12 2 STA T . 1 648PUBLIC LA W 11 0– 24 5—J U NE 1 7, 2008 foranype na lt y im po s e d ons uch person b y this title w ith respect to any failure to pay such ta x or to file any return or statement with respect to such tax or wa g es sub j ect to such tax .N o deduction shall be allowed under this title for any liability imposed by the preceding sentence. ‘ ‘ (4)PROVIS IO N S P R E VEN T IN GD O UBL ET AX ATION. — ‘‘( A ) AGREE M ENTS.—Paragraph ( 1 ) shall not apply to any ser v ices which are covered by an agreement under subsection (l). ‘‘( B ) EQ UIVALENT F OREIGN TAXATION.—Paragraph (1) shall not apply to any services if the employer establishes to the satisfaction of the S ecretary that the remuneration paid by such employer for such services is subject to a tax imposed by a foreign country which is substantially e q uivalent to the taxes imposed by this chapter. ‘‘( 5 ) C ROSS REFEREN C E.— F or relief from taxes in cases cov - ered by certain international agreements , see sections 3 1 0 1(c) and 3111(c). ’ ’. (b) SOCIAL SECURIT Y BENEFITS.—Subsection (e) of section 2 10 of the Social Security Act (42 U .S.C. 410(e)) is amended— (1) by stri k ing ‘‘(e) T he term’’ and inserting ‘‘(e)(1) The term’’, (2) by redesignating clauses (1) through ( 6 ) as clauses (A) through (F), respectively, and (3) by adding at the end the following new paragraph
‘‘(2)(A) I f any employee of a foreign person is performing serv- ices in connection with a contract between the United States G overnment (or any instrumentality thereof) and any member of any domestically controlled group of entities which includes such foreign person, such foreign person shall be treated as an American employer with respect to such services performed by such employee. ‘‘(B) For purposes of this paragraph— ‘‘(i) The term ‘domestically controlled group of entities’ means a controlled group of entities the common parent of which is a domestic corporation. ‘‘(ii) The term ‘controlled group of entities’ means a con- trolled group of corporations as defined in section 1563(a)(1) of the Internal R evenue Code of 1 98 6, except that— ‘‘(I) ‘more than 50 percent’ shall be substituted for ‘at least 80 percent’ each place it appears therein, and ‘‘(II) the determination shall be made without regard to subsections (a)(4) and (b)(2) of section 1563 of such Code. A partnership or any other entity (other than a corporation) shall be treated as a member of a controlled group of entities if such entity is controlled (within the meaning of section 954(d)(3) of such Code) by members of such group (including any entity treated as a member of such group by reason of this sentence). ‘‘(C) Subparagraph (A) shall not apply to any services to which paragraph (1) of section 3121( z ) of the Internal Revenue Code of 1986 does not apply by reason of paragraph (4) of such section.’’. (c) EFFECTIVE D ATE.—The amendment made by this section shall apply to services performed in calendar months beginning more than 30 days after the date of the enactment of this Act. 26USC31 21 note.
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