[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 353 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 353

  To provide Alaska Native Corporations, through an election process, 
   standing to contest the disallowance of certain tax losses by the 
Internal Revenue Service if the purchasers of the losses agree; and to 
offset any associated revenue losses by increasing the interest rate on 
                   certain related tax deficiencies.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             February 4 (legislative day, January 5), 1993

  Mr. Stevens introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To provide Alaska Native Corporations, through an election process, 
   standing to contest the disallowance of certain tax losses by the 
Internal Revenue Service if the purchasers of the losses agree; and to 
offset any associated revenue losses by increasing the interest rate on 
                   certain related tax deficiencies.

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

SEC.   . STANDING FOR CERTAIN TAXPAYERS WITH REGARD TO SALE OF NET 
              OPERATING LOSSES.

    (a) Subsection (c) of section 5021 of the Technical and 
Miscellaneous Revenue Act of 1988 (Public Law 100-647) is amended to 
read as follows:
    ``(c) Special Administrative Rules.--
            ``(1) Income included in native corporation return.--At the 
        joint election of a Native Corporation and a corporation 
        (referred to in this subsection (c) as the `buyer corporation') 
        with which the Native Corporation entered into a transaction 
        permitted under section 60(b)(5) of the Tax Reform Act of 1984 
        and section 1804(e)(4) of the Tax Reform Act of 1986 (referred 
        to in this subsection (c) as a `Native Corporation 
        transaction'), income assigned, transferred or otherwise made 
        available by the buyer corporation through the use of a 
        corporation (referred to in this subsection (c) as the `profit 
        subsidiary') by reason of such transaction for a period in 
        which the profit subsidiary qualified as a member of the 
        affiliated group of which the Native Corporation was the common 
        parent shall be included in the taxable income of the Native 
        Corporation affiliated group solely for purposes of section 
        6212 of the Internal Revenue Code--
                    ``(A) Election.--The election under this subsection 
                (c) for the taxable year to which the election relates 
                shall be made no later than 120 days after the date of 
                enactment of this amendment. The election shall be 
                irrevocable and shall be made by filing with the 
                district director for the Anchorage district office of 
                the Internal Revenue Service a written statement signed 
                by responsible officers of the Native Corporation and 
                the electing buyer corporation that--
                            ``(i) identifies the Native Corporation, 
                        the profit subsidiary, and the buyer 
                        corporation (and their taxpayer identification 
                        numbers) and states their agreement to make the 
                        election provided in this subsection (c);
                            ``(ii) states the amount of income 
                        assigned, transferred or otherwise made 
                        available to the profit subsidiary for the 
                        taxable year by reason of the Native 
                        Corporation transaction;
                            ``(iii) if profit subsidiaries related to a 
                        buyer corporation other than the electing buyer 
                        corporation were members of the affiliated 
                        group of which the Native Corporation was the 
                        common parent, describes the order and the 
                        amount of the losses and credits of the Native 
                        Corporation affiliated group that were used to 
                        offset the income of each profit subsidiary;
                            ``(iv) states the agreement of the buyer 
                        corporation to consent under section 6501(c)(4) 
                        of the Internal Revenue Code to extend the 
                        periods of limitations for assessment and 
                        collection solely with respect to the income of 
                        the profit subsidiary for the affected taxable 
                        period(s) to a date not less than 180 days 
                        after the date the tax liability for the 
                        taxable year in which the Native Corporation 
                        transaction occurred is finally determined;
                            ``(v) states the agreement of the Native 
                        Corporation to consent under section 6501(c)(4) 
                        of the Internal Revenue Code to extend the 
                        periods of limitations for assessment and 
                        collection solely with respect to the income of 
                        the profit subsidiary for the affected taxable 
                        period(s) to a date not less than 120 days 
                        after the date on which the Native Corporation 
                        makes the election under this subsection; and
                            ``(vi) the Native Corporation and the buyer 
                        corporation agree that the Service is 
                        authorized to make any refund of any 
                        overpayment that is determined to be due, 
