Sponsors (6)
The bill increases IRS visibility and provides clearer rules for complex cross-border transactions, but it also creates a new 'transaction tax' and expanded reporting that raise tax liabilities, compliance costs, and administrative burdens for businesses and taxpayers.
IRS and Treasury will receive more detailed information about certain controlled foreign corporation transactions because the bill expands 6038(a)(1)(B) reporting, improving the government's ability to detect underpayment and enforce tax rules.
Taxpayers engaged in large or cross-border transactions will have clearer tax rules because the bill defines taxable events and reporting requirements for the new 'transaction tax', reducing uncertainty about how transactions are taxed.
Businesses and financial institutions involved in affected transactions could face higher tax liabilities under the new 'transaction tax' (effective after Dec 31, 2025), increasing costs and potentially altering deal structures.
Taxpayers with controlled foreign corporations will face increased compliance costs to collect and report the additional transaction details required by the expanded reporting rules.
Expanded reporting requirements will raise administrative burdens for both the IRS (to process and analyze more detailed filings) and for taxpayers (to ensure accuracy), increasing the risk of penalties, disputes, and processing delays.
Based on analysis of 2 sections of legislative text.
Adds a new federal transaction tax and expands controlled foreign corporation reporting to include covered transactions; effective for transactions after Dec 31, 2025.
Official title: Amend the Internal Revenue Code of 1986 to impose a tax on certain trading transactions.
Introduced June 18, 2025 by Brian Emanuel Schatz · Last progress June 18, 2025
Creates a new federal transaction tax on certain financial transactions by adding a new subchapter to the Internal Revenue Code and expands reporting requirements for controlled foreign corporations (CFCs) to include covered transactions under a new section. The bill updates tax code tables and makes these changes effective for transactions after December 31, 2025.