House Passes Energy Legislation

The House on April 21, 2005, by a vote of 249 to 183, passed significant energy legislation (H.R. 6). Included among the 26 titles and hundreds of sections in this legislation are nearly 20 provisions focused on tax breaks (Title XIII). The majority of these provisions are business-focused. Several are related to depreciation and amortization for natural gas gathering and distribution lines, electric transmission property, oil and gas delay rental payments and geological and geophysical expenditures. Other provisions relate to business tax credits for fuel cell power plants, allowing certain business energy credits against the alternative minimum tax, and allowing the credit for fuel from nonconventional sources to be a component of the general business credit. Additional business-focused provisions relate to nuclear decommissioning costs, treatment of prepayments for natural gas under the tax-exempt bond arbitrage rules, the small refiner exception to the oil depletion deduction, and excise taxes for diesel fuel blended with water.

For individuals, the legislation provides a credit for residential qualified photovoltaic and solar water heating property, for qualified energy efficient improvements to existing homes, and for motor vehicles with qualified advanced lean-burn technology. The legislation also allows the new residential energy credits against both the regular tax and the alternative minimum tax.

The legislation now moves to the Senate where the likelihood of passage is uncertain. The main concerns being raised with respect to the legislation are drilling in the Arctic National Wildlife Refuge, liability protection for manufacturers of the MTBE gasoline additive that has been blamed for groundwater contamination, and the concern that the legislation may have little short-term impact on high energy prices or the dependence on foreign oil. The Administration has endorsed the legislation and called for Congressional passage prior to the August recess. The tax provisions have a projected five-year cost of $4 billion, with other non-tax-related subsidies adding additional cost to the legislation. The tax breaks are not offset by revenue raisers.

AUTHOR

Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

All stories by: Wolters Kluwer Tax and Accounting