[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7024 Placed on Calendar Senate (PCS)]
<DOC>
Calendar No. 349
118th CONGRESS
2d Session
H. R. 7024
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 1, 2024
Received
March 20, 2024
Read the first time
March 21, 2024
Read the second time and placed on the calendar
_______________________________________________________________________
AN ACT
To make improvements to the child tax credit, to provide tax incentives
to promote economic growth, to provide special rules for the taxation
of certain residents of Taiwan with income from sources within the
United States, to provide tax relief with respect to certain Federal
disasters, to make improvements to the low-income housing tax credit,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS; ETC.
(a) Short Title.--This Act may be cited as the ``Tax Relief for
American Families and Workers Act of 2024''.
(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 of this Act is as
follows:
Sec. 1. Short title; table of contents; etc.
TITLE I--TAX RELIEF FOR WORKING FAMILIES
Sec. 101. Per-child calculation of refundable portion of child tax
credit.
Sec. 102. Increase in refundable portion.
Sec. 103. Inflation of credit amount.
Sec. 104. Rule for determination of earned income.
Sec. 105. Special rule for certain early-filed 2023 returns.
TITLE II--AMERICAN INNOVATION AND GROWTH
Sec. 201. Deduction for domestic research and experimental
expenditures.
Sec. 202. Extension of allowance for depreciation, amortization, or
depletion in determining the limitation on
business interest.
Sec. 203. Extension of 100 percent bonus depreciation.
Sec. 204. Increase in limitations on expensing of depreciable business
assets.
TITLE III--INCREASING GLOBAL COMPETITIVENESS
Subtitle A--United States-Taiwan Expedited Double-Tax Relief Act
Sec. 301. Short title.
Sec. 302. Special rules for taxation of certain residents of Taiwan.
Subtitle B--United States-Taiwan Tax Agreement Authorization Act
Sec. 311. Short title.
Sec. 312. Definitions.
Sec. 313. Authorization to negotiate and enter into agreement.
Sec. 314. Consultations with Congress.
Sec. 315. Approval and implementation of agreement.
Sec. 316. Submission to Congress of agreement and implementation
policy.
Sec. 317. Consideration of approval legislation and implementing
legislation.
Sec. 318. Relationship of agreement to Internal Revenue Code of 1986.
Sec. 319. Authorization of subsequent tax agreements relative to
Taiwan.
Sec. 320. United States treatment of double taxation matters with
respect to Taiwan.
TITLE IV--ASSISTANCE FOR DISASTER-IMPACTED COMMUNITIES
Sec. 401. Short title.
Sec. 402. Extension of rules for treatment of certain disaster-related
personal casualty losses.
Sec. 403. Exclusion from gross income for compensation for losses or
damages resulting from certain wildfires.
Sec. 404. East Palestine disaster relief payments.
TITLE V--MORE AFFORDABLE HOUSING
Sec. 501. State housing credit ceiling increase for low-income housing
credit.
Sec. 502. Tax-exempt bond financing requirement.
TITLE VI--TAX ADMINISTRATION AND ELIMINATING FRAUD
Sec. 601. Increase in threshold for requiring information reporting
with respect to certain payees.
Sec. 602. Enforcement provisions with respect to COVID-related employee
retention credits.
TITLE I--TAX RELIEF FOR WORKING FAMILIES
SEC. 101. PER-CHILD CALCULATION OF REFUNDABLE PORTION OF CHILD TAX
CREDIT.
(a) In General.--Subparagraph (A) of section 24(h)(5) is amended to
read as follows:
``(A) In general.--In applying subsection (d)--
``(i) the amount determined under paragraph
(1)(A) of such subsection with respect to any
qualifying child shall not exceed $1,400, and
such paragraph shall be applied without regard
to paragraph (4) of this subsection, and
``(ii) paragraph (1)(B) of such subsection
shall be applied by multiplying each of--
``(I) the amount determined under
clause (i) thereof, and
``(II) the excess determined under
clause (ii) thereof,
by the number of qualifying children of the
taxpayer.''.
(b) Conforming Amendment.--The heading of paragraph (5) of section
24(h) is amended by striking ``Maximum amount of'' and inserting
``Special rules for''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2022.
SEC. 102. INCREASE IN REFUNDABLE PORTION.
(a) In General.--Paragraph (5) of section 24(h) is amended by
redesignating subparagraph (B) as subparagraph (C) and by inserting
after subparagraph (A) the following new subparagraph:
``(B) Amounts for 2023, 2024, and 2025.--In the
case of a taxable year beginning after 2022,
subparagraph (A) shall be applied by substituting for
`$1,400'--
``(i) in the case of taxable year 2023,
`$1,800',
``(ii) in the case of taxable year 2024,
`$1,900', and
``(iii) in the case of taxable year 2025,
`$2,000'.''.
(b) Conforming Amendment.--Subparagraph (C) of section 24(h)(5), as
redesignated by subsection (a), is amended by inserting ``and before
2023'' after ``2018''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2022.
SEC. 103. INFLATION OF CREDIT AMOUNT.
(a) In General.--Paragraph (2) of section 24(h) is amended--
(1) by striking ``amount.--Subsection'' and inserting
``amount.--
``(A) In general.--Subsection'', and
(2) by adding at the end the following new subparagraph:
``(B) Adjustment for inflation.--In the case of a
taxable year beginning after 2023, the $2,000 amounts
in subparagraph (A) and paragraph (5)(B)(iii) shall
each be increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year in which the taxable year begins,
determined by substituting `2022' for `2016' in
subparagraph (A)(ii) thereof.
If any increase under this clause is not a multiple of
$100, such increase shall be rounded to the next lowest
multiple of $100.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2023.
SEC. 104. RULE FOR DETERMINATION OF EARNED INCOME.
(a) In General.--Paragraph (6) of section 24(h) of the Internal
Revenue Code of 1986 is amended--
(1) by striking ``credit.--Subsection'' and inserting
``credit.--
``(A) In general.--Subsection'', and
(2) by adding at the end the following new subparagraphs
``(B) Rule for determination of earned income.--
``(i) In general.--In the case of a taxable
year beginning after 2023, if the earned income
of the taxpayer for such taxable year is less
than the earned income of the taxpayer for the
preceding taxable year, subsection (d)(1)(B)(i)
may, at the election of the taxpayer, be
applied by substituting--
``(I) the earned income for such
preceding taxable year, for
``(II) the earned income for the
current taxable year.
``(ii) Application to joint returns.--For
purposes of clause (i), in the case of a joint
return, the earned income of the taxpayer for
the preceding taxable year shall be the sum of
the earned income of each spouse for such
preceding taxable year.''.
(b) Errors Treated as Mathematical Errors.--Paragraph (2) of
section 6213(g) of the Internal Revenue Code of 1986 is amended by
striking ``and'' at the end of subparagraph (U), by striking the period
at the end of subparagraph (V) and inserting ``, and'', and by
inserting after subparagraph (V) the following new subparagraph:
``(W) in the case of a taxpayer electing the
application of section 24(h)(6)(B) for any taxable
year, an entry on a return of earned income pursuant to
such section which is inconsistent with the amount of
such earned income determined by the Secretary for the
preceding taxable year.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2023.
SEC. 105. SPECIAL RULE FOR CERTAIN EARLY-FILED 2023 RETURNS.
In the case of an individual who claims, on the taxpayer's return
of tax for the first taxable year beginning after December 31, 2022, a
credit under section 24 of the Internal Revenue Code of 1986 which is
determined without regard to the amendments made by sections 101 and
102 of this Act, the Secretary of the Treasury (or the Secretary's
delegate) shall, to the maximum extent practicable--
(1) redetermine the amount of such credit (after taking
into account such amendments) on the basis of the information
provided by the taxpayer on such return, and
(2) to the extent that such redetermination results in an
overpayment of tax, credit or refund such overpayment as
expeditiously as possible.
TITLE II--AMERICAN INNOVATION AND GROWTH
SEC. 201. DEDUCTION FOR DOMESTIC RESEARCH AND EXPERIMENTAL
EXPENDITURES.
(a) Delay of Amortization of Domestic Research and Experimental
Expenditures.--Section 174 is amended by adding at the end the
following new subsection:
``(e) Suspension of Application of Section to Domestic Research and
Experimental Expenditures.--In the case of any domestic research or
experimental expenditures (as defined in section 174A(b)), this
section--
``(1) shall apply to such expenditures paid or incurred in
taxable years beginning after December 31, 2025, and
``(2) shall not apply to such expenditures paid or incurred
in taxable years beginning on or before such date.''.
(b) Reinstatement of Expensing for Domestic Research and
Experimental Expenditures.--Part VI of subchapter B of chapter 1 is
amended by inserting after section 174 the following new section:
``SEC. 174A. TEMPORARY RULES FOR DOMESTIC RESEARCH AND EXPERIMENTAL
EXPENDITURES.
``(a) Treatment as Expenses.--Notwithstanding section 263, there
shall be allowed as a deduction any domestic research or experimental
expenditures which are paid or incurred by the taxpayer during the
taxable year.
