Tax Compliance Act of 1995

TABLE OF CONTENTS:

Title I: Provisions Relating to the Earned Income Credit

Title II: Provisions Relating to International Taxation

Title III: Additional Empowerment Zones

Tax Compliance Act of 1995 - Title I: Provisions Relating to the Earned Income Credit - Amends the Internal Revenue Code to deny the earned income tax credit to individuals without a social security number that is valid for employment purposes.

(Sec. 102) Denies such credit to individuals whose interest and dividends includible in gross income exceed $2,500.

Title II: Provisions Relating to International Taxation - Provides that if a U.S. citizen relinquishes citizenship, all property held by such citizen at the time immediately before relinquishment shall be treated as sold at such time for its fair market value and any gain or loss shall be subject to U.S. income tax. Excludes $600,000 in gain from taxation. Excepts U.S. real property interests and interest in certain retirement plans. Allows the deferral of the tax on expatriation with respect to interests in closely-held businesses.

(Sec. 202) Revises provisions governing information reporting on foreign trusts. Includes as reportable events a domestic trust becoming a foreign trust, the death of a U.S. citizen or resident who is a grantor of a foreign trust, and the residency starting date of a grantor of a foreign trust having one or more U.S. beneficiaries. Increases penalties for failure to file information returns with respect to certain foreign trusts.

(Sec. 203) Modifies the rules relating to the taxation of foreign trusts having one or more U.S. beneficiaries to prevent abusive transactions with respect to transfers at death, sales to foreign trusts, pre-immigration trusts, and outbound trust migrations.

(Sec. 204) Provides for a person to be treated as owning trust assets under the grantor trust rules only if that person is a U.S. citizen, U.S. resident, or domestic corporation.

(Sec. 205) Authorizes the Secretary of the Treasury to recharacterize purported gifts by partnerships and foreign corporations to persons who are not partners or shareholders to prevent the avoidance of tax.

(Sec. 206) Requires U.S. persons to report any gifts from foreign persons that exceed the value of $100,000. Establishes a penalty for failure to make such report.

(Sec. 207) Modifies the rules regarding the rate of interest on accumulated distributions of foreign nongrantor trusts to make such rate correspond to the interest rate on underpayment of tax. Authorizes the Secretary to prescribe regulations to prevent abusive transactions.

Provides for the taxation of the use of foreign trust property (valued at more than $2,500) by a trust participant as distributed income.

(Sec. 208) Provides for the treatment as a domestic estate or trust: (1) one which a U.S. court is able to exercise primary supervision over the administration of; and (2) in the case of a trust, one in which one or more U.S. fiduciaries have the authority to control all substantial trust decisions.

Title III: Additional Empowerment Zones - Authorizes the establishment of two additional urban empowerment zones. Increases the aggregate population of such zones that are eligible for such designation.