I 

113TH CONGRESS 

1ST SESSION H. R. 1556 

To amend the Internal Revenue Code of 1986 to prevent corporations from 

exploiting tax treaties to evade taxation of United States income. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 15, 2013 

Mr. DOGGETT (for himself, Mr. DEFAZIO, Ms. DELAURO, Mr. DINGELL, Mr. 

MORAN, Ms. LEE of California, Mr. RUSH, Mr. GARAMENDI, Ms. SCHAKOWSKY, Mr. MCDERMOTT, Mr. CICILLINE, and Mr. COHEN) introduced 

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

Means 

A BILL 

To amend the Internal Revenue Code of 1986 to prevent 

corporations from exploiting tax treaties to evade taxation of United States income. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Fairness in Inter5 national Taxation Act’’. 


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1 SEC. 2. LIMITATION ON TREATY BENEFITS FOR CERTAIN 

2 DEDUCTIBLE PAYMENTS. 

3 (a) IN GENERAL.—Section 894 of the Internal Rev4 enue Code of 1986 (relating to income affected by treaty) 

5 is amended by adding at the end the following new sub6 section: 

7 ‘‘(d) LIMITATION ON TREATY BENEFITS FOR CER8 TAIN DEDUCTIBLE PAYMENTS.— 

9 ‘‘(1) IN GENERAL.—In the case of any deduct10 ible related-party payment, any withholding tax im11 posed under chapter 3 (and any tax imposed under 

12 subpart A or B of this part) with respect to such 

13 payment may not be reduced under any treaty of the 

14 United States unless any such withholding tax would 

15 be reduced under a treaty of the United States if 

16 such payment were made directly to the foreign par17 ent corporation. 

18 ‘‘(2) DEDUCTIBLE RELATED-PARTY PAY19 MENT.—For purposes of this subsection, the term 

20 ‘deductible related-party payment’ means any pay21 ment made, directly or indirectly, by any person to 

22 any other person if the payment is allowable as a de23 duction under this chapter and both persons are 

24 members of the same foreign controlled group of en25 tities. 


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1 ‘‘(3) FOREIGN CONTROLLED GROUP OF ENTI2 TIES.—For purposes of this subsection— 

3 ‘‘(A) IN GENERAL.—The term ‘foreign 

4 controlled group of entities’ means a controlled 

5 group of entities the common parent of which 

6 is a foreign corporation. 

7 ‘‘(B) CONTROLLED GROUP OF ENTITIES.— 

8 The term ‘controlled group of entities’ means a 

9 controlled group of corporations as defined in 

10 section 1563(a)(1), except that— 

11 ‘‘(i) ‘more than 50 percent’ shall be 

12 substituted for ‘at least 80 percent’ each 

13 place it appears therein, and 

14 ‘‘(ii) the determination shall be made 

15 without regard to subsections (a)(4) and 

16 (b)(2) of section 1563. 

17 A partnership or any other entity (other than a 

18 corporation) shall be treated as a member of a 

19 controlled group of entities if such entity is con20 trolled (within the meaning of section 

21 954(d)(3)) by members of such group (includ22 ing any entity treated as a member of such 

23 group by reason of this sentence). 

24 ‘‘(4) FOREIGN PARENT CORPORATION.—For 

25 purposes of this subsection, the term ‘foreign parent 


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1 corporation’ means, with respect to any deductible 

2 related-party payment, the common parent of the 

3 foreign controlled group of entities referred to in 

4 paragraph (3)(A). 

5 ‘‘(5) REGULATIONS.—The Secretary may pre6 scribe such regulations or other guidance as are nec7 essary or appropriate to carry out the purposes of 

8 this subsection, including regulations or other guid9 ance which provide for— 

10 ‘‘(A) the treatment of two or more persons 

11 as members of a foreign controlled group of en12 tities if such persons would be the common par13 ent of such group if treated as one corporation, 

14 and 

15 ‘‘(B) the treatment of any member of a 

16 foreign controlled group of entities as the com17 mon parent of such group if such treatment is 

18 appropriate taking into account the economic 

19 relationships among such entities.’’. 

20 (b) EFFECTIVE DATE.—The amendment made by 

21 this section shall apply to payments made after the date 

22 of the enactment of this Act. 

Æ 


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