A BILL
To amend the Internal Revenue Code of 1986 to regulate and tax Internet gambling, and for other purposes.
“E Internet Gambling
“4491. Imposition of Internet gambling license tax
“(a) Internet gambling licensee
“(1) In general—There is hereby imposed a tax on each Internet gambling licensee in an amount equal to 4 percent of all funds deposited by customers making deposits while located within the United States during the preceding month into an account maintained by that Internet gambling licensee or any agent of that licensee that can be used for the purpose of placing a bet or wager as defined in section 5362(1) of title 31, United States Code.
“(2) Persons liable for tax—The tax imposed by subsection (a) shall be the direct and exclusive obligation of the Internet gambling operator and may not be deducted from the amounts available as deposits to the person placing a bet. Notwithstanding the preceding sentence, any person making a deposit for the purpose of placing a bet or wager with a person who is required but has failed to obtain a license pursuant to subchapter V of chapter 53 of title 31, United States Code, shall be liable for and pay the tax under this subchapter on all such deposits, but such liability shall not excuse any failure to pay the tax on the part of the person who is required but has failed to obtain such license. The person making the deposit shall not be liable for the tax on deposits in cases of fraud.
“(b) Unauthorized bets or wagers
“(1) In general—There is hereby imposed a tax on any person who accepts a bet or wager and who is not authorized pursuant to section 5383(b) of title 31, United States Code, to accept such bet or wager.
“(2) Amount of tax—The amount of such tax shall be equal to 50 percent of all funds deposited into an account that can be used for placing a bet or wager within the meaning of section 5362(1) of that title.
“(c) Credits for returns of funds
“(1) In general—There shall be allowed as a credit against the tax imposed by this section an amount equal to the sum of the following taxes which are paid on any funds returned by or on behalf of an Internet gambling licensee to the account of a customer:
“(A) The tax imposed by this section.
“(B) Any State or Indian tribal Internet gambling tax imposed under section 4493(b).
“(C) Any tax imposed on overseas Internet gambling under section 4493(d).
“(2) Limitation—The amount allowed as a credit under paragraph (1) with respect to a customer may not exceed 12 percent of the funds received in deposits from the customer.
“(d) When due—The tax imposed by this section shall be due at by the end of each calendar month with respect to deposits during the preceding month.
“(e) Definitions and special rules—For purposes of this subchapter—
“(1) Internet gambling licensee—The term Internet gambling licensee means a licensee, as defined in section 5382 of title 31, United States Code.
“(2) Deposits—Deposits made by or on behalf of an Internet gambling licensee of Internet gambling winnings or returns of funds by or on behalf of an Internet gambling licensee to the account of a customer shall not be treated as a deposit for purposes of this section.
“4492. Record requirements
“Each person liable for taxes under this subchapter, except for a person making a deposit who is liable for taxes pursuant to section 4491(a)(2), shall keep a daily record showing deposits (within the meaning of this subchapter), in addition to all other records required pursuant to section 6001.
“4493. Elective State and Indian tribal government online gambling tax
“(a) In general
“(1) Payment of State and Indian tribal government tax—On a monthly basis, each Internet gambling licensee shall pay to each qualified State and each qualified Indian tribal government an amount equal to the monthly pro rata State and Indian tribal government online gambling tax.
“(2) Monthly pro rata online gambling tax—For purposes of this section, with respect to a qualified State and a qualified Indian tribal government for any calendar month, the monthly pro rata online gambling tax is the amount of the taxes described in subsection (b) received with respect to such calendar month.
“(3) Qualified State; qualified Indian tribal government
“(A) In general—For purposes of this section, the terms qualified State and qualified Indian tribal government mean a State or an Indian tribal government, respectively, for which an election to receive funds under this section is in effect. Notice of such election shall be provided by the Governor, principal chief, or other chief executive officer in such form and manner as the Secretary may prescribe.
