< Back to S. 250 (113th Congress, 2013–2015)

Text of the Corporate Tax Dodging Prevention Act

This bill was introduced on February 7, 2013, in a previous session of Congress, but was not enacted. The text of the bill below is as of Feb 7, 2013 (Introduced).

II

113th CONGRESS

1st Session

S. 250

IN THE SENATE OF THE UNITED STATES

February 7, 2013

introduced the following bill; which was read twice and referred to theCommittee on Finance

A BILL

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

1.

Short title

This Act may be cited as the Corporate Tax Dodging Prevention Act .

2.

Deferral of Active Income of Controlled Foreign Corporations

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

(d)

Special Application of Subpart

(1)

In general

For taxable years beginning after December 31, 2013, notwithstanding any other provision of this subpart, the termsubpart F incomemeans, in the case of any controlled foreign corporation, the income of such corporation derived from any foreign country.

(2)

Applicable rules

Rules similar to the rules under the last sentence ofsubsection (a)andsubsection (d)shall apply to this subsection.

.

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 1986is amended by redesignatingsubsection (n)assubsection (o)and by inserting aftersubsection (m)the following new subsection:

(n)

Special rules relating to large integrated oil companies which are dual capacity taxpayers

(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—

(A)

if, for such period, the foreign country or possession does not impose a generally applicable income tax, or

(B)

to the extent such amount exceeds the amount (determined in accordance with regulations) which—

(i)

is paid by such dual capacity taxpayer pursuant to the generally applicable income tax imposed by the country or possession, or

(ii)

would be paid if the generally applicable income tax imposed by the country or possession were applicable to such dual capacity taxpayer.

Nothing in this paragraph shall be construed to imply the proper treatment of any such amount not in excess of the amount determined undersubparagraph (B).
(2)

Dual capacity taxpayer

For purposes of this subsection, the termdual capacity taxpayermeans, with respect to any foreign country or possession of the United States, a person who—

(A)

is subject to a levy of such country or possession, and

(B)

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

(3)

Generally applicable income tax

For purposes of this subsection—

(A)

In general

The termgenerally applicable income taxmeans 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.

(B)

Exceptions

Such term shall not include a tax unless it has substantial application, by its terms and in practice, to—

(i)

persons who are not dual capacity taxpayers, and

(ii)

persons who are citizens or residents of the foreign country or possession.

(4)

Large integrated oil company

For purposes of this subsection, the termlarge integrated oil companymeans, with respect to any taxable year, an integrated oil company (as defined insection 291(b)(4)) which—

(A)

had gross receipts in excess of $1,000,000,000 for such taxable year, and

(B)

has an average daily worldwide production of crude oil of at least 500,000 barrels for such taxable year.

.

(b)

Effective date

(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.

(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.

4.

Reinstitution of per country foreign tax credit

(a)

In general

Subsection (a) of section 904 of the Internal Revenue Code of 1986is amended to read as follows:

(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.

.

(b)

Effective date

The amendment made by this section shall apply to taxable years beginning after December 31, 2013.

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 1986is amended by redesignatingsubsection (p)assubsection (q)and by inserting aftersubsection (o)the following new subsection:

(p)

Certain corporations managed and controlled in the United States treated as domestic for income tax

(1)

In general

Notwithstandingsubsection (a)(4), in the case of a corporation described inparagraph (2)if—

(A)

the corporation would not otherwise be treated as a domestic corporation for purposes of this title, but

(B)

the management and control of the corporation occurs, directly or indirectly, primarily within the United States,

then, solely for purposes ofchapter 1(and any other provision of this title relating tochapter 1), the corporation shall be treated as a domestic corporation.
(2)

Corporation described

(A)

In general

A corporation is described in this paragraph if—

(i)

the stock of such corporation is regularly traded on an established securities market, or

(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.

(B)

General exception

A corporation shall not be treated as described in this paragraph if—

(i)

such corporation was treated as a corporation described in this paragraph in a preceding taxable year,

(ii)

such corporation—

(I)

is not regularly traded on an established securities market, and

(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, and

(iii)

theSecretarygrants a waiver to such corporation under this subparagraph.

(C)

Exception from gross assets test

Subparagraph (A)(ii)shall not apply to a corporation which is a controlled foreign corporation (as defined insection 957) and which is a member of an affiliated group (as definedsection 1504, but determined without regard tosection 1504(b)(3)) the common parent of which—

(i)

is a domestic corporation (determined without regard to this subsection), and

(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.

(3)

Management and control

(A)

In general

TheSecretaryshall 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.

(B)

Executive officers and senior management

Such regulations shall provide that—

(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, and

(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 inclause (i).

(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—

(i)

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

(ii)

decisions about how to invest the assets are made in the United States.

.

(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.