II 

116TH CONGRESS 

2D SESSION S. 4067 

To prohibit certain assistance for inverted domestic corporations. 

IN THE SENATE OF THE UNITED STATES 

JUNE 24, 2020 

Mr. DURBIN (for himself, Ms. DUCKWORTH, and Mr. VAN HOLLEN) introduced the following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To prohibit certain assistance for inverted domestic 

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 ‘‘American Assistance 

5 for American Companies Act’’. 

6 SEC. 2. PROHIBITION ON APPLICATION OF CERTAIN AS7 SISTANCE TO INVERTED DOMESTIC COR8 PORATIONS. 

9 (a) PROHIBITION ON USE OF CERTAIN TAX INCEN10 TIVES.— 


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1 (1) NET OPERATING LOSS CARRYBACKS.— 

2 (A) IN GENERAL.—Section 172(b)(1)(D) 

3 of the Internal Revenue Code of 1986 is 

4 amended by adding at the end the following 

5 new clause: 

6 ‘‘(vi) SPECIAL RULE FOR INVERTED

7 DOMESTIC CORPORATIONS.—Clause (i) 

8 shall not apply to any foreign corporation 

9 for any taxable year in which such corpora10 tion is an inverted domestic corporation 

11 (as defined in section 7701(p)(2)), or to 

12 any member of the expanded affiliated 

13 group (as defined in section 7874(c)(1)) of 

14 such a foreign corporation, unless such for15 eign corporation has made an election 

16 under section 7701(p)(1).’’. 

17 (B) EFFECTIVE DATE.—The amendment 

18 made by this section shall take effect as if in19 cluded in section 2303(b) of the CARES Act. 

20 (2) INCREASED LIMITATION ON BUSINESS IN21 TEREST.— 

22 (A) IN GENERAL.—Section 163(j)(10) of 

23 the Internal Revenue Code of 1986 is amended 

24 by adding at the end the following new sub25 paragraph: 


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1 ‘‘(C) SPECIAL RULE FOR INVERTED DO2 MESTIC CORPORATIONS.—Subparagraphs (A) 

3 and (B) shall not apply to any foreign corpora4 tion for any taxable year in which such corpora5 tion is an inverted domestic corporation (as de6 fined in section 7701(p)(2)), or to any member 

7 of the expanded affiliated group (as defined in 

8 section 7874(c)(1)) of such a foreign corpora9 tion, unless such foreign corporation has made 

10 an election under section 7701(p)(1).’’. 

11 (B) EFFECTIVE DATE.—The amendment 

12 made by this section shall take effect as if in13 cluded in section 2306 of the CARES Act. 

14 (3) FEDERAL RESERVE EMERGENCY LENDING

15 FACILITIES.— 

16 (A) IN GENERAL.—No inverted domestic 

17 corporation, as defined in section 7701(p)(2) of 

18 the Internal Revenue Code of 1986, or any 

19 member of the expanded affiliated group (as de20 fined in section 7874(c)(1) of such Code) of 

21 such inverted domestic corporation, may partici22 pate in any program or facility established by 

23 the Board of Governors of the Federal Reserve 

24 System under the authority of section 13(3) of 

25 the Federal Reserve Act (12 U.S.C. 343) and 


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1 with funding authorized under section 4003 of 

2 the CARES Act (Public Law 116–136), includ3 ing the Primary Market Corporate Credit Facil4 ity and the Secondary Market Corporate Credit 

5 Facility. 

6 (B) EXCEPTION.—Subparagraph (A) shall 

7 not apply if the inverted domestic corporation 

8 makes an election under section 7701(p)(1) of 

9 the Internal Revenue Code of 1986. 

10 (C) APPLICABILITY.—This paragraph shall 

11 apply to participation in any program or facility 

12 described in subparagraph (A) established be13 fore, on, or after the date of enactment of this 

14 Act. 

15 (b) ELECTION TO TREAT INVERTED DOMESTIC COR16 PORATIONS AS DOMESTIC CORPORATIONS.— 

17 (1) INVERTED DOMESTIC CORPORATIONS.—Sec18 tion 7701 of the Internal Revenue Code of 1986 is 

19 amended by redesignating subsection (p) as sub20 section (q) and by inserting after subsection (o) the 

21 following new subsection: 

22 ‘‘(p) INVERTED DOMESTIC CORPORATIONS.— 

23 ‘‘(1) ELECTION TO BE TREATED AS A DOMES24 TIC CORPORATION.— 


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1 ‘‘(A) IN GENERAL.—Notwithstanding pa2 ragraphs (4) and (5) of subsection (a), an in3 verted domestic corporation may elect to be 

4 treated as a domestic corporation for taxable 

5 years beginning with the last taxable year which 

6 begins before January 1, 2018. 