“(B) State election not to affect tribal election—An election by a State under subparagraph (A) to receive funds under this section shall not constitute an election to be so included on behalf of any Indian tribe located within or partially within the geographic boundaries of such State.
“(C) Revocation of State or Tribal election
“(i) In general—A State or Indian Tribal government may revoke its election by notice provided by the Governor, principal chief, or other chief executive officer and in such form and manner as the Secretary may prescribe.
“(ii) Timing of revocation—Revocation of state election shall take effect the later of 6 months after receipt by the Secretary of such revocation, or on January 1st of the year following receipt by the Secretary of such revocation.
“(D) State—The term State means any State, the District of Columbia, or any commonwealth, territory or other possession of the United States.
“(E) Indian tribal government—The term Indian tribal government means the government of an Indian tribe (within the meaning of section 4 of the Indian Gaming Regulatory Act).
“(4) Time of payments—The payment made under this subsection with respect to any calendar month shall be made not later than the 11th day of the succeeding calendar month.
“(5) List of qualified States and qualified Indian tribal governments—The Secretary shall maintain a current list of qualified States and qualified Indian tribal governments and shall publish such list online.
“(b) State and Indian Tribal Government Online Gambling tax—The State and Indian tribal government online gambling tax shall be an amount equal to 8 percent of all deposited funds deposited by customers located in each qualified state or area subject to the jurisdiction of a qualified Indian tribal government at the time of the deposit.
“(c) Effect of acceptance of tax—Acceptance by a State or Indian tribal government of the State and Indian tribal government online gambling tax shall relieve Internet gambling licensees from the obligation to pay any other fee or tax to the State or Indian tribal government relating to its online gambling services, except for—
“(1) applicable State individual and corporate income taxes, which shall be unaffected by the election, and
“(2) any fees associated with an Internet gambling licensee’s choice to rely on a State or Indian tribal regulatory body certification of suitability in connection with a Federal online gambling licensing application.
“(d) Overseas internet gambling tax—There is hereby imposed a tax on each Internet gambling licensee in an amount equal to 12 percent of all funds deposited by customers making deposits while located without the United States during the preceding month into an account maintained by that Internet gambling licensee or any agent of that licensee that can be used for the purpose of placing a bet or wager as defined in section 5362(1) of title 31, United States Code. Deposited funds subject to the State and Indian tribal government Internet gambling tax under this section shall not be taken into account for purposes of the preceding sentence.
“4494. Regulations
“The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out this subchapter.”
“6050X. Returns relating to Internet gambling
“(a) Requirement—Every person who is an Internet gambling licensee or who otherwise is engaged in the business of accepting any bet or wager within the meaning of section 5382(1) of title 31, United States Code, during a taxable year shall furnish, at such time and in such manner as the Secretary shall by regulations prescribe, the information described in subsection (b), and such person shall maintain (in the location, in the manner, and to the extent prescribed in regulations) such records as may be appropriate to the information described in subsection (b).
“(b) Required information—For purposes of subsection (a), the information described is set forth below, which information may be modified as appropriate by the Secretary through regulation—
“(1) the name, address, and TIN of the Internet gambling licensee or other person engaged in the business of accepting any bet or wager,
“(2) the name, address, and TIN of each person placing a bet or wager with the Internet gambling licensee or other person engaged in the business of accepting any bet or wager during the calendar year,
“(3) the gross winnings, gross wagers, and gross losses for the calendar year of each person placing a bet or wager with the Internet gambling licensee or other person engaged in the business of accepting any bet or wager during the year,
“(4) the net Internet gambling winnings for each such person for the calendar year,
“(5) the amount of tax withheld with respect to each such person for the calendar year,
“(6) beginning and end-of-year account balances for each such person for the calendar year, and
“(7) amounts deposited and withdrawn by each such person during the calendar year.