``(b) Domestic Research or Experimental Expenditures.--For purposes
of this section, the term `domestic research or experimental
expenditures' means research or experimental expenditures paid or
incurred by the taxpayer in connection with the taxpayer's trade or
business other than such expenditures which are attributable to foreign
research (within the meaning of section 41(d)(4)(F)).
``(c) Amortization of Certain Domestic Research and Experimental
Expenditures.--
``(1) In general.--At the election of the taxpayer, made in
accordance with regulations or other guidance provided by the
Secretary, in the case of domestic research or experimental
expenditures which would (but for subsection (a)) be chargeable
to capital account but not chargeable to property of a
character which is subject to the allowance under section 167
(relating to allowance for depreciation, etc.) or section 611
(relating to allowance for depletion), subsection (a) shall not
apply and the taxpayer shall--
``(A) charge such expenditures to capital account,
and
``(B) be allowed an amortization deduction of such
expenditures ratably over such period of not less than
60 months as may be selected by the taxpayer (beginning
with the month in which the taxpayer first realizes
benefits from such expenditures).
``(2) Time for and scope of election.--The election
provided by paragraph (1) may be made for any taxable year, but
only if made not later than the time prescribed by law for
filing the return for such taxable year (including extensions
thereof). The method so elected, and the period selected by the
taxpayer, shall be adhered to in computing taxable income for
the taxable year for which the election is made and for all
subsequent taxable years unless, with the approval of the
Secretary, a change to a different method (or to a different
period) is authorized with respect to part or all of such
expenditures. The election shall not apply to any expenditure
paid or incurred during any taxable year before the taxable
year for which the taxpayer makes the election.
``(d) Election to Capitalize Expenses.--In the case of a taxpayer
which elects (at such time and in such manner as the Secretary may
provide) the application of this subsection, subsections (a) and (c)
shall not apply and domestic research or experimental expenditures
shall be chargeable to capital account. Such election shall not apply
to any expenditure paid or incurred during any taxable year before the
taxable year for which the taxpayer makes the election and may be made
with respect to part of the expenditures paid or incurred during any
taxable year only with the approval of the Secretary.
``(e) Special Rules.--
``(1) Land and other property.--This section shall not
apply to any expenditure for the acquisition or improvement of
land, or for the acquisition or improvement of property to be
used in connection with the research or experimentation and of
a character which is subject to the allowance under section 167
(relating to allowance for depreciation, etc.) or section 611
(relating to allowance for depletion); but for purposes of this
section allowances under section 167, and allowances under
section 611, shall be considered as expenditures.
``(2) Exploration expenditures.--This section shall not
apply to any expenditure paid or incurred for the purpose of
ascertaining the existence, location, extent, or quality of any
deposit of ore or other mineral (including oil and gas).
``(3) Software development.--For purposes of this section,
any amount paid or incurred in connection with the development
of any software shall be treated as a research or experimental
expenditure.
``(f) Termination.--
``(1) In general.--This section shall not apply to amounts
paid or incurred in taxable years beginning after December 31,
2025.
``(2) Change in method of accounting.--In the case of a
taxpayer's first taxable year beginning after December 31,
2025, paragraph (1) (and the corresponding application of
section 174) shall be treated as a change in method of
accounting for purposes of section 481 and--
``(A) such change shall be treated as initiated by
the taxpayer,
``(B) such change shall be treated as made with the
consent of the Secretary, and
``(C) such change shall be applied only on a cut-
off basis for any domestic research or experimental
expenditures paid or incurred in taxable years
beginning after December 31, 2025, and no adjustment
under section 481(a) shall be made.''.
(c) Coordination With Certain Other Provisions.--
(1) Research credit.--
(A) Section 41(d)(1)(A) is amended by inserting
``or domestic research or experimental expenditures
under section 174A'' after ``section 174''.
(B) Section 280C(c)(1) is amended to read as
follows:
``(1) In general.--The domestic research or experimental
expenditures otherwise taken into account under section 174 or
174A (as the case may be) shall be reduced by the amount of the
credit allowed under section 41(a).''.
(2) AMT adjustment.--Section 56(b)(2) is amended by
striking ``174(a)'' each place it appears and inserting
``174A(a)''.
(3) Optional 10-year writeoff.--Section 59(e)(2)(B) is
amended by striking ``section 174(a) (relating to research and
experimental expenditures)'' and inserting ``section 174A(a)
(relating to temporary rules for domestic research and
experimental expenditures)''.
(4) Qualified small issue bonds.--Section 144(a)(4)(C)(iv)
is amended by striking ``174(a)'' and inserting ``174A(a)''.
(5) Start-up expenditures.--Section 195(c)(1) is amended by
striking ``or 174'' in the last sentence and inserting ``174,
or 174A''.
(6) Capital expenditures.--
(A) Section 263(a)(1)(B) is amended by inserting ``
or 174A'' after ``174''.
(B) Section 263A(c)(2) is amended by inserting ``or
174A'' after ``174''.
(7) Active business computer software royalties.--Section
543(d)(4)(A)(i) is amended by inserting ``174A,'' after
``174,''.
(8) Source rules.--Section 864(g)(2) is amended in the last
sentence--
(A) by striking ``treated as deferred expenses
under subsection (b) of section 174'' and inserting
``allowed as an amortization deduction under section
174(a) or section 174A(c),'', and
(B) by striking ``such subsection'' and inserting
``such section (as the case may be)''.
(9) Basis adjustment.--Section 1016(a)(14) is amended by
striking ``deductions as deferred expenses under section
174(b)(1) (relating to research and experimental
expenditures)'' and inserting ``deductions under section 174 or
174A''.
(10) Small business stock.--Section 1202(e)(2)(B) is
amended by striking ``research and experimental expenditures
under section 174'' and inserting ``specified research or
experimental expenditures under section 174 or domestic
research or experimental expenditures under section 174A''.
(d) Conforming Amendments.--
(1) Section 13206 of Public Law 115-97 is amended by
striking subsection (b) (relating to change in method of
accounting).
(2) The table of sections for part VI of subchapter B of
chapter 1 is amended by inserting after the item relating to
section 174 the following new item:
``Sec. 174A. Temporary rules for domestic research and experimental
expenditures.''.
(e) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
amounts paid or incurred in taxable years beginning after
December 31, 2021.
(2) Coordination with research credit.--The amendment made
by subsection (c)(1)(B) shall apply to taxable years beginning
after December 31, 2022.
(3) Repeal of superceded change in method of accounting
rules.--The amendment made by subsection (d)(1) shall take
effect as if included in Public Law 115-97.
(4) No inference with respect to coordination with research
credit for prior periods.--The amendment made by subsection
(c)(1)(B) shall not be construed to create any inference with
respect to the proper application of section 280C(c) of the
Internal Revenue Code of 1986 with respect to taxable years
beginning before January 1, 2023.
(f) Transition Rules.--
(1) In general.--Except as otherwise provided by the
Secretary, an election made under subsection (c) or (d) of
section 174A of the Internal Revenue Code of 1986 (as added by
this section) for the taxpayer's first taxable year beginning
after December 31, 2021, shall not fail to be treated as timely
made (or as made on the return) if made during the 1-year
period beginning on the date of the enactment of this Act on an
amended return for the taxpayer's first taxable year beginning
after December 31, 2021, or in such other manner as the
Secretary may provide.
(2) Election regarding treatment as change in method of
accounting.--In the case of any taxpayer which (as of the date
of the enactment of this Act) had adopted a method of
accounting provided by section 174 of the Internal Revenue Code
of 1986 (as in effect prior to the amendments made by this
section) for the taxpayer's first taxable year beginning after
December 31, 2021, and elects the application of this
paragraph--
(A) the amendments made by this section shall be
treated as a change in method of accounting for
purposes of section 481 of such Code,
(B) such change shall be treated as initiated by
the taxpayer for the taxpayer's immediately succeeding
taxable year,
(C) such change shall be treated as made with the
consent of the Secretary,
(D) such change shall be applied on a modified cut-
off basis, taking into account for purposes of section
481(a) of such Code only the domestic research or
experimental expenditures (as defined in section
174A(b) of such Code (as added by this section) and
determined by applying the rules of section 174A(e) of
such Code) paid or incurred in the taxpayer's first
taxable year beginning after December 31, 2021, and not
allowed as a deduction in such taxable year, and
(E) in the case of a taxpayer which elects the
application of this subparagraph, the amount of such
change (as determined under subparagraph (D)) shall be
taken into account ratably over the 2-taxable-year
period beginning with the taxable year referred to in
subparagraph (B).
(3) Election regarding 10-year writeoff.--
(A) In general.--Except as otherwise provided by
the Secretary, an eligible taxpayer which files, during
the 1-year period beginning on the date of the
enactment of this Act, an amended income tax return for
the taxable year described in subparagraph (B)(ii) may
elect the application of section 59(e) of the Internal
Revenue Code of 1986 with respect to qualified
expenditures described in section 59(e)(2)(B) of such
Code (as amended by subsection (c)(3)) with respect to
such taxable year. Such election shall be filed with
such amended income tax return and shall be effective
only to the extent that such election would have been
effective if filed with the original income tax return
for such taxable year (determined after taking into
account the amendment made by subsection (c)(3)).
