Seven US Democrats have written to Treasury Secretary Jack Lew, requesting that Treasury publish annually a list of inverted corporations to permit better enforcement of existing US bans on awarding government contracts to companies that undergo the tax avoidance maneuver.
“Although Congress and the Department of Treasury took steps in the past to curb corporation inversions, these tax dodgers have continued to exploit loopholes in our laws and regulations,” said Rosa DeLauro (D-CT), Dick Durbin (D-IL), Sander Levin (D-MI), Jack Reed (D-RI), Sheldon Whitehouse (D-RI), Elizabeth Warren (D-MA), and Lloyd Doggett (D-TX).
The lawmakers noted that while a 2002 law prohibits the Department of Homeland Security (DHS) from awarding contracts to inverted companies, and the ban was expanded in 2008 to cover all federal contracts, it is difficult for government procurement personnel to determine whether a company has inverted.
Ingersoll Rand is an example of an inverted corporation that has been able to exploit this loophole; the company was awarded a contract from the Army Corps of Engineers and has become cleared by the DHS to compete for federal contacts, the lawmakers note.
The lawmakers said that Treasury is “uniquely qualified” to determine if a company has inverted. If Treasury believes it is unable to list inverted companies under current law, the agency should advise about the statutory changes needed to permit the disclosures, they said.
The lawmakers also called on Treasury to use its authority under section 385 to recharacterize debt as equity for inverted companies to stop the incentive for companies to invert to take advantage of interest stripping.
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