This bill tightens tax rules to prevent U.S. corporations from relocating their tax home to a foreign country—a practice known as "corporate inversion"—while keeping most of their business and management in the United States. The legislation lowers the ownership threshold from 60 percent to 80 percent, meaning a foreign corporation would now be treated as a U.S. domestic corporation for tax purposes if at least 20 percent of its stock is owned by former U.S. shareholders, or if its management and control occur primarily in the United States with significant U.S. business operations (defined as at least 25 percent of employees, compensation, assets, or income). The law applies to inversions completed after May 8, 2014, and includes an exception for companies with substantial business activities in their foreign country of incorporation. The Treasury Department is directed to issue regulations defining management location and what constitutes "substantial business activities." The bill primarily affects multinational corporations and their shareholders but is intended to prevent tax base erosion that ultimately affects U.S. government revenues.
Take Action
Your position
Add a comment
to comment on this bill.
Annotate the text
Highlight any passage on the Summary or Full Text tab to attach a note. Annotations appear on the Annotations tab.