HR 3056 EHRFSCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to repeal the authority of the Internal Revenue Service to use private debt collection companies, to delay implementation of withholding taxes on government contractors, to revise the tax rules on expatriation, and for other purposes.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

(a) Short Title- This Act may be cited as the `Tax Collection Responsibility Act of 2007'.CommentsClose CommentsPermalink





(b) Amendment of 1986 Code- Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.CommentsClose CommentsPermalink





(c) Table of Contents- The table of contents of this Act is as follows:CommentsClose CommentsPermalink





Sec. 1. Short title; amendment of 1986 Code; table of contents.CommentsClose CommentsPermalink





Sec. 2. Repeal of authority to enter into private debt collection contracts.CommentsClose CommentsPermalink





Sec. 3. Delay of application of withholding requirement on certain governmental payments for goods and services.CommentsClose CommentsPermalink





Sec. 4. Clarification of entitlement of Virgin Islands residents to protections of limitations on assessment and collection of tax.CommentsClose CommentsPermalink





Sec. 5. Revision of tax rules on expatriation.CommentsClose CommentsPermalink





Sec. 6. Repeal of suspension of certain penalties and interest.CommentsClose CommentsPermalink





Sec. 7. Increase in information return penalties.CommentsClose CommentsPermalink





Sec. 8. Time for payment of corporate estimated taxes.CommentsClose CommentsPermalink

SEC. 2. REPEAL OF AUTHORITY TO ENTER INTO PRIVATE DEBT COLLECTION CONTRACTS.

(a) In General- Subchapter A of chapter 64 is amended by striking section 6306.CommentsClose CommentsPermalink





(b) Conforming Amendments-CommentsClose CommentsPermalink





(1) Subchapter B of chapter 76 is amended by striking section 7433A.CommentsClose CommentsPermalink





(2) Section 7811 is amended by striking subsection (g).CommentsClose CommentsPermalink





(3) Section 1203 of the Internal Revenue Service Restructuring Act of 1998 is amended by striking subsection (e).CommentsClose CommentsPermalink





(4) The table of sections for subchapter A of chapter 64 is amended by striking the item relating to section 6306.CommentsClose CommentsPermalink





(5) The table of sections for subchapter B of chapter 76 is amended by striking the item relating to section 7433A.CommentsClose CommentsPermalink





(c) Effective Date-CommentsClose CommentsPermalink





(1) IN GENERAL- Except as otherwise provided in this subsection, the amendments made by this section shall take effect on the date of the enactment of this Act.CommentsClose CommentsPermalink





(2) EXCEPTION FOR EXISTING CONTRACTS, ETC- The amendments made by this section shall not apply to any contract which was entered into before July 18, 2007, and is not renewed or extended on or after such date.CommentsClose CommentsPermalink





(3) UNAUTHORIZED CONTRACTS AND EXTENSIONS TREATED AS VOID- Any qualified tax collection contract (as defined in section 6306 of the Internal Revenue Code of 1986, as in effect before its repeal) which is entered into on or after July 18, 2007, and any extension or renewal on or after such date of any qualified tax collection contract (as so defined) shall be void.CommentsClose CommentsPermalink

SEC. 3. DELAY OF APPLICATION OF WITHHOLDING REQUIREMENT ON CERTAIN GOVERNMENTAL PAYMENTS FOR GOODS AND SERVICES.

(a) In General- Subsection (b) of section 511 of the Tax Increase Prevention and Reconciliation Act of 2005 is amended by striking `December 31, 2010' and inserting `December 31, 2011'.CommentsClose CommentsPermalink





(b) Report to Congress- Not later than 6 months after the date of the enactment of this Act, the Secretary of the Treasury shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report with respect to the withholding requirements of section 3402(t) of the Internal Revenue Code of 1986, including a detailed analysis of--CommentsClose CommentsPermalink





(1) the problems, if any, which are anticipated in administering and complying with such requirements,CommentsClose CommentsPermalink





(2) the burdens, if any, that such requirements will place on governments and businesses (taking into account such mechanisms as may be necessary to administer such requirements), andCommentsClose CommentsPermalink





(3) the application of such requirements to small expenditures for services and goods by governments.CommentsClose CommentsPermalink

SEC. 4. CLARIFICATION OF ENTITLEMENT OF VIRGIN ISLANDS RESIDENTS TO PROTECTIONS OF LIMITATIONS ON ASSESSMENT AND COLLECTION OF TAX.

