| 1 | 1 | | I |
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| 2 | 2 | | 119THCONGRESS |
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| 3 | 3 | | 1 |
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| 4 | 4 | | STSESSION H. R. 364 |
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| 5 | 5 | | To amend the Internal Revenue Code of 1986 to modify the residence and |
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| 6 | 6 | | source rules to provide for economic recovery in the possessions of the |
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| 7 | 7 | | United States. |
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| 8 | 8 | | IN THE HOUSE OF REPRESENTATIVES |
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| 9 | 9 | | JANUARY13, 2025 |
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| 10 | 10 | | Ms. P |
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| 11 | 11 | | LASKETTintroduced the following bill; which was referred to the |
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| 12 | 12 | | Committee on Ways and Means |
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| 13 | 13 | | A BILL |
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| 14 | 14 | | To amend the Internal Revenue Code of 1986 to modify |
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| 15 | 15 | | the residence and source rules to provide for economic |
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| 16 | 16 | | recovery in the possessions of the United States. |
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| 17 | 17 | | Be it enacted by the Senate and House of Representa-1 |
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| 18 | 18 | | tives of the United States of America in Congress assembled, 2 |
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| 19 | 19 | | SECTION 1. SHORT TITLE. 3 |
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| 20 | 20 | | This Act may be cited as the ‘‘Territorial Tax Equity 4 |
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| 21 | 21 | | and Economic Growth Act of 2025’’. 5 |
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| 22 | 22 | | SEC. 2. MODIFICATION TO RESIDENCE AND SOURCE RULES 6 |
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| 23 | 23 | | INVOLVING POSSESSIONS. 7 |
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| 24 | 24 | | (a) B |
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| 25 | 25 | | ONAFIDERESIDENT.—Section 937(a) of the 8 |
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| 26 | 26 | | Internal Revenue Code of 1986 is amended— 9 |
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| 27 | 27 | | VerDate Sep 11 2014 18:04 Feb 05, 2025 Jkt 059200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H364.IH H364 |
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| 28 | 28 | | ssavage on LAPJG3WLY3PROD with BILLS 2 |
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| 29 | 29 | | •HR 364 IH |
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| 30 | 30 | | (1) by striking the last sentence, and 1 |
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| 31 | 31 | | (2) by amending paragraph (1) to read as fol-2 |
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| 32 | 32 | | lows: 3 |
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| 33 | 33 | | ‘‘(1) who has a substantial presence (deter-4 |
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| 34 | 34 | | mined under the principles of section 7701(b)(3)(A) 5 |
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| 35 | 35 | | (applied by substituting ‘122 days’ for ‘31 days’ in 6 |
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| 36 | 36 | | clause (i) thereof) without regard to sections 7 |
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| 37 | 37 | | 7701(b)(3)(B), (C), and (D)) during the taxable 8 |
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| 38 | 38 | | year in Guam, American Samoa, the Northern Mar-9 |
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| 39 | 39 | | iana Islands, Puerto Rico, or the Virgin Islands, as 10 |
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| 40 | 40 | | the case may be, and’’. 11 |
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| 41 | 41 | | (b) S |
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| 42 | 42 | | OURCERULES.—Section 937(b) of such Code 12 |
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| 43 | 43 | | is amended— 13 |
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| 44 | 44 | | (1) in paragraph (1), by striking ‘‘and’’ at the 14 |
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| 45 | 45 | | end, 15 |
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| 46 | 46 | | (2) in paragraph (2), by striking the period at 16 |
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| 47 | 47 | | the end and inserting ‘‘, but only to the extent such 17 |
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| 48 | 48 | | income is attributable to an office or fixed place of 18 |
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| 49 | 49 | | business within the United States (determined under 19 |
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| 50 | 50 | | the rules of section 864(c)(5)),’’, and 20 |
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| 51 | 51 | | (3) by adding at the end the following new 21 |
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| 52 | 52 | | paragraphs: 22 |
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| 53 | 53 | | ‘‘(3) for purposes of paragraph (1), the prin-23 |
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| 54 | 54 | | ciples of section 864(c)(2), rather than rules similar 24 |
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| 55 | 55 | | to the rules in section 864(c)(4), shall apply for pur-25 |
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| 56 | 56 | | VerDate Sep 11 2014 18:04 Feb 05, 2025 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H364.IH H364 |
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| 57 | 57 | | ssavage on LAPJG3WLY3PROD with BILLS 3 |
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| 58 | 58 | | •HR 364 IH |
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| 59 | 59 | | poses of determining whether income from sources 1 |
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| 60 | 60 | | without a possession specified in subsection (a)(1) is 2 |
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| 61 | 61 | | effectively connected with the conduct of a trade or 3 |
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| 62 | 62 | | business within such possession, and 4 |
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| 63 | 63 | | ‘‘(4) for purposes of paragraph (2), income 5 |
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| 64 | 64 | | from activities within the United States which are of 6 |
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| 65 | 65 | | a preparatory or auxiliary character shall not be 7 |
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| 66 | 66 | | treated as income from sources within the United 8 |
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| 67 | 67 | | States or as effectively connected with the conduct 9 |
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| 68 | 68 | | of a trade or business within the United States.’’. 10 |
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| 69 | 69 | | (c) S |
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| 70 | 70 | | OURCERULES FOR PERSONALPROPERTY 11 |
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| 71 | 71 | | S |
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| 72 | 72 | | ALES.—Section 865(j)(3) of such Code is amended by 12 |
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| 73 | 73 | | inserting ‘‘, 932,’’ after ‘‘931’’. 13 |
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| 74 | 74 | | (d) E |
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| 75 | 75 | | FFECTIVEDATE.—The amendments made by 14 |
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| 76 | 76 | | this section shall apply to taxable years beginning after 15 |
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| 77 | 77 | | December 31, 2024. 16 |
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| 78 | 78 | | Æ |
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| 79 | 79 | | VerDate Sep 11 2014 18:04 Feb 05, 2025 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6301 E:\BILLS\H364.IH H364 |
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| 80 | 80 | | ssavage on LAPJG3WLY3PROD with BILLS |
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