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American A.I. Sovereign Wealth Fund Act
Introduced Jun 18, 2026 · Last action Jun 18, 2026 — Read twice and referred to the Committee on Finance.
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Summary
This legislation is called the A bill to amend the Internal Revenue Code of 1986 to impose an excise tax on systemically important AI activity, and for other purposes. It is being reviewed by a committee.
Full bill text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 4825 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
2d Session
S. 4825
To amend the Internal Revenue Code of 1986 to impose an excise tax on
systemically important AI activity, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 18, 2026
Mr. Sanders introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to impose an excise tax on
systemically important AI activity, and for other purposes.
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 A.I. Sovereign Wealth Fund
Act''.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) When a public resource generates wealth, the public
should share in that wealth.
(2) Artificial intelligence is a public resource that
derives its economic value from humanity's collective
intelligence, including our books, songs, artwork, journalism,
computer code, scientific research, videos, conversations,
images, and ideas spanning generations.
(3) A small number of oligarchs have essentially stolen the
creative work of hundreds of millions of people--writers,
artists, musicians, journalists, teachers, scientists, and
ordinary citizens--without permission, acknowledgment, or
compensation in order to control the majority of economic value
created by artificial intelligence.
(4) Artificial intelligence is built on the collective
knowledge of humanity and the wealth it generates must benefit
humanity.
(5) Sixty-seven countries throughout the world operate more
than 100 sovereign wealth funds to ensure working families
benefit from public resources and national wealth.
(6) Sovereign wealth funds have existed in the United
States for more than 150 years.
(7) The Texas Permanent School Fund was established in 1845
and distributed nearly $5,000,000,000 to Texas schools for the
2026-2027 school year.
(8) The Alaska Permanent Fund was established 50 years ago
from the State's oil revenues, and for decades it has paid
dividends directly to Alaskans. In 2022, that dividend check
was $3,284 per person; in 2023 it was $1,312; in 2024 it was
$1,702; and in 2025 it was $1,000.
(9) Today, 6 States operate sovereign wealth funds that
control over $300,000,000,000 in assets.
(10) Industry leaders support the creation of an artificial
intelligence sovereign wealth fund to ensure the American
people have a seat at the table to ensure artificial
intelligence is developed safely and to benefit humanity,
including--
(A) OpenAI, which has proposed a ``Public Wealth
Fund that provides every citizen--including those not
invested in financial markets--a stake in AI-driven
economic growth'';
(B) Anthropic, which has proposed a sovereign
wealth fund to ``shape the sector's behavior and
distribute AI-derived wealth more equitably''; and
(C) Elon Musk, who has proposed ``universal HIGH
INCOME via checks issued by the Federal Government'' to
address unemployment caused by artificial intelligence.
SEC. 3. EXCISE TAX ON SYSTEMICALLY IMPORTANT AI COMPANIES.
(a) In General.--Subtitle D of the Internal Revenue Code of 1986 is
amended by adding at the end the following new chapter:
``CHAPTER 50B--SYSTEMICALLY IMPORTANT AI COMPANIES
``Sec. 5000E. Excise tax on systemically important AI activity.
``SEC. 5000E. EXCISE TAX ON SYSTEMICALLY IMPORTANT AI ACTIVITY.
``(a) In General.--
``(1) Initial tax.--There is hereby imposed on any
applicable AI company a tax equal to the amount determined
under subsection (b).
``(2) Additional tax.--
``(A) In general.--In any case in which an
applicable AI company issues equity interests
(including equity interests issued as, or in settlement
of, employee or other service-provider compensation)
after the date on which the tax is first imposed on
such applicable AI company under paragraph (1), there
shall be imposed a tax equal to the amount determined
under subsection (b) by taking into account only the
equity interests so issued.
``(B) Special rule.--For the purposes of this
paragraph, equity interests transferred or delivered in
connection with the settlement, exercise, or vesting of
any stock option, restricted stock unit, or other
equity-based compensation award shall be treated as
additional equity interests issued at the time of such
transfer or delivery without regard to when the award
was granted.