(a) In General- Subsection (c) of section 932 (relating to treatment of Virgin Islands residents) is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





`(5) TREATMENT OF INCOME TAX RETURN FILED WITH VIRGIN ISLANDS- An income tax return filed with the Virgin Islands by an individual claiming to be described in paragraph (1) for the taxable year shall be treated for purposes of subtitle F in the same manner as if such return were an income tax return filed with the United States for such taxable year. The preceding sentence shall not apply where such return is false or fraudulent with the intent to avoid tax or otherwise is a willful attempt in any manner to defeat or evade tax.'.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after 1986.CommentsClose CommentsPermalink

SEC. 5. REVISION OF TAX RULES ON EXPATRIATION.

(a) In General- Subpart A of part II of subchapter N of chapter 1 is amended by inserting after section 877 the following new section:CommentsClose CommentsPermalink

`SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

`(a) General Rules- For purposes of this subtitle--CommentsClose CommentsPermalink





`(1) MARK TO MARKET- All property of a covered expatriate shall be treated as sold on the day before the expatriation date for its fair market value.CommentsClose CommentsPermalink





`(2) RECOGNITION OF GAIN OR LOSS- In the case of any sale under paragraph (1)--CommentsClose CommentsPermalink





`(A) notwithstanding any other provision of this title, any gain arising from such sale shall be taken into account for the taxable year of the sale, andCommentsClose CommentsPermalink





`(B) any loss arising from such sale shall be taken into account for the taxable year of the sale to the extent otherwise provided by this title, except that section 1091 shall not apply to any such loss.CommentsClose CommentsPermalink





Proper adjustment shall be made in the amount of any gain or loss subsequently realized for gain or loss taken into account under the preceding sentence, determined without regard to paragraph (3).CommentsClose CommentsPermalink





`(3) EXCLUSION FOR CERTAIN GAIN-CommentsClose CommentsPermalink





`(A) IN GENERAL- The amount which would (but for this paragraph) be includible in the gross income of any individual by reason of paragraph (1) shall be reduced (but not below zero) by $600,000.CommentsClose CommentsPermalink





`(B) ADJUSTMENT FOR INFLATION-CommentsClose CommentsPermalink





`(i) IN GENERAL- In the case of any taxable year beginning in a calendar year after 2008, the dollar amount in subparagraph (A) shall be increased by an amount equal to--CommentsClose CommentsPermalink





`(I) such dollar amount, multiplied byCommentsClose CommentsPermalink





`(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting `calendar year 2007' for `calendar year 1992' in subparagraph (B) thereof.CommentsClose CommentsPermalink





`(ii) ROUNDING- If any amount as adjusted under clause (i) is not a multiple of $1,000, such amount shall be rounded to the nearest multiple of $1,000.CommentsClose CommentsPermalink





`(b) Election To Defer Tax-CommentsClose CommentsPermalink





`(1) IN GENERAL- If the taxpayer elects the application of this subsection with respect to any property treated as sold by reason of subsection (a), the time for payment of the additional tax attributable to such property shall be extended until the due date of the return for the taxable year in which such property is disposed of (or, in the case of property disposed of in a transaction in which gain is not recognized in whole or in part, until such other date as the Secretary may prescribe).CommentsClose CommentsPermalink





`(2) DETERMINATION OF TAX WITH RESPECT TO PROPERTY- For purposes of paragraph (1), the additional tax attributable to any property is an amount which bears the same ratio to the additional tax imposed by this chapter for the taxable year solely by reason of subsection (a) as the gain taken into account under subsection (a) with respect to such property bears to the total gain taken into account under subsection (a) with respect to all property to which subsection (a) applies.CommentsClose CommentsPermalink





`(3) TERMINATION OF EXTENSION- The due date for payment of tax may not be extended under this subsection later than the due date for the return of tax imposed by this chapter for the taxable year which includes the date of death of the expatriate (or, if earlier, the time that the security provided with respect to the property fails to meet the requirements of paragraph (4), unless the taxpayer corrects such failure within the time specified by the Secretary).CommentsClose CommentsPermalink





`(4) SECURITY-CommentsClose CommentsPermalink





`(A) IN GENERAL- No election may be made under paragraph (1) with respect to any property unless adequate security is provided with respect to such property.CommentsClose CommentsPermalink





