II 

113TH CONGRESS 

1ST SESSION S. 1449 

To amend the Internal Revenue Code of 1986 to provide that income attributable to certain passenger cruise voyages beginning or ending in the 

United States shall be treated as effectively connected with the conduct 

of a trade or business within the United States. 

IN THE SENATE OF THE UNITED STATES 

AUGUST 1, 2013 

Mr. ROCKEFELLER introduced the following bill; which was read twice and 

referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

that income attributable to certain passenger cruise voyages beginning or ending in the United States shall 

be treated as effectively connected with the conduct of 

a trade or business within the United States. 

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

3 SECTION 1. TAXATION OF UNITED STATES CRUISE INDUS4 TRY INCOME OF NONRESIDENT ALIENS AND 

5 FOREIGN CORPORATIONS. 

6 (a) UNITED STATES CRUISE INDUSTRY INCOME

7 TREATED AS EFFECTIVELY CONNECTED TO THE CONVerDate Mar 15 2010 02:47 Aug 08, 2013 Jkt 029200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1449.IS S1449

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1 DUCT OF A TRADE OR BUSINESS WITHIN THE UNITED

2 STATES.— 

3 (1) INCOME FROM SOURCES WITHOUT THE

4 UNITED STATES.— 

5 (A) IN GENERAL.—Paragraph (4) of sec6 tion 864(c) of the Internal Revenue Code of 

7 1986 is amended by redesignating subpara8 graph (D) as subparagraph (E) and by insert9 ing after subparagraph (C) the following new 

10 subparagraph: 

11 ‘‘(D) UNITED STATES CRUISE INDUSTRY

12 INCOME.— 

13 ‘‘(i) IN GENERAL.—United States 

14 cruise industry income shall be treated as 

15 effectively connected with the conduct of a 

16 trade or business within the United States. 

17 ‘‘(ii) UNITED STATES CRUISE INDUS18 TRY INCOME.—For purposes of this sub19 paragraph, the term ‘United States cruise 

20 industry income’ means income attrib21 utable to any covered passenger cruise (as 

22 defined in paragraph (8)), including in23 come directly or indirectly attributable to 

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1 board or off-board activities incidental to 

2 such covered passenger cruise.’’. 

3 (B) COVERED PASSENGER CRUISE.—Sub4 section (c) of section 864 of such Code is 

5 amended by adding at the end the following 

6 new paragraph: 

7 ‘‘(8) COVERED PASSENGER CRUISE.—For pur8 poses of paragraph (4)(C)— 

9 ‘‘(A) DEFINITION.— 

10 ‘‘(i) IN GENERAL.—The term ‘covered 

11 passenger cruise’ means a voyage of a 

12 commercial passenger cruise vessel— 

13 ‘‘(I) that extends over 1 or more 

14 nights, and 

15 ‘‘(II) during which passengers 

16 embark or disembark the vessel in the 

17 United States. 

18 ‘‘(ii) EXCEPTIONS FOR CERTAIN VOY19 AGES.—Such term shall not include any 

20 voyage— 

21 ‘‘(I) on any vessel owned or oper22 ated by the United States, a State, or 

23 any subdivision thereof, 


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1 ‘‘(II) which occurs exclusively on 

2 the inland waterways of the United 

3 States, or 

4 ‘‘(III) in which a vessel in the 

5 usual course of employment proceeds, 

6 without an intervening foreign port of 

7 call from one port or place in the 

8 United States to the same port or 

9 place or to another port or place in 

10 the United States. 

11 ‘‘(B) PASSENGER CRUISE VESSEL.—For 

12 purposes of subparagraph (A)— 

13 ‘‘(i) IN GENERAL.—The term ‘pas14 senger cruise vessel’ means any passenger 

15 vessel having berth or stateroom accom16 modations for at least 250 passengers. 

17 ‘‘(ii) EXCEPTIONS.—Such term shall 

18 not include any ferry, recreational vessel, 

19 sailing school vessel, small passenger ves20 sel, offshore supply vessel, or any other 

21 vessel determined under regulations by the 

22 Secretary to be excluded from the applica23 tion of this part. 

24 ‘‘(iii) DEFINITIONS.—Any term used 

25 in this section which is used in chapter 21 


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1 of title 46, United States Code, shall have 

2 the meaning given such term under section 

3 2101 of such title.’’. 

4 (C) CONFORMING AMENDMENT.—Subpara5 graph (A) of section 864(c)(4) of such Code is 

6 amended by striking ‘‘subparagraphs (B) and 

7 (C)’’ and inserting ‘‘subparagraphs (B), (C), 

8 and (D)’’. 

9 (2) INCOME FROM SOURCES WITHIN THE

10 UNITED STATES.—Paragraph (4) of section 887(b) 

11 of such Code is amended by adding at the end the 

12 following flush sentence: 

13 ‘‘The preceding sentence shall not apply to with respect 

14 to any United States source gross transportation income 

15 which is United States cruise industry income (as defined 

16 in section 864(c)(4)(C)(ii)).’’. 

17 (b) REPEAL OF EXEMPTION FROM GROSS INCOME

18 FOR CERTAIN TAXPAYERS.— 

19 (1) NONRESIDENT ALIENS.—Paragraph (1) of 

20 section 872(b) of the Internal Revenue Code of 1986 

21 is amended by inserting ‘‘(other than United States 

22 cruise industry income (as defined in section 

23 864(c)(4)(C)))’’ after ‘‘or ships’’. 

24 (2) FOREIGN CORPORATIONS.—Paragraph (1) 

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1 ing ‘‘(other than United States cruise industry in2 come (as defined in section 864(c)(4)(C)))’’ after 

3 ‘‘or ships’’. 

4 (c) INCOME TAX TREATIES.—Section 894 of the In5 ternal Revenue Code of 1986 is amended by adding at the 

6 end the following new subsection: 

7 ‘‘(d) SPECIAL RULE FOR UNITED STATES CRUISE

8 INDUSTRY INCOME.—Notwithstanding subsection (a), no 

9 tax exemption or reduced tax rate shall be permitted under 

10 any treaty of the United States with respect to United 

11 States cruise industry income (as defined in section 

12 864(c)(4)(C)).’’. 

13 (d) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to income attributable to voyages 

15 made after the date of the enactment of this Act. 

Æ 


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