Bill > HR4679

This bill, titled the "Stop Corporate Inversions Act of 2014," modifies the rules for "inverted corporations," which are foreign companies that effectively become U.S. companies for tax purposes through a series of transactions. Specifically, it expands the definition of an inverted corporation to include foreign companies that acquire substantially all the properties or assets of a U.S. company or partnership after May 8, 2014, if either more than 50 percent of the acquiring company's stock is held by former U.S. shareholders or partners, or if the management and control of the expanded affiliated group (a group of related companies) primarily occurs in the U.S. and the group has significant domestic business activities. An exception exists if the foreign company has substantial business activities in its country of organization compared to its total business activities. The bill also clarifies how "management and control" and "significant domestic business activities" are determined, with the latter requiring at least 25 percent of employees, compensation, assets, or income to be U.S.-based. These changes are intended to prevent U.S. companies from avoiding U.S. taxes by relocating their legal domicile to a foreign country while maintaining their primary operations and management in the United States.