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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 3402 Introduced in Senate (IS)]

<DOC>

118th CONGRESS
  1st Session
                                S. 3402

 To amend the Internal Revenue Code of 1986 to impose an excise tax on 
    the failure of certain hedge funds owning excess single-family 
   residences to dispose of such residences, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            December 5, 2023

Mr. Merkley (for himself and Ms. Smith) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
 To amend the Internal Revenue Code of 1986 to impose an excise tax on 
    the failure of certain hedge funds owning excess single-family 
   residences to dispose of such residences, and for other purposes.

    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 ``End Hedge Fund Control of American 
Homes Act''.

SEC. 2. EXCISE TAX ON CERTAIN TAXPAYERS FAILING TO SELL EXCESS SINGLE-
              FAMILY RESIDENCES.

    (a) In General.--Subtitle D of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new chapter:

             ``CHAPTER 50B--EXCESS SINGLE-FAMILY RESIDENCES

``Sec. 5000E. Newly acquired single-family residences.
``Sec. 5000F. Excess single-family residences.
``Sec. 5000G. Definitions and other special rules.

``SEC. 5000E. NEWLY ACQUIRED SINGLE-FAMILY RESIDENCES.

    ``(a) In General.--In the case of an applicable taxpayer, there is 
hereby imposed a tax on the acquisition of any newly acquired single-
family residence equal to 50 percent of the fair market value of such 
residence.
    ``(b) Newly Acquired Single-Family Residence.--For purposes of this 
section, the term `newly acquired single-family residence' means any 
single-family residence which was acquired by the taxpayer in any 
taxable year which begins after the date of the enactment of this 
chapter.

``SEC. 5000F. EXCESS SINGLE-FAMILY RESIDENCES.

    ``(a) In General.--In the case of an applicable taxpayer who fails 
to meet the requirements of subsection (b), there is hereby imposed a 
tax equal to the product of--
            ``(1) $50,000, and
            ``(2) the excess of--
                    ``(A) the number of applicable single-family 
                residences owned by the taxpayer as of the last day of 
                the taxable year, over
                    ``(B) the sum of--
                            ``(i) 50 (zero in the case of any hedge 
                        fund taxpayer), plus
                            ``(ii) the maximum permissible units for 
                        the taxable year.
    ``(b) Requirement.--
            ``(1) In general.--An applicable taxpayer meets the 
        requirement of this subsection for any taxable year if the 
        number of applicable single-family residences owned by the 
        taxpayer as of the last day of the taxable year is equal to or 
        less than the maximum permissible units determined with respect 
        to such taxpayer for such taxable year.
            ``(2) Special rule for certain sales.--For purposes of 
        applying paragraph (1), a single-family residence which is sold 
        or transferred in a disqualified sale during the taxable year 
        shall be treated as a single-family residence which is owned by 
        the applicable taxpayer as of the last day of such taxable 
        year.
    ``(c) Maximum Permissible Units.--The maximum permissible units 
with respect to any applicable taxpayer for any taxable year shall be 
determined as follows:

----------------------------------------------------------------------------------------------------------------
                                       The maximum permissible units for a    The maximum permissible units for
         ``In the case of--                 hedge fund taxpayer is--         any other applicable taxpayer is--
----------------------------------------------------------------------------------------------------------------
the first full taxable year           90 percent of the number of           50 plus 90 percent of the number of
 beginning after the applicable date   applicable single-family residences   applicable single-family residences
 . . .                                 owned by the taxpayer on the          owned by the taxpayer on the
                                       applicable date                       applicable date
the second taxable year beginning     80 percent of the number of           50 plus 80 percent of the number of
 after the applicable date . . .       applicable single-family residences   applicable single-family residences
                                       owned by the taxpayer on the          owned by the taxpayer on the
                                       applicable date                       applicable date
the third taxable year beginning      70 percent of the number of           50 plus 70 percent of the number of
 after the applicable date . . .       applicable single-family residences   applicable single-family residences
                                       owned by the taxpayer on the          owned by the taxpayer on the
                                       applicable date                       applicable date
the fourth taxable year beginning     60 percent of the number of           50 plus 60 percent of the number of
 after the applicable date . . .       applicable single-family residences   applicable single-family residences
                                       owned by the taxpayer on the          owned by the taxpayer on the
                                       applicable date                       applicable date
the fifth taxable year beginning      50 percent of the number of           50 plus 50 percent of the number of
 after the applicable date . . .       applicable single-family residences   applicable single-family residences
                                       owned by the taxpayer on the          owned by the taxpayer on the
                                       applicable date                       applicable date
the sixth taxable year beginning      40 percent of the number of           50 plus 40 percent of the number of
 after the applicable date . . .       applicable single-family residences   applicable single-family residences
                                       owned by the taxpayer on the          owned by the taxpayer on the
                                       applicable date                       applicable date
the seventh taxable year beginning    30 percent of the number of           50 plus 30 percent of the number of
 after the applicable date . . .       applicable single-family residences   applicable single-family residences
                                       owned by the taxpayer on the          owned by the taxpayer on the
                                       applicable date                       applicable date
the eighth taxable year beginning     20 percent of the number of           50 plus 20 percent of the number of
 after the applicable date . . .       applicable single-family residences   applicable single-family residences
                                       owned by the taxpayer on the          owned by the taxpayer on the
                                       applicable date                       applicable date
the ninth taxable year beginning      10 percent of the number of           50 plus 10 percent of the number of
 after the applicable date . . .       applicable single-family residences   applicable single-family residences
                                       owned by the taxpayer on the          owned by the taxpayer on the
                                       applicable date                       applicable date
any taxable year beginning more than  0                                     50.
 9 years after the applicable date .
 . .
----------------------------------------------------------------------------------------------------------------