`(B) ADEQUATE SECURITY- For purposes of subparagraph (A), security with respect to any property shall be treated as adequate security if--CommentsClose CommentsPermalink





`(i) it is a bond which is furnished to, and accepted by, the Secretary, which is conditioned on the payment of tax (and interest thereon), and which meets the requirements of section 6325, orCommentsClose CommentsPermalink





`(ii) it is another form of security for such payment (including letters of credit) that meets such requirements as the Secretary may prescribe.CommentsClose CommentsPermalink





`(5) WAIVER OF CERTAIN RIGHTS- No election may be made under paragraph (1) unless the taxpayer makes an irrevocable waiver of any right under any treaty of the United States which would preclude assessment or collection of any tax imposed by reason of this section.CommentsClose CommentsPermalink





`(6) ELECTIONS- An election under paragraph (1) shall only apply to property described in the election and, once made, is irrevocable.CommentsClose CommentsPermalink





`(7) INTEREST- For purposes of section 6601, the last date for the payment of tax shall be determined without regard to the election under this subsection.CommentsClose CommentsPermalink





`(c) Exception for Certain Property- Subsection (a) shall not apply to--CommentsClose CommentsPermalink





`(1) any deferred compensation item (as defined in subsection (d)(4)),CommentsClose CommentsPermalink





`(2) any specified tax deferred account (as defined in subsection (e)(2)), andCommentsClose CommentsPermalink





`(3) any interest in a nongrantor trust (as defined in subsection (f)(3)).CommentsClose CommentsPermalink





`(d) Treatment of Deferred Compensation Items-CommentsClose CommentsPermalink





`(1) WITHHOLDING ON ELIGIBLE DEFERRED COMPENSATION ITEMS-CommentsClose CommentsPermalink





`(A) IN GENERAL- In the case of any eligible deferred compensation item, the payor shall deduct and withhold from any taxable payment to a covered expatriate with respect to such item a tax equal to 30 percent thereof.CommentsClose CommentsPermalink





`(B) TAXABLE PAYMENT- For purposes of subparagraph (A), the term `taxable payment' means with respect to a covered expatriate any payment to the extent it would be includible in the gross income of the covered expatriate if such expatriate continued to be subject to tax as a citizen or resident of the United States. A deferred compensation item shall be taken into account as a payment under the preceding sentence when such item would be so includible.CommentsClose CommentsPermalink





`(2) OTHER DEFERRED COMPENSATION ITEMS- In the case of any deferred compensation item which is not an eligible deferred compensation item--CommentsClose CommentsPermalink





`(A)(i) with respect to any deferred compensation item to which clause (ii) does not apply, an amount equal to the present value of the covered expatriate's accrued benefit shall be treated as having been received by such individual on the day before the expatriation date as a distribution under the plan, andCommentsClose CommentsPermalink





`(ii) with respect to any deferred compensation item referred to in paragraph (4)(D), the rights of the covered expatriate to such item shall be treated as becoming transferable and not subject to a substantial risk of forfeiture on the day before the expatriation date,CommentsClose CommentsPermalink





`(B) no early distribution tax shall apply by reason of such treatment, andCommentsClose CommentsPermalink





`(C) appropriate adjustments shall be made to subsequent distributions from the plan to reflect such treatment.CommentsClose CommentsPermalink





`(3) ELIGIBLE DEFERRED COMPENSATION ITEMS- For purposes of this subsection, the term `eligible deferred compensation item' means any deferred compensation item with respect to which--CommentsClose CommentsPermalink





`(A) the payor of such item is--CommentsClose CommentsPermalink





`(i) a United States person, orCommentsClose CommentsPermalink





`(ii) a person who is not a United States person but who elects to be treated as a United States person for purposes of paragraph (1) and meets such requirements as the Secretary may provide to ensure that the payor will meet the requirements of paragraph (1), andCommentsClose CommentsPermalink





`(B) the covered expatriate--CommentsClose CommentsPermalink





`(i) notifies the payor of his status as a covered expatriate, andCommentsClose CommentsPermalink





`(ii) makes an irrevocable waiver of any right to claim any reduction under any treaty with the United States in withholding on such item.CommentsClose CommentsPermalink





