American Assistance for American Companies Act

I 116TH CONGRESS 2D SESSION H. R. 7309 To prohibit certain assistance for inverted domestic corporations. IN THE HOUSE OF REPRESENTATIVES JUNE 24, 2020 Mr. DOGGETT introduced the following bill; which was referred to the Com- mittee on Ways and Means, and in addition to the Committee on Finan- cial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the juris- diction of the committee concerned A BILL To prohibit certain assistance for inverted domestic corporations. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘American Assistance 4 for American Companies Act’’. 5 VerDate Sep 11 2014 04:39 Jul 11, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H7309.IH H7309 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 7309 IH SEC. 2. PROHIBITION ON APPLICATION OF CERTAIN AS- 1 SISTANCE TO INVERTED DOMESTIC COR- 2 PORATIONS. 3 (a) PROHIBITION ON USE OF CERTAIN TAX INCEN- 4 TIVES.— 5 (1) NET OPERATING LOSS CARRYBACKS.— 6 (A) IN GENERAL.—Section 172(b)(1)(D) 7 of the Internal Revenue Code of 1986 is 8 amended by adding at the end the following 9 new clause: 10 ‘‘(vi) SPECIAL RULE FOR INVERTED 11 DOMESTIC CORPORATIONS.—Clause (i) 12 shall not apply to any foreign corporation 13 for any taxable year in which such corpora- 14 tion is an inverted domestic corporation 15 (as defined in section 7701(p)(2)), or to 16 any member of the expanded affiliated 17 group (as defined in section 7874(c)(1)) of 18 such a foreign corporation, unless such for- 19 eign corporation has made an election 20 under section 7701(p)(1).’’. 21 (B) EFFECTIVE DATE.—The amendment 22 made by this section shall take effect as if in- 23 cluded in section 2303(b) of the CARES Act. 24 (2) INCREASED LIMITATION ON BUSINESS IN- 25 TEREST.— 26 VerDate Sep 11 2014 04:39 Jul 11, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7309.IH H7309 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 7309 IH (A) IN GENERAL.—Section 163(j)(10) of 1 the Internal Revenue Code of 1986 is amended 2 by adding at the end the following new sub- 3 paragraph: 4 ‘‘(C) SPECIAL RULE FOR INVERTED DO- 5 MESTIC CORPORATIONS.—Subparagraphs (A) 6 and (B) shall not apply to any foreign corpora- 7 tion for any taxable year in which such corpora- 8 tion is an inverted domestic corporation (as de- 9 fined in section 7701(p)(2)), or to any member 10 of the expanded affiliated group (as defined in 11 section 7874(c)(1)) of such a foreign corpora- 12 tion, unless such foreign corporation has made 13 an election under section 7701(p)(1).’’. 14 (B) EFFECTIVE DATE.—The amendment 15 made by this section shall take effect as if in- 16 cluded in section 2306 of the CARES Act. 17 (3) FEDERAL RESERVE EMERGENCY LENDING 18 FACILITIES.— 19 (A) IN GENERAL.—No inverted domestic 20 corporation, as defined in section 7701(p)(2) of 21 the Internal Revenue Code of 1986, or any 22 member of the expanded affiliated group (as de- 23 fined in section 7874(c)(1) of such Code) of 24 such inverted domestic corporation, may partici- 25 VerDate Sep 11 2014 04:39 Jul 11, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H7309.IH H7309 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 7309 IH pate in any program or facility established by 1 the Board of Governors of the Federal Reserve 2 System under the authority of section 13(3) of 3 the Federal Reserve Act (12 U.S.C. 343) and 4 with funding authorized under section 4003 of 5 the CARES Act (Public Law 116–136), includ- 6 ing the Primary Market Corporate Credit Facil- 7 ity and the Secondary Market Corporate Credit 8 Facility. 9 (B) EXCEPTION.—Subparagraph (A) shall 10 not apply if the inverted domestic corporation 11 makes an election under section 7701(p)(1) of 12 the Internal Revenue Code of 1986. 13 (C) APPLICABILITY.