International Regulated Investment Company Act of 2017
This bill amends the Internal Revenue Code to provide for international regulated investment companies (IRICs) and specify rules for the taxation of IRICs. An IRIC is a regulated investment company (i.e., a mutual fund) that has all of its outstanding stock held by foreign shareholders, including nonresident alien individuals (and their foreign estates) and qualified foreign pension funds, and meets other specified requirements.
[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4204 Introduced in House (IH)]
<DOC>
115th CONGRESS
1st Session
H. R. 4204
To amend the Internal Revenue Code of 1986 to provide for International
Regulated Investment Companies.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 1, 2017
Mr. Marchant introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for International
Regulated Investment Companies.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``International Regulated Investment
Company Act of 2017''.
SEC. 2. INTERNATIONAL REGULATED INVESTMENT COMPANIES.
(a) In General.--Subchapter N of chapter 1 of the Internal Revenue
Code of 1986 is amended by redesignating part V as part VI and
inserting after part IV the following new part:
``PART V--INTERNATIONAL REGULATED INVESTMENT COMPANIES
``Sec. 998. Definition of international regulated investment company.
``Sec. 998A. Taxation of IRICs.
``Sec. 998B. Other rules.
``SEC. 998. DEFINITION OF INTERNATIONAL REGULATED INVESTMENT COMPANY.
``(a) General Rule.--For purposes of this title, the terms
`international regulated investment company' and `IRIC' mean, with
respect to any taxable year, a domestic corporation which, at all times
during the taxable year, meets the following requirements:
``(1) The corporation is registered under the Investment
Company Act of 1940.
``(2) Except as provided in subsection (c), the corporation
holds no assets other than the stock of a single regulated
investment company--
``(A) to which part I of subchapter M applies, and
``(B) which is not a qualified investment entity
(as defined in section 897(h)(4)(A)(ii)).
``(3) All outstanding stock of the corporation is held by
nonresident alien individuals (and their foreign estates) and
qualified foreign pension funds (within the meaning of section
897(l)(2)).
``(4) The corporation has in effect an election to be
treated as an IRIC.
``(b) Election.--An election to be treated as an IRIC shall apply
to the taxable year for which made and all subsequent taxable years
until terminated. Such election shall be made for any taxable year not
later than the due date (with extensions) for the return of tax imposed
by this subtitle for the taxable year.
``(c) Permitted Assets.--For purposes of subsection (a)(2), an IRIC
may hold--
``(1) an amount of cash and cash equivalents reasonably
necessary or appropriate for the corporation to conduct its
normal affairs, and
``(2) such other assets as are incidental to the
corporation's conduct of its normal affairs or otherwise
allowed by the Secretary.
``(d) Termination.--
``(1) In general.--Except as provided in paragraph (2), if
a corporation fails to meet the requirements of subsection (a)
at any time during the taxable year, the corporation shall not
be treated as an IRIC for such taxable year.
``(2) Inadvertent failure.--
``(A) In general.--A corporation which fails to
meet the requirements of subsection (a) for any taxable
year shall nevertheless be considered to have satisfied
the requirements of such subsection for such taxable
year if--
``(i) the failure was due to reasonable
cause and not due to willful neglect,
``(ii) no later than 30 days after the
discovery of the event causing such failure,
the corporation meets the requirements of
subsection (a),
``(iii) in the case of a failure to meet
the requirements of subsection (a)(3) for any
period, the failure was caused by persons not
described therein holding, in the aggregate,
less than 1 percent of the stock (by value) of
the corporation, and
``(iv) the corporation pays the additional
tax imposed by reason of subparagraph (B).
``(B) Imposition of additional tax on certain
failures.--In the case of a failure described in
subparagraph (A)(iii) for any taxable year, the tax
imposed by section 998A(a) on the IRIC shall be equal
to the sum of--
``(i) the tax determined under such section
(without regard to this subparagraph) on
amounts received by the IRIC for the taxable
year other than amounts so received which are
attributable to stock held by persons not
described in subsection (a)(3) for the period
so held, plus
``(ii) 100 percent of the amounts received
which are so attributable.
The Secretary shall prescribe rules for the proper
allocation of deductions to amounts described in this
subparagraph.
``SEC. 998A. TAXATION OF IRICS.
``(a) In General.--In the case of an IRIC, there shall be imposed,
in lieu of the tax imposed by section 11, a tax equal to 30 percent of
the excess of--
``(1) the amounts received by the IRIC which (before the
application of any treaty) would be subject to tax under
section 871(a) if received by a nonresident alien individual,
over
``(2) the deductions properly allocable to such amounts
(other than deductions allowed under sections 163, 172, 243,
and such other provisions as the Secretary may prescribe in
regulations to prevent abuse).
``(b) Treaties.--
``(1) In general.--In the case of a treaty IRIC, subsection
(a) shall be applied by substituting `15 percent' for `30
percent'.
``(2) Treaty iric.--For purposes of paragraph (1), the term
`treaty IRIC' means an IRIC--
``(A) all the outstanding stock of which is held by
persons resident in a country that has in effect with
the United States an income tax treaty pursuant to
which such persons would, by reason of section 894(a),
be subject to tax under section 871(a) on dividends at
a rate not greater than 15 percent, and
``(B) which elects to be a treaty IRIC.
Rules similar to the rules of section 998(b) shall apply to an
election under subparagraph (B).
``SEC. 998B. OTHER RULES.
``(a) Coordination With Subchapter M.--Except as provided in
subsection (e), an IRIC shall not be treated as a regulated investment
company for purposes of this title.
``(b) No Carryovers.--
``(1) Carryovers to iric years.--No carryforward, and no
carryback, arising for a taxable year for which the corporation
is not an IRIC may be carried to a taxable year for which such
corporation is an IRIC.
``(2) Carryovers from iric years.--No carryforward, and no
carryback, shall arise for a taxable year for which a
corporation is an IRIC.
``(c) Certain Taxes Not To Apply.--Sections 55, 531, and 541 shall
not apply to an IRIC.
``(d) Credits Not Allowed.--No credits under this chapter shall be
allowed to an IRIC.
``(e) Redemptions.--In applying section 302(b)(5), an IRIC shall be
treated as a publicly offered regulated investment company.
``(f) Reliance on Certification.--
``(1) Reliance.--With respect to the requirement in
sections 998(a)(3) and 998A(b)(2)(A), a corporation may rely on
the certification of its shareholders, unless or until such
time that the corporation has reason to know that the
certification is false or is no longer true.
``(2) Redemption upon false certification.--If a
corporation has reason to know that the certification made by
one of its shareholders is false or is no longer true, the
corporation must redeem the stock held by such shareholder as
soon as reasonably practicable (and in no case more than 30
days after the corporation obtains such reason to know).
Failure to redeem such stock in a timely manner shall result in
the corporation failing the requirement of section 998(a)(3) or
998A(b)(2)(A), whichever is applicable.
``(3) Certification by certain institutions.--For purposes
of this subsection, a certification with regard to a person
which is made by an institution described in section
871(h)(5)(B) in a form satisfactory to the Secretary under
section 871(h) shall be deemed to be a certification by such
person.''.
(b) Clerical Amendment.--The table of parts for subchapter N of
chapter 1 of the Internal Revenue Code of 1986 is amended by
redesignating the item relating to part V as relating to part VI and
inserting after the item relating to part IV the following new item:
``Part V--International Regulated Investment Companies''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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