§896 Adjustment of tax on nationals, residents, and corporations of certain foreign countries

Summary

Lets the President change how U.S. tax rules treat people or companies from a foreign country when that country is taxing U.S. citizens or U.S. companies more harshly than the U.S. taxes similar income of that country’s people or companies. The President can act if three things are true: the foreign law treats Americans or U.S. firms worse or charges a higher effective tax rate on certain income; the United States asked the foreign country to fix the problem and it did not; and it is in the public interest to act. The change can include using tax rules from before 1967 or otherwise adjusting tax rates for those foreign nationals, residents, or companies. If the foreign country later fixes the problem, the President can reverse the action. The President must give Congress 30 days’ notice before making the official change, and the Treasury Secretary must write rules to carry it out.