(B) Eligible taxpayer.--For purposes of
subparagraph (A), the term ``eligible taxpayer'' means
any taxpayer which--
(i) does not elect the application of
paragraph (2), and
(ii) filed an income tax return for such
taxpayer's first taxable year beginning after
December 31, 2021, before the earlier of--
(I) the due date for such return,
and
(II) the date of the enactment of
this Act.
(4) Election regarding coordination with research credit.--
Except as otherwise provided by the Secretary, an eligible
taxpayer (as defined in paragraph (3)(B) without regard to
clause (i) thereof) which files, during the 1-year period
beginning on the date of the enactment of this Act, an amended
income tax return for the taxpayer's first taxable year
beginning after December 31, 2021, may, notwithstanding
subparagraph (C) of section 280C(c)(2) of the Internal Revenue
Code of 1986 make, or revoke, on such amended return the
election under such section for such taxable year.
SEC. 202. EXTENSION OF ALLOWANCE FOR DEPRECIATION, AMORTIZATION, OR
DEPLETION IN DETERMINING THE LIMITATION ON BUSINESS
INTEREST.
(a) In General.--Section 163(j)(8)(A)(v) is amended by striking
``January 1, 2022'' and inserting ``January 1, 2026''.
(b) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendment made by this section shall apply to
taxable years beginning after December 31, 2023.
(2) Election to apply extension retroactively.--In the case
of a taxpayer which elects (at such time and in such manner as
the Secretary may provide) the application of this paragraph,
paragraph (1) shall be applied by substituting ``December 31,
2021'' for ``December 31, 2023''.
SEC. 203. EXTENSION OF 100 PERCENT BONUS DEPRECIATION.
(a) In General.--Section 168(k)(6)(A) is amended--
(1) in clause (i)--
(A) by striking ``2023'' and inserting ``2026'',
and
(B) by adding ``and'' at the end, and
(2) by striking clauses (ii), (iii), and (iv), and
redesignating clause (v) as clause (ii).
(b) Property With Longer Production Periods.--Section 168(k)(6)(B)
is amended--
(1) in clause (i)--
(A) by striking ``2024'' and inserting ``2027'',
and
(B) by adding ``and'' at the end, and
(2) by striking clauses (ii), (iii), and (iv), and
redesignating clause (v) as clause (ii).
(c) Plants Bearing Fruits and Nuts.--Section 168(k)(6)(C) is
amended--
(1) in clause (i)--
(A) by striking ``2023'' and inserting ``2026'',
and
(B) by adding ``and'' at the end, and
(2) by striking clauses (ii), (iii), and (iv), and
redesignating clause (v) as clause (ii).
(d) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
property placed in service after December 31, 2022.
(2) Plants bearing fruits and nuts.--The amendments made by
subsection (c) shall apply to specified plants planted or
grafted after December 31, 2022.
SEC. 204. INCREASE IN LIMITATIONS ON EXPENSING OF DEPRECIABLE BUSINESS
ASSETS.
(a) In General.--Section 179(b) is amended--
(1) by striking ``$1,000,000'' in paragraph (1) and
inserting ``$1,290,000'', and
(2) by striking ``$2,500,000'' in paragraph (2) and
inserting ``$3,220,000''.
(b) Inflation Adjustment.--Section 179(b)(6) is amended--
(1) by striking ``2018'' and inserting ``2024 (2018 in the
case of the dollar amount in paragraph (5)(A))'', and
(2) by striking ```calendar year 2017'' and inserting
```calendar year 2024' (`calendar year 2017' in the case of the
dollar amount in paragraph (5)(A))''.
(c) Effective Date.--The amendments made by this section shall
apply to property placed in service in taxable years beginning after
December 31, 2023.
TITLE III--INCREASING GLOBAL COMPETITIVENESS
Subtitle A--United States-Taiwan Expedited Double-Tax Relief Act
SEC. 301. SHORT TITLE.
This subtitle may be cited as the ``United States-Taiwan Expedited
Double-Tax Relief Act''.
SEC. 302. SPECIAL RULES FOR TAXATION OF CERTAIN RESIDENTS OF TAIWAN.
(a) In General.--Subpart D of part II of subchapter N of chapter 1
is amended by inserting after section 894 the following new section:
``SEC. 894A. SPECIAL RULES FOR QUALIFIED RESIDENTS OF TAIWAN.
``(a) Certain Income From United States Sources.--
``(1) Interest, dividends, and royalties, etc.--
``(A) In general.--In the case of interest (other
than original issue discount), dividends, royalties,
amounts described in section 871(a)(1)(C), and gains
described in section 871(a)(1)(D) received by or paid
to a qualified resident of Taiwan--
``(i) sections 871(a), 881(a), 1441(a),
1441(c)(5), and 1442(a) shall each be applied
by substituting `the applicable percentage (as
defined in section 894A(a)(1)(C))' for `30
percent' each place it appears, and
``(ii) sections 871(a), 881(a), and
1441(c)(1) shall each be applied by
substituting `a United States permanent
establishment of a qualified resident of
Taiwan' for `a trade or business within the
United States' each place it appears.
``(B) Exceptions.--
``(i) In general.--Subparagraph (A) shall
not apply to--
``(I) any dividend received from or
paid by a real estate investment trust
which is not a qualified REIT dividend,
``(II) any amount subject to
section 897,
``(III) any amount received from or
paid by an expatriated entity (as
defined in section 7874(a)(2)) to a
foreign related person (as defined in
section 7874(d)(3)), and
``(IV) any amount which is included
in income under section 860C to the
extent that such amount does not exceed
an excess inclusion with respect to a
REMIC.
``(ii) Qualified reit dividend.--For
purposes of clause (i)(I), the term `qualified
REIT dividend' means any dividend received from
or paid by a real estate investment trust if
such dividend is paid with respect to a class
of shares that is publicly traded and the
recipient of the dividend is a person who holds
an interest in any class of shares of the real
estate investment trust of not more than 5
percent.
``(C) Applicable percentage.--For purposes of
applying subparagraph (A)(i)--
``(i) In general.--Except as provided in
clause (ii), the term `applicable percentage'
means 10 percent.
``(ii) Special rules for dividends.-- In
the case of any dividend in respect of stock
received by or paid to a qualified resident of
Taiwan, the applicable percentage shall be 15
percent (10 percent in the case of a dividend
which meets the requirements of subparagraph
(D) and is received by or paid to an entity
taxed as a corporation in Taiwan).
``(D) Requirements for lower dividend rate.--
``(i) In general.--The requirements of this
subparagraph are met with respect to any
dividend in respect of stock in a corporation
if, at all times during the 12-month period
ending on the date such stock becomes ex-
dividend with respect to such dividend--
``(I) the dividend is derived by a
qualified resident of Taiwan, and
``(II) such qualified resident of
Taiwan has held directly at least 10
percent (by vote and value) of the
total outstanding shares of stock in
such corporation.
For purposes of subclause (II), a person shall
be treated as directly holding a share of stock
during any period described in the preceding
sentence if the share was held by a corporation
from which such person later acquired that
share and such corporation was, at the time the
share was acquired, both a connected person to
such person and a qualified resident of Taiwan.
``(ii) Exception for rics and reits.--
Notwithstanding clause (i), the requirements of
this subparagraph shall not be treated as met
with respect to any dividend paid by a
regulated investment company or a real estate
investment trust.
``(2) Qualified wages.--
``(A) In general.--No tax shall be imposed under
this chapter (and no amount shall be withheld under
section 1441(a) or chapter 24) with respect to
qualified wages paid to a qualified resident of Taiwan
who--
``(i) is not a resident of the United
States (determined without regard to subsection
(c)(3)(E)), or
``(ii) is employed as a member of the
regular component of a ship or aircraft
operated in international traffic.
``(B) Qualified wages.--
``(i) In general.--The term `qualified
wages' means wages, salaries, or similar
remunerations with respect to employment
involving the performance of personal services
within the United States which--
``(I) are paid by (or on behalf of)
any employer other than a United States
person, and
``(II) are not borne by a United
States permanent establishment of any
person other than a United States
person.
``(ii) Exceptions.--Such term shall not
include directors' fees, income derived as an
entertainer or athlete, income derived as a
student or trainee, pensions, amounts paid with
respect to employment with the United States,
any State (or political subdivision thereof),
or any possession of the United States (or any
political subdivision thereof), or other
amounts specified in regulations or guidance
under subsection (f)(1)(F).
``(3) Income derived from entertainment or athletic
activities.--
``(A) In general.--No tax shall be imposed under
this chapter (and no amount shall be withheld under
section 1441(a) or chapter 24) with respect to income
derived by an entertainer or athlete who is a qualified
resident of Taiwan from personal activities as such
performed in the United States if the aggregate amount
of gross receipts from such activities for the taxable
year do not exceed $30,000.
