II 

116TH CONGRESS 

1ST SESSION S. 779 

To end offshore corporate tax avoidance, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 13, 2019 

Mr. WHITEHOUSE (for himself and Mrs. SHAHEEN) introduced the following 

bill; which was read twice and referred to the Committee on Finance 

A BILL 

To end offshore corporate tax avoidance, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE, ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Stop Tax Haven Abuse Act’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment 

9 to, or repeal of, a section or other provision, the reference 

10 shall be considered to be made to a section or other provi11 sion of the Internal Revenue Code of 1986. 


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1 (c) TABLE OF CONTENTS.—The table of contents of 

2 this Act is as follows: 

Sec. 1. Short title, etc. 

TITLE I—ENDING CORPORATE OFFSHORE TAX AVOIDANCE 

Sec. 101. Repeal of check-the-box rules for certain foreign entities and CFC 

look-thru rules. 

Sec. 102. Limitation on deduction of interest by domestic corporations which 

are members of an international financial reporting group. 

Sec. 103. Treatment of foreign corporations managed and controlled in the 

United States as domestic corporations. 

Sec. 104. Swap payments made from the United States to persons offshore. 

Sec. 105. Modifications to rules relating to inverted corporations. 

Sec. 106. Requirement to disclose total corporate taxes paid. 

Sec. 107. Penalty for election to pay tax on deferred foreign income in installments. 

TITLE II—ADDITIONAL MEASURES TO COMBAT TAX EVASION 

Sec. 201. Authorizing special measures against foreign jurisdictions, financial 

institutions, and others that significantly impede United States 

tax enforcement. 

Sec. 202. Strengthening the Foreign Account Tax Compliance Act (FATCA). 

Sec. 203. Reporting United States beneficial owners of foreign owned financial 

accounts. 

Sec. 204. Penalty for failing to disclose offshore holdings. 

Sec. 205. Deadline for anti-money laundering rule for investment advisers. 

Sec. 206. Anti-money laundering requirements for formation agents. 

Sec. 207. Strengthening John Doe summons proceedings. 

Sec. 208. Improving enforcement of foreign financial account reporting. 

3 TITLE I—ENDING CORPORATE 

4 OFFSHORE TAX AVOIDANCE 

5 SEC. 101. REPEAL OF CHECK-THE-BOX RULES FOR CERTAIN 

6 FOREIGN ENTITIES AND CFC LOOK-THRU 

7 RULES. 

8 (a) CHECK-THE-BOX RULES.—Paragraph (3) of sec9 tion 7701(a) is amended— 

10 (1) by striking ‘‘and’’, and 


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1 (2) by inserting after ‘‘insurance companies’’ 

2 the following: ‘‘, and any foreign business entity 

3 that— 

4 ‘‘(A) has a single owner that does not have 

5 limited liability, or 

6 ‘‘(B) has one or more members all of 

7 which have limited liability’’. 

8 (b) LOOK-THRU RULE.—Subparagraph (C) of sec9 tion 954(c)(6) is amended to read as follows: 

10 ‘‘(C) TERMINATION.—Subparagraph (A) 

11 shall not apply to dividends, interest, rents, and 

12 royalties received or accrued after the date of 

13 the enactment of the Stop Tax Haven Abuse 

14 Act.’’. 

15 (c) EFFECTIVE DATE.— 

16 (1) The amendments made by subsection (a) 

17 shall take effect on the date of the enactment of this 

18 Act. 

19 (2) The amendment made by subsection (b) 

20 shall apply to payments received after the date of 

21 the enactment of this Act. 


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1 SEC. 102. LIMITATION ON DEDUCTION OF INTEREST BY DO2 MESTIC CORPORATIONS WHICH ARE MEM3 BERS OF AN INTERNATIONAL FINANCIAL RE4 PORTING GROUP. 

5 (a) IN GENERAL.—Section 163 is amended by redes6 ignating subsection (n) as subsection (p) and by inserting 

7 after subsection (m) the following new subsection: 

8 ‘‘(n) LIMITATION ON DEDUCTION OF INTEREST BY

9 DOMESTIC CORPORATIONS IN INTERNATIONAL FINAN10 CIAL REPORTING GROUPS.— 

11 ‘‘(1) IN GENERAL.—In the case of any domestic 

12 corporation which is a member of any international 

13 financial reporting group, the deduction under this 

14 chapter for interest paid or accrued during the tax15 able year shall not exceed the sum of— 

16 ‘‘(A) the allowable percentage of 110 per17 cent of the excess (if any) of— 

18 ‘‘(i) the amount of such interest so 

19 paid or accrued, over 

20 ‘‘(ii) the amount described in subpara21 graph (B), plus 

22 ‘‘(B) the amount of interest includible in 

23 gross income of such corporation for such tax24 able year. 

25 ‘‘(2) INTERNATIONAL FINANCIAL REPORTING

26 GROUP.— 


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1 ‘‘(A) For purposes of this subsection, the 

2 term ‘international financial reporting group’ 

3 means, with respect to any reporting year, any 

4 group of entities which— 

5 ‘‘(i) includes— 

6 ‘‘(I) at least one foreign corpora7 tion engaged in a trade or business 

8 within the United States, or 

9 ‘‘(II) at least one domestic cor10 poration and one foreign corporation, 

11 ‘‘(ii) prepares consolidated financial 

12 statements with respect to such year, and 

13 ‘‘(iii) reports in such statements aver14 age annual gross receipts (determined in 

15 the aggregate with respect to all entities 

16 which are part of such group) for the 3-re17 porting-year period ending with such re18 porting year in excess of $100,000,000. 

19 ‘‘(B) RULES RELATING TO DETERMINA20 TION OF AVERAGE GROSS RECEIPTS.—For pur21 poses of subparagraph (A)(iii), rules similar to 

22 the rules of section 448(c)(3) shall apply. 

23 ‘‘(3) ALLOWABLE PERCENTAGE.—For purposes 

24 of this subsection— 


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1 ‘‘(A) IN GENERAL.—The term ‘allowable 

2 percentage’ means, with respect to any domestic 

3 corporation for any taxable year, the ratio (ex4 pressed as a percentage and not greater than 

5 100 percent) of— 

6 ‘‘(i) such corporation’s allocable share 

7 of the international financial reporting 

8 group’s reported net interest expense for 

9 the reporting year of such group which 

10 ends in or with such taxable year of such 

11 corporation, over 

12 ‘‘(ii) such corporation’s reported net 

13 interest expense for such reporting year of 

14 such group. 

15 ‘‘(B) REPORTED NET INTEREST EX16 PENSE.—The term ‘reported net interest ex17 pense’ means— 

18 ‘‘(i) with respect to any international 

19 financial reporting group for any reporting 

20 year, the excess of— 

21 ‘‘(I) the aggregate amount of in22 terest expense reported in such 

23 group’s consolidated financial state24 ments for such taxable year, over 


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1 ‘‘(II) the aggregate amount of in2 terest income reported in such group’s 

3 consolidated financial statements for 

4 such taxable year, and 

5 ‘‘(ii) with respect to any domestic cor6 poration for any reporting year, the excess 

7 of— 

8 ‘‘(I) the amount of interest ex9 pense of such corporation reported in 

10 the books and records of the inter11 national financial reporting group 

12 which are used in preparing such 

13 group’s consolidated financial state14 ments for such taxable year, over 

15 ‘‘(II) the amount of interest in16 come of such corporation reported in 

17 such books and records. 

18 ‘‘(C) ALLOCABLE SHARE OF REPORTED

19 NET INTEREST EXPENSE.—With respect to any 

20 domestic corporation which is a member of any 

21 international financial reporting group, such 

22 corporation’s allocable share of such group’s re23 ported net interest expense for any reporting 

24 year is the portion of such expense which bears 

25 the same ratio to such expense as— 


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1 ‘‘(i) the EBITDA of such corporation 

2 for such reporting year, bears to 

3 ‘‘(ii) the EBITDA of such group for 

4 such reporting year. 

5 ‘‘(D) EBITDA.— 

6 ‘‘(i) IN GENERAL.—The term 

7 ‘EBITDA’ means, with respect to any re8 porting year, earnings before interest, 

9 taxes, depreciation, and amortization— 

10 ‘‘(I) as determined in the inter11 national financial reporting group’s 

12 consolidated financial statements for 

13 such year, or 

14 ‘‘(II) for purposes of subpara15 graph (A)(i), as determined in the 

16 books and records of the international 

17 financial reporting group which are 

18 used in preparing such statements if 

19 not determined in such statements. 

20 ‘‘(ii) TREATMENT OF DISREGARDED

21 ENTITIES.—The EBITDA of any domestic 

22 corporation shall not fail to include the 

23 EBITDA of any entity which is dis24 regarded for purposes of this chapter. 


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1 ‘‘(iii) TREATMENT OF INTRA-GROUP

2 DISTRIBUTIONS.—The EBITDA of any do3 mestic corporation shall be determined 

4 without regard to any distribution received 

5 by such corporation from any other mem6 ber of the international financial reporting 

7 group. 

