II 

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. 

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 ‘‘End Hedge Fund Con5 trol of American Homes Act’’. 


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1 SEC. 2. EXCISE TAX ON CERTAIN TAXPAYERS FAILING TO 

2 SELL EXCESS SINGLE-FAMILY RESIDENCES. 

3 (a) IN GENERAL.—Subtitle D of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new chapter: 

6 ‘‘CHAPTER 50B—EXCESS SINGLE-FAMILY 

7 RESIDENCES 

‘‘Sec. 5000E. Newly acquired single-family residences. 

‘‘Sec. 5000F. Excess single-family residences. 

‘‘Sec. 5000G. Definitions and other special rules. 

8 ‘‘SEC. 5000E. NEWLY ACQUIRED SINGLE-FAMILY RESI9 DENCES. 

10 ‘‘(a) IN GENERAL.—In the case of an applicable tax11 payer, there is hereby imposed a tax on the acquisition 

12 of any newly acquired single-family residence equal to 50 

13 percent of the fair market value of such residence. 

14 ‘‘(b) NEWLY ACQUIRED SINGLE-FAMILY RESI15 DENCE.—For purposes of this section, the term ‘newly ac16 quired single-family residence’ means any single-family 

17 residence which was acquired by the taxpayer in any tax18 able year which begins after the date of the enactment 

19 of this chapter. 

20 ‘‘SEC. 5000F. EXCESS SINGLE-FAMILY RESIDENCES. 

21 ‘‘(a) IN GENERAL.—In the case of an applicable tax22 payer who fails to meet the requirements of subsection (b), 

23 there is hereby imposed a tax equal to the product of— 

24 ‘‘(1) $50,000, and 


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1 ‘‘(2) the excess of— 

2 ‘‘(A) the number of applicable single-family 

3 residences owned by the taxpayer as of the last 

4 day of the taxable year, over 

5 ‘‘(B) the sum of— 

6 ‘‘(i) 50 (zero in the case of any hedge 

7 fund taxpayer), plus 

8 ‘‘(ii) the maximum permissible units 

9 for the taxable year. 

10 ‘‘(b) REQUIREMENT.— 

11 ‘‘(1) IN GENERAL.—An applicable taxpayer 

12 meets the requirement of this subsection for any tax13 able year if the number of applicable single-family 

14 residences owned by the taxpayer as of the last day 

15 of the taxable year is equal to or less than the max16 imum permissible units determined with respect to 

17 such taxpayer for such taxable year. 

18 ‘‘(2) SPECIAL RULE FOR CERTAIN SALES.—For 

19 purposes of applying paragraph (1), a single-family 

20 residence which is sold or transferred in a disquali21 fied sale during the taxable year shall be treated as 

22 a single-family residence which is owned by the ap23 plicable taxpayer as of the last day of such taxable 

24 year. 


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1 ‘‘(c) MAXIMUM PERMISSIBLE UNITS.—The max2 imum permissible units with respect to any applicable tax3 payer for any taxable year shall be determined as follows: 

‘‘In the case of— 

The maximum permissible units for a hedge 

fund taxpayer is— 

The maximum permissible units for any other 

applicable taxpayer is— 

the first full taxable year 

beginning after the applicable date . . . 

90 percent of the number of applicable single-family residences 

owned by the taxpayer 

on the applicable date 

50 plus 90 percent of the 

number of applicable 

single-family residences owned by the 

taxpayer on the applicable date 

the second taxable year 

beginning after the applicable date . . . 

80 percent of the number of applicable single-family residences 

owned by the taxpayer 

on the applicable date 

50 plus 80 percent of the 

number of applicable 

single-family residences owned by the 

taxpayer on the applicable date 

the third taxable year beginning after the applicable date . . . 70 percent of the number of applicable single-family residences 

owned by the taxpayer 

on the applicable date 

50 plus 70 percent of the 

number of applicable 

single-family residences owned by the 

taxpayer on the applicable date 

the fourth taxable year 

beginning after the applicable date . . . 