``(B) Exception.--Subparagraph (A) shall not apply
with respect to--
``(i) income which is qualified wages (as
defined in paragraph (2)(B), determined without
regard to clause (ii) thereof), or
``(ii) income which is effectively
connected with a United States permanent
establishment.
``(b) Income Connected With a United States Permanent Establishment
of a Qualified Resident of Taiwan.--
``(1) In general.--
``(A) In general.--In lieu of applying sections
871(b) and 882, a qualified resident of Taiwan that
carries on a trade or business within the United States
through a United States permanent establishment shall
be taxable as provided in section 1, 11, 55, or 59A, on
its taxable income which is effectively connected with
such permanent establishment.
``(B) Determination of taxable income.--In
determining taxable income for purposes of paragraph
(1), gross income includes only gross income which is
effectively connected with the permanent establishment.
``(2) Treatment of dispositions of united states real
property.--In the case of a qualified resident of Taiwan,
section 897(a) shall be applied--
``(A) by substituting `carried on a trade or
business within the United States through a United
States permanent establishment' for `were engaged in a
trade or business within the United States', and
``(B) by substituting `such United States permanent
establishment' for `such trade or business'.
``(3) Treatment of branch profits taxes.--In the case of
any corporation which is a qualified resident of Taiwan,
section 884 shall be applied--
``(A) by substituting `10 percent' for `30 percent
' in subsection (a) thereof, and
``(B) by substituting `a United States permanent
establishment of a qualified resident of Taiwan' for
`the conduct of a trade or business within the United
States' in subsection (d)(1) thereof.
``(4) Special rule with respect to income derived from
certain entertainment or athletic activities.--
``(A) In general.--Paragraph (1) shall not apply to
the extent that the income is derived--
``(i) in respect of entertainment or
athletic activities performed in the United
States, and
``(ii) by a qualified resident of Taiwan
who is not the entertainer or athlete
performing such activities.
``(B) Exception.--Subparagraph (A) shall not apply
if the person described in subparagraph (A)(ii) is
contractually authorized to designate the individual
who is to perform such activities.
``(5) Special rule with respect to certain amounts.--
Paragraph (1) shall not apply to any income which is wages,
salaries, or similar remuneration with respect to employment or
with respect to any amount which is described in subsection
(a)(2)(B)(ii).
``(c) Qualified Resident of Taiwan.--For purposes of this section--
``(1) In general.--The term `qualified resident of Taiwan'
means any person who--
``(A) is liable to tax under the laws of Taiwan by
reason of such person's domicile, residence, place of
management, place of incorporation, or any similar
criterion,
``(B) is not a United States person (determined
without regard to paragraph (3)(E)), and
``(C) in the case of an entity taxed as a
corporation in Taiwan, meets the requirements of
paragraph (2).
``(2) Limitation on benefits for corporate entities of
taiwan.--
``(A) In general.--Subject to subparagraphs (E) and
(F), an entity meets the requirements of this paragraph
only if it--
``(i) meets the ownership and income
requirements of subparagraph (B),
``(ii) meets the publicly traded
requirements of subparagraph (C), or
``(iii) meets the qualified subsidiary
requirements of subparagraph (D).
``(B) Ownership and income requirements.--The
requirements of this subparagraph are met for an entity
if--
``(i) at least 50 percent (by vote and
value) of the total outstanding shares of stock
in such entity are owned directly or indirectly
by qualified residents of Taiwan, and
``(ii) less than 50 percent of such
entity's gross income (and in the case of an
entity that is a member of a tested group, less
than 50 percent of the tested group's gross
income) is paid or accrued, directly or
indirectly, in the form of payments that are
deductible for purposes of the income taxes
imposed by Taiwan, to persons who are not--
``(I) qualified residents of
Taiwan, or
``(II) United States persons who
meet such requirements with respect to
the United States as determined by the
Secretary to be equivalent to the
requirements of this subsection
(determined without regard to paragraph
(1)(B)) with respect to residents of
Taiwan.
``(C) Publicly traded requirements.--An entity
meets the requirements of this subparagraph if--
``(i) the principal class of its shares
(and any disproportionate class of shares) of
such entity are primarily and regularly traded
on an established securities market in Taiwan,
or
``(ii) the primary place of management and
control of the entity is in Taiwan and all
classes of its outstanding shares described in
clause (i) are regularly traded on an
established securities market in Taiwan.
``(D) Qualified subsidiary requirements.--An entity
meets the requirement of this subparagraph if--
``(i) at least 50 percent (by vote and
value) of the total outstanding shares of the
stock of such entity are owned directly or
indirectly by 5 or fewer entities--
``(I) which meet the requirements
of subparagraph (C), or
``(II) which are United States
persons the principal class of the
shares (and any disproportionate class
of shares) of which are primarily and
regularly traded on an established
securities market in the United States,
and
``(ii) the entity meets the requirements of
clause (ii) of subparagraph (B).
``(E) Only indirect ownership through qualifying
intermediaries counted.--
``(i) In general.--Stock in an entity owned
by a person indirectly through 1 or more other
persons shall not be treated as owned by such
person in determining whether the person meets
the requirements of subparagraph (B)(i) or
(D)(i) unless all such other persons are
qualifying intermediate owners.
``(ii) Qualifying intermediate owners.--The
term `qualifying intermediate owner' means a
person that is--
``(I) a qualified resident of
Taiwan, or
``(II) a resident of any other
foreign country (other than a foreign
country that is a foreign country of
concern) that has in effect a
comprehensive convention with the
United States for the avoidance of
double taxation.
``(iii) Special rule for qualified
subsidiaries.--For purposes of applying
subparagraph (D)(i), the term `qualifying
intermediate owner' shall include any person
who is a United States person who meets such
requirements with respect to the United States
as determined by the Secretary to be equivalent
to the requirements of this subsection
(determined without regard to paragraph (1)(B))
with respect to residents of Taiwan.
``(F) Certain payments not included.--In
determining whether the requirements of subparagraph
(B)(ii) or (D)(ii) are met with respect to an entity,
the following payments shall not be taken into account:
``(i) Arm's-length payments by the entity
in the ordinary course of business for services
or tangible property.
``(ii) In the case of a tested group,
intra-group transactions.
``(3) Dual residents.--
``(A) Rules for determination of status.--
``(i) In general.--An individual who is an
applicable dual resident and who is described
in subparagraph (B), (C), or (D) shall be
treated as a qualified resident of Taiwan.
``(ii) Applicable dual resident.--For
purposes of this paragraph, the term
`applicable dual resident' means an individual
who--
``(I) is not a United States
citizen,
``(II) is a resident of the United
States (determined without regard to
subparagraph (E)), and
``(III) would be a qualified
resident of Taiwan but for paragraph
(1)(B).
``(B) Permanent home.--An individual is described
in this subparagraph if such individual--
``(i) has a permanent home available to
such individual in Taiwan, and
``(ii) does not have a permanent home
available to such individual in the United
States.
``(C) Center of vital interests.--An individual is
described in this subparagraph if--
``(i) such individual has a permanent home
available to such individual in both Taiwan and
the United States, and
``(ii) such individual's personal and
economic relations (center of vital interests)
are closer to Taiwan than to the United States.
``(D) Habitual abode.--An individual is described
in this subparagraph if--
``(i) such individual--
``(I) does not have a permanent
home available to such individual in
either Taiwan or the United States, or
``(II) has a permanent home
available to such individual in both
Taiwan and the United States but such
individual's center of vital interests
under subparagraph (C)(ii) cannot be
determined, and
``(ii) such individual has a habitual abode
in Taiwan and not the United States.
``(E) United states tax treatment of qualified
resident of taiwan.--Notwithstanding section 7701, an
individual who is treated as a qualified resident of
Taiwan by reason of this paragraph for all or any
portion of a taxable year shall not be treated as a
resident of the United States for purposes of computing
such individual's United States income tax liability
for such taxable year or portion thereof.
``(4) Rules of special application.--
``(A) Dividends.--For purposes of applying this
section to any dividend, paragraph (2)(D) shall be
applied without regard to clause (ii) thereof.
``(B) Items of income emanating from an active
trade or business in taiwan.--For purposes of this
section--
``(i) In general.--Notwithstanding the
preceding paragraphs of this subsection, if an
entity taxed as a corporation in Taiwan is not
a qualified resident of Taiwan but meets the
requirements of subparagraphs (A) and (B) of
paragraph (1), any qualified item of income
such entity derived from the United States
shall be treated as income of a qualified
resident of Taiwan.
``(ii) Qualified items of income.--
``(I) In general.--The term
`qualified item of income' means any
item of income which emanates from, or
is incidental to, the conduct of an
active trade or business in Taiwan
(other than operating as a holding
company, providing overall supervision
or administration of a group of
companies, providing group financing,
or making or managing investments
(unless such making or managing
investments is carried on by a bank,
insurance company, or registered
securities dealer in the ordinary
course of its business as such)).
``(II) Substantial activity
requirement.--An item of income which
is derived from a trade or business
conducted in the United States or from
a connected person shall be a qualified
item of income only if the trade or
business activity conducted in Taiwan
to which the item is related is
substantial in relation to the same or
a complementary trade or business
activity carried on in the United
States. For purposes of applying this
subclause, activities conducted by
persons that are connected to the
entity described in clause (i) shall be
deemed to be conducted by such entity.