                        jointly to the Native Corporation and the 
                        electing buyer corporation.
                If a Native Corporation has engaged in multiple Native 
                Corporation transactions, such election shall be 
                independently made by each buyer corporation on 
                separate written statements. A buyer corporation that 
                elects under this provision must so elect for all 
                Native Corporation transactions with the particular 
                Native Corporation with whom the election is made for 
                which the statue of limitations for assessment is open.
                    ``(B) Taxable rate.--Notwithstanding section 11 of 
                the Internal Revenue Code, any income of the profit 
                subsidiary that is subject to the election provided in 
                this subsection (c) shall be taxed at the rate that 
                such income would have been taxed if it had been 
                included in the return of the buyer corporation for the 
                taxable year from which such income was assigned, 
                transferred or otherwise made available. Solely for 
                purposes of issuing a notice under section 6212 of the 
                Internal Revenue Code to a Native Corporation for a 
                Native Corporation transaction for which an election 
                has been made under this subsection (c), the tax may be 
                computed by applying the maximum corporate rate under 
                section 11 of the Internal Revenue Code.
            ``(2) Treatment of native corporation as common parent as 
        sole agent.--The common parent of an affiliated group which 
        includes a Native Corporation that elects under subsection 
        (c)(1) shall be the sole agent for the profit subsidiary for 
        purposes of the Native Corporation transaction for the period 
        of affiliation.
            ``(3) Collection of tax from buyer corporation.--For 
        purposes of this subsection, the amount of any tax, interest, 
        addition to tax, penalty or other amount attributable to the 
        income of the profit subsidiary shall be paid by and be 
        collectible from the profit subsidiary and the buyer 
        corporation for the taxable year for which income was assigned, 
        transferred or otherwise made available by the buyer 
        corporation in connection with the Native Corporation 
        transaction.
            ``(4) Payment of tax by native corporation.--If, after the 
        election provided in subsection (c)(1) is made, the Native 
        Corporation pays all or any part of the tax, interest, addition 
        to tax, penalty or other amount attributable to the income of 
        the profit subsidiary, such payment shall be deemed to be a 
        payment by the buyer corporation for the taxable year for which 
        such income would otherwise have been included in the buyer 
        corporation's return if the election provided in subsection 
        (c)(1) was not made--
                    ``(A) Filing of refund claim.--A Native Corporation 
                that elects under subsection (c)(1) shall be treated as 
                the taxpayer for purposes of sections 6402 and 6511 of 
                the Internal Revenue Code with respect to all payments 
                of tax, interest, additions to tax, penalties, or other 
                amounts attributable to the income of the profit 
                subsidiary and shall be entitled to file a claim for 
                refund as the taxpayer with respect to any taxes, 
                interest, additions to tax, penalties or other amounts 
                attributable to the income of the profit subsidiary.
                    ``(B) Filing of refund suit.--A Native Corporation 
                that elects under subsection (c)(1) shall be treated as 
                the taxpayer for purposes of section 7422 of the 
                Internal Revenue Code with respect to all payments of 
                tax, interest, additions to tax, penalties, or other 
                amounts attributable to the income of the profit 
                subsidiary, and as the plaintiff for purposes of 
                section 1402 of title 28, United States Code, and shall 
                be entitled to file and maintain a proceeding in court 
                as the taxpayer for the recovery of such amounts.
                    ``(C) Refund of overpayment.--In the event that an 
                overpayment is determined to be due, whether by final 
                administrative or judicial decision, with respect to a 
                Native Corporation transaction (c)(1), the Native 
                Corporation shall be treated as the person who made the 
                overpayment within the meaning of section 6402(a) of 
                the Internal Revenue Code. Notwithstanding any law or 
                rule of law, including the preceding sentence, any 
                refund of such overpayment may be made jointly to the 
                Native Corporation and to the electing buyer 
                corporation, as agreed to under paragraph (A)(v) of 
                subsection (c)(1).
            ``(5) Participatory rights of electing buyer corporation.--
        Any buyer corporation that makes an election under subsection 
        (c)(1) shall have the right to--
                    ``(A) submit a written statement and participate 
                with the Native Corporation in any administrative 
                proceeding relating to any proposed adjustment 
                regarding a Native Corporation transaction for which an 
                election has been made; and
