Tax Reform and the Oil and Gas Industry by Michael A. Andrews

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A great deal of attention been focused on the generous tax incentives for the renewable energy industry that were added to the "fiscal cliff " legislation during the closing hours of negotiations. Those provisions have a net cost of over $12 billion, according to Congressional Research Service (CRS) estimates. It was an enormous victory for wind and solar energy developers. Left out of that debate were provisions in the tax code that are essential to the oil and gas industry.

Within the coming months, Congress will start the process of reforming the tax code. The chairman of the House Ways and Means Committee, Representative Dave Camp (R-MI), has announced that his committee will move forward regardless of the president's agenda. Provisions in the code that have been central to the oil and gas industry will be a major target of the White House and Democrats on the tax writing committees. Wiping out most of those tax expenditures would save $38.5 billion over the next decade (according to CRS). The Administration has proposed a framework for tax reform, which includes repealing the oil and natural gas industry's ability to expense intangible drilling costs and the percentage depletion allowance for oil and natural gas wells. Recently, Senator Dick Durbin (D-IL) said "I can tell you there are still deductions, credits, special treatments under the tax code which ought to be looked at very carefully." Those provisions that have long favored oil and gas companies will be at the top of the list.

Topics:  American Taxpayer Relief Act, Fiscal Cliff, Oil & Gas, Renewable Energy, Solar Energy, Tax Incentives, Tax Reform, Wind Power

Published In: Elections & Politics Updates, Energy & Utilities Updates, Environmental Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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