What Happens If H.R. 1 Conflicts with U.S. Tax Treaties? [December 19, 2017]   [open pdf - 404KB]

"When a provision in the Internal Revenue Code (IRC) conflicts with a U.S. tax treaty, which takes precedence over the other? This question may be of interest to Congress as it considers the Tax Cuts and Jobs Act (H.R. 1), amid reports discussing whether certain provisions in the bill may be inconsistent with existing U.S. tax treaties. The United States has bilateral tax treaties with approximately 65 countries that are intended to reduce the incidence of double taxation and prevent tax evasion. These treaties are negotiated by the Treasury Department and ratified by the President with the advice and consent of the Senate. As discussed below, Congress has the authority, if it so chooses, to address expressly the relationship between the provisions in legislation and potentially conflicting tax treaties. In the absence of such express language, if a provision in H.R. 1 was found to conflict with an existing tax treaty, it is likely that a court would determine that H.R. 1 takes precedence over the treaty based on relevant Supreme Court precedent. These issues are discussed below, followed by considerations for Congress as it continues to debate H.R. 1."

Report Number:
CRS Legal Sidebar, LSB10047
Public Domain
Retrieved From:
Federation of American Scientists: http://www.fas.org/sgp/crs/index.html
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