Section 1 Short title
This Act may be cited as the “American Assistance for American Companies Act”.
American Assistance for American Companies Act
A BILL
To prohibit certain assistance for inverted domestic corporations.
Sec. 2 Prohibition on application of certain assistance to inverted domestic corporations
Prohibition on use of certain tax incentives—
Net operating loss carrybacks—
In general— Section 172(b)(1)(D) of the Internal Revenue Code of 1986 is amended by adding at the end the following new clause:
“(vi) Special rule for inverted domestic corporations—Clause (i) shall not apply to any foreign corporation for any taxable year in which such corporation is an inverted domestic corporation (as defined in section 7701(p)(2)), or to any member of the expanded affiliated group (as defined in section 7874(c)(1)) of such a foreign corporation, unless such foreign corporation has made an election under section 7701(p)(1).”
Effective date— The amendment made by this section shall take effect as if included in section 2303(b) of the CARES Act.
Increased limitation on business interest—
In general— Section 163(j)(10) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
“(C) Special rule for inverted domestic corporations—Subparagraphs (A) and (B) shall not apply to any foreign corporation for any taxable year in which such corporation is an inverted domestic corporation (as defined in section 7701(p)(2)), or to any member of the expanded affiliated group (as defined in section 7874(c)(1)) of such a foreign corporation, unless such foreign corporation has made an election under section 7701(p)(1).”
Effective date— The amendment made by this section shall take effect as if included in section 2306 of the CARES Act.
Federal reserve emergency lending facilities—
In general— No inverted domestic corporation, as defined in section 7701(p)(2) of the Internal Revenue Code of 1986, or any member of the expanded affiliated group (as defined in section 7874(c)(1) of such Code) of such inverted domestic corporation, may participate in any program or facility established by the Board of Governors of the Federal Reserve System under the authority of section 13(3) of the Federal Reserve Act (12 U.S.C. 343) and with funding authorized under section 4003 of the CARES Act (Public Law 116–136), including the Primary Market Corporate Credit Facility and the Secondary Market Corporate Credit Facility.
Exception— Subparagraph (A) shall not apply if the inverted domestic corporation makes an election under section 7701(p)(1) of the Internal Revenue Code of 1986.
Applicability— This paragraph shall apply to participation in any program or facility described in subparagraph (A) established before, on, or after the date of enactment of this Act.
Election To treat inverted domestic corporations as domestic corporations—
Inverted domestic corporations— Section 7701 of the Internal Revenue Code of 1986 is amended by redesignating subsection (p) as subsection (q) and by inserting after subsection (o) the following new subsection:
“(p) Inverted domestic corporations
“(1) Election to be treated as a domestic corporation
“(A) In general—Notwithstanding paragraphs (4) and (5) of subsection (a), an inverted domestic corporation may elect to be treated as a domestic corporation for taxable years beginning with the last taxable year which begins before January 1, 2018.
“(B) Election—An election under this subsection—
“(i) shall be made not later than 30 days after the date of the enactment of this subsection, and
“(ii) once made, shall be irrevocable.
“(C) Time for filing returns and payment of taxes—Notwithstanding sections 6072 and 6151, any return for any taxable year ending before the date described in subparagraph (B)(i), and any payment of taxes or penalties, shall not be considered due before January 1, 2021.
“(2) Inverted domestic corporation—For purposes of this subsection, the term inverted domestic corporation means any foreign corporation which, pursuant to a plan (or a series of related transactions)—
“(A) completes after March 4, 2003, the direct or indirect acquisition of—
“(i) substantially all of the properties held directly or indirectly by a domestic corporation, or
“(ii) substantially all of the assets of, or substantially all of the properties constituting a trade or business of, a domestic partnership, and
“(B) after the acquisition, either—
“(i) more than 50 percent of the stock (by vote or value) of the corporation is held—
“(I) in the case of an acquisition with respect to a domestic corporation, by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation, or
“(II) in the case of an acquisition with respect to a domestic partnership, by former partners of the domestic partnership by reason of holding a capital or profits interest in the domestic partnership, or
“(ii) the management and control of the expanded affiliated group which includes the corporation occurs, directly or indirectly, primarily within the United States, and such expanded affiliated group has significant domestic business activities.
“(3) Exception for corporations with substantial business activities in foreign country of organization—Such term shall not include a foreign corporation described in paragraph (2) if after the acquisition the expanded affiliated group which includes the corporation has substantial business activities in the foreign country in which or under the law of which the corporation is created or organized when compared to the total business activities of such expanded affiliated group. For purposes of the preceding sentence, the term substantial business activities shall have the meaning given such term under regulations in effect on January 18, 2017, except that the Secretary may issue regulations increasing the threshold percent in any of the tests under such regulations for determining if business activities constitute substantial business activities for purposes of this paragraph.
“(4) Management and control—For purposes of paragraph (2)(B)(ii)—
“(A) In general—The Secretary shall prescribe regulations for purposes of determining cases in which the management and control of an expanded affiliated group is to be treated as occurring, directly or indirectly, primarily within the United States. The regulations prescribed under the preceding sentence shall apply to periods after March 4, 2003.
“(B) Executive officers and senior management—Such regulations shall provide that the management and control of an expanded affiliated group shall be treated as occurring, directly or indirectly, primarily within the United States if substantially all of the executive officers and senior management of the expanded affiliated group who exercise day-to-day responsibility for making decisions involving strategic, financial, and operational policies of the expanded affiliated group are based or primarily located within the United States. Individuals who in fact exercise such day-to-day responsibilities shall be treated as executive officers and senior management regardless of their title.
“(5) Significant domestic business activities—For purposes of paragraph (2)(B)(ii), an expanded affiliated group has significant domestic business activities if at least 25 percent of—
“(A) the employees of the group are based in the United States,
“(B) the employee compensation incurred by the group is incurred with respect to employees based in the United States,
“(C) the assets of the group are located in the United States, or
“(D) the income of the group is derived in the United States,
“(6) Definitions and other rules
“(A) Expanded affiliated group—The term expanded affiliated group has the meaning give such term under section 7874(c)(1).
“(B) Other rules—Rules similar to the rules of paragraphs (2), (3), (5), and (6) of section 7874(c) shall apply for purposes of this subsection.”