I 

117TH CONGRESS 

1ST SESSION H. R. 3142 

To amend the Internal Revenue Code of 1986 to provide for International 

Regulated Investment Companies. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 12, 2021 

Mr. DANNY K. DAVIS of Illinois (for himself, Mr. ESTES, Mr. PASCRELL, and 

Mr. SUOZZI) 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 provide 

for International Regulated Investment 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. SHORT TITLE. 

4 This Act may be cited as the ‘‘Tax Parity for U.S. 

5 Mutual Funds Act of 2021’’. 

6 SEC. 2. INTERNATIONAL REGULATED INVESTMENT COMPA7 NIES. 

8 (a) IN GENERAL.—Subchapter N of chapter 1 of the 

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1 nating part V as part VI and inserting after part IV the 

2 following new part: 

3 ‘‘PART V—INTERNATIONAL REGULATED 

4 INVESTMENT COMPANIES 

‘‘Sec. 998. Definition of international regulated investment company. 

‘‘Sec. 998A. Taxation of IRICs. 

‘‘Sec. 998B. Other rules. 

5 ‘‘SEC. 998. DEFINITION OF INTERNATIONAL REGULATED IN6 VESTMENT COMPANY. 

7 ‘‘(a) GENERAL RULE.—For purposes of this title, the 

8 terms ‘international regulated investment company’ and 

9 ‘IRIC’ mean, with respect to any taxable year, a domestic 

10 corporation which, at all times during the taxable year, 

11 meets the following requirements: 

12 ‘‘(1) The corporation is registered under the In13 vestment Company Act of 1940. 

14 ‘‘(2) Except as provided in subsection (c), the 

15 corporation holds no assets other than the stock of 

16 a single regulated investment company— 

17 ‘‘(A) to which part I of subchapter M ap18 plies, and 

19 ‘‘(B) which is not a qualified investment 

20 entity (as defined in section 897(h)(4)(A)(ii)). 

21 ‘‘(3) All outstanding stock of the corporation is 

22 held by nonresident alien individuals (and their for23 eign estates) and qualified foreign pension funds 

24 (within the meaning of section 897(l)(2)). 


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1 ‘‘(4) The corporation has in effect an election 

2 to be treated as an IRIC. 

3 ‘‘(b) ELECTION.—An election to be treated as an 

4 IRIC shall apply to the taxable year for which made and 

5 all subsequent taxable years until terminated. Such elec6 tion shall be made for any taxable year not later than the 

7 due date (with extensions) for the return of tax imposed 

8 by this subtitle for the taxable year. 

9 ‘‘(c) PERMITTED ASSETS.—For purposes of sub10 section (a)(2), an IRIC may hold— 

11 ‘‘(1) an amount of cash and cash equivalents 

12 reasonably necessary or appropriate for the corpora13 tion to conduct its normal affairs, and 

14 ‘‘(2) such other assets as are incidental to the 

15 corporation’s conduct of its normal affairs or other16 wise allowed by the Secretary. 

17 ‘‘(d) TERMINATION.— 

18 ‘‘(1) IN GENERAL.—Except as provided in para19 graph (2), if a corporation fails to meet the require20 ments of subsection (a) at any time during the tax21 able year, the corporation shall not be treated as an 

22 IRIC for such taxable year. 

23 ‘‘(2) INADVERTENT FAILURE.— 

24 ‘‘(A) IN GENERAL.—A corporation which 

25 fails to meet the requirements of subsection (a) 


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1 for any taxable year shall nevertheless be con2 sidered to have satisfied the requirements of 

3 such subsection for such taxable year if— 

4 ‘‘(i) the failure was due to reasonable 

5 cause and not due to willful neglect, 

6 ‘‘(ii) no later than 30 days after the 

7 discovery of the event causing such failure, 

8 the corporation meets the requirements of 

9 subsection (a), 

10 ‘‘(iii) in the case of a failure to meet 

11 the requirements of subsection (a)(3) for 

12 any period, the failure was caused by per13 sons not described therein holding, in the 

14 aggregate, less than 1 percent of the stock 

15 (by value) of the corporation, and 

16 ‘‘(iv) the corporation pays the addi17 tional tax imposed by reason of subpara18 graph (B). 

19 ‘‘(B) IMPOSITION OF ADDITIONAL TAX ON

20 CERTAIN FAILURES.—In the case of a failure 

21 described in subparagraph (A)(iii) for any tax22 able year, the tax imposed by section 998A(a) 

23 on the IRIC shall be equal to the sum of— 

24 ‘‘(i) the tax determined under such 

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1 graph) on amounts received by the IRIC 

2 for the taxable year other than amounts so 

3 received which are attributable to stock 

4 held by persons not described in subsection 

5 (a)(3) for the period so held, plus 

6 ‘‘(ii) 100 percent of the amounts re7 ceived which are so attributable. 

