SEC. 2. CERTAIN DOMESTICALLY CONTROLLED FOREIGN 
PERSONS PERFORMING SERVICES UNDER 
CONTRACT WITH UNITED STATES GOVERN-
MENT TREATED AS AMERICAN EMPLOYERS. 
(a) FICA TAXES.—Section 3121 of the Internal Rev-
enue Code of 1986 (relating to definitions) is amended by 
adding at the end the following new subsection: 
‘‘(z) TREATMENT OF CERTAIN FOREIGN PERSONS AS 
AMERICAN EMPLOYERS.— 
‘‘(1) IN GENERAL.—If any employee of a for-
eign person is performing services in connection with 
a contract between the United States Government 
(or any instrumentality thereof) and any member of 
any domestically controlled group of entities which 
includes such foreign person, such foreign person 
shall be treated for purposes of this chapter as an 
American employer with respect to such services per-
formed by such employee. 
‘‘(2) DOMESTICALLY CONTROLLED GROUP OF 
ENTITIES.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘domesti-
cally controlled group of entities’ means a con-
trolled group of entities the common parent of 
which is a domestic corporation. 
‘‘(B) CONTROLLED GROUP OF ENTITIES.— 
The term ‘controlled group of entities’ means a 
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controlled group of corporations as defined in 
section 1563(a)(1), except that— 
‘‘(i) ‘more than 50 percent’ shall be 
substituted for ‘at least 80 percent’ each 
place it appears therein, and 
‘‘(ii) the determination shall be made 
without regard to subsections (a)(4) and 
(b)(2) of section 1563. 
A partnership or any other entity (other than a 
corporation) shall be treated as a member of a 
controlled group of entities if such entity is con-
trolled 
(within 
the 
meaning 
of 
section 
954(d)(3)) by members of such group (includ-
ing any entity treated as a member of such 
group by reason of this sentence). 
‘‘(3) LIABILITY OF COMMON PARENT.—In the 
case of a foreign person who is a member of any do-
mestically controlled group of entities, the common 
parent of such group shall be jointly and severally 
liable for any tax under this chapter for which such 
foreign person is liable by reason of this subsection. 
‘‘(4) CROSS REFERENCE.—For relief from taxes 
in cases covered by certain international agreements, 
see sections 3101(c) and 3111(c).’’. 
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(b) SOCIAL SECURITY BENEFITS.—Subsection (e) of 
section 210 of the Social Security Act (42 U.S.C. 410(e)) 
is amended— 
(1) by striking ‘‘(e) The term’’ and inserting 
‘‘(e)(1) The term’’, 
(2) by redesignating paragraphs (1) through 
(6) as subparagraphs (A) through (F), respectively, 
and 
(3) by adding at the end the following new 
paragraph: 
‘‘(2)(A) If any employee of a foreign person is 
performing services in connection with a contract be-
tween the United States Government (or any instru-
mentality thereof) and any member of any domesti-
cally controlled group of entities which includes such 
foreign person, such foreign person shall be treated 
for purposes of this chapter as an American em-
ployer with respect to such services performed by 
such employee. 
‘‘(B) For purposes of this paragraph— 
‘‘(i) The term ‘domestically controlled 
group of entities’ means a controlled group of 
entities the common parent of which is a do-
mestic corporation. 
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‘‘(ii) The term ‘controlled group of entities’ 
means a controlled group of corporations as de-
fined in section 1563(a)(1) of the Internal Rev-
enue Code of 1986, except that— 
‘‘(I) ‘more than 50 percent’ shall be 
substituted for ‘at least 80 percent’ each 
place it appears therein, and 
‘‘(II) the determination shall be made 
without regard to subsections (a)(4) and 
(b)(2) of section 1563 of such Code. 
A partnership or any other entity (other than a 
corporation) shall be treated as a member of a 
controlled group of entities if such entity is con-
trolled (within the meaning of section 954(d)(3) 
of such Code) by members of such group (in-
cluding any entity treated as a member of such 
group by reason of this sentence).’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to services performed after the 
date of the enactment of this Act. 
Æ 
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