`(4) DEFERRED COMPENSATION ITEM- For purposes of this subsection, the term `deferred compensation item' means--CommentsClose CommentsPermalink





`(A) any interest in a plan or arrangement described in section 219(g)(5),CommentsClose CommentsPermalink





`(B) any interest in a foreign pension plan or similar retirement arrangement or program,CommentsClose CommentsPermalink





`(C) any item of deferred compensation, andCommentsClose CommentsPermalink





`(D) any property, or right to property, which the individual is entitled to receive in connection with the performance of services to the extent not previously taken into account under section 83 or in accordance with section 83.CommentsClose CommentsPermalink





`(5) EXCEPTION- Paragraphs (1) and (2) shall not apply to any deferred compensation item which is attributable to services performed outside the United States while the covered expatriate was not a citizen or resident of the United States.CommentsClose CommentsPermalink





`(6) SPECIAL RULES-CommentsClose CommentsPermalink





`(A) APPLICATION OF WITHHOLDING RULES- Rules similar to the rules of subchapter B of chapter 3 shall apply for purposes of this subsection.CommentsClose CommentsPermalink





`(B) APPLICATION OF TAX- Any item subject to the withholding tax imposed under paragraph (1) shall be subject to tax under section 871.CommentsClose CommentsPermalink





`(C) COORDINATION WITH OTHER WITHHOLDING REQUIREMENTS- Any item subject to withholding under paragraph (1) shall not be subject to withholding under section 1441 or chapter 24.CommentsClose CommentsPermalink





`(e) Treatment of Specified Tax Deferred Accounts-CommentsClose CommentsPermalink





`(1) ACCOUNT TREATED AS DISTRIBUTED- In the case of any interest in a specified tax deferred account held by a covered expatriate on the day before the expatriation date--CommentsClose CommentsPermalink





`(A) the covered expatriate shall be treated as receiving a distribution of his entire interest in such account on the day before the expatriation date,CommentsClose CommentsPermalink





`(B) no early distribution tax shall apply by reason of such treatment, andCommentsClose CommentsPermalink





`(C) appropriate adjustments shall be made to subsequent distributions from the account to reflect such treatment.CommentsClose CommentsPermalink





`(2) SPECIFIED TAX DEFERRED ACCOUNT- For purposes of paragraph (1), the term `specified tax deferred account' means an individual retirement plan (as defined in section 7701(a)(37)) other than any arrangement described in subsection (k) or (p) of section 408, a qualified tuition program (as defined in section 529), a Coverdell education savings account (as defined in section 530), a health savings account (as defined in section 223), and an Archer MSA (as defined in section 220).CommentsClose CommentsPermalink





`(f) Special Rules for Nongrantor Trusts-CommentsClose CommentsPermalink





`(1) IN GENERAL- In the case of a distribution (directly or indirectly) of any property from a nongrantor trust to a covered expatriate--CommentsClose CommentsPermalink





`(A) the trustee shall deduct and withhold from such distribution an amount equal to 30 percent of the taxable portion of the distribution, andCommentsClose CommentsPermalink





`(B) if the fair market value of such property exceeds its adjusted basis in the hands of the trust, gain shall be recognized to the trust as if such property were sold to the expatriate at its fair market value.CommentsClose CommentsPermalink





`(2) TAXABLE PORTION- For purposes of this subsection, the term `taxable portion' means, with respect to any distribution, that portion of the distribution which would be includible in the gross income of the covered expatriate if such expatriate continued to be subject to tax as a citizen or resident of the United States.CommentsClose CommentsPermalink





`(3) NONGRANTOR TRUST- For purposes of this subsection, the term `nongrantor trust' means the portion of any trust that the individual is not considered the owner of under subpart E of part I of subchapter J. The determination under the preceding sentence shall be made immediately before the expatriation date.CommentsClose CommentsPermalink





`(4) SPECIAL RULES RELATING TO WITHHOLDING- For purposes of this subsection--CommentsClose CommentsPermalink





`(A) rules similar to the rules of subsection (d)(6) shall apply, andCommentsClose CommentsPermalink





`(B) the covered expatriate shall be treated as having waived any right to claim any reduction under any treaty with the United States in withholding on any distribution to which paragraph (1)(A) applies.CommentsClose CommentsPermalink





`(g) Definitions and Special Rules Relating to Expatriation- For purposes of this section--CommentsClose CommentsPermalink





