S 250 ISCommentsClose CommentsPermalink

113th CONGRESSCommentsClose CommentsPermalink

1st SessionCommentsClose CommentsPermalink

S. 250CommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to modify the treatment of foreign corporations, and for other purposes.CommentsClose CommentsPermalink

IN THE SENATE OF THE UNITED STATESCommentsClose CommentsPermalink

February 7, 2013CommentsClose CommentsPermalink

Mr. SANDERS introduced the following bill; which was read twice and referred to the Committee on FinanceCommentsClose CommentsPermalink

A BILLCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to modify the treatment of foreign corporations, 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.

This Act may be cited as the ‘Corporate Tax Dodging Prevention Act’.CommentsClose CommentsPermalink

SEC. 2. DEFERRAL OF ACTIVE INCOME OF CONTROLLED FOREIGN CORPORATIONS.

Section 952 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(d) Special Application of Subpart-CommentsClose CommentsPermalink





‘(1) IN GENERAL- For taxable years beginning after December 31, 2013, notwithstanding any other provision of this subpart, the term ‘subpart F income’ means, in the case of any controlled foreign corporation, the income of such corporation derived from any foreign country.CommentsClose CommentsPermalink





‘(2) APPLICABLE RULES- Rules similar to the rules under the last sentence of subsection (a) and subsection (d) shall apply to this subsection.’.CommentsClose CommentsPermalink

SEC. 3. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE TO LARGE INTEGRATED OIL COMPANIES WHICH ARE DUAL CAPACITY TAXPAYERS.

(a) In General- Section 901 of the Internal Revenue Code of 1986 is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) the following new subsection:CommentsClose CommentsPermalink





‘(n) Special Rules Relating to Large Integrated Oil Companies Which Are Dual Capacity Taxpayers-CommentsClose CommentsPermalink





‘(1) GENERAL RULE- Notwithstanding any other provision of this chapter, any amount paid or accrued by a dual capacity taxpayer which is a large integrated oil company to a foreign country or possession of the United States for any period shall not be considered a tax--CommentsClose CommentsPermalink





‘(A) if, for such period, the foreign country or possession does not impose a generally applicable income tax, orCommentsClose CommentsPermalink





‘(B) to the extent such amount exceeds the amount (determined in accordance with regulations) which--CommentsClose CommentsPermalink





‘(i) is paid by such dual capacity taxpayer pursuant to the generally applicable income tax imposed by the country or possession, orCommentsClose CommentsPermalink





‘(ii) would be paid if the generally applicable income tax imposed by the country or possession were applicable to such dual capacity taxpayer.CommentsClose CommentsPermalink





Nothing in this paragraph shall be construed to imply the proper treatment of any such amount not in excess of the amount determined under subparagraph (B).CommentsClose CommentsPermalink





‘(2) DUAL CAPACITY TAXPAYER- For purposes of this subsection, the term ‘dual capacity taxpayer’ means, with respect to any foreign country or possession of the United States, a person who--CommentsClose CommentsPermalink





‘(A) is subject to a levy of such country or possession, andCommentsClose CommentsPermalink





‘(B) receives (or will receive) directly or indirectly a specific economic benefit (as determined in accordance with regulations) from such country or possession.CommentsClose CommentsPermalink





‘(3) GENERALLY APPLICABLE INCOME TAX- For purposes of this subsection--CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘generally applicable income tax’ means an income tax (or a series of income taxes) which is generally imposed under the laws of a foreign country or possession on income derived from the conduct of a trade or business within such country or possession.CommentsClose CommentsPermalink





‘(B) EXCEPTIONS- Such term shall not include a tax unless it has substantial application, by its terms and in practice, to--CommentsClose CommentsPermalink





‘(i) persons who are not dual capacity taxpayers, andCommentsClose CommentsPermalink





‘(ii) persons who are citizens or residents of the foreign country or possession.CommentsClose CommentsPermalink





‘(4) LARGE INTEGRATED OIL COMPANY- For purposes of this subsection, the term ‘large integrated oil company’ means, with respect to any taxable year, an integrated oil company (as defined in section 291(b)(4)) which--CommentsClose CommentsPermalink





‘(A) had gross receipts in excess of $1,000,000,000 for such taxable year, andCommentsClose CommentsPermalink





‘(B) has an average daily worldwide production of crude oil of at least 500,000 barrels for such taxable year.’.CommentsClose CommentsPermalink





(b) Effective Date-CommentsClose CommentsPermalink





(1) IN GENERAL- The amendments made by this section shall apply to taxes paid or accrued in taxable years beginning after the date of the enactment of this Act.CommentsClose CommentsPermalink





(2) CONTRARY TREATY OBLIGATIONS UPHELD- The amendments made by this section shall not apply to the extent contrary to any treaty obligation of the United States.CommentsClose CommentsPermalink

SEC. 4. REINSTITUTION OF PER COUNTRY FOREIGN TAX CREDIT.

