II 

115TH CONGRESS 

1ST SESSION S. 851 

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

IN THE SENATE OF THE UNITED STATES 

APRIL 5 (legislative day, APRIL 4), 2017 

Mr. WHITEHOUSE 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. Allocation of expenses and taxes on basis of repatriation of foreign 

income. 

Sec. 102. Excess income from transfers of intangibles to low-taxed affiliates 

treated as subpart F income. 

Sec. 103. Limitations on income shifting through intangible property transfers. 

Sec. 104. Repeal of check-the-box rules for certain foreign entities and CFC 

look-thru rules. 

Sec. 105. Restrictions on deduction for interest expense of members of financial 

reporting groups with excess domestic indebtedness. 

Sec. 106. Treatment of foreign corporations managed and controlled in the 

United States as domestic corporations. 

Sec. 107. Swap payments made from the United States to persons offshore. 

Sec. 108. Modifications to rules relating to inverted corporations. 

Sec. 109. Country-by-country reporting. 

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. ALLOCATION OF EXPENSES AND TAXES ON BASIS 

6 OF REPATRIATION OF FOREIGN INCOME. 

7 (a) IN GENERAL.—Part III of subchapter N of chap8 ter 1 is amended by inserting after subpart G the following 

9 new subpart: 


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1 ‘‘Subpart H—Special Rules for Allocation of Foreign2 Related Deductions and Foreign Tax Credits 

‘‘Sec. 975. Deductions allocated to deferred foreign income may not offset 

United States source income. 

‘‘Sec. 976. Amount of foreign taxes computed on overall basis. 

‘‘Sec. 977. Application of subpart. 

3 ‘‘SEC. 975. DEDUCTIONS ALLOCATED TO DEFERRED FOR4 EIGN INCOME MAY NOT OFFSET UNITED 

5 STATES SOURCE INCOME. 

6 ‘‘(a) CURRENT YEAR DEDUCTIONS.—For purposes 

7 of this chapter, foreign-related deductions for any taxable 

8 year— 

9 ‘‘(1) shall be taken into account for such tax10 able year only to the extent that such deductions are 

11 allocable to currently-taxed foreign income, and 

12 ‘‘(2) to the extent not so allowed, shall be taken 

13 into account in subsequent taxable years as provided 

14 in subsection (b). 

15 Foreign-related deductions shall be allocated to currently16 taxed foreign income in the same proportion which cur17 rently-taxed foreign income bears to the sum of currently18 taxed foreign income and deferred foreign income. 

19 ‘‘(b) DEDUCTIONS RELATED TO REPATRIATED DE20 FERRED FOREIGN INCOME.— 

21 ‘‘(1) IN GENERAL.—If there is repatriated for22 eign income for a taxable year, the portion of the 

23 previously deferred deductions allocated to the repaVerDate Sep 11 2014 03:07 Apr 11, 2017 Jkt 069200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S851.IS S851

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1 triated foreign income shall be taken into account 

2 for the taxable year as a deduction allocated to in3 come from sources outside the United States. Any 

4 such amount shall not be included in foreign-related 

5 deductions for purposes of applying subsection (a) to 

6 such taxable year. 

7 ‘‘(2) PORTION OF PREVIOUSLY DEFERRED DE8 DUCTIONS.—For purposes of paragraph (1), the por9 tion of the previously deferred deductions allocated 

10 to repatriated foreign income is— 

11 ‘‘(A) the amount which bears the same 

12 proportion to such deductions, as 

13 ‘‘(B) the repatriated income bears to the 

14 previously deferred foreign income. 

15 ‘‘(c) DEFINITIONS AND SPECIAL RULE.—For pur16 poses of this section— 

17 ‘‘(1) FOREIGN-RELATED DEDUCTIONS.—The 

18 term ‘foreign-related deductions’ means the total 

19 amount of deductions and expenses which would be 

20 allocated or apportioned to gross income from 

21 sources without the United States for the taxable 

22 year if both the currently-taxed foreign income and 

23 deferred foreign income were taken into account. 

24 ‘‘(2) CURRENTLY-TAXED FOREIGN INCOME.— 

25 The term ‘currently-taxed foreign income’ means the 


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1 amount of gross income from sources without the 

2 United States for the taxable year (determined with3 out regard to repatriated foreign income for such 

4 year). 

5 ‘‘(3) DEFERRED FOREIGN INCOME.—The term 

6 ‘deferred foreign income’ means the excess of— 

7 ‘‘(A) the amount that would be includible 

8 in gross income under subpart F of this part 

9 for the taxable year if— 

10 ‘‘(i) all controlled foreign corporations 

11 were treated as one controlled foreign cor12 poration, and 

13 ‘‘(ii) all earnings and profits of all 

14 controlled foreign corporations were sub15 part F income (as defined in section 952), 

16 over 

17 ‘‘(B) the sum of— 

18 ‘‘(i) all dividends received during the 

19 taxable year from controlled foreign cor20 porations, plus 

21 ‘‘(ii) amounts includible in gross in22 come under section 951(a). 

23 ‘‘(4) PREVIOUSLY DEFERRED FOREIGN IN24 COME.—The term ‘previously deferred foreign in25 come’ means the aggregate amount of deferred forVerDate Sep 11 2014 03:07 Apr 11, 2017 Jkt 069200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S851.IS S851

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1 eign income for all prior taxable years to which this 

2 part applies, determined as of the beginning of the 

3 taxable year, reduced by the repatriated foreign in4 come for all such prior taxable years. 

5 ‘‘(5) REPATRIATED FOREIGN INCOME.—The 

6 term ‘repatriated foreign income’ means the amount 

7 included in gross income on account of distributions 

8 out of previously deferred foreign income. 

9 ‘‘(6) PREVIOUSLY DEFERRED DEDUCTIONS.— 

10 The term ‘previously deferred deductions’ means the 

11 aggregate amount of foreign-related deductions not 

12 taken into account under subsection (a) for all prior 

13 taxable years (determined as of the beginning of the 

14 taxable year), reduced by any amounts taken into 

15 account under subsection (b) for such prior taxable 

16 years. 

17 ‘‘(7) TREATMENT OF CERTAIN FOREIGN

18 TAXES.— 

19 ‘‘(A) PAID BY CONTROLLED FOREIGN COR20 PORATION.—Section 78 shall not apply for pur21 poses of determining currently-taxed foreign in22 come and deferred foreign income. 

23 ‘‘(B) PAID BY TAXPAYER.—For purposes 

24 of determining currently-taxed foreign income, 

25 gross income from sources without the United 


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1 States shall be reduced by the aggregate 

2 amount of taxes described in the applicable 

3 paragraph of section 901(b) which are paid by 

4 the taxpayer (without regard to sections 902 

5 and 960) during the taxable year. 

6 ‘‘(8) COORDINATION WITH SECTION 976.—In 

7 determining currently-taxed foreign income and de8 ferred foreign income, the amount of deemed foreign 

9 tax credits shall be determined with regard to sec10 tion 976. 

