,,ii #aaith ,,congress #b;d ,session ,s4 #dhbe ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,june #ah1 #bjbf,mr4 ,sanders introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to impose an excise tax on systemically important ,,ai activity1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,american ,a4,i4 ,sovereign ,wealth ,fund ,act4 #b4 ,findings ,congress makes the following findings3 7#a7 ,when a public resource generates wealth1 the public should share in that wealth4 7#b7 ,artificial intelligence is a public resource that derives its economic value from humanity's collective intelligence1 including our books1 songs1 artwork1 journalism1 computer code1 scientific research1 videos1 conversations1 images1 and ideas spanning generations4 7#c7 ,a small number of oligarchs have essentially stolen the creative work of hundreds of millions of people--writers1 artists1 musicians1 journalists1 teachers1 scientists1 and ordinary citizens--without permission1 acknowledgment1 or compensation in order to control the majority of economic value created by artificial intelligence4 7#d7 ,artificial intelligence is built on the collective knowledge of humanity and the wealth it generates must benefit humanity4 7#e7 ,sixty-seven countries throughout the world operate more than #ajj sovereign wealth funds to ensure working families benefit from public resources and national wealth4 7#f7 ,sovereign wealth funds have existed in the ,united ,states for more than #aej years4 7#g7 ,the ,texas ,permanent ,school ,fund was established in #ahde and distributed nearly #e1jjj1jjj1jjj to ,texas schools for the #bjbf-bjbg school year4 7#h7 ,the ,alaska ,permanent ,fund was established #ej years ago from the ,state's oil revenues1 and for decades it has paid dividends directly to ,alaskans4 ,in #bjbb1 that dividend check was #c1bhd per person2 in #bjbc it was #a1cab2 in #bjbd it was #a1gjb2 and in #bjbe it was #a1jjj4 7#i7 ,today1 #f ,states operate sovereign wealth funds that control over #cjj1jjj1jjj1jjj in assets4 7#aj7 ,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 humanity1 including-- 7,a7 ,open,a,i1 which has proposed a ,public ,wealth ,fund that provides every citizen--including those not invested in financial markets--a stake in ,,ai-driven economic growth2 7,b7 ,anthropic1 which has proposed a sovereign wealth fund to shape the sector's behavior and distribute ,,ai-derived wealth more equitably2 and 7,c7 ,elon ,musk1 who has proposed universal ,,high ,,income via checks issued by the ,federal ,government to address unemployment caused by artificial intelligence4 #c4 ,excise tax on systemically important ,,ai companies 7a7 ,in general ,subtitle ,d of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new chapter3 #ej;,b ,systemically important ,,ai companies ,sec4 #ejjj;,e4 ,excise tax on systemically important ,,ai activity4 #ejjj;,e4 ,excise tax on systemically important ,,ai activity 7a7 ,in general 7#a7 ,initial tax ,there is hereby imposed on any applicable ,,ai company a tax equal to the amount determined under subsection 7b74 7#b7 ,additional tax 7,a7 ,in general ,in any case in which an applicable ,,ai company issues equity interests 7including equity interests issued as1 or in settlement of1 employee or other service-provider compensation7 after the date on which the tax is first imposed on such applicable ,,ai company under paragraph 7#a71 there shall be imposed a tax equal to the amount determined under subsection 7b7 by taking into account only the equity interests so issued4 7,b7 ,special rule ,for the purposes of this paragraph1 equity interests transferred or delivered in connection with the settlement1 exercise1 or vesting of any stock option1 restricted stock unit1 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 granted4 7#c7 ,coordination with separation requirement 7,a7 ,in general ,in the case of an applicable ,,ai company that is required to separate its applicable ,,ai trade or business pursuant to section #d of the ,american ,a4,i4 ,sovereign ,wealth ,fund ,act1 no tax shall be imposed under this section until such separation is complete1 and upon completion the tax shall apply only to the separated entity that holds the applicable ,,ai trade or business4 7,b7 ,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 #d of the ,american ,a4,i4 ,sovereign ,wealth ,fund ,act1 whichever is earlier4 7b7 ,amount of tax2 remittance 7#a7 ,in general ,the amount of tax