[Congressional Record Volume 165, Number 120 (Wednesday, July 17, 2019)]
[Senate]
[Pages S4909-S4912]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. DURBIN (for himself, Mr. Reed, Mr. Whitehouse, Ms.
Duckworth, and Mr. Sanders):
S. 2139. A bill to prohibit the award of Federal Government contracts
to inverted domestic corporations, and for other purposes; to the
Committee on Homeland Security and Governmental Affairs.
Mr. DURBIN. Mr. President, I ask unanimous consent that the text of
the bill be printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 2139
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 ``American Business for
American Companies Act of 2019''.
SEC. 2. PROHIBITION ON AWARDING CONTRACTS TO INVERTED
DOMESTIC CORPORATIONS.
(a) Civilian Contracts.--
(1) In general.--Chapter 47 of title 41, United States
Code, is amended by adding at the end the following new
section:
``Sec. 4714. Prohibition on awarding contracts to inverted
domestic corporations
``(a) Prohibition.--
``(1) In general.--The head of an executive agency may not
award a contract for the procurement of property or services
to--
``(A) any foreign incorporated entity that such head has
determined is an inverted domestic corporation or any
subsidiary of such entity; or
``(B) any joint venture if more than 10 percent of the
joint venture (by vote or value) is held by a foreign
incorporated entity that such head has determined is an
inverted domestic corporation or any subsidiary of such
entity.
``(2) Subcontracts.--
``(A) In general.--The head of an executive agency shall
include in each contract for the procurement of property or
services awarded by the executive agency with a value in
excess of $10,000,000, other than a contract for exclusively
commercial items, a clause that prohibits the prime
contractor on such contract from--
``(i) awarding a first-tier subcontract with a value
greater than 10 percent of the total value of the prime
contract to an entity or joint venture described in paragraph
(1); or
``(ii) structuring subcontract tiers in a manner designed
to avoid the limitation in paragraph (1) by enabling an
entity or joint venture described in paragraph (1) to perform
more than 10 percent of the total value of the prime contract
as a lower-tier subcontractor.
``(B) Penalties.--The contract clause included in contracts
pursuant to subparagraph (A) shall provide that, in the event
that the prime contractor violates the contract clause--
``(i) the prime contract may be terminated for default; and
[[Page S4910]]
``(ii) the matter may be referred to the suspension or
debarment official for the appropriate agency and may be a
basis for suspension or debarment of the prime contractor.
``(b) Inverted Domestic Corporation.--
``(1) In general.--For purposes of this section, a foreign
incorporated entity shall be treated as an inverted domestic
corporation if, pursuant to a plan (or a series of related
transactions)--
``(A) the entity completes on or 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, as
determined pursuant to regulations prescribed by the
Secretary of the Treasury, and such expanded affiliated group
has significant domestic business activities.
``(2) Exception for corporations with substantial business
activities in foreign country of organization.--
``(A) In general.--A foreign incorporated entity described
in paragraph (1) 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.
``(B) Substantial business activities.--The Secretary of
the Treasury (or the Secretary's delegate) shall establish
regulations for determining whether an affiliated group has
substantial business activities for purposes of subparagraph
(A), except that such regulations may not treat any group as
having substantial business activities if such group would
not be considered to have substantial business activities
under the regulations prescribed under section 7874 of the
Internal Revenue Code of 1986, as in effect on January 18,
2017.
``(3) Significant domestic business activities.--
``(A) In general.--For purposes of paragraph (1)(B)(ii), an
expanded affiliated group has significant domestic business
activities if at least 25 percent of--
``(i) the employees of the group are based in the United
States;
``(ii) the employee compensation incurred by the group is
incurred with respect to employees based in the United
States;
``(iii) the assets of the group are located in the United
States; or
``(iv) the income of the group is derived in the United
States.
