[Congressional Record Volume 170, Number 79 (Tuesday, May 7, 2024)]
[Senate]
[Page S3505]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. DURBIN (for himself, Mr. Reed, Mr. Whitehouse, Mr.
Blumenthal, Mr. Sanders, Ms. Hirono, Ms. Duckworth, Mr. Van
Hollen, and Ms. Baldwin):
S. 4275. 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. Madam 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. 4275
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 2024''.
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, 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.
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