imposed by subsection 7a7 is of such amount that immediately after the tax has been paid1 the ,secretary shall hold #ej percent of all outstanding equity interests in the applicable ,,ai company1 to be remitted in exact proportion of the outstanding equity interests 7including by class of interest7 in such entity immediately prior to the tax being paid4 7#b7 ,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 remittance4 ,no previously outstanding1 treasury1 or repurchased equity interest may be used to satisfy the tax4 ,notwithstanding any provision of the certificate of incorporation1 bylaws1 or other governing document of the applicable ,,ai company1 including any limitation on the number of authorized equity interests or any requirement of approval for issuance1 the company shall issue and remit the equity interests required under this section4 7#c7 ,treatment of repurchases and new issuances ,equity interests issued and remitted under paragraph 7#b7 shall not be treated as an issuance of additional equity interests for purposes of subsection 7a77#b74 ,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 subsection4 7c7 ,applicable ,,ai company ,for purposes of this section-- 7#a7 ,in general ,the term applicable ,,ai company means any corporation or partnership-- 7,a7 which is engaged in #a or more applicable ,,ai trades or businesses for any taxable year beginning after ,december #ca1 #bjbe1 and 7,b7 with respect to which the aggregate gross receipts from such trades or businesses for the calendar year in which such taxable year begins exceed #bjj1jjj1jjj4 7#b7 ,applicable ,,ai trade or business 7,a7 ,in general ,the term applicable ,,ai trade or business means any trade or business engaged in activities related to one or more of the following3 7i7 ,,ai data centers4 7ii7 ,,ai computing infrastructure4 7iii7 ,,ai services4 7iv7 ,researching1 producing1 or manufacturing advanced robotics4 7,b7 ,trade or business ,for purposes of this paragraph1 the term trade or business shall include any activity treated as a trade or business under paragraph 7#e7 or 7#f7 of section #dfi7;c7 7determined without regard to the phrase ,to the extent provided in regulations in such paragraph 7#f774 7#c7 ,special rules ,for purposes of paragraph 7#a77;,b7-- 7,a7 ,aggregation rules ,for purposes of determining aggregate gross receipts1 all persons which are treated as a single employer under subsections 7a7 and 7b7 of section #eb shall be treated as a single person4 7,b7 ,election to use taxable year 7i7 ,in general ,if an applicable ,,ai company makes an election under this subparagraph1 paragraph 7#a77;,b7 shall be applied by substituting such taxable year for the calendar year in which such taxable year begins4 7ii7 ,election ,an election under this subparagraph shall be made at such time and manner as the ,secretary may provide and1 once made1 may be revoked only with the consent of the ,secretary4 7,c7 ,gross receipts ,rules similar to the rules of subparagraphs 7,b71 7,c71 and 7,d7 of section #ddh7;c77#c7 shall apply in determining gross receipts4 7d7 ,other definitions ,for purposes of this section-- 7#a7 ,,ai data center ,the term ,,ai data center means all the buildings1 equipment1 structures1 and other stationary items1 such as server racks1 that-- 7,a7 are located on a single site or on contiguous1 adjacent1 or otherwise connected sites1 7,b7 are owned or operated by the same entity or by any entity that controls1 is controlled by1 or is under the common control of that entity1 regardless of whether the site is a single-occupant or multi-occupant facility1 and 7,c7 7i7 are used for the development or operation of artificial intelligence models at scale1 or 7ii7 7,i7 have a maximum rated power capacity or total peak power load in excess of #bj megawatts1 and 7,,ii7 are designed or equipped-- 7aa7 to deliver #bj kilowatts or more of electrical power to a single server rack1 or 7bb7 to utilize cooling systems that circulate liquid to individual hardware components or submerge electronic hardware in liquid4 7#b7 ,,ai computing infrastructure ,the term ,,ai computing infrastructure means semiconductors1 integrated circuits1 and products containing integrated circuits1 including computers1 networking equipment1 and data storage systems1 that will be used3 7,a7 in an artificial intelligence data center1 or 7,b7 in the training or deployment of artificial intelligence models at scale4 7#c7 ,,ai services 7,a7 ,in general ,the term ,,ai services means the development1 distribution1 or sale of an artificial intelligence model that was trained using a quantity of computing power greater than or equal to #ajbe integer or floating-point operations4 7,b7 ,adjustment ,the ,secretary shall annually1 in coordination with the ,secretary of ,commerce1 adjust the computing power threshold under subparagraph 7,a7 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 #ajbe integer or floating-point operations4 7#d7 ,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 applications4 7#e7 ,equity interests ,the term equity interests means-- 7,a7 in the case of a corporation1 stock in such corporation1 and 7,b7 in the case of a partnership1 any capital or profits interest4 7e7 ,regulations and guidance ,the ,secretary shall prescribe such regulations or other guidance as the ,secretary determines necessary or appropriate to carry out this section4 4 7b7 ,american ,a4,i4 sovereign wealth fund 7#a7 ,establishment of fund ,subchapter ,a of chapter #ih of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #ieab4 ,american ,a4,i4 ,sovereign ,wealth ,fund 7a7 ,creation of trust fund ,there is established in the ,treasury of the ,united ,states a trust fund to be known as the ,american ,a4,i4 ,sovereign ,wealth ,fund 7in this section referred to as the ,fund71 consisting of such amounts as may be transferred to such ,trust ,fund as provided in this section or section #ifjb7;b74 7b7 ,transfers to fund ,there is hereby transferred to the ,fund the equity interests collected as taxes under section #ejjj;,e and any income or gain from such equity interests4 7c7 ,management of fund ,the assets of the ,fund shall be managed by the ,independent ,commission for ,democratic ,,ai4 7d7 ,distributions from fund 7#a7 ,in general 7,a7 ,annual amount ,there are authorized to be appropriated from the ,fund for each fiscal year amounts equal to #e percent of the average market value of the ,fund for the fiscal year1 reduced by the reasonable costs of administering the ,fund4 7,b7 ,average market value ,for purposes of subparagraph 7,a71 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 assets4 7,c7 ,determination of market value ,in determining the market value of the ,fund-- 7i7 equity interests for which there is a readily ascertainable market price shall be valued at such price1 and 7ii7 equity interests for which there is no readily ascertainable market price shall be valued by the ,secretary using the most recent transaction price1 appraisal1 or other reasonable valuation method the ,secretary determines appropriate1 and shall be revalued not less frequently than annually4 7#b7 ,use of distributions ,amounts appropriated from the ,fund shall be used1 as provided in appropriations ,act or law1 to provide for direct payments to the ,american people and to ensure that every man1 woman and child in the ,united ,states has a decent and dignified standard of living1 including health care1 education1 housing1 and a healthy and habitable environment1 in such manner as ,congress may provide4 7#c7 ,preservation of equity interests ,no distribution or amount appropriated from the ,fund under this subsection shall require the sale or other disposition of1 the equity interests held in the ,fund4 7#d7 ,no ,bailout ,no amounts in the ,fund may be used to provide financial assistance to1 or for the benefit of1 any applicable ,,ai company 7as defined in section #ejjj;,e7 or other firm that is insolvent or for the purpose of preventing the failure1 insolvency1 or liquidation of any such firm4 4 7#b7 ,independent ,commission for ,democratic ,,ai 7,a7 ,in general 7i7 ,establishment ,there is established within the ,department of the ,treasury the ,independent ,commission for ,democratic ,,ai 7in this paragraph referred to as the ,commission74 7ii7 ,commissioners ,the ,commission shall consist of #g commissioners appointed by the ,president1 by and with the advice and consent of the ,senate1 of whom-- 7,i7 #a shall be designated as the ,chairperson of the ,commission and shall be selected from a list submitted by the ,majority ,leader of the ,senate2 7,,ii7 #a shall be designated as ,vice-,chairperson of the ,commission and shall be selected from a list submitted by the ,speaker of the ,house of ,representatives2 7,,iii7 #a 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 ,health1 ,education1 ,labor1 and ,pensions of the ,senate2 7,,iv7 #a