11 ‘‘SEC. 976. AMOUNT OF FOREIGN TAXES COMPUTED ON 

12 OVERALL BASIS. 

13 ‘‘(a) CURRENT YEAR ALLOWANCE.—For purposes of 

14 this chapter, the amount taken into account as foreign in15 come taxes for any taxable year shall be an amount which 

16 bears the same ratio to the total foreign income taxes for 

17 that taxable year as— 

18 ‘‘(1) the currently-taxed foreign income for such 

19 taxable year, bears to 

20 ‘‘(2) the sum of the currently-taxed foreign in21 come and deferred foreign income for such year. 

22 The portion of the total foreign income taxes for any tax23 able year not taken into account under the preceding sen24 tence for a taxable year shall only be taken into account 


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1 as provided in subsection (b) (and shall not be taken into 

2 account for purposes of applying sections 902 and 960). 

3 ‘‘(b) ALLOWANCE RELATED TO REPATRIATED DE4 FERRED FOREIGN INCOME.— 

5 ‘‘(1) IN GENERAL.—If there is repatriated for6 eign income for any taxable year, the portion of the 

7 previously deferred foreign income taxes paid or ac8 crued during such taxable year shall be taken into 

9 account for the taxable year as foreign taxes paid or 

10 accrued. Any such taxes so taken into account shall 

11 not be included in foreign income taxes for purposes 

12 of applying subsection (a) to such taxable year. 

13 ‘‘(2) PORTION OF PREVIOUSLY DEFERRED FOR14 EIGN INCOME TAXES.—For purposes of paragraph 

15 (1), the portion of the previously deferred foreign in16 come taxes allocated to repatriated deferred foreign 

17 income is— 

18 ‘‘(A) the amount which bears the same 

19 proportion to such taxes, as 

20 ‘‘(B) the repatriated deferred income bears 

21 to the previously deferred foreign income. 

22 ‘‘(c) DEFINITIONS AND SPECIAL RULE.—For pur23 poses of this section— 

24 ‘‘(1) PREVIOUSLY DEFERRED FOREIGN INCOME

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1 come taxes’ means the aggregate amount of total 

2 foreign income taxes not taken into account under 

3 subsection (a) for all prior taxable years (determined 

4 as of the beginning of the taxable year), reduced by 

5 any amounts taken into account under subsection 

6 (b) for such prior taxable years. 

7 ‘‘(2) TOTAL FOREIGN INCOME TAXES.—The 

8 term ‘total foreign income taxes’ means the sum of 

9 foreign income taxes paid or accrued during the tax10 able year (determined without regard to section 

11 904(c)) plus the increase in foreign income taxes 

12 that would be paid or accrued during the taxable 

13 year under sections 902 and 960 if— 

14 ‘‘(A) all controlled foreign corporations 

15 were treated as one controlled foreign corpora16 tion, and 

17 ‘‘(B) all earnings and profits of all con18 trolled foreign corporations were subpart F in19 come (as defined in section 952). 

20 ‘‘(3) FOREIGN INCOME TAXES.—The term ‘for21 eign income taxes’ means any income, war profits, or 

22 excess profits taxes paid by the taxpayer to any for23 eign country or possession of the United States. 

24 ‘‘(4) CURRENTLY-TAXED FOREIGN INCOME AND

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1 rently-taxed foreign income’ and ‘deferred foreign in2 come’ have the meanings given such terms by sec3 tion 975(c). 

4 ‘‘SEC. 977. APPLICATION OF SUBPART. 

5 ‘‘This subpart— 

6 ‘‘(1) shall be applied before subpart A, and 

7 ‘‘(2) shall be applied separately with respect to 

8 the categories of income specified in section 

9 904(d)(1).’’. 

10 (b) CLERICAL AMENDMENT.—The table of subparts 

11 for part III of subpart N of chapter 1 is amended by in12 serting after the item relating to subpart G the following 

13 new item: 

‘‘SUBPART H. SPECIAL RULES FOR ALLOCATION OF FOREIGN-RELATED

DEDUCTIONS AND FOREIGN TAX CREDITS’’. 

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

15 this section shall apply to taxable years beginning after 

16 the date of the enactment of this Act. 

17 SEC. 102. EXCESS INCOME FROM TRANSFERS OF INTANGI18 BLES TO LOW-TAXED AFFILIATES TREATED 

19 AS SUBPART F INCOME. 

20 (a) IN GENERAL.—Subsection (a) of section 954 is 

21 amended by inserting after paragraph (3) the following 

22 new paragraph: 

23 ‘‘(4) the foreign base company excess intangible 

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1 section (f) and reduced as provided in subsection 

2 (b)(5)), and’’. 

3 (b) FOREIGN BASE COMPANY EXCESS INTANGIBLE

4 INCOME.—Section 954 is amended by inserting after sub5 section (e) the following new subsection: 

6 ‘‘(f) FOREIGN BASE COMPANY EXCESS INTANGIBLE

7 INCOME.—For purposes of subsection (a)(4) and this sub8 section: 

9 ‘‘(1) FOREIGN BASE COMPANY EXCESS INTAN10 GIBLE INCOME DEFINED.— 

11 ‘‘(A) IN GENERAL.—The term ‘foreign 

12 base company excess intangible income’ means, 

13 with respect to any covered intangible, the ex14 cess of— 

15 ‘‘(i) the sum of— 

16 ‘‘(I) gross income from the sale, 

17 lease, license, or other disposition of 

18 property in which such covered intan19 gible is used directly or indirectly, and 

20 ‘‘(II) gross income from the pro21 vision of services related to such cov22 ered intangible or in connection with 

23 property in which such covered intan24 gible is used directly or indirectly, 

25 over 


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1 ‘‘(ii) 150 percent of the costs properly 

2 allocated and apportioned to the gross in3 come taken into account under clause (i) 

4 other than expenses for interest and taxes 

5 and any expenses which are not directly al6 locable to such gross income. 

7 ‘‘(B) SAME COUNTRY INCOME NOT TAKEN

8 INTO ACCOUNT.—If— 

9 ‘‘(i) the sale, lease, license, or other 

10 disposition of the property referred to in 

11 subparagraph (A)(i)(I) is for use, con12 sumption, or disposition in the country 

13 under the laws of which the controlled for14 eign corporation is created or organized, or 

15 ‘‘(ii) the services referred to in sub16 paragraph (A)(i)(II) are performed in such 

17 country, 

18 the gross income from such sale, lease, license, 

19 or other disposition, or provision of services, 

20 shall not be taken into account under subpara21 graph (A)(i). 

22 ‘‘(2) EXCEPTION BASED ON EFFECTIVE FOR23 EIGN INCOME TAX RATE.— 

24 ‘‘(A) IN GENERAL.—Foreign base company 

25 excess intangible income shall not include the 


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1 applicable percentage of any item of income re2 ceived by a controlled foreign corporation if the 

3 taxpayer establishes to the satisfaction of the 

4 Secretary that such income was subject to an 

5 effective rate of income tax imposed by a for6 eign country in excess of 5 percent. 

7 ‘‘(B) APPLICABLE PERCENTAGE.—For 

8 purposes of subparagraph (A), the term ‘appli9 cable percentage’ means the ratio (expressed as 

10 a percentage), not greater than 100 percent, 

11 of— 

12 ‘‘(i) the number of percentage points 

13 by which the effective rate of income tax 

14 referred to in subparagraph (A) exceeds 5 

15 percentage points, over 

16 ‘‘(ii) 10 percentage points. 

