[Congressional Record (Bound Edition), Volume 156 (2010), Part 10]
[House]
[Pages 14727-14728]
[From the U.S. 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.
       (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

[[Page 14728]]

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.
  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 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. Mr. 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.
  Mr. 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.

                              {time}  0000

  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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