I 
114TH CONGRESS 
1ST SESSION 
H. R. 785 
To repeal the revised annuity employee and further revised annuity employee 
categories within the Federal Employees Retirement System, and for 
other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 5, 2015 
Ms. EDWARDS (for herself, Mr. CUMMINGS, Mr. CONNOLLY, Mr. CART-
WRIGHT, Mr. ELLISON, Ms. KAPTUR, Mr. LYNCH, Ms. MCCOLLUM, Mrs. 
NAPOLITANO, Ms. NORTON, and Mr. RANGEL) introduced the following 
bill; which was referred to the Committee on Ways and Means, and in 
addition to the Committees on Oversight and Government Reform and 
Foreign Affairs, for a period to be subsequently determined by the Speak-
er, in each case for consideration of such provisions as fall within the ju-
risdiction of the committee concerned 
A BILL 
To repeal the revised annuity employee and further revised 
annuity employee categories within the Federal Employ-
ees Retirement System, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Federal Employee Pen-
sion Fairness Act of 2015’’. 
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SEC. 2. REPEAL OF FERS REVISED AND FURTHER REVISED 
ANNUITANT CATEGORIES. 
(a) REPEAL OF ANNUITY COMPUTATION.—Section 
8415 of title 5, United States Code, is amended by strik-
ing subsection (d). 
(b) REPEAL OF ANNUITANT CATEGORIES.—Section 
8422(a)(3) of title 5, United States Code, is amended— 
(1) by striking ‘‘other than revised annuity em-
ployees or further revised annuity employees’’; and 
(2) by striking subparagraphs (B) and (C). 
(c) REPEAL
OF GOVERNMENT CONTRIBUTIONS.— 
Section 8423(a) of title 5, United States Code, is amended 
by striking paragraph (2) and inserting the following: 
‘‘(2) In determining any normal-cost percentage 
to be applied under this subsection, amounts pro-
vided for under section 8422 shall be taken into ac-
count.’’. 
(d) CONFORMING AMENDMENTS.—Section 8401 of 
title 5, United States Code, is amended— 
(1) in paragraph (35)(B), by striking the semi- 
colon at the end and inserting ‘‘; and’’; 
(2) in paragraph (36), by striking ‘‘; and’’ at 
the end and inserting a period; and 
(3) by striking paragraphs (37) and (38). 
(e) APPLICATION.— 
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(1) IN GENERAL.—The amendments made by 
this section shall apply on the first day of the first 
pay period beginning after the date of enactment of 
this Act. 
(2) TREATMENT OF FORMER REVISED OR FUR-
THER REVISED ANNUITANTS.—Any individual who, 
as of the date of enactment of this Act, was a re-
vised annuity employee or a further revised annuity 
employee (but for the amendments made by this sec-
tion) shall be deemed to be an employee or Member 
(as those terms are defined in section 8401 of title 
5, United States Code) for purposes of chapter 84 
of such title. 
SEC. 3. REPEAL OF FOREIGN SERVICE REVISED OR FUR-
THER REVISED ANNUITY PARTICIPANT CAT-
EGORIES. 
(a) REPEAL OF ANNUITANT CATEGORIES.—Section 
856(a) of the Foreign Service Act of 1980 (22 U.S.C. 
4071e(a)) is amended by striking paragraph (2) and in-
serting the following: 
‘‘(2) The applicable percentage for a participant 
other than a revised annuity participant or a further re-
vised annuity participant shall be as follows: 
‘‘7.5 
Before January 1, 1999. 
7.75 
January 1, 1999, to December 31, 1999. 
7.9 
January 1, 2000, to December 31, 2000. 
7.55 
After January 11, 2003.’’. 
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(b) GOVERNMENT CONTRIBUTION.—Section 857 of 
the Foreign Service Act of 1980 (22 U.S.C. 4071f) is 
amended by striking subsection (c). 
(c) CONFORMING AMENDMENTS.—Section 852 of 
such Act is amended (22 U.S.C. 4071a)— 
(1) by striking paragraphs (7) and (8); and 
(2) by redesignating paragraphs (9), (10), and 
(11) as paragraphs (7), (8), and (9), respectively. 
(d) APPLICATION.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply on the first day of the first 
pay period beginning after the date of enactment of 
this Act. 
(2) TREATMENT OF FORMER REVISED OR FUR-
THER REVISED ANNUITANTS.—Any individual who, 
as of the date of enactment of this Act, was a re-
vised annuity participant or a further revised annu-
ity participant (but for the amendments made by 
this section) shall be deemed to be a participant (as 
that term is defined in section 852 of the Foreign 
Service Act of 1980 (22 U.S.C. 4071a)) for pur-
poses of the Foreign Service pension system. 