8 ‘‘(E) SPECIAL RULES FOR NON-POSITIVE

9 EBITDA.— 

10 ‘‘(i) NON-POSITIVE GROUP EBITDA.— 

11 In the case of any international financial 

12 reporting group the EBITDA of which is 

13 zero or less, paragraph (1) shall not apply 

14 to any member of such group the EBITDA 

15 of which is above zero. 

16 ‘‘(ii) NON-POSITIVE ENTITY

17 EBITDA.—In the case of any group mem18 ber the EBITDA of which is zero or less, 

19 paragraph (1) shall be applied without re20 gard to subparagraph (A) thereof. 

21 ‘‘(4) CONSOLIDATED FINANCIAL STATEMENT.— 

22 For purposes of this subsection, the term ‘consoli23 dated financial statement’ means any consolidated 

24 financial statement described in paragraph (2)(A)(ii) 

25 if such statement is— 


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1 ‘‘(A) a financial statement which is cer2 tified as being prepared in accordance with gen3 erally accepted accounting principles, inter4 national financial reporting standards, or any 

5 other comparable method of accounting identi6 fied by the Secretary, and which is— 

7 ‘‘(i) a 10–K (or successor form), or 

8 annual statement to shareholders, required 

9 to be filed with the United States Securi10 ties and Exchange Commission, 

11 ‘‘(ii) an audited financial statement 

12 which is used for— 

13 ‘‘(I) credit purposes, 

14 ‘‘(II) reporting to shareholders, 

15 partners, or other proprietors, or to 

16 beneficiaries, or 

17 ‘‘(III) any other substantial 

18 nontax purpose, 

19 but only if there is no statement described 

20 in clause (i), or 

21 ‘‘(iii) filed with any other Federal or 

22 State agency for nontax purposes, but only 

23 if there is no statement described in clause 

24 (i) or (ii), or 

25 ‘‘(B) a financial statement which— 


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1 ‘‘(i) is used for a purpose described in 

2 subclause (I), (II), or (III) of subpara3 graph (A)(ii), or 

4 ‘‘(ii) filed with any regulatory or gov5 ernmental body (whether domestic or for6 eign) specified by the Secretary, 

7 but only if there is no statement described in 

8 subparagraph (A). 

9 ‘‘(5) REPORTING YEAR.—For purposes of this 

10 subsection, the term ‘reporting year’ means, with re11 spect to any international financial reporting group, 

12 the year with respect to which the consolidated fi13 nancial statements are prepared. 

14 ‘‘(6) APPLICATION TO CERTAIN ENTITIES.— 

15 ‘‘(A) PARTNERSHIPS.—Except as other16 wise provided by the Secretary in paragraph 

17 (7), this subsection and subsection (o) shall 

18 apply to any partnership which is a member of 

19 any international financial reporting group 

20 under rules similar to the rules of section 

21 163(j)(4). 

22 ‘‘(B) FOREIGN CORPORATIONS ENGAGED

23 IN TRADE OR BUSINESS WITHIN THE UNITED

24 STATES.—Except as otherwise provided by the 

25 Secretary in paragraph (7), any deduction for 


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1 interest paid or accrued by a foreign corpora2 tion engaged in a trade or business within the 

3 United States shall be limited in a manner con4 sistent with the principles of this subsection. 

5 ‘‘(C) CONSOLIDATED GROUPS.—For pur6 poses of this subsection, the members of any 

7 group that file (or are required to file) a con8 solidated return with respect to the tax imposed 

9 by chapter 1 for a taxable year shall be treated 

10 as a single corporation. 

11 ‘‘(7) REGULATIONS.—The Secretary may issue 

12 such regulations or other guidance as are necessary 

13 or appropriate to carry out the purposes of this sub14 section.’’. 

15 (b) CARRYFORWARD OF DISALLOWED INTEREST.— 

16 (1) IN GENERAL.—Section 163 is amended by 

17 inserting after subsection (n), as added by sub18 section (a), the following new subsection: 

19 ‘‘(o) CARRYFORWARD OF CERTAIN DISALLOWED IN20 TEREST.—The amount of any interest not allowed as a 

21 deduction for any taxable year by reason of subsection 

22 (j)(1) or (n)(1) (whichever imposes the lower limitation 

23 with respect to such taxable year) shall be treated as inter24 est (and as business interest for purposes of subsection 

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1 terest paid or accrued in any taxable year (determined 

2 without regard to the preceding sentence) shall not be car3 ried past the fifth taxable year following such taxable year, 

4 determined by treating interest as allowed as a deduction 

5 on a first-in, first-out basis.’’. 

6 (2) CONFORMING AMENDMENTS.— 

7 (A) Section 163(j)(2) is amended to read 

8 as follows: 

9 ‘‘(2) CARRYFORWARD CROSS-REFERENCE.—For 

10 carryforward treatment, see subsection (o).’’. 

11 (B) Section 163(j)(4)(B)(i)(I) is amended 

12 by striking ‘‘paragraph (2)’’ and inserting ‘‘sub13 section (o)’’. 

14 (C) Section 381(c)(20) is amended to read 

15 as follows: 

16 ‘‘(20) CARRYFORWARD OF DISALLOWED INTER17 EST.—The carryover of disallowed interest described 

18 in section 163(o) to taxable years ending after the 

19 date of distribution or transfer.’’. 

20 (D) Section 382(d)(3) is amended to read 

21 as follows: 

22 ‘‘(3) APPLICATION TO CARRYFORWARD OF DIS23 ALLOWED INTEREST.—The term ‘pre-change loss’ 

24 shall include any carryover of disallowed interest deVerDate Sep 11 2014 18:15 Mar 28, 2019 Jkt 089200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S779.IS S779

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1 scribed in section 163(o) under rules similar to the 

2 rules of paragraph (1).’’. 

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning after 

5 December 31, 2018. 

6 SEC. 103. TREATMENT OF FOREIGN CORPORATIONS MAN7 AGED AND CONTROLLED IN THE UNITED 

8 STATES AS DOMESTIC CORPORATIONS. 

9 (a) IN GENERAL.—Section 7701 is amended by re10 designating subsection (p) as subsection (q) and by insert11 ing after subsection (o) the following new subsection: 

12 ‘‘(p) CERTAIN CORPORATIONS MANAGED AND CON13 TROLLED IN THE UNITED STATES TREATED AS DOMES14 TIC FOR INCOME TAX.— 

15 ‘‘(1) IN GENERAL.—Notwithstanding subsection 

16 (a)(4), in the case of a corporation described in 

17 paragraph (2) if— 

18 ‘‘(A) the corporation would not otherwise 

19 be treated as a domestic corporation for pur20 poses of this title, but 

21 ‘‘(B) the management and control of the 

22 corporation occurs, directly or indirectly, pri23 marily within the United States, 


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1 then, solely for purposes of chapter 1 (and any other 

2 provision of this title relating to chapter 1), the cor3 poration shall be treated as a domestic corporation. 

4 ‘‘(2) CORPORATION DESCRIBED.— 

5 ‘‘(A) IN GENERAL.—A corporation is de6 scribed in this paragraph if— 

7 ‘‘(i) the stock of such corporation is 

8 regularly traded on an established securi9 ties market, or 

10 ‘‘(ii) the aggregate gross assets of 

11 such corporation (or any predecessor there12 of), including assets under management 

13 for investors, whether held directly or indi14 rectly, at any time during the taxable year 

15 or any preceding taxable year is 

16 $50,000,000 or more. 

17 ‘‘(B) GENERAL EXCEPTION.—A corpora18 tion shall not be treated as described in this 

19 paragraph if— 

20 ‘‘(i) such corporation was treated as a 

21 corporation described in this paragraph in 

22 a preceding taxable year, 

23 ‘‘(ii) such corporation— 

24 ‘‘(I) is not regularly traded on an 

25 established securities market, and 


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1 ‘‘(II) has, and is reasonably ex2 pected to continue to have, aggregate 

3 gross assets (including assets under 

4 management for investors, whether 

5 held directly or indirectly) of less than 

6 $50,000,000, and 

7 ‘‘(iii) the Secretary grants a waiver to 

8 such corporation under this subparagraph. 

9 ‘‘(3) MANAGEMENT AND CONTROL.— 

10 ‘‘(A) IN GENERAL.—The Secretary shall 

11 prescribe regulations for purposes of deter12 mining cases in which the management and 

13 control of a corporation is to be treated as oc14 curring primarily within the United States. 

