109 HR 6288 IH: International Tax Simplification Act of U.S. House of Representatives 2006-09-29 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
I 109th CONGRESS 2d Session H. R. 6288 IN THE HOUSE OF REPRESENTATIVES September 29, 2006 Mr. Sam Johnson of Texas 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 improve the rules relating to income earned abroad.
1.
Short title; amendment of 1986 Code; table of contents
(a)
Short title
This Act may be cited as the International Tax Simplification Act of 2006. (b)
Amendment of 1986 Code
Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. (c)
Table of contents
The table of contents for this Act is as follows: Sec. 1. Short title; amendment of 1986 Code; table of contents. Sec. 2. Permanent Subpart F exemption for active financing income. Sec. 3. Permanent look-thru rule for related controlled foreign corporations. Sec. 4. Repeal of foreign base company sales and services income rules. Sec. 5. Repeal of foreign base company oil related income rules. Sec. 6. Repeal of special rules for applying foreign tax credit in case of foreign oil and gas income. Sec. 7. Extension of carryforward period for excess foreign taxes. Sec. 8. Subpart F earnings and profits determined under generally accepted accounting principles. Sec. 9. Acceleration of election to allocate interest on a worldwide basis. Sec. 10. Expansion of de minimis rule under subpart F.
2.
Permanent Subpart F exemption for active financing income
(a)
Exempt insurance income
Paragraph (10) of section 953(e) is amended— (1)by striking and before January 1, 2009,, and (2)by striking the second sentence. (b)
Foreign personal holding company income
Paragraph (9) of section 954(h) is amended by striking and before January 1, 2009,.
3.
Permanent look-thru rule for related controlled foreign corporations
Subparagraph (B) of section 954(c)(6) (relating to application) is amended by striking and before January 1, 2009,.
4.
Repeal of foreign base company sales and services income rules
(a)
In general
Subsection (a) of section 954 (relating to foreign base company income) is amended by striking paragraphs (2) and (3). (b)
Certain sales
Paragraph (1) of section 954(c) is amended by adding at the end the following new subparagraph: (I)
Certain sales
Income (whether in the form of profits, commissions, fees, or otherwise) derived in connection with the purchase of personal property from a related person and its sale to any person, the sale of personal property to any person on behalf of a related person, the purchase of personal property from any person and its sale to a related person, or the purchase of personal property from any person on behalf of a related person where— (i)the property which is purchased (or in the case of property sold on behalf of a related person, the property which is sold) is manufactured, produced, grown, or extracted in the United States, and (ii)the property is sold for use, consumption, or disposition in the United States, or, in the case of property purchased on behalf of a related person, is purchased for use, consumption, or disposition in the United States. . (c)
Conforming amendments
(1)Clause (iii) of section 952(c)(1)(B) is amended by striking subclauses (II) and (III) and by redesignating subclauses (IV) and (V) as subclauses (II) and (III), respectively. (2)Paragraph (5) of section 954(b) is amended by striking , the foreign base company sales income, the foreign base company services income,. (3)Section 954 is amended by striking subsections (d) and (e). (4)(A)Subsection (b) of section 954 is amended by adding at the end the following new paragraph: (7)
Related person defined
For purposes of this section, a person is a related person with respect to a controlled foreign corporation if— (A)such person is an individual, corporation, partnership, trust, or estate which controls, or is controlled by, the controlled foreign corporation, or— (B)such person is a corporation, partnership, trust, or estate which is controlled by the same person or persons which control the controlled foreign corporation. For purposes of the preceding sentence, control means, with respect to a corporation, the ownership, directly or indirectly, of stock possessing more than 50 percent of the total voting power of all classes of stock entitled to vote or of the total value of stock of such corporation. In the case of a partnership, trust, or estate, control means the ownership, directly or indirectly, of more than 50 percent (by value) of the beneficial interests in such partnership, trust, or estate. For purposes of this paragraph, rules similar to the rules of section 958 shall apply.. (B)Sections 552(c)(2), 861(c)(2)(B), 904(d)(2)(H), 953(d)(3), 953(e), 955(b), 958(b), 971(f), 988(e)(3)(C), 1297(b)(2), 1298(d)(3), and 1298(e)(2)(B) are each amended by striking 954(d)(3) each place it appears and inserting 954(b)(7). (d)
Effective date
The amendments made by this section shall apply to taxable years of a foreign corporation beginning after December 31, 2006, and to taxable years of United States shareholders with or within which any such taxable year of such foreign corporation ends.
