I 

114TH CONGRESS 

2D SESSION H. R. 5545 

To amend the Internal Revenue Code of 1986 to modify the application 

of certain rules with respect to certain foreign countries. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 21, 2016 

Mr. BOUSTANY (for himself, Mr. ROSKAM, Mr. TIBERI, Mr. BUCHANAN, Mr. 

SAM JOHNSON of Texas, Mr. REICHERT, Mr. YOUNG of Indiana, Mr. 

NUNES, and Mrs. BLACK) 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 modify 

the application of certain rules with respect to certain 

foreign countries. 

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 ‘‘Preventing Investment 

5 in Terrorist Regimes Act’’. 

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1 SEC. 2. MODIFICATION OF APPLICATION OF CERTAIN 

2 RULES WITH RESPECT TO CERTAIN FOREIGN 

3 COUNTRIES. 

4 (a) LIMITATION ON WAIVER AUTHORITY.—Section 

5 901(j)(5)(A) of the Internal Revenue Code of 1986 is 

6 amended by inserting ‘‘(other than a country described in 

7 paragraph (2)(A)(iv))’’ after ‘‘a country’’. 

8 (b) DENIAL OF FOREIGN TAX CREDIT WITH RE9 SPECT TO INCOME DERIVED FROM CERTAIN FOREIGN

10 COUNTRIES WITHOUT REGARD TO WHICH COUNTRY TAX

11 IS PAID.—Subparagraph (A) of section 901(j)(1) of such 

12 Code is amended by striking ‘‘to any country’’ and all that 

13 follows and inserting ‘‘to— 

14 ‘‘(i) any foreign country to which this 

15 subsection applies if such taxes are with 

16 respect to income attributable to a period 

17 during which this subsection applies to 

18 such foreign country, and 

19 ‘‘(ii) any foreign country (without re20 gard to whether this subsection applies to 

21 such foreign country) if such taxes are 

22 with respect to income derived from any 

23 foreign country to which this subsection 

24 applies during a period for which this sub25 section so applies (determined under rules 

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1 similar to the rules of section 952(d)), 

2 and’’. 

3 (c) DENIAL OF DEDUCTION FOR TAXES FOR WHICH

4 FOREIGN TAX CREDIT IS DENIED, ETC.—Section 

5 901(j)(3) of such Code is amended to read as follows: 

6 ‘‘(3) DENIAL OF DEDUCTION FOR TAXES FOR

7 WHICH FOREIGN TAX CREDIT IS DENIED, ETC.— 

8 ‘‘(A) IN GENERAL.—No deduction shall be 

9 allowed under this chapter for any tax for 

10 which credit is not allowable under this section 

11 by reason of paragraph (1)(A). 

12 ‘‘(B) DENIAL OF DEDUCTION PARITY.— 

13 Solely for purposes of section 78, the taxes 

14 deemed to be paid under section 902(a) and 

15 960(a)(1) shall be determined without regard to 

16 this subsection.’’. 

17 (d) APPLICATION OF DENIAL OF DEDUCTION FOR

18 TAXES PAID BY CONTROLLED FOREIGN CORPORA19 TIONS.— 

20 (1) DETERMINATION OF SUBPART F INCOME.— 

21 Section 952(a) of such Code is amended by striking 

22 ‘‘(including taxes)’’ in the last sentence and insert23 ing ‘‘(including taxes other than taxes for which 

24 credit is not allowed under section 901 by reason of 

25 section 901(j)(1)(A))’’. 

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1 (2) DETERMINATION OF EARNINGS AND PROF2 ITS.—Section 964(a) of such Code is amended by in3 serting ‘‘, or any taxes for which credit is not al4 lowed under section 901 by reason of section 

5 901(j)(1)(A),’’ after ‘‘other payment (within the 

6 meaning of section 162(c))’’. 

