[Congressional Record Volume 156, Number 113 (Thursday, July 29, 2010)]
[House]
[Pages H6429-H6431]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 2350
REAL ESTATE JOBS AND INVESTMENT ACT OF 2010
Mr. CROWLEY. Madam Speaker, I move to suspend the rules and pass the
bill (H.R. 5901) to amend the Internal Revenue Code of 1986 to exempt
certain stock of real estate investment trusts from the tax on foreign
investment in United States real property interests, and for other
purposes.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 5901
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 ``Real Estate Jobs and
Investment Act of 2010''.
SEC. 2. EXCEPTION FROM FIRPTA FOR CERTAIN STOCK OF REAL
ESTATE INVESTMENT TRUSTS.
(a) In General.--Paragraph (3) of section 897(c) of the
Internal Revenue Code of 1986 is amended--
(1) by striking all that precedes ``If any class'' and
inserting the following:
``(3) Exceptions for certain stock dispositions.--
``(A) Exception for stock regularly traded on established
securities markets.--'',
(2) by adding at the end of subparagraph (A) (as added by
paragraph (1)) the following: ``In the case of any class of
stock of a real estate investment trust, the preceding
sentence shall be applied by substituting `10 percent' for `5
percent'.'', and
(3) by adding at the end the following new subparagraph:
``(B) Exception for certain stock in real estate investment
trusts.--
``(i) In general.--Stock of a real estate investment trust
held by a qualified shareholder shall not be treated as a
United States real property interest except to the extent
that an investor in the qualified shareholder holds (directly
or indirectly through the qualified shareholder) more than 10
percent of the stock of such real estate investment trust.
``(ii) Qualified shareholder.--For purposes of this
subparagraph, the term `qualified shareholder' means a
shareholder--
``(I) which would be eligible for a reduced rate of
withholding under any income tax treaty of the United States
with respect to ordinary dividends paid by the real estate
investment trust even if such shareholder holds more than 10
percent of the stock of such real estate investment trust,
and
``(II) whose principal class of interests is listed and
regularly traded on one or more recognized stock exchanges
(as defined in the relevant income tax treaty referred to in
subclause (I)).''.
(b) Distributions of Real Estate Investment Trusts.--
Paragraph (1) of section 897(h) of such Code is amended--
(1) by inserting ``(10 percent in the case of stock of a
real estate investment trust)'' after ``5 percent of such
class of stock'', and
(2) by inserting ``, and any distribution to a qualified
shareholder (as defined in subsection (c)(3)(B)(ii)) shall
not be treated as gain recognized from the sale or exchange
of a United States real property interest to the extent that
the stock of the real estate investment trust held by such
qualified shareholder is not treated as a United States real
property interest under subsection (c)(3)(B)'' before the
period at the end.
(c) Conforming Amendment.--Subparagraph (C) of section
897(c)(6) of such Code is amended by striking ``more than 5
percent'' and inserting ``more than a particular
percentage''.
(d) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to dispositions
made after the date of the enactment of this Act.
[[Page H6430]]
(2) Distributions of real estate investment trusts.--The
amendments made by subsection (b) shall apply to
distributions made after the date of the enactment of this
Act.
SEC. 3. APPLICATION OF CONTINUOUS LEVY TO TAX LIABILITIES OF
CERTAIN FEDERAL CONTRACTORS.
(a) In General.--Subsection (f) of section 6330 of the
Internal Revenue Code of 1986 is amended by striking ``or''
at the end of paragraph (2), by inserting ``or'' at the end
of paragraph (3), and by inserting after paragraph (3) the
following new paragraph:
``(4) the Secretary has served a Federal contractor
levy,''.
(b) Federal Contractor Levy.--Subsection (h) of section
6330 of such Code is amended--
(1) by striking all that precedes ``any levy in connection
with the collection'' and inserting the following:
``(h) Definitions Related to Exceptions.--For purposes of
subsection (f)--
``(1) Disqualified employment tax levy.--A disqualified
employment tax levy is''; and
(2) by adding at the end the following new paragraph:
``(2) Federal contractor levy.--A Federal contractor levy
is any levy if the person whose property is subject to the
levy (or any predecessor of such person) is a Federal
contractor.''.
