,i #aafth ,,congress #b;d ,session ,h4 ,r4 #gggb ,,in ,,the ,,house ,,of ,,representatives ,july #bd1 #bjbj ,mr4 ,danny ,k4 ,davis of ,illinois 7for himself1 ,mr4 ,marchant1 ,mr4 ,suozzi1 and ,mr4 ,estes7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide for ,international ,regulated ,investment ,companies4 #a4 ,short title ,this ,act may be cited as the ,tax ,parity for ,u4,s4 ,mutual ,funds ,act of #bjbj4 #b4 ,international regulated investment companies 7a7 ,in general ,subchapter ,n of chapter #a of the ,internal ,revenue ,code of #aihf is amended by redesignating part ,v as part ,,vi and inserting after part ,,iv the following new part3 ,v ,international regulated investment companies ,sec4 #iih4 ,definition of international regulated investment company4 ,sec4 #iih;,a4 ,taxation of ,i,r,i,cs4 ,sec4 #iih;,b4 ,other rules4 #iih4 ,definition of international regulated investment company 7a7 ,general rule ,for purposes of this title1 the terms international regulated investment company and ,,iric mean1 with respect to any taxable year1 a domestic corporation which1 at all times during the taxable year1 meets the following requirements3 7#a7 ,the corporation is registered under the ,investment ,company ,act of #aidj4 7#b7 ,except as provided in subsection 7c71 the corporation holds no assets other than the stock of a single regulated investment company-- 7,a7 to which part ,i of subchapter ,m applies1 and 7,b7 which is not a qualified investment entity 7as defined in section #hig7;h77#d77;,a77ii774 7#c7 ,all outstanding stock of the corporation is held by nonresident alien individuals 7and their foreign estates7 and qualified foreign pension funds 7within the meaning of section #hig7l77#b774 7#d7 ,the corporation has in effect an election to be treated as an ,,iric4 7b7 ,election ,an election to be treated as an ,,iric shall apply to the taxable year for which made and all subsequent taxable years until terminated4 ,such election shall be made for any taxable year not later than the due date 7with extensions7 for the return of tax imposed by this subtitle for the taxable year4 7c7 ,permitted assets ,for purposes of subsection 7a77#b71 an ,,iric may hold-- 7#a7 an amount of cash and cash equivalents reasonably necessary or appropriate for the corporation to conduct its normal affairs1 and 7#b7 such other assets as are incidental to the corporation's conduct of its normal affairs or otherwise allowed by the ,secretary4 7d7 ,termination 7#a7 ,in general ,except as provided in paragraph 7#b71 if a corporation fails to meet the requirements of subsection 7a7 at any time during the taxable year1 the corporation shall not be treated as an ,,iric for such taxable year4 7#b7 ,inadvertent failure 7,a7 ,in general ,a corporation which fails to meet the requirements of subsection 7a7 for any taxable year shall nevertheless be considered to have satisfied the requirements of such subsection for such taxable year if-- 7i7 the failure was due to reasonable cause and not due to willful neglect1 7ii7 no later than #cj days after the discovery of the event causing such failure1 the corporation meets the requirements of subsection 7a71 7iii7 in the case of a failure to meet the requirements of subsection 7a77#c7 for any period1 the failure was caused by persons not described therein holding1 in the aggregate1 less than #a percent of the stock 7by value7 of the corporation1 and 7iv7 the corporation pays the additional tax imposed by reason of subparagraph 7,b74 7,b7 ,imposition of additional tax on certain failures ,in the case of a failure described in subparagraph 7,a77iii7 for any taxable year1 the tax imposed by section #iih;,a7a7 on the ,,iric shall be equal to the sum of-- 7i7 the tax determined under such section 7without regard to this subparagraph7 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 7a77#c7 for the period so held1 plus 7ii7 #ajj percent of the amounts received which are so attributable4 ,the ,secretary shall prescribe rules for the proper allocation of deductions to amounts described in this subparagraph4 #iih;,a4 ,taxation of ,i,r,i,cs 7a7 ,in general ,in the case of an ,,iric1 there shall be imposed1 in lieu of the tax imposed by section #aa1 a tax equal to #cj percent of the excess of-- 7#a7 the amounts received by the ,,iric which 7before the application of any treaty7 would be subject to tax under section #hga7;a7 if received by a nonresident alien individual1 over 7#b7 the deductions properly allocable to such amounts 7other than deductions allowed under sections #afc1 #agb1 #bdc1 and such other provisions as the ,secretary may prescribe in regulations to prevent abuse74 7b7 ,treaties 7#a7 ,in general ,in the case of a treaty ,,iric1 subsection 7a7 shall be applied by substituting #ae percent for #cj percent4 7#b7 ,treaty ,,iric ,for purposes of paragraph 7#a71 the term treaty ,,iric means an ,,iric-- 7,a7 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 would1 by reason of section #hid7;a71 be subject to tax under section #hga7;a7 on dividends at a rate not greater than #ae percent1 and 7,b7 which elects to be a treaty ,,iric4 ,rules similar to the rules of section #iih7;b7 shall apply to an election under subparagraph 7,b74 #iih;,b4 ,other rules 7a7 ,coordination with subchapter ,m ,except as provided in subsection 7e71 an ,,iric shall not be treated as a regulated investment company for purposes of this title4 7b7 ,no carryovers 7#a7 ,carryovers to ,,iric years ,no carryforward1 and no carryback1 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 ,,iric4 7#b7 ,carryovers from ,,iric years ,no carryforward1 and no carryback1 shall arise for a taxable year for which a corporation is an ,,iric4 7c7 ,certain taxes not ,to apply ,sections #ee1 #eca1 and #eda shall not apply to an ,,iric4 7d7 ,credits not allowed ,no credits under this chapter shall be allowed to an ,,iric4 7e7 ,redemptions ,in applying section #cjb7;b77#e71 an ,,iric shall be treated as a publicly offered regulated investment company4 7f7 ,reliance on certification 7#a7 ,reliance ,with respect to the requirement in sections #iih7;a77#c7 and #iih;,a7b77#b77;,a71 a corporation may rely on the certification of its shareholders1 unless or until such time that the corporation has reason to know that the certification is false or is no longer true4 7#b7 ,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 true1 the corporation must redeem the stock held by such shareholder as soon as reasonably practicable 7and in no case more than #cj days after the corporation obtains such reason to know74 ,failure to redeem such stock in a timely manner shall result in the corporation failing the requirement of section #iih7;a77#c7 or #iih;,a7b77#b77;,a71 whichever is applicable4 7#c7 ,certification by certain institutions ,for purposes of this subsection1 a certification with regard to a person which is made by an institution described in section #hga7;h77#e77;,b7 in a form satisfactory to the ,secretary under section #hga7;h7 shall be deemed to be a certification by such person4 4 7b7 ,clerical amendment ,the table of parts for subchapter ,n of chapter #a of the ,internal ,revenue ,code of #aihf 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 item3 ,part ,v--,international regulated investment companies 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4