17 ‘‘(C) TREATMENT OF LOSSES IN DETER18 MINING EFFECTIVE RATE OF FOREIGN INCOME

19 TAX.—For purposes of determining the effective 

20 rate of income tax imposed by any foreign 

21 country— 

22 ‘‘(i) such effective rate shall be deter23 mined without regard to any losses carried 

24 to the relevant taxable year, and 


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1 ‘‘(ii) to the extent the income with re2 spect to such intangible reduces losses in 

3 the relevant taxable year, such effective 

4 rate shall be treated as being the effective 

5 rate which would have been imposed on 

6 such income without regard to such losses. 

7 ‘‘(3) COVERED INTANGIBLE.—The term ‘cov8 ered intangible’ means, with respect to any con9 trolled foreign corporation, any intangible property 

10 (as defined in section 936(h)(3)(B))— 

11 ‘‘(A) which is sold, leased, licensed, or oth12 erwise transferred (directly or indirectly) to 

13 such controlled foreign corporation from a re14 lated person, or 

15 ‘‘(B) with respect to which such controlled 

16 foreign corporation and one or more related 

17 persons has (directly or indirectly) entered into 

18 any shared risk or development agreement (in19 cluding any cost sharing agreement). 

20 ‘‘(4) RELATED PERSON.—The term ‘related 

21 person’ has the meaning given such term in sub22 section (d)(3).’’. 

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1 nating paragraph (7) as paragraph (8) and by inserting 

2 after paragraph (6) the following new paragraph: 

3 ‘‘(7) SEPARATE APPLICATION TO FOREIGN

4 BASE COMPANY EXCESS INTANGIBLE INCOME.— 

5 ‘‘(A) IN GENERAL.—Subsections (a), (b), 

6 and (c) of this section and sections 902, 907, 

7 and 960 shall be applied separately with respect 

8 to each item of income which is taken into ac9 count under section 954(a)(4) as foreign base 

10 company excess intangible income. 

11 ‘‘(B) REGULATIONS.—The Secretary may 

12 issue such regulations or other guidance as is 

13 necessary or appropriate to carry out the pur14 poses of this subsection, including regulations 

15 or other guidance which provides that related 

16 items of income may be aggregated for pur17 poses of this paragraph.’’. 

18 (d) CONFORMING AMENDMENTS.— 

19 (1) Paragraph (4) of section 954(b) is amended 

20 by inserting ‘‘foreign base company excess intangible 

21 income described in subsection (a)(4) or’’ before 

22 ‘‘foreign base company oil-related income’’ in the 

23 last sentence thereof. 

24 (2) Subsection (b) of section 954 is amended by 

25 adding at the end the following new paragraph: 


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1 ‘‘(7) FOREIGN BASE COMPANY EXCESS INTAN2 GIBLE INCOME NOT TREATED AS ANOTHER KIND OF

3 BASE COMPANY INCOME.—Income of a corporation 

4 which is foreign base company excess intangible in5 come shall not be considered foreign base company 

6 income of such corporation under paragraph (2), 

7 (3), or (5) of subsection (a).’’. 

8 (e) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to taxable years beginning after 

10 the date of the enactment of this Act. 

11 SEC. 103. LIMITATIONS ON INCOME SHIFTING THROUGH IN12 TANGIBLE PROPERTY TRANSFERS. 

13 (a) CLARIFICATION OF DEFINITION OF INTANGIBLE

14 ASSET.—Clause (vi) of section 936(h)(3)(B) is amended 

15 by inserting ‘‘(including any section 197 intangible de16 scribed in subparagraph (A), (B), or (C)(i) of subsection 

17 (d)(1) of such section)’’ after ‘‘item’’. 

18 (b) CLARIFICATION OF ALLOWABLE VALUATION

19 METHODS.— 

20 (1) FOREIGN CORPORATIONS.—Paragraph (2) 

21 of section 367(d) is amended by adding at the end 

22 the following new subparagraph: 

23 ‘‘(D) REGULATORY AUTHORITY.—For pur24 poses of the last sentence of subparagraph (A), 

25 the Secretary may require— 


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1 ‘‘(i) the valuation of transfers of in2 tangible property on an aggregate basis, or 

3 ‘‘(ii) the valuation of such a transfer 

4 on the basis of the realistic alternatives to 

5 such a transfer, 

6 in any case in which the Secretary determines 

7 that such basis is the most reliable means of 

8 valuation of such transfers.’’. 

9 (2) ALLOCATION AMONG TAXPAYERS.—Section 

10 482 is amended by adding at the end the following: 

11 ‘‘For purposes of the preceding sentence, the Sec12 retary may require the valuation of transfers of in13 tangible property on an aggregate basis or the valu14 ation of such a transfer on the basis of the realistic 

15 alternatives to such a transfer, in any case in which 

16 the Secretary determines that such basis is the most 

17 reliable means of valuation of such transfers.’’. 

18 (c) EFFECTIVE DATE.— 

19 (1) IN GENERAL.—The amendments made by 

20 this section shall apply to transfers in taxable years 

21 beginning after the date of the enactment of this 

22 Act. 

23 (2) NO INFERENCE.—Nothing in the amend24 ment made by subsection (a) shall be construed to 

25 create any inference with respect to the application 


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1 of section 936(h)(3) of the Internal Revenue Code of 

2 1986, or the authority of the Secretary of the Treas3 ury to provide regulations for such application, on or 

4 before the date of the enactment of such amend5 ment. 

6 SEC. 104. REPEAL OF CHECK-THE-BOX RULES FOR CERTAIN 

7 FOREIGN ENTITIES AND CFC LOOK-THRU 

8 RULES. 

9 (a) CHECK-THE-BOX RULES.—Paragraph (3) of sec10 tion 7701(a) is amended— 

11 (1) by striking ‘‘and’’, and 

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

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

14 that— 

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

16 limited liability, or 

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

18 which have limited liability’’. 

19 (b) LOOK-THRU RULE.—Subparagraph (C) of sec20 tion 954(c)(6) is amended to read as follows: 

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

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

23 royalties received or accrued after the date of 

24 the enactment of the Stop Tax Haven Abuse 

25 Act.’’. 


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1 (c) EFFECTIVE DATE.— 

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

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

4 Act. 

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

6 shall apply to payments received after the date of 

7 the enactment of this Act. 

8 SEC. 105. RESTRICTIONS ON DEDUCTION FOR INTEREST 

9 EXPENSE OF MEMBERS OF FINANCIAL RE10 PORTING GROUPS WITH EXCESS DOMESTIC 

11 INDEBTEDNESS. 

12 (a) IN GENERAL.—Section 163 is amended by redes13 ignating subsection (n) as subsection (o) and by inserting 

14 after subsection (m) the following new subsection: 

15 ‘‘(n) RESTRICTION ON DEDUCTION FOR INTEREST

16 EXPENSE OF MEMBERS OF FINANCIAL REPORTING

17 GROUPS WITH EXCESS DOMESTIC INDEBTEDNESS.— 

18 ‘‘(1) IN GENERAL.—In the case of any corpora19 tion which is a member of an applicable financial re20 porting group the common parent of which is a for21 eign corporation, the deduction allowed under this 

22 chapter for interest paid or accrued by the corpora23 tion during the taxable year shall not exceed the ap24 plicable limitation for the taxable year. 


