Bill Summary
The "Hindering Oppressive Nations from Obtaining Revenue Act" or "HONOR Act" is a piece of legislation aimed at amending the Internal Revenue Code of 1986 to restrict U.S. taxpayers from claiming foreign tax credits or deductions for taxes paid to the Russian Federation.
Key provisions of the Act include:
1. **Denial of Foreign Tax Credit**: The Act specifically states that any taxes paid or accrued to Russia will not qualify for a foreign tax credit. This provision is effective 30 days after enactment and will remain in effect until the U.S. resumes normal trade relations with Russia, as outlined in another legislative measure.
2. **Deduction Restrictions**: The Act further specifies that deductions for taxes related to Russia are also denied, reinforcing the inability of U.S. entities to benefit from any tax obligations they may have to the Russian government.
3. **Effective Dates**: The provisions of the Act take effect immediately upon enactment, with the deduction limitation applying to taxes paid after a 90-day period following enactment.
4. **Treaty Obligations**: The Act expressly states that its provisions will apply regardless of any existing treaty obligations between the United States and other nations.
Overall, the HONOR Act aims to impose financial consequences on the Russian Federation by eliminating potential revenue benefits for U.S. taxpayers that would arise from paying taxes to Russia.
Possible Impacts
The "Hindering Oppressive Nations from Obtaining Revenue Act" (HONOR Act) could affect people in a variety of ways. Here are three examples:
1. **U.S. Businesses with Operations in Russia**: Companies that operate in Russia or have business dealings with Russian entities may face increased tax liabilities. Since they can no longer claim foreign tax credits or deductions for taxes paid to the Russian Federation, their overall tax burden could rise significantly. This could lead to reduced profitability and may even force some businesses to reconsider their operations in Russia, potentially resulting in layoffs or closures.
2. **Individuals Living or Working in Russia**: U.S. citizens or permanent residents who are living or working in Russia will no longer be able to deduct or receive credits for taxes they pay to the Russian government. This could effectively increase their tax burden, as they would be subject to U.S. taxes on their worldwide income without the benefit of offsetting foreign tax credits. This could impact their financial situations and living standards, leading to financial strain for families abroad.
3. **Economic Relations and Trade**: The enactment of the HONOR Act could lead to broader economic ramifications by reducing U.S. investments in Russia. As businesses and individuals assess the increased costs and risks associated with tax liabilities, they may decide to withdraw from the market or limit their trade with Russian entities. This could negatively impact trade relations and economic interactions between the two countries, potentially leading to job losses in sectors dependent on international trade and cooperation.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 327 Engrossed in Senate (ES)]
<DOC>
119th CONGRESS
2d Session
S. 327
_______________________________________________________________________
AN ACT
To amend the Internal Revenue Code of 1986 to deny any foreign tax
credit or deduction with respect to taxes paid or accrued to the
Russian Federation.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Hindering Oppressive Nations from
Obtaining Revenue Act'' or ``HONOR Act''.
SEC. 2. DENIAL OF FOREIGN TAX CREDIT WITH RESPECT TO THE RUSSIAN
FEDERATION.
(a) In General.--Section 901(j)(2) of the Internal Revenue Code of
1986 is amended by adding at the end the following new subparagraph:
``(C) Special rule for russia.--
``(i) In general.--This subsection shall
apply to the Russian Federation during the
period described in clause (ii).
``(ii) Period of application.--The period
described in this clause with respect to any
country is the period--
``(I) beginning on the date that is
30 days after the date of the enactment
of this subparagraph, and
``(II) ending on the date on which
the resumption of the application of
the rates of duty set forth in column 1
of the Harmonized Tariff Schedule of
the United States to products of that
country takes effect pursuant to
section 4(b) of the Suspending Normal
Trade Relations with Russia and Belarus
Act.''.
(b) Deduction Denied.--Section 901(j)(3) of such Code is amended by
adding at the end the following new sentence: ``The preceding sentence
shall not apply to any tax of any country to which paragraph (2)(C)
applies.''.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall take effect on the date
of the enactment of this Act.
(2) Deduction limitation.--The amendment made by subsection
(b) shall apply to taxes paid or accrued (or deemed paid or
accrued under section 960 of the Internal Revenue Code of 1986)
after the date that is 90 days after the date of the enactment
of this Act.
(3) Nonapplication of treaty rules.--This section and the
amendments made by this section shall be applied without regard
to any treaty obligation of the United States.
Passed the Senate March 10, 2026.
Attest:
Secretary.
119th CONGRESS
2d Session
S. 327
_______________________________________________________________________
AN ACT
To amend the Internal Revenue Code of 1986 to deny any foreign tax
credit or deduction with respect to taxes paid or accrued to the
Russian Federation.