July 17, 2019 - Issue: Vol. 165, No. 120 — Daily Edition116th Congress (2019 - 2020) - 1st Session
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STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS; Congressional Record Vol. 165, No. 120
(Senate - July 17, 2019)
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[Pages S4909-S4912] From the Congressional Record Online through the Government Publishing Office [www.gpo.gov] STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Mr. DURBIN (for himself, Mr. Reed, Mr. Whitehouse, Ms. Duckworth, and Mr. Sanders): S. 2139. A bill to prohibit the award of Federal Government contracts to inverted domestic corporations, and for other purposes; to the Committee on Homeland Security and Governmental Affairs. Mr. DURBIN. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record. There being no objection, the text of the bill was ordered to be printed in the Record, as follows: S. 2139 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 ``American Business for American Companies Act of 2019''. SEC. 2. PROHIBITION ON AWARDING CONTRACTS TO INVERTED DOMESTIC CORPORATIONS. (a) Civilian Contracts.-- (1) In general.--Chapter 47 of title 41, United States Code, is amended by adding at the end the following new section: ``Sec. 4714. Prohibition on awarding contracts to inverted domestic corporations ``(a) Prohibition.-- ``(1) In general.--The head of an executive agency may not award a contract for the procurement of property or services to-- ``(A) any foreign incorporated entity that such head has determined is an inverted domestic corporation or any subsidiary of such entity; or ``(B) any joint venture if more than 10 percent of the joint venture (by vote or value) is held by a foreign incorporated entity that such head has determined is an inverted domestic corporation or any subsidiary of such entity. ``(2) Subcontracts.-- ``(A) In general.--The head of an executive agency shall include in each contract for the procurement of property or services awarded by the executive agency with a value in excess of $10,000,000, other than a contract for exclusively commercial items, a clause that prohibits the prime contractor on such contract from-- ``(i) awarding a first-tier subcontract with a value greater than 10 percent of the total value of the prime contract to an entity or joint venture described in paragraph (1); or ``(ii) structuring subcontract tiers in a manner designed to avoid the limitation in paragraph (1) by enabling an entity or joint venture described in paragraph (1) to perform more than 10 percent of the total value of the prime contract as a lower-tier subcontractor. ``(B) Penalties.--The contract clause included in contracts pursuant to subparagraph (A) shall provide that, in the event that the prime contractor violates the contract clause-- ``(i) the prime contract may be terminated for default; and [[Page S4910]] ``(ii) the matter may be referred to the suspension or debarment official for the appropriate agency and may be a basis for suspension or debarment of the prime contractor. ``(b) Inverted Domestic Corporation.-- ``(1) In general.--For purposes of this section, a foreign incorporated entity shall be treated as an inverted domestic corporation if, pursuant to a plan (or a series of related transactions)-- ``(A) the entity completes on or 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, as determined pursuant to regulations prescribed by the Secretary of the Treasury, and such expanded affiliated group has significant domestic business activities. ``(2) Exception for corporations with substantial business activities in foreign country of organization.-- ``(A) In general.--A foreign incorporated entity described in paragraph (1) 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. ``(B) Substantial business activities.--The Secretary of the Treasury (or the Secretary's delegate) shall establish regulations for determining whether an affiliated group has substantial business activities for purposes of subparagraph (A), except that such regulations may not treat any group as having substantial business activities if such group would not be considered to have substantial business activities under the regulations prescribed under section 7874 of the Internal Revenue Code of 1986, as in effect on January 18, 2017. ``(3) Significant domestic business activities.-- ``(A) In general.--For purposes of paragraph (1)(B)(ii), an expanded affiliated group has significant domestic business activities if at least 25 percent of-- ``(i) the employees of the group are based in the United States; ``(ii) the employee compensation incurred by the group is incurred with respect to employees based in the United States; ``(iii) the assets of the group are located in the United States; or ``(iv) the income of the group is derived in the United States. ``(B) Determination.--Determinations pursuant to subparagraph (A) shall be made in the same manner as such determinations are made for purposes of determining substantial business activities under regulations referred to in paragraph (2) 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 of the Treasury (or the Secretary's delegate) 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. ``(c) Waiver.-- ``(1) In general.--The head of an executive agency may waive subsection (a) with respect to any Federal Government contract under the authority of such head if the head determines that the waiver is-- ``(A) required in the interest of national security; or ``(B) necessary for the efficient or effective administration of Federal or federally funded-- ``(i) programs that provide health benefits to individuals; or ``(ii) public health programs. ``(2) Report to congress.--The head of an executive agency issuing a waiver under paragraph (1) shall, not later than 14 days after issuing such waiver, submit a written notification of the waiver to the relevant authorizing committees of Congress and the Committees on Appropriations of the Senate and the House of Representatives. ``(d) Applicability.-- ``(1) In general.