8 The Secretary shall prescribe rules for the prop9 er allocation of deductions to amounts described 

10 in this subparagraph. 

11 ‘‘SEC. 998A. TAXATION OF IRICs. 

12 ‘‘(a) IN GENERAL.—In the case of an IRIC, there 

13 shall be imposed, in lieu of the tax imposed by section 11, 

14 a tax equal to 30 percent of the excess of— 

15 ‘‘(1) the amounts received by the IRIC which 

16 (before the application of any treaty) would be sub17 ject to tax under section 871(a) if received by a non18 resident alien individual, over 

19 ‘‘(2) the deductions properly allocable to such 

20 amounts (other than deductions allowed under sec21 tions 163, 172, 243, and such other provisions as 

22 the Secretary may prescribe in regulations to pre23 vent abuse). 

24 ‘‘(b) TREATIES.— 


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1 ‘‘(1) IN GENERAL.—In the case of a treaty 

2 IRIC, subsection (a) shall be applied by substituting 

3 ‘15 percent’ for ‘30 percent’. 

4 ‘‘(2) TREATY IRIC.—For purposes of paragraph 

5 (1), the term ‘treaty IRIC’ means an IRIC— 

6 ‘‘(A) all the outstanding stock of which is 

7 held by persons resident in a country that has 

8 in effect with the United States an income tax 

9 treaty pursuant to which such persons would, 

10 by reason of section 894(a), be subject to tax 

11 under section 871(a) on dividends at a rate not 

12 greater than 15 percent, and 

13 ‘‘(B) which elects to be a treaty IRIC. 

14 Rules similar to the rules of section 998(b) shall 

15 apply to an election under subparagraph (B). 

16 ‘‘SEC. 998B. OTHER RULES. 

17 ‘‘(a) COORDINATION WITH SUBCHAPTER M.—Except 

18 as provided in subsection (e), an IRIC shall not be treated 

19 as a regulated investment company for purposes of this 

20 title. 

21 ‘‘(b) NO CARRYOVERS.— 

22 ‘‘(1) CARRYOVERS TO IRIC YEARS.—No 

23 carryforward, and no carryback, arising for a tax24 able year for which the corporation is not an IRIC 


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1 may be carried to a taxable year for which such cor2 poration is an IRIC. 

3 ‘‘(2) CARRYOVERS FROM IRIC YEARS.—No 

4 carryforward, and no carryback, shall arise for a 

5 taxable year for which a corporation is an IRIC. 

6 ‘‘(c) CERTAIN TAXES NOT TO APPLY.—Sections 55, 

7 531, and 541 shall not apply to an IRIC. 

8 ‘‘(d) CREDITS NOT ALLOWED.—No credits under 

9 this chapter shall be allowed to an IRIC. 

10 ‘‘(e) REDEMPTIONS.—In applying section 302(b)(5), 

11 an IRIC shall be treated as a publicly offered regulated 

12 investment company. 

13 ‘‘(f) RELIANCE ON CERTIFICATION.— 

14 ‘‘(1) RELIANCE.—With respect to the require15 ment in sections 998(a)(3) and 998A(b)(2)(A), a 

16 corporation may rely on the certification of its share17 holders, unless or until such time that the corpora18 tion has reason to know that the certification is false 

19 or is no longer true. 

20 ‘‘(2) REDEMPTION UPON FALSE CERTIFI21 CATION.—If a corporation has reason to know that 

22 the certification made by one of its shareholders is 

23 false or is no longer true, the corporation must re24 deem the stock held by such shareholder as soon as 

25 reasonably practicable (and in no case more than 30 


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1 days after the corporation obtains such reason to 

2 know). Failure to redeem such stock in a timely 

3 manner shall result in the corporation failing the re4 quirement of section 998(a)(3) or 998A(b)(2)(A), 

5 whichever is applicable. 

6 ‘‘(3) CERTIFICATION BY CERTAIN INSTITU7 TIONS.—For purposes of this subsection, a certifi8 cation with regard to a person which is made by an 

9 institution described in section 871(h)(5)(B) in a 

10 form satisfactory to the Secretary under section 

11 871(h) shall be deemed to be a certification by such 

12 person.’’. 

13 (b) CLERICAL AMENDMENT.—The table of parts for 

14 subchapter N of chapter 1 of the Internal Revenue Code 

15 of 1986 is amended by redesignating the item relating to 

16 part V as relating to part VI and inserting after the item 

17 relating to part IV the following new item: 

‘‘Part V—International regulated investment companies’’. 

18 (c) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to taxable years beginning after 

20 the date of the enactment of this Act. 

Æ 


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