Stop Corporate Expatriation and Invest in America's Infrastructure Act of 2014 - Amends the Internal Revenue Code to revise rules for the taxation of inverted corporations (i.e., U.S. corporations that acquire foreign companies to reincorporate in a foreign jurisdiction with income tax rates lower than the United States) to provide that a foreign corporation that acquires the properties of a U.S. corporation or partnership after May 8, 2014, shall be treated as an inverted corporation and thus subject to U.S. taxation if, after such acquisition: (1) it holds more than 50% of the stock of the new entity (expanded affiliated group), or (2) the management or control of the new entity occurs primarily within the United States and the new entity has significant domestic business activities.
Authorizes additional appropriations to the Highway Account and Mass Transit Account in the Highway Trust Fund.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4985 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 4985
To amend the Internal Revenue Code of 1986 to modify the rules relating
to inverted corporations and to transfer the resulting revenues to the
Highway Trust Fund.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 26, 2014
Mr. Van Hollen (for himself, Mr. Levin, Mr. Becerra, Mr. Danny K. Davis
of Illinois, Mr. Rangel, Mr. McDermott, Ms. Schwartz, Mr. Blumenauer,
Mr. Doggett, Mr. Langevin, Ms. DeLauro, Ms. Slaughter, Mr. George
Miller of California, Ms. Shea-Porter, Mr. Cartwright, Ms. Schakowsky,
Mr. Huffman, Mr. DeFazio, Ms. Roybal-Allard, Mr. Michaud, Mr.
Garamendi, Ms. Duckworth, Ms. Esty, Mr. Lowenthal, Mr. Cardenas, Mr.
Heck of Washington, Mr. Rush, Ms. Matsui, Mr. Pocan, Mr. Nolan, Mr.
Sires, Ms. Velazquez, Mr. Serrano, Mrs. Carolyn B. Maloney of New York,
Mr. Connolly, Mr. Welch, Ms. Edwards, Mr. Courtney, Mrs. Negrete
McLeod, Mr. Horsford, Mr. Vargas, Ms. Norton, Ms. Clark of
Massachusetts, and Mr. Walz) introduced the following bill; which was
referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to modify the rules relating
to inverted corporations and to transfer the resulting revenues to the
Highway Trust Fund.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Stop Corporate Expatriation and
Invest in America's Infrastructure Act of 2014''.
SEC. 2. MODIFICATIONS TO RULES RELATING TO INVERTED CORPORATIONS.
(a) In General.--Subsection (b) of section 7874 of the Internal
Revenue Code of 1986 is amended to read as follows:
``(b) Inverted Corporations Treated as Domestic Corporations.--
``(1) In general.--Notwithstanding section 7701(a)(4), a
foreign corporation shall be treated for purposes of this title
as a domestic corporation if--
``(A) such corporation would be a surrogate foreign
corporation if subsection (a)(2) were applied by
substituting `80 percent' for `60 percent', or
``(B) such corporation is an inverted domestic
corporation.
``(2) Inverted domestic corporation.--For purposes of this
subsection, a foreign corporation shall be treated as an
inverted domestic corporation if, pursuant to a plan (or a
series of related transactions)--
``(A) the entity completes after May 8, 2014, the
direct or indirect acquisition of--
``(i) substantially all of the properties
held directly or indirectly by a domestic
corporation, or
``(ii) substantially all of the assets of,
or substantially all of the properties
constituting a trade or business of, a domestic
partnership, and
``(B) after the acquisition, either--
``(i) more than 50 percent of the stock (by
vote or value) of the entity is held--
``(I) in the case of an acquisition
with respect to a domestic corporation,
by former shareholders of the domestic
corporation by reason of holding stock
in the domestic corporation, or
``(II) in the case of an
acquisition with respect to a domestic
partnership, by former partners of the
domestic partnership by reason of
holding a capital or profits interest
in the domestic partnership, or
``(ii) the management and control of the
expanded affiliated group which includes the
entity occurs, directly or indirectly,
primarily within the United States, and such
expanded affiliated group has significant
domestic business activities.