``(3) Coordination with separation requirement.--
``(A) In general.--In the case of an applicable AI
company that is required to separate its applicable AI
trade or business pursuant to section 4 of the American
A.I. Sovereign Wealth Fund Act, no tax shall be imposed
under this section until such separation is complete,
and upon completion the tax shall apply only to the
separated entity that holds the applicable AI trade or
business.
``(B) Separation period.--The tax under this
section shall be imposed on the separated entity as of
the date the separation is complete or the date by
which structural separation is required under section 4
of the American A.I. Sovereign Wealth Fund Act,
whichever is earlier.
``(b) Amount of Tax; Remittance.--
``(1) In general.--The amount of tax imposed by subsection
(a) is of such amount that immediately after the tax has been
paid, the Secretary shall hold 50 percent of all outstanding
equity interests in the applicable AI company, to be remitted
in exact proportion of the outstanding equity interests
(including by class of interest) in such entity immediately
prior to the tax being paid.
``(2) Form of remittance.--All equity interests remitted in
satisfaction of the tax imposed by this section shall be equity
interests newly issued by the applicable AI company for
purposes of such remittance. No previously outstanding,
treasury, or repurchased equity interest may be used to satisfy
the tax. Notwithstanding any provision of the certificate of
incorporation, bylaws, or other governing document of the
applicable AI company, including any limitation on the number
of authorized equity interests or any requirement of approval
for issuance, the company shall issue and remit the equity
interests required under this section.
``(3) Treatment of repurchases and new issuances.--Equity
interests issued and remitted under paragraph (2) shall not be
treated as an issuance of additional equity interests for
purposes of subsection (a)(2). Any repurchase or redemption of
equity interests by the applicable AI company shall not reduce
the number of outstanding equity interests taken into account
in determining the amount required to be remitted under this
subsection.
``(c) Applicable AI Company.--For purposes of this section--
``(1) In general.--The term `applicable AI company' means
any corporation or partnership--
``(A) which is engaged in 1 or more applicable AI
trades or businesses for any taxable year beginning
after December 31, 2025, and
``(B) with respect to which the aggregate gross
receipts from such trades or businesses for the
calendar year in which such taxable year begins exceed
$200,000,000.
``(2) Applicable ai trade or business.--
``(A) In general.--The term `applicable AI trade or
business' means any trade or business engaged in
activities related to one or more of the following:
``(i) AI data centers.
``(ii) AI computing infrastructure.
``(iii) AI services.
``(iv) Researching, producing, or
manufacturing advanced robotics.
``(B) Trade or business.--For purposes of this
paragraph, the term `trade or business' shall include
any activity treated as a trade or business under
paragraph (5) or (6) of section 469(c) (determined
without regard to the phrase `To the extent provided in
regulations' in such paragraph (6)).
``(3) Special rules.--For purposes of paragraph (1)(B)--
``(A) Aggregation rules.--For purposes of
determining aggregate gross receipts, all persons which
are treated as a single employer under subsections (a)
and (b) of section 52 shall be treated as a single
person.
``(B) Election to use taxable year.--
``(i) In general.--If an applicable AI
company makes an election under this
subparagraph, paragraph (1)(B) shall be applied
by substituting `such taxable year' for `the
calendar year in which such taxable year
begins'.
``(ii) Election.--An election under this
subparagraph shall be made at such time and
manner as the Secretary may provide and, once
made, may be revoked only with the consent of
the Secretary.
``(C) Gross receipts.--Rules similar to the rules
of subparagraphs (B), (C), and (D) of section 448(c)(3)
shall apply in determining gross receipts.
