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SEC. 2. FEDERAL CONTRACTING PREFERENCE FOR PA-
TRIOT CORPORATIONS. 
After December 31, 2013, in the evaluation of bids 
or proposals for a contract for the procurement of goods 
or services, the Federal Government shall provide a pref-
erence to any entity that is a Patriot corporation (as de-
fined in section 11(e) of the Internal Revenue Code of 
1986, as added by section 3 of this Act), unless the award 
of the contract to such entity would jeopardize the na-
tional security interests of the United States. 
SEC. 3. REDUCTION IN RATE OF INCOME TAX FOR PATRIOT 
CORPORATIONS. 
(a) IN GENERAL.—Section 11 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(e) PATRIOT CORPORATIONS.— 
‘‘(1) RATE REDUCTION FOR PATRIOT CORPORA-
TIONS.—In the case of a Patriot corporation, the 
amount of the tax imposed under subsection (a) (de-
termined without regard to this paragraph) shall be 
reduced (but not below zero) by an amount equal to 
5 percent of the taxable income of such corporation. 
‘‘(2) PATRIOT
CORPORATION
DEFINED.—For 
purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘Patriot cor-
poration’ means, with respect to any taxable 
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year, any corporation which is certified by the 
Secretary as meeting the requirements of sub-
paragraph (B) for such taxable and the pre-
ceding taxable year. 
‘‘(B) 
REQUIREMENTS.—A 
corporation 
meets the requirements of this subparagraph, 
with respect to any taxable year, if such cor-
poration— 
‘‘(i) produces in the United States at 
least 90 percent of the goods and services 
sold by such corporation during such tax-
able year, 
‘‘(ii) does not provide compensation to 
any management personnel of such cor-
poration at a level of compensation which 
exceeds 10,000 percent of the level of com-
pensation of the full-time employee of such 
corporation with the lowest level of com-
pensation during such taxable year, 
‘‘(iii) conducts at least 50 percent of 
the research and development conducted by 
such corporation during such taxable year 
(determined on the basis of cost) in the 
United States, 
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‘‘(iv) has contributed at least 5 per-
cent of wages paid by the corporation dur-
ing the taxable year to a portable pension 
fund for the benefit of employees of the 
corporation, 
‘‘(v) has paid at least 70 percent of 
the cost of a standardized health insurance 
plan for the benefit of employees of the 
corporation during such taxable year, 
‘‘(vi) has maintained at all times dur-
ing such taxable year neutrality in em-
ployee organizing drives and has in effect 
a policy to that effect, 
‘‘(vii) provides full differential salary 
and insurance benefits for all National 
Guard and Reserve employees who are 
called to active duty, 
‘‘(viii) has not been (at any time dur-
ing such taxable year) in violation of ap-
propriate Federal regulations including 
those related to the environment, work-
place safety, labor relations, and consumer 
protections, as determined by the Sec-
retary, and 
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‘‘(ix) has not been in violation of any 
other regulations specified by the Sec-
retary. 
‘‘(C) CERTIFICATION PROCESS.—Not later 
than 90 days after the date of the enactment of 
this subsection, the Secretary shall establish an 
application and certification process to annually 
certify corporations as Patriot corporations. 
Such certifications shall be made at such time 
and on the basis of such materials as the Sec-
retary determines appropriate.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2013. 
(c) CERTIFICATION ALLOWED FOR YEAR PRECEDING 
EFFECTIVE DATE OF RATE REDUCTION.—For purposes 
of section 11(e) of the Internal Revenue Code of 1986, 
as added by this section, the Secretary may certify a cor-
poration as a Patriot corporation for the last taxable year 
of the corporation beginning on or before December 31, 
2013, if the corporation meets the requirements of para-
graph (2)(B) of such section for such taxable year. 
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SEC. 4. TAX AVOIDANCE FOREIGN CORPORATIONS SUB-
JECT TO UNITED STATES INCOME TAX. 
(a) IN GENERAL.—Paragraph (4) of section 7701(a) 
of the Internal Revenue Code of 1986 (defining domestic) 
is amended to read as follows: 
‘‘(4) DOMESTIC.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘domestic’ when ap-
plied to a corporation or partnership means cre-
ated or organized in the United States or under 
the law of the United States or of any State 
unless, in the case of a partnership, the Sec-
retary provides otherwise by regulations. 
‘‘(B) TAX AVOIDANCE FOREIGN CORPORA-
TIONS TREATED AS DOMESTIC.—Any corpora-
tion which would (but for this subparagraph) be 
treated as a foreign corporation shall be treated 
as a domestic corporation if the Secretary de-
termines that such corporation was created or 
organized as a foreign corporation (instead of 
as a domestic corporation) principally for the 
purpose of avoiding being treated as a domestic 
corporation under this title.’’. 
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(b) EFFECTIVE DATES.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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