Sponsors (2)
The bill removes U.S. tax advantages for payments tied to the Russian government and speeds enforcement to reinforce sanctions, but it raises tax costs for firms operating in Russia (and possibly consumers) and creates treaty/legal uncertainty for multinational taxpayers.
U.S. taxpayers: Eliminates U.S. tax benefits for amounts treated as paid to the Russian government, reducing indirect subsidy to Russia and aligning tax policy with sanctions.
Taxpayers and financial institutions: Makes the rule effective on enactment and directs Treasury/IRS to apply it without regard to treaties, simplifying and accelerating enforcement and administration.
U.S. businesses with Russian operations and their customers: Lose foreign tax credits and may face double taxation or higher effective U.S. tax rates on amounts paid or deemed paid to Russia, increasing costs for affected firms and potentially leading to higher consumer prices.
Multinational taxpayers and the U.S. government: Requiring application 'without regard to any U.S. treaty' could provoke reciprocal actions, legal challenges, and increased uncertainty for cross-border businesses and tax administration.
Based on analysis of 2 sections of legislative text.
Denies foreign tax credits for Russian taxes during a temporary period tied to U.S. trade restrictions and changes deduction treatment, with a phased effective date.
Denies U.S. taxpayers the foreign tax credit for taxes paid to the Russian Federation for a temporary period tied to U.S. trade restrictions, and treats those Russian taxes differently for deduction-limitation rules. Most amendments take effect on enactment, but the denial of deductions is phased in to apply only to taxes paid or accrued more than 90 days after enactment. The provision must be applied without regard to any U.S. treaty obligations. The change is a targeted tax-law sanction: it prevents U.S. taxpayers and entities from offsetting U.S. tax by claiming credits for Russian taxes during the covered period that begins 30 days after enactment and lasts until U.S. normal-duty rates for Russian products are officially resumed under a separate trade statute.
Official title: 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.
Introduced January 30, 2025 by Catherine Marie Cortez Masto · Last progress March 16, 2026