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H.R. 412: Territorial Tax Equity and Economic Growth Act of 2019

The text of the bill below is as of Jan 9, 2019 (Introduced).



1st Session

H. R. 412


January 9, 2019

introduced the following bill; which was referred to the Committee on Ways and Means


To amend the Internal Revenue Code of 1986 to modify the residence and source rules to provide for economic recovery in the possessions of the United States.


Short title

This Act may be cited as the Territorial Tax Equity and Economic Growth Act of 2019.


Modification to residence and source rules involving possessions


Bona fide resident

Section 937(a) of the Internal Revenue Code of 1986 is amended—


by striking the last sentence, and


by amending paragraph (1) to read as follows:


who has a substantial presence (determined under the principles of section 7701(b)(3)(A) (applied by substituting 122 days for 31 days in clause (i) thereof) without regard to sections 7701(b)(3)(B), (C), and (D)) during the taxable year in Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, or the Virgin Islands, as the case may be, and



Source rules

Section 937(b) of such Code is amended—


in paragraph (1), by striking and at the end,


in paragraph (2), by striking the period at the end and inserting , but only to the extent such income is attributable to an office or fixed place of business within the United States (determined under the rules of Section 864(c)(5)),, and


by adding at the end the following new paragraphs:


for purposes of paragraph (1), the principles of section 864(c)(2), rather than rules similar to the rules in section 864(c)(4), shall apply for purposes of determining whether income from sources without a possession specified in subsection (a)(1) is effectively connected with the conduct of a trade or business within such possession, and


for purposes of paragraph (2), income from activities within the United States which are of a preparatory or auxiliary character shall not be treated as income from sources within the United States or as effectively connected with the conduct of a trade or business within the United States.



Source rules for personal property sales

Section 865(j)(3) of such Code is amended by inserting , 932, after 931.


Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2018.