7 (e) CLARIFICATION REGARDING COUNTRY FROM

8 WHICH INCOME IS DERIVED.—Section 952(d) of such 

9 Code is amended by striking ‘‘The Secretary’’ and insert10 ing the following: 

11 ‘‘(1) IN GENERAL.—For purposes of subsection 

12 (a)(5), income shall be treated as derived from a for13 eign country if such income is derived in connection 

14 with— 

15 ‘‘(A) property which is sold— 

16 ‘‘(i) for use, consumption, or disposi17 tion in such foreign country, or 

18 ‘‘(ii) to any foreign person which is 

19 created, organized, or controlled in such 

20 foreign country or to a citizen or resident 

21 of such foreign country, or 

22 ‘‘(B) services provided with respect to per23 sons or property located in such foreign country 

24 or with respect to persons described in subpara25 graph (A)(ii). 

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1 ‘‘(2) SPECIAL RULES.—For purposes of this 

2 subsection— 

3 ‘‘(A) ULTIMATE DISPOSITION.—Property 

4 shall not fail to be treated as described in para5 graph (1)(A) if the controlled foreign corpora6 tion or any related person knew, or had reason 

7 to know, that such property would be ultimately 

8 sold— 

9 ‘‘(i) for use, consumption, or disposi10 tion in such foreign country, or 

11 ‘‘(ii) to any person described in para12 graph (1)(A)(ii). 

13 ‘‘(B) SALES TO RELATED PARTIES.—If 

14 property is sold to a related person, such sale 

15 shall not fail to be treated as described in para16 graph (1)(A) unless— 

17 ‘‘(i) such property is ultimately sold— 

18 ‘‘(I) for use, consumption or dis19 position outside such foreign country, 

20 or 

21 ‘‘(II) to a person not described in 

22 paragraph (1)(A)(ii), or 

23 ‘‘(ii) such property is resold to an un24 related person not described in paragraph 

25 (1)(A)(ii) and neither the controlled formstockstill on DSK3G9T082PROD with BILLS

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1 eign corporation nor any related person 

2 knew or had reason to know that such 

3 property would be ultimately sold in a sale 

4 described in paragraph (1)(A). 

5 ‘‘(C) APPLICATION TO SERVICES.—Rules 

6 similar to the rules of subparagraphs (A) and 

7 (B) shall apply with respect to services de8 scribed in paragraph (1)(B). 

9 ‘‘(D) RELATED PERSON.—The term ‘re10 lated person’ has the meaning given such term 

11 by section 954(d)(3). 

12 ‘‘(3) REGULATIONS.—The Secretary’’. 

13 (f) DOUBLING OF RATES OF TAX WITH RESPECT TO

14 CERTAIN FOREIGN COUNTRIES.— 

15 (1) DOUBLING OF RATES OF TAX ON CITIZENS

16 AND CORPORATIONS OF CERTAIN FOREIGN COUN17 TRIES.—Section 891 of such Code is amended— 

18 (A) by striking ‘‘Whenever the President’’ 

19 and inserting the following: 

20 ‘‘(a) DOUBLING OF RATES OF TAX ON CITIZENS AND

21 CORPORATIONS OF CERTAIN FOREIGN COUNTRIES.— 

22 ‘‘(1) PRESIDENTIAL PROCLAMATION.—When23 ever the President’’, and 

24 (B) by adding at the end the following new 

25 paragraph: 

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1 ‘‘(2) STATUTORY APPLICATION.—In the case of 

2 any foreign country to which section 901(j) applies 

3 for any period, paragraph (1) shall apply with re4 spect to such country in the same manner as if the 

5 President had made a proclamation described in the 

6 first sentence of paragraph (1) with respect to such 

7 country at the beginning of such period and a proc8 lamation described in the last sentence of paragraph 

9 (1) with respect to such country at the end of such 

10 period.’’. 

11 (2) DOUBLING OF RATES OF TAX ON INCOME

12 DERIVED FROM CERTAIN FOREIGN COUNTRIES.— 

13 Section 891 of such Code, as amended by paragraph 

14 (1), is amended by adding at the end the following 

15 new subsection: 

16 ‘‘(b) DOUBLING OF RATES OF TAX ON INCOME DE17 RIVED FROM CERTAIN FOREIGN COUNTRIES.— 

18 ‘‘(1) IN GENERAL.—In the case of any foreign 

19 country to which section 901(j) applies for any pe20 riod, the rates of tax imposed by sections 1, 11, 801, 

21 831, 852, 871, and 881 with respect to any taxpayer 

22 shall be doubled in the case of income derived from 

23 such foreign country during such period (determined 

24 under rules similar to the rules of section 952(d)). 

