As if retooling the one-sixth of the nation’s economy represented by health care isn’t enough to grapple with, Congress will come to grips this week with legislation aimed at drastically reducing U.S. greenhouse gas emissions. The climate bill, designed to make good on President Obama’s election campaign promise to chop carbon emissions back to 20 percent below 2005 levels by 2020, is scheduled for hearings in the Senate Committee on Environment and Public Works this week.

If you need to get up-to-speed fast on the tax implications of the proposed legislation — and let’s face it, there’s going to be some serious complexity here, if Congress decides to move ahead — a new brief from Deloitte offers a useful overview of the issues, including the vexed question of why exactly we need all the paraphernalia of a cap-and-trade system when a straight carbon tax could achieve the same thing (or could it?). There’s also an informative discussion of a recent report from the Joint Committee on Taxation (JCT) that looks at some areas of uncertainty that taxpayers would have to muddle through under a greenhouse gas program. Here are just a few of the murky spots:

• The receipt of an allocated allowance. Would the allowance be included in income when received — or when surrendered for the right to emit? Or maybe excluded until sold?

• Basis recovery of allowances and offset credits. The JCT notes five possible ways of treating allowances for purposes of recovering basis, depending on whether they’re considered as inventory; materials or supplies; business expenses; amortizable intangible property; or nonamortizable intangible property.

• International tax issues. If a U.S.-owned foreign corporation purchases and sells emissions, would the income be subject to U.S. deferral rules? If a foreign company produces offsets in the U.S., would that establish a presence for income tax purposes? How would transfer pricing work for allowances and credits?

• State tax issues. A cap-and-trade program would raise myriad issues at the state and local levels, according to Deloitte. For example, some states may treat an allowance as income even if it’s not so treated for federal tax purposes.

Even though guidance is still thin on the ground, “tax departments should begin to consider the tax data collection requirements of a cap-and-trade system and the supporting systems necessary for tax compliance, reporting, and planning,” advises Deloitte. ###