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SEC. 4. TREATMENT OF FOREIGN CORPORATIONS MAN-
AGED AND CONTROLLED IN THE UNITED 
STATES AS DOMESTIC CORPORATIONS. 
(a) IN GENERAL.—Section 7701 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
(p) as subsection (q) and by inserting after subsection (o) 
the following new subsection: 
‘‘(p) CERTAIN CORPORATIONS MANAGED AND CON-
TROLLED IN THE UNITED STATES TREATED AS DOMES-
TIC FOR INCOME TAX.— 
‘‘(1) IN GENERAL.—Notwithstanding subsection 
(a)(4), in the case of a corporation described in 
paragraph (2) if— 
‘‘(A) the corporation would not otherwise 
be treated as a domestic corporation for pur-
poses of this title, but 
‘‘(B) the management and control of the 
corporation occurs, directly or indirectly, pri-
marily within the United States, 
then, solely for purposes of chapter 1 (and any other 
provision of this title relating to chapter 1), the cor-
poration shall be treated as a domestic corporation. 
‘‘(2) CORPORATION DESCRIBED.— 
‘‘(A) IN GENERAL.—A corporation is de-
scribed in this paragraph if— 
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‘‘(i) the stock of such corporation is 
regularly traded on an established securi-
ties market, or 
‘‘(ii) the aggregate gross assets of 
such corporation (or any predecessor there-
of), including assets under management 
for investors, whether held directly or indi-
rectly, at any time during the taxable year 
or 
any 
preceding 
taxable 
year 
is 
$50,000,000 or more. 
‘‘(B) GENERAL
EXCEPTION.—A corpora-
tion shall not be treated as described in this 
paragraph if— 
‘‘(i) such corporation was treated as a 
corporation described in this paragraph in 
a preceding taxable year, 
‘‘(ii) such corporation— 
‘‘(I) is not regularly traded on an 
established securities market, and 
‘‘(II) has, and is reasonably ex-
pected to continue to have, aggregate 
gross assets (including assets under 
management for investors, whether 
held directly or indirectly) of less than 
$50,000,000, and 
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the same chain of corporations as the cor-
poration) shall be treated as executive offi-
cers and senior management if such indi-
viduals exercise the day-to-day responsibil-
ities of the corporation described in clause 
(i). 
‘‘(C) CORPORATIONS PRIMARILY HOLDING 
INVESTMENT
ASSETS.—Such regulations shall 
also provide that the management and control 
of a corporation shall be treated as occurring 
primarily within the United States if— 
‘‘(i) the assets of such corporation (di-
rectly or indirectly) consist primarily of as-
sets being managed on behalf of investors, 
and 
‘‘(ii) decisions about how to invest the 
assets are made in the United States.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning on or 
after the date which is 2 years after the date of the enact-
ment of this Act, whether or not regulations are issued 
under section 7701(p)(3) of the Internal Revenue Code 
of 1986, as added by this section. 
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SEC. 5. MODIFICATIONS TO RULES RELATING TO IN-
VERTED CORPORATIONS. 
(a) IN GENERAL.—Subsection (b) of section 7874 of 
the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(b) INVERTED CORPORATIONS TREATED AS DO-
MESTIC CORPORATIONS.— 
‘‘(1) IN
GENERAL.—Notwithstanding section 
7701(a)(4), a foreign corporation shall be treated for 
purposes of this title as a domestic corporation if— 
‘‘(A) such corporation would be a surro-
gate foreign corporation if subsection (a)(2) 
were applied by substituting ‘80 percent’ for 
‘60 percent’, or 
‘‘(B) such corporation is an inverted do-
mestic corporation. 
‘‘(2) INVERTED DOMESTIC CORPORATION.—For 
purposes of this subsection, a foreign corporation 
shall be treated as an inverted domestic corporation 
if, pursuant to a plan (or a series of related trans-
actions)— 
‘‘(A) the entity completes after May 8, 
2014, the direct or indirect acquisition of— 
‘‘(i) substantially all of the properties 
held directly or indirectly by a domestic 
corporation, or 
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‘‘(ii) substantially all of the assets of, 
or substantially all of the properties consti-
tuting a trade or business of, a domestic 
partnership, and 
‘‘(B) after the acquisition, either— 
‘‘(i) more than 50 percent of the stock 
(by vote or value) of the entity is held— 
‘‘(I) in the case of an acquisition 
with respect to a domestic corpora-
tion, by former shareholders of the 
domestic corporation by reason of 
holding stock in the domestic corpora-
tion, or 
‘‘(II) in the case of an acquisition 
with respect to a domestic partner-
ship, by former partners of the do-
mestic partnership by reason of hold-
ing a capital or profits interest in the 
domestic partnership, or 
‘‘(ii) the management and control of 
the expanded affiliated group which in-
cludes the entity occurs, directly or indi-
rectly, primarily within the United States, 
and such expanded affiliated group has 
significant domestic business activities. 