60 percent of the number of applicable single-family residences 

owned by the taxpayer 

on the applicable date 

50 plus 60 percent of the 

number of applicable 

single-family residences owned by the 

taxpayer on the applicable date 

the fifth taxable year beginning after the applicable date . . . 50 percent of the number of applicable single-family residences 

owned by the taxpayer 

on the applicable date 

50 plus 50 percent of the 

number of applicable 

single-family residences owned by the 

taxpayer on the applicable date 

the sixth taxable year beginning after the applicable date . . . 40 percent of the number of applicable single-family residences 

owned by the taxpayer 

on the applicable date 

50 plus 40 percent of the 

number of applicable 

single-family residences owned by the 

taxpayer on the applicable date 

the seventh taxable year 

beginning after the applicable date . . . 

30 percent of the number of applicable single-family residences 

owned by the taxpayer 

on the applicable date 

50 plus 30 percent of the 

number of applicable 

single-family residences owned by the 

taxpayer on the applicable date 

the eighth taxable year 

beginning after the applicable date . . . 

20 percent of the number of applicable single-family residences 

owned by the taxpayer 

on the applicable date 

50 plus 20 percent of the 

number of applicable 

single-family residences owned by the 

taxpayer on the applicable date 


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‘‘In the case of— 

The maximum permissible units for a hedge 

fund taxpayer is— 

The maximum permissible units for any other 

applicable taxpayer is— 

the ninth taxable year 

beginning after the applicable date . . . 

10 percent of the number of applicable single-family residences 

owned by the taxpayer 

on the applicable date 

50 plus 10 percent of the 

number of applicable 

single-family residences owned by the 

taxpayer on the applicable date 

any taxable year beginning more than 9 

years after the applicable date . . . 

0 50. 

1 ‘‘(d) DEFINITIONS.—For purposes of this section— 

2 ‘‘(1) APPLICABLE SINGLE-FAMILY RESI3 DENCE.—The term ‘applicable single-family resi4 dence’ means any single-family residence which was 

5 acquired on or before the applicable date. 

6 ‘‘(2) APPLICABLE DATE.— 

7 ‘‘(A) IN GENERAL.—The term ‘applicable 

8 date’ means— 

9 ‘‘(i) the last day of the first full tax10 able year ending on or after the date of the 

11 enactment of this chapter, or 

12 ‘‘(ii) in the case of any taxpayer de13 scribed in subparagraph (B), the date pro14 vided in such subparagraph. 

15 ‘‘(B) TAXPAYERS CHANGING STATUS.— 

16 ‘‘(i) IN GENERAL.—In the case of any 

17 applicable taxpayer described in clause (ii), 

18 the applicable date means the last day of 

19 the taxable year immediately preceding the 


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1 taxable year in which the taxpayer is de2 scribed in such clause. 

3 ‘‘(ii) APPLICABLE TAXPAYER DE4 SCRIBED.—An applicable taxpayer is de5 scribed in this clause with respect to any 

6 taxable year if— 

7 ‘‘(I) such taxpayer was not a 

8 hedge fund taxpayer for the preceding 

9 taxable year, and 

10 ‘‘(II) such taxpayer is a hedge 

11 fund taxpayer for such taxable year. 

12 ‘‘(3) HEDGE FUND TAXPAYER.—For purposes 

13 of this subsection, the term ‘hedge fund taxpayer’ 

14 means, with respect to any taxable year, any appli15 cable taxpayer which has $50,000,000 or more in 

16 net value or assets under management on any day 

17 during the taxable year. 

18 ‘‘SEC. 5000G. DEFINITIONS AND OTHER SPECIAL RULES. 

19 ‘‘(a) APPLICABLE TAXPAYER.—For purposes of this 

20 chapter— 

21 ‘‘(1) IN GENERAL.—The term ‘applicable tax22 payer’ means any applicable entity which— 

23 ‘‘(A) manages funds pooled from investors, 

24 and 


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1 ‘‘(B) is a fiduciary with respect to such in2 vestors. 

3 ‘‘(2) APPLICABLE ENTITY.— 

4 ‘‘(A) IN GENERAL.—The term ‘applicable 

5 entity’ means— 

6 ‘‘(i) any partnership, 

7 ‘‘(ii) any corporation, or 

8 ‘‘(iii) any real estate investment trust. 

9 ‘‘(B) EXCEPTIONS.—The term ‘applicable 

10 entity’ shall not include— 

11 ‘‘(i) an organization which is de12 scribed in section 501(c)(3) and exempt 

13 from tax under section 501(a), or 

14 ‘‘(ii) an organization primarily en15 gaged in the construction or rehabilitation 

16 of single-family residences. 

