IN THE SENATE OF THE UNITED STATES
July 31, 2017
Mr. Brown (for himself, Mr. Durbin, and Mr. Van Hollen) introduced the following bill; which was read twice and referred to the Committee on Finance
To amend the Internal Revenue Code to include in income the unrepatriated earnings of groups that include an inverted corporation.
This Act may be cited as the
Pay What You Owe Before You Go Act.
Recapture of unrepatriated earnings of groups including an inverted corporation
Section 7874 of the Internal Revenue Code of 1986 is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:
Recapture of tax on unrepatriated earnings
The subpart F income of any applicable controlled foreign corporation for its last taxable year ending before the acquisition date shall be increased by the accumulated deferred foreign income of the corporation.
Applicable controlled foreign corporation
For purposes of this subsection—
The term applicable controlled foreign corporation means any controlled foreign corporation with respect to which—
a covered entity was a United States shareholder at any time during the 5-year period ending on the acquisition date, or
a member of the same expanded affiliated group as a covered entity was a United States shareholder at any time during the 5-year period ending on the acquisition date.
The term covered entity means, with respect to a controlled foreign corporation, any entity which—
is treated as a surrogate foreign corporation under subsection (a)(2)(B), determined—
July 24, 2017 for
March 4, 2003 each place it appears,
more than 50 percent for
at least 60 percent in clause (ii) thereof, and
by disregarding clause (iii) thereof, and
is not treated as a domestic corporation by reason of subsection (b).
Accumulated deferred foreign income
For purposes of this section—
The term accumulated deferred foreign income means the excess of—
the undistributed earnings of the controlled foreign corporation, over
the undistributed U.S. earnings of such controlled foreign corporation.
The term undistributed earnings means the earnings and profits of the controlled foreign corporation described in section 959(c)(3), determined—
as of the close of the taxable year described in paragraph (1),
without diminution by reason of distributions made during such taxable year, and
without regard to this subsection.
Undistributed U.S. earnings
The term undistributed U.S. earnings has the meaning given the term post-1986 undistributed U.S. earnings in section 245(a)(5), determined—
as of the close of the taxable year described in paragraph (1), and
without regard to
post-1986 each place it appears in the matter before subparagraph (A).
For purposes of this section, the term acquisition date means the date the covered entity completes the acquisition described in subsection (a)(2)(B)(i) (after the application of paragraph (2)(B)(i) of this subsection).
The amendments made by this section shall apply with respect to taxable years ending after July 24, 2017.