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119-s-5350119th CongressWALLET

American Energy Independence and Tax Fairness Act

Sponsored By: Senator Heinrich, Martin [D-NM]

Introduced

Summary

Expands U.S. tax reach over foreign oil and gas income. This bill would widen which foreign energy earnings U.S. companies must include for tax purposes and restrict certain foreign tax credits for entities that also act as government payers.

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  • U.S. shareholders of foreign corporations would see more foreign oil and gas income counted in the Global Intangible Low-Taxed Income (GILTI) base, because the bill adds foreign oil and gas extraction income to net controlled foreign corporation tested income. These changes apply to taxable years of foreign corporations beginning after enactment and to the matching U.S. shareholder years.
  • Energy producers with oil shale and tar sands operations would have those extraction receipts treated like oil and gas under U.S. tax rules, because the bill inserts "oil shale or tar sands" into the definitions. That change applies to taxable years beginning after enactment.
  • Companies that pay host-country charges could lose foreign tax credit treatment for those payments under a new "dual capacity" rule unless the country imposes a generally applicable income tax or the payment does not exceed that tax. The special foreign tax credit rule starts for foreign corporations' taxable years beginning after December 31, 2026, and for the related U.S. shareholder years.

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Bill Overview

Analyzed Economic Effects

2 provisions identified: 0 benefits, 2 costs, 0 mixed.

Limits on foreign oil-and-gas tax credits

The bill would disallow some payments tied to combined foreign oil and gas income from counting as foreign taxes for credit purposes. Payments would not count as a ‘‘tax’’ if the foreign jurisdiction does not impose a generally applicable income tax for the period. Payments would also not count to the extent they exceed the tax that would apply if the taxpayer were not a dual capacity taxpayer. The bill defines a dual capacity taxpayer as someone who is taxed by a jurisdiction and who receives a specific economic benefit from that jurisdiction. This rule would apply to foreign corporations' tax years beginning after December 31, 2026, and to U.S. shareholders' matching years.

More U.S. tax on foreign oil

The bill would count foreign oil and gas extraction income when computing GILTI for U.S. shareholders. It would also add oil shale and tar sands to the legal definition of foreign oil and gas income. If enacted, U.S. shareholders of affected foreign companies would likely pay more U.S. tax on those earnings. The GILTI change would apply to foreign corporations' tax years beginning after enactment and to U.S. shareholder years that end with those years. The oil shale and tar sands definition change would apply to taxable years beginning after enactment.

Sponsors & CoSponsors

Sponsor

Heinrich, Martin [D-NM]

NM • D

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

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