17 ‘‘(b) SINGLE-FAMILY RESIDENCE.—For purposes of 

18 this chapter— 

19 ‘‘(1) IN GENERAL.—The term ‘single-family 

20 residence’ means a residential property consisting of 

21 1-to-4 dwelling units. 

22 ‘‘(2) EXCEPTIONS.—Such term shall not in23 clude— 

24 ‘‘(A) any unoccupied single-family resi25 dence acquired through foreclosure, 


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1 ‘‘(B) any single-family residence that is— 

2 ‘‘(i) not rented or leased, and 

3 ‘‘(ii) used as the principal residence 

4 (within the meaning of section 121) of any 

5 person who has an ownership interest in 

6 the applicable taxpayer, or 

7 ‘‘(C) any single-family residence con8 structed, acquired, or operated with Federal ap9 propriated funding sources. 

10 ‘‘(c) ACQUISITION; OWNERSHIP.—For purposes of 

11 this chapter, an applicable taxpayer shall be treated— 

12 ‘‘(1) as acquiring a single-family residence if 

13 the applicable taxpayer acquires a majority owner14 ship interest in the single-family residence, regard15 less of the percentage of that ownership interest, 

16 and 

17 ‘‘(2) as owning a single-family residence if the 

18 applicable taxpayer owns a majority ownership inter19 est in the single-family residence, regardless of the 

20 percentage of that ownership interest. 

21 ‘‘(d) DISQUALIFIED SALE.—For purposes of this 

22 chapter, the term ‘disqualified sale’ means any sale or 

23 transfer to— 

24 ‘‘(1) a corporation or other entity engaged in a 

25 trade or business, or 


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1 ‘‘(2) an individual who owns any other single2 family residence at the time of such sale or transfer. 

3 ‘‘(e) AGGREGATION RULES.— 

4 ‘‘(1) IN GENERAL.—For purposes of this chap5 ter, all persons which are treated as a single em6 ployer under subsections (a) and (b) of section 52 

7 shall be treated as a single person. 

8 ‘‘(2) MODIFICATIONS.—For purposes of this 

9 subsection— 

10 ‘‘(A) section 52(a) shall be applied by sub11 stituting ‘component members’ for ‘members’, 

12 and 

13 ‘‘(B) for purposes of applying section 

14 52(b), the term ‘trade or business’ shall include 

15 any activity treated as a trade or business 

16 under paragraph (5) or (6) of section 469(c) 

17 (determined without regard to the phrase ‘To 

18 the extent provided in regulations’ in such para19 graph (6)). 

20 ‘‘(3) COMPONENT MEMBER.—For purposes of 

21 this paragraph, the term ‘component member’ has 

22 the meaning given such term by section 1563(b), ex23 cept that the determination shall be made without 

24 regard to section 1563(b)(2). 

25 ‘‘(f) REPORTING.— 


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1 ‘‘(1) IN GENERAL.—The Secretary shall require 

2 such reporting as the Secretary determines nec3 essary or appropriate to carry out the purposes of 

4 this section, including reporting with respect to— 

5 ‘‘(A) the dates on which single-family resi6 dences owned by an applicable taxpayer were 

7 acquired by such taxpayer, and 

8 ‘‘(B) whether any person acquiring a sin9 gle-family residence from an applicable taxpayer 

10 owns any other single-family residences at the 

11 time of the acquisition. 

12 ‘‘(2) FAILURE TO REPORT.— 

13 ‘‘(A) IN GENERAL.—Any person who fails 

14 to report information required under paragraph 

15 (1) or who fails to include correct information 

16 in such report shall pay a penalty of $20,000. 

17 ‘‘(B) REASONABLE CAUSE WAIVER.—No 

18 penalty shall be imposed under this paragraph 

19 with respect to any failure if it is shown that 

20 such failure is due to reasonable cause and not 

21 to willful neglect. 

22 ‘‘(C) TREATMENT OF PENALTY.—The pen23 alty under this paragraph shall be paid upon 

24 notice and demand by the Secretary, and shall 

25 be assessed and collected in the same manner 


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1 as an assessable penalty under subchapter B of 

2 chapter 68.’’. 