--Except as provided in paragraph (2), this section shall not apply to any contract entered into before the date of the enactment of this section. ``(2) Task and delivery orders.--This section shall apply to any task or delivery order issued after the date of the enactment of this section pursuant to a contract entered into before, on, or after such date of enactment. ``(3) Scope.--This section applies only to contracts subject to regulation under the Federal Acquisition Regulation. ``(e) Definitions and Special Rules.-- ``(1) Definitions.--In this section, the terms `expanded affiliated group', `foreign incorporated entity', `person', `domestic', and `foreign' have the meaning given those terms in section 835(c) of the Homeland Security Act of 2002 (6 U.S.C. 395(c)). ``(2) Special rules.--In applying subsection (b) of this section for purposes of subsection (a) of this section, the rules described under 835(c)(1) of the Homeland Security Act of 2002 (6 U.S.C. 395(c)(1)) shall apply.''. (2) Clerical amendment.--The table of sections at the beginning of chapter 47 of title 41, United States Code, is amended by inserting after the item relating to section 4713 the following new item: ``4714. Prohibition on awarding contracts to inverted domestic corporations.''. (b) Defense Contracts.-- (1) In general.--Chapter 137 of title 10, United States Code, is amended by adding at the end the following new section: ``Sec. 2339. Prohibition on awarding contracts to inverted domestic corporations ``(a) Prohibition.-- ``(1) In general.--The head of an agency may not award a contract for the procurement of property or services to-- ``(A) any foreign incorporated entity that such head has determined is an inverted domestic corporation or any subsidiary of such entity; or ``(B) any joint venture if more than 10 percent of the joint venture (by vote or value) is owned by a foreign incorporated entity that such head has determined is an inverted domestic corporation or any subsidiary of such entity. ``(2) Subcontracts.-- ``(A) In general.--The head of an executive agency shall include in each contract for the procurement of property or services awarded by the executive agency with a value in excess of $10,000,000, other than a contract for exclusively commercial items, a clause that prohibits the prime contractor on such contract from-- ``(i) awarding a first-tier subcontract with a value greater than 10 percent of the total value of the prime contract to an entity or joint venture described in paragraph (1); or ``(ii) structuring subcontract tiers in a manner designed to avoid the limitation in paragraph (1) by enabling an entity or joint venture described in paragraph (1) to perform more than 10 percent of the total value of the prime contract as a lower-tier subcontractor. ``(B) Penalties.--The contract clause included in contracts pursuant to subparagraph (A) shall provide that, in the event that the prime contractor violates the contract clause-- ``(i) the prime contract may be terminated for default; and ``(ii) the matter may be referred to the suspension or debarment official for the appropriate agency and may be a basis for suspension or debarment of the prime contractor. ``(b) Inverted Domestic Corporation.-- ``(1) In general.--For purposes of this section, a foreign incorporated entity shall be treated as an inverted domestic corporation if, pursuant to a plan (or a series of related transactions)-- ``(A) the entity completes on or 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, as determined pursuant to regulations prescribed by the Secretary of the Treasury, and such expanded affiliated group has significant domestic business activities. ``(2) Exception for corporations with substantial business activities in foreign country of organization.-- ``(A) In general.--A foreign incorporated entity described in paragraph (1) 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. ``(B) Substantial business activities.--The Secretary of the Treasury (or the Secretary's delegate) shall establish regulations for determining whether an affiliated group has substantial business activities for purposes of subparagraph (A), except that such regulations may not treat any group as having substantial business activities if such [[Page S4911]] group would not be considered to have substantial business activities under the regulations prescribed under section 7874 of the Internal Revenue Code of 1986, as in effect on January 18, 2017. ``(3) Significant domestic business activities.-- ``(A) In general.--For purposes of paragraph (1)(B)(ii), an expanded affiliated group has significant domestic business activities if at least 25 percent of-- ``(i) the employees of the group are based in the United States; ``(ii) the employee compensation incurred by the group is incurred with respect to employees based in the United States; ``(iii) the assets of the group are located in the United States; or ``(iv) the income of the group is derived in the United States. ``(B) Determination.--Determinations pursuant to subparagraph (A) shall be made in the same manner as such determinations are made for purposes of determining substantial business activities under regulations referred to in paragraph (2) 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 of the Treasury (or the Secretary's delegate) 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. ``(c) Waiver.-- ``(1) In general.--The head of an agency may waive subsection (a) with respect to any Federal Government contract under the authority of such head if the head determines that the waiver is required in the interest of national security or is necessary for the efficient or effective administration of Federal or federally funded programs that provide health benefits to individuals. ``(2) Report to congress.--The head of an agency issuing a waiver under paragraph (1) shall, not later than 14 days after issuing such waiver, submit a written notification of the waiver to the congressional defense committees. ``(d) Applicability.-- ``(1) In general.--Except as provided in paragraph (2), this section shall not apply to any contract entered into before the date of the enactment of this section. ``(2) Task and delivery orders.