Federal Employee Pension Fairness Act - Repeals provisions requiring federal employees, including foreign service employees, who began service after 2012 to pay an increased contribution (4.4%) for funding their annuities under the Federal Employees Retirement System (FERS).
Amends the Internal Revenue Code to: (1) treat certain foreign corporations managed and controlled primarily in the United States as domestic corporations for U.S. tax purposes; and (2) revise rules for the taxation of inverted corporations (i.e., U.S. corporations that acquire foreign companies to reincorporate in a foreign jurisdiction with lower income tax rates than the United States).
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5338 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 5338
To repeal the revised annuity employee and further revised annuity
employee categories within the Federal Employees Retirement System, and
for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 31, 2014
Ms. Edwards (for herself, Mr. Connolly, Mr. Cummings, Ms. Norton, Ms.
Kaptur, Mr. Lynch, Mr. Ellison, and Mr. Rangel) introduced the
following bill; which was referred to the Committee on Ways and Means,
and in addition to the Committees on Oversight and Government Reform
and Foreign Affairs, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To repeal the revised annuity employee and further revised annuity
employee categories within the Federal Employees Retirement System, and
for other purposes.
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 ``Federal Employee Pension Fairness
Act''.
SEC. 2. REPEAL OF FERS REVISED AND FURTHER REVISED ANNUITANT
CATEGORIES.
(a) Repeal of Annuity Computation.--Section 8415 of title 5, United
States Code, is amended by striking subsection (d).
(b) Repeal of Annuitant Categories.--Section 8422(a)(3) of title 5,
United States Code, is amended--
(1) by striking ``other than revised annuity employees or
further revised annuity employees''; and
(2) by striking subparagraphs (B) and (C).
(c) Repeal of Government Contributions.--Section 8423(a) of title
5, United States Code, is amended by striking paragraph (2) and
inserting the following:
``(2) In determining any normal-cost percentage to be
applied under this subsection, amounts provided for under
section 8422 shall be taken into account.''.
(d) Conforming Amendments.--Section 8401 of title 5, United States
Code, is amended--
(1) in paragraph (35)(B), by striking the semi-colon at the
end and inserting ``; and'';
(2) in paragraph (36), by striking ``; and'' at the end and
inserting a period; and
(3) by striking paragraphs (37) and (38).
(e) Application.--
(1) In general.--The amendments made by this section shall
apply on the first day of the first pay period beginning after
the date of enactment of this Act.
(2) Treatment of former revised or further revised
annuitants.--Any individual who, as of the date of enactment of
this Act, was a revised annuity employee or a further revised
annuity employee (but for the amendments made by this section)
shall be deemed to be an employee or Member (as those terms are
defined in section 8401 of title 5, United States Code) for
purposes of chapter 84 of such title.
SEC. 3. REPEAL OF FOREIGN SERVICE REVISED OR FURTHER REVISED ANNUITY
PARTICIPANT CATEGORIES.
(a) Repeal of Annuitant Categories.--Section 856(a) of the Foreign
Service Act of 1980 (22 U.S.C. 4071e(a)) is amended by striking
paragraph (2) and inserting the following:
``(2) The applicable percentage for a participant other than a
revised annuity participant or a further revised annuity participant
shall be as follows:
``7.5 Before January 1, 1999.
7.75 January 1, 1999, to December 31,
1999.
7.9 January 1, 2000, to December 31,
2000.
7.55 After January 11, 2003.''.
(b) Government Contribution.--Section 857 of the Foreign Service
Act of 1980 (22 U.S.C. 4071f) is amended by striking subsection (c).
(c) Conforming Amendments.--Section 852 of such Act is amended (22
U.S.C. 4071a)--
(1) by striking paragraphs (7) and (8); and
(2) by redesignating paragraphs (9), (10), and (11) as
paragraphs (7), (8), and (9), respectively.
(d) Application.--
(1) In general.--The amendments made by this section shall
apply on the first day of the first pay period beginning after
the date of enactment of this Act.
(2) Treatment of former revised or further revised
annuitants.--Any individual who, as of the date of enactment of
this Act, was a revised annuity participant or a further
revised annuity participant (but for the amendments made by
this section) shall be deemed to be a participant (as that term
is defined in section 852 of the Foreign Service Act of 1980
(22 U.S.C. 4071a)) for purposes of the Foreign Service pension
system.
SEC. 4. TREATMENT OF FOREIGN CORPORATIONS MANAGED AND CONTROLLED IN THE
UNITED STATES AS DOMESTIC CORPORATIONS.
(a) In General.--Section 7701 of the Internal Revenue Code of 1986
is amended by redesignating subsection (p) as subsection (q) and by
inserting after subsection (o) the following new subsection:
``(p) Certain Corporations Managed and Controlled in the United
States Treated as Domestic for Income Tax.--
``(1) In general.--Notwithstanding subsection (a)(4), in
the case of a corporation described in paragraph (2) if--
``(A) the corporation would not otherwise be
treated as a domestic corporation for purposes of this
title, but
``(B) the management and control of the corporation
occurs, directly or indirectly, primarily within the
United States,
then, solely for purposes of chapter 1 (and any other provision
of this title relating to chapter 1), the corporation shall be
treated as a domestic corporation.
``(2) Corporation described.--
``(A) In general.--A corporation is described in
this paragraph if--
``(i) the stock of such corporation is
regularly traded on an established securities
market, or
``(ii) the aggregate gross assets of such
corporation (or any predecessor thereof),
including assets under management for
investors, whether held directly or indirectly,
at any time during the taxable year or any
preceding taxable year is $50,000,000 or more.
``(B) General exception.--A corporation shall not
be treated as described in this paragraph if--
``(i) such corporation was treated as a
corporation described in this paragraph in a
preceding taxable year,
``(ii) such corporation--
``(I) is not regularly traded on an
established securities market, and
``(II) has, and is reasonably
expected to continue to have, aggregate
gross assets (including assets under
management for investors, whether held
directly or indirectly) of less than
$50,000,000, and
``(iii) the Secretary grants a waiver to
such corporation under this subparagraph.
``(3) Management and control.--
``(A) In general.--The Secretary shall prescribe
regulations for purposes of determining cases in which
the management and control of a corporation is to be
treated as occurring primarily within the United
States.
``(B) Executive officers and senior management.--
Such regulations shall provide that--
``(i) the management and control of a
corporation shall be treated as occurring
primarily within the United States if
substantially all of the executive officers and
senior management of the corporation who
exercise day-to-day responsibility for making
decisions involving strategic, financial, and
operational policies of the corporation are
located primarily within the United States, and
``(ii) individuals who are not executive
officers and senior management of the
corporation (including individuals who are
officers or employees of other corporations in
the same chain of corporations as the
corporation) shall be treated as executive
officers and senior management if such
individuals exercise the day-to-day
responsibilities of the corporation described
in clause (i).
``(C) Corporations primarily holding investment
assets.--Such regulations shall also provide that the
management and control of a corporation shall be
treated as occurring primarily within the United States
if--
``(i) the assets of such corporation
(directly or indirectly) consist primarily of
assets being managed on behalf of investors,
and
``(ii) decisions about how to invest the
assets are made in the United States.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning on or after the date which is 2 years
after the date of the enactment of this Act, whether or not regulations
are issued under section 7701(p)(3) of the Internal Revenue Code of
1986, as added by this section.
SEC. 5. 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.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committees on Oversight and Government Reform, and Foreign Affairs, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committees on Oversight and Government Reform, and Foreign Affairs, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committees on Oversight and Government Reform, and Foreign Affairs, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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