“(c) Statement To be furnished to persons with respect to whom information is required—Every person required to make a return under subsection (a) shall furnish to each person whose name is required to be set forth in such return by reason of placing a bet or wager a written statement showing—
“(1) the name, address, and phone number of the information contact of the person required to make such return, and
“(2) the information required to be shown on such return with respect to each person whose name is required to be set forth in such return.
“(d) Definitions
“(1) Internet gambling licensee—The term Internet gambling licensee has the meaning given such term by section 4491(d)(1).
“(2) Net internet gambling winnings—The term net Internet gambling winnings means gross winnings from wagers placed over the Internet with a person required to be licensed under section 5382 of chapter 53 of title 31, United States Code, less the amounts wagered.
“(3) Internet; wager—The terms Internet and wager shall have the respective meanings given such terms by section 5362 of chapter 53 of title 31, United States Code.”
“(G) section 6050X(b)(4) (relating to net Internet gambling winnings).”
“(E) the gross amount of winnings from each wager placed over the Internet with a person required to be licensed under section 5382 of chapter 53 of title 31, United States Code (as such terms are defined in section 6050X(d)(2)),”
“(10) Internet gambling winnings—Any Internet gambling winnings received from an Internet gambling licensee (as defined by section 4491(d)(1)).”
“(2) placed within the United States, or any Commonwealth, territory, or possession thereof, by a person who is a United States citizen or resident.”
“(c) Income earned by nonresident alien individuals operating internet gambling facilities
“(1) Treatment as United States trade or business—For purposes of this title, a nonresident alien individual who is a licensee or operates an Internet gambling facility for which a license is required under section 103 of the Internet Gambling Regulation and Enforcement Act of 2013 at any time during a taxable year shall be deemed to be engaged in the conduct of a trade or business within the United States during the taxable year.
“(2) Treatment of gross income as effectively connected income—For purposes of this title, all gross income related to domestic wagers that are placed over the Internet shall be deemed to be effectively connected with the licensee’s trade or business within the United States.
“(3) Treatment of gross income as attributable to permanent establishment—For purposes of any applicable United States income tax treaty, a nonresident alien individual who is a licensee or operates an Internet gambling facility for which a license is required under section 103 of the Internet Gambling Regulation and Enforcement Act of 2013 at any time during a taxable year shall be deemed to have a permanent establishment located in the United States, and all gross income arising from domestic wagers that are placed over the Internet shall be treated as attributable to the permanent establishment of such nonresident alien individual.
“(4) Definitions—For purposes of this subsection—
“(A) Domestic wager—The term domestic wager means a wager placed by a person located in the United States.
“(B) Wager—The term wager has the meaning given the term bet or wager in section 102(2) of the Internet Gambling Regulation and Enforcement Act of 2013.
“(C) Internet—The term Internet has the meaning given in section 5362(5) of title 31, United States Code.”
“(e) Income earned by foreign corporations operating internet gambling facilities
“(1) Treatment as United States trade or business—For purposes of this title, a foreign corporation that is a licensee or operates an Internet gambling facility for which a license is required under section 103 of the Internet Gambling Regulation and Enforcement Act of 2013 at any time during a taxable year shall be deemed to be engaged in the conduct of a trade or business within the United States during the taxable year.
“(2) Treatment of gross income as effectively connected income—For purposes of this title, all gross income related to domestic wagers that are placed over the Internet shall be deemed to be effectively connected with the licensee’s trade or business within the United States.
“(3) Treatment of gross income as attributable to permanent establishment—For purposes of any applicable United States income tax treaty, a foreign corporation that is a licensee or operates an Internet gambling facility for which a license is required under section 103 of the Internet Gambling Regulation and Enforcement Act of 2013 at any time during a taxable year shall be deemed to have a permanent establishment located in the United States, and all gross income arising from domestic wagers that are placed over the Internet shall be treated as attributable to the permanent establishment of such foreign corporation.
“(4) Definitions
“(A) Domestic wager—The term domestic wager means a wager placed by a person located in the United States.