``(d) Other Definitions.--For purposes of this section--
``(1) AI data center.--The term `AI data center' means all
the buildings, equipment, structures, and other stationary
items, such as server racks, that--
``(A) are located on a single site or on
contiguous, adjacent, or otherwise connected sites,
``(B) are owned or operated by the same entity or
by any entity that controls, is controlled by, or is
under the common control of that entity, regardless of
whether the site is a single-occupant or multi-occupant
facility, and
``(C)(i) are used for the development or operation
of artificial intelligence models at scale, or
``(ii)(I) have a maximum rated power capacity or
total peak power load in excess of 20 megawatts, and
``(II) are designed or equipped--
``(aa) to deliver 20 kilowatts or more of
electrical power to a single server rack, or
``(bb) to utilize cooling systems that
circulate liquid to individual hardware
components or submerge electronic hardware in
liquid.
``(2) AI computing infrastructure.--The term `AI computing
infrastructure' means semiconductors, integrated circuits, and
products containing integrated circuits, including computers,
networking equipment, and data storage systems, that will be
used:
``(A) in an artificial intelligence data center, or
``(B) in the training or deployment of artificial
intelligence models at scale.
``(3) AI services.--
``(A) In general.--The term `AI services' means the
development, distribution, or sale of an artificial
intelligence model that was trained using a quantity of
computing power greater than or equal to 10\25\ integer
or floating-point operations.
``(B) Adjustment.--The Secretary shall annually, in
coordination with the Secretary of Commerce, adjust the
computing power threshold under subparagraph (A) to
reflect changes in the efficiency of training methods
or other technological developments made after the date
of enactment of this section to maintain equivalency
with 10\25\ integer or floating-point operations.
``(4) Advanced robotics.--The term `advanced robotics'
means an automated or semi-automated mechanical system that
uses artificial intelligence to perform tasks with partial or
full independence from direct human control for commercial or
industrial applications.
``(5) Equity interests.--The term `equity interests'
means--
``(A) in the case of a corporation, stock in such
corporation, and
``(B) in the case of a partnership, any capital or
profits interest.
``(e) Regulations and Guidance.--The Secretary shall prescribe such
regulations or other guidance as the Secretary determines necessary or
appropriate to carry out this section.''.
(b) American A.I. Sovereign Wealth Fund.--
(1) Establishment of fund.--Subchapter A of chapter 98 of
the Internal Revenue Code of 1986 is amended by adding at the
end the following new section:
``SEC. 9512. AMERICAN A.I. SOVEREIGN WEALTH FUND.
``(a) Creation of Trust Fund.--There is established in the Treasury
of the United States a trust fund to be known as the American A.I.
Sovereign Wealth Fund (in this section referred to as the `Fund'),
consisting of such amounts as may be transferred to such Trust Fund as
provided in this section or section 9602(b).
``(b) Transfers to Fund.--There is hereby transferred to the Fund
the equity interests collected as taxes under section 5000E and any
income or gain from such equity interests.
``(c) Management of Fund.--The assets of the Fund shall be managed
by the Independent Commission for Democratic AI.
``(d) Distributions From Fund.--
``(1) In general.--
``(A) Annual amount.--There are authorized to be
appropriated from the Fund for each fiscal year amounts
equal to 5 percent of the average market value of the
Fund for the fiscal year, reduced by the reasonable
costs of administering the Fund.
``(B) Average market value.--For purposes of
subparagraph (A), the average market value of the Fund
for a fiscal year is the average of the market values
of the Fund determined as of the last day of each
calendar month ending in such fiscal year during which
the Fund held assets.
``(C) Determination of market value.--In
determining the market value of the Fund--
``(i) equity interests for which there is a
readily ascertainable market price shall be
valued at such price, and
``(ii) equity interests for which there is
no readily ascertainable market price shall be
valued by the Secretary using the most recent
transaction price, appraisal, or other
reasonable valuation method the Secretary
determines appropriate, and shall be revalued
not less frequently than annually.
``(2) Use of distributions.--Amounts appropriated from the
Fund shall be used, as provided in appropriations Act or law,
to provide for direct payments to the American people and to
ensure that every man, woman and child in the United States has
a decent and dignified standard of living, including health
care, education, housing, and a healthy and habitable
environment, in such manner as Congress may provide.