``(B) Determination.--Determinations pursuant to
subparagraph (A) shall be made in the same manner as such
determinations are made for purposes of determining
substantial business activities under regulations referred to
in paragraph (2) as in effect on January 18, 2017, but
applied by treating all references in such regulations to
`foreign country' and `relevant foreign country' as
references to `the United States'. The Secretary of the
Treasury (or the Secretary's delegate) 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.
``(c) Waiver.--
``(1) In general.--The head of an executive agency may
waive subsection (a) with respect to any Federal Government
contract under the authority of such head if the head
determines that the waiver is--
``(A) required in the interest of national security; or
``(B) necessary for the efficient or effective
administration of Federal or federally funded--
``(i) programs that provide health benefits to individuals;
or
``(ii) public health programs.
``(2) Report to congress.--The head of an executive agency
issuing a waiver under paragraph (1) shall, not later than 14
days after issuing such waiver, submit a written notification
of the waiver to the relevant authorizing committees of
Congress and the Committees on Appropriations of the Senate
and the House of Representatives.
``(d) Applicability.--
``(1) In general.--Except as provided in paragraph (2),
this section shall not apply to any contract entered into
before the date of the enactment of this section.
``(2) Task and delivery orders.--This section shall apply
to any task or delivery order issued after the date of the
enactment of this section pursuant to a contract entered into
before, on, or after such date of enactment.
``(3) Scope.--This section applies only to contracts
subject to regulation under the Federal Acquisition
Regulation.
``(e) Definitions and Special Rules.--
``(1) Definitions.--In this section, the terms `expanded
affiliated group', `foreign incorporated entity', `person',
`domestic', and `foreign' have the meaning given those terms
in section 835(c) of the Homeland Security Act of 2002 (6
U.S.C. 395(c)).
``(2) Special rules.--In applying subsection (b) of this
section for purposes of subsection (a) of this section, the
rules described under 835(c)(1) of the Homeland Security Act
of 2002 (6 U.S.C. 395(c)(1)) shall apply.''.
(2) Clerical amendment.--The table of sections at the
beginning of chapter 47 of title 41, United States Code, is
amended by inserting after the item relating to section 4713
the following new item:
``4714. Prohibition on awarding contracts to inverted domestic
corporations.''.
(b) Defense Contracts.--
(1) In general.--Chapter 137 of title 10, United States
Code, is amended by adding at the end the following new
section:
``Sec. 2339. Prohibition on awarding contracts to inverted
domestic corporations
``(a) Prohibition.--
``(1) In general.--The head of an agency may not award a
contract for the procurement of property or services to--
``(A) any foreign incorporated entity that such head has
determined is an inverted domestic corporation or any
subsidiary of such entity; or
``(B) any joint venture if more than 10 percent of the
joint venture (by vote or value) is owned by a foreign
incorporated entity that such head has determined is an
inverted domestic corporation or any subsidiary of such
entity.
``(2) Subcontracts.--
``(A) In general.--The head of an executive agency shall
include in each contract for the procurement of property or
services awarded by the executive agency with a value in
excess of $10,000,000, other than a contract for exclusively
commercial items, a clause that prohibits the prime
contractor on such contract from--
``(i) awarding a first-tier subcontract with a value
greater than 10 percent of the total value of the prime
contract to an entity or joint venture described in paragraph
(1); or
``(ii) structuring subcontract tiers in a manner designed
to avoid the limitation in paragraph (1) by enabling an
entity or joint venture described in paragraph (1) to perform
more than 10 percent of the total value of the prime contract
as a lower-tier subcontractor.
``(B) Penalties.--The contract clause included in contracts
pursuant to subparagraph (A) shall provide that, in the event
that the prime contractor violates the contract clause--
``(i) the prime contract may be terminated for default; and
``(ii) the matter may be referred to the suspension or
debarment official for the appropriate agency and may be a
basis for suspension or debarment of the prime contractor.