“(B) Wager—The term wager has the meaning given the term bet or wager in section 102(2) of the Internet Gambling Regulation and Enforcement Act of 2013.
“(C) Internet—The term Internet has the meaning given in section 5362(5) of title 31, United States Code.”
“XXII Block grants to States for transitional assistance
“2201. Transitional Assistance Trust Fund
“(a) Creation of trust fund—There is established in the Treasury of the United States a trust fund to be known as the Transitional Assistance Trust Fund, consisting of such amounts as may be appropriated or credited to the Transitional Assistance Trust Fund as provided in this section.
“(b) Transfer to Transitional Assistance Trust Fund of amounts equivalent to certain taxes
“(1) In general—There are hereby appropriated to the Transitional Assistance Trust Fund, out of any money in the Treasury not otherwise appropriated, amounts equivalent to 25 percent of the taxes received in the Treasury after December 31, 2012, that the Secretary of the Treasury determines are attributable to Internet gambling.
“(2) Method of transfer—The amounts appropriated by paragraph (1) shall be transferred from time to time from the general fund in the Treasury to the Transitional Assistance Trust Fund. Such amounts shall be determined on the basis of estimates by the Secretary of the Treasury of the taxes, specified in paragraph (1) of this subsection, paid to or deposited into the Treasury. Proper adjustments shall be made in amounts subsequently transferred to the extent prior estimates were in excess of or were less than the taxes specified in paragraph (1) of this subsection.
“(c) Expenditures from Transitional Assistance Trust Fund—Amounts in the Transitional Assistance Trust Fund shall be available, as provided by appropriation Acts, for making expenditures to carry out section 2202.
“2202. Transitional assistance grant program
“(a) In general—Each State shall be entitled to a payment under this section for each fiscal year in an amount equal to its allotment for such fiscal year, to be used by such State to carry out the State’s plan for transitional assistance described in subsection (c), subject to the requirements of this section.
“(b) Plan approval required—No State may receive a payment under this section unless the State submits the State’s plan for transitional assistance described in subsection (c) to the Secretary and the Secretary approves such plan.
“(c) State plan for transitional assistance—A State plan for transitional assistance is described by this subsection if the plan—
“(1) provides for expanded education opportunities for individuals who are, or were formerly, in foster care, including streamlining and coordinating education financing opportunities and providing counseling and assistance to such individuals for the purpose of ensuring completion of their academic goals;
“(2) provides for job training opportunities for individuals who are, or were formerly, in foster care;
“(3) provides, primarily through expanding access to and investment in community colleges, for expanded post-secondary education and job training opportunities that lead to a certificate, for individuals who are working in, or had worked in, declining sectors of the economy, as defined by the Secretary, and who want to pursue a new career in a sector of the economy with the potential for high wages and high growth, as defined by the Secretary; and
“(4) provides a subsidy for the use of public transportation by—
“(A) individuals qualifying for benefits or services under title XX, including the Federal-State Unemployment Insurance Program; and
“(B) individuals participating in programs under the Workforce Investment Act.
“(d) Allotment—The allotment for a fiscal year for a State receiving an allotment for such fiscal year shall be an amount equal to—
“(1) the amount appropriated for such fiscal year under subsection (f), multiplied by
“(2) the ratio by which the population of the State bears to the population of all the States receiving an allotment for such fiscal year as determined by the Secretary (on the basis of the most recent data available from the Department of Commerce).
“(e) Definitions—For purposes of this section:
“(1) In foster care—The term in foster care means, with respect to an individual, an individual who is under the care and placement responsibility of the State agency responsible for administering a plan, in connection with such individual, under part B or part E of title IV.
“(2) Secretary—The term Secretary means the Secretary of Health and Human Services.
“(3) State—The term State means the 50 States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands.
“(f) Authorization of appropriations—There are authorized to be appropriated for each fiscal year to the Secretary the amount deposited into the Transitional Assistance Trust Fund pursuant to section 2201 to carry out this section.”