15 ‘‘(B) EXECUTIVE OFFICERS AND SENIOR

16 MANAGEMENT.—Such regulations shall provide 

17 that— 

18 ‘‘(i) the management and control of a 

19 corporation shall be treated as occurring 

20 primarily within the United States if sub21 stantially all of the executive officers and 

22 senior management of the corporation who 

23 exercise day-to-day responsibility for mak24 ing decisions involving strategic, financial, 

25 and operational policies of the corporation 


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1 are located primarily within the United 

2 States, and 

3 ‘‘(ii) individuals who are not executive 

4 officers and senior management of the cor5 poration (including individuals who are of6 ficers or employees of other corporations in 

7 the same chain of corporations as the cor8 poration) shall be treated as executive offi9 cers and senior management if such indi10 viduals exercise the day-to-day responsibil11 ities of the corporation described in clause 

12 (i). 

13 ‘‘(C) CORPORATIONS PRIMARILY HOLDING

14 INVESTMENT ASSETS.—Such regulations shall 

15 also provide that the management and control 

16 of a corporation shall be treated as occurring 

17 primarily within the United States if— 

18 ‘‘(i) the assets of such corporation (di19 rectly or indirectly) consist primarily of as20 sets being managed on behalf of investors, 

21 and 

22 ‘‘(ii) decisions about how to invest the 

23 assets are made in the United States.’’. 

24 (b) EFFECTIVE DATE.—The amendments made by 

25 this section shall apply to taxable years beginning on or 


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1 after the date which is 2 years after the date of the enact2 ment of this Act, whether or not regulations are issued 

3 under section 7701(p)(3) of the Internal Revenue Code 

4 of 1986, as added by this section. 

5 SEC. 104. SWAP PAYMENTS MADE FROM THE UNITED 

6 STATES TO PERSONS OFFSHORE. 

7 (a) TAX ON SWAP PAYMENTS RECEIVED BY FOR8 EIGN PERSONS.—Section 871(a)(1) is amended— 

9 (1) by inserting ‘‘swap payments (as identified 

10 in section 1256(b)(2)(B)),’’ after ‘‘annuities,’’ in 

11 subparagraph (A), and 

12 (2) by adding at the end the following new sen13 tence: ‘‘In the case of swap payments, the source of 

14 a swap payment is determined by reference to the lo15 cation of the payor.’’. 

16 (b) TAX ON SWAP PAYMENTS RECEIVED BY FOR17 EIGN CORPORATIONS.—Section 881(a) is amended— 

18 (1) by inserting ‘‘swap payments (as identified 

19 in section 1256(b)(2)(B)),’’ after ‘‘annuities,’’ in 

20 paragraph (1), and 

21 (2) by adding at the end the following new sen22 tence: ‘‘In the case of swap payments, the source of 

23 a swap payment is determined by reference to the lo24 cation of the payor.’’. 


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1 SEC. 105. MODIFICATIONS TO RULES RELATING TO IN2 VERTED CORPORATIONS. 

3 (a) IN GENERAL.—Subsection (b) of section 7874 is 

4 amended to read as follows: 

5 ‘‘(b) INVERTED CORPORATIONS TREATED AS DO6 MESTIC CORPORATIONS.— 

7 ‘‘(1) IN GENERAL.—Notwithstanding section 

8 7701(a)(4), a foreign corporation shall be treated for 

9 purposes of this title as a domestic corporation if— 

10 ‘‘(A) such corporation would be a surro11 gate foreign corporation if subsection (a)(2) 

12 were applied by substituting ‘80 percent’ for 

13 ‘60 percent’, or 

14 ‘‘(B) such corporation is an inverted do15 mestic corporation. 

16 ‘‘(2) INVERTED DOMESTIC CORPORATION.—For 

17 purposes of this subsection, a foreign corporation 

18 shall be treated as an inverted domestic corporation 

19 if, pursuant to a plan (or a series of related trans20 actions)— 

21 ‘‘(A) the entity completes after December 

22 22, 2017, the direct or indirect acquisition of— 

23 ‘‘(i) substantially all of the properties 

24 held directly or indirectly by a domestic 

25 corporation, or 


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1 ‘‘(ii) substantially all of the assets of, 

2 or substantially all of the properties consti3 tuting a trade or business of, a domestic 

4 partnership, and 

5 ‘‘(B) after the acquisition, either— 

6 ‘‘(i) more than 50 percent of the stock 

7 (by vote or value) of the entity is held— 

8 ‘‘(I) in the case of an acquisition 

9 with respect to a domestic corpora10 tion, by former shareholders of the 

11 domestic corporation by reason of 

12 holding stock in the domestic corpora13 tion, or 

14 ‘‘(II) in the case of an acquisition 

15 with respect to a domestic partner16 ship, by former partners of the do17 mestic partnership by reason of hold18 ing a capital or profits interest in the 

19 domestic partnership, or 

20 ‘‘(ii) the management and control of 

21 the expanded affiliated group which in22 cludes the entity occurs, directly or indi23 rectly, primarily within the United States, 

24 and such expanded affiliated group has 

25 significant domestic business activities. 


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1 ‘‘(3) EXCEPTION FOR CORPORATIONS WITH

2 SUBSTANTIAL BUSINESS ACTIVITIES IN FOREIGN

3 COUNTRY OF ORGANIZATION.—A foreign corporation 

4 described in paragraph (2) shall not be treated as an 

5 inverted domestic corporation if after the acquisition 

6 the expanded affiliated group which includes the en7 tity has substantial business activities in the foreign 

8 country in which or under the law of which the enti9 ty is created or organized when compared to the 

10 total business activities of such expanded affiliated 

11 group. For purposes of subsection (a)(2)(B)(iii) and 

12 the preceding sentence, the term ‘substantial busi13 ness activities’ shall have the meaning given such 

14 term under regulations in effect on December 22, 

15 2017, except that the Secretary may issue regula16 tions increasing the threshold percent in any of the 

17 tests under such regulations for determining if busi18 ness activities constitute substantial business activi19 ties for purposes of this paragraph. 

20 ‘‘(4) MANAGEMENT AND CONTROL.—For pur21 poses of paragraph (2)(B)(ii)— 

22 ‘‘(A) IN GENERAL.—The Secretary shall 

23 prescribe regulations for purposes of deter24 mining cases in which the management and 

25 control of an expanded affiliated group is to be 


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1 treated as occurring, directly or indirectly, pri2 marily within the United States. The regula3 tions prescribed under the preceding sentence 

4 shall apply to periods after December 22, 2017. 

5 ‘‘(B) EXECUTIVE OFFICERS AND SENIOR

6 MANAGEMENT.—Such regulations shall provide 

7 that the management and control of an ex8 panded affiliated group shall be treated as oc9 curring, directly or indirectly, primarily within 

10 the United States if substantially all of the ex11 ecutive officers and senior management of the 

12 expanded affiliated group who exercise day-to13 day responsibility for making decisions involving 

14 strategic, financial, and operational policies of 

15 the expanded affiliated group are based or pri16 marily located within the United States. Indi17 viduals who in fact exercise such day-to-day re18 sponsibilities shall be treated as executive offi19 cers and senior management regardless of their 

20 title. 

21 ‘‘(5) SIGNIFICANT DOMESTIC BUSINESS ACTIVI22 TIES.—For purposes of paragraph (2)(B)(ii), an ex23 panded affiliated group has significant domestic 

24 business activities if at least 25 percent of— 


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1 ‘‘(A) the employees of the group are based 

2 in the United States, 

3 ‘‘(B) the employee compensation incurred 

4 by the group is incurred with respect to employ5 ees based in the United States, 

6 ‘‘(C) the assets of the group are located in 

7 the United States, or 

8 ‘‘(D) the income of the group is derived in 

9 the United States, 

10 determined in the same manner as such determina11 tions are made for purposes of determining substan12 tial business activities under regulations referred to 

13 in paragraph (3) as in effect on December 22, 2017, 

14 but applied by treating all references in such regula15 tions to ‘foreign country’ and ‘relevant foreign coun16 try’ as references to ‘the United States’. The Sec17 retary may issue regulations decreasing the thresh18 old percent in any of the tests under such regula19 tions for determining if business activities constitute 

20 significant domestic business activities for purposes 

21 of this paragraph.’’. 

22 (b) CONFORMING AMENDMENTS.— 

23 (1) Clause (i) of section 7874(a)(2)(B) is 

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1 serting ‘‘after March 4, 2003, and before December 

2 23, 2017,’’. 

