I 

114TH CONGRESS 

1ST SESSION H. R. 415 

To amend the Internal Revenue Code of 1986 to modify the rules relating 

to inverted corporations. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 20, 2015 

Mr. LEVIN (for himself, Mr. DOGGETT, Ms. SLAUGHTER, and Mr. VAN HOLLEN) introduced the following bill; which was referred to the Committee 

on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to modify 

the rules relating to inverted corporations. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Stop Corporate Inver5 sions Act of 2015’’. 

6 SEC. 2. MODIFICATIONS TO RULES RELATING TO IN7 VERTED CORPORATIONS. 

8 (a) IN GENERAL.—Subsection (b) of section 7874 of 

9 the Internal Revenue Code of 1986 is amended to read 

10 as follows: 


tkelley on DSK3SPTVN1PROD with BILLS
2 

•HR 415 IH

1 ‘‘(b) INVERTED CORPORATIONS TREATED AS DO2 MESTIC CORPORATIONS.— 

3 ‘‘(1) IN GENERAL.—Notwithstanding section 

4 7701(a)(4), a foreign corporation shall be treated for 

5 purposes of this title as a domestic corporation if— 

6 ‘‘(A) such corporation would be a surro7 gate foreign corporation if subsection (a)(2) 

8 were applied by substituting ‘80 percent’ for 

9 ‘60 percent’, or 

10 ‘‘(B) such corporation is an inverted do11 mestic corporation. 

12 ‘‘(2) INVERTED DOMESTIC CORPORATION.—For 

13 purposes of this subsection, a foreign corporation 

14 shall be treated as an inverted domestic corporation 

15 if, pursuant to a plan (or a series of related trans16 actions)— 

17 ‘‘(A) the entity completes after May 8, 

18 2014, the direct or indirect acquisition of— 

19 ‘‘(i) substantially all of the properties 

20 held directly or indirectly by a domestic 

21 corporation, or 

22 ‘‘(ii) substantially all of the assets of, 

23 or substantially all of the properties consti24 tuting a trade or business of, a domestic 

25 partnership, and 


tkelley on DSK3SPTVN1PROD with BILLS
3 

•HR 415 IH

1 ‘‘(B) after the acquisition, either— 

2 ‘‘(i) more than 50 percent of the stock 

3 (by vote or value) of the entity is held— 

4 ‘‘(I) in the case of an acquisition 

5 with respect to a domestic corpora6 tion, by former shareholders of the 

7 domestic corporation by reason of 

8 holding stock in the domestic corpora9 tion, or 

10 ‘‘(II) in the case of an acquisition 

11 with respect to a domestic partner12 ship, by former partners of the do13 mestic partnership by reason of hold14 ing a capital or profits interest in the 

15 domestic partnership, or 

16 ‘‘(ii) the management and control of 

17 the expanded affiliated group which in18 cludes the entity occurs, directly or indi19 rectly, primarily within the United States, 

20 and such expanded affiliated group has 

21 significant domestic business activities. 

22 ‘‘(3) EXCEPTION FOR CORPORATIONS WITH

23 SUBSTANTIAL BUSINESS ACTIVITIES IN FOREIGN

24 COUNTRY OF ORGANIZATION.—A foreign corporation 

25 described in paragraph (2) shall not be treated as an 


tkelley on DSK3SPTVN1PROD with BILLS
4 

•HR 415 IH

1 inverted domestic corporation if after the acquisition 

2 the expanded affiliated group which includes the en3 tity has substantial business activities in the foreign 

4 country in which or under the law of which the enti5 ty is created or organized when compared to the 

6 total business activities of such expanded affiliated 

7 group. For purposes of subsection (a)(2)(B)(iii) and 

8 the preceding sentence, the term ‘substantial busi9 ness activities’ shall have the meaning given such 

10 term under regulations in effect on May 8, 2014, ex11 cept that the Secretary may issue regulations in12 creasing the threshold percent in any of the tests 

13 under such regulations for determining if business 

14 activities constitute substantial business activities for 

15 purposes of this paragraph. 