shall be appointed from among persons who have demonstrated experience in the management of a public pension fund1 endowment1 sovereign wealth fund1 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 ,representatives2 7,v7 #a shall be appointed from among persons who have demonstrated experience in the development1 deployment1 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 ,commerce1 ,science1 and ,transportation of the ,senate2 7,,vi7 #a 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 ,representatives2 and 7,,vii7 #a 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 ,senate4 ,of the commissioners appointed under the preceding sentence1 not more than #d shall be affiliated with the same political party4 7iii7 ,timing of appointment ,the ,president shall nominate a commissioner under each subclause of clause 7ii7 not later than #cj days after a list is submitted under such subclause4 7iv7 ,qualifications 7,i7 ,financial interests ,no commissioner1 and no spouse or dependent of a commissioner1 may hold any equity or other financial interest in any applicable ,,ai company during the commissioner's service4 ,each commissioner shall divest any such interest upon appointment4 7,,ii7 ,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 appointment4 7,,iii7 ,prohibition on service on company boards ,no person shall be a commissioner if such person1 or the spouse or any dependent of such person1 serves on the board of directors of an applicable ,,ai company4 7v7 ,terms ,a commissioner shall be appointed for a term of #e years4 7vi7 ,vacancies 7,i7 ,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 appointment4 7,,ii7 ,filling unexpired term ,an individual chosen to fill a vacancy shall be appointed for the unexpired term of the commissioner replaced4 7vii7 ,removal ,a commissioner may be removed by the ,president only for inefficiency1 neglect of duty1 or malfeasance in office4 7,b7 ,duties and powers 7i7 ,in general ,the ,commission shall-- 7,i7 exercise all voting and governance rights attached to the equity interests held in the ,american ,a4,i4 ,sovereign ,wealth ,fund2 and 7,,ii7 manage the ,american ,a4,i4 ,sovereign ,wealth ,fund1 in consultation with the ,secretary of ,labor1 in such manner as to effectively promote the goals of worker welfare1 public safety1 fair competition among applicable ,,ai companies 7as defined in section #ejjj;,e of the ,internal ,revenue ,code of #aihf71 environmental sustainability1 and financial solvency4 7ii7 ,designation of representatives 7,i7 ,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 interests1 and shall exercise the voting and governance rights attached to those interests to cause such individuals to be elected1 appointed1 or designated to the board of directors of the company1 in the largest number the ,fund's equity interests entitle it to elect1 appoint1 or designate4 7,,ii7 ,duties of representatives ,a representative designated under this section shall act to advance the goals described in clause 7i77,,ii74 7,,iii7 ,fiduciary duties ,notwithstanding any other provision of law1 any provision of the certificate of incorporation1 bylaws1 or other governing document of the company1 or any duty owed under the law of the company's jurisdiction of organization 7including any duty to balance interests under a public benefit corporation statute71 advancing the goals described in clause 7i77,,ii7 shall be a proper purpose consistent with the fiduciary and other duties of a representative1 even where doing so conflicts with the financial interests of the company or its other equity holders4 ,no representative1 and no action of a board of directors taken in accordance with this clause1 shall be subject to liability or challenge on the ground that it advanced those goals4 7iii7 ,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 coordinates1 or has the effect of coordinating1 the competitive conduct of such companies4 7iv7 ,recusal ,a commissioner shall recuse himself or herself from any decision uniquely affecting a company by which the commissioner1 or the spouse or any dependent of such commissioner1 was formerly employed during the #b-year period after the commissioner was first appointed to the ,commission4 7v7 ,transparency 7,i7 ,disclosure of votes ,the ,commission shall make publicly available1 not less frequently than quarterly1 a complete record of how it exercised the voting rights attached to the equity interests held by