# What This Bill Actually Does

This bill is about closing a tax loophole that allows wealthy Americans to avoid taxes by hiding money in foreign companies. Here's the practical situation: imagine you're a U.S. citizen who owns a foreign company through a chain of ownership that includes foreign investors. Under current tax rules, you might be able to claim you don't really "own" that company for tax purposes because the ownership technically flows through non-U.S. people. This bill says that trick won't work anymore.

The bill targets a specific tax avoidance strategy where Americans use foreign intermediaries to obscure their ownership of foreign corporations. When the IRS tries to figure out who actually controls a foreign company, it normally traces ownership through all the layers. But there's a rule that says you can't count ownership that flows "downward" through foreign people to get to an American. This bill removes that exception, meaning the IRS can now see through those foreign layers and identify American owners who were previously hidden from taxation.

The bill creates a new category called "foreign controlled foreign corporations" and requires Americans who own more than 50 percent of these companies to report and pay taxes on their share of the company's income, similar to how they're already taxed on regular foreign corporations they control. This applies retroactively to foreign companies' tax years starting in 2018, so it catches years that may have already passed. The goal is straightforward: make sure wealthy Americans can't use complex foreign ownership structures to dodge U.S. taxes on their foreign business income.

To amend the Internal Revenue Code of 1986 to restore the limitation on downward attribution of stock ownership in applying the constructive ownership rules to controlled foreign corporations, and for other purposes.

Moore, Gwen

 <p>This bill restores the limitation on downward attribution rules to 50% of stock ownership in applying constructive ownership rules to controlled foreign corporations.</p>