—This paragraph shall 14 apply to participation in any program or facility 15 described in subparagraph (A) established be- 16 fore, on, or after the date of enactment of this 17 Act. 18 (b) ELECTION TO TREAT INVERTED DOMESTIC COR- 19 PORATIONS AS DOMESTIC CORPORATIONS.— 20 (1) INVERTED DOMESTIC CORPORATIONS.—Sec- 21 tion 7701 of the Internal Revenue Code of 1986 is 22 amended by redesignating subsection (p) as sub- 23 section (q) and by inserting after subsection (o) the 24 following new subsection: 25 VerDate Sep 11 2014 04:39 Jul 11, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H7309.IH H7309 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 7309 IH ‘‘(p) INVERTED DOMESTIC CORPORATIONS.— 1 ‘‘(1) ELECTION TO BE TREATED AS A DOMES- 2 TIC CORPORATION.— 3 ‘‘(A) IN GENERAL.—Notwithstanding pa- 4 ragraphs (4) and (5) of subsection (a), an in- 5 verted domestic corporation may elect to be 6 treated as a domestic corporation for taxable 7 years beginning with the last taxable year which 8 begins before January 1, 2018. 9 ‘‘(B) ELECTION.—An election under this 10 subsection— 11 ‘‘(i) shall be made not later than 30 12 days after the date of the enactment of 13 this subsection, and 14 ‘‘(ii) once made, shall be irrevocable. 15 ‘‘(C) TIME FOR FILING RETURNS AND PAY- 16 MENT OF TAXES.—Notwithstanding sections 17 6072 and 6151, any return for any taxable year 18 ending before the date described in subpara- 19 graph (B)(i), and any payment of taxes or pen- 20 alties, shall not be considered due before Janu- 21 ary 1, 2021. 22 ‘‘(2) INVERTED DOMESTIC CORPORATION.—For 23 purposes of this subsection, the term ‘inverted do- 24 mestic corporation’ means any foreign corporation 25 VerDate Sep 11 2014 04:39 Jul 11, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H7309.IH H7309 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 7309 IH which, pursuant to a plan (or a series of related 1 transactions)— 2 ‘‘(A) completes after March 4, 2003, the 3 direct or indirect acquisition of— 4 ‘‘(i) substantially all of the properties 5 held directly or indirectly by a domestic 6 corporation, or 7 ‘‘(ii) substantially all of the assets of, 8 or substantially all of the properties consti- 9 tuting a trade or business of, a domestic 10 partnership, and 11 ‘‘(B) after the acquisition, either— 12 ‘‘(i) more than 50 percent of the stock 13 (by vote or value) of the corporation is 14 held— 15 ‘‘(I) in the case of an acquisition 16 with respect to a domestic corpora- 17 tion, by former shareholders of the 18 domestic corporation by reason of 19 holding stock in the domestic corpora- 20 tion, or 21 ‘‘(II) in the case of an acquisition 22 with respect to a domestic partner- 23 ship, by former partners of the do- 24 mestic partnership by reason of hold- 25 VerDate Sep 11 2014 04:39 Jul 11, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H7309.IH H7309 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 7309 IH ing a capital or profits interest in the 1 domestic partnership, or 2 ‘‘(ii) the management and control of 3 the expanded affiliated group which in- 4 cludes the corporation occurs, directly or 5 indirectly, primarily within the United 6 States, and such expanded affiliated group 7 has significant domestic business activities. 8 ‘‘(3) EXCEPTION FOR CORPORATIONS WITH 9 SUBSTANTIAL BUSINESS ACTIVITIES IN FOREIGN 10 COUNTRY OF ORGANIZATION.