HONOR Act

This bill would prohibit taxpayers from claiming the foreign tax credit or an itemized tax deduction for taxes paid or accrued to Russia. These restrictions would take effect shortly after enactment and remain in place until normal trade relations between the United States and Russia are restored. Currently, federal law allows such deductions for most foreign taxes, though it already denies the foreign tax credit for payments made to countries that support international terrorism or lack diplomatic relations with the United States.

This bill affects taxpayers who pay, accrue, or are deemed to have paid income, war profits, or excess profits taxes to Russia. These individuals and entities would be prohibited from claiming the foreign tax credit or an itemized tax deduction for such payments. The restrictions apply to those seeking tax relief for obligations to the Russian government until normal trade relations are restored.

• Prohibition on Foreign Tax Credit for taxes paid to Russia. The bill prevents taxpayers from claiming the Foreign Tax Credit for income, war profits, or excess profits taxes paid or accrued to Russia. This restriction takes effect 30 days after the bill's enactment and remains in place until normal trade relations with Russia are restored.
• Disallowance of itemized tax deductions for Russian taxes. Taxpayers are prohibited from claiming an itemized tax deduction for taxes paid, accrued, or deemed paid to Russia. This provision becomes effective 90 days after the date of enactment.

The prohibition on claiming the foreign tax credit for taxes paid to Russia begins 30 days after the date of enactment, while the disallowance of itemized tax deductions for such taxes takes effect 90 days after enactment. These restrictions remain in place until normal U.S. trade relations with Russia are restored.

The bill modifies existing tax law by prohibiting the use of the foreign tax credit or itemized deductions for taxes paid to Russia, expanding upon current restrictions that apply to countries with which the United States lacks diplomatic relations or that support international terrorism. It also links the restoration of these tax benefits to the requirements established by the Suspending Normal Trade Relations with Russia and Belarus Act.

The bill seeks to restrict the flow of revenue to Russia by prohibiting taxpayers from claiming foreign tax credits or itemized deductions for taxes paid to the Russian government. This restriction remains in effect until normal trade relations between the United States and Russia are restored.