``(iii) Exception.--This subparagraph shall
not apply to any item of income derived by an
entity if at least 50 percent (by vote or
value) of such entity is owned (directly or
indirectly) or controlled by residents of a
foreign country of concern.
``(d) Other Definitions and Special Rules.--For purposes of this
section--
``(1) United states permanent establishment.--
``(A) In general.--The term `United States
permanent establishment' means, with respect to a
qualified resident of Taiwan, a permanent establishment
of such resident which is within the United States.
``(B) Special rule.--The determination of whether
there is a permanent establishment of a qualified
resident of Taiwan within the United States shall be
made without regard to whether an entity which is taxed
as a corporation in Taiwan and which is a qualified
resident of Taiwan controls or is controlled by--
``(i) a domestic corporation, or
``(ii) any other person that carries on
business in the United States (whether through
a permanent establishment or otherwise).
``(2) Permanent establishment.--
``(A) In general.--The term `permanent
establishment' means a fixed place of business through
which a trade or business is wholly or partly carried
on. Such term shall include--
``(i) a place of management,
``(ii) a branch,
``(iii) an office,
``(iv) a factory,
``(v) a workshop, and
``(vi) a mine, an oil or gas well, a
quarry, or any other place of extraction of
natural resources.
``(B) Special rules for certain temporary
projects.--
``(i) In general.--A building site or
construction or installation project, or an
installation or drilling rig or ship used for
the exploration or exploitation of the sea bed
and its subsoil and their natural resources,
constitutes a permanent establishment only if
it lasts, or the activities of the rig or ship
lasts, for more than 12 months.
``(ii) Determination of 12-month period.--
For purposes of clause (i), the period over
which a building site or construction or
installation project of a person lasts shall
include any period of more than 30 days during
which such person does not carry on activities
at such building site or construction or
installation project but connected activities
are carried on at such building site or
construction or installation project by one or
more connected persons.
``(C) Habitual exercise of contract authority
treated as permanent establishment.--Notwithstanding
subparagraphs (A) and (B), where a person (other than
an agent of an independent status to whom subparagraph
(D)(ii) applies) is acting on behalf of a trade or
business of a qualified resident of Taiwan and has and
habitually exercises an authority to conclude contracts
that are binding on the trade or business, that trade
or business shall be deemed to have a permanent
establishment in the country in which such authority is
exercised in respect of any activities that the person
undertakes for the trade or business, unless the
activities of such person are limited to those
described in subparagraph (D)(i) that, if exercised
through a fixed place of business, would not make this
fixed place of business a permanent establishment under
the provisions of that subparagraph.
``(D) Exclusions.--
``(i) In general.--Notwithstanding
subparagraphs (A) and (B), the term `permanent
establishment' shall not include--
``(I) the use of facilities solely
for the purpose of storage, display, or
delivery of goods or merchandise
belonging to the trade or business,
``(II) the maintenance of a stock
of goods or merchandise belonging to
the trade or business solely for the
purpose of storage, display, or
delivery,
``(III) the maintenance of a stock
of goods or merchandise belonging to
the trade or business solely for the
purpose of processing by another trade
or business,
``(IV) the maintenance of a fixed
place of business solely for the
purpose of purchasing goods or
merchandise, or of collecting
information, for the trade or business,
``(V) the maintenance of a fixed
place of business solely for the
purpose of carrying on, for the trade
or business, any other activity of a
preparatory or auxiliary character, or
``(VI) the maintenance of a fixed
place of business solely for any
combination of the activities mentioned
in subclauses (I) through (V), provided
that the overall activity of the fixed
place of business resulting from this
combination is of a preparatory or
auxiliary character.
``(ii) Brokers and other independent
agents.--A trade or business shall not be
considered to have a permanent establishment in
a country merely because it carries on business
in such country through a broker, general
commission agent, or any other agent of an
independent status, provided that such persons
are acting in the ordinary course of their
business as independent agents.
``(3) Tested group.--The term `tested group' includes, with
respect to any entity taxed as a corporation in Taiwan, such
entity and any other entity taxed as a corporation in Taiwan
that--
``(A) participates as a member with such entity in
a tax consolidation, fiscal unity, or similar regime
that requires members of the group to share profits or
losses, or
``(B) shares losses with such entity pursuant to a
group relief or other loss sharing regime.
``(4) Connected person.--Two persons shall be `connected
persons' if one owns, directly or indirectly, at least 50
percent of the interests in the other (or, in the case of a
corporation, at least 50 percent of the aggregate vote and
value of the corporation's shares) or another person owns,
directly or indirectly, at least 50 percent of the interests
(or, in the case of a corporation, at least 50 percent of the
aggregate vote and value of the corporation's shares) in each
person. In any case, a person shall be connected to another if,
based on all the relevant facts and circumstances, one has
control of the other or both are under the control of the same
person or persons.
``(5) Foreign country of concern.--The term `foreign
country of concern' has the meaning given such term under
paragraph (7) of section 9901 of the William M. (Mac)
Thornberry National Defense Authorization Act for Fiscal Year
2021 (15 U.S.C. 4651(7)), as added by section 103(a)(4) of the
CHIPS Act of 2022).
``(6) Partnerships; beneficiaries of estates and trusts.--
For purposes of this section--
``(A) a qualified resident of Taiwan which is a
partner of a partnership which carries on a trade or
business within the United States through a United
States permanent establishment shall be treated as
carrying on such trade or business through such
permanent establishment, and
``(B) a qualified resident of Taiwan which is a
beneficiary of an estate or trust which carries on a
trade or business within the United States through a
United States permanent establishment shall be treated
as carrying on such trade or business through such
permanent establishment.
``(7) Denial of benefits for certain payments through
hybrid entities.--For purposes of this section, rules similar
to the rules of section 894(c) shall apply.
``(e) Application.--
``(1) In general.--This section shall not apply to any
period unless the Secretary has determined that Taiwan has
provided benefits to United States persons for such period that
are reciprocal to the benefits provided to qualified residents
of Taiwan under this section.
``(2) Provision of reciprocity.--The President or his
designee is authorized to exchange letters, enter into an
agreement, or take other necessary and appropriate steps
relative to Taiwan for the reciprocal provision of the benefits
described in this section.
``(f) Regulations or Other Guidance.--
``(1) In general.--The Secretary shall issue such
regulations or other guidance as may be necessary or
appropriate to carry out the provisions of this section,
including such regulations or guidance for--
``(A) determining--
``(i) what constitutes a United States
permanent establishment of a qualified resident
of Taiwan, and
``(ii) income that is effectively connected
with such a permanent establishment,
``(B) preventing the abuse of the provisions of
this section by persons who are not (or who should not
be treated as) qualified residents of Taiwan,
``(C) requirements for record keeping and
reporting,
``(D) rules to assist withholding agents or
employers in determining whether a foreign person is a
qualified resident of Taiwan for purposes of
determining whether withholding or reporting is
required for a payment (and, if withholding is
required, whether it should be applied at a reduced
rate),
``(E) the application of subsection (a)(1)(D)(i) to
stock held by predecessor owners,
``(F) determining what amounts are to be treated as
qualified wages for purposes of subsection (a)(2),
``(G) determining the amounts to which subsection
(a)(3) applies,
``(H) defining established securities market for
purposes of subsection (c),
``(I) the application of the rules of subsection
(c)(4)(B),
``(J) the application of subsection (d)(6) and
section 1446,
``(K) determining ownership interests held by
residents of a foreign country of concern, and
``(L) determining the starting and ending dates for
periods with respect to the application of this section
under subsection (e), which may be separate dates for
taxes withheld at the source and other taxes.
``(2) Regulations to be consistent with model treaty.--Any
regulations or other guidance issued under this section shall,
to the extent practical, be consistent with the provisions of
the United States model income tax convention dated February 7,
2016.''.
(b) Conforming Amendment to Withholding Tax.--Subchapter A of
chapter 3 is amended by adding at the end the following new section:
``SEC. 1447. WITHHOLDING FOR QUALIFIED RESIDENTS OF TAIWAN.
``For reduced rates of withholding for certain residents of Taiwan,
see section 894A.''.
(c) Clerical Amendments.--
(1) The table of sections for subpart D of part II of
subchapter N of chapter 1 is amended by inserting after the
item relating to section 894 the following new item:
``Sec. 894A. Special rules for qualified residents of Taiwan.''.
(2) The table of sections for subchapter A of chapter 3 is
amended by adding at the end the following new item:
``Sec. 1447. Withholding for qualified residents of Taiwan.''.
Subtitle B--United States-Taiwan Tax Agreement Authorization Act
SEC. 311. SHORT TITLE.
This subtitle may be cited as the ``United States-Taiwan Tax
Agreement Authorization Act''.
SEC. 312. DEFINITIONS.
In this subtitle:
(1) Agreement.--The term ``Agreement'' means the tax
agreement authorized by section 313(a).
