Sponsors (10)
The bill tightens and clarifies rules to curb corporate inversions and protect the U.S. tax base, but does so at the cost of higher tax burdens and compliance costs for some multinational firms and added uncertainty for past transactions.
U.S. taxpayers and U.S.-based businesses: reduces opportunities for corporations to reincorporate abroad and ensures more consistent taxation of firms with substantial U.S. operations, helping preserve the U.S. tax base and limit profit-shifting.
Financial institutions and taxpayers: creates clearer, objective metrics for enforcement, which can improve IRS administration and reduce uncertainty about whether a transaction will be treated as an inversion.
Multinational companies with U.S. operations: may face higher U.S. tax liability or loss of tax benefits, which could reduce investment, slow growth, or lead to higher prices for consumers and downstream businesses.
Taxpayers and companies affected by the rules: retroactive application to tax years after May 8, 2014 could create uncertainty and unexpected tax exposure for past transactions completed under prior rules.
Affected firms: will incur increased compliance, restructuring, and administrative costs as they adapt to new ownership and activity tests and await implementing Treasury regulations.
Based on analysis of 2 sections of legislative text.
Tightens when a foreign parent is treated as a U.S. corporation by replacing prior percentage tests with a 50% ownership/management-control test and 25% U.S.-activity thresholds.
Official title: Amend the Internal Revenue Code of 1986 to modify the rules relating to inverted corporations.
Introduced February 11, 2026 by Richard Joseph Durbin · Last progress February 11, 2026
Revises the tax rules that determine when a foreign parent corporation of a U.S. business is treated as a U.S. (domestic) corporation for tax purposes, narrowing opportunities for so-called "corporate inversions." The bill replaces the prior 60%/80% ownership tests with a new 50% ownership and management/control test, adds a clear post-acquisition date threshold, and creates objective measures for when an expanded group has "significant domestic business activities." The changes modify cross-references in the Internal Revenue Code, set a retroactive applicability window (applying to taxable years ending after May 8, 2014), and provide concrete metrics (25% tests for employees, compensation, assets, or income in the United States) to determine whether a foreign parent is nevertheless treated as a U.S. corporation because management/control and domestic activity are substantial. The result narrows the surrogate foreign corporation rules and raises the chance that inversion transactions will be taxed as domestic reorganizations.