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1 ‘‘(2) CARRYFORWARD.—Any amount disallowed 

2 under paragraph (1) for any taxable year shall be 

3 treated as interest paid or accrued in the succeeding 

4 taxable year. 

5 ‘‘(3) APPLICABLE LIMITATION.—For purposes 

6 of this subsection— 

7 ‘‘(A) IN GENERAL.—The applicable limita8 tion with respect to a taxpayer for any taxable 

9 year is the sum of— 

10 ‘‘(i) the greater of— 

11 ‘‘(I) the taxpayer’s allocable 

12 share of the applicable financial re13 porting group’s net interest expense 

14 for the taxable year, or 

15 ‘‘(II) 10 percent of the taxpayer’s 

16 adjusted taxable income for the tax17 able year, plus 

18 ‘‘(ii) the excess limitation carryfor19 wards to the taxable year from any pre20 ceding taxable year. 

21 ‘‘(B) LIMITATION NOT LESS THAN IN22 CLUDIBLE INTEREST.—The applicable limita23 tion under subparagraph (A) for any taxable 

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1 est includible in the gross income of the tax2 payer for the taxable year. 

3 ‘‘(C) EXCESS LIMITATION

4 CARRYFORWARD.—If the applicable limitation 

5 of a taxpayer for any taxable year (determined 

6 without regard to carryforwards under subpara7 graph (A)(ii)) exceeds the interest paid or ac8 crued by the taxpayer during the taxable year, 

9 such excess shall be an excess limitation 

10 carryforward to the 1st succeeding taxable year 

11 and the 2nd and 3rd succeeding taxable years 

12 to the extent not previously taken into account 

13 under this paragraph. 

14 ‘‘(4) ALLOCABLE SHARE OF NET INTEREST EX15 PENSE.—For purposes of this subsection— 

16 ‘‘(A) IN GENERAL.—A taxpayer’s allocable 

17 share of an applicable financial reporting 

18 group’s net interest expense for any taxable 

19 year shall be the amount (not less than zero) 

20 which bears the same ratio to such net interest 

21 expense as— 

22 ‘‘(i) the net earnings of the taxpayer, 

23 bears to 


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1 ‘‘(ii) the aggregate net earnings of all 

2 members of the applicable financial report3 ing group. 

4 ‘‘(B) NET EARNINGS.—The term ‘net 

5 earnings’ means, with respect to any taxpayer, 

6 the earnings of the taxpayer— 

7 ‘‘(i) computed without regard to any 

8 reduction allowable for— 

9 ‘‘(I) net interest expense, 

10 ‘‘(II) taxes, or 

11 ‘‘(III) depreciation, amortization, 

12 or depletion, and 

13 ‘‘(ii) computed with such other adjust14 ments as the Secretary may by regulations 

15 prescribe. 

16 ‘‘(C) BURDEN ON TAXPAYER.—If a tax17 payer elects not to compute its allocable share, 

18 or fails to establish to the satisfaction of the 

19 Secretary the amount of its allocable share, for 

20 any taxable year, the allocable share shall be 

21 zero. 

22 ‘‘(5) NET INTEREST EXPENSE AND NET EARN23 INGS DETERMINATIONS.—For purposes of this sub24 section— 


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1 ‘‘(A) NET INTEREST EXPENSE.—Any de2 termination of net interest expense for any tax3 able year shall be made— 

4 ‘‘(i) on the basis of the applicable fi5 nancial statement of the applicable finan6 cial reporting group for the last financial 

7 reporting year ending with or within the 

8 taxable year, and 

9 ‘‘(ii) under United States tax prin10 ciples. 

11 ‘‘(B) NET EARNINGS.—Any determination 

12 of net earnings for any taxable year shall be 

13 made on the basis of the applicable financial 

14 statement of the applicable financial reporting 

15 group for the last financial reporting year end16 ing with or within the taxable year. 

17 ‘‘(C) APPLICABLE FINANCIAL STATE18 MENT.—The term ‘applicable financial state19 ment’ means a statement for financial reporting 

20 purposes which is made on the basis of— 

21 ‘‘(i) generally accepted accounting 

22 principles, 

23 ‘‘(ii) international financial reporting 

24 standards, or 


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1 ‘‘(iii) any other method specified by 

2 the Secretary in regulations. 

3 A statement under clause (ii) or (iii) may be 

4 used as an applicable financial statement by a 

5 group only if there is no statement of the group 

6 under any preceding clause. 

7 ‘‘(6) APPLICABLE FINANCIAL REPORTING

8 GROUP.—For purposes of this subsection— 

9 ‘‘(A) IN GENERAL.—The term ‘applicable 

10 financial reporting group’ means, with respect 

11 to any corporation, a group of which such cor12 poration is a member and which files an appli13 cable financial statement. 

14 ‘‘(B) EXCEPTION FOR GROUPS WITH MINI15 MAL DOMESTIC NET INTEREST EXPENSE.— 

16 Such term shall not include a group if the ag17 gregate net interest expense for which a deduc18 tion is allowable to all members of the group 

19 under this chapter (determined without regard 

20 to this subsection or any other limitation on de21 ductibility of interest under this chapter) is less 

22 than $5,000,000. 

23 ‘‘(C) EXCEPTION FOR CERTAIN FINANCIAL

24 ENTITIES.—A corporation which is described in 

25 section 864(f)(4)(B), or is treated as described 


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1 in section 864(f)(4)(B) by reason of paragraph 

2 (4)(C) or (5)(A) of section 864(f) (without re3 gard to whether an election is made under such 

4 paragraph (5)(A)), shall not be treated as a 

5 member of an applicable financial reporting 

6 group of which it is otherwise a member and 

7 this subsection shall not apply to such corpora8 tion. 

9 ‘‘(7) OTHER DEFINITIONS AND RULES.—For 

10 purposes of this subsection— 

11 ‘‘(A) ADJUSTED TAXABLE INCOME.—The 

12 term ‘adjusted taxable income’ has the meaning 

13 given such term by subsection (j)(6)(A). 

14 ‘‘(B) NET INTEREST EXPENSE.—The term 

15 ‘net interest expense’ has the meaning given 

16 such term by subsection (j)(6)(B). 

17 ‘‘(C) TREATMENT OF AFFILIATED

18 GROUP.—All members of the same affiliated 

19 group (within the meaning of section 1504(a)) 

20 shall be treated as 1 taxpayer. 

21 ‘‘(8) REGULATIONS.—The Secretary shall pre22 scribe such regulations as may be necessary to carry 

23 out the purposes of this section, including regula24 tions providing— 


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1 ‘‘(A) for the coordination of the application 

2 of this subsection and other provisions of this 

3 chapter relating to the deductibility of interest, 

4 ‘‘(B) for the waiver of certain adjustments 

5 required under United States tax principles in 

6 appropriate cases for purposes of applying this 

7 subsection, 

8 ‘‘(C) for the determination of which finan9 cial institutions are eligible for the exception 

10 from membership in an applicable financial re11 porting group under paragraph (6)(C) and the 

12 application of this subsection to the other mem13 bers of the group which are not so excepted, 

14 and 

15 ‘‘(D) for the application of this subsection 

16 in the case of pass thru entities and for the 

17 treatment of pass thru entities as corporations 

18 in cases where necessary to prevent the avoid19 ance of the purposes of this subsection.’’. 

