I 

114TH CONGRESS 

2D SESSION H. R. 5184 

To amend the Internal Revenue Code of 1986 to expand rules related to 

investment by nonresident aliens in domestic mutual funds and business 

development companies. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 10, 2016 

Mr. PAULSEN 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 expand 

rules related to investment by nonresident aliens in domestic mutual funds and business development companies. 

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

3 SECTION 1. EXEMPTION FOR CERTAIN DIVIDENDS PAID BY 

4 REGULATED INVESTMENT COMPANIES TO 

5 NONRESIDENT ALIENS EXPANDED AND MADE 

6 PERMANENT. 

7 (a) EXPANSION OF EXEMPTION FOR INTEREST-RE8 LATED DIVIDENDS.— 


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1 (1) IN GENERAL.—Subparagraph (E) of section 

2 871(k)(1) of the Internal Revenue Code of 1986 is 

3 amended by striking clauses (iii) and (iv) and insert4 ing the following new clauses: 

5 ‘‘(iii) Any amount referred to in sub6 section (i)(2)(A) (without regard to the 

7 trade or business of the regulated invest8 ment company) or in subsection (i)(2)(B). 

9 ‘‘(iv) Any interest which is exempt 

10 from tax under section 103 or any other 

11 provision of law without regard to the 

12 identity of the holder. 

13 ‘‘(v) Any other amount includible in 

14 gross income that is determined by ref15 erence to an interest rate and that would 

16 not be subject to withholding under section 

17 1441 if received by a nonresident alien in18 dividual. 

19 ‘‘(vi) Any amount includible in gross 

20 income from sources without the United 

21 States. 

22 ‘‘(vii) Any qualified income-related 

23 dividend includible in gross income with re24 spect to stock of another regulated invest25 ment company.’’. 


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•HR 5184 IH

1 (2) MODIFICATION OF EXCEPTIONS.—Clause (i) 

2 of section 871(k)(1)(B) of such Code is amended by 

3 striking ‘‘interest (other than interest described in 

4 subparagraph (E)(i) or (iii))’’ and inserting ‘‘interest 

5 described in subparagraph (E)(ii) (and not described 

6 in subparagraph (E) (i), (iii), or (iv))’’. 

7 (3) CONFORMING AMENDMENTS.— 

8 (A) Paragraph (1) of section 871(k) of 

9 such Code is amended— 

10 (i) by striking ‘‘interest-related divi11 dend’’ each place it appears in the text and 

12 inserting ‘‘qualified income-related divi13 dend’’, 

14 (ii) by striking ‘‘qualified net interest 

15 income’’ each place it appears in the text 

16 and inserting ‘‘qualified net income’’, 

17 (iii) by striking ‘‘qualified interest in18 come’’ each place it appears in the text 

19 and inserting ‘‘qualified income’’, 

20 (iv) by striking ‘‘INTEREST-RELATED

21 DIVIDENDS’’ in the heading thereof and in22 serting ‘‘QUALIFIED INCOME-RELATED

23 DIVIDENDS’’, 

24 (v) by striking ‘‘INTEREST RELATED

25 DIVIDEND’’ in the heading of subparagraph 


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•HR 5184 IH

1 (C) and inserting ‘‘QUALIFIED INCOME-RE2 LATED DIVIDEND’’, 

3 (vi) by striking ‘‘QUALIFIED NET IN4 TEREST INCOME’’ in the heading of sub5 paragraph (D) and inserting ‘‘QUALIFIED

6 NET INCOME’’, and 

7 (vii) by striking ‘‘QUALIFIED INTER8 EST INCOME’’ in the heading of subpara9 graph (E) and inserting ‘‘QUALIFIED IN10 COME’’. 

11 (B) Paragraph (1) of section 881(e) of 

12 such Code is amended— 

13 (i) by striking ‘‘interest-related divi14 dend’’ each place it appears in subpara15 graphs (A) and (B) and inserting ‘‘quali16 fied income-related dividend’’, 

17 (ii) by striking ‘‘interest received’’ in 

18 subparagraph (B)(ii) and inserting ‘‘inter19 est described in clause (ii) of section 

20 871(k)(1)(E) (and not described in clause 

21 (i), (iii), or (iv) of such section) received’’, 

22 (iii) by striking ‘‘interest-related divi23 dend received’’ in subparagraph (C) and 

24 inserting ‘‘qualified income-related diviVerDate Sep 11 2014 02:31 May 12, 2016 Jkt 059200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5184.IH H5184

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•HR 5184 IH

1 dend received from a regulated investment 

2 company’’, 

3 (iv) by striking ‘‘clause (i) or (iii)’’ in 

4 subparagraph (C) and inserting ‘‘clause 

5 (i), (iii), or (iv)’’, and 

6 (v) by striking ‘‘INTEREST-RELATED

7 DIVIDENDS’’ in the heading thereof and in8 serting ‘‘QUALIFIED INCOME-RELATED

9 DIVIDENDS’’. 

10 (b) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to dividends with respect to taxable 

12 years of regulated investment companies beginning after 

13 December 31, 2015. 

Æ 


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