5.
Repeal of foreign base company oil related income rules
(a)
In general
Subsection (a) of section 954 (relating to foreign base company income) is amended by striking paragraph (5). (b)
Conforming amendments
(1)Clause (iii) of section 952(c)(1)(B), as amended by this Act, is amended by striking subclause (I) and by redesignating subclauses (II) and (III) as subclauses (I) and (II), respectively. (2)Paragraph (5) of section 954(b), as amended by this Act, is amended by striking and the foreign base company oil related income. (3)Section 954 is amended by striking subsection (g). (c)
Effective date
The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2006, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end.
6.
Repeal of special rules for applying foreign tax credit in case of foreign oil and gas income
(a)
In General
Section 907 (relating to special rules in case of foreign oil and gas income), as amended by this Act, is repealed. (b)
Conforming Amendments
(1)Each of the following provisions are amended by striking 907,: (A)Section 245(a)(10). (B)Section 865(h)(1)(B). (C)Section 904(d)(1). (D)Section 904(g)(10)(A). (2)Section 904(f)(5)(E)(iii) is amended by inserting , as in effect before its repeal by the International Tax Simplification Act of 2006 after section 907(c)(4)(B). (3)Section 954(g)(1) is amended by inserting , as in effect before its repeal by the International Tax Simplification Act of 2006 after 907(c). (4)Section 6501(i) is amended— (A)by striking , or under section 907(f) (relating to carryback and carryover of disallowed oil and gas extraction taxes), and (B)by striking or 907(f). (5)The table of sections for subpart A of part III of subchapter N of chapter 1 is amended by striking the item relating to section 907. (c)
Effective Date
The amendments made by this section shall apply to taxable years beginning after December 31, 2006.
7.
Extension of carryforward period for excess foreign taxes
(a)
In general
Section 904(c)(1) is amended by striking 10 and inserting 20. (b)
Excess Extraction Taxes
Paragraph (1) of section 907(f) is amended by striking 10 succeeding taxable year and inserting 20 succeeding taxable years. (c)
Effective date
The amendments made by this section shall apply to excess foreign taxes arising in taxable years beginning after December 31, 2006.
8.
Subpart F earnings and profits determined under generally accepted accounting principles
(a)
In General
Section 964(a) (relating to earnings and profits) is amended by striking rules substantially similar to those applicable to domestic corporations, under regulations prescribed by the Secretary and inserting generally accepted accounting principles in the United States. (b)
Effective Date
The amendment made by subsection (a) shall apply to distributions during, and the determination of the inclusion under section 951 of the Internal Revenue Code of 1986 with respect to, taxable years of foreign corporations beginning after December 31, 2006.
9.
Acceleration of election to allocate interest on a worldwide basis
(a)
In general
Section 864(f)(6) is amended by striking December 31, 2008 and inserting December 31, 2006. (b)
Conforming amendment
Section 401(c) of the American Jobs Creation Act of 2004 is amended by striking December 31, 2008 and inserting December 31, 2006. (c)
Effective date
The amendments made by this section shall take effect as if included in section 401 of the American Jobs Creation Act of 2004.
10.
Expansion of de minimis rule under subpart F
(a)
In general
Sections 954(b)(3)(A)(ii), 864(d)(5)(A)(ii), and 881(c)(5)(A)(i) are each amended by striking $1,000,000 and inserting $5,000,000. (b)
Effective date
The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2006, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end.