To amend the Internal Revenue Code of 1986 to expand and make permanent rules related to investment by nonresident aliens in domestic mutual funds.

Bill: 113-hr-4555
Sponsor: full_name: Rep. Paulsen, Erik [R-MN-3]
Introduced: 2014-05-01
Policy area: Taxation
Subjects: Financial services and investments

Income tax exclusion

Interest, dividends, interest rates

Taxation of foreign income

U.S. and foreign investments
Latest action: action_date: 2014-05-01
text: Referred to the House Committee on Ways and Means.

Summaries:
action_date: 2014-05-01
action_desc: Introduced in House
text: <p>Amends the Internal Revenue Code, with respect to the tax on nonresident alien individuals, to: (1) make permanent the tax exemption for interest-related dividends and short-term capital gain dividends received from a regulated investment company, and (2) expand the categories of interest-related dividends for which a tax exemption is allowed. </p>

tv_txt: I 113th CONGRESS 2d Session H. R. 4555 IN THE HOUSE OF REPRESENTATIVES May 1, 2014 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 nonresident aliens in domestic mutual funds.

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 Subparagraph (C) of section 871(k)(1) of the Internal Revenue 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-Related 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 subsection (i)(2)(A) (without regard to the trade or business of the regulated investment 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 reference to an interest rate and that would not be subject to withholding under section 1441 if received by a nonresident alien individual. (vi) Any amount includible in gross income from sources without the United States. (vii) Any qualified income-related dividend includible in gross income with respect to stock of another regulated investment company. . (2) Modification of exceptions Clause (i) of section 871(k)(1)(B) is amended by striking interest (other than interest described in subparagraph (E)(i) or (iii)) and inserting interest described in subparagraph (E)(ii) (and not described in subparagraph (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 dividend each place it appears in the text and inserting qualified income-related dividend , (ii) by striking qualified net interest income each place it appears in the text and inserting qualified net income , (iii) by striking qualified interest income each place it appears in the text and inserting qualified income , (iv) by striking Interest-related dividends in the heading thereof and inserting Qualified income-related dividends , (v) by striking Interest related dividend in the heading of subparagraph (C) and inserting Qualified income-related dividend , (vi) by striking Qualified net interest income in the heading of subparagraph (D) and inserting Qualified net income , and (vii) by striking Qualified interest income in the heading of subparagraph (E) and inserting Qualified income . (B) Paragraph (1) of section 881(e) of such Code is amended— (i) by striking interest-related dividend each place it appears in subparagraphs (A) and (B) and inserting qualified income-related dividend , (ii) by striking interest received in subparagraph (B)(ii) and inserting interest 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 dividend received in subparagraph (C) and inserting qualified income-related dividend 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 inserting 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, 2013.