`(1) COVERED EXPATRIATE-CommentsClose CommentsPermalink





`(A) IN GENERAL- The term `covered expatriate' means an expatriate who meets the requirements of subparagraph (A), (B), or (C) of section 877(a)(2).CommentsClose CommentsPermalink





`(B) EXCEPTIONS- An individual shall not be treated as meeting the requirements of subparagraph (A) or (B) of section 877(a)(2) if--CommentsClose CommentsPermalink





`(i) the individual--CommentsClose CommentsPermalink





`(I) became at birth a citizen of the United States and a citizen of another country and, as of the expatriation date, continues to be a citizen of, and is taxed as a resident of, such other country, andCommentsClose CommentsPermalink





`(II) has been a resident of the United States (as defined in section 7701(b)(1)(A)(ii)) for not more than 10 taxable years during the 15-taxable year period ending with the taxable year during which the expatriation date occurs, orCommentsClose CommentsPermalink





`(ii)(I) the individual's relinquishment of United States citizenship occurs before such individual attains age 18 1/2 , andCommentsClose CommentsPermalink





`(II) the individual has been a resident of the United States (as so defined) for not more than 10 taxable years before the date of relinquishment.CommentsClose CommentsPermalink





`(C) COVERED EXPATRIATES ALSO SUBJECT TO TAX AS CITIZENS OR RESIDENTS- In the case of any covered expatriate who is subject to tax as a citizen or resident of the United States for any period beginning after the expatriation date, such individual shall not be treated as a covered expatriate during such period for purposes of subsections (d)(1) and (f) and section 2801.CommentsClose CommentsPermalink





`(2) EXPATRIATE- The term `expatriate' means--CommentsClose CommentsPermalink





`(A) any United States citizen who relinquishes his citizenship, andCommentsClose CommentsPermalink





`(B) any long-term resident of the United States who ceases to be a lawful permanent resident of the United States (within the meaning of section 7701(b)(6)).CommentsClose CommentsPermalink





`(3) EXPATRIATION DATE- The term `expatriation date' means--CommentsClose CommentsPermalink





`(A) the date an individual relinquishes United States citizenship, orCommentsClose CommentsPermalink





`(B) in the case of a long-term resident of the United States, the date on which the individual ceases to be a lawful permanent resident of the United States (within the meaning of section 7701(b)(6)).CommentsClose CommentsPermalink





`(4) RELINQUISHMENT OF CITIZENSHIP- A citizen shall be treated as relinquishing his United States citizenship on the earliest of--CommentsClose CommentsPermalink





`(A) the date the individual renounces his United States nationality before a diplomatic or consular officer of the United States pursuant to paragraph (5) of section 349(a) of the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),CommentsClose CommentsPermalink





`(B) the date the individual furnishes to the United States Department of State a signed statement of voluntary relinquishment of United States nationality confirming the performance of an act of expatriation specified in paragraph (1), (2), (3), or (4) of section 349(a) of the Immigration and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),CommentsClose CommentsPermalink





`(C) the date the United States Department of State issues to the individual a certificate of loss of nationality, orCommentsClose CommentsPermalink





`(D) the date a court of the United States cancels a naturalized citizen's certificate of naturalization.CommentsClose CommentsPermalink





Subparagraph (A) or (B) shall not apply to any individual unless the renunciation or voluntary relinquishment is subsequently approved by the issuance to the individual of a certificate of loss of nationality by the United States Department of State.CommentsClose CommentsPermalink





`(5) LONG-TERM RESIDENT- The term `long-term resident' has the meaning given to such term by section 877(e)(2).CommentsClose CommentsPermalink





`(6) EARLY DISTRIBUTION TAX- The term `early distribution tax' means any increase in tax imposed under section 72(t), 220(e)(4), 223(f)(4), 409A(a)(1)(B), 529(c)(6), or 530(d)(4).CommentsClose CommentsPermalink





`(h) Other Rules-CommentsClose CommentsPermalink





`(1) TERMINATION OF DEFERRALS, ETC- In the case of any covered expatriate, notwithstanding any other provision of this title--CommentsClose CommentsPermalink





`(A) any time period for acquiring property which would result in the reduction in the amount of gain recognized with respect to property disposed of by the taxpayer shall terminate on the day before the expatriation date, andCommentsClose CommentsPermalink





