H.R. 1430 would amend the Internal Revenue Code to make permanent the “look-through rule” that applied to the taxable years of foreign corporations beginning after December 31, 2005 and before January 1, 2015. This treatment would be permanently effective for taxable years beginning after December 31, 2014. The “look-through rule” determines the tax treatment of payments between related controlled foreign corporations (CFCs) under foreign personal holding company rules. Under this rule, dividends, interest, rents, and royalties received or accrued by one CFC from a related CFC are not treated as foreign personal holding company income for tax purposes if they meet certain characteristics.
The staff of the Joint Committee on Taxation (JCT) estimates that enacting H.R. 1430 would reduce revenues, thus increasing federal deficits, by about $21.8 billion over the 2016-2025 period.
The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending and revenues. Enacting H.R. 1430 would result in revenue losses in each year beginning in 2016.
JCT has determined that the bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.