
price rebate amount in subsection (b)(1) shall
19
be treated as being zero unless the taxpayer in-
20
cludes the valid identification number of the
21
taxpayer on the return of tax for the taxable
22
year.
23
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•S 408 IS
‘‘(B) JOINT RETURNS.—In the case of a
1
joint return, the gasoline price rebate amount
2
in subsection (b)(1) shall be treated as being—
3
‘‘(i) 50 percent of the amount other-
4
wise determined without regard to this
5
paragraph if the valid identification num-
6
ber of only 1 spouse is included on the re-
7
turn of tax for the taxable year, and
8
‘‘(ii) zero if the valid identification
9
number of neither spouse is so included.
10
‘‘(C) VALID
IDENTIFICATION
NUMBER.—
11
For purposes of this paragraph, the term ‘valid
12
identification number’ means a social security
13
number issued to an individual by the Social
14
Security Administration on or before the due
15
date for filing the return for the taxable year.
16
‘‘(D) SPECIAL
RULE
FOR
MEMBERS
OF
17
THE ARMED FORCES.—Subparagraph (B) shall
18
not apply in the case where at least 1 spouse
19
was a member of the Armed Forces of the
20
United States at any time during the taxable
21
year and the valid identification number of at
22
least 1 spouse is included on the return of tax
23
for the taxable year.
24
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10
•S 408 IS
‘‘(E) COORDINATION
WITH
CERTAIN
AD-
1
VANCE PAYMENTS.—In the case of any payment
2
determined pursuant to subsection (f)(6), a
3
valid identification number shall be treated for
4
purposes of this paragraph as included on the
5
taxpayer’s return of tax if such valid identifica-
6
tion number is available to the Secretary as de-
7
scribed in such subsection.
8
‘‘(F) MATHEMATICAL OR CLERICAL ERROR
9
AUTHORITY.—Any omission of a correct valid
10
identification number required under this para-
11
graph shall be treated as a mathematical or
12
clerical error for purposes of applying section
13
6213(g)(2) to such omission.
14
‘‘(3) CREDIT TREATED AS REFUNDABLE.—The
15
credit allowed by subsection (a) shall be treated as
16
allowed by subpart C of part IV of subchapter A of
17
chapter 1.
18
‘‘(e) REGULATIONS.—The Secretary shall prescribe
19
such regulations or other guidance as may be necessary
20
or appropriate to carry out the purposes of this section.
21
‘‘(f) OUTREACH.—The Secretary shall carry out a ro-
22
bust and comprehensive outreach program to ensure that
23
all taxpayers learn of their eligibility for the credits al-
24
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•S 408 IS
lowed under this section and are provided assistance in
1
claiming such credits.’’.
2
(b) TREATMENT OF CERTAIN POSSESSIONS.—
3
(1) PAYMENTS TO POSSESSIONS WITH MIRROR
4
CODE TAX SYSTEMS.—The Secretary of the Treas-
5
ury shall pay to each possession of the United States
6
which has a mirror code tax system amounts equal
7
to the loss (if any) to that possession by reason of
8
the amendments made by this section. Such
9
amounts shall be determined by the Secretary of the
10
Treasury based on information provided by the gov-
11
ernment of the respective possession.
12
(2) PAYMENTS TO OTHER POSSESSIONS.—The
13
Secretary of the Treasury shall pay to each posses-
14
sion of the United States which does not have a mir-
15
ror code tax system amounts estimated by the Sec-
16
retary of the Treasury as being equal to the aggre-
17
gate benefits (if any) that would have been provided
18
to residents of such possession by reason of the
19
amendments made by this section if a mirror code
20
tax system had been in effect in such possession.
21
The preceding sentence shall not apply unless the re-
22
spective possession has a plan, which has been ap-
23
proved by the Secretary of the Treasury, under
24
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•S 408 IS
which such possession will promptly distribute such
1
payments to its residents.
2
(3)
INCLUSION
OF
ADMINISTRATIVE
EX-
3
PENSES.—The Secretary of the Treasury shall pay
4
to each possession of the United States to which the
5
Secretary makes a payment under paragraph (1) or
6
(2) an amount equal to the increase (if any) of the
7
administrative expenses of such possession—
8
(A) in the case of a possession described in
9
paragraph (1), by reason of the amendments
10
made by this section, and
11
(B) in the case of a possession described in
12
paragraph (2), by reason of carrying out the
13
plan described in such paragraph, or
14
the amount described in subparagraph (A) shall be
15
determined by the Secretary of the Treasury based
16
on information provided by the government of the
17
respective possession.
18
(4) COORDINATION
WITH
CREDIT
ALLOWED
19
AGAINST UNITED STATES INCOME TAXES.—No cred-
20
it shall be allowed against United States income
21
taxes under section 6434 of the Int
[Text truncated for display. Full text available on Congress.gov.]