`(B) any extension of time for payment of tax shall cease to apply on the day before the expatriation date and the unpaid portion of such tax shall be due and payable at the time and in the manner prescribed by the Secretary.CommentsClose CommentsPermalink





`(2) STEP-UP IN BASIS- Solely for purposes of determining any tax imposed by reason of subsection (a), property which was held by an individual on the date the individual first became a resident of the United States (within the meaning of section 7701(b)) shall be treated as having a basis on such date of not less than the fair market value of such property on such date. The preceding sentence shall not apply if the individual elects not to have such sentence apply. Such an election, once made, shall be irrevocable.CommentsClose CommentsPermalink





`(3) COORDINATION WITH SECTION 684- If the expatriation of any individual would result in the recognition of gain under section 684, this section shall be applied after the application of section 684.CommentsClose CommentsPermalink





`(i) Regulations- The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.'.CommentsClose CommentsPermalink





(b) Tax on Gifts and Bequests Received by United States Citizens and Residents From Expatriates-CommentsClose CommentsPermalink





(1) IN GENERAL- Subtitle B (relating to estate and gift taxes) is amended by inserting after chapter 14 the following new chapter:CommentsClose CommentsPermalink

`CHAPTER 15--GIFTS AND BEQUESTS FROM EXPATRIATES

`Sec. 2801. Imposition of tax.CommentsClose CommentsPermalink

`SEC. 2801. IMPOSITION OF TAX.

`(a) In General- If, during any calendar year, any United States citizen or resident receives any covered gift or bequest, there is hereby imposed a tax equal to the product of--CommentsClose CommentsPermalink





`(1) the highest rate of tax specified in the table contained in section 2001(c) as in effect on the date of such receipt (or, if greater, the highest rate of tax specified in the table applicable under section 2502(a) as in effect on the date), andCommentsClose CommentsPermalink





`(2) the value of such covered gift or bequest.CommentsClose CommentsPermalink





`(b) Tax To Be Paid by Recipient- The tax imposed by subsection (a) on any covered gift or bequest shall be paid by the person receiving such gift or bequest.CommentsClose CommentsPermalink





`(c) Exception for Certain Gifts- Subsection (a) shall apply only to the extent that the value of covered gifts and bequests received by any person during the calendar year exceeds $10,000.CommentsClose CommentsPermalink





`(d) Tax Reduced by Foreign Gift or Estate Tax- The tax imposed by subsection (a) on any covered gift or bequest shall be reduced by the amount of any gift or estate tax paid to a foreign country with respect to such covered gift or bequest.CommentsClose CommentsPermalink





`(e) Covered Gift or Bequest-CommentsClose CommentsPermalink





`(1) IN GENERAL- For purposes of this chapter, the term `covered gift or bequest' means--CommentsClose CommentsPermalink





`(A) any property acquired by gift directly or indirectly from an individual who, at the time of such acquisition, is a covered expatriate, andCommentsClose CommentsPermalink





`(B) any property acquired directly or indirectly by reason of the death of an individual who, immediately before such death, was a covered expatriate.CommentsClose CommentsPermalink





`(2) EXCEPTIONS FOR TRANSFERS OTHERWISE SUBJECT TO ESTATE OR GIFT TAX- Such term shall not include--CommentsClose CommentsPermalink





`(A) any property shown on a timely filed return of tax imposed by chapter 12 which is a taxable gift by the covered expatriate, andCommentsClose CommentsPermalink





`(B) any property included in the gross estate of the covered expatriate for purposes of chapter 11 and shown on a timely filed return of tax imposed by chapter 11 of the estate of the covered expatriate.CommentsClose CommentsPermalink





`(3) TRANSFERS IN TRUST-CommentsClose CommentsPermalink





`(A) DOMESTIC TRUSTS- In the case of a covered gift or bequest made to a domestic trust--CommentsClose CommentsPermalink





`(i) subsection (a) shall apply in the same manner as if such trust were a United States citizen, andCommentsClose CommentsPermalink





`(ii) the tax imposed by subsection (a) on such gift or bequest shall be paid by such trust.CommentsClose CommentsPermalink





