Bill Details
HR.2423 - 119th Congress
Status
Latest action
2025-03-27 - Referred to the House Committee on Ways and Means.
Introduced Date
2025-03-27
Policy Area
Taxation
Committees
View committees (1)
Sponsors
Cosponsors
View cosponsors (20)
- Rep. Buchanan, Vern [R-Florida-16]
- Rep. Smith, Adrian [R-Nebraska-3]
- Rep. Kelly, Mike [R-Pennsylvania-16]
- Rep. Schweikert, David [R-Arizona-1]
- Rep. LaHood, Darin [R-Illinois-16]
- Rep. Arrington, Jodey C. [R-Texas-19]
- Rep. Smucker, Lloyd [R-Pennsylvania-11]
- Rep. Hern, Kevin [R-Oklahoma-1]
- Rep. Miller, Carol D. [R-West Virginia-1]
- Rep. Murphy, Gregory F. [R-North Carolina-3]
- Rep. Kustoff, David [R-Tennessee-8]
- Rep. Fitzpatrick, Brian K. [R-Pennsylvania-1]
- Rep. Steube, W. Gregory [R-Florida-17]
- Rep. Tenney, Claudia [R-New York-24]
- Rep. Fischbach, Michelle [R-Minnesota-7]
- Rep. Moore, Blake D. [R-Utah-1]
- Rep. Van Duyne, Beth [R-Texas-24]
- Rep. Feenstra, Randy [R-Iowa-4]
- Rep. Malliotakis, Nicole [R-New York-11]
- Rep. Carey, Mike [R-Ohio-15]
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AI Summary This summary was generated by AI from the bill text. AI can get information wrong.
This bill would change part of the federal tax code to make it harder for some foreign-owned companies to avoid U.S. taxes. It focuses on companies linked to foreign tax systems that reach beyond a country’s own borders and tax income based on ownership connections. Under this bill, certain foreign-owned entities tied to those tax systems would face stricter rules under the base erosion and anti-abuse tax, which is a tax aimed at stopping companies from shifting profits out of the United States. In practical terms, the bill would treat some of these companies as if more of their costs count as tax-deductible erosion payments, making them more likely to owe this anti-abuse tax. The changes would apply to tax years starting after the bill becomes law.
- It creates special tax rules for “foreign-owned extraterritorial tax regime entities,” meaning some foreign-controlled businesses linked to countries that impose taxes based on ownership chains or related income.
- For these companies, 50% of the cost of goods sold would be treated as a base erosion tax benefit, which could increase the amount of tax they owe.
- The bill would also change how certain existing exceptions and timing rules apply, making the anti-abuse tax apply more broadly to these entities.
- The new rules would take effect for taxable years beginning after the date the bill is enacted.
Official Summaries
No summaries available
Current Full Text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2423 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 2423
To amend the Internal Revenue Code of 1986 to modify the application of
the base erosion and anti-abuse tax with respect to certain entities
connected to jurisdictions which have implemented an extraterritorial
tax.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 27, 2025
Mr. Estes (for himself, Mr. Buchanan, Mr. Smith of Nebraska, Mr. Kelly
of Pennsylvania, Mr. Schweikert, Mr. LaHood, Mr. Arrington, Mr.
Smucker, Mr. Hern of Oklahoma, Mrs. Miller of West Virginia, Mr.
Murphy, Mr. Kustoff, Mr. Fitzpatrick, Mr. Steube, Ms. Tenney, Mrs.
Fischbach, Mr. Moore of Utah, Ms. Van Duyne, Mr. Feenstra, Ms.
Malliotakis, Mr. Carey, Mr. Yakym, Mr. Miller of Ohio, Mr. Bean of
Florida, and Mr. Moran) 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 modify the application of
the base erosion and anti-abuse tax with respect to certain entities
connected to jurisdictions which have implemented an extraterritorial
tax.
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 ``Unfair Tax Prevention Act''.
SEC. 2. APPLICATION OF THE BASE EROSION AND ANTI-ABUSE TAX WITH RESPECT
TO CERTAIN ENTITIES CONNECTED TO EXTRATERRITORIAL TAX
JURISDICTIONS.
(a) In General.--Section 59A of the Internal Revenue Code of 1986
is amended by redesignating subsection (i) as subsection (j) and
inserting after subsection (h) the following new subsection:
``(i) Special Rules for Foreign-Owned Extraterritorial Tax Regime
Entities.--
``(1) In general.--In the case of any foreign-owned
extraterritorial tax regime entity--
``(A) such entity shall be treated as described in
subparagraphs (B) and (C) of subsection (e)(1) for
purposes of determining whether such entity is an
applicable taxpayer,
``(B) subsection (b)(2) shall be applied by
substituting `the date of the enactment of subsection
(i)' for `December 31, 2025',
``(C) subsections (c)(2)(B), (c)(4)(B)(ii), and
(d)(5) shall not apply, and
``(D) 50 percent of such entity's cost of goods
sold shall be treated as a base erosion tax benefit
with respect to a base erosion payment.
``(2) Foreign-owned extraterritorial tax regime entity.--
For purposes of this subsection--
``(A) In general.--The term `foreign-owned
extraterritorial tax regime entity' means any taxpayer
which is controlled by a foreign entity (other than a
foreign entity controlled by any domestic corporation)
if an extraterritorial tax is imposed on any of the
following entities:
``(i) Any foreign entity which controls the
taxpayer.
``(ii) Any foreign entity which is
controlled by--
``(I) the taxpayer, or
``(II) any foreign entity described
in clause (i).
``(iii) Any trade or business of any
foreign entity described in clause (i) or (ii).
``(B) Extraterritorial tax.--
``(i) In general.--The term
`extraterritorial tax' means any tax imposed by
a foreign country on a corporation (including
any trade or business of such corporation)
which is determined by reference to any income
or profits received by any person (including
any trade or business of any person) by reason
of such person being connected to such
corporation through any chain of ownership,
determined without regard to the ownership
interests of any individual, and other than by
reason of such corporation having a direct or
indirect ownership interest in such person.
``(ii) Tax.--The term `tax' includes any
increase in tax whether effectuated by an
increase in the rate or base of a tax, by a
denial of deductions or credits, or otherwise.
``(C) Foreign entity.--The term `foreign entity'
means any foreign person other than an individual.
``(D) Control.--Control has the same meaning given
such term under section 954(d)(3).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
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