3 (2) Subsection (c) of section 7874 is amend4 ed— 

5 (A) in paragraph (2)— 

6 (i) by striking ‘‘subsection 

7 (a)(2)(B)(ii)’’ and inserting ‘‘subsections 

8 (a)(2)(B)(ii) and (b)(2)(B)(i)’’; and 

9 (ii) by inserting ‘‘or (b)(2)(A)’’ after 

10 ‘‘(a)(2)(B)(i)’’ in subparagraph (B); 

11 (B) in paragraph (3), by inserting ‘‘or 

12 (b)(2)(B)(i), as the case may be,’’ after 

13 ‘‘(a)(2)(B)(ii)’’; 

14 (C) in paragraph (5), by striking ‘‘sub15 section (a)(2)(B)(ii)’’ and inserting ‘‘sub16 sections (a)(2)(B)(ii) and (b)(2)(B)(i)’’; and 

17 (D) in paragraph (6), by inserting ‘‘or in18 verted domestic corporation, as the case may 

19 be,’’ after ‘‘surrogate foreign corporation’’. 

20 (c) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to taxable years ending after De22 cember 22, 2017. 


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1 SEC. 106. REQUIREMENT TO DISCLOSE TOTAL CORPORATE 

2 TAXES PAID. 

3 (a) IN GENERAL.—Section 13 of the Securities Ex4 change Act of 1934 (15 U.S.C. 78m) is amended by add5 ing at the end the following new subsection: 

6 ‘‘(s) DISCLOSURE OF TOTAL CORPORATE TAXES

7 PAID.— 

8 ‘‘(1) ISSUER DISCLOSURE REQUIREMENT.— 

9 Each issuer required to file an annual or quarterly 

10 report under subsection (a) shall disclose in that re11 port— 

12 ‘‘(A) the total pre-tax profit of the issuer 

13 during the period covered by the report; 

14 ‘‘(B) the total amount paid by the issuer 

15 in State taxes during the period covered by the 

16 report; 

17 ‘‘(C) the total amount paid by the issuer in 

18 Federal taxes during the period covered by the 

19 report; and 

20 ‘‘(D) the total amount paid by the issuer 

21 in foreign taxes during the period covered by 

22 the report. 

23 ‘‘(2) DISCLOSURE OF COUNTRY-BY-COUNTRY

24 REPORTING INFORMATION.—Each issuer required to 

25 file an annual or quarterly report under subsection 

26 (a) shall disclose in that report, for each of its subVerDate Sep 11 2014 18:15 Mar 28, 2019 Jkt 089200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\S779.IS S779

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1 sidiaries and aggregated on a country-by-country 

2 basis— 

3 ‘‘(A) revenues generated from transactions 

4 with other constituent entities; 

5 ‘‘(B) revenues not generated from trans6 actions with other constituent entities; 

7 ‘‘(C) profit or loss before income tax; 

8 ‘‘(D) total income tax paid on a cash basis 

9 to all tax jurisdictions, and any taxes withheld 

10 on payments received by the constituent enti11 ties; 

12 ‘‘(E) total accrued tax expense recorded on 

13 taxable profits or losses, reflecting only oper14 ations in the relevant annual period and exclud15 ing deferred taxes or provisions for uncertain 

16 tax liabilities; 

17 ‘‘(F) stated capital, except that the stated 

18 capital of a permanent establishment must be 

19 reported in the tax jurisdiction of residence of 

20 the legal entity of which it is a permanent es21 tablishment unless there is a defined capital re22 quirement in the permanent establishment tax 

23 jurisdiction for regulatory purposes; 

24 ‘‘(G) total accumulated earnings, except 

25 that accumulated earnings of a permanent esVerDate Sep 11 2014 18:15 Mar 28, 2019 Jkt 089200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\S779.IS S779

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1 tablishment must be reported by the legal entity 

2 of which it is a permanent establishment; 

3 ‘‘(H) total number of employees on a full4 time equivalent basis; and 

5 ‘‘(I) net book value of tangible assets, 

6 which, for purposes of this section, does not in7 clude cash or cash equivalents, intangibles, or 

8 financial assets. 

9 ‘‘(3) AVAILABILITY OF INFORMATION.—The 

10 Commission shall make the information filed with 

11 the Commission pursuant to this subsection publicly 

12 available through the Commission website in a man13 ner that is searchable, sortable, and downloadable.’’. 

14 (b) EFFECTIVE DATE.—The amendment made by 

15 this section shall apply to disclosures made after the date 

16 of the enactment of this Act. 

17 SEC. 107. PENALTY FOR ELECTION TO PAY TAX ON DE18 FERRED FOREIGN INCOME IN INSTALL19 MENTS. 

20 (a) IN GENERAL.—Section 965(h) is amended by 

21 adding at the end the following new paragraph: 

22 ‘‘(7) PENALTY.—Interest on installments under 

23 this subsection shall be payable as determined under 

24 section 6601 by treating the last date prescribed for 


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1 payment for any installment as the date for payment 

2 of the first installment under this subsection.’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 subsection (a) shall take effect as if included in section 

5 14103 of Public Law 115–97. 

6 TITLE II—ADDITIONAL MEAS7 URES TO COMBAT TAX EVA8 SION 

9 SEC. 201. AUTHORIZING SPECIAL MEASURES AGAINST FOR10 EIGN JURISDICTIONS, FINANCIAL INSTITU11 TIONS, AND OTHERS THAT SIGNIFICANTLY 

12 IMPEDE UNITED STATES TAX ENFORCEMENT. 

13 (a) IN GENERAL.—Section 5318A of title 31, United 

14 States Code, is amended— 

15 (1) by striking the section heading and insert16 ing the following: ‘‘Special measures for juris17 dictions, financial institutions, or inter18 national transactions that are of primary 

19 money laundering concern or signifi20 cantly impede United States tax enforce21 ment’’; 

22 (2) in subsection (a), by striking the subsection 

23 heading and inserting the following: ‘‘SPECIAL

24 MEASURES TO COUNTER MONEY LAUNDERING AND


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1 EFFORTS TO SIGNIFICANTLY IMPEDE UNITED

2 STATES TAX ENFORCEMENT’’; 

3 (3) in subsection (c)— 

4 (A) by striking the subsection heading and 

5 inserting the following: ‘‘CONSULTATIONS AND

6 INFORMATION TO BE CONSIDERED IN FINDING

7 JURISDICTIONS, INSTITUTIONS, TYPES OF AC8 COUNTS, OR TRANSACTIONS TO BE OF PRI9 MARY MONEY LAUNDERING CONCERN OR TO

10 BE SIGNIFICANTLY IMPEDING UNITED STATES

11 TAX ENFORCEMENT’’; and 

12 (B) in paragraph (2), by adding at the end 

13 the following: 

14 ‘‘(C) OTHER CONSIDERATIONS.—The fact 

15 that a jurisdiction or financial institution is co16 operating with the United States on imple17 menting the requirements specified in chapter 4 

18 of the Internal Revenue Code of 1986 may be 

19 favorably considered in evaluating whether such 

20 jurisdiction or financial institution is signifi21 cantly impeding United States tax enforce22 ment.’’; 

23 (4) in subsection (a)(1), by inserting ‘‘or is sig24 nificantly impeding United States tax enforcement’’ 

25 after ‘‘primary money laundering concern’’; 


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1 (5) in subsection (a)(4)— 

2 (A) in subparagraph (A)— 

3 (i) by inserting ‘‘in matters involving 

4 money laundering,’’ before ‘‘shall consult’’; 

5 and 

6 (ii) by striking ‘‘and’’ at the end; 

7 (B) by redesignating subparagraph (B) as 

8 subparagraph (C); and 

9 (C) by inserting after subparagraph (A) 

10 the following: 

11 ‘‘(B) in matters involving United States 

12 tax enforcement, shall consult with the Commis13 sioner of Internal Revenue, the Secretary of 

14 State, the Attorney General of the United 

15 States, and in the sole discretion of the Sec16 retary, such other agencies and interested par17 ties as the Secretary may find to be appro18 priate; and’’; 

19 (6) in each of paragraphs (1)(A), (2), (3), and 

20 (4) of subsection (b), by inserting ‘‘or to be signifi21 cantly impeding United States tax enforcement’’ 

22 after ‘‘primary money laundering concern’’ each 

23 place that term appears; 

24 (7) in subsection (b), by striking paragraph (5) 

25 and inserting the following: 


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1 ‘‘(5) PROHIBITIONS OR CONDITIONS ON OPEN2 ING OR MAINTAINING CERTAIN CORRESPONDENT OR

3 PAYABLE-THROUGH ACCOUNTS OR AUTHORIZING

4 CERTAIN PAYMENT CARDS.—If the Secretary finds a 

5 jurisdiction outside of the United States, 1 or more 

6 financial institutions operating outside of the United 

7 States, or 1 or more classes of transactions within 

8 or involving a jurisdiction outside of the United 

9 States to be of primary money laundering concern or 

10 to be significantly impeding United States tax en11 forcement, the Secretary, in consultation with the 

12 Secretary of State, the Attorney General of the 

13 United States, and the Chairman of the Board of 

14 Governors of the Federal Reserve System, may pro15 hibit, or impose conditions upon— 

16 ‘‘(A) the opening or maintaining in the 

17 United States of a correspondent account or 

18 payable-through account by any domestic finan19 cial institution or domestic financial agency for 