20 (b) COORDINATION WITH LIMITATION ON RELATED

21 PARTY INDEBTEDNESS.—Paragraph (2) of section 163(j) 

22 of the Internal Revenue Code of 1986 is amended by add23 ing at the end the following new subparagraph: 

24 ‘‘(D) COORDINATION WITH LIMITATION ON

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1 section shall not apply to any corporation for 

2 any taxable year to which subsection (n) applies 

3 to such corporation.’’. 

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

5 this section shall apply to taxable years beginning after 

6 December 31, 2016. 

7 SEC. 106. TREATMENT OF FOREIGN CORPORATIONS MAN8 AGED AND CONTROLLED IN THE UNITED 

9 STATES AS DOMESTIC CORPORATIONS. 

10 (a) IN GENERAL.—Section 7701 is amended by re11 designating subsection (p) as subsection (q) and by insert12 ing after subsection (o) the following new subsection: 

13 ‘‘(p) CERTAIN CORPORATIONS MANAGED AND CON14 TROLLED IN THE UNITED STATES TREATED AS DOMES15 TIC FOR INCOME TAX.— 

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

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

18 paragraph (2) if— 

19 ‘‘(A) the corporation would not otherwise 

20 be treated as a domestic corporation for pur21 poses of this title, but 

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

23 corporation occurs, directly or indirectly, pri24 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. 107. 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. 108. MODIFICATIONS TO RULES RELATING TO IN2 VERTED CORPORATIONS. 

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

4 the Internal Revenue Code of 1986 is amended to read 

5 as follows: 

6 ‘‘(b) INVERTED CORPORATIONS TREATED AS DO7 MESTIC CORPORATIONS.— 

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

9 7701(a)(4), a foreign corporation shall be treated for 

10 purposes of this title as a domestic corporation if— 

11 ‘‘(A) such corporation would be a surro12 gate foreign corporation if subsection (a)(2) 

13 were applied by substituting ‘80 percent’ for 

14 ‘60 percent’, or 

15 ‘‘(B) such corporation is an inverted do16 mestic corporation. 

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

18 purposes of this subsection, a foreign corporation 

19 shall be treated as an inverted domestic corporation 

20 if, pursuant to a plan (or a series of related trans21 actions)— 

22 ‘‘(A) the entity completes after May 8, 

23 2014, the direct or indirect acquisition of— 

24 ‘‘(i) substantially all of the properties 

25 held directly or indirectly by a domestic 

26 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 May 8, 2014, ex15 cept that the Secretary may issue regulations in16 creasing the threshold percent in any of the tests 

17 under such regulations for determining if business 

18 activities constitute substantial business activities for 

19 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 May 8, 2014. 

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 May 8, 2014, but 

14 applied by treating all references in such regulations 

15 to ‘foreign country’ and ‘relevant foreign country’ as 

16 references to ‘the United States’. The Secretary may 

17 issue regulations decreasing the threshold percent in 

18 any of the tests under such regulations for deter19 mining if business activities constitute significant 

20 domestic business activities for purposes of this 

21 paragraph.’’. 

22 (b) CONFORMING AMENDMENTS.— 

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

24 Code is amended by striking ‘‘after March 4, 2003,’’ 


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1 and inserting ‘‘after March 4, 2003, and before May 

2 9, 2014,’’. 

3 (2) Subsection (c) of section 7874 of such Code 

4 is amended— 

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 May 

22 8, 2014. 

23 SEC. 109. COUNTRY-BY-COUNTRY REPORTING. 

24 (a) COUNTRY-BY-COUNTRY REPORTING.—Section 13 

25 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) 


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1 is amended by adding at the end the following new sub2 section: 

3 ‘‘(s) DISCLOSURE OF FINANCIAL PERFORMANCE ON

4 A COUNTRY-BY-COUNTRY BASIS.— 

5 ‘‘(1) RULES REQUIRED.—The Commission shall 

6 issue rules that require each issuer to include in an 

7 annual report filed by the issuer with the Commis8 sion information on a country-by-country basis dur9 ing the covered period for each tax jurisdiction, ag10 gregated from all subsidiaries residing in that juris11 diction, consisting of— 

12 ‘‘(A) revenues from unrelated parties, re13 lated parties, and in total, 

14 ‘‘(B) profit or loss before taxes, 

15 ‘‘(C) income tax accrued for the current 

16 year, 

17 ‘‘(D) income tax paid (on a cash basis), 

18 ‘‘(E) stated capital, 

19 ‘‘(F) accumulated earnings, 

20 ‘‘(G) number of employees, 

21 ‘‘(H) tangible assets other than cash or 

22 cash equivalents, and 

23 ‘‘(I) such other financial information as 

24 the Commission may determine is necessary or 


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1 appropriate in the public interest or for the pro2 tection of investors. 

3 ‘‘(2) RULES RELATING TO FOREIGN SUB4 SIDIARY.—For each foreign subsidiary, the report 

5 required by paragraph (1) shall be grouped by resi6 dent jurisdiction (including a group for subsidiaries 

7 resident nowhere), the tax jurisdiction (if different), 

8 and main business activity.’’. 

9 (b) RULEMAKING.— 

10 (1) DEADLINES.—The Securities and Exchange 

11 Commission (in this section referred to as the ‘‘Com12 mission’’) shall— 

13 (A) not later than 270 days after the date 

14 of enactment of this Act, issue a proposed rule 

15 to carry out this section and the amendment 

16 made by this section; and 

17 (B) not later than 1 year after the date of 

18 enactment of this Act, issue a final rule to 

19 carry out this section and the amendment made 

20 by this section. 

21 (2) DATA FORMAT.—The information required 

22 to be provided by this section shall be provided by 

23 the issuer in a report in a format prescribed by the 

24 Commission, and such report shall be made available 


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1 to the public online, in such format as the Commis2 sion shall prescribe. 

3 (3) EFFECTIVE DATE.—Subsection (s) of sec4 tion 13 of the Securities Exchange Act of 1934, as 

5 added by this section, shall become effective 1 year 

6 after the date on which the Commission issues a 

7 final rule under this section. 

