H.R. 368 · Where this bill is now
In committee
Introduced in the House, sent to the Committee on Ways and Means, Jan 13, 2025
What this bill does
In plain words · AI-written from the official summaryExtends tax break to Virgin Islands residents
Right now, if you're a U.S. citizen living in Puerto Rico, Guam, American Samoa, or the Northern Mariana Islands, you can exclude certain foreign investment income from your federal taxes under specific conditions. This bill would extend that same tax break to people living in the U.S. Virgin Islands. Specifically, it would let bona fide Virgin Islands residents skip reporting certain types of income from foreign corporations organized in the Virgin Islands when that income is tied to the territory.
How it affects you
This change directly affects bona fide residents of the U.S. Virgin Islands who own shares in foreign corporations organized there. For them, it means they could exclude certain investment income from their federal tax returns, similar to what residents of other U.S. territories already can do. Most other people and businesses would not be affected.
Read the official summary (Introduced in House, Jan 13, 2025)
Territorial Tax Parity and Fairness Act
This bill excepts individuals who are bona fide residents of the Virgin Islands from including in gross income for U.S. federal tax purposes subpart F income received from certain corporations if such income may be sourced to the Virgin Islands.
Under current law, a U.S. shareholder of a controlled foreign corporation generally is required to include in gross income their pro rata share of dividends, interest, rent, royalties, and certain other types of income of the controlled foreign corporation (collectively known as subpart F income). A U.S. shareholder is a U.S. person (citizen, resident, domestic partnership or corporation, trust, or estate) that owns a certain percentage of stock in the controlled foreign corporation.
However, under current law, the definition of a U.S. person does not include individuals who are bona fide residents of the U.S. territories of Puerto Rico, Guam, America Samoa, and the Northern Mariana Islands who receive subpart F income from controlled foreign corporations that meets certain requirements for being sourced to the territory or being connected to or derived from a trade or business in the territory.
This bill expands the exceptions from the definition of a U.S. person for purposes of the subpart F income tax rules, to include individuals who are bona fide residents of the Virgin Islands and receive subpart F income from a controlled foreign corporation organized under the laws of the Virgin Islands if the subpart F income may be sourced to the Virgin Islands.
Written by AI (Claude) using only the official summary by the Congressional Research Service, the Library of Congress’s nonpartisan research staff. It can miss nuance, so check the official summary and the bill text for details.
1st SessionH. R. 368
A BILL
Territorial Tax Parity and Fairness Act
Sponsor: Del. Stacey E. Plaskett (D-VI-At Large) · Introduced Jan 13, 2025 · Taxation · 1 version of the text
Sources: Congress.gov actions and votes · bill text from GovInfo · latest official action Jan 13, 2025: “Referred to the House Committee on Ways and Means.”