``(3) Preservation of equity interests.--No distribution or
amount appropriated from the Fund under this subsection shall
require the sale or other disposition of, the equity interests
held in the Fund.
``(4) No bailout.--No amounts in the Fund may be used to
provide financial assistance to, or for the benefit of, any
applicable AI company (as defined in section 5000E) or other
firm that is insolvent or for the purpose of preventing the
failure, insolvency, or liquidation of any such firm.''.
(2) Independent commission for democratic ai.--
(A) In general.--
(i) Establishment.--There is established
within the Department of the Treasury the
Independent Commission for Democratic AI (in
this paragraph referred to as the
``Commission'').
(ii) Commissioners.--The Commission shall
consist of 7 commissioners appointed by the
President, by and with the advice and consent
of the Senate, of whom--
(I) 1 shall be designated as the
Chairperson of the Commission and shall
be selected from a list submitted by
the Majority Leader of the Senate;
(II) 1 shall be designated as Vice-
Chairperson of the Commission and shall
be selected from a list submitted by
the Speaker of the House of
Representatives;
(III) 1 shall be appointed as a
representative of labor interests and
shall be selected from a list submitted
by the Majority Leader of the Senate in
consultation with the chair and ranking
member of the Committee on Health,
Education, Labor, and Pensions of the
Senate;
(IV) 1 shall be appointed from
among persons who have demonstrated
experience in the management of a
public pension fund, endowment,
sovereign wealth fund, or comparable
institutional fund subject to fiduciary
obligations and shall be selected from
a list submitted by the Speaker of the
House of Representatives in
consultation with the chair and ranking
member of the Committee on Ways and
Means of the House of Representatives;
(V) 1 shall be appointed from among
persons who have demonstrated
experience in the development,
deployment, or governance of artificial
intelligence systems and shall be
selected from a list submitted by the
Majority Leader of the Senate in
consultation with the chair and ranking
member of the Committee on Commerce,
Science, and Transportation of the
Senate;
(VI) 1 shall be appointed from
among persons who have demonstrated
experience in privacy and data
protection and shall be selected from a
list submitted by the Speaker of the
House of Representatives in
consultation with the chair and ranking
member of the Committee on the
Judiciary of the House of
Representatives; and
(VII) 1 shall be appointed as a
representative of public safety or
national security interests and shall
be selected from a list submitted by
the Majority Leader of the Senate in
consultation with the chair and ranking
member of the Committee on Armed
Services of the Senate.
Of the commissioners appointed under the
preceding sentence, not more than 4 shall be
affiliated with the same political party.
(iii) Timing of appointment.--The President
shall nominate a commissioner under each
subclause of clause (ii) not later than 30 days
after a list is submitted under such subclause.
(iv) Qualifications.--
(I) Financial interests.--No
commissioner, and no spouse or
dependent of a commissioner, may hold
any equity or other financial interest
in any applicable AI company during the
commissioner's service. Each
commissioner shall divest any such
interest upon appointment.
(II) Prior employment.--No
individual may be appointed to the
Commission if the individual was
employed by an applicable AI company at
any time during the two-year period
preceding appointment.
(III) Prohibition on service on
company boards.--No person shall be a
commissioner if such person, or the
spouse or any dependent of such person,
serves on the board of directors of an
applicable AI company.
(v) Terms.--A commissioner shall be
appointed for a term of 5 years.
(vi) Vacancies.--
(I) In general.--A vacancy on the
Commission shall be filled in the
manner in which the original
appointment was made and shall be
subject to any conditions that applied
with respect to the original
appointment.
(II) Filling unexpired term.--An
individual chosen to fill a vacancy
shall be appointed for the unexpired
term of the commissioner replaced.
(vii) Removal.--A commissioner may be
removed by the President only for inefficiency,
neglect of duty, or malfeasance in office.