20 or on behalf of a foreign banking institution, if 

21 such correspondent account or payable-through 

22 account involves any such jurisdiction or insti23 tution, or if any such transaction may be con24 ducted through such correspondent account or 

25 payable-through account; or 


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1 ‘‘(B) the authorization, approval, or use in 

2 the United States of a credit card, charge card, 

3 debit card, or similar credit or debit financial 

4 instrument by any domestic financial institu5 tion, domestic financial agency, or credit card 

6 company or association for or on behalf of a 

7 foreign banking institution, if such credit card, 

8 charge card, debit card, or similar credit or 

9 debit financial instrument involves any such ju10 risdiction or institution, or if any such trans11 action may be conducted through such credit 

12 card, charge card, debit card, or similar credit 

13 or debit financial instrument.’’; 

14 (8) in subsection (c)(1), by inserting ‘‘or is sig15 nificantly impeding United States tax enforcement’’ 

16 after ‘‘primary money laundering concern’’; 

17 (9) in subsection (c)(2)(A)— 

18 (A) in clause (ii), by striking ‘‘bank secrecy 

19 or special regulatory advantages’’ and inserting 

20 ‘‘bank, tax, corporate, trust, or financial secrecy 

21 or regulatory advantages’’; 

22 (B) in clause (iii), by striking ‘‘supervisory 

23 and counter-money’’ and inserting ‘‘supervisory, 

24 international tax enforcement, and counter25 money’’; 


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1 (C) in clause (v), by striking ‘‘banking or 

2 secrecy’’ and inserting ‘‘banking, tax, or se3 crecy’’; and 

4 (D) in clause (vi), by inserting ‘‘, tax trea5 ty, or tax information exchange agreement’’ 

6 after ‘‘treaty’’; 

7 (10) in subsection (c)(2)(B)— 

8 (A) in clause (i), by inserting ‘‘or tax eva9 sion’’ after ‘‘money laundering’’; and 

10 (B) in clause (iii), by inserting ‘‘, tax eva11 sion,’’ after ‘‘money laundering’’; and 

12 (11) in subsection (d), by inserting ‘‘involving 

13 money laundering, and shall notify, in writing, the 

14 Committee on Finance of the Senate and the Com15 mittee on Ways and Means of the House of Rep16 resentatives of any such action involving United 

17 States tax enforcement’’ after ‘‘such action’’. 

18 (b) CLERICAL AMENDMENT.—The table of contents 

19 for chapter 53 of title 31, United States Code, is amended 

20 by striking the item relating to section 5318A and insert21 ing the following: 

‘‘5318A. Special measures for jurisdictions, financial institutions, or international transactions that are of primary money laundering 

concern or significantly impede United States tax enforcement.’’. 


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1 SEC. 202. STRENGTHENING THE FOREIGN ACCOUNT TAX 

2 COMPLIANCE ACT (FATCA). 

3 (a) REPORTING ACTIVITIES WITH RESPECT TO PAS4 SIVE FOREIGN INVESTMENT COMPANIES.—Section 

5 1298(f) is amended by inserting ‘‘, or who directly or indi6 rectly forms, transfers assets to, is a beneficiary of, has 

7 a beneficial interest in, or receives money or property or 

8 the use thereof from,’’ after ‘‘shareholder of’’. 

9 (b) WITHHOLDABLE PAYMENTS TO FOREIGN FINAN10 CIAL INSTITUTIONS.—Section 1471(d) is amended— 

11 (1) in paragraph (2)(A), by inserting ‘‘or trans12 action’’ after ‘‘any depository’’, and 

13 (2) in paragraph (5)(C), by striking ‘‘or any in14 terest’’ and all that follows and inserting ‘‘deriva15 tives, or any interest (including a futures or forward 

16 contract, swap, or option) in such securities, part17 nership interests, commodities, or derivatives.’’. 

18 (c) WITHHOLDABLE PAYMENTS TO OTHER FOREIGN

19 FINANCIAL INSTITUTIONS.—Section 1472 is amended— 

20 (1) by inserting ‘‘as a result of any customer 

21 identification, anti-money laundering, anti-corrup22 tion, or similar obligation to identify account hold23 ers,’’ after ‘‘reason to know,’’ in subsection (b)(2), 

24 and 


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1 (2) by inserting ‘‘as posing a low risk of tax 

2 evasion’’ after ‘‘this subsection’’ in subsection 

3 (c)(1)(G). 

4 (d) DEFINITIONS.—Clauses (i) and (ii) of section 

5 1473(2)(A) are each amended by inserting ‘‘or as a bene6 ficial owner’’ after ‘‘indirectly’’. 

7 (e) SPECIAL RULES.—Section 1474(c) is amended— 

8 (1) by inserting ‘‘, except that information pro9 vided under section 1471(c) or 1472(b) may be dis10 closed to any Federal law enforcement agency, upon 

11 request or upon the initiation of the Secretary, to in12 vestigate or address a possible violation of United 

13 States law’’ after ‘‘shall apply’’ in paragraph (1), 

14 and 

15 (2) by inserting ‘‘, or has had an agreement 

16 terminated under such section,’’ after ‘‘section 

17 1471(b)’’ in paragraph (2). 

18 (f) INFORMATION WITH RESPECT TO FOREIGN FI19 NANCIAL ASSETS.—Section 6038D(a) is amended by in20 serting ‘‘ownership or beneficial ownership’’ after ‘‘holds 

21 any’’. 

22 (g) ESTABLISHING PRESUMPTIONS FOR ENTITIES

23 AND TRANSACTIONS INVOLVING NON-FATCA INSTITU24 TIONS.— 

25 (1) PRESUMPTIONS FOR TAX PURPOSES.— 


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1 (A) IN GENERAL.—Chapter 76 is amended 

2 by inserting after section 7491 the following 

3 new subchapter: 

4 ‘‘Subchapter F—Presumptions for Certain 

5 Legal Proceedings 

‘‘Sec. 7492. Presumptions pertaining to entities and transactions involving nonFATCA institutions. 

6 ‘‘SEC. 7492. PRESUMPTIONS PERTAINING TO ENTITIES AND 

7 TRANSACTIONS INVOLVING NON-FATCA IN8 STITUTIONS. 

9 ‘‘(a) CONTROL.—For purposes of any United States 

10 civil judicial or administrative proceeding to determine or 

11 collect tax, there shall be a rebuttable presumption that 

12 a United States person who, directly or indirectly, formed, 

13 transferred assets to, was a beneficiary of, had a beneficial 

14 interest in, or received money or property or the use there15 of from an entity, including a trust, corporation, limited 

16 liability company, partnership, or foundation, that holds 

17 an account, or in any other manner has assets, in a non18 FATCA institution, exercised control over such entity. The 

19 presumption of control created by this subsection shall not 

20 be applied to prevent the Secretary from determining or 

21 arguing the absence of control. 

22 ‘‘(b) TRANSFERS OF INCOME.—For purposes of any 

23 United States civil judicial or administrative proceeding 

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1 sumption that any amount or thing of value received by 

2 a United States person directly or indirectly from an ac3 count or from an entity that holds an account, or in any 

4 other manner has assets, in a non-FATCA institution, 

5 constitutes income of such person taxable in the year of 

6 receipt; and any amount or thing of value paid or trans7 ferred by or on behalf of a United States person directly 

8 or indirectly to an account, or entity that holds an ac9 count, or in any other manner has assets, in a non10 FATCA institution, represents previously unreported in11 come of such person taxable in the year of the transfer. 

12 ‘‘(c) REBUTTING THE PRESUMPTIONS.—The pre13 sumptions established in this section may be rebutted only 

14 by clear and convincing evidence, including detailed docu15 mentary, testimonial, and transactional evidence, estab16 lishing that— 

17 ‘‘(1) in subsection (a), such taxpayer exercised 

18 no control, directly or indirectly, over account or en19 tity at the time in question, and 

20 ‘‘(2) in subsection (b), such amounts or things 

21 of value did not represent income related to such 

22 United States person. 

23 Any court having jurisdiction of a civil proceeding in which 

24 control of such an offshore account or offshore entity or 

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1 ferred is an issue shall prohibit the introduction by the 

2 taxpayer of any foreign based document that is not au3 thenticated in open court by a person with knowledge of 

4 such document, or any other evidence supplied by a person 

5 outside the jurisdiction of a United States court, unless 

6 such person appears before the court.’’. 

7 (B) The table of subchapters for chapter 

8 76 is amended by inserting after the item relat9 ing to subchapter E the following new item: 

‘‘SUBCHAPTER F. PRESUMPTIONS FOR CERTAIN LEGAL PROCEEDINGS’’. 