--This section shall apply to any task or delivery order issued after the date of the enactment of this section pursuant to a contract entered into before, on, or after such date of enactment. ``(3) Scope.--This section applies only to contracts subject to regulation under the Federal Acquisition Regulation and the Defense Supplement to the Federal Acquisition Regulation. ``(e) Definitions and Special Rules.-- ``(1) Definitions.--In this section, the terms `expanded affiliated group', `foreign incorporated entity', `person', `domestic', and `foreign' have the meaning given those terms in section 835(c) of the Homeland Security Act of 2002 (6 U.S.C. 395(c)). ``(2) Special rules.--In applying subsection (b) of this section for purposes of subsection (a) of this section, the rules described under 835(c)(1) of the Homeland Security Act of 2002 (6 U.S.C. 395(c)(1)) shall apply.''. (2) Clerical amendment.--The table of sections at the beginning of chapter 137 of title 10, United States Code, is amended by inserting after the item relating to section 2338 the following new item: ``2339. Prohibition on awarding contracts to inverted domestic corporations.''. (c) Regulations Regarding Management and Control.-- (1) In general.--The Secretary of the Treasury (or the Secretary's delegate) shall, for purposes of section 4714(b)(1)(B)(ii) of title 41, United States Code, and section 2339(b)(1)(B)(ii) of title 10, United States Code, as added by subsections (a) and (b), respectively, 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. (2) Executive officers and senior management.--The regulations prescribed under paragraph (1) 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. ______ By Mr. DURBIN (for himself, Mr. Reed, Ms. Warren, Mr. Brown, Ms. Baldwin, Mr. Whitehouse, Mr. Merkley, Mrs. Feinstein, Ms. Duckworth, Mr. Sanders, and Mr. Blumenthal): S. 2140. A bill to amend the Internal Revenue Code of 1986 to modify the rules relating to inverted corporations; to the Committee on Finance. Mr. DURBIN. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record. There being no objection, the text of the bill was ordered to be printed in the Record, as follows: S. 2140 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 2019''. 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, [[Page S4912]] 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. ______ By Ms. COLLINS (for herself, Ms. Sinema, Mr. Hawley, Mr. Peters, Ms. McSally, and Mr. Scott of Florida): S. 2147. A bill to double the existing penalties for the provision of misleading or inaccurate caller identification information, and to extend the statute of limitations for forfeiture penalties for persons who commit such violations; to the Committee on Commerce, Science, and Transportation. Ms. COLLINS. Mr. President, I rise today to introduce the ``Anti- Spoofing Penalty Modernization Act of 2019'' with my colleague, Senator Sinema, who serves with me on the Senate Committee on Aging, which I chair. I am also pleased that Senators Hawley, Peters, and McSally have joined as original cosponsors. This morning, the Senate Aging Committee held its 23rd hearing in the past six years to examine scams targeting our Nation's seniors. Scams the Committee has examined include the infamous IRS imposter scam the Jamaican Lottery scam, computer tech support scams, grandparent scams, elder financial exploitation, identity theft, and the notorious ``Drug Mule'' scam--where seniors are tricked into unwittingly serving as drug couriers. Two things are central to nearly all of these scams: first, the scams are initiated by robocallers who cast a wide net in their hunt for potential victims, and second, the scammers ``spoof' the victim's Caller-ID to mask their identity, a key to the success of their outrageous frauds. When victims see the ``Internal Revenue Service'' or the ``local Sheriff's Department'' pop-up on their Caller-ID, they are understandably worried, scared, and often easily hustled into doing whatever the scammers demand. Last year, robocallers generated more than 26 billion unwanted calls that reached American mobile phones. When landlines are included, the number soars to 48 billion. In Maine alone, our residents received an astonishing 93 million robocalls last year. That averages out to 73 calls to every person in Maine. So far this year, scammers are on pace to generate more than 58 billion unwanted, illegal robocalls targeting Americans. Putting a stop to these illegal robocalls requires a coordinated approach from all levels of our government, working in coordination with the private sector. Recently, this body overwhelmingly passed the bipartisan ``TRACED Act,'' which makes a number of important changes to our law that will help make it easier to fight illegal robocalls, such as increasing civil penalties on robocallers and extending the statute of limitations for violations to three years. The TRACED Act also requires telecommunications carriers to implement the so-called SHAKEN/ STIR technology to verify whether Caller-IDs that appear on incoming calls are authentic. When fully implemented, this technology will be a major advance against illegal spoofing. I am pleased to be a cosponsor of the TRACED Act, and I am hopeful it will soon become law. The bipartisan bill we are introducing today complements the TRACED Act by doubling the penalties on illegal spoofing. Except for inflation adjustments, the penalties on illegal spoofing have not been updated since they were first passed into law through the Truth in Caller ID Act of 2009. Our bill also extends the statute of limitations to three years for spoofing violations to match the extension for robocalling violations included in the TRACED Act. Mr. President, putting an end to the scourge of illegal robocalls will take an aware public, aggressive action by regulators and law enforcement agencies, and a coordinated effort at every level of our telecommunications industry. The enhanced penalties called for by the ``Anti-Spoofing Penalty Modernization Act'' are an important tool in the fight. I urge my colleagues to support this legislation. ____________________
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