(B) Duties and powers.--
(i) In general.--The Commission shall--
(I) exercise all voting and
governance rights attached to the
equity interests held in the American
A.I. Sovereign Wealth Fund; and
(II) manage the American A.I.
Sovereign Wealth Fund, in consultation
with the Secretary of Labor, in such
manner as to effectively promote the
goals of worker welfare, public safety,
fair competition among applicable AI
companies (as defined in section 5000E
of the Internal Revenue Code of 1986),
environmental sustainability, and
financial solvency.
(ii) Designation of representatives.--
(I) In general.--The Commission
shall designate qualified individuals
to serve as representatives of the Fund
on the board of directors of each
applicable AI company in which the Fund
holds equity interests, and shall
exercise the voting and governance
rights attached to those interests to
cause such individuals to be elected,
appointed, or designated to the board
of directors of the company, in the
largest number the Fund's equity
interests entitle it to elect, appoint,
or designate.
(II) Duties of representatives.--A
representative designated under this
section shall act to advance the goals
described in clause (i)(II).
(III) Fiduciary duties.--
Notwithstanding any other provision of
law, any provision of the certificate
of incorporation, bylaws, or other
governing document of the company, or
any duty owed under the law of the
company's jurisdiction of organization
(including any duty to balance
interests under a public benefit
corporation statute), advancing the
goals described in clause (i)(II) shall
be a proper purpose consistent with the
fiduciary and other duties of a
representative, even where doing so
conflicts with the financial interests
of the company or its other equity
holders. No representative, and no
action of a board of directors taken in
accordance with this clause, shall be
subject to liability or challenge on
the ground that it advanced those
goals.
(iii) No coordination among competitors.--
The Commission shall not exercise the voting or
governance rights attached to equity interests
in two or more applicable AI companies that
compete in the same market in any manner that
coordinates, or has the effect of coordinating,
the competitive conduct of such companies.
(iv) Recusal.--A commissioner shall recuse
himself or herself from any decision uniquely
affecting a company by which the commissioner,
or the spouse or any dependent of such
commissioner, was formerly employed during the
2-year period after the commissioner was first
appointed to the Commission.
(v) Transparency.--
(I) Disclosure of votes.--The
Commission shall make publicly
available, not less frequently than
quarterly, a complete record of how it
exercised the voting rights attached to
the equity interests held by the
American A.I. Sovereign Wealth Fund in
each applicable AI company, including
the matter voted upon and the manner in
which the Commission voted.
(II) Disclosure of governance
activity.--The Commission shall make
publicly available, not less frequently
than annually, a report describing the
significant positions taken and actions
directed by each commissioner serving
on the board of directors of an
applicable AI company to the extent
such disclosure is not prohibited by
applicable law and does not require the
disclosure of material nonpublic
information of the company.
(III) Form of disclosure.--
Disclosures under this clause shall be
made in a manner that is publicly
accessible and machine-readable.
(C) Personnel matters.--
(i) Compensation of commissioners.--A
commissioner who is not an officer or employee
of the Federal Government shall be compensated
at a rate equal to the daily equivalent of the
annual rate of basic pay prescribed for level
IV of the Executive Schedule under section 5315
of title 5, United States Code, for each day
(including travel time) during which the
commissioner is engaged in the performance of
the duties of the Commission.
(ii) Travel expenses.--A commissioner shall
be allowed travel expenses, including per diem
in lieu of subsistence, at rates authorized for
employees of agencies under subchapter I of
chapter 57 of title 5, United States Code,
while away from their homes or regular places
of business in the performance of services for
the Commission.
(iii) Staff.--
(I) In general.--The Chairperson of
the Commission may, without regard to
the civil service laws (including
regulations), appoint and terminate an
executive director and such other
additional personnel as may be
necessary to enable the Commission to
perform its duties, except that the
employment of an executive director
shall be subject to confirmation by the
Commission.
