Title: Pay What You Owe Before You Go Act
Policy area: Taxation

Summary:
Pay What You Owe Before You Go Act
This bill amends the Internal Revenue Code to require the recapture in subpart F income (i.e., income of a controlled foreign corporation earned outside the United States which is not tax deferred) of the accumulated deferred foreign income of such corporation (i.e., the undistributed earnings of the controlled foreign corporation over its undistributed U.S. earnings) for its last taxable year.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 1673 Introduced in Senate (IS)]

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115th CONGRESS
  1st Session
                                S. 1673

      To amend the Internal Revenue Code to include in income the 
 unrepatriated earnings of groups that include an inverted corporation.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 31, 2017

Mr. Brown (for himself, Mr. Durbin, and Mr. Van Hollen) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
      To amend the Internal Revenue Code to include in income the 
 unrepatriated earnings of groups that include an inverted corporation.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Pay What You Owe Before You Go 
Act''.

SEC. 2. RECAPTURE OF UNREPATRIATED EARNINGS OF GROUPS INCLUDING AN 
              INVERTED CORPORATION.

    (a) In General.--Section 7874 of the Internal Revenue Code of 1986 
is amended by redesignating subsection (g) as subsection (h) and by 
inserting after subsection (f) the following new subsection:
    ``(g) Recapture of Tax on Unrepatriated Earnings.--
            ``(1) In general.--The subpart F income of any applicable 
        controlled foreign corporation for its last taxable year ending 
        before the acquisition date shall be increased by the 
        accumulated deferred foreign income of the corporation.
            ``(2) Applicable controlled foreign corporation.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `applicable controlled 
                foreign corporation' means any controlled foreign 
                corporation with respect to which--
                            ``(i) a covered entity was a United States 
                        shareholder at any time during the 5-year 
                        period ending on the acquisition date, or
                            ``(ii) a member of the same expanded 
                        affiliated group as a covered entity was a 
                        United States shareholder at any time during 
                        the 5-year period ending on the acquisition 
                        date.
                    ``(B) Covered entity.--The term `covered entity' 
                means, with respect to a controlled foreign 
                corporation, any entity which--
                            ``(i) is treated as a surrogate foreign 
                        corporation under subsection (a)(2)(B), 
                        determined--
                                    ``(I) by substituting `July 24, 
                                2017' for `March 4, 2003' each place it 
                                appears,
                                    ``(II) by substituting `more than 
                                50 percent' for `at least 60 percent' 
                                in clause (ii) thereof, and
                                    ``(III) by disregarding clause 
                                (iii) thereof, and
                            ``(ii) is not treated as a domestic 
                        corporation by reason of subsection (b).
            ``(3) Accumulated deferred foreign income.--For purposes of 
        this section--
                    ``(A) In general.--The term `accumulated deferred 
                foreign income' means the excess of--
                            ``(i) the undistributed earnings of the 
                        controlled foreign corporation, over
                            ``(ii) the undistributed U.S. earnings of 
                        such controlled foreign corporation.
                    ``(B) Undistributed earnings.--The term 
                `undistributed earnings' means the earnings and profits 
                of the controlled foreign corporation described in 
                section 959(c)(3), determined--
                            ``(i) as of the close of the taxable year 
                        described in paragraph (1),
                            ``(ii) without diminution by reason of 
                        distributions made during such taxable year, 
                        and
                            ``(iii) without regard to this subsection.
                For purposes of this chapter, any determination with 
                respect to the treatment of distributions described in 
                clause (ii) shall be made after the application of this 
                subsection to the earnings and profits described in the 
                matter preceding clause (i).
                    ``(C) Undistributed u.s. earnings.--The term 
                `undistributed U.S. earnings' has the meaning given the 
                term `post-1986 undistributed U.S. earnings' in section 
                245(a)(5), determined--
                            ``(i) as of the close of the taxable year 
                        described in paragraph (1), and
                            ``(ii) without regard to `post-1986' each 
                        place it appears in the matter before 
                        subparagraph (A).
            ``(4) Acquisition date.--For purposes of this section, the 
        term `acquisition date' means the date the covered entity 
        completes the acquisition described in subsection (a)(2)(B)(i) 
        (after the application of paragraph (2)(B)(i) of this 
        subsection).''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to taxable years ending after July 24, 2017.
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