(2) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Foreign Relations and the
Committee on Finance of the Senate; and
(B) the Committee on Ways and Means of the House of
Representatives.
(3) Approval legislation.--The term ``approval
legislation'' means legislation that approves the Agreement.
(4) Implementing legislation.--The term ``implementing
legislation'' means legislation that makes any changes to the
Internal Revenue Code of 1986 necessary to implement the
Agreement.
SEC. 313. AUTHORIZATION TO NEGOTIATE AND ENTER INTO AGREEMENT.
(a) In General.--Subsequent to a determination under section
894A(e)(1) of the Internal Revenue Code of 1986 (as added by the United
States-Taiwan Expedited Double-Tax Relief Act), the President is
authorized to negotiate and enter into a tax agreement relative to
Taiwan.
(b) Elements of Agreement.--
(1) Conformity with bilateral income tax conventions.--The
President shall ensure that--
(A) any provisions included in the Agreement
conform with provisions customarily contained in United
States bilateral income tax conventions, as exemplified
by the 2016 United States Model Income Tax Convention;
and
(B) the Agreement does not include elements outside
the scope of the 2016 United States Model Income Tax
Convention.
(2) Incorporation of tax agreements and laws.--
Notwithstanding paragraph (1), the Agreement may incorporate
and restate provisions of any agreement, or existing United
States law, addressing double taxation for residents of the
United States and Taiwan.
(3) Authority.--The Agreement shall include the following
statement: ``The Agreement is entered into pursuant to the
United States-Taiwan Tax Agreement Authorization Act.''
(4) Entry into force.--The Agreement shall include a
provision conditioning entry into force upon--
(A) enactment of approval legislation and
implementing legislation pursuant to section 317; and
(B) confirmation by the Secretary of the Treasury
that the relevant authority in Taiwan has approved and
taken appropriate steps required to implement the
Agreement.
SEC. 314. CONSULTATIONS WITH CONGRESS.
(a) Notification Upon Commencement of Negotiations.--The President
shall provide written notification to the appropriate congressional
committees of the commencement of negotiations between the United
States and Taiwan on the Agreement at least 15 calendar days before
commencing such negotiations.
(b) Consultations During Negotiations.--
(1) Briefings.--Not later than 90 days after commencement
of negotiations with respect to the Agreement, and every 180
days thereafter until the President enters into the Agreement,
the President shall provide a briefing to the appropriate
congressional committees on the status of the negotiations,
including a description of elements under negotiation.
(2) Meetings and other consultations.--
(A) In general.--In the course of negotiations with
respect to the Agreement, the Secretary of the
Treasury, in coordination with the Secretary of State,
shall--
(i) meet, upon request, with the chairman
or ranking member of any of the appropriate
congressional committees regarding negotiating
objectives and the status of negotiations in
progress; and
(ii) consult closely and on a timely basis
with, and keep fully apprised of the
negotiations, the appropriate congressional
committees.
(B) Elements of consultations.--The consultations
described in subparagraph (A) shall include
consultations with respect to--
(i) the nature of the contemplated
Agreement;
(ii) how and to what extent the
contemplated Agreement is consistent with the
elements set forth in section 313(b); and
(iii) the implementation of the
contemplated Agreement, including--
(I) the general effect of the
contemplated Agreement on existing
laws;
(II) proposed changes to any
existing laws to implement the
contemplated Agreement; and
(III) proposed administrative
actions to implement the contemplated
Agreement.
SEC. 315. APPROVAL AND IMPLEMENTATION OF AGREEMENT.
(a) In General.--The Agreement may not enter into force unless--
(1) the President, at least 60 days before the day on which
the President enters into the Agreement, publishes the text of
the contemplated Agreement on a publicly available website of
the Department of the Treasury; and
(2) there is enacted into law, with respect to the
Agreement, approval legislation and implementing legislation
pursuant to section 317.
(b) Entry Into Force.--The President may provide for the Agreement
to enter into force upon--
(1) enactment of approval legislation and implementing
legislation pursuant to section 317; and
(2) confirmation by the Secretary of the Treasury that the
relevant authority in Taiwan has approved and taken appropriate
steps required to implement the Agreement.
SEC. 316. SUBMISSION TO CONGRESS OF AGREEMENT AND IMPLEMENTATION
POLICY.
(a) Submission of Agreement.--Not later than 270 days after the
President enters into the Agreement, the President or the President's
designee shall submit to Congress--
(1) the final text of the Agreement; and
(2) a technical explanation of the Agreement.
(b) Submission of Implementation Policy.--Not later than 270 days
after the President enters into the Agreement, the Secretary of the
Treasury shall submit to Congress--
(1) a description of those changes to existing laws that
the President considers would be required in order to ensure
that the United States acts in a manner consistent with the
Agreement; and
(2) a statement of anticipated administrative action
proposed to implement the Agreement.
SEC. 317. CONSIDERATION OF APPROVAL LEGISLATION AND IMPLEMENTING
LEGISLATION.
(a) In General.--The approval legislation with respect to the
Agreement shall include the following: ``Congress approves the
Agreement submitted to Congress pursuant to section 316 of the United
States-Taiwan Tax Agreement Authorization Act on ____.'', with the
blank space being filled with the appropriate date.
(b) Approval Legislation Committee Referral.--The approval
legislation shall--
(1) in the Senate, be referred to the Committee on Foreign
Relations; and
(2) in the House of Representaives, be referred to the
Committee on Ways and Means.
(c) Implementing Legislation Committee Referral.--The implementing
legislation shall--
(1) in the Senate, be referred to the Committee on Finance;
and
(2) in the House of Representatives, be referred to the
Committee on Ways and Means.
SEC. 318. RELATIONSHIP OF AGREEMENT TO INTERNAL REVENUE CODE OF 1986.
(a) Internal Revenue Code of 1986 to Control.--No provision of the
Agreement or approval legislation, nor the application of any such
provision to any person or circumstance, which is inconsistent with any
provision of the Internal Revenue Code of 1986, shall have effect.
(b) Construction.--Nothing in this subtitle shall be construed--
(1) to amend or modify any law of the United States; or
(2) to limit any authority conferred under any law of the
United States,
unless specifically provided for in this subtitle.
SEC. 319. AUTHORIZATION OF SUBSEQUENT TAX AGREEMENTS RELATIVE TO
TAIWAN.
(a) In General.--Subsequent to the enactment of approval
legislation and implementing legislation pursuant to section 317--
(1) the term ``tax agreement'' in section 313(a) shall be
treated as including any tax agreement relative to Taiwan which
supplements or supersedes the Agreement to which such approval
legislation and implementing legislation relates, and
(2) the term ``Agreement'' shall be treated as including
such tax agreement.
(b) Requirements, etc., to Apply Separately.--The provisions of
this subtitle (including section 314) shall be applied separately with
respect to each tax agreement referred to in subsection (a).
SEC. 320. UNITED STATES TREATMENT OF DOUBLE TAXATION MATTERS WITH
RESPECT TO TAIWAN.
(a) Findings.--Congress makes the following findings:
(1) The United States addresses issues with respect to
double taxation with foreign countries by entering into
bilateral income tax conventions (known as tax treaties) with
such countries, subject to the advice and consent of the Senate
to ratification pursuant to article II of the Constitution.
(2) The United States has entered into more than sixty such
tax treaties, which facilitate economic activity, strengthen
bilateral cooperation, and benefit United States workers,
businesses, and other United States taxpayers.
(3) Due to Taiwan's unique status, the United States is
unable to enter into an article II tax treaty with Taiwan,
necessitating an agreement to address issues with respect to
double taxation.
(b) Statement of Policy.--It is the policy of the United States
to--
(1) provide for additional bilateral tax relief with
respect to Taiwan, beyond that provided for in section 894A of
the Internal Revenue Code of 1986 (as added by the United
States-Taiwan Expedited Double-Tax Relief Act), only after
entry into force of an Agreement, as provided for in section
315, and only in a manner consistent with such Agreement; and
(2) continue to provide for bilateral tax relief with
sovereign states to address double taxation and other related
matters through entering into bilateral income tax conventions,
subject to the Senate's advice and consent to ratification
pursuant to article II of the Constitution.
TITLE IV--ASSISTANCE FOR DISASTER-IMPACTED COMMUNITIES
SEC. 401. SHORT TITLE.
This title may be cited as the ``Federal Disaster Tax Relief Act of
2024''.
SEC. 402. EXTENSION OF RULES FOR TREATMENT OF CERTAIN DISASTER-RELATED
PERSONAL CASUALTY LOSSES.
For purposes of applying section 304(b) of the Taxpayer Certainty
and Disaster Tax Relief Act of 2020, section 301 of such Act shall be
applied by substituting ``the Federal Disaster Tax Relief Act of 2024''
for ``this Act'' each place it appears.
SEC. 403. EXCLUSION FROM GROSS INCOME FOR COMPENSATION FOR LOSSES OR
DAMAGES RESULTING FROM CERTAIN WILDFIRES.
(a) In General.--For purposes of the Internal Revenue Code of 1986,
gross income shall not include any amount received by an individual as
a qualified wildfire relief payment.