7 ‘‘(B) ELECTION.—An election under this 

8 subsection— 

9 ‘‘(i) shall be made not later than 30 

10 days after the date of the enactment of 

11 this subsection, and 

12 ‘‘(ii) once made, shall be irrevocable. 

13 ‘‘(C) TIME FOR FILING RETURNS AND PAY14 MENT OF TAXES.—Notwithstanding sections 

15 6072 and 6151, any return for any taxable year 

16 ending before the date described in subpara17 graph (B)(i), and any payment of taxes or pen18 alties, shall not be considered due before Janu19 ary 1, 2021. 

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

21 purposes of this subsection, the term ‘inverted do22 mestic corporation’ means any foreign corporation 

23 which, pursuant to a plan (or a series of related 

24 transactions)— 


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1 ‘‘(A) completes after March 4, 2003, the 

2 direct or indirect acquisition of— 

3 ‘‘(i) substantially all of the properties 

4 held directly or indirectly by a domestic 

5 corporation, or 

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

7 or substantially all of the properties consti8 tuting a trade or business of, a domestic 

9 partnership, and 

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

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

12 (by vote or value) of the corporation is 

13 held— 

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

15 with respect to a domestic corpora16 tion, by former shareholders of the 

17 domestic corporation by reason of 

18 holding stock in the domestic corpora19 tion, or 

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

21 with respect to a domestic partner22 ship, by former partners of the do23 mestic partnership by reason of hold24 ing a capital or profits interest in the 

25 domestic partnership, or 


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1 ‘‘(ii) the management and control of 

2 the expanded affiliated group which in3 cludes the corporation occurs, directly or 

4 indirectly, primarily within the United 

5 States, and such expanded affiliated group 

6 has significant domestic business activities. 

7 ‘‘(3) EXCEPTION FOR CORPORATIONS WITH

8 SUBSTANTIAL BUSINESS ACTIVITIES IN FOREIGN

9 COUNTRY OF ORGANIZATION.—Such term shall not 

10 include a foreign corporation described in paragraph 

11 (2) if after the acquisition the expanded affiliated 

12 group which includes the corporation has substantial 

13 business activities in the foreign country in which or 

14 under the law of which the corporation is created or 

15 organized when compared to the total business ac16 tivities of such expanded affiliated group. For pur17 poses of the preceding sentence, the term ‘substan18 tial business activities’ shall have the meaning given 

19 such term under regulations in effect on January 

20 18, 2017, except that the Secretary may issue regu21 lations increasing the threshold percent in any of the 

22 tests under such regulations for determining if busi23 ness activities constitute substantial business activi24 ties for purposes of this paragraph. 


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1 ‘‘(4) MANAGEMENT AND CONTROL.—For pur2 poses of paragraph (2)(B)(ii)— 

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

4 prescribe regulations for purposes of deter5 mining cases in which the management and 

6 control of an expanded affiliated group is to be 

7 treated as occurring, directly or indirectly, pri8 marily within the United States. The regula9 tions prescribed under the preceding sentence 

10 shall apply to periods after March 4, 2003. 

11 ‘‘(B) EXECUTIVE OFFICERS AND SENIOR

12 MANAGEMENT.—Such regulations shall provide 

13 that the management and control of an ex14 panded affiliated group shall be treated as oc15 curring, directly or indirectly, primarily within 

16 the United States if substantially all of the ex17 ecutive officers and senior management of the 

18 expanded affiliated group who exercise day-to19 day responsibility for making decisions involving 

20 strategic, financial, and operational policies of 

21 the expanded affiliated group are based or pri22 marily located within the United States. Indi23 viduals who in fact exercise such day-to-day re24 sponsibilities shall be treated as executive offiVerDate Sep 11 2014 21:02 Jul 07, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4067.IS S4067

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1 cers and senior management regardless of their 

2 title. 

3 ‘‘(5) SIGNIFICANT DOMESTIC BUSINESS ACTIVI4 TIES.—For purposes of paragraph (2)(B)(ii), an ex5 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 employ11 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 determina17 tions are made for purposes of determining substan18 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 regula21 tions to ‘foreign country’ and ‘relevant foreign coun22 try’ as references to ‘the United States’. The Sec23 retary may issue regulations decreasing the thresh24 old percent in any of the tests under such regula25 tions for determining if business activities constitute 


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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 sec10 tion 7874(c) shall apply for purposes of this 

11 subsection.’’. 

Æ 


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