26 U.S.C. § 896 — Adjustment of tax on nationals, residents, and corporations of certain foreign countries

submitted 60 years ago by Pub. L. 89-809 to r/title-26-INTERNAL-REVENUE-CODE · 787 words · no verdicts yet

in plain englishAI-generated · not legal advice

If a foreign country taxes United States citizens or corporations more heavily or at a higher effective rate and does not fix that treatment, the President may apply older United States tax rules or adjust treaty-country tax rates after notifying Congress. When the foreign country fixes the problem, the President must end the adjustment.

(a) If the President finds that a foreign country's tax system burdens United States nonresident citizens or domestic corporations more than this subtitle burdens comparable income of that country's residents or corporations; the country refused a United States request to reduce the burden; and applying pre-1967 rules is in the public interest, the President must proclaim that comparable United States-source income of that country's residents or corporations will, for tax years beginning after the proclamation, be calculated without later amendments to this subchapter and chapter 3. (b) If the President finds that the country taxes United States citizens or corporations at a higher effective rate than its own comparable people or businesses, refused to remove that difference, and adjustment is in the public interest, the President must proclaim an adjustment making the United States effective rate on comparable income substantially equal to the foreign rate. The adjustment may deny deductions, credits, or exemptions in whole or part, or raise the otherwise applicable rate. (c) If the foreign country later changes its laws so the discriminatory or heavier tax no longer applies, the President must proclaim that this subtitle's tax is calculated without the relevant subsection for tax years beginning after that proclamation. (d) The President cannot issue a proclamation until at least 30 days after notifying both Houses of Congress of the intent. (e) The Secretary must issue needed or appropriate regulations.

the actual law source: uscode.house.gov ↗public domain

(a) Imposition of more burdensome taxes by foreign country

Whenever the President finds that—

(1)

under the laws of any foreign country, considering the tax system of such foreign country, citizens of the United States not residents of such foreign country or domestic corporations are being subjected to more burdensome taxes, on any item of income received by such citizens or corporations from sources within such foreign country, than taxes imposed by the provisions of this subtitle on similar income derived from sources within the United States by residents or corporations of such foreign country,

(2)

such foreign country, when requested by the United States to do so, has not acted to revise or reduce such taxes so that they are no more burdensome than taxes imposed by the provisions of this subtitle on similar income derived from sources within the United States by residents or corporations of such foreign country, and

(3)

it is in the public interest to apply pre-1967 tax provisions in accordance with the provisions of this subsection to residents or corporations of such foreign country,

the President shall proclaim that the tax on such similar income derived from sources within the United States by residents or corporations of such foreign country shall, for taxable years beginning after such proclamation, be determined under this subtitle without regard to amendments made to this subchapter and chapter 3 on or after the date of enactment of this section.

(b) Imposition of discriminatory taxes by foreign country

Whenever the President finds that—

(1)

under the laws of any foreign country, citizens of the United States or domestic corporations (or any class of such citizens or corporations) are, with respect to any item of income, being subjected to a higher effective rate of tax than are nationals, residents, or corporations of such foreign country (or a similar class of such nationals, residents, or corporations) under similar circumstances;

(2)

such foreign country, when requested by the United States to do so, has not acted to eliminate such higher effective rate of tax; and

(3)

it is in the public interest to adjust, in accordance with the provisions of this subsection, the effective rate of tax imposed by this subtitle on similar income of nationals, residents, or corporations of such foreign country (or such similar class of such nationals, residents, or corporations),

the President shall proclaim that the tax on similar income of nationals, residents, or corporations of such foreign country (or such similar class of such nationals, residents, or corporations) shall, for taxable years beginning after such proclamation, be adjusted so as to cause the effective rate of tax imposed by this subtitle on such similar income to be substantially equal to the effective rate of tax imposed by such foreign country on such item of income of citizens of the United States or domestic corporations (or such class of citizens or corporations). In implementing a proclamation made under this subsection, the effective rate of tax imposed by this subtitle on an item of income may be adjusted by the disallowance, in whole or in part, of any deduction, credit, or exemption which would otherwise be allowed with respect to that item of income or by increasing the rate of tax otherwise applicable to that item of income.

Whenever the President finds that—

(1)

the laws of any foreign country with respect to which the President has made a proclamation under subsection (a) have been modified so that citizens of the United States not residents of such foreign country or domestic corporations are no longer subject to more burdensome taxes on the item of income derived by such citizens or corporations from sources within such foreign country, or

(2)

the laws of any foreign country with respect to which the President has made a proclamation under subsection (b) have been modified so that citizens of the United States or domestic corporations (or any class of such citizens or corporations) are no longer subject to a higher effective rate of tax on the item of income,

he shall proclaim that the tax imposed by this subtitle on the similar income of nationals, residents, or corporations of such foreign country shall, for any taxable year beginning after such proclamation, be determined under this subtitle without regard to such subsection.

(d) Notification of Congress required

No proclamation shall be issued by the President pursuant to this section unless, at least 30 days prior to such proclamation, he has notified the Senate and the House of Representatives of his intention to issue such proclamation.

(e) Implementation by regulations

The Secretary shall prescribe such regulations as he deems necessary or appropriate to implement this section.

Source credit: (Added Pub. L. 89–809, title I, § 105(b), Nov. 13, 1966, 80 Stat. 1563; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

history & why it existsrecord from the source credit

1966Enacted · Pub. L. 89-809 · 80 Stat. 1563
1976Amended · Pub. L. 94-455 · 90 Stat. 1834

A history note hasn’t been published yet. The record shows enactment by Pub. L. 89-809 on 1966-11-13.

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