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‘‘(3) EXCEPTION
FOR
CORPORATIONS
WITH 
SUBSTANTIAL
BUSINESS
ACTIVITIES
IN
FOREIGN 
COUNTRY OF ORGANIZATION.—A foreign corporation 
described in paragraph (2) shall not be treated as an 
inverted domestic corporation if after the acquisition 
the expanded affiliated group which includes the en-
tity has substantial business activities in the foreign 
country in which or under the law of which the enti-
ty is created or organized when compared to the 
total business activities of such expanded affiliated 
group. For purposes of subsection (a)(2)(B)(iii) and 
the preceding sentence, the term ‘substantial busi-
ness activities’ shall have the meaning given such 
term under regulations in effect on May 8, 2014, ex-
cept that the Secretary may issue regulations in-
creasing the threshold percent in any of the tests 
under such regulations for determining if business 
activities constitute substantial business activities for 
purposes of this paragraph. 
‘‘(4) MANAGEMENT AND CONTROL.—For pur-
poses of paragraph (2)(B)(ii)— 
‘‘(A) IN
GENERAL.—The Secretary shall 
prescribe regulations for purposes of deter-
mining cases in which the management and 
control of an expanded affiliated group is to be 
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treated as occurring, directly or indirectly, pri-
marily within the United States. The regula-
tions prescribed under the preceding sentence 
shall apply to periods after May 8, 2014. 
‘‘(B) EXECUTIVE OFFICERS AND SENIOR 
MANAGEMENT.—Such regulations shall provide 
that the management and control of an ex-
panded affiliated group shall be treated as oc-
curring, directly or indirectly, primarily within 
the United States if substantially all of the ex-
ecutive officers and senior management of the 
expanded affiliated group who exercise day-to- 
day responsibility for making decisions involving 
strategic, financial, and operational policies of 
the expanded affiliated group are based or pri-
marily located within the United States. Indi-
viduals who in fact exercise such day-to-day re-
sponsibilities shall be treated as executive offi-
cers and senior management regardless of their 
title. 
‘‘(5) SIGNIFICANT DOMESTIC BUSINESS ACTIVI-
TIES.—For purposes of paragraph (2)(B)(ii), an ex-
panded affiliated group has significant domestic 
business activities if at least 25 percent of— 
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‘‘(A) the employees of the group are based 
in the United States, 
‘‘(B) the employee compensation incurred 
by the group is incurred with respect to employ-
ees based in the United States, 
‘‘(C) the assets of the group are located in 
the United States, or 
‘‘(D) the income of the group is derived in 
the United States, 
determined in the same manner as such determina-
tions are made for purposes of determining substan-
tial business activities under regulations referred to 
in paragraph (3) as in effect on May 8, 2014, but 
applied by treating all references in such regulations 
to ‘foreign country’ and ‘relevant foreign country’ as 
references to ‘the United States’. The Secretary may 
issue regulations decreasing the threshold percent in 
any of the tests under such regulations for deter-
mining if business activities constitute significant 
domestic business activities for purposes of this 
paragraph.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Clause (i) of section 7874(a)(2)(B) of such 
Code is amended by striking ‘‘after March 4, 2003,’’ 
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and inserting ‘‘after March 4, 2003, and before May 
9, 2014,’’. 
(2) Subsection (c) of section 7874 of such Code 
is amended— 
(A) in paragraph (2)— 
(i) 
by 
striking 
‘‘subsection 
(a)(2)(B)(ii)’’ and inserting ‘‘subsections 
(a)(2)(B)(ii) and (b)(2)(B)(i)’’, and 
(ii) by inserting ‘‘or (b)(2)(A)’’ after 
‘‘(a)(2)(B)(i)’’ in subparagraph (B), 
(B) in paragraph (3), by inserting ‘‘or 
(b)(2)(B)(i), as the case may be,’’ after 
‘‘(a)(2)(B)(ii)’’, 
(C) in paragraph (5), by striking ‘‘sub-
section (a)(2)(B)(ii)’’ and inserting ‘‘sub-
sections (a)(2)(B)(ii) and (b)(2)(B)(i)’’, and 
(D) in paragraph (6), by inserting ‘‘or in-
verted domestic corporation, as the case may 
be,’’ after ‘‘surrogate foreign corporation’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after May 
8, 2014. 
Æ 
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