[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 2758 Introduced in Senate (IS)]
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117th CONGRESS
1st Session
S. 2758
To amend the Internal Revenue Code of 1986 to impose an excise tax on
stock buybacks of publicly traded corporations.
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IN THE SENATE OF THE UNITED STATES
September 20, 2021
Mr. Brown (for himself and Mr. Wyden) introduced the following bill;
which was read twice and referred to the Committee on Finance
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A BILL
To amend the Internal Revenue Code of 1986 to impose an excise tax on
stock buybacks of publicly traded 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 ``Stock Buyback Accountability Act of
2021''.
SEC. 2. EXCISE TAX ON REPURCHASE OF CORPORATE STOCK.
(a) In General.--Subtitle D of the Internal Revenue Code of 1986 is
amended by inserting after chapter 36 the following new chapter:
``CHAPTER 37--REPURCHASE OF CORPORATE STOCK
``Sec. 4501. Repurchase of corporate stock.
``SEC. 4501. REPURCHASE OF CORPORATE STOCK.
``(a) General Rule.--There is hereby imposed on each covered
corporation a tax equal to 2 percent of the value of any stock of the
corporation repurchased by such corporation during the taxable year.
``(b) Covered Corporation.--For purposes of this section, the term
`covered corporation' means--
``(1) any domestic corporation the stock of which is traded
on an established securities market (within the meaning of
section 7704(b)(1)), and
``(2) any surrogate foreign corporation (as determined
under section 7874(a)(2)(B)) the stock of which is traded on an
established securities market (within the meaning of section
7704(b)(1)).
``(c) Repurchase.--For purposes of this section--
``(1) In general.--
``(A) In general.--The term `repurchase' means a
redemption within the meaning of section 317(b)
(applied as provided in subparagraph (B)) or any
similar transaction (as determined by the Secretary)
with regard to the stock of a covered corporation.
``(B) Application to economically equivalent
transactions.--For purposes of applying section 317(b)
to this section--
``(i) the acquisition by a corporation of
the right to acquire its stock, and
``(ii) to the extent provided by the
Secretary, any transaction economically similar
to the acquisition by a corporation of its
stock,
shall be treated in the same manner as the acquisition
by a corporation of its stock under such section
317(b).
``(2) Treatment of purchases by specified affiliates.--
``(A) In general.--The acquisition of stock of a
covered corporation by a specified affiliate of such
covered corporation from a person who is not the
covered corporation or a specified affiliate of such
covered corporation shall be treated as a repurchase of
the stock of the covered corporation by such covered
corporation.
``(B) Special rules for foreign-parented domestic
corporations.--
``(i) In general.--In the case of an
acquisition of stock of an applicable foreign
corporation by a specified affiliate of such
corporation from a person who is not the
applicable foreign corporation or a specified
affiliate of such applicable foreign
corporation, for purposes of this section--
``(I) such specified affiliate
shall be treated in the same manner as
a covered corporation with respect to
such acquisition, and
``(II) such acquisition shall be
treated as a repurchase of the stock of
such specified affiliate by such
specified affiliate.
``(ii) Applicable foreign corporation.--For
purposes of this subparagraph, the term
`applicable foreign corporation' means any
foreign corporation which would be treated as a
covered corporation under this section if it
were a domestic corporation.
``(C) Specified affiliate.--For purposes of this
section, the term `specified affiliate' means, with
respect to any corporation--
``(i) any domestic corporation more than 50
percent of the stock of which is owned (by vote
or by value), directly or indirectly, by such
corporation, and
``(ii) any domestic partnership more than
50 percent of the capital interests or profits
interests of which is held, directly or
indirectly, by such corporation.
``(3) Adjustment.--The amount of any stock repurchased by a
covered corporation taken into account under subsection (a)
shall be reduced by--
``(A) the value of any stock newly issued by the
covered corporation during the taxable year, and
``(B) the value of any stock issued to employees of
such covered corporation during the taxable year,
including in response to the exercise of an option to
purchase stock of the covered corporation.
``(d) Exceptions.--Subsection (a) shall not apply--
``(1) to the extent that the repurchase is part of a
reorganization (within the meaning of section 368(a)) and no
gain or loss is recognized under chapter 1 on such repurchase
by reason of such reorganization,
``(2) in any case in which the stock repurchased is, or an
amount of stock equal to the value of the stock repurchased is,
contributed to an employer-sponsored retirement plan, employee
stock ownership plan, or similar plan,
``(3) in any case in which the total value of the stock
repurchased during the calendar year does not exceed
$1,000,000,
``(4) under regulations prescribed by the Secretary, in
cases in which the repurchase is by a dealer in securities in
the ordinary course of business, or
``(5) to the extent that the repurchase is treated as a
dividend for purposes of this title.
``(e) Denial of Deduction.--No deduction shall be allowed under any
provision of this title with regard to the tax imposed by this section.
``(f) Regulations and Guidance.--The Secretary shall prescribe such
regulations and other guidance as are necessary or appropriate to
administer and to prevent the avoidance of the purposes of this
section, including regulations and other guidance--
``(1) to prevent the abuse of the exceptions provided by
subsection (d),
``(2) with respect to the identification of transactions to
which subsection (c)(1)(B)(ii) applies,
``(3) to address special classes of stock and preferred
stock, and
``(4) for the application of the rules under subsection
(c)(2).''.
(b) Clerical Amendment.--The table of chapters for subtitle D of
the Internal Revenue Code of 1986 is amended by inserting after the
item relating to chapter 36 the following new item:
``Chapter 37--Repurchase of Corporate Stock''.
(c) Effective Date.--The amendments made by this section shall
apply to repurchases (within the meaning of section 4501(c) of the
Internal Revenue Code of 1986, as added by this section) of stock after
December 31, 2021.
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