25 In any case in which the manner in which income 

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1 is stacked would change the rate of tax which is 

2 treated as applying to income described in the pre3 ceding sentence, such income shall be stacked in the 

4 manner which results in the highest rate of tax ap5 plying to the income so described. 

6 ‘‘(2) COORDINATION WITH DOUBLING OF RATES

7 OF TAX ON CITIZENS AND CORPORATIONS OF CER8 TAIN FOREIGN COUNTRIES.—Paragraph (1) shall 

9 not apply to any taxpayer for any period for which 

10 subsection (a) applies to such taxpayer.’’. 

11 (3) CONFORMING AMENDMENTS.— 

12 (A) The heading of section 891 of such 

13 Code is amended by striking ‘‘ON CITIZENS

14 AND CORPORATIONS OF’’ and inserting 

15 ‘‘WITH RESPECT TO’’. 

16 (B) The item relating to section 891 in the 

17 table of sections for subpart D of part II of 

18 subchapter N of chapter 1 of such Code is 

19 amended to read as follows: 

‘‘Sec. 891. Doubling of rates of tax with respect to certain foreign countries.’’. 

20 (g) PROHIBITION ON AGREEMENTS TO DELEGATE

21 CERTAIN REPORTING TO CERTAIN FOREIGN COUN22 TRIES.—Section 1474(f) of such Code is amended— 

23 (1) by striking ‘‘The Secretary’’ and inserting 

24 the following: 

25 ‘‘(1) IN GENERAL.—The Secretary’’, and 

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1 (2) by adding at the end the following new 

2 paragraph: 

3 ‘‘(2) PROHIBITION ON INTERGOVERNMENTAL

4 AGREEMENTS WITH CERTAIN FOREIGN COUN5 TRIES.—The Secretary may not enter into any inter6 governmental agreement to carry out section 

7 1471(b) with any country to which section 901(j) 

8 applies.’’. 

9 (h) EFFECTIVE DATE.— 

10 (1) IN GENERAL.—Except as otherwise pro11 vided in this subsection, the amendments made by 

12 subsections (a), (b), and (c) shall apply to taxes paid 

13 or incurred in taxable years ending after the date of 

14 the introduction of this Act. 

15 (2) AMENDMENTS RELATED TO CONTROLLED

16 FOREIGN CORPORATIONS.—The amendments made 

17 by— 

18 (A) subsections (a), (b), and (c) to the ex19 tent such amendments relate to section 

20 952(a)(5) of the Internal Revenue Code of 1986 

21 or to taxes deemed to have been paid under sec22 tion 902 or 960 of such Code, and 

23 (B) subsections (d) and (e), 

24 shall apply to taxable years of foreign corporations 

25 ending after the date of the introduction of this Act 

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1 and to taxable years of United States shareholders 

2 with or within which such taxable years of foreign 

3 corporations end. 

4 (3) AMENDMENTS RELATED TO DOUBLING OF

5 TAX ON CITIZENS AND CORPORATIONS OF CERTAIN

6 FOREIGN COUNTRIES.—The amendments made by 

7 subsection (g) shall apply to taxable years ending 

8 after the date of the introduction of this Act (with9 out regard to whether the period described in sub10 section (a)(2) or (b)(1) of section 891 of the Inter11 nal Revenue Code of 1986, as added by subsection 

12 (f), begins before such date). 

13 (4) AMENDMENTS RELATED TO PROHIBITION

14 ON AGREEMENTS TO DELEGATE CERTAIN REPORT15 ING TO CERTAIN FOREIGN COUNTRIES.—The amend16 ments made by subsection (g) shall take effect on 

17 the date of the enactment of this Act. 

Æ 

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