(c) Conforming Amendment.--The heading of subsection (f) of
section 6330 of such Code is amended by striking ``Jeopardy
and State Refund Collection'' and inserting ``Exceptions''.
(d) Effective Date.--The amendments made by this section
shall apply to levies issued after December 31, 2010.
SEC. 4. PAYGO COMPLIANCE.
The budgetary effects of this Act, for the purpose of
complying with the Statutory Pay-As-You-Go Act of 2010, shall
be determined by reference to the latest statement titled
``Budgetary Effects of PAYGO Legislation'' for this Act,
submitted for printing in the Congressional Record by the
Chairman of the House Budget Committee, provided that such
statement has been submitted prior to the vote on passage.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from New
York (Mr. Crowley) and the gentleman from Texas (Mr. Brady) each will
control 20 minutes.
The Chair recognizes the gentleman from New York.
Mr. CROWLEY. Madam Speaker, I yield myself 4 minutes.
I am pleased to introduce this bill, the Real Estate Jobs and
Investment Act. This bill will help address the growing problems in the
U.S. commercial real estate market by attracting new capital through
alleviating punitive taxes that discourage investment in the United
States real estate markets.
Currently, almost $170 billion in commercial U.S. real estate is
underwater, with many of these mortgages needing to be refinanced
within the next 2 to 3 years. Without a new infusion of capital, a
collapse in the commercial real estate market could lead to yet another
economic downturn. That is a risk that our country can simply not
afford right now.
Under current U.S. tax law, foreign investors generally do not pay
capital gains taxes when they sell stock in a U.S. corporation, such as
a Microsoft or Google, unless that U.S. corporation is a real estate
investment trust, also known as a REIT, which is like a mutual fund for
real estate.
Because Federal tax law imposes certain punitive taxes on foreign
investment in U.S. real estate, foreign investors are not putting their
money into the U.S. commercial real estate sector. The Real Estate Jobs
and Investment Act takes direct aim at this problem by doubling the
amount of foreign capital that can be invested in a publicly traded
real estate investment trust.
The bill is fully PAYGO compliant, so it won't increase our debt or
our deficit by even a single penny.
I also want my colleagues to know that this bill will not
disadvantage U.S. taxpayers over foreign taxpayers. That's because
foreign investment in U.S. real property will continue to be taxed in
the same manner as domestic investment. Under current tax law, only
foreign investors in U.S. real estate are penalized with a special tax.
This bill relieves part of the tax on real estate, a tax that does not
exist when a foreigner invests in any other U.S. asset class such as
stocks.
Further, this bill will not open the door to another Dubai Ports
situation or to greater control of U.S. real estate by countries who do
not have our best interests at heart.
This bill only increases from 5 percent to 10 percent the amount a
foreign investor can place in a real estate investment trust. This is
not ownership control by any means.
Any foreign investor owning more than 10 percent in one of these real
estate investment vehicles will still be forced to pay the punitive tax
and will have to register with the Securities and Exchange Commission.
This bill aims to correct the current tax law which discourages
foreign investment in U.S. real estate and bring new investment into
commercial real estate.
The bill has been endorsed by a number of organizations, including
the Real Estate Roundtable, Organization for International Investment,
National Association for Real Estate Investment Trusts, the
International Council of Shopping Centers, the Building Owners and
Managers Association, the National Association of Real Estate
Investment Managers, the Association of Foreign Investors in Real
Estate, the National Multi Housing Council, and the National Apartment
Association.
I believe this is a commonsense reform at a time when new investments
are needed in our U.S. economy. The more we can do to address the
problems in commercial real estate before they boil over, the better.
I reserve the balance of my time.
Mr. BRADY of Texas. I yield myself such time as I may consume.
(Mr. BRADY of Texas asked and was given permission to revise and
extend his remarks.)
Mr. BRADY of Texas. Madam Speaker, we're all aware of the ongoing
turbulence in the credit markets that has made it very difficult for
owners of real estate, including commercial real estate, to obtain
financing for new projects or to refinance existing ones. Transaction
volumes have fallen, asset values have fallen, and rents have fallen.
Our real estate markets are desperate for infusion of new capital.
One significant source of capital investment for these projects is
foreign investors. It's important for Congress to periodically review
the restrictions that the U.S. Tax Code imposes on foreign investment
to ensure that these restrictions do not unnecessarily discourage this
investment, especially during times like this.
