H.R. 3922 (107th): Save America’s Jobs Act of 2002

107th Congress, 2001–2002. Text as of Mar 11, 2002 (Introduced).

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HR 3922 IH

107th CONGRESS

2d Session

H. R. 3922

To amend the Internal Revenue Code of 1986 to prevent corporations from avoiding the United States income tax by reincorporating in a foreign country.

IN THE HOUSE OF REPRESENTATIVES

March 11, 2002

Mr. MALONEY of Connecticut introduced the following bill; which was referred to the Committee on Ways and Means


A BILL

To amend the Internal Revenue Code of 1986 to prevent corporations from avoiding the United States income tax by reincorporating in a foreign country.

    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 ‘Save America’s Jobs Act of 2002’.

SEC. 2. PREVENTION OF CORPORATE EXPATRIATION TO AVOID UNITED STATES INCOME TAX.

    (a) IN GENERAL- Paragraph (4) of section 7701(a) of the Internal Revenue Code of 1986 (defining domestic) is amended to read as follows:

      ‘(4) DOMESTIC-

        ‘(A) IN GENERAL- Except as provided in subparagraph (B), the term ‘domestic’ when applied to a corporation or partnership means created or organized in the United States or under the law of the United States or of any State unless, in the case of a partnership, the Secretary provides otherwise by regulations.

        ‘(B) CERTAIN CORPORATIONS TREATED AS DOMESTIC-

          ‘(i) IN GENERAL- The acquiring corporation in a corporate expatriation transaction shall be treated as a domestic corporation.

          ‘(ii) CORPORATE EXPATRIATION TRANSACTION- For purposes of this subparagraph, the term ‘corporate expatriation transaction’ means any transaction if--

            ‘(I) a nominally foreign corporation (referred to in this subparagraph as the ‘acquiring corporation’) acquires, as a result of such transaction, directly or indirectly substantially all of the properties held directly or indirectly by a domestic corporation, and

            ‘(II) immediately after the transaction, more than 80 percent of the stock (by vote or value) of the acquiring corporation is held by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation.

          ‘(iii) LOWER STOCK OWNERSHIP REQUIREMENT IN CERTAIN CASES- Subclause (II) of clause (ii) shall be applied by substituting ‘50 percent’ for ‘80 percent’ with respect to any nominally foreign corporation if--

            ‘(I) such corporation does not have substantial business activities (when compared to the total business activities of the expanded affiliated group) in the foreign country in which or under the law of which the corporation is created or organized, and

            ‘(II) the stock of the corporation is publicly traded and the principal market for the public trading of such stock is in the United States.

          ‘(iv) PARTNERSHIP TRANSACTIONS- The term ‘corporate expatriation transaction’ includes any transaction if--

            ‘(I) a nominally foreign corporation (referred to in this subparagraph as the ‘acquiring corporation’) acquires, as a result of such transaction, directly or indirectly properties constituting a trade or business of a domestic partnership,

            ‘(II) immediately after the transaction, more than 80 percent of the stock (by vote or value) of the acquiring corporation is held by former partners of the domestic partnership (determined without regard to stock of the acquiring corporation which is sold in a public offering related to the transaction), and

            ‘(III) the acquiring corporation meets the requirements of subclauses (I) and (II) of clause (iii).

          ‘(v) SPECIAL RULES- For purposes of this subparagraph--

            ‘(I) a series of related transactions shall be treated as 1 transaction, and

            ‘(II) stock held by members of the expanded affiliated group which includes the acquiring corporation shall not be taken into account in determining ownership.

          ‘(vi) OTHER DEFINITIONS- For purposes of this subparagraph--

            ‘(I) NOMINALLY FOREIGN CORPORATION- The term ‘nominally foreign corporation’ means any corporation which would (but for this subparagraph) be treated as a foreign corporation.

            ‘(II) EXPANDED AFFILIATED GROUP- The term ‘expanded affiliated group’ means an affiliated group (as defined in section 1504(a) without regard to section 1504(b)).’

    (b) MODIFICATION OF RATES OF CORPORATE TAX-

      (1) IN GENERAL- The Secretary of the Treasury shall prescribe rates of tax under section 11 of the Internal Revenue Code of 1986 (relating to tax imposed on corporations) which result in a net decrease in revenues for a taxable year equal to the net increase in revenue (if any) for that year as a result of the amendment made by subsection (a).

      (2) ESTIMATES AND SUBSEQUENT ADJUSTMENTS- The rates of tax prescribed under paragraph (1) shall be determined on the basis of estimates made by the Secretary of the Treasury. Adjustments shall be made in such rates for succeeding taxable years to the extent prior estimates resulted in revenues which were in excess of or less than the revenues required under paragraph (1).

    (c) EFFECTIVE DATES-

      (1) IN GENERAL- The amendment made by this section shall apply to corporate expatriation transactions completed after September 11, 2001.

      (2) SPECIAL RULE- The amendment made by this section shall also apply to corporate expatriation transactions completed on or before September 11, 2001, but only with respect to taxable years of the acquiring corporation beginning after December 31, 2003.