the ,american ,a4,i4 ,sovereign ,wealth ,fund in each applicable ,,ai company1 including the matter voted upon and the manner in which the ,commission voted4 7,,ii7 ,disclosure of governance activity ,the ,commission shall make publicly available1 not less frequently than annually1 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 company4 7,,iii7 ,form of disclosure ,disclosures under this clause shall be made in a manner that is publicly accessible and machine-readable4 7,c7 ,personnel matters 7i7 ,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 #ecae of title #e1 ,united ,states ,code1 for each day 7including travel time7 during which the commissioner is engaged in the performance of the duties of the ,commission4 7ii7 ,travel expenses ,a commissioner shall be allowed travel expenses1 including per diem in lieu of subsistence1 at rates authorized for employees of agencies under subchapter ,i of chapter #eg of title #e1 ,united ,states ,code1 while away from their homes or regular places of business in the performance of services for the ,commission4 7iii7 ,staff 7,i7 ,in general ,the ,chairperson of the ,commission may1 without regard to the civil service laws 7including regulations71 appoint and terminate an executive director and such other additional personnel as may be necessary to enable the ,commission to perform its duties1 except that the employment of an executive director shall be subject to confirmation by the ,commission4 7,,ii7 ,compensation ,the ,chairperson of the ,commission may fix the compensation of the executive director and other personnel without regard to chapter #ea and subchapter ,,iii of chapter #ec of title #e1 ,united ,states ,code1 relating to classification of positions and ,general ,schedule pay rates1 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 #ecaf of that title4 7iv7 ,detail of government employees ,a ,federal ,government employee may be detailed to the ,commission without reimbursement1 and such detail shall be without interruption or loss of civil service status or privilege4 7v7 ,procurement of temporary and intermittent services ,the ,chairperson of the ,commission may procure temporary and intermittent services under section #caji7;b7 of title #e1 ,united ,states ,code1 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 #ecaf of that title4 7vi7 ,conflicts of interest 7,i7 ,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 ,commission4 7,,ii7 ,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 #e-year period following the commissioner's service on the ,commission4 7,d7 ,funding ,the costs of the operation of the ,commission shall be paid from the assets and income of the ,american ,a4,i4 ,sovereign ,wealth ,fund4 7,e7 ,applicable ,,ai company ,for purposes of this paragraph1 the term applicable ,,ai company has the meaning given such term under section #ejjj;,e of the ,internal ,revenue ,code of #aihf4 7c7 ,information reporting 7#a7 ,in general ,subpart ,b of part ,,iii of subchapter ,a of chapter #fa of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #fjej;,,bb4 ,purchases from ,,ai businesses 7a7 ,in general ,any person-- 7#a7 who is engaged in a trade or business1 and 7#b7 who in the course of such trade or businesses purchases during the taxable year ,,ai data centers1 ,,ai computing infrastructure1 ,,ai services1 or advanced robotics in excess of the amount in effect under section #ddh7;c77#a7 for such taxable year1 shall make a return according to the forms or regulations prescribed by the ,secretary1 setting forth the amount of such purchases and the name and address of the person from whom such ,,ai data center1 ,,ai computing infrastructure1 ,,ai services1 or advanced robotics were purchased4 7b7 ,statement ,to be furnished to persons with respect to whom information is required ,every person required to make a return under subsection 7a7 shall furnish to each corporation or partnership whose name is required to be set forth in such return a written statement showing-- 7#a7 the name1 address1 and phone number of the information contact of the person required to make such return1 and 7#b7 the aggregate amount of purchases from such corporation or partnership required to be shown on the return4 ,the written statement required under the preceding sentence shall be furnished 7either in person or in a statement mailing by first-class mail which includes adequate notice that the statement is enclosed7 to the person