‘‘(6) all income of such corporation derived 
from all foreign countries during any period during 
which section 901(m) applies to such corporation.’’. 
(c) REPORTING.— 
(1) IN GENERAL.—Part II of subchapter B of 
chapter 68 of the Internal Revenue Code of 1986 
(relating to failure to comply with certain informa-
tion reporting requirements) is amended by adding 
at the end the following new section: 
‘‘SEC. 6726. FAILURE TO REPORT INFORMATION UNDER 
SECTION 901(m). 
‘‘(a) IN GENERAL.—In the case of each failure de-
scribed in subsection (c) by any person, such person shall 
pay a penalty of $100,000 for each day in the noncompli-
ance period with respect to which the failure relates. 
‘‘(b) NONCOMPLIANCE PERIOD.—For purposes of 
this section, the term ‘noncompliance period’ means, with 
respect to any failure, the period— 
‘‘(1) beginning on the date such failure first oc-
curs; and 
‘‘(2) ending on the date such failure is cor-
rected. 
‘‘(c) FAILURES SUBJECT TO PENALTY.—For pur-
poses of subsection (a), the failure described in this sub-
section is a failure to comply with any requirement con-
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tained in the regulations prescribed under section 
901(m).’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part II of subchapter B of chapter 68 of 
such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 6726. Failure to report information under section 901(m).’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 303. INCOME TAX OF FOREIGN CORPORATIONS EN-
GAGED IN BUSINESS ACTIVITY WITH IRAN 
PROHIBITED BY UNITED STATES LAW. 
(a) IN GENERAL.—Subpart B of part II of sub-
chapter N of chapter 1 of the Internal Revenue Code of 
1986 (relating to foreign corporations) is amended by in-
serting after section 884 the following new section: 
‘‘SEC. 884A. INCOME TAX OF FOREIGN CORPORATIONS EN-
GAGED IN BUSINESS ACTIVITY WITH IRAN 
PROHIBITED BY UNITED STATES LAW. 
‘‘In the case of a foreign corporation which is en-
gaged in business activity with Iran prohibited by United 
States law— 
‘‘(1) in respect of tax on income— 
‘‘(A) section 881(a) shall be applied by 
substituting ‘45 percent’ for ‘30 percent’; 
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‘‘(B) subsections (b), (c), (d) and (e) of 
section 881 shall not apply; 
‘‘(C) tax imposed pursuant to section 882 
shall be imposed at a rate of 45 percent; 
‘‘(D) section 883 shall not apply; and 
‘‘(E) section 884(a) shall be applied by 
substituting ‘45 percent’ for ‘30 percent’; and 
‘‘(2) in respect of withholding— 
‘‘(A) section 1442(a) shall be applied by 
substituting ‘45 percent’ for ‘30 percent’; and 
‘‘(B) section 1442(c) shall not apply.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subpart B of part II of subchapter N of chapter 1 
of such Code is amended by inserting after the item relat-
ing to section 884 the following new item: 
‘‘Sec. 884A. Income tax of foreign corporations engaged in business activity 
with Iran prohibited by United States law.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 304. COMPENSATION FOR FORMER UNITED STATES 
HOSTAGES IN IRAN FUND. 
(a) CREATION OF FUND.—There is established a 
fund to be known as the ‘‘Compensation for Former 
United States Hostages in Iran Fund’’ (in this section re-
ferred to as the ‘‘Fund’’), consisting of such amounts as 
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may be appropriated to the Fund as provided by this sec-
tion. 
(b) TRANSFERS TO FUND.—There are hereby appro-
priated to the Fund amounts equivalent to the taxes re-
ceived in the Treasury by reason of the amendments made 
by sections 302 and 303 of this Act. 
(c) EXPENDITURES FROM FUND.—Amounts in the 
Fund shall be available, as provided by appropriation Acts, 
for making expenditures to pay claims to the United 
States citizens held hostage in Iran, and to members of 
the families of such United States citizens, who are identi-
fied as plaintiffs or class members in Case Number 
1:00CV03110 (EGS) or Case Number 1:00CV00716 
(HHK) in the United States District Court for the Dis-
trict of Columbia. 
TITLE IV—DEFINITIONS 
SEC. 401. DEFINITIONS. 
In this Act: 
(1) APPROPRIATE
CONGRESSIONAL
COMMIT-
TEES.—The term ‘‘appropriate congressional com-
mittees’’ means— 
(A) the Committee on Foreign Affairs and 
the Committee on Appropriations of the House 
of Representatives; and 
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(B) the Committee on Foreign Relations 
and the Committee on Appropriations of the 
Senate. 
(2) GOVERNMENT OF SYRIA.—The term ‘‘Gov-
ernment of Syria’’ includes any agency or instru-
mentality of the Government of Syria, including any 
entity that is controlled by the Government of Syria. 
(3) GOVERNMENT OF IRAN.—The term ‘‘Gov-
ernment of Iran’’ includes any agency or instrumen-
tality of the Government of Iran, including any enti-
ty that is controlled by the Government of Iran. 
(4) GOVERNMENT
OF
NORTH
KOREA.—The 
term ‘‘Government of North Korea’’ includes any 
agency or instrumentality of the Government of 
North Korea, including any entity that is controlled 
by the Government of North Korea. 
(5) WEAPONS
OF
MASS
DESTRUCTION
PRO-
GRAMS.—The term ‘‘weapons of mass destruction 
programs’’ means— 
(A) and chemical weapons, biological weap-
ons, radiological or nuclear procurement and 
development programs and efforts; 
(B) ballistic missile procurement and devel-
opment programs and efforts; and 
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