10 (2) DEFINITION OF NON-FATCA INSTITUTION.— 

11 Section 7701(a) is amended by adding at the end 

12 the following new paragraph: 

13 ‘‘(51) NON-FATCA INSTITUTION.—The term 

14 ‘non-FATCA institution’ means any foreign financial 

15 institution that does not meet the reporting require16 ments of section 1471(b).’’. 

17 (3) PRESUMPTIONS FOR SECURITIES LAW PUR18 POSES.—Section 21 of the Securities Exchange Act 

19 of 1934 (15 U.S.C. 78u) is amended by adding at 

20 the end the following new subsection: 

21 ‘‘(j) PRESUMPTIONS PERTAINING TO CONTROL AND

22 BENEFICIAL OWNERSHIP.— 

23 ‘‘(1) CONTROL.—For purposes of any civil judi24 cial or administrative proceeding under this title, 

25 there shall be a rebuttable presumption that a 


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•S 779 IS

1 United States person who, directly or indirectly, 

2 formed, transferred assets to, was a beneficiary of, 

3 had a beneficial interest in, or received money or 

4 property or the use thereof from an entity, including 

5 a trust, corporation, limited liability company, part6 nership, or foundation, that holds an account, or in 

7 any other manner has assets, in a non-FATCA insti8 tution (as defined in section 7701(a)(51) of the In9 ternal Revenue Code of 1986), exercised control over 

10 such entity. The presumption of control created by 

11 this paragraph shall not be applied to prevent the 

12 Commission from determining or arguing the ab13 sence of control. 

14 ‘‘(2) BENEFICIAL OWNERSHIP.—For purposes 

15 of any civil judicial or administrative proceeding 

16 under this title, there shall be a rebuttable presump17 tion that securities that are nominally owned by an 

18 entity, including a trust, corporation, limited liability 

19 company, partnership, or foundation, and that are 

20 held in a non-FATCA institution (as so defined), are 

21 beneficially owned by any United States person who 

22 directly or indirectly exercised control over such enti23 ty. The presumption of beneficial ownership created 

24 by this paragraph shall not be applied to prevent the 


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•S 779 IS

1 Commission from determining or arguing the ab2 sence of beneficial ownership.’’. 

3 (4) PRESUMPTION FOR REPORTING PURPOSES

4 RELATING TO FOREIGN FINANCIAL ACCOUNTS.—Sec5 tion 5314 of title 31, United States Code, is amend6 ed by adding at the end the following new sub7 section: 

8 ‘‘(d) REBUTTABLE PRESUMPTION.—For purposes of 

9 this section, there shall be a rebuttable presumption that 

10 any account with a non-FATCA institution (as defined in 

11 section 7701(a)(51) of the Internal Revenue Code of 

12 1986) contains funds in an amount that is at least suffi13 cient to require a report prescribed by regulations under 

14 this section.’’. 

15 (5) REGULATORY AUTHORITY.—Not later than 

16 180 days after the date of enactment of this Act, the 

17 Secretary of the Treasury and the Chairman of the 

18 Securities and Exchange Commission shall each 

19 adopt regulations or other guidance necessary to im20 plement the amendments made by this subsection. 

21 The Secretary and the Chairman may, by regulation 

22 or guidance, provide that the presumption of control 

23 shall not extend to particular classes of transactions, 

24 such as corporate reorganizations or transactions 

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1 mines that applying such amendments to such trans2 actions is not necessary to carry out the purposes of 

3 such amendments. 

4 (h) EFFECTIVE DATE.—The amendments made by 

5 this section shall take effect on the date which is 180 days 

6 after the date of enactment of this Act, whether or not 

7 regulations are issued under subsection (g)(5). 

8 SEC. 203. REPORTING UNITED STATES BENEFICIAL OWN9 ERS OF FOREIGN OWNED FINANCIAL AC10 COUNTS. 

11 (a) IN GENERAL.—Subpart B of part III of sub12 chapter A of chapter 61 is amended by inserting after sec13 tion 6045B the following new sections: 

14 ‘‘SEC. 6045C. RETURNS REGARDING UNITED STATES BENE15 FICIAL OWNERS OF FINANCIAL ACCOUNTS 

16 LOCATED IN THE UNITED STATES AND HELD 

17 IN THE NAME OF A FOREIGN ENTITY. 

18 ‘‘(a) REQUIREMENT OF RETURN.—If— 

19 ‘‘(1) any withholding agent under sections 1441 

20 and 1442 has the control, receipt, custody, disposal, 

21 or payment of any amount constituting gross income 

22 from sources within the United States of any foreign 

23 entity, including a trust, corporation, limited liability 

24 company, partnership, or foundation (other than an 


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•S 779 IS

1 entity with shares regularly traded on an established 

2 securities market), and 

3 ‘‘(2) such withholding agent determines for pur4 poses of title 14, 18, or 31 of the United States 

5 Code that a United States person has any beneficial 

6 interest in the foreign entity or in the account in 

7 such entity’s name (hereafter in this section referred 

8 to as ‘United States beneficial owner’), 

9 then the withholding agent shall make a return according 

10 to the forms or regulations prescribed by the Secretary. 

11 ‘‘(b) REQUIRED INFORMATION.—For purposes of 

12 subsection (a) the information required to be included on 

13 the return shall include— 

14 ‘‘(1) the name, address, and, if known, the tax15 payer identification number of the United States 

16 beneficial owner, 

17 ‘‘(2) the known facts pertaining to the relation18 ship of such United States beneficial owner to the 

19 foreign entity and the account, 

20 ‘‘(3) the gross amount of income from sources 

21 within the United States (including gross proceeds 

22 from brokerage transactions), and 

23 ‘‘(4) such other information as the Secretary 

24 may by forms or regulations provide. 


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1 ‘‘(c) STATEMENTS TO BE FURNISHED TO BENE2 FICIAL OWNERS WITH RESPECT TO WHOM INFORMATION

3 IS REQUIRED TO BE REPORTED.—A withholding agent 

4 required to make a return under subsection (a) shall fur5 nish to each United States beneficial owner whose name 

6 is required to be set forth in such return a statement 

7 showing— 

8 ‘‘(1) the name, address, and telephone number 

9 of the information contact of the person required to 

10 make such return, and 

11 ‘‘(2) the information required to be shown on 

12 such return with respect to such United States bene13 ficial owner. 

14 The written statement required under the preceding sen15 tence shall be furnished to the United States beneficial 

16 owner on or before January 31 of the year following the 

17 calendar year for which the return under subsection (a) 

18 was required to be made. In the event the person filing 

19 such return does not have a current address for the United 

20 States beneficial owner, such written statement may be 

21 mailed to the address of the foreign entity. 


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1 ‘‘SEC. 6045D. RETURNS BY FINANCIAL INSTITUTIONS RE2 GARDING ESTABLISHMENT OF ACCOUNTS IN 

3 NON-FATCA INSTITUTIONS. 

4 ‘‘(a) REQUIREMENT OF RETURN.—Any financial in5 stitution directly or indirectly opening a bank, brokerage, 

6 or other financial account for or on behalf of an offshore 

7 entity, including a trust, corporation, limited liability com8 pany, partnership, or foundation (other than an entity 

9 with shares regularly traded on an established securities 

10 market), in a non-FATCA institution (as defined in sec11 tion 7701(a)(51)) at the direction of, on behalf of, or for 

12 the benefit of a United States person shall make a return 

13 according to the forms or regulations prescribed by the 

14 Secretary. 

15 ‘‘(b) REQUIRED INFORMATION.—For purposes of 

16 subsection (a) the information required to be included on 

17 the return shall include— 

18 ‘‘(1) the name, address, and taxpayer identifica19 tion number of such United States person, 

20 ‘‘(2) the name and address of the financial in21 stitution at which a financial account is opened, the 

22 type of account, the account number, the name 

23 under which the account was opened, and the 

24 amount of the initial deposit, 

25 ‘‘(3) if the account is held in the name of an 

26 entity, the name and address of such entity, the type 


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•S 779 IS

1 of entity, and the name and address of any company 

2 formation agent or other professional employed to 

3 form or acquire the entity, and 

4 ‘‘(4) such other information as the Secretary 

5 may by forms or regulations provide. 

6 ‘‘(c) STATEMENTS TO BE FURNISHED TO UNITED

7 STATES PERSONS WITH RESPECT TO WHOM INFORMA8 TION IS REQUIRED TO BE REPORTED.—A financial insti9 tution required to make a return under subsection (a) 

10 shall furnish to each United States person whose name 

11 is required to be set forth in such return a statement 

12 showing— 

13 ‘‘(1) the name, address, and telephone number 

14 of the information contact of the person required to 

15 make such return, and 

16 ‘‘(2) the information required to be shown on 

17 such return with respect to such United States per18 son. 

19 The written statement required under the preceding sen20 tence shall be furnished to such United States person on 

21 or before January 31 of the year following the calendar 

22 year for which the return under subsection (a) was re23 quired to be made. 