    ``(d) Definitions.--For purposes of this section--
            ``(1) Applicable single-family residence.--The term 
        `applicable single-family residence' means any single-family 
        residence which was acquired on or before the applicable date.
            ``(2) Applicable date.--
                    ``(A) In general.--The term `applicable date' 
                means--
                            ``(i) the last day of the first full 
                        taxable year ending on or after the date of the 
                        enactment of this chapter, or
                            ``(ii) in the case of any taxpayer 
                        described in subparagraph (B), the date 
                        provided in such subparagraph.
                    ``(B) Taxpayers changing status.--
                            ``(i) In general.--In the case of any 
                        applicable taxpayer described in clause (ii), 
                        the applicable date means the last day of the 
                        taxable year immediately preceding the taxable 
                        year in which the taxpayer is described in such 
                        clause.
                            ``(ii) Applicable taxpayer described.--An 
                        applicable taxpayer is described in this clause 
                        with respect to any taxable year if--
                                    ``(I) such taxpayer was not a hedge 
                                fund taxpayer for the preceding taxable 
                                year, and
                                    ``(II) such taxpayer is a hedge 
                                fund taxpayer for such taxable year.
            ``(3) Hedge fund taxpayer.--For purposes of this 
        subsection, the term `hedge fund taxpayer' means, with respect 
        to any taxable year, any applicable taxpayer which has 
        $50,000,000 or more in net value or assets under management on 
        any day during the taxable year.

``SEC. 5000G. DEFINITIONS AND OTHER SPECIAL RULES.

