S. 1501Senate117th Congress (2021-2023)In Committee

Stop Corporate Inversions Act of 2021

Introduced April 29, 2021

AI-Generated Summary

Updated February 8, 2026 at 2:25 AM UTC

The Stop Corporate Inversions Act of 2021 changes tax rules so that companies that move their legal headquarters abroad to lower taxes (inversions) are still treated as U.S. corporations for tax purposes. It applies to foreign corporations that acquire most of a U.S. company's assets or partnership interests after May 8 2014 and meet ownership or control tests. The bill also sets thresholds for U.S. management, employee, asset, and income presence, and provides an exception for companies with substantial business in the foreign country where they are organized.

Key Provisions

  • Redefines an “inverted domestic corporation” and treats such foreign corporations as domestic if they acquire at least 80% of a U.S. company's assets or partnership interests and meet ownership or U.S. control criteria.
  • Requires that after the acquisition, either more than 50% of the stock is held by former U.S. shareholders/partners, or the expanded group’s management and control are primarily in the United States and it has significant domestic business activity.
  • Defines “significant domestic business activities” as at least 25% of employees, compensation, assets, or income being in the United States.
  • Provides an exception for corporations that retain substantial business activities in the foreign country of organization.
  • Directs the Treasury Secretary to issue regulations on management‑control tests and allows adjustments to thresholds; updates related code references and sets the rule to apply to tax years ending after May 8 2014.

Legislative Activity

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1 earlier action
SenateIntro Referral Latest Action

Read twice and referred to the Committee on Finance. (text: CR S2364-2365)

April 29, 2021

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SenateIntro Referral

Introduced in Senate

April 29, 2021

SenateIntro Referral

Read twice and referred to the Committee on Finance. (text: CR S2364-2365)

April 29, 2021

Floor Debate

8 members

What members said about S. 1501 on the floor

2 Republicans6 Democrats
John Thune
Sen. John ThuneR-SD · Apr 29, 2021

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record. Mr. President, along with my livestock producer protection bill, I am also introducing legislation today to…

Tim Kaine
Sen. Tim KaineD-VA · Apr 29, 2021

Mr. President. A vibrant and independent media and public access to accurate information are critical to the functioning of any democracy. A free press is so important that our Founding Fathers…

Susan M. Collins
Sen. Susan M. CollinsR-ME · Apr 29, 2021

Mr. President, today I am pleased to be joined by my friend and colleague from Delaware, Senator Chris Coons, to reintroduce the Reach Every Mother and Child Act of 2021. Our legislation would make…

Alex Padilla
Sen. Alex PadillaD-CA · Apr 29, 2021

Mr. President, I rise to introduce the ``Protecting Unique and Beautiful Landscapes by Investing in California (PUBLIC) Lands Act.'' This measure would increase protections for over 1 million acres…

Dianne Feinstein
Sen. Dianne FeinsteinD-CA · Apr 29, 2021

Mr. President, I rise today to reintroduce bipartisan legislation that would better align the Department of Housing and Urban Development's (HUD) homeless assistance programs with other federal…

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Jack Reed
Sen. Jack ReedD-RI · Apr 29, 2021

Today, I am joined by Senators Warren, Brown, Van Hollen, and Gillibrand to introduce legislation to ensure that at least one Federal Reserve Governor has demonstrated primary experience in…

Ron Wyden
Sen. Ron WydenD-OR · Apr 29, 2021

Madam President, today I have introduced the Retirement Parity for Student Loans Act. This legislation would permit employers to make matching contributions to workers under 401(k) and similar types…

Richard J. Durbin
Sen. Richard J. DurbinD-IL · Apr 29, 2021

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Richard J. Durbin
Sen. Richard J. DurbinD-IL · Apr 29, 2021

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Bill Text

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Introduced in SenateIssued April 29, 2021

II

117th CONGRESS

1st Session

S. 1501

IN THE SENATE OF THE UNITED STATES

April 29, 2021

Mr. Durbin (for himself, Mr. Reed, Ms. Hirono, Mr. Blumenthal, Ms. Duckworth, Mr. Brown, Mr. Whitehouse, Ms. Warren, Mrs. Feinstein, Mr. Leahy, Mr. Van Hollen, and 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 modify the rules relating to inverted corporations.

1.

Short title

This Act may be cited as the Stop Corporate Inversions Act of 2021.

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.