``(3) Exception for corporations with substantial business
activities in foreign country of organization.--A foreign
corporation described in paragraph (2) shall not be treated as
an inverted domestic corporation if after the acquisition the
expanded affiliated group which includes the entity has
substantial business activities in the foreign country in which
or under the law of which the entity is created or organized
when compared to the total business activities of such expanded
affiliated group. For purposes of subsection (a)(2)(B)(iii) and
the preceding sentence, the term `substantial business
activities' shall have the meaning given such term under
regulations in effect on May 8, 2014, except that the Secretary
may issue regulations increasing the threshold percent in any
of the tests under such regulations for determining if business
activities constitute substantial business activities for
purposes of this paragraph.
``(4) Management and control.--For purposes of paragraph
(2)(B)(ii)--
``(A) In general.--The Secretary shall prescribe
regulations for purposes of determining cases in which
the management and control of an expanded affiliated
group is to be treated as occurring, directly or
indirectly, primarily within the United States. The
regulations prescribed under the preceding sentence
shall apply to periods after May 8, 2014.
``(B) Executive officers and senior management.--
Such regulations shall provide that the management and
control of an expanded affiliated group shall be
treated as occurring, directly or indirectly, primarily
within the United States if substantially all of the
executive officers and senior management of the
expanded affiliated group who exercise day-to-day
responsibility for making decisions involving
strategic, financial, and operational policies of the
expanded affiliated group are based or primarily
located within the United States. Individuals who in
fact exercise such day-to-day responsibilities shall be
treated as executive officers and senior management
regardless of their title.
``(5) Significant domestic business activities.--For
purposes of paragraph (2)(B)(ii), an expanded affiliated group
has significant domestic business activities if at least 25
percent of--
``(A) the employees of the group are based in the
United States,
``(B) the employee compensation incurred by the
group is incurred with respect to employees based in
the United States,
``(C) the assets of the group are located in the
United States, or
``(D) the income of the group is derived in the
United States,
determined in the same manner as such determinations are made
for purposes of determining substantial business activities
under regulations referred to in paragraph (3) as in effect on
May 8, 2014, but applied by treating all references in such
regulations to `foreign country' and `relevant foreign country'
as references to `the United States'. The Secretary may issue
regulations decreasing the threshold percent in any of the
tests under such regulations for determining if business
activities constitute significant domestic business activities
for purposes of this paragraph.''.
(b) Conforming Amendments.--
(1) Clause (i) of section 7874(a)(2)(B) of such Code is
amended by striking ``after March 4, 2003,'' and inserting
``after March 4, 2003, and before May 9, 2014,''.
(2) Subsection (c) of section 7874 of such Code is
amended--
(A) in paragraph (2)--
(i) by striking ``subsection
(a)(2)(B)(ii)'' and inserting ``subsections
(a)(2)(B)(ii) and (b)(2)(B)(i)'', and
(ii) by inserting ``or (b)(2)(A)'' after
``(a)(2)(B)(i)'' in subparagraph (B),
(B) in paragraph (3), by inserting ``or
(b)(2)(B)(i), as the case may be,'' after
``(a)(2)(B)(ii)'',
(C) in paragraph (5), by striking ``subsection
(a)(2)(B)(ii)'' and inserting ``subsections
(a)(2)(B)(ii) and (b)(2)(B)(i)'', and
(D) in paragraph (6), by inserting ``or inverted
domestic corporation, as the case may be,'' after
``surrogate foreign corporation''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years ending after May 8, 2014.
SEC. 3. TRANSFERS TO HIGHWAY TRUST FUND.
(a) In General.--Section 9503(f) of the Internal Revenue Code of
1986 is amended by redesignating paragraph (5) as paragraph (6) and by
inserting after paragraph (4) the following new paragraph:
``(5) Additional appropriations to trust fund.--Out of
money in the Treasury not otherwise appropriated, there is
hereby appropriated--
``(A) $15,566,000,000 to the Highway Account (as
defined in subsection (e)(5)(B)) in the Highway Trust
Fund, and
``(B) $3,891,000,000 to the Mass Transit Account in
the Highway Trust Fund.''.
(b) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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