I 
112TH CONGRESS 
2D SESSION 
H. R. 4623 
To amend the Internal Revenue Code of 1986 to expand and make permanent 
rules related to investment by nonresident aliens in domestic mutual funds. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 25, 2012 
Mr. PAULSEN (for himself and Mr. CAMPBELL) 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 
and make permanent rules related to investment by non-
resident aliens in domestic mutual funds. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. EXEMPTION FOR CERTAIN DIVIDENDS PAID BY 
REGULATED INVESTMENT COMPANIES TO 
NONRESIDENT ALIENS EXPANDED AND MADE 
PERMANENT. 
(a) EXEMPTIONS FOR CERTAIN DIVIDENDS MADE 
PERMANENT.— 
(1) INTEREST-RELATED DIVIDENDS.—Subpara-
graph (C) of section 871(k)(1) of the Internal Rev-
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enue Code of 1986 is amended by striking clause 
(v). 
(2) CAPITAL GAIN DIVIDENDS.—Subparagraph 
(C) of section 871(k)(2) of such Code is amended by 
striking clause (v). 
(b) EXPANSION OF EXEMPTION FOR INTEREST-RE-
LATED DIVIDENDS.— 
(1) IN GENERAL.—Subparagraph (E) of section 
871(k)(1) of such Code is amended by striking 
clauses (iii) and (iv) and inserting the following new 
clauses: 
‘‘(iii) Any amount referred to in sub-
section (i)(2)(A) (without regard to the 
trade or business of the regulated invest-
ment company) or in subsection (i)(2)(B). 
‘‘(iv) Any interest which is exempt 
from tax under section 103 or any other 
provision of law without regard to the 
identity of the holder. 
‘‘(v) Any other amount includible in 
gross income that is determined by ref-
erence to an interest rate and that would 
not be subject to withholding under section 
1441 if received by a nonresident alien in-
dividual. 
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‘‘(vi) Any amount includible in gross 
income from sources without the United 
States. 
‘‘(vii) Any qualified income-related 
dividend includible in gross income with re-
spect to stock of another regulated invest-
ment company.’’. 
(2) MODIFICATION OF EXCEPTIONS.—Clause (i) 
of section 871(k)(1)(B) is amended by striking ‘‘in-
terest (other than interest described in subparagraph 
(E)(i) or (iii))’’ and inserting ‘‘interest described in 
subparagraph (E)(ii) (and not described in subpara-
graph (E) (i), (iii), or (iv))’’. 
(3) CONFORMING AMENDMENTS.— 
(A) Paragraph (1) of section 871(k) of 
such Code is amended— 
(i) by striking ‘‘interest-related divi-
dend’’ each place it appears in the text and 
inserting ‘‘qualified income-related divi-
dend’’, 
(ii) by striking ‘‘qualified net interest 
income’’ each place it appears in the text 
and inserting ‘‘qualified net income’’, 
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(iii) by striking ‘‘qualified interest in-
come’’ each place it appears in the text 
and inserting ‘‘qualified income’’, 
(iv) by striking ‘‘INTEREST-RELATED 
DIVIDENDS’’ in the heading thereof and in-
serting 
‘‘QUALIFIED
INCOME-RELATED 
DIVIDENDS’’, 
(v) by striking ‘‘INTEREST RELATED 
DIVIDEND’’ in the heading of subparagraph 
(C) and inserting ‘‘QUALIFIED INCOME-RE-
LATED DIVIDEND’’, 
(vi) by striking ‘‘QUALIFIED NET IN-
TEREST INCOME’’ in the heading of sub-
paragraph (D) and inserting ‘‘QUALIFIED 
NET INCOME’’, and 
(vii) by striking ‘‘QUALIFIED INTER-
EST INCOME’’ in the heading of subpara-
graph (E) and inserting ‘‘QUALIFIED IN-
COME’’. 
(B) Paragraph (1) of section 881(e) of 
such Code is amended— 
(i) by striking ‘‘interest-related divi-
dend’’ each place it appears in subpara-
graphs (A) and (B) and inserting ‘‘quali-
fied income-related dividend’’, 
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(ii) by striking ‘‘interest received’’ in 
subparagraph (B)(ii) and inserting ‘‘inter-
est described in clause (ii) of section 
871(k)(1)(E) (and not described in clause 
(i), (iii), or (iv) of such section) received’’, 
(iii) by striking ‘‘interest-related divi-
dend received’’ in subparagraph (C) and 
inserting ‘‘qualified income-related divi-
dend received from a regulated investment 
company’’, 
(iv) by striking ‘‘clause (i) or (iii)’’ in 
subparagraph (C) and inserting ‘‘clause 
(i), (iii), or (iv)’’, and 
(v) by striking ‘‘INTEREST-RELATED 
DIVIDENDS’’ in the heading thereof and in-
serting 
‘‘QUALIFIED
INCOME-RELATED 
DIVIDENDS’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to dividends with respect to taxable 
years of regulated investment companies beginning after 
December 31, 2011. 
Æ 
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