Earlier this year, the gentleman from Ohio (Mr. Tiberi) worked with
the gentleman from New York (Mr. Crowley) to introduce H.R. 4539,
legislation that would modify some of the tax rules in this area
collectively known as FIRPTA, the Foreign Investment in Real Property
Tax Act. Today's legislation based on their earlier bill would remove
an unnecessary barrier to foreign investment in the U.S. real estate
market, providing increased liquidity that is sorely needed.
Under current law, foreign portfolio investors who own less than 5
percent of U.S. publicly traded companies are exempted from the more
stringent tax regime under FIRPTA. This bill would simply raise that 5
percent threshold for this FIRPTA exception to 10 percent for
investments in publicly traded real estate investment trusts, or REITs.
This modification would encourage investment of additional capital into
our real estate markets at a time when the credit markets need it most.
Let me say just a word about the offset the majority has chosen for
this bill, the tightening of the IRS levy rules for Federal contractors
identified as owing taxes. This provision is based on a similar
proposal that was included in the President's fiscal year 2011 budget
request, and it was subsequently included in H.R. 4849, the small
business and infrastructure spending bill introduced by Chairman Levin,
which passed the House on a mostly party-line vote on March 24 of this
year.
The bill we're considering today was introduced just last night, and
for the very first time, the real estate proposal that Mr. Tiberi had
been working on with the gentleman from New York has been paired up
with this particular offset. Since the bill with this new offset was
introduced last night, we've conducted considerable due diligence on
this provision, including discussion with representatives of numerous
associations representing potentially affected taxpayers.
While none of these associations have offered any expressions of
support for this offset, we are, at this time, unaware of any group
that intends to actively oppose this bill because of this provision.
Should H.R. 5901 pass the
[[Page H6431]]
House, I'll certainly continue to discuss this new provision with
potentially affected groups to ensure it does not place any undue
burden on taxpayers.
That being said, the crisis in the credit markets is a serious
concern we all share, and this bill will help our struggling real
estate markets get the capital they need.
I yield back the balance of my time.
Mr. CROWLEY. Mr. Speaker, in closing, I want to thank the gentleman
for his comments and remarks and also recognize we may very well have
to come back to do additional work to help this industry because this
is a national crisis. It's not just in New York. It's not just in Texas
or Boston or L.A. or Chicago. It's really all over the country, and I
think this is a small part right now to help infuse some foreign
investment and cash into the system to put people back to work, to get
construction workers back on the job, and to get people building out
offices, office spacing, and really bringing in more capital to lift up
this industry.
General Leave
Mr. CROWLEY. I ask unanimous consent that all Members may have 5
legislative days within which to revise and extend their remarks and
include extraneous material on H.R. 5901.
The SPEAKER pro tempore (Mr. Lujan). Is there objection to the
request of the gentleman from New York?
There was no objection.
Mr. VAN HOLLEN. Madam Speaker, I rise in support of the Real Estate
Jobs and Investment Act (H.R. 5901), and I commend Congressman Crowley
and the Ways and Means committee staff for the hard work that went into
crafting this bill.
Even as we work hard to address the current foreclosure crisis in the
residential housing market, a growing chorus of economists is warning
that the commercial real estate market could very well be the next shoe
to fall. In order to get in front of that looming crisis, and the
additional burden on our recovery it would represent, Congress should
consider any and all responsible steps we can take now to head off that
outcome.
This legislation is that kind of step. By increasing from 5 percent
to 10 percent the amount of foreign capital that can be invested in a
publicly traded REIT before the Foreign Investment in Real Property Tax
Act, FIRPTA, filing and withholding requirements kick in, we can
attract more foreign investment to our commercial real estate market at
a time when that investment is needed most--and we can do it in a way
that doesn't disadvantage U.S. taxpayers or cede ownership control of
U.S. real estate to foreign interests.
Madam Speaker, this is forward-looking legislation. It's fully paid
for. I urge a ``yes'' vote.
Mr. CROWLEY. I yield back the balance of my time.
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The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from New York (Mr. Crowley) that the House suspend the rules
and pass the bill, H.R. 5901.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. CROWLEY. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the
Chair's prior announcement, further proceedings on this motion will be
postponed.
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