at such time and in such form as the ,secretary may prescribe by regulations4 7c7 ,definitions ,any term used in this section which is used in section #ejjj;,e shall have the meaning given such term under section #ejjj;,e4 4 7#b7 ,penalties ,section #fgbd7;d7 of such ,code is amended-- 7,a7 in paragraph 7#a77;,b71 by striking or at the end of clause 7xxviii71 by inserting or at the end of clause 7xxix71 and by adding at the end the following new clause3 7xxx7 section #fjej;,,bb7a7 7relating to purchases from ,,ai businesses71 1 and 7,b7 in paragraph 7#b71 by striking or at the end of subparagraph 7,,nn71 by striking the period at the end of subparagraph 7,,oo7 and inserting 1 or1 and by inserting after subparagraph 7,,oo7 the following new subparagraph3 7,,pp7 section #fjej;,,bb7b7 7relating to purchases from ,,ai businesses74 4 7d7 ,accuracy related penalties ,section #fffb of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7n7 ,application to excise tax on systemically important ,,ai companies ,in the case of any underpayment of tax required under section #ejjj;,e1 there shall be added to the tax under such section an amount equal to the excess of-- 7#a7 the amount determined under section #ejjj;,e7b7 7determined by substituting #fj percent for #ej percent71 over 7#b7 the amount of tax remitted4 4 7e7 ,failure ,to file ,section #ffea of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subsection3 7k7 ,application to excise tax on systemically important ,,ai companies ,in the case of any failure to file any return of tax imposed under section #ejjj;,e1 subsection 7a7 shall not apply and there shall be added to the amount required to be shown as tax on such return #a1jjj1jjj4 4 7f7 ,rules for expatriated entities 7#a7 ,in general ,subsection 7b7 of section #ghgd of the ,internal ,revenue ,code of #aihf is amended to read as follows3 7b7 ,inverted corporations treated as domestic corporations 7#a7 ,in general ,notwithstanding section #ggja7;a77#d71 a foreign corporation shall be treated for purposes of this title as a domestic corporation if-- 7,a7 such corporation would be a surrogate foreign corporation if subsection 7a77#b7 were applied by substituting #hj percent for #fj percent1 or 7,b7 such corporation is an inverted applicable ,,ai company4 7#b7 ,inverted applicable ,,ai company ,for purposes of this subsection1 a foreign corporation shall be treated as an inverted applicable ,,ai company if1 pursuant to a plan 7or a series of related transactions7-- 7,a7 the entity completes the direct or indirect acquisition of-- 7i7 substantially all of the properties held directly or indirectly by a domestic corporation which is an applicable ,,ai company1 or 7ii7 substantially all of the assets of1 or substantially all of the properties constituting a trade or business of1 a domestic partnership which is an applicable ,,ai company1 and 7,b7 after the acquisition1 either-- 7i7 more than #ej percent of the stock 7by vote or value7 of the entity is held-- 7,i7 in the case of an acquisition with respect to a domestic corporation1 by former shareholders of the applicable ,,ai company by reason of holding stock in the applicable ,,ai company1 or 7,,ii7 in the case of an acquisition with respect to a domestic partnership1 by former partners of the applicable ,,ai company by reason of holding a capital or profits interest in the applicable ,,ai company1 or 7ii7 the management and control of the expanded affiliated group which includes the entity occurs1 directly or indirectly1 primarily within the ,united ,states1 and such expanded affiliated group has significant domestic business activities4 7#c7 ,exception for corporations with substantial business activities in foreign country of organization ,a foreign corporation described in paragraph 7#b7 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 group4 ,for purposes of subsection 7a77#b77;,b77iii7 and the preceding sentence1 the term substantial business activities shall have the meaning given such term under regulations in effect on ,january #ah1 #bjag1 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 paragraph4 7#d7 ,management and control ,for purposes of paragraph 7#b77;,b77ii7-- 7,a7 ,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 occurring1 directly or indirectly1 primarily within the ,united ,states4 7,b7 ,executive officers and senior management ,such regulations shall provide that the management and control of an expanded