,,ii  #aacth ,,congress  #ast ,session  
,s4 #addi  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,august #a1    
#bjac ,mr4 ,rockefeller introduced the  
following bill2 which was read twice and
 referred to the ,committee on ,finance 
,a ,,bill  ,to amend the ,internal      
,revenue ,code of #aihf to provide that 
income attributable to certain passenger
 cruise voyages beginning or ending in  
the ,united ,states shall be treated as 
effectively connected with the conduct  
of a trade or business within the       
,united ,states4  #a4 ,taxation of      
,united ,states cruise industry income  
of nonresident aliens and foreign       
corporations  7a7 ,united ,states       
,cruise industry income treated as      
effectively connected to the conduct of 
a trade or business within the ,united  
,states  7#a7 ,income from sources      
without the ,united ,states  7,a7 ,in   
general ,paragraph 7#d7 of section      
#hfd7;c7 of the ,internal ,revenue ,code
 of #aihf is amended by redesignating   

subparagraph 7,d7 as subparagraph 7,e7  
and by inserting after subparagraph 7,c7
 the following new subparagraph3  7,d7  
,united ,states cruise industry income  
7i7 ,in general ,united ,states cruise  
industry income shall be treated as     
effectively connected with the conduct  
of a trade or business within the       
,united ,states4  7ii7 ,united ,states  
cruise industry income ,for purposes of 
this subparagraph1 the term ,united     
,states cruise industry income means    
income attributable to any covered      
passenger cruise 7as defined in         
paragraph 7#h771 including income       
directly or indirectly attributable to  
the carriage of passengers and any      
on-board or off-board activities        
incidental to such covered passenger    
cruise4  4  7,b7 ,covered passenger     
cruise ,subsection 7c7 of section #hfd  
of such ,code is amended by adding at   
the end the following new paragraph3    
7#h7 ,covered passenger cruise ,for     
purposes of paragraph 7#d77;,c7--  7,a7 

,definition  7i7 ,in general ,the term  
covered passenger cruise means a voyage 
of a commercial passenger cruise        
vessel--  7,i7 that extends over #a or  
more nights1 and  7,,ii7 during which   
passengers embark or disembark the      
vessel in the ,united ,states4  7ii7    
,exceptions for certain voyages ,such   
term shall not include any voyage--     
7,i7 on any vessel owned or operated by 
the ,united ,states1 a ,state1 or any   
subdivision thereof1  7,,ii7 which      
occurs exclusively on the inland        
waterways of the ,united ,states1 or    
7,,iii7 in which a vessel in the usual  
course of employment proceeds1 without  
an intervening foreign port of call from
 one port or place in the ,united       
,states to the same port or place or to 
another port or place in the ,united    
,states4  7,b7 ,passenger cruise vessel 
,for purposes of subparagraph 7,a7--    
7i7 ,in general ,the term passenger     
cruise vessel means any passenger vessel
 having berth or stateroom              

accommodations for at least #bej        
passengers4  7ii7 ,exceptions ,such term
 shall not include any ferry1           
recreational vessel1 sailing school     
vessel1 small passenger vessel1 offshore
 supply vessel1 or any other vessel     
determined under regulations by the     
,secretary to be excluded from the      
application of this part4  7iii7        
,definitions ,any term used in this     
section which is used in chapter #ba of 
title #df1 ,united ,states ,code1 shall 
have the meaning given such term under  
section #baja of such title4  4  7,c7   
,conforming amendment ,subparagraph 7,a7
 of section #hfd7;c77#d7 of such ,code  
is amended by striking subparagraphs    
7,b7 and 7,c7 and inserting             
subparagraphs 7,b71 7,c71 and 7,d74     
7#b7 ,income from sources within the    
,united ,states ,paragraph 7#d7 of      
section #hhg7;b7 of such ,code is       
amended by adding at the end the        
following flush sentence3  ,the         
preceding sentence shall not apply to   

with respect to any ,united ,states     
source gross transportation income which
 is ,united ,states cruise industry     
income 7as defined in section           
#hfd7;c77#d77;,c77ii774 4  7b7 ,repeal  
of exemption from gross income for      
certain taxpayers  7#a7 ,nonresident    
aliens ,paragraph 7#a7 of section       
#hgb7;b7 of the ,internal ,revenue ,code
 of #aihf is amended by inserting 7other
 than ,united ,states cruise industry   
income 7as defined in section           
#hfd7;c77#d77;,c777 after or ships4     
7#b7 ,foreign corporations ,paragraph   
7#a7 of section #hhc7;a7 of such ,code  
is amended by inserting 7other than     
,united ,states cruise industry income  
7as defined in section                  
#hfd7;c77#d77;,c777 after or ships4  7c7
 ,income tax treaties ,section #hid of  
the ,internal ,revenue ,code of #aihf is
 amended by adding at the end the       
following new subsection3  7d7 ,special 
rule for ,united ,states cruise industry
 income ,notwithstanding subsection 7a71

 no tax exemption or reduced tax rate   
shall be permitted under any treaty of  
the ,united ,states with respect to     
,united ,states cruise industry income  
7as defined in section                  
#hfd7;c77#d77;,c774  4  7d7 ,effective  
date ,the amendments made by this       
section shall apply to income           
attributable to voyages made after the  
date of the enactment of this ,act4