1.  Inverted Domestic Corporation

Comment: Three respondents opined that the incorporation of the Internal Revenue Code (IRC) definition of "inverted domestic corporation" broadened the definition of the term beyond the intent of Congress as the definitions are not the same. They stated rulemaking on inverted domestic corporations should be based on the definition in the Homeland Security Act of 2002 rather than the IRC as Congress did not incorporate the IRC definition into any contracting ban.

Response: The Homeland Security Act of 2002 and IRC definitions are not identical. To simplify and avoid complicating the application of the inverted domestic corporation prohibition, the Councils have-

Deleted FAR 9.108-2, Relationship with the Internal Revenue Code and Treasury regulations;

Added to the definition of "inverted domestic corporation;"

Changed the content of FAR 52.209-2(b), Relation to Internal Revenue Code; and

Changed FAR 52.212-3(n)(1), Relation to Internal Revenue Code.

Thus, the inverted domestic corporation prohibition will be implemented with the Homeland Security Act of 2002 definition stating explicitly that it is not the same as the IRC definition.