(b) Qualified Wildfire Relief Payment.--For purposes of this
section--
(1) In general.--The term ``qualified wildfire relief
payment'' means any amount received by or on behalf of an
individual as compensation for losses, expenses, or damages
(including compensation for additional living expenses, lost
wages (other than compensation for lost wages paid by the
employer which would have otherwise paid such wages), personal
injury, death, or emotional distress) incurred as a result of a
qualified wildfire disaster, but only to the extent the losses,
expenses, or damages compensated by such payment are not
compensated for by insurance or otherwise.
(2) Qualified wildfire disaster.--The term ``qualified
wildfire disaster'' means any federally declared disaster (as
defined in section 165(i)(5)(A) of the Internal Revenue Code of
1986) declared, after December 31, 2014, as a result of any
forest or range fire.
(c) Denial of Double Benefit.--Notwithstanding any other provision
of the Internal Revenue Code of 1986--
(1) no deduction or credit shall be allowed (to the person
for whose benefit a qualified wildfire relief payment is made)
for, or by reason of, any expenditure to the extent of the
amount excluded under this section with respect to such
expenditure, and
(2) no increase in the basis or adjusted basis of any
property shall result from any amount excluded under this
subsection with respect to such property.
(d) Limitation on Application.--This section shall only apply to
qualified wildfire relief payments received by the individual during
taxable years beginning after December 31, 2019, and before January 1,
2026.
SEC. 404. EAST PALESTINE DISASTER RELIEF PAYMENTS.
(a) Disaster Relief Payments to Victims of East Palestine Train
Derailment.--East Palestine train derailment payments shall be treated
as qualified disaster relief payments for purposes of section 139(b) of
the Internal Revenue Code of 1986.
(b) East Palestine Train Derailment Payments.--For purposes of this
section, the term ``East Palestine train derailment payment'' means any
amount received by or on behalf of an individual as compensation for
loss, damages, expenses, loss in real property value, closing costs
with respect to real property (including realtor commissions), or
inconvenience (including access to real property) resulting from the
East Palestine train derailment if such amount was provided by--
(1) a Federal, State, or local government agency,
(2) Norfolk Southern Railway, or
(3) any subsidiary, insurer, or agent of Norfolk Southern
Railway or any related person.
(c) Train Derailment.--For purposes of this section, the term
``East Palestine train derailment'' means the derailment of a train in
East Palestine, Ohio, on February 3, 2023.
(d) Effective Date.--This section shall apply to amounts received
on or after February 3, 2023.
TITLE V--MORE AFFORDABLE HOUSING
SEC. 501. STATE HOUSING CREDIT CEILING INCREASE FOR LOW-INCOME HOUSING
CREDIT.
(a) In General.--Section 42(h)(3)(I) is amended--
(1) by striking ``and 2021,'' and inserting ``2021, 2023,
2024, and 2025,'', and
(2) by striking ``2018, 2019, 2020, and 2021'' in the
heading and inserting ``certain calendar years''.
(b) Effective Date.--The amendments made by this section shall
apply to calendar years after 2022.
SEC. 502. TAX-EXEMPT BOND FINANCING REQUIREMENT.
(a) In General.--Section 42(h)(4) is amended by striking
subparagraph (B) and inserting the following:
``(B) Special rule where minimum percent of
buildings is financed with tax-exempt bonds subject to
volume cap.--For purposes of subparagraph (A),
paragraph (1) shall not apply to any portion of the
credit allowable under subsection (a) with respect to a
building if--
``(i) 50 percent or more of the aggregate
basis of such building and the land on which
the building is located is financed by 1 or
more obligations described in subparagraph (A),
or
``(ii)(I) 30 percent or more of the
aggregate basis of such building and the land
on which the building is located is financed by
1 or more qualified obligations, and
``(II) 1 or more of such qualified
obligations--
``(aa) are part of an issue the
issue date of which is after December
31, 2023, and
``(bb) provide the financing for
not less than 5 percent of the
aggregate basis of such building and
the land on which the building is
located.
``(C) Qualified obligation.--For purposes of
subparagraph (B)(ii), the term `qualified obligation'
means an obligation which is described in subparagraph
(A) and which is part of an issue the issue date of
which is before January 1, 2026.''.
(b) Effective Date.--
(1) In general.--The amendment made by this section shall
apply to buildings placed in service in taxable years beginning
after December 31, 2023.
(2) Rehabilitation expenditures treated as separate new
building.--In the case of any building with respect to which
any expenditures are treated as a separate new building under
section 42(e) of the Internal Revenue Code of 1986, for
purposes of paragraph (1), both the existing building and the
separate new building shall be treated as having been placed in
service on the date such expenditures are treated as placed in
service under section 42(e)(4) of such Code.
TITLE VI--TAX ADMINISTRATION AND ELIMINATING FRAUD
SEC. 601. INCREASE IN THRESHOLD FOR REQUIRING INFORMATION REPORTING
WITH RESPECT TO CERTAIN PAYEES.
(a) In General.--Sections 6041(a) is amended by striking ``$600''
and inserting ``$1,000''.
(b) Inflation Adjustment.--Section 6041 is amended by adding at the
end the following new subsection:
``(h) Inflation Adjustment.--In the case of any calendar year after
2024, the dollar amount in subsection (a) shall be increased by an
amount equal to--
``(1) such dollar amount, multiplied by
``(2) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year, determined by
substituting `calendar year 2023' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
If any increase under the preceding sentence is not a multiple of $100,
such increase shall be rounded to the nearest multiple of $100.''.
(c) Application to Reporting on Remuneration for Services and
Direct Sales.--Section 6041A is amended--
(1) in subsection (a)(2), by striking ``is $600 or more''
and inserting ``equals or exceeds the dollar amount in effect
for such calendar year under section 6041(a)'', and
(2) in subsection (b)(1)(B), by striking ``is $5,000 or
more'' and inserting ``equals or exceeds the dollar amount in
effect for such calendar year under section 6041(a)''.
(d) Application to Backup Withholding.--Section 3406(b)(6) is
amended--
(1) by striking ``$600'' in subparagraph (A) and inserting
``the dollar amount in effect for such calendar year under
section 6041(a)'', and
(2) by striking ``only where aggregate for calendar year is
$600 or more'' in the heading and inserting ``only if in excess
of threshold''.
(e) Conforming Amendments.--
(1) The heading of section 6041(a) is amended by striking
``of $600 or More'' and inserting ``Exceeding Threshold''.
(2) Section 6041(a) is amended by striking ``taxable year''
and inserting ``calendar year''.
(f) Effective Date.--The amendments made by this section shall
apply with respect to payments made after December 31, 2023.
SEC. 602. ENFORCEMENT PROVISIONS WITH RESPECT TO COVID-RELATED EMPLOYEE
RETENTION CREDITS.
(a) Increase in Assessable Penalty on COVID-ERTC Promoters for
Aiding and Abetting Understatements of Tax Liability.--
(1) In general.--If any COVID-ERTC promoter is subject to
penalty under section 6701(a) of the Internal Revenue Code of
1986 with respect to any COVID-ERTC document, notwithstanding
paragraphs (1) and (2) of section 6701(b) of such Code, the
amount of the penalty imposed under such section 6701(a) shall
be the greater of--
(A) $200,000 ($10,000, in the case of a natural
person), or
(B) 75 percent of the gross income derived (or to
be derived) by such promoter with respect to the aid,
assistance, or advice referred to in section 6701(a)(1)
of such Code with respect to such document.
(2) No inference.--Paragraph (1) shall not be construed to
create any inference with respect to the proper application of
the knowledge requirement of section 6701(a)(3) of the Internal
Revenue Code of 1986.
(b) Failure to Comply With Due Diligence Requirements Treated as
Knowledge for Purposes of Assessable Penalty for Aiding and Abetting
Understatement of Tax Liability.--In the case of any COVID-ERTC
promoter, the knowledge requirement of section 6701(a)(3) of the
Internal Revenue Code of 1986 shall be treated as satisfied with
respect to any COVID-ERTC document with respect to which such promoter
provided aid, assistance, or advice, if such promoter fails to comply
with the due diligence requirements referred to in subsection (c)(1).
(c) Assessable Penalty for Failure to Comply With Due Diligence
Requirements.--
(1) In general.--Any COVID-ERTC promoter which provides
aid, assistance, or advice with respect to any COVID-ERTC
document and which fails to comply with due diligence
requirements imposed by the Secretary with respect to
determining eligibility for, or the amount of, any COVID-
related employee retention tax credit, shall pay a penalty of
$1,000 for each such failure.
(2) Due diligence requirements.--Except as otherwise
provided by the Secretary, the due diligence requirements
referred to in paragraph (1) shall be similar to the due
diligence requirements imposed under section 6695(g).
(3) Restriction to documents used in connection with
returns or claims for refund.--Paragraph (1) shall not apply
with respect to any COVID-ERTC document unless such document
constitutes, or relates to, a return or claim for refund.