24 ‘‘(d) EXEMPTION.—The Secretary may by regula25 tions exempt any class of United States persons or any 


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•S 779 IS

1 class of accounts or entities from the requirements of this 

2 section if the Secretary determines that applying this sec3 tion to such persons, accounts, or entities is not necessary 

4 to carry out the purposes of this section.’’. 

5 (b) PENALTIES.— 

6 (1) RETURNS.—Section 6724(d)(1)(B) is 

7 amended by striking ‘‘or’’ at the end of clause (xxv), 

8 by striking ‘‘and’’ at the end of clause (xxvi), and 

9 by adding after clause (xxvi) the following new 

10 clauses: 

11 ‘‘(xxvii) section 6045C(a) (relating to 

12 returns regarding United States beneficial 

13 owners of financial accounts located in the 

14 United States and held in the name of a 

15 foreign entity), or 

16 ‘‘(xxviii) section 6045D(a) (relating to 

17 returns by financial institutions regarding 

18 establishment of accounts at non-FATCA 

19 institutions), and’’. 

20 (2) PAYEE STATEMENTS.—Section 6724(d)(2) 

21 is amended by redesignating the second subpara22 graph (JJ) as subparagraph (KK), by striking ‘‘or’’ 

23 at the end of subparagraph (II), by striking the pe24 riod at the end of subparagraph (KK) (as so redesVerDate Sep 11 2014 18:15 Mar 28, 2019 Jkt 089200 PO 00000 Frm 00046 Fmt 6652 Sfmt 6201 E:\BILLS\S779.IS S779

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1 ignated), and by inserting after such subparagraph 

2 (KK) the following new subparagraphs: 

3 ‘‘(LL) section 6045C(c) (relating to re4 turns regarding United States beneficial owners 

5 of financial accounts located in the United 

6 States and held in the name of a foreign enti7 ty), or 

8 ‘‘(MM) section 6045D(c) (relating to re9 turns by financial institutions regarding estab10 lishment of accounts at non-FATCA institu11 tions).’’. 

12 (c) CLERICAL AMENDMENT.—The table of sections 

13 for subpart B of part III of subchapter A of chapter 61 

14 is amended by inserting after the item relating to section 

15 6045B the following new items: 

‘‘Sec. 6045C. Returns regarding United States beneficial owners of financial 

accounts located in the United States and held in the name of 

a foreign entity. 

‘‘Sec. 6045D. Returns by financial institutions regarding establishment of accounts at non-FATCA institutions.’’. 

16 (d) ADDITIONAL PENALTIES.— 

17 (1) ADDITIONAL PENALTIES ON BANKS.—Sec18 tion 5239(b)(1) of the Revised Statutes of the 

19 United States (12 U.S.C. 93(b)(1)) is amended by 

20 inserting ‘‘or any of the provisions of section 6045D 

21 of the Internal Revenue Code of 1986,’’ after ‘‘any 

22 regulation issued pursuant to,’’. 


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1 (2) ADDITIONAL PENALTIES ON SECURITIES

2 FIRMS.—Section 21(d)(3)(A) of the Securities Ex3 change Act of 1934 (15 U.S.C. 78u(d)(3)(A)) is 

4 amended by inserting ‘‘any of the provisions of sec5 tion 6045D of the Internal Revenue Code of 1986,’’ 

6 after ‘‘the rules or regulations thereunder,’’. 

7 (e) REGULATORY AUTHORITY AND EFFECTIVE

8 DATE.— 

9 (1) REGULATORY AUTHORITY.—Not later than 

10 180 days after the date of the enactment of this Act, 

11 the Secretary of the Treasury shall adopt regula12 tions, forms, or other guidance necessary to imple13 ment this section. 

14 (2) EFFECTIVE DATE.—Section 6045C of the 

15 Internal Revenue Code of 1986 (as added by this 

16 section) and the amendment made by subsection 

17 (d)(1) shall take effect with respect to amounts paid 

18 into foreign owned accounts located in the United 

19 States after December 31 of the year of the date of 

20 the enactment of this Act. Section 6045D of such 

21 Code (as so added) and the amendment made by 

22 subsection (d)(2) shall take effect with respect to ac23 counts opened after December 31 of the year of the 

24 date of the enactment of this Act. Section 6045D of 

25 such Code (as so added) and the amendment made 


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1 by subsection (d)(2) shall take effect with respect to 

2 accounts opened after December 31 of the year of 

3 the date of the enactment of this act, whether or not 

4 regulations are issued under Section 6045D. 

5 SEC. 204. PENALTY FOR FAILING TO DISCLOSE OFFSHORE 

6 HOLDINGS. 

7 (a) SECURITIES EXCHANGE ACT OF 1934.—Section 

8 21(d)(3)(B) of the Securities Exchange Act of 1934 (15 

9 U.S.C. 78u(d)(3)(B)) is amended by adding at the end 

10 the following: 

11 ‘‘(iv) FOURTH TIER.—Notwith12 standing clauses (i), (ii), and (iii), for each 

13 such violation, the amount of penalty shall 

14 not exceed $1,000,000 for any natural per15 son or $10,000,000 for any other person, 

16 if— 

17 ‘‘(I) such person directly or indi18 rectly controlled any foreign entity, in19 cluding any trust, corporation, limited 

20 liability company, partnership, or 

21 foundation through which an issuer 

22 purchased, sold, or held equity or debt 

23 instruments; 

24 ‘‘(II) such person knowingly or 

25 recklessly failed to disclose any such 


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1 holding, purchase, or sale by the 

2 issuer; and 

3 ‘‘(III) the holding, purchase, or 

4 sale would have been otherwise sub5 ject to disclosure by the issuer or such 

6 person under this title.’’. 

7 (b) SECURITIES ACT OF 1933.—Section 20(d)(2) of 

8 the Securities Act of 1933 (15 U.S.C. 77t(d)(2)) is 

9 amended by adding at the end the following: 

10 ‘‘(D) FOURTH TIER.—Notwithstanding 

11 subparagraphs (A), (B), and (C), for each such 

12 violation, the amount of penalty shall not ex13 ceed $1,000,000 for any natural person or 

14 $10,000,000 for any other person, if— 

15 ‘‘(i) such person directly or indirectly 

16 controlled any foreign entity, including any 

17 trust, corporation, limited liability com18 pany, partnership, or foundation through 

19 which an issuer purchased, sold, or held 

20 equity or debt instruments; 

21 ‘‘(ii) such person knowingly or reck22 lessly failed to disclose any such holding, 

23 purchase, or sale by the issuer; and 

24 ‘‘(iii) the holding, purchase, or sale 

25 would have been otherwise subject to disVerDate Sep 11 2014 18:15 Mar 28, 2019 Jkt 089200 PO 00000 Frm 00050 Fmt 6652 Sfmt 6201 E:\BILLS\S779.IS S779

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1 closure by the issuer or such person under 

2 this title.’’. 

3 (c) INVESTMENT ADVISERS ACT OF 1940.—Section 

4 203(i)(2) of the Investment Advisers Act of 1940 (15 

5 U.S.C. 80b–3(i)(2)) is amended by adding at the end the 

6 following: 

7 ‘‘(D) FOURTH TIER.—Notwithstanding 

8 subparagraphs (A), (B), and (C), for each such 

9 violation, the amount of penalty shall not ex10 ceed $1,000,000 for any natural person or 

11 $10,000,000 for any other person, if— 

12 ‘‘(i) such person directly or indirectly 

13 controlled any foreign entity, including any 

14 trust, corporation, limited liability com15 pany, partnership, or foundation through 

16 which an issuer purchased, sold, or held 

17 equity or debt instruments; 

18 ‘‘(ii) such person knowingly or reck19 lessly failed to disclose any such holding, 

20 purchase, or sale by the issuer; and 

21 ‘‘(iii) the holding, purchase, or sale 

22 would have been otherwise subject to dis23 closure by the issuer or such person under 

24 this title.’’. 


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1 SEC. 205. DEADLINE FOR ANTI-MONEY LAUNDERING RULE 

2 FOR INVESTMENT ADVISERS. 

3 (a) ANTI-MONEY LAUNDERING OBLIGATIONS FOR

4 INVESTMENT ADVISERS.—Section 5312(a)(2) of title 31, 

5 United States Code, is amended— 

6 (1) in subparagraph (Y), by striking ‘‘or’’ at 

7 the end; 

8 (2) by redesignating subparagraph (Z) as sub9 paragraph (BB); and 

10 (3) by inserting after subparagraph (Y) the fol11 lowing: 

12 ‘‘(Z) an investment adviser (as defined in 

13 section 202(a) of the Investment Advisers Act 

14 of 1940);’’. 

