I 

108TH CONGRESS 

2D SESSION H. R. 4207

To amend the Internal Revenue Code of 1986 to increase the refundability 

of the child tax credit. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 22, 2004

Ms. DELAURO (for herself, Mr. OBERSTAR, Mr. RANGEL, Mr. SANDERS, Mr. 

EMANUEL, Mr. LYNCH, Mr. LEVIN, Ms. LEE, Mr. BRADY of Pennsylvania, Ms. SCHAKOWSKY, Mr. FORD, Ms. WATERS, Ms. MILLENDERMCDONALD, Mr. RODRIGUEZ, Mr. ETHERIDGE, Mr. FRANK of Massachusetts, Mr. CONYERS, Ms. BALDWIN, Ms. CARSON of Indiana, Mr. FROST, 

Ms. SOLIS, Mr. MICHAUD, Mr. SERRANO, Mr. BISHOP of New York, Mr. 

MCGOVERN, Mr. HOEFFEL, Mr. BERMAN, Mr. MARSHALL, Mr. OWENS, 

Ms. WOOLSEY, Mr. VAN HOLLEN, Mr. CROWLEY, and Ms. SLAUGHTER) 

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 increase 

the refundability of the child tax credit.

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 ‘‘Fairness for Working 

5 Americans Act of 2004’’. 
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1 SEC. 2. INCREASE IN REFUNDABILITY OF THE CHILD TAX 

2 CREDIT. 

3 (a) ACCELERATION OF REFUNDABILITY.—Clause (i) 

4 of section 24(d)(1)(B) of the Internal Revenue Code of 

5 1986 (relating to portion of credit refundable) is amended 

6 by striking ‘‘(10 percent in the case of taxable years begin7 ning before January 1, 2005)’’. 

8 (b) EARNED INCOME INCLUDES COMBAT PAY.—

9 Paragraph (1) of section 24(d) of such Code is amended 

10 by adding at the end the following new sentence: ‘‘For 

11 purposes of subparagraph (B), any amount excluded from 

12 gross income by reason of section 112 shall be treated as 

13 earned income which is taken into account in computing 

14 taxable income for the taxable year.’’. 

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

16 this section shall apply to taxable years beginning after 

17 December 31, 2003. 

18 SEC. 3. PREVENTION OF CORPORATE EXPATRIATION TO 

19 AVOID UNITED STATES INCOME TAX. 

20 (a) IN GENERAL.—Paragraph (4) of section 7701(a) 

21 of the Internal Revenue Code of 1986 (defining domestic) 

22 is amended to read as follows: 

23 ‘‘(4) DOMESTIC.—

24 ‘‘(A) IN GENERAL.—Except as provided in 

25 subparagraph (B), the term ‘domestic’ when ap26 plied to a corporation or partnership means cre-
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1 ated or organized in the United States or under 

2 the law of the United States or of any State 

3 unless, in the case of a partnership, the Sec4 retary provides otherwise by regulations. 

5 ‘‘(B) CERTAIN CORPORATIONS TREATED

6 AS DOMESTIC.—

7 ‘‘(i) IN GENERAL.—The acquiring cor8 poration in a corporate expatriation trans9 action shall be treated as a domestic cor10 poration. 

11 ‘‘(ii) CORPORATE EXPATRIATION

12 TRANSACTION.—For purposes of this sub13 paragraph, the term ‘corporate expatria14 tion transaction’ means any transaction 

15 if—

16 ‘‘(I) a nominally foreign corpora17 tion (referred to in this subparagraph 

18 as the ‘acquiring corporation’) ac19 quires, as a result of such transaction, 

20 directly or indirectly substantially all 

21 of the properties held directly or indi22 rectly by a domestic corporation, and 

23 ‘‘(II) immediately after the trans24 action, more than 80 percent of the 

25 stock (by vote or value) of the acquir-
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1 ing corporation is held by former 

2 shareholders of the domestic corpora3 tion by reason of holding stock in the 

4 domestic corporation. 

5 ‘‘(iii) LOWER STOCK OWNERSHIP RE6 QUIREMENT IN CERTAIN CASES.—Sub7 clause (II) of clause (ii) shall be applied by 

8 substituting ‘50 percent’ for ‘80 percent’ 

9 with respect to any nominally foreign cor10 poration if—

11 ‘‘(I) such corporation does not 

12 have substantial business activities 

13 (when compared to the total business 

14 activities of the expanded affiliated 

15 group) in the foreign country in which 

16 or under the law of which the corpora17 tion is created or organized, and 

18 ‘‘(II) the stock of the corporation 

19 is publicly traded and the principal 

20 market for the public trading of such 

21 stock is in the United States. 

22 ‘‘(iv) PARTNERSHIP TRANSACTIONS.—

23 The term ‘corporate expatriation trans24 action’ includes any transaction if—
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1 ‘‘(I) a nominally foreign corpora2 tion (referred to in this subparagraph 

3 as the ‘acquiring corporation’) ac4 quires, as a result of such transaction, 

5 directly or indirectly properties consti6 tuting a trade or business of a domes7 tic partnership, 

8 ‘‘(II) immediately after the trans9 action, more than 80 percent of the 

10 stock (by vote or value) of the acquir11 ing corporation is held by former 

12 partners of the domestic partnership 

13 or related foreign partnerships (deter14 mined without regard to stock of the 

15 acquiring corporation which is sold in 

16 a public offering related to the trans17 action), and 

18 ‘‘(III) the acquiring corporation 

19 meets the requirements of subclauses 

20 (I) and (II) of clause (iii). 

21 ‘‘(v) SPECIAL RULES.—For purposes 

22 of this subparagraph—

23 ‘‘(I) a series of related trans24 actions shall be treated as 1 trans25 action, and 
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1 ‘‘(II) stock held by members of 

2 the expanded affiliated group which 

3 includes the acquiring corporation 

4 shall not be taken into account in de5 termining ownership. 

6 ‘‘(vi) OTHER DEFINITIONS.—For pur7 poses of this subparagraph—

8 ‘‘(I) NOMINALLY FOREIGN COR9 PORATION.—The term ‘nominally for10 eign corporation’ means any corpora11 tion which would (but for this sub12 paragraph) be treated as a foreign 

13 corporation. 

14 ‘‘(II) EXPANDED AFFILIATED

15 GROUP.—The term ‘expanded affili16 ated group’ means an affiliated group 

17 (as defined in section 1504(a) without 

18 regard to section 1504(b)). 

19 ‘‘(III) RELATED FOREIGN PART20 NERSHIP.—A foreign partnership is 

21 related to a domestic partnership if 

22 they are under common control (with23 in the meaning of section 482), or 

24 they shared the same trademark or 

25 tradename.’’
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1 (b) EFFECTIVE DATES.—

2 (1) IN GENERAL.—The amendment made by 

3 this section shall apply to corporate expatriation 

4 transactions completed after September 11, 2001. 

5 (2) SPECIAL RULE.—The amendment made by 

6 this section shall also apply to corporate expatriation 

7 transactions completed on or before September 11, 

8 2001, but only with respect to taxable years of the 

9 acquiring corporation beginning after December 31, 

10 2003.

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