    ``(a) Applicable Taxpayer.--For purposes of this chapter--
            ``(1) In general.--The term `applicable taxpayer' means any 
        applicable entity which--
                    ``(A) manages funds pooled from investors, and
                    ``(B) is a fiduciary with respect to such 
                investors.
            ``(2) Applicable entity.--
                    ``(A) In general.--The term `applicable entity' 
                means--
                            ``(i) any partnership,
                            ``(ii) any corporation, or
                            ``(iii) any real estate investment trust.
                    ``(B) Exceptions.--The term `applicable entity' 
                shall not include--
                            ``(i) an organization which is described in 
                        section 501(c)(3) and exempt from tax under 
                        section 501(a), or
                            ``(ii) an organization primarily engaged in 
                        the construction or rehabilitation of single-
                        family residences.
    ``(b) Single-Family Residence.--For purposes of this chapter--
            ``(1) In general.--The term `single-family residence' means 
        a residential property consisting of 1-to-4 dwelling units.
            ``(2) Exceptions.--Such term shall not include--
                    ``(A) any unoccupied single-family residence 
                acquired through foreclosure,
                    ``(B) any single-family residence that is--
                            ``(i) not rented or leased, and
                            ``(ii) used as the principal residence 
                        (within the meaning of section 121) of any 
                        person who has an ownership interest in the 
                        applicable taxpayer, or
                    ``(C) any single-family residence constructed, 
                acquired, or operated with Federal appropriated funding 
                sources.
    ``(c) Acquisition; Ownership.--For purposes of this chapter, an 
applicable taxpayer shall be treated--
            ``(1) as acquiring a single-family residence if the 
        applicable taxpayer acquires a majority ownership interest in 
        the single-family residence, regardless of the percentage of 
        that ownership interest, and
            ``(2) as owning a single-family residence if the applicable 
        taxpayer owns a majority ownership interest in the single-
        family residence, regardless of the percentage of that 
        ownership interest.
    ``(d) Disqualified Sale.--For purposes of this chapter, the term 
`disqualified sale' means any sale or transfer to--
            ``(1) a corporation or other entity engaged in a trade or 
        business, or
            ``(2) an individual who owns any other single-family 
        residence at the time of such sale or transfer.
    ``(e) Aggregation Rules.--
            ``(1) In general.--For purposes of this chapter, all 
        persons which are treated as a single employer under 
        subsections (a) and (b) of section 52 shall be treated as a 
        single person.
            ``(2) Modifications.--For purposes of this subsection--
                    ``(A) section 52(a) shall be applied by 
                substituting `component members' for `members', and
                    ``(B) for purposes of applying section 52(b), the 
                term `trade or business' shall include any activity 
                treated as a trade or business under paragraph (5) or 
                (6) of section 469(c) (determined without regard to the 
                phrase `To the extent provided in regulations' in such 
                paragraph (6)).
            ``(3) Component member.--For purposes of this paragraph, 
        the term `component member' has the meaning given such term by 
        section 1563(b), except that the determination shall be made 
        without regard to section 1563(b)(2).
    ``(f) Reporting.--
            ``(1) In general.--The Secretary shall require such 
        reporting as the Secretary determines necessary or appropriate 
        to carry out the purposes of this section, including reporting 
        with respect to--
                    ``(A) the dates on which single-family residences 
                owned by an applicable taxpayer were acquired by such 
                taxpayer, and
                    ``(B) whether any person acquiring a single-family 
                residence from an applicable taxpayer owns any other 
                single-family residences at the time of the 
                acquisition.
            ``(2) Failure to report.--
                    ``(A) In general.--Any person who fails to report 
                information required under paragraph (1) or who fails 
                to include correct information in such report shall pay 
                a penalty of $20,000.
                    ``(B) Reasonable cause waiver.--No penalty shall be 
                imposed under this paragraph with respect to any 
                failure if it is shown that such failure is due to 
                reasonable cause and not to willful neglect.
                    ``(C) Treatment of penalty.--The penalty under this 
                paragraph shall be paid upon notice and demand by the 
                Secretary, and shall be assessed and collected in the 
                same manner as an assessable penalty under subchapter B 
                of chapter 68.''.
    (b) Tax Form.--Not later than 180 days after the date of the 
enactment of this Act, the Secretary of the Treasury (or the 
Secretary's delegate) shall publish a form to be used for calculating 
the amount of tax owned under chapter 50B of the Internal Revenue Code 
of 1986 (as added by subsection (a)).
    (c) Certification.--
            (1) In general.--The reporting required under section 
        5000G(f)(1)(B) of the Internal Revenue Code of 1986, as added 
        by subsection (a), shall include a certification from each 
        individual to whom a single-family residence is sold or 
        transferred from an applicable taxpayer.
            (2) Form of certification.--The certification required 
        under this subsection shall be signed by the purchaser or 
        transferee and state the following:
                    (A) The name and address of the purchaser or 
                transferee.
                    (B) The sale is not a sale disqualified sale (as 
                defined in section 5000G(d) of the Internal Revenue 
                Code of 1986, as added by this section).
                    (C) The purchaser or transferee will be subject to 
                the penalty imposed under section 5000G(f)(2) of such 
                Code for any false certification.
            (3) Definitions.--Any term used in this subsection which is 
        used in chapter 50B of the Internal Revenue Code of 1986 (as 
        added by this section) shall have the meaning give such term 
        under such chapter.
    (d) Clerical Amendment.--The table of chapters for subtitle D of 
the Internal Revenue Code of 1986 is amended by adding at the end the 
following new item:

           ``Chapter 50B--Excess Single-Family Residences''.

    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of enactment of this 
Act.

SEC. 3. USE OF TAX REVENUES FOR DOWN PAYMENT ASSISTANCE GRANTS.

    (a) Establishment of Housing Downpayment Trust Fund.--
            (1) In general.--Subchapter A of chapter 98 of the Internal 
        Revenue Code of 1986 is amended by adding at the end the 
        following new section:

``SEC. 9512. HOUSING DOWNPAYMENT TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the Housing 
Downpayment Trust Fund (hereinafter in this section referred to as the 
`Trust Fund'), consisting of such amounts as may be appropriated or 
credited to such Trust Fund as provided in this section and section 
9602(b).
    ``(b) Transfers to Trust Fund.--There are hereby appropriated to 
the Trust Fund amounts equivalent to revenues received in the Treasury 
from the tax imposed by sections 5000E and 5000F.
    ``(c) Expenditures From Trust Fund.--Amounts in the Trust Fund 
shall be available, as provided in appropriations Acts, only for grants 
under section 3(b) of the End Hedge Fund Control of American Homes 
Act.''.
            (2) Clerical amendment.--The table of sections for 
        subchapter A of chapter 98 of the Internal Revenue Code of 1986 
        is amended by adding at the end the following new item:

``Sec. 9512. Housing Downpayment Trust Fund.''.
    (b) Grants Program for Down Payment Assistance Programs.--
            (1) Establishment.--The Secretary of Housing and Urban 
        Development shall establish a program under which the Secretary 
        makes grants to State housing finance agencies to establish new 
        or supplement existing programs that provide down payment 
        assistance to families purchasing homes within the State.
            (2) Priority.--A State housing finance agency that receives 
        a grant under this section shall give priority to families 
        seeking assistance to purchase any single-family residence that 
        is sold or transferred by an applicable taxpayer (as defined in 
        section 5000G of the Internal Revenue Code of 1986, as added by 
        section 2).
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