15 (b) RULES REQUIRED.—The Secretary of the Treas16 ury shall— 

17 (1) in consultation with the Securities and Ex18 change Commission and the Commodity Futures 

19 Trading Commission, not later than 180 days after 

20 the date of enactment of this Act, publish a pro21 posed rule in the Federal Register to carry out the 

22 amendments made by this section; and 

23 (2) not later than 270 days after the date of 

24 enactment of this Act, publish a final rule in the 

25 Federal Register on the matter described in para26 graph (1). 


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1 (c) CONTENTS.—The final rule published under this 

2 section shall require, at a minimum, each investment ad3 viser (as defined in section 202(a)(11) of the Investment 

4 Advisers Act of 1940 (15 U.S.C. 80b–2(a)(11))) reg5 istered with the Securities and Exchange Commission pur6 suant to section 203 of that Act (15 U.S.C. 80b–3)— 

7 (1) to submit suspicious activity reports and es8 tablish an anti-money laundering program under 

9 subsections (g) and (h), respectively, of section 5318 

10 of title 31, United States Code; and 

11 (2) to comply with— 

12 (A) the customer identification program 

13 requirements under section 5318(l) of title 31, 

14 United States Code; and 

15 (B) the due diligence requirements under 

16 section 5318(i) of title 31, United States Code. 

17 SEC. 206. ANTI-MONEY LAUNDERING REQUIREMENTS FOR 

18 FORMATION AGENTS. 

19 (a) ANTI-MONEY LAUNDERING OBLIGATIONS FOR

20 FORMATION AGENTS.—Section 5312(a)(2) of title 31, 

21 United States Code, as amended by section 205 of this 

22 Act, is amended by inserting after subparagraph (Z) the 

23 following: 

24 ‘‘(AA) any person engaged in the business 

25 of forming new corporations, limited liability 


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1 companies, partnerships, trusts, or other legal 

2 entities; or’’. 

3 (b) DEADLINE FOR ANTI-MONEY LAUNDERING

4 RULE FOR FORMATION AGENTS.— 

5 (1) PROPOSED RULE.—The Secretary of the 

6 Treasury, in consultation with the Attorney General 

7 of the United States, the Secretary of Homeland Se8 curity, and the Commissioner of Internal Revenue, 

9 shall— 

10 (A) not later than 120 days after the date 

11 of enactment of this Act, publish a proposed 

12 rule in the Federal Register requiring persons 

13 described in section 5312(a)(2)(AA) of title 31, 

14 United States Code, as added by this section, to 

15 establish anti-money laundering programs 

16 under section 5318(h) of that title; and 

17 (B) not later than 270 days after the date 

18 of enactment of this Act, publish a final rule in 

19 the Federal Register on the matter described in 

20 subparagraph (A). 

21 (2) EXCLUSIONS.—The rule promulgated under 

22 this subsection shall exclude from the category of 

23 persons engaged in the business of forming new cor24 porations or other entities— 

25 (A) any government agency; and 


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1 (B) any attorney or law firm that uses a 

2 paid formation agent operating within the 

3 United States to form such corporations or 

4 other entities. 

5 SEC. 207. STRENGTHENING JOHN DOE SUMMONS PRO6 CEEDINGS. 

7 (a) IN GENERAL.—Subsection (f) of section 7609 is 

8 amended to read as follows: 

9 ‘‘(f) ADDITIONAL REQUIREMENT IN THE CASE OF A

10 JOHN DOE SUMMONS.— 

11 ‘‘(1) GENERAL RULE.—Any summons described 

12 in subsection (c)(1) which does not identify the per13 son with respect to whose liability the summons is 

14 issued may be served only after a court proceeding 

15 in which the Secretary establishes that— 

16 ‘‘(A) the summons relates to the investiga17 tion of a particular person or ascertainable 

18 group or class of persons, 

19 ‘‘(B) there is a reasonable basis for believ20 ing that such person or group or class of per21 sons may fail or may have failed to comply with 

22 any provision of any internal revenue law, and 

23 ‘‘(C) the information sought to be obtained 

24 from the examination of the records or testi25 mony (and the identity of the person or persons 


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1 with respect to whose liability the summons is 

2 issued) is not readily available from other 

3 sources. 

4 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

5 apply to any summons which specifies that it is lim6 ited to information regarding a United States cor7 respondent account (as defined in section 

8 5318A(e)(1)(B) of title 31, United States Code) or 

9 a United States payable-through account (as defined 

10 in section 5318A(e)(1)(C) of such title) of a finan11 cial institution that is held at a non-FATCA institu12 tion (as defined in section 7701(a)(51)). 

13 ‘‘(3) PRESUMPTION IN CASES INVOLVING NON14 FATCA INSTITUTIONS.—For purposes of this section, 

15 in any case in which the particular person or ascer16 tainable group or class of persons have financial ac17 counts in or transactions related to a non-FATCA 

18 institution (as defined in section 7701(a)(51)), there 

19 shall be a presumption that there is a reasonable 

20 basis for believing that such person or group or class 

21 of persons may fail or may have failed to comply 

22 with provisions of internal revenue law. 

23 ‘‘(4) PROJECT JOHN DOE SUMMONSES.— 

24 ‘‘(A) IN GENERAL.—Notwithstanding the 

25 requirements of paragraph (1), the Secretary 


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1 may issue a summons described in paragraph 

2 (1) if the summons— 

3 ‘‘(i) relates to a project which is ap4 proved under subparagraph (B), 

5 ‘‘(ii) is issued to a person who is a 

6 member of the group or class established 

7 under subparagraph (B)(i), and 

8 ‘‘(iii) is issued within 3 years of the 

9 date on which such project was approved 

10 under subparagraph (B). 

11 ‘‘(B) APPROVAL OF PROJECTS.—A project 

12 may only be approved under this subparagraph 

13 after a court proceeding in which the Secretary 

14 establishes that— 

15 ‘‘(i) any summons issued with respect 

16 to the project will be issued to a member 

17 of an ascertainable group or class of per18 sons, and 

19 ‘‘(ii) any summons issued with respect 

20 to such project will meet the requirements 

21 of paragraph (1). 

22 ‘‘(C) EXTENSION.—Upon application of 

23 the Secretary, the court may extend the time 

24 for issuing such summonses under subpara25 graph (A)(i) for additional 3-year periods, but 


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1 only if the court continues to exercise oversight 

2 of such project under subparagraph (D). 

3 ‘‘(D) ONGOING COURT OVERSIGHT.—Dur4 ing any period in which the Secretary is author5 ized to issue summonses in relation to a project 

6 approved under subparagraph (B) (including 

7 during any extension under subparagraph (C)), 

8 the Secretary shall report annually to the court 

9 on the use of such authority, provide copies of 

10 all summonses with such report, and comply 

11 with the court’s direction with respect to the 

12 issuance of any John Doe summons under such 

13 project.’’. 

14 (b) JURISDICTION OF COURT.— 

15 (1) IN GENERAL.—Paragraph (1) of section 

16 7609(h) is amended by inserting after the first sen17 tence the following new sentence: ‘‘Any United 

18 States district court in which a member of the group 

19 or class to which a summons may be issued resides 

20 or is found shall have jurisdiction to hear and deter21 mine the approval of a project under subsection 

22 (f)(4)(B).’’. 

23 (2) CONFORMING AMENDMENT.—The first sen24 tence of section 7609(h)(1) is amended by striking 

25 ‘‘(f)’’ and inserting ‘‘(f)(1)’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to summonses issued after the date 

3 of the enactment of this Act. 

4 SEC. 208. IMPROVING ENFORCEMENT OF FOREIGN FINAN5 CIAL ACCOUNT REPORTING. 

6 (a) CLARIFYING THE CONNECTION OF FOREIGN FI7 NANCIAL ACCOUNT REPORTING TO TAX ADMINISTRA8 TION.—Paragraph (4) of section 6103(b) is amended by 

9 adding at the end the following new sentence: 

10 ‘‘For purposes of subparagraph (A)(i), section 5314 

11 of title 31, United States Code, and sections 5321 

12 and 5322 of such title (as such sections pertain to 

13 such section 5314), shall be considered related stat14 utes.’’. 

15 (b) SIMPLIFYING THE CALCULATION OF FOREIGN

16 FINANCIAL ACCOUNT REPORTING PENALTIES.—Section 

17 5321(a)(5)(D)(ii) of title 31, United States Code, is 

18 amended by striking ‘‘the balance in the account at the 

19 time of the violation’’ and inserting ‘‘the highest balance 

20 in the account during the reporting period to which the 

21 violation relates’’. 

22 (c) CLARIFYING THE USE OF SUSPICIOUS ACTIVITY

23 REPORTS UNDER THE BANK SECRECY ACT FOR CIVIL

24 TAX LAW ENFORCEMENT.—Section 5319 of title 31, 

25 United States Code, is amended by inserting ‘‘the civil and 


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1 criminal enforcement divisions of the Internal Revenue 

2 Service,’’ after ‘‘including’’. 

Æ 


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