The Stop Tax Haven Abuse Act includes a provision to treat any firm that is publicly traded or has
assets over $50 million as a U.S. corporation. This provision would include hedge funds but
would not affect subsidiaries of multinational firms because decisions are made by the parent
firm. Sullivan argues that such a provision would have a devastating effect on the U.S. hedge
fund industry, where offshore firms generally attract tax exempt U.S. investors and foreigners
who wish to avoid filing tax returns, as well as U.S. tax evaders, and that legislative relief for
U.S. tax exempt investors (pension funds, university endowments) would be likely.