``(b) Inverted Domestic Corporation.--
``(1) In general.--For purposes of this section, a foreign
incorporated entity shall be treated as an inverted domestic
corporation if, pursuant to a plan (or a series of related
transactions)--
``(A) the entity completes on or 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, as
determined pursuant to regulations prescribed by the
Secretary of the Treasury, and such expanded affiliated group
has significant domestic business activities.
``(2) Exception for corporations with substantial business
activities in foreign country of organization.--
``(A) In general.--A foreign incorporated entity described
in paragraph (1) 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.
``(B) Substantial business activities.--The Secretary of
the Treasury (or the Secretary's delegate) shall establish
regulations for determining whether an affiliated group has
substantial business activities for purposes of subparagraph
(A), except that such regulations may not treat any group as
having substantial business activities if such
[[Page S4911]]
group would not be considered to have substantial business
activities under the regulations prescribed under section
7874 of the Internal Revenue Code of 1986, as in effect on
January 18, 2017.
``(3) Significant domestic business activities.--
``(A) In general.--For purposes of paragraph (1)(B)(ii), an
expanded affiliated group has significant domestic business
activities if at least 25 percent of--
``(i) the employees of the group are based in the United
States;
``(ii) the employee compensation incurred by the group is
incurred with respect to employees based in the United
States;
``(iii) the assets of the group are located in the United
States; or
``(iv) the income of the group is derived in the United
States.
``(B) Determination.--Determinations pursuant to
subparagraph (A) shall be made in the same manner as such
determinations are made for purposes of determining
substantial business activities under regulations referred to
in paragraph (2) as in effect on January 18, 2017, but
applied by treating all references in such regulations to
`foreign country' and `relevant foreign country' as
references to `the United States'. The Secretary of the
Treasury (or the Secretary's delegate) 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.
``(c) Waiver.--
``(1) In general.--The head of an agency may waive
subsection (a) with respect to any Federal Government
contract under the authority of such head if the head
determines that the waiver is required in the interest of
national security or is necessary for the efficient or
effective administration of Federal or federally funded
programs that provide health benefits to individuals.
``(2) Report to congress.--The head of an agency issuing a
waiver under paragraph (1) shall, not later than 14 days
after issuing such waiver, submit a written notification of
the waiver to the congressional defense committees.
``(d) Applicability.--
``(1) In general.--Except as provided in paragraph (2),
this section shall not apply to any contract entered into
before the date of the enactment of this section.
``(2) Task and delivery orders.--This section shall apply
to any task or delivery order issued after the date of the
enactment of this section pursuant to a contract entered into
before, on, or after such date of enactment.
``(3) Scope.--This section applies only to contracts
subject to regulation under the Federal Acquisition
Regulation and the Defense Supplement to the Federal
Acquisition Regulation.
``(e) Definitions and Special Rules.--
``(1) Definitions.--In this section, the terms `expanded
affiliated group', `foreign incorporated entity', `person',
`domestic', and `foreign' have the meaning given those terms
in section 835(c) of the Homeland Security Act of 2002 (6
U.S.C. 395(c)).
``(2) Special rules.--In applying subsection (b) of this
section for purposes of subsection (a) of this section, the
rules described under 835(c)(1) of the Homeland Security Act
of 2002 (6 U.S.C. 395(c)(1)) shall apply.''.
(2) Clerical amendment.--The table of sections at the
beginning of chapter 137 of title 10, United States Code, is
amended by inserting after the item relating to section 2338
the following new item:
``2339. Prohibition on awarding contracts to inverted domestic
corporations.''.
(c) Regulations Regarding Management and Control.--
(1) In general.--The Secretary of the Treasury (or the
Secretary's delegate) shall, for purposes of section
4714(b)(1)(B)(ii) of title 41, United States Code, and
section 2339(b)(1)(B)(ii) of title 10, United States Code, as
added by subsections (a) and (b), respectively, 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.
(2) Executive officers and senior management.--The
regulations prescribed under paragraph (1) 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.
______
By Mr. DURBIN (for himself, Mr. Reed, Ms. Warren, Mr. Brown, Ms.