(a) In General- Subsection (a) of section 904 of the Internal Revenue Code of 1986 is amended to read as follows:CommentsClose CommentsPermalink





‘(a) Limitation- The amount of the credit in respect of the tax paid or accrued to any foreign country or possession of the United States shall not exceed the same proportion of the tax against which such credit is taken which the taxpayer’s taxable income from sources within such country or possession (but not in excess of the taxpayer’s entire taxable income) bears to such taxpayer’s entire taxable income for the same taxable year.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after December 31, 2013.CommentsClose CommentsPermalink

SEC. 5. TREATMENT OF FOREIGN CORPORATIONS MANAGED AND CONTROLLED IN THE UNITED STATES AS DOMESTIC CORPORATIONS.

(a) In General- Section 7701 of the Internal Revenue Code of 1986 is amended by redesignating subsection (p) as subsection (q) and by inserting after subsection (o) the following new subsection:CommentsClose CommentsPermalink





‘(p) Certain Corporations Managed and Controlled in the United States Treated as Domestic for Income Tax-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Notwithstanding subsection (a)(4), in the case of a corporation described in paragraph (2) if--CommentsClose CommentsPermalink





‘(A) the corporation would not otherwise be treated as a domestic corporation for purposes of this title, butCommentsClose CommentsPermalink





‘(B) the management and control of the corporation occurs, directly or indirectly, primarily within the United States,CommentsClose CommentsPermalink





then, solely for purposes of chapter 1 (and any other provision of this title relating to chapter 1), the corporation shall be treated as a domestic corporation.CommentsClose CommentsPermalink





‘(2) CORPORATION DESCRIBED-CommentsClose CommentsPermalink





‘(A) IN GENERAL- A corporation is described in this paragraph if--CommentsClose CommentsPermalink





‘(i) the stock of such corporation is regularly traded on an established securities market, orCommentsClose CommentsPermalink





‘(ii) the aggregate gross assets of such corporation (or any predecessor thereof), including assets under management for investors, whether held directly or indirectly, at any time during the taxable year or any preceding taxable year is $50,000,000 or more.CommentsClose CommentsPermalink





‘(B) GENERAL EXCEPTION- A corporation shall not be treated as described in this paragraph if--CommentsClose CommentsPermalink





‘(i) such corporation was treated as a corporation described in this paragraph in a preceding taxable year,CommentsClose CommentsPermalink





‘(ii) such corporation--CommentsClose CommentsPermalink





‘(I) is not regularly traded on an established securities market, andCommentsClose CommentsPermalink





‘(II) has, and is reasonably expected to continue to have, aggregate gross assets (including assets under management for investors, whether held directly or indirectly) of less than $50,000,000, andCommentsClose CommentsPermalink





‘(iii) the Secretary grants a waiver to such corporation under this subparagraph.CommentsClose CommentsPermalink





‘(C) EXCEPTION FROM GROSS ASSETS TEST- Subparagraph (A)(ii) shall not apply to a corporation which is a controlled foreign corporation (as defined in section 957) and which is a member of an affiliated group (as defined section 1504, but determined without regard to section 1504(b)(3)) the common parent of which--CommentsClose CommentsPermalink





‘(i) is a domestic corporation (determined without regard to this subsection), andCommentsClose CommentsPermalink





‘(ii) has substantial assets (other than cash and cash equivalents and other than stock of foreign subsidiaries) held for use in the active conduct of a trade or business in the United States.CommentsClose CommentsPermalink





‘(3) MANAGEMENT AND CONTROL-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The Secretary shall prescribe regulations for purposes of determining cases in which the management and control of a corporation is to be treated as occurring primarily within the United States.CommentsClose CommentsPermalink





‘(B) EXECUTIVE OFFICERS AND SENIOR MANAGEMENT- Such regulations shall provide that--CommentsClose CommentsPermalink





‘(i) the management and control of a corporation shall be treated as occurring primarily within the United States if substantially all of the executive officers and senior management of the corporation who exercise day-to-day responsibility for making decisions involving strategic, financial, and operational policies of the corporation are located primarily within the United States, andCommentsClose CommentsPermalink





‘(ii) individuals who are not executive officers and senior management of the corporation (including individuals who are officers or employees of other corporations in the same chain of corporations as the corporation) shall be treated as executive officers and senior management if such individuals exercise the day-to-day responsibilities of the corporation described in clause (i).CommentsClose CommentsPermalink





‘(C) CORPORATIONS PRIMARILY HOLDING INVESTMENT ASSETS- Such regulations shall also provide that the management and control of a corporation shall be treated as occurring primarily within the United States if--CommentsClose CommentsPermalink





‘(i) the assets of such corporation (directly or indirectly) consist primarily of as sets being managed on behalf of investors, andCommentsClose CommentsPermalink





‘(ii) decisions about how to invest the assets are made in the United States.’.CommentsClose CommentsPermalink





(b) Effective Date- The amendments made by this section shall apply to taxable years beginning on or after the date which is 2 years after the date of the enactment of this Act.CommentsClose CommentsPermalink