I 

113TH CONGRESS 

2D SESSION H. R. 4985 

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

to inverted corporations and to transfer the resulting revenues to the 

Highway Trust Fund. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 26, 2014 

Mr. VAN HOLLEN (for himself, Mr. LEVIN, Mr. BECERRA, Mr. DANNY K. 

DAVIS of Illinois, Mr. RANGEL, Mr. MCDERMOTT, Ms. SCHWARTZ, Mr. 

BLUMENAUER, Mr. DOGGETT, Mr. LANGEVIN, Ms. DELAURO, Ms. 

SLAUGHTER, Mr. GEORGE MILLER of California, Ms. SHEA-PORTER, Mr. 

CARTWRIGHT, Ms. SCHAKOWSKY, Mr. HUFFMAN, Mr. DEFAZIO, Ms. 

ROYBAL-ALLARD, Mr. MICHAUD, Mr. GARAMENDI, Ms. DUCKWORTH, 

Ms. ESTY, Mr. LOWENTHAL, Mr. CA ́RDENAS, Mr. HECK of Washington, 

Mr. RUSH, Ms. MATSUI, Mr. POCAN, Mr. NOLAN, Mr. SIRES, Ms. 

VELA ́ZQUEZ, Mr. SERRANO, Mrs. CAROLYN B. MALONEY of New York, 

Mr. CONNOLLY, Mr. WELCH, Ms. EDWARDS, Mr. COURTNEY, Mrs. 

NEGRETE MCLEOD, Mr. HORSFORD, Mr. VARGAS, Ms. NORTON, Ms. 

CLARK of Massachusetts, and Mr. WALZ) 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 and to transfer 

the resulting revenues to the Highway Trust Fund. 

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


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Stop Corporate Expa3 triation and Invest in America’s Infrastructure Act of 

4 2014’’. 

5 SEC. 2. MODIFICATIONS TO RULES RELATING TO IN6 VERTED CORPORATIONS. 

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

8 the Internal Revenue Code of 1986 is amended to read 

9 as follows: 

10 ‘‘(b) INVERTED CORPORATIONS TREATED AS DO11 MESTIC CORPORATIONS.— 

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

13 7701(a)(4), a foreign corporation shall be treated for 

14 purposes of this title as a domestic corporation if— 

15 ‘‘(A) such corporation would be a surro16 gate foreign corporation if subsection (a)(2) 

17 were applied by substituting ‘80 percent’ for 

18 ‘60 percent’, or 

19 ‘‘(B) such corporation is an inverted do20 mestic corporation. 

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

22 purposes of this subsection, a foreign corporation 

23 shall be treated as an inverted domestic corporation 

24 if, pursuant to a plan (or a series of related trans25 actions)— 


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

2 2014, the 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 entity is held— 

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

14 with respect to a domestic corpora15 tion, by former shareholders of the 

16 domestic corporation by reason of 

17 holding stock in the domestic corpora18 tion, or 

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

20 with respect to a domestic partner21 ship, by former partners of the do22 mestic partnership by reason of hold23 ing a capital or profits interest in the 

24 domestic partnership, or 


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1 ‘‘(ii) the management and control of 

2 the expanded affiliated group which in3 cludes the entity occurs, directly or indi4 rectly, primarily within the United States, 

5 and such expanded affiliated group has 

6 significant domestic business activities. 

7 ‘‘(3) EXCEPTION FOR CORPORATIONS WITH

8 SUBSTANTIAL BUSINESS ACTIVITIES IN FOREIGN

9 COUNTRY OF ORGANIZATION.—A foreign corporation 

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

11 inverted domestic corporation if after the acquisition 

12 the expanded affiliated group which includes the en13 tity has substantial business activities in the foreign 

14 country in which or under the law of which the enti15 ty is created or organized when compared to the 

16 total business activities of such expanded affiliated 

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

18 the preceding sentence, the term ‘substantial busi19 ness activities’ shall have the meaning given such 

20 term under regulations in effect on May 8, 2014, ex21 cept that the Secretary may issue regulations in22 creasing the threshold percent in any of the tests 

23 under such regulations for determining if business 

24 activities constitute substantial business activities for 

25 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 May 8, 2014. 

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 Mar 15 2010 23:09 Jun 27, 2014 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4985.IH H4985

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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 May 8, 2014, but 

20 applied by treating all references in such regulations 

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

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

23 issue regulations decreasing the threshold percent in 

24 any of the tests under such regulations for deter25 mining if business activities constitute significant 


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1 domestic business activities for purposes of this 

2 paragraph.’’. 

3 (b) CONFORMING AMENDMENTS.— 

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

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

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

7 9, 2014,’’. 

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

9 is amended— 

10 (A) in paragraph (2)— 

11 (i) by striking ‘‘subsection 

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

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

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

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

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

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

18 ‘‘(a)(2)(B)(ii)’’, 

19 (C) in paragraph (5), by striking ‘‘sub20 section (a)(2)(B)(ii)’’ and inserting ‘‘sub21 sections (a)(2)(B)(ii) and (b)(2)(B)(i)’’, and 

22 (D) in paragraph (6), by inserting ‘‘or in23 verted domestic corporation, as the case may 

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


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

2 this section shall apply to taxable years ending after May 

3 8, 2014. 

4 SEC. 3. TRANSFERS TO HIGHWAY TRUST FUND. 

5 (a) IN GENERAL.—Section 9503(f) of the Internal 

6 Revenue Code of 1986 is amended by redesignating para7 graph (5) as paragraph (6) and by inserting after para8 graph (4) the following new paragraph: 

9 ‘‘(5) ADDITIONAL APPROPRIATIONS TO TRUST

10 FUND.—Out of money in the Treasury not otherwise 

11 appropriated, there is hereby appropriated— 

12 ‘‘(A) $15,566,000,000 to the Highway Ac13 count (as defined in subsection (e)(5)(B)) in 

14 the Highway Trust Fund, and 

15 ‘‘(B) $3,891,000,000 to the Mass Transit 

16 Account in the Highway Trust Fund.’’. 

17 (b) EFFECTIVE DATE.—The amendments made by 

18 this section shall take effect on the date of the enactment 

19 of this Act. 

Æ 


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