[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 143 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 143

To amend the Internal Revenue Code of 1986 to provide equity to exports 
                              of software.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 7, 1997

   Ms. Dunn (for herself, Mr. Matsui, Mr. Herger, Mr. Jefferson, Mr. 
   Crane, Mr. Neal of Massachusetts, Mr. McCrery, Mr. McDermott, Mr. 
English of Pennsylvania, and Mr. Weller) 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 provide equity to exports 
                              of software.

    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 ``Software Export Equity Act''.

SEC. 2. PROVIDING EQUITY TO EXPORTS OF SOFTWARE.

    (a) Findings.--
            (1) In 1971, well before the emergence of the United States 
        software industry, Congress enacted legislation to encourage 
        domestic economic activity, create jobs, and improve the 
        balance of trade by providing an incentive to export from the 
        United States.
            (2) Through the enactment of the Foreign Sales Corporation 
        (FSC) statute, Congress intended to level the playing field so 
        all United States industries could compete more fairly and 
        effectively with foreign competitors, who often receive 
        favorable tax treatment for exports.
            (3) In today's increasingly competitive global marketplace, 
        one of the most important steps a United States company can 
        take to reduce the cost of exporting and thereby increase its 
        opportunities in the export market is to set up a FSC.
            (4) A FSC is established by a United States corporation to 
        obtain a corporate tax benefit on a portion of its earnings 
        generated by the sale or lease of export property.
            (5) The statute is carefully crafted to ensure that only 
        the United States job creating activity (property manufactured 
        or produced in the United States and sold or leased outside the 
        United States) qualifies as export property eligible for FSC 
        benefits.
            (6) Today the United States software industry is an 
        important and growing part of the United States economy; in an 
        increasingly competitive global economy, incentives to 
        encourage firms to develop their products in the United States, 
        and export from the United States, are more important than 
        ever.
            (7) The United States currently has more than 2,000,000 
        software developers, and those numbers are growing rapidly. The 
        United States software industry is a world-wide competitor, 
        exporting more than $26,000,000,000 worth of software annually. 
        United States software companies currently perform a majority 
        of their software development work in the United States.
            (8) As a result of a narrow Internal Revenue Service 
        interpretation of the law, the United States software industry, 
        which is at the cutting edge of the information age, a 
        multitrillion dollar United States job and economic growth 
        opportunity, does not generally qualify for the FSC export 
        incentive, which is available to virtually all United States 
        exports.
            (9) The global explosion of technology, driven by the 
        Internet and the Worldwide Web, is a once in a lifetime 
        opportunity for the United States software industry to expand 
        its global competitiveness.
    (b) Purpose.--It is the purpose of this Act to clarify that 
software qualifies for FSC benefits.

SEC. 3. CLARIFICATION OF APPLICATION OF FOREIGN SALES CORPORATION RULES 
              TO SOFTWARE.

    Subparagraph (B) of section 927(a)(2) of the Internal Revenue Code 
of 1986 (relating to property excluded from eligibility as FSC export 
property) is amended by inserting ``, and software, whether or not 
patented'' after ``for commercial or home use''.
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