H.R. 7493

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7493 Introduced in House (IH)]

<DOC>

119th CONGRESS
2d Session
H. R. 7493

To amend the Internal Revenue Code of 1986 to modify the rules relating 
to inverted corporations.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

February 11, 2026

Mr. Doggett 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 modify the rules relating 
to inverted 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 ``Stop Corporate Inversions Act of 
2026''.

SEC. 2. MODIFICATIONS TO RULES RELATING TO INVERTED CORPORATIONS.

(a) In General.--Subsection (b) of section 7874 of the Internal 
Revenue Code of 1986 is amended to read as follows:
``(b) Inverted Corporations Treated as Domestic Corporations.--
``(1) In general.--Notwithstanding section 7701(a)(4), a 
foreign corporation shall be treated for purposes of this title 
as a domestic corporation if--
``(A) such corporation would be a surrogate foreign 
corporation if subsection (a)(2) were applied by 
substituting `80 percent' for `60 percent', or
``(B) such corporation is an inverted domestic 
corporation.
``(2) Inverted domestic corporation.--For purposes of this 
subsection, a foreign corporation shall be treated as an 
inverted domestic corporation if, pursuant to a plan (or a 
series of related transactions)--
``(A) the entity completes after May 8, 2014, 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 entity 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 
entity 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.--A foreign 
corporation described in paragraph (2) shall not be treated as 
an inverted domestic corporation if after the acquisition the 
expanded affiliated group which includes the entity has 
substantial business activities in the foreign country in which 
or under the law of which the entity is created or organized 
when compared to the total business activities of such expanded 
affiliated group. For purposes of subsection (a)(2)(B)(iii) and 
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 May 8, 2014.
``(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,
determined in the same manner as such determinations are made 
for purposes of determining substantial business activities 
under regulations referred to in paragraph (3) as in effect on 
January 18, 2017, but applied by treating all references in 
such regulations to `foreign country' and `relevant foreign 
country' as references to `the United States'. The Secretary 
may issue regulations decreasing the threshold percent in any 
of the tests under such regulations for determining if business 
activities constitute significant domestic business activities 
for purposes of this paragraph.''.
(b) Conforming Amendments.--
(1) Clause (i) of section 7874(a)(2)(B) of such Code is 
amended by striking ``after March 4, 2003,'' and inserting 
``after March 4, 2003, and before May 8, 2014,''.
(2) Subsection (c) of section 7874 of such Code is 
amended--
(A) in paragraph (2)--
(i) by striking ``subsection 
(a)(2)(B)(ii)'' and inserting ``subsections 
(a)(2)(B)(ii) and (b)(2)(B)(i)''; and
(ii) by inserting ``or (b)(2)(A)'' after 
``(a)(2)(B)(i)'' in subparagraph (B);
(B) in paragraph (3), by inserting ``or 
(b)(2)(B)(i), as the case may be,'' after 
``(a)(2)(B)(ii)'';
(C) in paragraph (5), by striking ``subsection 
(a)(2)(B)(ii)'' and inserting ``subsections 
(a)(2)(B)(ii) and (b)(2)(B)(i)''; and
(D) in paragraph (6), by inserting ``or inverted 
domestic corporation, as the case may be,'' after 
``surrogate foreign corporation''.
(c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after May 8, 2014.
<all>