[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4623 Introduced in House (IH)]

112th CONGRESS
  2d Session
                                H. R. 4623

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 25, 2012

  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.

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

SECTION 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, 2011.
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