(4) Treatment as assessable penalty, etc.--For purposes of
the Internal Revenue Code of 1986, the penalty imposed under
paragraph (1) shall be treated in the same manner as a penalty
imposed under section 6695(g).
(5) Secretary.--For purposes of this subsection, the term
``Secretary'' means the Secretary of the Treasury or the
Secretary's delegate.
(d) Assessable Penalties for Failure to Disclose Information,
Maintain Client Lists, etc.--For purposes of sections 6111, 6112, 6707
and 6708 of the Internal Revenue Code of 1986--
(1) any COVID-related employee retention tax credit
(whether or not the taxpayer claims such COVID-related employee
retention tax credit) shall be treated as a listed transaction
(and as a reportable transaction) with respect to any COVID-
ERTC promoter if such promoter provides any aid, assistance, or
advice with respect to any COVID-ERTC document relating to such
COVID-related employee retention tax credit, and
(2) such COVID-ERTC promoter shall be treated as a material
advisor with respect to such transaction.
(e) COVID-ERTC Promoter.--For purposes of this section--
(1) In general.--The term ``COVID-ERTC promoter'' means,
with respect to any COVID-ERTC document, any person which
provides aid, assistance, or advice with respect to such
document if--
(A) such person charges or receives a fee for such
aid, assistance, or advice which is based on the amount
of the refund or credit with respect to such document
and, with respect to such person's taxable year in
which such person provided such assistance or the
preceding taxable year, the aggregate gross receipts of
such person for aid, assistance, and advice with
respect to all COVID-ERTC documents exceeds 20 percent
of the gross receipts of such person for such taxable
year, or
(B) with respect to such person's taxable year in
which such person provided such assistance or the
preceding taxable year--
(i) the aggregate gross receipts of such
person for aid, assistance, and advice with
respect to all COVID-ERTC documents exceeds 50
percent of the gross receipts of such person
for such taxable year, or
(ii) both--
(I) such aggregate gross receipts
exceeds 20 percent of the gross
receipts of such person for such
taxable year, and
(II) the aggregate gross receipts
of such person for aid, assistance, and
advice with respect to all COVID-ERTC
documents (determined after application
of paragraph (3)) exceeds $500,000.
(2) Exception for certified professional employer
organizations.--The term ``COVID-ERTC promoter'' shall not
include a certified professional employer organization (as
defined in section 7705).
(3) Aggregation rule.--For purposes of paragraph
(1)(B)(ii)(II), all persons treated as a single employer under
subsection (a) or (b) of section 52 of the Internal Revenue
Code of 1986, or subsection (m) or (o) of section 414 of such
Code, shall be treated as 1 person.
(4) Short taxable years.--In the case of any taxable year
of less than 12 months, paragraph (1) shall be applied with
respect to the calendar year in which such taxable year begins
(in addition to applying to such taxable year).
(f) COVID-ERTC Document.--For purposes of this section, the term
``COVID-ERTC document'' means any return, affidavit, claim, or other
document related to any COVID-related employee retention tax credit,
including any document related to eligibility for, or the calculation
or determination of any amount directly related to any COVID-related
employee retention tax credit.
(g) COVID-related Employee Retention Tax Credit.--For purposes of
this section, the term ``COVID-related employee retention tax credit''
means--
(1) any credit, or advance payment, under section 3134 of
the Internal Revenue Code of 1986, and
(2) any credit, or advance payment, under section 2301 of
the CARES Act.
(h) Limitation on Credit and Refund of COVID-related Employee
Retention Tax Credits.--Notwithstanding section 6511 of the Internal
Revenue Code of 1986 or any other provision of law, no credit or refund
of any COVID-related employee retention tax credit shall be allowed or
made after January 31, 2024, unless a claim for such credit or refund
is filed by the taxpayer on or before such date.
(i) Amendments to Extend Limitation on Assessment.--
(1) In general.--Section 3134(l) of the Internal Revenue
Code of 1986 is amended to read as follows:
``(l) Extension of Limitation on Assessment.--
``(1) In general.--Notwithstanding section 6501, the
limitation on the time period for the assessment of any amount
attributable to a credit claimed under this section shall not
expire before the date that is 6 years after the latest of--
``(A) the date on which the original return which
includes the calendar quarter with respect to which
such credit is determined is filed,
``(B) the date on which such return is treated as
filed under section 6501(b)(2), or
``(C) the date on which the claim for credit or
refund with respect to such credit is made.
``(2) Deduction for wages taken into account in determining
improperly claimed credit.--
``(A) In general.--Notwithstanding section 6511, in
the case of an assessment attributable to a credit
claimed under this section, the limitation on the time
period for credit or refund of any amount attributable
to a deduction for improperly claimed ERTC wages shall
not expire before the time period for such assessment
expires under paragraph (1).
``(B) Improperly claimed ertc wages.--For purposes
of this paragraph, the term `improperly claimed ERTC
wages' means, with respect to an assessment
attributable to a credit claimed under this section,
the wages with respect to which a deduction would not
have been allowed if the portion of the credit to which
such assessment relates had been properly claimed.''.
(2) Application to cares act credit.--Section 2301 of the
CARES Act is amended by adding at the end the following new
subsection:
``(o) Extension of Limitation on Assessment.--
``(1) In general.--Notwithstanding section 6501 of the
Internal Revenue Code of 1986, the limitation on the time
period for the assessment of any amount attributable to a
credit claimed under this section shall not expire before the
date that is 6 years after the latest of--
``(A) the date on which the original return which
includes the calendar quarter with respect to which
such credit is determined is filed,
``(B) the date on which such return is treated as
filed under section 6501(b)(2) of such Code, or
``(C) the date on which the claim for credit or
refund with respect to such credit is made.
``(2) Deduction for wages taken into account in determining
improperly claimed credit.--
``(A) In general.--Notwithstanding section 6511 of
such Code, in the case of an assessment attributable to
a credit claimed under this section, the limitation on
the time period for credit or refund of any amount
attributable to a deduction for improperly claimed ERTC
wages shall not expire before the time period for such
assessment expires under paragraph (1).
``(B) Improperly claimed ertc wages.--For purposes
of this paragraph, the term `improperly claimed ERTC
wages' means, with respect to an assessment
attributable to a credit claimed under this section,
the wages with respect to which a deduction would not
have been allowed if the portion of the credit to which
such assessment relates had been properly claimed.''.
(j) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the provisions of this section shall apply to aid,
assistance, and advice provided after March 12, 2020.
(2) Due diligence requirements.--Subsections (b) and (c)
shall apply to aid, assistance, and advice provided after the
date of the enactment of this Act.
(3) Limitation on credit and refund of covid-related
employee retention tax credits.--Subsection (h) shall apply to
credits and refunds allowed or made after January 31, 2024.
(4) Amendments to extend limitation on assessment.--The
amendments made by subsection (i) shall apply to assessments
made after the date of the enactment of this Act.
(k) Transition Rule With Respect to Requirements to Disclose
Information, Maintain Client Lists, etc.--Any return under section 6111
of the Internal Revenue Code of 1986, or list under section 6112 of
such Code, required by reason of subsection (d) of this section to be
filed or maintained, respectively, with respect to any aid, assistance,
or advice provided by a COVID-ERTC promoter with respect to a COVID-
ERTC document before the date of the enactment of this Act, shall not
be required to be so filed or maintained (with respect to such aid,
assistance or advice) before the date which is 90 days after such date.
(l) Provisions Not to Be Construed to Create Negative Inferences.--
(1) No inference with respect to application of knowledge
requirement to pre-enactment conduct of covid-ertc promoters,
etc.--Subsection (b) shall not be construed to create any
inference with respect to the proper application of section
6701(a)(3) of the Internal Revenue Code of 1986 with respect to
any aid, assistance, or advice provided by any COVID-ERTC
promoter on or before the date of the enactment of this Act (or
with respect to any other aid, assistance, or advice to which
such subsection does not apply).
(2) Requirements to disclose information, maintain client
lists, etc.--Subsections (d) and (k) shall not be construed to
create any inference with respect to whether any COVID-related
employee retention tax credit is (without regard to subsection
(d)) a listed transaction (or reportable transaction) with
respect to any COVID-ERTC promoter; and, for purposes of
subsection (j), a return or list shall not be treated as
required (with respect to such aid, assistance, or advice) by
reason of subsection (d) if such return or list would be so
required without regard to subsection (d).
(m) Regulations.--The Secretary (as defined in subsection (c)(5))
shall issue such regulations or other guidance as may be necessary or
appropriate to carry out the purposes of this section (and the
amendments made by this section).
Passed the House of Representatives January 31, 2024.
Attest:
KEVIN F. MCCUMBER,
Clerk.
Calendar No. 349
118th CONGRESS
2d Session
H. R. 7024
_______________________________________________________________________
AN ACT
To make improvements to the child tax credit, to provide tax incentives
to promote economic growth, to provide special rules for the taxation
of certain residents of Taiwan with income from sources within the
United States, to provide tax relief with respect to certain Federal
disasters, to make improvements to the low-income housing tax credit,
and for other purposes.
_______________________________________________________________________
March 21, 2024
Read the second time and placed on the calendar