8 TITLE II—ADDITIONAL MEAS9 URES TO COMBAT TAX EVA10 SION 

11 SEC. 201. AUTHORIZING SPECIAL MEASURES AGAINST FOR12 EIGN JURISDICTIONS, FINANCIAL INSTITU13 TIONS, AND OTHERS THAT SIGNIFICANTLY 

14 IMPEDE UNITED STATES TAX ENFORCEMENT. 

15 Section 5318A of title 31, United States Code, is 

16 amended— 

17 (1) by striking the section heading and insert18 ing the following: 

19 ‘‘§ 5318A. Special measures for jurisdictions, financial 

20 institutions, or international transactions 

21 that are of primary money laundering 

22 concern or significantly impede United 

23 States tax enforcement’’; 

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

25 heading and inserting the following: 


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1 ‘‘(a) SPECIAL MEASURES TO COUNTER MONEY

2 LAUNDERING AND EFFORTS TO SIGNIFICANTLY IMPEDE

3 UNITED STATES TAX ENFORCEMENT.—’’; 

4 (3) in subsection (c)— 

5 (A) by striking the subsection heading and 

6 inserting the following: 

7 ‘‘(c) CONSULTATIONS AND INFORMATION TO BE

8 CONSIDERED IN FINDING JURISDICTIONS, INSTITUTIONS, 

9 TYPES OF ACCOUNTS, OR TRANSACTIONS TO BE OF PRI10 MARY MONEY LAUNDERING CONCERN OR TO BE SIGNIFI11 CANTLY IMPEDING UNITED STATES TAX ENFORCE12 MENT.—’’; and 

13 (B) by inserting at the end of paragraph 

14 (2) thereof the following new subparagraph: 

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

16 that a jurisdiction or financial institution is co17 operating with the United States on imple18 menting the requirements specified in chapter 4 

19 of the Internal Revenue Code of 1986 may be 

20 favorably considered in evaluating whether such 

21 jurisdiction or financial institution is signifi22 cantly impeding United States tax enforce23 ment.’’; 


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1 (4) in subsection (a)(1), by inserting ‘‘or is sig2 nificantly impeding United States tax enforcement’’ 

3 after ‘‘primary money laundering concern’’; 

4 (5) in subsection (a)(4)— 

5 (A) in subparagraph (A)— 

6 (i) by inserting ‘‘in matters involving 

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

8 and 

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

10 (B) by redesignating subparagraph (B) as 

11 subparagraph (C); and 

12 (C) by inserting after subparagraph (A) 

13 the following: 

14 ‘‘(B) in matters involving United States 

15 tax enforcement, shall consult with the Commis16 sioner of Internal Revenue, the Secretary of 

17 State, the Attorney General of the United 

18 States, and in the sole discretion of the Sec19 retary, such other agencies and interested par20 ties as the Secretary may find to be appro21 priate; and’’; 

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

23 (4) of subsection (b), by inserting ‘‘or to be signifi24 cantly impeding United States tax enforcement’’ 


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1 after ‘‘primary money laundering concern’’ each 

2 place that term appears; 

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

4 and inserting the following: 

5 ‘‘(5) PROHIBITIONS OR CONDITIONS ON OPEN6 ING OR MAINTAINING CERTAIN CORRESPONDENT OR

7 PAYABLE-THROUGH ACCOUNTS OR AUTHORIZING

8 CERTAIN PAYMENT CARDS.—If the Secretary finds a 

9 jurisdiction outside of the United States, 1 or more 

10 financial institutions operating outside of the United 

11 States, or 1 or more classes of transactions within 

12 or involving a jurisdiction outside of the United 

13 States to be of primary money laundering concern or 

14 to be significantly impeding United States tax en15 forcement, the Secretary, in consultation with the 

16 Secretary of State, the Attorney General of the 

17 United States, and the Chairman of the Board of 

18 Governors of the Federal Reserve System, may pro19 hibit, or impose conditions upon— 

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

21 United States of a correspondent account or 

22 payable-through account; or 

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

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

25 debit card, or similar credit or debit financial 


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1 instrument by any domestic financial institu2 tion, financial agency, or credit card company 

3 or association, for or on behalf of a foreign 

4 banking institution, if such correspondent ac5 count, payable-through account, credit card, 

6 charge card, debit card, or similar credit or 

7 debit financial instrument, involves any such ju8 risdiction or institution, or if any such trans9 action may be conducted through such cor10 respondent account, payable-through account, 

11 credit card, charge card, debit card, or similar 

12 credit or debit financial instrument.’’; 

13 (8) in subsection (c)(1), by inserting ‘‘or is sig14 nificantly impeding United States tax enforcement’’ 

15 after ‘‘primary money laundering concern’’; 

16 (9) in subsection (c)(2)(A)— 

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

18 or special regulatory advantages’’ and inserting 

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

20 or regulatory advantages’’; 

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

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

23 international tax enforcement, and counter24 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 SEC. 202. STRENGTHENING THE FOREIGN ACCOUNT TAX 

19 COMPLIANCE ACT (FATCA). 

20 (a) REPORTING ACTIVITIES WITH RESPECT TO PAS21 SIVE FOREIGN INVESTMENT COMPANIES.—Section 

22 1298(f) is amended by inserting ‘‘, or who directly or indi23 rectly forms, transfers assets to, is a beneficiary of, has 

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

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


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1 (b) WITHHOLDABLE PAYMENTS TO FOREIGN FINAN2 CIAL INSTITUTIONS.—Section 1471(d) is amended— 

3 (1) by inserting ‘‘or transaction’’ after ‘‘any de4 pository’’ in paragraph (2)(A), and 

5 (2) by striking ‘‘or any interest’’ and all that 

6 follows in paragraph (5)(C) and inserting ‘‘deriva7 tives, or any interest (including a futures or forward 

8 contract, swap, or option) in such securities, part9 nership interests, commodities, or derivatives.’’. 

10 (c) WITHHOLDABLE PAYMENTS TO OTHER FOREIGN

11 FINANCIAL INSTITUTIONS.—Section 1472 is amended— 

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

13 identification, anti-money laundering, anti-corrup14 tion, or similar obligation to identify account hold15 ers,’’ after ‘‘reason to know,’’ in subsection (b)(2), 

16 and 

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

18 evasion’’ after ‘‘this subsection’’ in subsection 

19 (c)(1)(G). 

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

21 1473(2)(A) are each amended by inserting ‘‘or as a bene22 ficial owner’’ after ‘‘indirectly’’. 

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

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1 closed to any Federal law enforcement agency, upon 

2 request or upon the initiation of the Secretary, to in3 vestigate or address a possible violation of United 

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

5 and 

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

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

8 1471(b)’’ in paragraph (2). 

9 (f) INFORMATION WITH RESPECT TO FOREIGN FI10 NANCIAL ASSETS.—Section 6038D(a) is amended by in11 serting ‘‘ownership or beneficial ownership’’ after ‘‘holds 

12 any’’. 

13 (g) ESTABLISHING PRESUMPTIONS FOR ENTITIES

14 AND TRANSACTIONS INVOLVING NON-FATCA INSTITU15 TIONS.— 

16 (1) PRESUMPTIONS FOR TAX PURPOSES.— 

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

18 by inserting after section 7491 the following 

19 new subchapter: 

20 ‘‘Subchapter F—Presumptions for Certain 

21 Legal Proceedings 

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


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

2 TRANSACTIONS INVOLVING NON-FATCA IN3 STITUTIONS. 

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

5 civil judicial or administrative proceeding to determine or 

6 collect tax, there shall be a rebuttable presumption that 

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

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

9 interest in, or received money or property or the use there10 of from an entity, including a trust, corporation, limited 

11 liability company, partnership, or foundation, that holds 

12 an account, or in any other manner has assets, in a non13 FATCA institution, exercised control over such entity. The 

14 presumption of control created by this subsection shall not 

15 be applied to prevent the Secretary from determining or 

16 arguing the absence of control. 

