I 
113TH CONGRESS 
2D SESSION 
H. R. 5278 
To prohibit the award of Federal Government contracts to inverted domestic 
corporations, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 30, 2014 
Ms. DELAURO (for herself, Mr. DOGGETT, and Mr. LEVIN) introduced the fol-
lowing bill; which was referred to the Committee on Oversight and Gov-
ernment Reform, and in addition to the Committee on Armed Services, 
for a period to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of the 
committee concerned 
A BILL 
To prohibit the award of Federal Government contracts to 
inverted domestic corporations, 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 ‘‘No Federal Contracts 
for Corporate Deserters Act of 2014’’. 
SEC. 2. PROHIBITION ON AWARDING CONTRACTS TO IN-
VERTED DOMESTIC CORPORATIONS. 
(a) CIVILIAN CONTRACTS.— 
VerDate Mar 15 2010 
03:05 Aug 05, 2014
Jkt 039200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H5278.IH
H5278
jbell on DSK4SPTVN1PROD with BILLS
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, 
as determined pursuant to regulations pre-
scribed by the Secretary of the Treasury, 
and such expanded affiliated group has 
significant domestic business activities. 
‘‘(2) EXCEPTION
FOR
CORPORATIONS
WITH 
SUBSTANTIAL
BUSINESS
ACTIVITIES
IN
FOREIGN 
COUNTRY OF ORGANIZATION.— 
‘‘(A) IN GENERAL.—A foreign incorporated 
entity described in paragraph (1) shall not be 
treated as an inverted domestic corporation if 
after the acquisition the expanded affiliated 
group which includes the entity has substantial 
business activities in the foreign country in 
which or under the law of which the entity is 
created or organized when compared to the 
total business activities of such expanded affili-
ated group. 
VerDate Mar 15 2010 
03:05 Aug 05, 2014
Jkt 039200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H5278.IH
H5278
jbell on DSK4SPTVN1PROD with BILLS
‘‘(B) 
SUBSTANTIAL
BUSINESS
ACTIVI-
TIES.—The Secretary of the Treasury (or the 
Secretary’s delegate) shall establish regulations 
for determining whether an affiliated group has 
substantial business activities for purposes of 
subparagraph (A), except that such regulations 
may not treat any group as having substantial 
business activities if such group would not be 
considered to have substantial business activi-
ties under the regulations prescribed under sec-
tion 7874 of the Internal Revenue Code of 
1986, as in effect on May 8, 2014. 
‘‘(3) SIGNIFICANT DOMESTIC BUSINESS ACTIVI-
TIES.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(B)(ii), an expanded affiliated group 
has significant domestic business activities if at 
least 25 percent of— 
‘‘(i) the employees of the group are 
based in the United States; 
‘‘(ii) the employee compensation in-
curred by the group is incurred with re-
spect to employees based in the United 
States; 
VerDate Mar 15 2010 
03:05 Aug 05, 2014
Jkt 039200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H5278.IH
H5278
jbell on DSK4SPTVN1PROD with BILLS
‘‘(iii) the assets of the group are lo-
cated in the United States; or 
‘‘(iv) the income of the group is de-
rived in the United States. 
‘‘(B) 
DETERMINATION.—Determinations 
pursuant to subparagraph (A) shall be made in 
the same manner as such determinations are 
made for purposes of determining substantial 
business activities under regulations referred to 
in paragraph (2) 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 of the Treasury (or the 
Secretary’s delegate) may issue regulations de-
creasing the threshold percent in any of the 
tests under such regulations for determining if 
business activities constitute significant domes-
tic business activities for purposes of this para-
graph. 
‘‘(c) WAIVER.— 
‘‘(1) IN GENERAL.—The head of an executive 
agency may waive subsection (a) with respect to any 
Federal Government contract under the authority of 
VerDate Mar 15 2010 
03:05 Aug 05, 2014
Jkt 039200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H5278.IH
H5278
jbell on DSK4SPTVN1PROD with BILLS
such head if the head determines that the waiver is 
required in the interest of national security. 
‘‘(2) REPORT TO CONGRESS.—The head of an 
executive agency issuing a waiver under paragraph 
(1) shall, not later than 14 days after issuing such 
waiver, submit a written notification of the waiver to 
the relevant authorizing committees of Congress and 
the Committees on Appropriations of the Senate and 
the House of Representatives. 
‘‘(d) APPLICABILITY.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), this section shall not apply to any con-
tract entered into before the date of the enactment 
of this section. 
‘‘(2) TASK AND DELIVERY ORDERS.—This sec-
tion shall apply to any task or delivery order issued 
after the date of the enactment of this section pur-
suant to a contract entered into before, on, or after 
such date of enactment. 
‘‘(e) DEFINITIONS AND SPECIAL RULES.— 
‘‘(1) DEFINITIONS.—In this section, the terms 
‘expanded affiliated group’, ‘foreign incorporated en-
tity’, ‘person’, ‘domestic’, and ‘foreign’ have the 
meaning given those terms in section 835(c) of the 
Homeland Security Act of 2002 (6 U.S.C. 395(c)). 
VerDate Mar 15 2010 
03:05 Aug 05, 2014
Jkt 039200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H5278.IH
H5278
jbell on DSK4SPTVN1PROD with BILLS
‘‘(2) SPECIAL RULES.—In applying subsection 
(b) of this section for purposes of subsection (a) of 
this section, the rules described under 835(c)(1) of 
the Homeland Security Act of 2002 (6 U.S.C. 
395(c)(1)) shall apply.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions at the beginning of chapter 47 of title 41, 
United States Code, is amended by inserting after 
the item relating to section 4712 the following new 
item: 
‘‘4713. Prohibition on awarding contracts to inverted domestic corporations.’’. 
(b) DEFENSE CONTRACTS.— 
(1) IN
GENERAL.—Chapter 137 of title 10, 
United States Code, is amended by adding at the 
end the following new section: 
‘‘§ 2338. Prohibition on awarding contracts to in-
verted domestic corporations 
‘‘(a) PROHIBITION.— 
‘‘(1) IN GENERAL.—The head of an agency may 
not award a contract to— 
‘‘(A) any foreign incorporated entity that 
such head has determined is an inverted domes-
tic corporation or any subsidiary of such entity; 
or 
‘‘(B) any joint venture if more than 10 
percent of the joint venture (by vote or value) 
VerDate Mar 15 2010 
03:05 Aug 05, 2014
Jkt 039200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H5278.IH
H5278
jbell on DSK4SPTVN1PROD with BILLS