S. 5151 — Introduced in Senate

II 117th CONGRESS 2d Session S. 5151 IN THE SENATE OF THE UNITED STATES November 30 (legislative day, November 29), 2022Mr. Merkley introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To prohibit individuals and entities from owning more than 100 single-family residences, and for other purposes. 1. Short title This Act may be cited as the End Hedge Fund Control of American Homes Act. 2. Excise tax on certain taxpayers failing to sell excess single-family residences (a) In general Subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter: 50B Excess single-family residences Sec. 5000E. Excess single-family residences. 5000E. Excess single-family residences (a) In general In the case of any covered taxpayer who fails to meet the requirement of subsection (b) for any taxable year, there is hereby imposed a tax equal to the product of— (1) $20,000, and (2) the excess of— (A) the number of single-family residences owned by the taxpayer as of the last day of the taxable year, over (B) 100. (b) Requirement A covered taxpayer meets the requirements of this section for any taxable year if the number of single-family residences owned by the covered taxpayer as of the last day of the taxable year is equal to or less than 90 percent of the number of single family homes owned by the covered taxpayer as of the first day of the taxable year. (c) Covered taxpayer For purposes of this section— (1) In general The term covered taxpayer means, with respect to any taxable year, any person who owns more than 100 single-family residences, as determined on the first day of the taxable year. (2) Exclusions Such term shall not include— (A) a mortgage note holder that owns a single-family residence through foreclosure, (B) a organization which is described in section 501(c)(3) and exempt from tax under section 501(a), (C) any person primarily engaged in the construction or rehabilitation of single-family residences, or (D) any person who owns federally subsidized housing. (3) Aggregation rules (A) In general For purposes of this section, all persons which are treated as a single employer under subsections (a) and (b) of section 52 shall be treated as a single taxpayer. (B) Modifications For purposes of this paragraph— (i) section 52(a) shall be applied by substituting component members for members, and (ii) for purposes of applying section 52(b), 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)). (C) Component member For purposes of this paragraph, the term component member has the meaning given such term by section 1563(b), except that the determination shall be made without regard to section 1563(b)(2). (d) Other rules and definitions For purposes of this section— (1) Single-family residence The term single-family residence means a residential property consisting of 1-to-4 dwelling units. (2) Own (A) In general The term own, with respect to a single-family residence, means having a direct majority ownership interest in the single-family residence, regardless of the percentage of that ownership interest. (B) Special rule for certain sales (i) In general Notwithstanding subparagraph (A), for purposes of subsections (a)(2)(A) and (b), any single-family residence which is owned by a covered taxpayer as of the first day of the taxable year and which is sold or transferred during such taxable year by the covered taxpayer in a sale or transfer described in clause (ii) shall be treated as a single-family residence which is owned by the covered taxpayer as of the last day of such taxable year. (ii) Sales described A sale or transfer is described in this clause if such sale or transfer is a sale or transfer to— (I) a corporation or entity engaged in a trade or business, (II) a group of more than 2 individuals, or (III) a person who owns any other single-family residence at the time of such sale. (e) Reporting (1) In general The Secretary shall require such reporting as the Secretary determines necessary or appropriate to carry out the purposes of this section, including reporting with respect to whether any person acquiring a single-family residence from a covered taxpayer owns any other single-family residences at the time of the acquisition. (2) Failure to report (A) In general Any person who fails to report information required under paragraph (1) or who fails to include correct information in such report shall pay a penalty of $20,000. (B) Reasonable cause waiver No penalty shall be imposed under this paragraph with respect to any failure if it is shown that such failure is due to reasonable cause and not to willful neglect. (C) Treatment of penalty The penalty under this paragraph shall be paid upon notice and demand by the Secretary, and shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68. . (b) Certification (1) In general The reporting required under section 5000E(a) of the Internal Revenue Code of 1986, as added by this section, shall include a certification from each individual to whom a single-family residence is sold or transferred from a covered taxpayer. (2) Form of certification The certification required under this subsection shall be signed by the purchaser or transferee and state the following: (A) The name and address of the purchaser or transferee. (B) The sale is not a sale described in section 5000E(d)(2)(B)(ii) of the Internal Revenue Code of 1986. (C) The purchaser or transferee will be subject to the penalty imposed under section 5000E(e)(2) of such Code for any false certification. (3) Definitions Any term used in this subsection which is used in section 5000E of the Internal Revenue Code of 1986 shall have the meaning give such term under such section. (c) Clerical amendment 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—Excess single-Family residences . (d) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2022. 3. Use of tax revenues for down payment assistance grants (a) Establishment of housing trust fund (1) In general Subchapter A of chapter 98 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 9512. Housing Trust Fund (a) Creation of trust fund There is established in the Treasury of the United States a trust fund to be known as the Housing Trust Fund (hereinafter in this section referred to as the Trust Fund), consisting of such amounts as may be appropriated or credited to such Trust Fund as provided in this section and section 9602(b). (b) Transfers to Trust Fund There are hereby appropriated to the Housing Trust Fund amounts equivalent to revenues received in the Treasury from the tax imposed by section 5000E. (c) Expenditures from Trust Fund Amounts in the Housing Trust Fund shall be available, as provided in appropriations Acts, only for grants under section 3(b) of the End Hedge Fund Control of American Homes Act. . (2) Clerical amendment The table of sections for subchapter A of chapter 98 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item: (b) Grants program for down payment assistance programs (1) Establishment The Secretary of Housing and Urban Development shall establish a program under which the Secretary makes grants to State housing finance agencies to establish new or supplement existing programs that provide down payment assistance to families purchasing homes within the State. (2) Priority A State housing finance agency that receives a grant under this section shall give priority to families seeking assistance to purchase any single-family residence that is sold or transferred by a covered taxpayer (as defined in section 5000E(c) of the Internal Revenue Code of 1986, as added by section 2).