affiliated group shall be treated as occurring1 directly or indirectly1 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 strategic1 financial1 and operational policies of the expanded affiliated group are based or primarily located within the ,united ,states4 ,individuals who in fact exercise such day-to-day responsibilities shall be treated as executive officers and senior management regardless of their title4 7#e7 ,significant domestic business activities ,for purposes of paragraph 7#b77;,b77ii71 an expanded affiliated group has significant domestic business activities if at least #be percent of-- 7,a7 the employees of the group are based in the ,united ,states1 7,b7 the employee compensation incurred by the group is incurred with respect to employees based in the ,united ,states1 7,c7 the assets of the group are located in the ,united ,states1 or 7,d7 the income of the group is derived in the ,united ,states1 determined in the same manner as such determinations are made for purposes of determining substantial business activities under regulations referred to in paragraph 7#c7 as in effect on ,january #ah1 #bjag1 but applied by treating all references in such regulations to foreign country and relevant foreign country as references to the ,united ,states4 ,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 paragraph4 7#f7 ,applicable ,,ai company ,for purposes of this section1 the term applicable ,,ai company has the meaning given such term under section #ejjj;,e4 4 7#b7 ,conforming amendments ,subsection 7c7 of section #ghgd of such ,code is amended-- 7,a7 in paragraph 7#b7-- 7i7 by striking subsection 7a77#b77;,b77ii7 and inserting subsections 7a77#b77;,b77ii7 and 7b77#b77;,b77i72 and 7ii7 by inserting or 7b77#b77;,a7 after 7a77#b77;,b77i7 in subparagraph 7,b72 7,b7 in paragraph 7#c71 by inserting or 7b77#b77;,b77i71 as the case may be1 after 7a77#b77;,b77ii72 7,c7 in paragraph 7#e71 by striking subsection 7a77#b77;,b77ii7 and inserting subsections 7a77#b77;,b77ii7 and 7b77#b77;,b77i72 and 7,d7 in paragraph 7#f71 by inserting or inverted applicable ,,ai company1 as the case may be1 after surrogate foreign corporation4 7g7 ,clerical amendments 7#a7 ,the table of chapters for subtitle ,d of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new item3 ,chapter #ej;,b--,systemically important ,,ai companies 4 7#b7 ,the table of sections for subchapter ,a of chapter #ih of such ,code is amended by adding at the end the following new item3 ,sec4 #ieab4 ,american ,a4,i4 ,sovereign ,wealth ,fund4 4 7#c7 ,the table of sections for subpart ,b of part ,,iii of subchapter ,a of chapter #fa of such ,code is amended by adding at the end the following new item3 ,sec4 #fjej;,,bb4 ,purchases from ,,ai businesses4 4 7h7 ,effective date ,the amendments made by this section shall take effect on the date that is #ij days after the date of the enactment of this ,act4 #d4 ,structural separation 7a7 ,definitions 7#a7 ,applicable ai company2 applicable ai trade or business ,the terms applicable ,,ai company and applicable ,,ai trade or business have the meanings given those terms1 respectively1 in section #ejjj;,e of the ,internal ,revenue ,code of #aihf 7as added by section #c of this ,act74 7#b7 ,structural separation ,the term structural separation1 with respect to an applicable ,,ai company1 means adoption of an operating structure under which the applicable ,,ai company-- 7,a7 does not conduct any business that is not an applicable ,,ai trade or business2 7,b7 does not hold equity in1 provide credit to1 or otherwise provide financing to any business other than the applicable ,,ai trade or business2 7,c7 is not held by any entity engaged in any business other than the applicable ,,ai trade or business2 7,d7 does not share any officer or director with any entity that is not an applicable ,,ai company2 and 7,e7 does not participate in any joint ventures with an entity that is not an applicable ,,ai company4 7b7 ,structural separation required ,the ,federal ,trade ,commission shall require that each applicable ,,ai company complete structural separation-- 7#a7 with respect to an applicable ,,ai company in existence on the date of enactment of this ,act1 not later than #ij days after the date of enactment of this ,act2 and 7#b7 with respect to an applicable ,,ai company established on or after the date of enactment of this ,act1 not later than #ij days after meeting the definition of an applicable ,,ai company4