—Such term shall not 11 include a foreign corporation described in paragraph 12 (2) if after the acquisition the expanded affiliated 13 group which includes the corporation has substantial 14 business activities in the foreign country in which or 15 under the law of which the corporation is created or 16 organized when compared to the total business ac- 17 tivities of such expanded affiliated group. For pur- 18 poses of the preceding sentence, the term ‘substan- 19 tial business activities’ shall have the meaning given 20 such term under regulations in effect on January 21 18, 2017, except that the Secretary may issue regu- 22 lations increasing the threshold percent in any of the 23 tests under such regulations for determining if busi- 24 VerDate Sep 11 2014 04:39 Jul 11, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H7309.IH H7309 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 7309 IH ness activities constitute substantial business activi- 1 ties for purposes of this paragraph. 2 ‘‘(4) MANAGEMENT AND CONTROL.—For pur- 3 poses of paragraph (2)(B)(ii)— 4 ‘‘(A) IN GENERAL.—The Secretary shall 5 prescribe regulations for purposes of deter- 6 mining cases in which the management and 7 control of an expanded affiliated group is to be 8 treated as occurring, directly or indirectly, pri- 9 marily within the United States. The regula- 10 tions prescribed under the preceding sentence 11 shall apply to periods after March 4, 2003. 12 ‘‘(B) EXECUTIVE OFFICERS AND SENIOR 13 MANAGEMENT.—Such regulations shall provide 14 that the management and control of an ex- 15 panded affiliated group shall be treated as oc- 16 curring, directly or indirectly, primarily within 17 the United States if substantially all of the ex- 18 ecutive officers and senior management of the 19 expanded affiliated group who exercise day-to- 20 day responsibility for making decisions involving 21 strategic, financial, and operational policies of 22 the expanded affiliated group are based or pri- 23 marily located within the United States. Indi- 24 viduals who in fact exercise such day-to-day re- 25 VerDate Sep 11 2014 04:39 Jul 11, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H7309.IH H7309 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 7309 IH sponsibilities shall be treated as executive offi- 1 cers and senior management regardless of their 2 title. 3 ‘‘(5) SIGNIFICANT DOMESTIC BUSINESS ACTIVI- 4 TIES.—For purposes of paragraph (2)(B)(ii), an ex- 5 panded affiliated group has significant domestic 6 business activities if at least 25 percent of— 7 ‘‘(A) the employees of the group are based 8 in the United States, 9 ‘‘(B) the employee compensation incurred 10 by the group is incurred with respect to employ- 11 ees based in the United States, 12 ‘‘(C) the assets of the group are located in 13 the United States, or 14 ‘‘(D) the income of the group is derived in 15 the United States, 16 determined in the same manner as such determina- 17 tions are made for purposes of determining substan- 18 tial business activities under regulations referred to 19 in paragraph (3) as in effect on January 18, 2017, 20 but applied by treating all references in such regula- 21 tions to ‘foreign country’ and ‘relevant foreign coun- 22 try’ as references to ‘the United States’. The Sec- 23 retary may issue regulations decreasing the thresh- 24 old percent in any of the tests under such regula- 25 VerDate Sep 11 2014 04:39 Jul 11, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H7309.IH H7309 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 7309 IH tions for determining if business activities constitute 1 significant domestic business activities for purposes 2 of this paragraph. 3 ‘‘(6) DEFINITIONS AND OTHER RULES.— 4 ‘‘(A) EXPANDED AFFILIATED GROUP.— 5 The term ‘expanded affiliated group’ has the 6 meaning give such term under section 7 7874(c)(1). 8 ‘‘(B) OTHER RULES.—Rules similar to the 9 rules of paragraphs (2), (3), (5), and (6) of sec- 10 tion 7874(c) shall apply for purposes of this 11 subsection.’’. 12 Æ VerDate Sep 11 2014 04:39 Jul 11, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\H7309.IH H7309 kjohnson on DSK79L0C42PROD with BILLS