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HR 3604 IH

To amend the Internal Revenue Code of 1986 to treat certain payments made to the European Union in lieu of income taxes to a member of the European Union as income taxes paid to a foreign country for purposes of the foreign tax credit.

September 19, 2007

Mr. UDALL of New Mexico introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to treat certain payments made to the European Union in lieu of income taxes to a member of the European Union as income taxes paid to a foreign country for purposes of the foreign tax credit.

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

SECTION 1. CERTAIN PAYMENTS MADE TO THE EUROPEAN UNION IN LIEU OF INCOME TAX TO A MEMBER OF THE EUROPEAN UNION TREATED AS INCOME TAX PAID TO A FOREIGN COUNTRY.

(a) In General- Section 903 of the Internal Revenue Code of 1986 (relating to credit for taxes in lieu of income, etc., taxes) is amended to read as follows:

`SEC. 903. CREDIT FOR TAXES IN LIEU OF INCOME, ETC., TAXES.

`For purposes of this part and of sections 164(a) and 275(a)--

`(1) the term `income, war profits, and excess profits taxes' shall include a tax paid in lieu of a tax on income, war profits, or excess profits otherwise generally imposed by any foreign country or by any possession of the United States, and

`(2) in the case of an individual, any payment to the European Union shall be treated as an income tax paid to a foreign country if such payment is--

`(A) determined on the basis of compensation (including any health, pension, retirement, or other benefits) paid by the European Union to such individual for services performed by such individual for the European Union, and

`(B) paid in lieu of an income tax otherwise generally imposed by any foreign country which is a member of the European Union.'.

(b) Effective Date- The amendment made by this section shall apply to payments made after the date of the enactment of this Act, in taxable years ending after such date.