                    ``(B) file an amicus brief in any proceeding in a 
                Federal court or the United States Tax Court that has 
                been filed by the Native Corporation involving a 
                proposed adjustment regarding such a Native Corporation 
                transaction.
        All written notices or other reports issued by the Secretary or 
        his delegate with respect to such a Native Corporation 
        transaction shall be issued to the Native Corporation, and it 
        shall be the obligation of the Native Corporation to provide 
        copies thereof to the electing buyer corporation. Rules similar 
        to the rules of subparagraphs (B) and (C) of paragraph (7) 
        shall apply for purposes of this paragraph.
            ``(6) Final determination of issues.--
                    ``(A) All issues with respect to the Native 
                Corporation transaction with respect to which an 
                election is made under subsection (c)(1), including the 
                applicability of any interest, addition to tax, penalty 
                or other amount, shall be determined by administrative 
                or judicial decision with respect to the consolidated 
                return of the Native Corporation affiliated group.
                    ``(B) Upon such determination, any income of the 
                profit subsidiary that is not offset in the Native 
                Corporation transaction shall be reported on the buyer 
                corporation's return as if it were originally reported 
                thereon and subject to all adjustments, including net 
                operating loss or other carrybacks, to which such 
                income would otherwise be subject.
            ``(7) No effect on nonelecting corporations.--The absence 
        of an election by a Native Corporation and a buyer corporation 
        with respect to a Native Corporation transaction shall not 
        restrict the authority of the Secretary of the Treasury or his 
        delegate to settle or litigate with any nonelecting buyer 
        corporation with respect to any issue relating to such a 
        transaction--
                    ``(A) Rights of native corporation.--For any such 
                Native Corporation transaction for which no election is 
                made under subsection (c)(1), the Native Corporation 
                shall have the right to submit a written statement and 
                participate with the buyer corporation in any 
                administrative proceeding relating to any proposed 
                adjustment regarding such Native Corporation 
                transaction; and to file an amicus brief in any 
                proceeding in a Federal court or the United States Tax 
                Court that has been filed by the non-electing buyer 
                corporation involving a proposed adjustment regarding 
                such Native Corporation transaction.
                    ``(B) Extension of statute of limitations.--
                Subparagraph (A) shall not apply if the Secretary of 
                the Treasury or his delegate determines that an 
                extension of the statute of limitations is necessary to 
                permit the participation described in subparagraph (A) 
                and the taxpayer and the Secretary or his delegate have 
                not agreed to such extension.
                    ``(C) Failures.--For purposes of the 1986 Code, any 
                failure by the Secretary of the Treasury or his 
                delegate to comply with the provisions of this 
                subsection shall not affect the validity of the 
                determination of the Internal Revenue Service of any 
                adjustment of tax liability of any non-electing buyer 
                corporation.
            ``(8) Effective date.--This provision shall be effective 
        for all taxable years for which the statute of limitations for 
        assessment with respect to an electing Native Corporation has 
        not expired prior to the date of enactment of this Act--
                    ``(A) Extension of statute of limitations.--Any 
                Native Corporation for which the statue of limitations 
                for assessment will expire within 120 days after the 
                date of enactment of this section shall have the right 
                upon request to extend such statute of limitations 
                pursuant to section 6501(c)(4) of the Internal Revenue 
                Code to a date not less than 120 days after the date of 
                enactment of this section.
                    ``(B) Period for assessments.--If the statute of 
                limitations for assessments with respect to an electing 
                Native Corporation has not expired prior to the date of 
                the enactment of this Act, such period shall not expire 
                before the date 120 days after the date on which the 
                Native Corporation makes the election under this 
                subsection.''.
    (b) Section 5021 of the Technical and Miscellaneous Revenue Act of 
1988 (Public Law 100-647) is amended by adding, after subsection (e), 
new subsection (f) to read as follows:
    ``(f) Increase in Underpayment Rate.--For purposes of determining 
the amount of interest payable under section 6601 of the Internal 
Revenue Code on a tax underpayment attributable to a Native Corporation 
transaction for which an election has been made under subsection (c) 
hereof, the underpayment rate otherwise applicable under section 
6621(a) (2) or (c) of the Internal Revenue Code of 1986 shall be 
increased by 0.5 percentage points.''.

                                 <all>