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

18 United States civil judicial or administrative proceeding 

19 to determine or collect tax, there shall be a rebuttable pre20 sumption that any amount or thing of value received by 

21 a United States person directly or indirectly from an ac22 count or from an entity that holds an account, or in any 

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

24 constitutes income of such person taxable in the year of 

25 receipt; and any amount or thing of value paid or trans26 ferred by or on behalf of a United States person directly 


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1 or indirectly to an account, or entity that holds an ac2 count, or in any other manner has assets, in a non3 FATCA institution, represents previously unreported in4 come of such person taxable in the year of the transfer. 

5 ‘‘(c) REBUTTING THE PRESUMPTIONS.—The pre6 sumptions established in this section may be rebutted only 

7 by clear and convincing evidence, including detailed docu8 mentary, testimonial, and transactional evidence, estab9 lishing that— 

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

11 no control, directly or indirectly, over account or en12 tity at the time in question, and 

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

14 of value did not represent income related to such 

15 United States person. 

16 Any court having jurisdiction of a civil proceeding in which 

17 control of such an offshore account or offshore entity or 

18 the income character of such receipts or amounts trans19 ferred is an issue shall prohibit the introduction by the 

20 taxpayer of any foreign based document that is not au21 thenticated in open court by a person with knowledge of 

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

23 outside the jurisdiction of a United States court, unless 

24 such person appears before the court.’’. 


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1 (B) The table of subchapters for chapter 

2 76 is amended by inserting after the item relat3 ing to subchapter E the following new item: 

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

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

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

6 the following new paragraph: 

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

8 ‘non-FATCA institution’ means any foreign financial 

9 institution that does not meet the reporting require10 ments of section 1471(b).’’. 

11 (3) PRESUMPTIONS FOR SECURITIES LAW PUR12 POSES.—Section 21 of the Securities Exchange Act 

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

14 the end the following new subsection: 

15 ‘‘(j) PRESUMPTIONS PERTAINING TO CONTROL AND

16 BENEFICIAL OWNERSHIP.— 

17 ‘‘(1) CONTROL.—For purposes of any civil judi18 cial or administrative proceeding under this title, 

19 there shall be a rebuttable presumption that a 

20 United States person who, directly or indirectly, 

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

22 had a beneficial interest in, or received money or 

23 property or the use thereof from an entity, including 

24 a trust, corporation, limited liability company, part25 nership, or foundation, that holds an account, or in 


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1 any other manner has assets, in a non-FATCA insti2 tution (as defined in section 7701(a)(51) of the In3 ternal Revenue Code of 1986), exercised control over 

4 such entity. The presumption of control created by 

5 this paragraph shall not be applied to prevent the 

6 Commission from determining or arguing the ab7 sence of control. 

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

9 of any civil judicial or administrative proceeding 

10 under this title, there shall be a rebuttable presump11 tion that securities that are nominally owned by an 

12 entity, including a trust, corporation, limited liability 

13 company, partnership, or foundation, and that are 

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

15 beneficially owned by any United States person who 

16 directly or indirectly exercised control over such enti17 ty. The presumption of beneficial ownership created 

18 by this paragraph shall not be applied to prevent the 

19 Commission from determining or arguing the ab20 sence of beneficial ownership.’’. 

21 (4) PRESUMPTION FOR REPORTING PURPOSES

22 RELATING TO FOREIGN FINANCIAL ACCOUNTS.—Sec23 tion 5314 of title 31, United States Code, is amend24 ed by adding at the end the following new sub25 section: 


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

2 this section, there shall be a rebuttable presumption that 

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

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

5 1986) contains funds in an amount that is at least suffi6 cient to require a report prescribed by regulations under 

7 this section.’’. 

8 (5) REGULATORY AUTHORITY.—Not later than 

9 180 days after the date of enactment of this Act, the 

10 Secretary of the Treasury and the Chairman of the 

11 Securities and Exchange Commission shall each 

12 adopt regulations or other guidance necessary to im13 plement the amendments made by this subsection. 

14 The Secretary and the Chairman may, by regulation 

15 or guidance, provide that the presumption of control 

16 shall not extend to particular classes of transactions, 

17 such as corporate reorganizations or transactions 

18 below a specified dollar threshold, if either deter19 mines that applying such amendments to such trans20 actions is not necessary to carry out the purposes of 

21 such amendments. 

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

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

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

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


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1 SEC. 203. REPORTING UNITED STATES BENEFICIAL OWN2 ERS OF FOREIGN OWNED FINANCIAL AC3 COUNTS. 

4 (a) IN GENERAL.—Subpart B of part III of sub5 chapter A of chapter 61 is amended by inserting after sec6 tion 6045B the following new sections: 

7 ‘‘SEC. 6045C. RETURNS REGARDING UNITED STATES BENE8 FICIAL OWNERS OF FINANCIAL ACCOUNTS 

9 LOCATED IN THE UNITED STATES AND HELD 

10 IN THE NAME OF A FOREIGN ENTITY. 

11 ‘‘(a) REQUIREMENT OF RETURN.—If— 

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

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

14 or payment of any amount constituting gross income 

15 from sources within the United States of any foreign 

16 entity, including a trust, corporation, limited liability 

17 company, partnership, or foundation (other than an 

18 entity with shares regularly traded on an established 

19 securities market), and 

20 ‘‘(2) such withholding agent determines for pur21 poses of title 14, 18, or 31 of the United States 

22 Code that a United States person has any beneficial 

23 interest in the foreign entity or in the account in 

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

25 to as ‘United States beneficial owner’), 


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1 then the withholding agent shall make a return according 

2 to the forms or regulations prescribed by the Secretary. 

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

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

5 the return shall include— 

6 ‘‘(1) the name, address, and, if known, the tax7 payer identification number of the United States 

8 beneficial owner, 

9 ‘‘(2) the known facts pertaining to the relation10 ship of such United States beneficial owner to the 

11 foreign entity and the account, 

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

13 within the United States (including gross proceeds 

14 from brokerage transactions), and 

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

16 may by forms or regulations provide. 

17 ‘‘(c) STATEMENTS TO BE FURNISHED TO BENE18 FICIAL OWNERS WITH RESPECT TO WHOM INFORMATION

19 IS REQUIRED TO BE REPORTED.—A withholding agent 

20 required to make a return under subsection (a) shall fur21 nish to each United States beneficial owner whose name 

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

23 showing— 


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

2 of the information contact of the person required to 

3 make such return, and 

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

5 such return with respect to such United States bene6 ficial owner. 

7 The written statement required under the preceding sen8 tence shall be furnished to the United States beneficial 

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

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

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

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

13 States beneficial owner, such written statement may be 

14 mailed to the address of the foreign entity. 

15 ‘‘SEC. 6045D. RETURNS BY FINANCIAL INSTITUTIONS RE16 GARDING ESTABLISHMENT OF ACCOUNTS IN 

17 NON-FATCA INSTITUTIONS. 

18 ‘‘(a) REQUIREMENT OF RETURN.—Any financial in19 stitution directly or indirectly opening a bank, brokerage, 

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

21 entity, including a trust, corporation, limited liability com22 pany, partnership, or foundation (other than an entity 

23 with shares regularly traded on an established securities 

24 market), in a non-FATCA institution (as defined in sec25 tion 7701(a)(51)) at the direction of, on behalf of, or for 


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

2 according to the forms or regulations prescribed by the 

3 Secretary. 

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

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

6 the return shall include— 

7 ‘‘(1) the name, address, and taxpayer identifica8 tion number of such United States person, 

9 ‘‘(2) the name and address of the financial in10 stitution at which a financial account is opened, the 

11 type of account, the account number, the name 

12 under which the account was opened, and the 

13 amount of the initial deposit, 

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

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

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

17 formation agent or other professional employed to 

18 form or acquire the entity, and 

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

20 may by forms or regulations provide. 

