I 
110TH CONGRESS 
1ST SESSION H. R. 3160 
To amend the Internal Revenue Code of 1986 to prevent corporations from 
exploiting tax treaties to evade taxation of United States income. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 24, 2007 
Mr. DOGGETT (for himself, Mr. STARK, Mr. LEVIN, Mr. MCDERMOTT, Mr. 
LEWIS of Georgia, Mr. NEAL of Massachusetts, Mr. MCNULTY, Mr. POM-
EROY, Mrs. JONES of Ohio, Mr. PASCRELL, Mr. MEEK of Florida, Mr. 
ABERCROMBIE, Mr. ACKERMAN, Mr. ANDREWS, Mr. BAIRD, Mr. BER-
MAN, Mr. BERRY, Ms. CORRINE BROWN of Florida, Mr. CAPUANO, Ms. 
CARSON, Ms. CLARKE, Mr. CLEAVER, Mr. CONYERS, Mr. COSTELLO, Mr. 
CUMMINGS, Mr. DAVIS of Illinois, Mr. DEFAZIO, Mr. DELAHUNT, Ms. 
DELAURO, Mr. EDWARDS, Mr. ELLISON, Mr. FARR, Mr. FATTAH, Mr. 
FILNER, Mr. GRIJALVA, Mr. HARE, Mr. HINCHEY, Mr. HOLT, Ms. 
HOOLEY, Mr. JACKSON of Illinois, Ms. JACKSON-LEE of Texas, Mr. 
JOHNSON of Georgia, Ms. KAPTUR, Mr. KENNEDY, Ms. KILPATRICK, Ms. 
LEE, Mr. MCGOVERN, Mr. GEORGE MILLER of California, Mr. PATRICK 
J. MURPHY of Pennsylvania, Mr. NADLER, Mr. PAYNE, Mr. RUSH, Ms. 
LORETTA SANCHEZ of California, Ms. SCHAKOWSKY, Mr. SHERMAN, Ms. 
SLAUGHTER, Ms. SOLIS, Ms. SUTTON, Mr. TIERNEY, Ms. WATSON, and 
Mr. WAXMAN) 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 prevent 
corporations from exploiting tax treaties to evade tax-
ation of United States income. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. LIMITATION ON TREATY BENEFITS FOR CER-
TAIN DEDUCTIBLE PAYMENTS. 
(a) IN GENERAL.—Section 894 of the Internal Rev-
enue Code of 1986 (relating to income affected by treaty) 
is amended by adding at the end the following new sub-
section: 
‘‘(d) LIMITATION ON TREATY BENEFITS FOR CER-
TAIN DEDUCTIBLE PAYMENTS.— 
‘‘(1) IN GENERAL.—In the case of any deduct-
ible related-party payment, the amount of any with-
holding tax imposed under chapter 3 (and any tax 
imposed under subpart A or B of this part) with re-
spect to such payment shall not be less than the 
amount which would be imposed if the payment were 
made directly to the foreign parent corporation (tak-
ing into account any income tax treaty between the 
United States and the country in which the foreign 
parent corporation is resident). 
‘‘(2) 
DEDUCTIBLE
RELATED-PARTY
PAY-
MENT.—For purposes of this subsection, the term 
‘deductible related-party payment’ means any pay-
ment made, directly or indirectly, by any person to 
any other person if the payment is allowable as a de-
duction under this chapter and both persons are 
members of the same foreign controlled group of en-
tities. 
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‘‘(3) FOREIGN CONTROLLED GROUP OF ENTI-
TIES.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘foreign 
controlled group of entities’ means a controlled 
group of entities the common parent of which 
is a foreign corporation. 
‘‘(B) CONTROLLED GROUP OF ENTITIES.— 
The term ‘controlled group of entities’ means a 
controlled group of corporations as defined in 
section 1563(a)(1), except that— 
‘‘(i) ‘more than 50 percent’ shall be 
substituted for ‘at least 80 percent’ each 
place it appears therein, and 
‘‘(ii) the determination shall be made 
without regard to subsections (a)(4) and 
(b)(2) of section 1563. 
A partnership or any other entity (other than a 
corporation) shall be treated as a member of a 
controlled group of entities if such entity is con-
trolled 
(within 
the 
meaning 
of 
section 
954(d)(3)) by members of such group (includ-
ing any entity treated as a member of such 
group by reason of this sentence). 
‘‘(4) FOREIGN
PARENT
CORPORATION.—For 
purposes of this subsection, the term ‘foreign parent 
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corporation’ means, with respect to any deductible 
related-party payment, the common parent of the 
foreign controlled group of entities referred to in 
paragraph (3)(A). 
‘‘(5) REGULATIONS.—The Secretary may pre-
scribe such regulations or other guidance as are nec-
essary or appropriate to carry out the purposes of 
this subsection, including regulations or other guid-
ance which provide for— 
‘‘(A) the treatment of two or more persons 
as members of a foreign controlled group of en-
tities if such persons would be the common par-
ent of such group if treated as one corporation, 
and 
‘‘(B) the treatment of any member of a 
foreign controlled group of entities as the com-
mon parent of such group if such treatment is 
appropriate taking into account the economic 
relationships among such entities.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to payments made after the date 
of the enactment of this Act. 
Æ 
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