16 ‘‘(4) MANAGEMENT AND CONTROL.—For pur17 poses of paragraph (2)(B)(ii)— 

18 ‘‘(A) IN GENERAL.—The Secretary shall 

19 prescribe regulations for purposes of deter20 mining cases in which the management and 

21 control of an expanded affiliated group is to be 

22 treated as occurring, directly or indirectly, pri23 marily within the United States. The regula24 tions prescribed under the preceding sentence 

25 shall apply to periods after May 8, 2014. 


tkelley on DSK3SPTVN1PROD with BILLS
5 

•HR 415 IH

1 ‘‘(B) EXECUTIVE OFFICERS AND SENIOR

2 MANAGEMENT.—Such regulations shall provide 

3 that the management and control of an ex4 panded affiliated group shall be treated as oc5 curring, directly or indirectly, primarily within 

6 the United States if substantially all of the ex7 ecutive officers and senior management of the 

8 expanded affiliated group who exercise day-to9 day responsibility for making decisions involving 

10 strategic, financial, and operational policies of 

11 the expanded affiliated group are based or pri12 marily located within the United States. Indi13 viduals who in fact exercise such day-to-day re14 sponsibilities shall be treated as executive offi15 cers and senior management regardless of their 

16 title. 

17 ‘‘(5) SIGNIFICANT DOMESTIC BUSINESS ACTIVI18 TIES.—For purposes of paragraph (2)(B)(ii), an ex19 panded affiliated group has significant domestic 

20 business activities if at least 25 percent of— 

21 ‘‘(A) the employees of the group are based 

22 in the United States, 

23 ‘‘(B) the employee compensation incurred 

24 by the group is incurred with respect to employ25 ees based in the United States, 


tkelley on DSK3SPTVN1PROD with BILLS
6 

•HR 415 IH

1 ‘‘(C) the assets of the group are located in 

2 the United States, or 

3 ‘‘(D) the income of the group is derived in 

4 the United States, 

5 determined in the same manner as such determina6 tions are made for purposes of determining substan7 tial business activities under regulations referred to 

8 in paragraph (3) as in effect on May 8, 2014, but 

9 applied by treating all references in such regulations 

10 to ‘foreign country’ and ‘relevant foreign country’ as 

11 references to ‘the United States’. The Secretary may 

12 issue regulations decreasing the threshold percent in 

13 any of the tests under such regulations for deter14 mining if business activities constitute significant 

15 domestic business activities for purposes of this 

16 paragraph.’’. 

17 (b) CONFORMING AMENDMENTS.— 

18 (1) Clause (i) of section 7874(a)(2)(B) of such 

19 Code is amended by striking ‘‘after March 4, 2003,’’ 

20 and inserting ‘‘after March 4, 2003, and before May 

21 9, 2014,’’. 

22 (2) Subsection (c) of section 7874 of such Code 

23 is amended— 

24 (A) in paragraph (2)— 


tkelley on DSK3SPTVN1PROD with BILLS
7 

•HR 415 IH

1 (i) by striking ‘‘subsection 

2 (a)(2)(B)(ii)’’ and inserting ‘‘subsections 

3 (a)(2)(B)(ii) and (b)(2)(B)(i)’’, and 

4 (ii) by inserting ‘‘or (b)(2)(A)’’ after 

5 ‘‘(a)(2)(B)(i)’’ in subparagraph (B), 

6 (B) in paragraph (3), by inserting ‘‘or 

7 (b)(2)(B)(i), as the case may be,’’ after 

8 ‘‘(a)(2)(B)(ii)’’, 

9 (C) in paragraph (5), by striking ‘‘sub10 section (a)(2)(B)(ii)’’ and inserting ‘‘sub11 sections (a)(2)(B)(ii) and (b)(2)(B)(i)’’, and 

12 (D) in paragraph (6), by inserting ‘‘or in13 verted domestic corporation, as the case may 

14 be,’’ after ‘‘surrogate foreign corporation’’. 

15 (c) EFFECTIVE DATE.—The amendments made by 

16 this section shall apply to taxable years ending after May 

17 8, 2014. 

Æ 


tkelley on DSK3SPTVN1PROD with BILLS