Representative Sander Levin and Senator Carl Levin, brothers from Michigan, will both propose bills, aides said.

Public hearings may follow, shining a light on the increasingly popular inversion strategy. But analysts said it was unlikely that legislation could win approval anytime soon with Congress deadlocked over fiscal policy.

"A fresh wave of deals could increase chances that a bill could move. But for now odds of enactment are well below 50 percent," said Greg Valliere, chief political strategist at the independent Potomac Research Group.

The Levin proposal could face opposition in the Republican-led House of Representatives, although Dave Camp, chairman of the tax-writing House Ways and Means Committee, has put forward proposals to end inversions.

"It is a real problem when the tax code provides an incentive for U.S-based companies to move overseas, often times taking good jobs with them," Camp said last month.

Two major inversion deals were launched recently. Both have stumbled. One was a possible combination of U.S. advertising firm Omnicom Group Inc (>> Omnicom Group Inc.) with French rival Publicis Groupe SA (>> PUBLICIS GROUPE). That deal collapsed.

The other was U.S. drugmaker Pfizer Inc's (>> Pfizer Inc.) pursuit of UK competitor AstraZeneca Plc (>> AstraZeneca plc). That deal was thrown into doubt on Monday when AstraZeneca rejected Pfizer's latest offer.

Several smaller inversion transactions have succeeded. A Reuters review showed about 50 such deals have been done in the past 25 years, with half occurring since the 2008-2009 credit crisis abated.

U.S. drugstore chain Walgreen Co (>> Walgreen Company) has been under pressure from some investors to do an inversion with European rival Alliance Boots Holdings Ltd , the Financial Times said. Walgreen bought a 45-percent stake in Alliance Boots in 2012, with an option to buy the rest in 2015.

While legal, inversions typically involve the acquisition by a U.S. company of a foreign company, then a restructuring allowing the U.S. company to be "reflagged" for tax purposes to the foreign company's home or elsewhere.

Both Omnicom and Pfizer proposed relocating their tax domiciles to Britain, which has a lower corporate income tax rate than the United States.

There are some restrictions on these deals, which erode the U.S. corporate tax base. President Barack Obama earlier this year proposed tightening the restrictions in his 2015 budget.

Separately, a private tax activist group said on Monday that major U.S. corporations are likely saving about $550 billion a year by holding nearly $2 trillion in profits overseas.

Urging Congress to take action, the left-leaning Citizens for Tax Justice, based in Washington, said the use of offshore tax havens by corporations is widespread and growing.

(Reporting by Kevin Drawbaugh; Editing by Howard Goller)

By Kevin Drawbaugh