American Energy Independence and Tax Fairness Act

This bill amends the Internal Revenue Code to change how foreign oil and gas income is taxed for U.S. shareholders of controlled foreign corporations (CFCs), expands the definition of foreign oil and gas extraction income to include oil shale and tar sands, and modifies foreign tax credit rules for certain taxpayers receiving specific economic benefits from foreign governments.

Sec. 2, Foreign oil and gas extraction income included in net CFC tested income: This section amends the calculation of net CFC tested income under section 951A of the Internal Revenue Code to include foreign oil and gas extraction income. The change applies to taxable years of foreign corporations beginning after the date of enactment, and to U.S. shareholders' taxable years that include those foreign corporation years.

Sec. 3, Foreign oil and gas extraction income and foreign oil related income to include oil shale and tar sands: This section amends section 907(c) of the Internal Revenue Code to include income from the extraction of minerals from oil shale or tar sands in the definitions of foreign oil and gas extraction income and foreign oil related income. The change applies to taxable years beginning after the date of enactment.

Sec. 4, Modifications of foreign tax credit rules applicable to certain taxpayers receiving specific economic benefits: This section adds a new subsection (n) to section 901 of the Internal Revenue Code. It provides that amounts paid by a dual capacity taxpayer (a person subject to a foreign levy who also receives a specific economic benefit from that foreign country) for combined foreign oil and gas income will not be treated as a tax if the foreign country does not impose a generally applicable income tax, or to the extent the amount exceeds what would be paid under that generally applicable income tax. The term 'dual capacity taxpayer' and 'generally applicable income tax' are defined. The amendments apply to taxable years of foreign corporations beginning after December 31, 2026, and to U.S. shareholders' taxable years that include those foreign corporation years.