(II) Compensation.--The Chairperson
of the Commission may fix the
compensation of the executive director
and other personnel without regard to
chapter 51 and subchapter III of
chapter 53 of title 5, United States
Code, relating to classification of
positions and General Schedule pay
rates, except that the rate of pay for
the executive director and other
personnel may not exceed the rate
payable for level V of the Executive
Schedule under section 5316 of that
title.
(iv) Detail of government employees.--A
Federal Government employee may be detailed to
the Commission without reimbursement, and such
detail shall be without interruption or loss of
civil service status or privilege.
(v) Procurement of temporary and
intermittent services.--The Chairperson of the
Commission may procure temporary and
intermittent services under section 3109(b) of
title 5, United States Code, at rates for
individuals that do not exceed the daily
equivalent of the annual rate of basic pay
prescribed for level V of the Executive
Schedule under section 5316 of that title.
(vi) Conflicts of interest.--
(I) Financial holdings.--Any equity
investments of a commissioner shall be
held in a blind trust during any period
in which such commissioner serves on
the Commission.
(II) Subsequent employment.--A
former commissioner of the Commission
may not accept employment or
compensation from any applicable AI
company or begin service on the board
of directors of such company during the
5-year period following the
commissioner's service on the
Commission.
(D) Funding.--The costs of the operation of the
Commission shall be paid from the assets and income of
the American A.I. Sovereign Wealth Fund.
(E) Applicable ai company.--For purposes of this
paragraph, the term ``applicable AI company'' has the
meaning given such term under section 5000E of the
Internal Revenue Code of 1986.
(c) Information Reporting.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 of the Internal Revenue Code of 1986 is amended by
adding at the end the following new section:
``SEC. 6050BB. PURCHASES FROM AI BUSINESSES.
``(a) In General.--Any person--
``(1) who is engaged in a trade or business, and
``(2) who in the course of such trade or businesses
purchases during the taxable year AI data centers, AI computing
infrastructure, AI services, or advanced robotics in excess of
the amount in effect under section 448(c)(1) for such taxable
year,
shall make a return according to the forms or regulations prescribed by
the Secretary, setting forth the amount of such purchases and the name
and address of the person from whom such AI data center, AI computing
infrastructure, AI services, or advanced robotics were purchased.
``(b) Statement To Be Furnished to Persons With Respect to Whom
Information Is Required.--Every person required to make a return under
subsection (a) shall furnish to each corporation or partnership whose
name is required to be set forth in such return a written statement
showing--
``(1) the name, address, and phone number of the
information contact of the person required to make such return,
and
``(2) the aggregate amount of purchases from such
corporation or partnership required to be shown on the return.
The written statement required under the preceding sentence shall be
furnished (either in person or in a statement mailing by first-class
mail which includes adequate notice that the statement is enclosed) to
the person at such time and in such form as the Secretary may prescribe
by regulations.
``(c) Definitions.--Any term used in this section which is used in
section 5000E shall have the meaning given such term under section
5000E.''.
(2) Penalties.--Section 6724(d) of such Code is amended--
(A) in paragraph (1)(B), by striking ``or'' at the
end of clause (xxviii), by inserting ``or'' at the end
of clause (xxix), and by adding at the end the
following new clause:
``(xxx) section 6050BB(a) (relating to
purchases from AI businesses),'', and
(B) in paragraph (2), by striking ``or'' at the end
of subparagraph (NN), by striking the period at the end
of subparagraph (OO) and inserting ``, or'', and by
inserting after subparagraph (OO) the following new
subparagraph:
``(PP) section
6050BB(b) (relating to
purchases from AI
businesses).''.
(d) Accuracy Related Penalties.--Section 6662 of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
subsection:
``(n) Application to Excise Tax on Systemically Important AI
Companies.--In the case of any underpayment of tax required under
section 5000E, there shall be added to the tax under such section an
amount equal to the excess of--
``(1) the amount determined under section 5000E(b)
(determined by substituting `60 percent' for `50 percent'),
over
``(2) the amount of tax remitted.''.
