Stop Corporate Inversions Act of 2026

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

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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.
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