`(B) FOREIGN TRUSTS-CommentsClose CommentsPermalink





`(i) IN GENERAL- In the case of a covered gift or bequest made to a foreign trust, subsection (a) shall apply to any distribution attributable to such gift or bequest from such trust (whether from income or corpus) to a United States citizen or resident in the same manner as if such distribution were a covered gift or bequest.CommentsClose CommentsPermalink





`(ii) DEDUCTION FOR TAX PAID BY RECIPIENT- There shall be allowed as a deduction under section 164 the amount of tax imposed by this section which is paid or accrued by a United States citizen or resident by reason of a distribution from a foreign trust, but only to the extent such tax is imposed on the portion of such distribution which is included in the gross income of such citizen or resident.CommentsClose CommentsPermalink





`(iii) ELECTION TO BE TREATED AS DOMESTIC TRUST- Solely for purposes of this section, a foreign trust may elect to be treated as a domestic trust. Such an election may be revoked with the consent of the Secretary.CommentsClose CommentsPermalink





`(f) Covered Expatriate- For purposes of this section, the term `covered expatriate' has the meaning given to such term by section 877A(g)(1).'.CommentsClose CommentsPermalink





(2) CLERICAL AMENDMENT- The table of chapters for subtitle B is amended by inserting after the item relating to chapter 14 the following new item:CommentsClose CommentsPermalink

`Chapter 15. Gifts and Bequests From Expatriates.'.

(c) Definition of Termination of United States Citizenship-CommentsClose CommentsPermalink





(1) IN GENERAL- Section 7701(a) is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





`(50) TERMINATION OF UNITED STATES CITIZENSHIP-CommentsClose CommentsPermalink





`(A) IN GENERAL- An individual shall not cease to be treated as a United States citizen before the date on which the individual's citizenship is treated as relinquished under section 877A(g)(4).CommentsClose CommentsPermalink





`(B) DUAL CITIZENS- Under regulations prescribed by the Secretary, subparagraph (A) shall not apply to an individual who became at birth a citizen of the United States and a citizen of another country.'.CommentsClose CommentsPermalink





(2) CONFORMING AMENDMENTS-CommentsClose CommentsPermalink





(A) Paragraph (1) of section 877(e) is amended to read as follows:CommentsClose CommentsPermalink





`(1) IN GENERAL- Any long-term resident of the United States who ceases to be a lawful permanent resident of the United States (within the meaning of section 7701(b)(6)) shall be treated for purposes of this section and sections 2107, 2501, and 6039G in the same manner as if such resident were a citizen of the United States who lost United States citizenship on the date of such cessation or commencement.'.CommentsClose CommentsPermalink





(B) Paragraph (6) of section 7701(b) is amended by adding at the end the following flush sentence:CommentsClose CommentsPermalink





`An individual shall cease to be treated as a lawful permanent resident of the United States if such individual commences to be treated as a resident of a foreign country under the provisions of a tax treaty between the United States and the foreign country, does not waive the benefits of such treaty applicable to residents of the foreign country, and notifies the Secretary of the commencement of such treatment.'.CommentsClose CommentsPermalink





(C) Section 7701 is amended by striking subsection (n) and by redesignating subsections (o) and (p) as subsections (n) and (o), respectively.CommentsClose CommentsPermalink





(d) Information Returns- Section 6039G is amended--CommentsClose CommentsPermalink





(1) by inserting `or 877A' after `section 877(b)' in subsection (a), andCommentsClose CommentsPermalink





(2) by inserting `or 877A' after `section 877(a)' in subsection (d).CommentsClose CommentsPermalink





(e) Clerical Amendment- The table of sections for subpart A of part II of subchapter N of chapter 1 is amended by inserting after the item relating to section 877 the following new item:CommentsClose CommentsPermalink





`Sec. 877A. Tax responsibilities of expatriation.'.CommentsClose CommentsPermalink





(f) Effective Date-CommentsClose CommentsPermalink





(1) IN GENERAL- Except as provided in this subsection, the amendments made by this section shall apply to expatriates (as defined in section 877A(g) of the Internal Revenue Code of 1986, as added by this section) whose expatriation date (as so defined) is on or after the date of the enactment of this Act.CommentsClose CommentsPermalink





(2) GIFTS AND BEQUESTS- Chapter 15 of the Internal Revenue Code of 1986 (as added by subsection (b)) shall apply to covered gifts and bequests (as defined in section 2801 of such Code, as so added) received on or after the date of the enactment of this Act, regardless of when the transferor expatriated.CommentsClose CommentsPermalink

SEC. 6. REPEAL OF SUSPENSION OF CERTAIN PENALTIES AND INTEREST.