Baldwin, Mr. Whitehouse, Mr. Merkley, Mrs. Feinstein, Ms.
Duckworth, Mr. Sanders, and Mr. Blumenthal):
S. 2140. A bill to amend the Internal Revenue Code of 1986 to modify
the rules relating to inverted corporations; to the Committee on
Finance.
Mr. DURBIN. Mr. President, I ask unanimous consent that the text of
the bill be printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 2140
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 Inversions
Act of 2019''.
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 January 18,
2017, 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,
[[Page S4912]]
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 January 18, 2017, 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 8, 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.
______
By Ms. COLLINS (for herself, Ms. Sinema, Mr. Hawley, Mr. Peters,
Ms. McSally, and Mr. Scott of Florida):
S. 2147. A bill to double the existing penalties for the provision of
misleading or inaccurate caller identification information, and to
extend the statute of limitations for forfeiture penalties for persons
who commit such violations; to the Committee on Commerce, Science, and
Transportation.
Ms. COLLINS. Mr. President, I rise today to introduce the ``Anti-
Spoofing Penalty Modernization Act of 2019'' with my colleague, Senator
Sinema, who serves with me on the Senate Committee on Aging, which I
chair. I am also pleased that Senators Hawley, Peters, and McSally have
joined as original cosponsors.
This morning, the Senate Aging Committee held its 23rd hearing in the
past six years to examine scams targeting our Nation's seniors. Scams
the Committee has examined include the infamous IRS imposter scam the
Jamaican Lottery scam, computer tech support scams, grandparent scams,
elder financial exploitation, identity theft, and the notorious ``Drug
Mule'' scam--where seniors are tricked into unwittingly serving as drug
couriers.
Two things are central to nearly all of these scams: first, the scams
are initiated by robocallers who cast a wide net in their hunt for
potential victims, and second, the scammers ``spoof' the victim's
Caller-ID to mask their identity, a key to the success of their
outrageous frauds. When victims see the ``Internal Revenue Service'' or
the ``local Sheriff's Department'' pop-up on their Caller-ID, they are
understandably worried, scared, and often easily hustled into doing
whatever the scammers demand.
Last year, robocallers generated more than 26 billion unwanted calls
that reached American mobile phones. When landlines are included, the
number soars to 48 billion. In Maine alone, our residents received an
astonishing 93 million robocalls last year. That averages out to 73
calls to every person in Maine. So far this year, scammers are on pace
to generate more than 58 billion unwanted, illegal robocalls targeting
Americans.
Putting a stop to these illegal robocalls requires a coordinated
approach from all levels of our government, working in coordination
with the private sector. Recently, this body overwhelmingly passed the
bipartisan ``TRACED Act,'' which makes a number of important changes to
our law that will help make it easier to fight illegal robocalls, such
as increasing civil penalties on robocallers and extending the statute
of limitations for violations to three years. The TRACED Act also
requires telecommunications carriers to implement the so-called SHAKEN/
STIR technology to verify whether Caller-IDs that appear on incoming
calls are authentic. When fully implemented, this technology will be a
major advance against illegal spoofing. I am pleased to be a cosponsor
of the TRACED Act, and I am hopeful it will soon become law.
The bipartisan bill we are introducing today complements the TRACED
Act by doubling the penalties on illegal spoofing. Except for inflation
adjustments, the penalties on illegal spoofing have not been updated
since they were first passed into law through the Truth in Caller ID
Act of 2009. Our bill also extends the statute of limitations to three
years for spoofing violations to match the extension for robocalling
violations included in the TRACED Act.
Mr. President, putting an end to the scourge of illegal robocalls
will take an aware public, aggressive action by regulators and law
enforcement agencies, and a coordinated effort at every level of our
telecommunications industry. The enhanced penalties called for by the
``Anti-Spoofing Penalty Modernization Act'' are an important tool in
the fight. I urge my colleagues to support this legislation.
____________________