3 (b) TAX FORM.—Not later than 180 days after the 

4 date of the enactment of this Act, the Secretary of the 

5 Treasury (or the Secretary’s delegate) shall publish a form 

6 to be used for calculating the amount of tax owned under 

7 chapter 50B of the Internal Revenue Code of 1986 (as 

8 added by subsection (a)). 

9 (c) CERTIFICATION.— 

10 (1) IN GENERAL.—The reporting required 

11 under section 5000G(f)(1)(B) of the Internal Rev12 enue Code of 1986, as added by subsection (a), shall 

13 include a certification from each individual to whom 

14 a single-family residence is sold or transferred from 

15 an applicable taxpayer. 

16 (2) FORM OF CERTIFICATION.—The certifi17 cation required under this subsection shall be signed 

18 by the purchaser or transferee and state the fol19 lowing: 

20 (A) The name and address of the pur21 chaser or transferee. 

22 (B) The sale is not a sale disqualified sale 

23 (as defined in section 5000G(d) of the Internal 

24 Revenue Code of 1986, as added by this sec25 tion). 


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1 (C) The purchaser or transferee will be 

2 subject to the penalty imposed under section 

3 5000G(f)(2) of such Code for any false certifi4 cation. 

5 (3) DEFINITIONS.—Any term used in this sub6 section which is used in chapter 50B of the Internal 

7 Revenue Code of 1986 (as added by this section) 

8 shall have the meaning give such term under such 

9 chapter. 

10 (d) CLERICAL AMENDMENT.—The table of chapters 

11 for subtitle D of the Internal Revenue Code of 1986 is 

12 amended by adding at the end the following new item: 

‘‘CHAPTER 50B—EXCESS SINGLE-FAMILY RESIDENCES’’. 

13 (e) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to taxable years beginning after 

15 the date of enactment of this Act. 

16 SEC. 3. USE OF TAX REVENUES FOR DOWN PAYMENT AS17 SISTANCE GRANTS. 

18 (a) ESTABLISHMENT OF HOUSING DOWNPAYMENT

19 TRUST FUND.— 

20 (1) IN GENERAL.—Subchapter A of chapter 98 

21 of the Internal Revenue Code of 1986 is amended by 

22 adding at the end the following new section: 

23 ‘‘SEC. 9512. HOUSING DOWNPAYMENT TRUST FUND. 

24 ‘‘(a) CREATION OF TRUST FUND.—There is estab25 lished in the Treasury of the United States a trust fund 


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1 to be known as the Housing Downpayment Trust Fund 

2 (hereinafter in this section referred to as the ‘Trust 

3 Fund’), consisting of such amounts as may be appro4 priated or credited to such Trust Fund as provided in this 

5 section and section 9602(b). 

6 ‘‘(b) TRANSFERS TO TRUST FUND.—There are here7 by appropriated to the Trust Fund amounts equivalent to 

8 revenues received in the Treasury from the tax imposed 

9 by sections 5000E and 5000F. 

10 ‘‘(c) EXPENDITURES FROM TRUST FUND.—Amounts 

11 in the Trust Fund shall be available, as provided in appro12 priations Acts, only for grants under section 3(b) of the 

13 End Hedge Fund Control of American Homes Act.’’. 

14 (2) CLERICAL AMENDMENT.—The table of sec15 tions for subchapter A of chapter 98 of the Internal 

16 Revenue Code of 1986 is amended by adding at the 

17 end the following new item: 

‘‘Sec. 9512. Housing Downpayment Trust Fund.’’. 

18 (b) GRANTS PROGRAM FOR DOWN PAYMENT ASSIST19 ANCE PROGRAMS.— 

20 (1) ESTABLISHMENT.—The Secretary of Hous21 ing and Urban Development shall establish a pro22 gram under which the Secretary makes grants to 

23 State housing finance agencies to establish new or 

24 supplement existing programs that provide down 


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1 payment assistance to families purchasing homes 

2 within the State. 

3 (2) PRIORITY.—A State housing finance agency 

4 that receives a grant under this section shall give 

5 priority to families seeking assistance to purchase 

6 any single-family residence that is sold or trans7 ferred by an applicable taxpayer (as defined in sec8 tion 5000G of the Internal Revenue Code of 1986, 

9 as added by section 2). 

Æ 


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