Title: Stock Buyback Accountability Act of 2021
Policy area: Taxation

Summary:
Stock Buyback Accountability Act of 2021
This bill imposes a 2% excise tax on the value of any stock of certain publicly-traded domestic and foreign corporations repurchased (i.e., redeemed) by such corporations. The bill allows exemptions from the tax for repurchases that are part of a reorganization, for repurchased stock that is contributed to an employer-sponsored retirement plan or employee stock ownership plan, for repurchased stock whose value does not exceed $1 million, and for repurchases treated as dividends.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 2758 Introduced in Senate (IS)]

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117th CONGRESS
  1st Session
                                S. 2758

 To amend the Internal Revenue Code of 1986 to impose an excise tax on 
            stock buybacks of publicly traded corporations.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 20, 2021

 Mr. Brown (for himself and Mr. Wyden) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to impose an excise tax on 
            stock buybacks of publicly traded corporations.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Stock Buyback Accountability Act of 
2021''.

SEC. 2. EXCISE TAX ON REPURCHASE OF CORPORATE STOCK.

    (a) In General.--Subtitle D of the Internal Revenue Code of 1986 is 
amended by inserting after chapter 36 the following new chapter:

              ``CHAPTER 37--REPURCHASE OF CORPORATE STOCK

``Sec. 4501. Repurchase of corporate stock.

``SEC. 4501. REPURCHASE OF CORPORATE STOCK.

    ``(a) General Rule.--There is hereby imposed on each covered 
corporation a tax equal to 2 percent of the value of any stock of the 
corporation repurchased by such corporation during the taxable year.
    ``(b) Covered Corporation.--For purposes of this section, the term 
`covered corporation' means--
            ``(1) any domestic corporation the stock of which is traded 
        on an established securities market (within the meaning of 
        section 7704(b)(1)), and
            ``(2) any surrogate foreign corporation (as determined 
        under section 7874(a)(2)(B)) the stock of which is traded on an 
        established securities market (within the meaning of section 
        7704(b)(1)).
    ``(c) Repurchase.--For purposes of this section--
            ``(1) In general.--
                    ``(A) In general.--The term `repurchase' means a 
                redemption within the meaning of section 317(b) 
                (applied as provided in subparagraph (B)) or any 
                similar transaction (as determined by the Secretary) 
                with regard to the stock of a covered corporation.
                    ``(B) Application to economically equivalent 
                transactions.--For purposes of applying section 317(b) 
                to this section--
                            ``(i) the acquisition by a corporation of 
                        the right to acquire its stock, and
                            ``(ii) to the extent provided by the 
                        Secretary, any transaction economically similar 
                        to the acquisition by a corporation of its 
                        stock,
                shall be treated in the same manner as the acquisition 
                by a corporation of its stock under such section 
                317(b).
            ``(2) Treatment of purchases by specified affiliates.--
                    ``(A) In general.--The acquisition of stock of a 
                covered corporation by a specified affiliate of such 
                covered corporation from a person who is not the 
                covered corporation or a specified affiliate of such 
                covered corporation shall be treated as a repurchase of 
                the stock of the covered corporation by such covered 
                corporation.
                    ``(B) Special rules for foreign-parented domestic 
                corporations.--
                            ``(i) In general.--In the case of an 
                        acquisition of stock of an applicable foreign 
                        corporation by a specified affiliate of such 
                        corporation from a person who is not the 
                        applicable foreign corporation or a specified 
                        affiliate of such applicable foreign 
                        corporation, for purposes of this section--
                                    ``(I) such specified affiliate 
                                shall be treated in the same manner as 
                                a covered corporation with respect to 
                                such acquisition, and
                                    ``(II) such acquisition shall be 
                                treated as a repurchase of the stock of 
                                such specified affiliate by such 
                                specified affiliate.
                            ``(ii) Applicable foreign corporation.--For 
                        purposes of this subparagraph, the term 
                        `applicable foreign corporation' means any 
                        foreign corporation which would be treated as a 
                        covered corporation under this section if it 
                        were a domestic corporation.
                    ``(C) Specified affiliate.--For purposes of this 
                section, the term `specified affiliate' means, with 
                respect to any corporation--
                            ``(i) any domestic corporation more than 50 
                        percent of the stock of which is owned (by vote 
                        or by value), directly or indirectly, by such 
                        corporation, and
                            ``(ii) any domestic partnership more than 
                        50 percent of the capital interests or profits 
                        interests of which is held, directly or 
                        indirectly, by such corporation.
            ``(3) Adjustment.--The amount of any stock repurchased by a 
        covered corporation taken into account under subsection (a) 
        shall be reduced by--
                    ``(A) the value of any stock newly issued by the 
                covered corporation during the taxable year, and
                    ``(B) the value of any stock issued to employees of 
                such covered corporation during the taxable year, 
                including in response to the exercise of an option to 
                purchase stock of the covered corporation.
    ``(d) Exceptions.--Subsection (a) shall not apply--
            ``(1) to the extent that the repurchase is part of a 
        reorganization (within the meaning of section 368(a)) and no 
        gain or loss is recognized under chapter 1 on such repurchase 
        by reason of such reorganization,
            ``(2) in any case in which the stock repurchased is, or an 
        amount of stock equal to the value of the stock repurchased is, 
        contributed to an employer-sponsored retirement plan, employee 
        stock ownership plan, or similar plan,
            ``(3) in any case in which the total value of the stock 
        repurchased during the calendar year does not exceed 
        $1,000,000,
            ``(4) under regulations prescribed by the Secretary, in 
        cases in which the repurchase is by a dealer in securities in 
        the ordinary course of business, or
            ``(5) to the extent that the repurchase is treated as a 
        dividend for purposes of this title.
    ``(e) Denial of Deduction.--No deduction shall be allowed under any 
provision of this title with regard to the tax imposed by this section.
    ``(f) Regulations and Guidance.--The Secretary shall prescribe such 
regulations and other guidance as are necessary or appropriate to 
administer and to prevent the avoidance of the purposes of this 
section, including regulations and other guidance--
            ``(1) to prevent the abuse of the exceptions provided by 
        subsection (d),
            ``(2) with respect to the identification of transactions to 
        which subsection (c)(1)(B)(ii) applies,
            ``(3) to address special classes of stock and preferred 
        stock, and
            ``(4) for the application of the rules under subsection 
        (c)(2).''.
    (b) Clerical Amendment.--The table of chapters for subtitle D of 
the Internal Revenue Code of 1986 is amended by inserting after the 
item relating to chapter 36 the following new item:

             ``Chapter 37--Repurchase of Corporate Stock''.

    (c) Effective Date.--The amendments made by this section shall 
apply to repurchases (within the meaning of section 4501(c) of the 
Internal Revenue Code of 1986, as added by this section) of stock after 
December 31, 2021.
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