The Department of the Treasury and the Internal Revenue Service (IRS) acted last week to make corporate inversions more difficult for companies looking to swap their American address for a lower tax rate.

Corporate inversions allow U.S. corporations to register as a foreign corporation in order to lower the taxes they owe. But the transaction occurs largely on paper— meaning the location of many of a company’s employees, the markets the company serves, and the products themselves are unlikely to change significantly.

Corporations that have reclassified themselves as “foreign-owned” received approximately $1 billion in federal contracts over the last five years. These companies profit from American tax dollars despite avoiding U.S. taxes themselves.

On Jan. 13, Rep. Lloyd Doggett (D-TX) and Sen. Sheldon Whitehouse (D-RI) introduced the Stop Tax Haven Abuse Act. The bill would eliminate incentives for U.S. companies to shift jobs overseas, close offshore loopholes to ensure corporations are paying their fair share in taxes, and change rules on corporate inversions. 

In early August, Bank of America agreed to a $16.65 billion settlement, which includes funds for “consumer relief.” However, after tax write-offs and deductions, Bank of America's net penalty could be less than $15 billion.