(a) In General- Section 6404 is amended by striking subsection (g) and by redesignating subsection (h) as subsection (g).CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by subsection (a) shall apply to notices provided by the Secretary of the Treasury, or his delegate, after the date which is 6 months after the date of the enactment of the Small Business and Work Opportunity Tax Act of 2007.CommentsClose CommentsPermalink

SEC. 7. INCREASE IN INFORMATION RETURN PENALTIES.

(a) Failure To File Correct Information Returns-CommentsClose CommentsPermalink





(1) IN GENERAL- Subsections (a)(1), (b)(1)(A), and (b)(2)(A) of section 6721 are each amended by striking `$50' and inserting `$100'.CommentsClose CommentsPermalink





(2) AGGREGATE ANNUAL LIMITATION- Subsections (a)(1), (d)(1)(A), and (e)(3)(A) of section 6721 are each amended by striking `$250,000' and inserting `$600,000'.CommentsClose CommentsPermalink





(b) Reduction Where Correction Within 30 Days-CommentsClose CommentsPermalink





(1) IN GENERAL- Subparagraph (A) of section 6721(b)(1) is amended by striking `$15' and inserting `$25'.CommentsClose CommentsPermalink





(2) AGGREGATE ANNUAL LIMITATION- Subsections (b)(1)(B) and (d)(1)(B) of section 6721 are each amended by striking `$75,000' and inserting `$200,000'.CommentsClose CommentsPermalink





(c) Reduction Where Correction on or Before August 1-CommentsClose CommentsPermalink





(1) IN GENERAL- Subparagraph (A) of section 6721(b)(2) is amended by striking `$30' and inserting `$60'.CommentsClose CommentsPermalink





(2) AGGREGATE ANNUAL LIMITATION- Subsections (b)(2)(B) and (d)(1)(C) of section 6721 are each amended by striking `$150,000' and inserting `$400,000'.CommentsClose CommentsPermalink





(d) Aggregate Annual Limitations for Persons With Gross Receipts of Not More Than $5,000,000- Paragraph (1) of section 6721(d) is amended--CommentsClose CommentsPermalink





(1) by striking `$100,000' in subparagraph (A) and inserting `$250,000',CommentsClose CommentsPermalink





(2) by striking `$25,000' in subparagraph (B) and inserting `$75,000', andCommentsClose CommentsPermalink





(3) by striking `$50,000' in subparagraph (C) and inserting `$150,000'.CommentsClose CommentsPermalink





(e) Penalty in Case of Intentional Disregard- Paragraph (2) of section 6721(e) is amended by striking `$100' and inserting `$250'.CommentsClose CommentsPermalink





(f) Failure To Furnish Correct Payee Statements-CommentsClose CommentsPermalink





(1) IN GENERAL- Subsection (a) of section 6722 is amended by striking `$50' and inserting `$100'.CommentsClose CommentsPermalink





(2) AGGREGATE ANNUAL LIMITATION- Subsections (a) and (c)(2)(A) of section 6722 are each amended by striking `$100,000' and inserting `$600,000'.CommentsClose CommentsPermalink





(3) PENALTY IN CASE OF INTENTIONAL DISREGARD- Paragraph (1) of section 6722(c) is amended by striking `$100' and inserting `$250'.CommentsClose CommentsPermalink





(g) Failure To Comply With Other Information Reporting Requirements- Section 6723 is amended--CommentsClose CommentsPermalink





(1) by striking `$50' and inserting `$100', andCommentsClose CommentsPermalink





(2) by striking `$100,000' and inserting `$600,000'.CommentsClose CommentsPermalink





(h) Effective Date- The amendments made by this section shall apply with respect to information returns required to be filed on or after January 1, 2008.CommentsClose CommentsPermalink

SEC. 8. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.

Subparagraph (B) of section 401(1) of the Tax Increase Prevention and Reconciliation Act of 2005 is amended by striking `115 percent' and inserting `115.25 percent'.CommentsClose CommentsPermalink

Passed the House of Representatives October 10, 2007.CommentsClose CommentsPermalink

Attest:CommentsClose CommentsPermalink

Clerk.