US Codex
Bill
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To amend the Internal Revenue Code of 1986 to provide that income attributable to certain passenger cruise voyages beginning or ending in the United States shall be treated as effectively connected with the conduct of a trade or business within the United States.

S. 1449 · 113th Congress · Aug 1, 2013 · Lineage

A BILL

1. Taxation of United States cruise industry income of nonresident aliens and foreign corporations

(a)
United States Cruise industry income treated as effectively connected to the conduct of a trade or business within the United States—
(1)
Income from sources without the United States—
(A)
In general— Paragraph (4) of section 864(c) of the Internal Revenue Code of 1986 is amended by redesignating subparagraph (D) as subparagraph (E) and by inserting after subparagraph (C) the following new subparagraph:

“(D) United States cruise industry income

“(i) In general—United States cruise industry income shall be treated as effectively connected with the conduct of a trade or business within the United States.

“(ii) United States cruise industry income—For purposes of this subparagraph, the term United States cruise industry income means income attributable to any covered passenger cruise (as defined in paragraph (8)), including income directly or indirectly attributable to the carriage of passengers and any on-board or off-board activities incidental to such covered passenger cruise.”

(B)
Covered passenger cruise— Subsection (c) of section 864 of such Code is amended by adding at the end the following new paragraph:

“(8) Covered passenger cruise—For purposes of paragraph (4)(C)—

“(A) Definition

“(i) In general—The term covered passenger cruise means a voyage of a commercial passenger cruise vessel—

“(I) that extends over 1 or more nights, and

“(II) during which passengers embark or disembark the vessel in the United States.

“(ii) Exceptions for certain voyages—Such term shall not include any voyage—

“(I) on any vessel owned or operated by the United States, a State, or any subdivision thereof,

“(II) which occurs exclusively on the inland waterways of the United States, or

“(III) in which a vessel in the usual course of employment proceeds, without an intervening foreign port of call from one port or place in the United States to the same port or place or to another port or place in the United States.

“(B) Passenger cruise vessel—For purposes of subparagraph (A)—

“(i) In general—The term passenger cruise vessel means any passenger vessel having berth or stateroom accommodations for at least 250 passengers.

“(ii) Exceptions—Such term shall not include any ferry, recreational vessel, sailing school vessel, small passenger vessel, offshore supply vessel, or any other vessel determined under regulations by the Secretary to be excluded from the application of this part.

“(iii) Definitions—Any term used in this section which is used in chapter 21 of title 46, United States Code, shall have the meaning given such term under section 2101 of such title.”

(C)
Conforming amendment— Subparagraph (A) of section 864(c)(4) of such Code is amended by striking “subparagraphs (B) and (C)” and inserting “subparagraphs (B), (C), and (D)”.
(2)
Income from sources within the United States— Paragraph (4) of section 887(b) of such Code is amended by adding at the end the following flush sentence:
(b)
Repeal of exemption from gross income for certain taxpayers—
(1)
Nonresident aliens— Paragraph (1) of section 872(b) of the Internal Revenue Code of 1986 is amended by inserting “(other than United States cruise industry income (as defined in section 864(c)(4)(C)))” after “or ships”.
(2)
Foreign corporations— Paragraph (1) of section 883(a) of such Code is amended by inserting “(other than United States cruise industry income (as defined in section 864(c)(4)(C)))” after “or ships”.
(c)
Income tax treaties— Section 894 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

“(d) Special rule for United States cruise industry income—Notwithstanding subsection (a), no tax exemption or reduced tax rate shall be permitted under any treaty of the United States with respect to United States cruise industry income (as defined in section 864(c)(4)(C)).”

(d)
Effective date— The amendments made by this section shall apply to income attributable to voyages made after the date of the enactment of this Act.