(e) Failure To File.--Section 6651 of the Internal Revenue Code of
1986 is amended by adding at the end the following new subsection:
``(k) Application to Excise Tax on Systemically Important AI
Companies.--In the case of any failure to file any return of tax
imposed under section 5000E, subsection (a) shall not apply and there
shall be added to the amount required to be shown as tax on such return
$1,000,000.''.
(f) Rules for Expatriated Entities.--
(1) 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 applicable AI
company.
``(2) Inverted applicable ai company.--For purposes of this
subsection, a foreign corporation shall be treated as an
inverted applicable AI company if, pursuant to a plan (or a
series of related transactions)--
``(A) the entity completes the direct or indirect
acquisition of--
``(i) substantially all of the properties
held directly or indirectly by a domestic
corporation which is an applicable AI company,
or
``(ii) substantially all of the assets of,
or substantially all of the properties
constituting a trade or business of, a domestic
partnership which is an applicable AI company,
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
applicable AI company by reason of
holding stock in the applicable AI
company, or
``(II) in the case of an
acquisition with respect to a domestic
partnership, by former partners of the
applicable AI company by reason of
holding a capital or profits interest
in the applicable AI company, 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 applicable AI company 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.
``(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.
``(6) Applicable ai company.--For purposes of this section,
the term `applicable AI company' has the meaning given such
term under section 5000E.''.
(2) Conforming amendments.--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
applicable AI company, as the case may be,'' after
``surrogate foreign corporation''.
(g) Clerical Amendments.--
(1) The table of chapters for subtitle D of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new item:
``Chapter 50B--Systemically Important AI Companies''.
(2) The table of sections for subchapter A of chapter 98 of
such Code is amended by adding at the end the following new
item:
``Sec. 9512. American A.I. Sovereign Wealth Fund.''.
(3) The table of sections for subpart B of part III of
subchapter A of chapter 61 of such Code is amended by adding at
the end the following new item:
``Sec. 6050BB. Purchases from AI businesses.''.
(h) Effective Date.--The amendments made by this section shall take
effect on the date that is 90 days after the date of the enactment of
this Act.
SEC. 4. STRUCTURAL SEPARATION.
(a) Definitions.--
(1) Applicable ai company; applicable ai trade or
business.--The terms ``applicable AI company'' and ``applicable
AI trade or business'' have the meanings given those terms,
respectively, in section 5000E of the Internal Revenue Code of
1986 (as added by section 3 of this Act).
(2) Structural separation.--The term ``structural
separation'', with respect to an applicable AI company, means
adoption of an operating structure under which the applicable
AI company--
(A) does not conduct any business that is not an
applicable AI trade or business;
(B) does not hold equity in, provide credit to, or
otherwise provide financing to any business other than
the applicable AI trade or business;
(C) is not held by any entity engaged in any
business other than the applicable AI trade or
business;
(D) does not share any officer or director with any
entity that is not an applicable AI company; and
(E) does not participate in any joint ventures with
an entity that is not an applicable AI company.
(b) Structural Separation Required.--The Federal Trade Commission
shall require that each applicable AI company complete structural
separation--
(1) with respect to an applicable AI company in existence
on the date of enactment of this Act, not later than 90 days
after the date of enactment of this Act; and
(2) with respect to an applicable AI company established on
or after the date of enactment of this Act, not later than 90
days after meeting the definition of an applicable AI company.
<all>Official legislative text sourced from the public record (cached on CivicsHQ).
Official source
View the original bill, actions, and full legislative record on Congress.gov.
Status
In Committee
- 1Introduced
- 2Committee
- 3Floor
- 4Passed
- 5Signed
Timeline reflects current normalized status only. Full action history is not yet stored in the API.
Topics
Government Operations
Sponsors
- Sen. Sanders, Bernard [I-VT]ISenateVT
Cosponsors
No cosponsors on record.
Votes
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