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

22 STATES PERSONS WITH RESPECT TO WHOM INFORMA23 TION IS REQUIRED TO BE REPORTED.—A financial insti24 tution required to make a return under subsection (a) 

25 shall furnish to each United States person whose name 


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

2 showing— 

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

4 of the information contact of the person required to 

5 make such return, and 

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

7 such return with respect to such United States per8 son. 

9 The written statement required under the preceding sen10 tence shall be furnished to such United States person on 

11 or before January 31 of the year following the calendar 

12 year for which the return under subsection (a) was re13 quired to be made. 

14 ‘‘(d) EXEMPTION.—The Secretary may by regula15 tions exempt any class of United States persons or any 

16 class of accounts or entities from the requirements of this 

17 section if the Secretary determines that applying this sec18 tion to such persons, accounts, or entities is not necessary 

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

20 (b) PENALTIES.— 

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

22 amended by striking ‘‘or’’ at the end of clause 

23 (xxiv), by striking ‘‘and’’ at the end of clause (xxv), 

24 and by adding after clause (xxv) the following new 

25 clauses: 


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1 ‘‘(xxvi) section 6045C(a) (relating to 

2 returns regarding United States beneficial 

3 owners of financial accounts located in the 

4 United States and held in the name of a 

5 foreign entity), or 

6 ‘‘(xxvii) section 6045D(a) (relating to 

7 returns by financial institutions regarding 

8 establishment of accounts at non-FATCA 

9 institutions), and’’. 

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

11 is amended by striking ‘‘or’’ at the end of subpara12 graph (HH), by striking the period at the end of 

13 subparagraph (II), and by inserting after subpara14 graph (II) the following new subparagraphs: 

15 ‘‘(JJ) section 6045C(c) (relating to returns 

16 regarding United States beneficial owners of fi17 nancial accounts located in the United States 

18 and held in the name of a foreign entity), or 

19 ‘‘(KK) section 6045D(c) (relating to re20 turns by financial institutions regarding estab21 lishment of accounts at non-FATCA institu22 tions).’’. 

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

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


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1 is amended by inserting after the item relating to section 

2 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.’’. 

3 (d) ADDITIONAL PENALTIES.— 

4 (1) ADDITIONAL PENALTIES ON BANKS.—Sec5 tion 5239(b)(1) of the Revised Statutes of the 

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

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

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

9 regulation issued pursuant to,’’. 

10 (2) ADDITIONAL PENALTIES ON SECURITIES

11 FIRMS.—Section 21(d)(3)(A) of the Securities Ex12 change Act of 1934 (15 U.S.C. 78u(d)(3)(A)) is 

13 amended by inserting ‘‘any of the provisions of sec14 tion 6045D of the Internal Revenue Code of 1986,’’ 

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

16 (e) REGULATORY AUTHORITY AND EFFECTIVE

17 DATE.— 

18 (1) REGULATORY AUTHORITY.—Not later than 

19 180 days after the date of the enactment of this Act, 

20 the Secretary of the Treasury shall adopt regula21 tions, forms, or other guidance necessary to imple22 ment this section. 


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

2 Internal Revenue Code of 1986 (as added by this 

3 section) and the amendment made by subsection 

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

5 into foreign owned accounts located in the United 

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

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

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

9 subsection (d)(2) shall take effect with respect to ac10 counts opened after December 31 of the year of the 

11 date of the enactment of this Act. 

12 SEC. 204. PENALTY FOR FAILING TO DISCLOSE OFFSHORE 

13 HOLDINGS. 

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

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

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

17 the following: 

18 ‘‘(iv) FOURTH TIER.—Notwith19 standing clauses (i), (ii), and (iii), for each 

20 violation, the amount of the penalty shall 

21 not exceed $1,000,000 for any natural per22 son or $10,000,000 for any other person, 

23 if— 

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1 cluding any trust, corporation, limited 

2 liability company, partnership, or 

3 foundation through which an issuer 

4 purchased, sold, or held equity or debt 

5 instruments; 

6 ‘‘(II) such person knowingly or 

7 recklessly failed to disclose any such 

8 holding, purchase, or sale by the 

9 issuer; and 

10 ‘‘(III) the holding, purchase, or 

11 sale would have been otherwise sub12 ject to disclosure by the issuer or such 

13 person under this title.’’. 

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

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

16 amended by adding at the end the following: 

17 ‘‘(D) FOURTH TIER.—Notwithstanding 

18 subparagraphs (A), (B), and (C), for each viola19 tion, the amount of the penalty shall not exceed 

20 $1,000,000 for any natural person or 

21 $10,000,000 for any other person, if— 

22 ‘‘(i) such person directly or indirectly 

23 controlled any foreign entity, including any 

24 trust, corporation, limited liability com25 pany, partnership, or foundation through 


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1 which an issuer purchased, sold, or held 

2 equity or debt instruments; 

3 ‘‘(ii) such person knowingly or reck4 lessly failed to disclose any such holding, 

5 purchase, or sale by the issuer; and 

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

7 would have been otherwise subject to dis8 closure by the issuer or such person under 

9 this title.’’. 

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

11 203(i)(2) of the Investment Advisers Act of 1940 (15 

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

13 following: 

14 ‘‘(D) FOURTH TIER.—Notwithstanding 

15 subparagraphs (A), (B), and (C), for each viola16 tion, the amount of the penalty shall not exceed 

17 $1,000,000 for any natural person or 

18 $10,000,000 for any other person, if— 

19 ‘‘(i) such person directly or indirectly 

20 controlled any foreign entity, including any 

21 trust, corporation, limited liability com22 pany, partnership, or foundation through 

23 which an issuer purchased, sold, or held 

24 equity or debt instruments; 


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1 ‘‘(ii) such person knowingly or reck2 lessly failed to disclose any such holding, 

3 purchase, or sale by the issuer; and 

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

5 would have been otherwise subject to dis6 closure by the issuer or such person under 

7 this title.’’. 

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

9 FOR INVESTMENT ADVISERS. 

10 (a) ANTI-MONEY LAUNDERING OBLIGATIONS FOR

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

12 United States Code, is amended— 

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

14 the end; 

15 (2) by redesignating subparagraph (Z) as sub16 paragraph (BB); and 

17 (3) by inserting after subparagraph (Y) the fol18 lowing: 

19 ‘‘(Z) an investment adviser;’’. 

20 (b) RULES REQUIRED.—The Secretary of the Treas21 ury shall— 

22 (1) in consultation with the Chairman of the 

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1 ment of this Act, publish a proposed rule in the Fed2 eral Register to carry out the amendments made by 

3 this section; and 

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

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

6 Federal Register on the matter described in para7 graph (1). 

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

9 section shall require, at a minimum, each investment ad10 viser (as defined in section 202(a)(11) of the Investment 

11 Advisers Act of 1940 (15 U.S.C. 80b–2(a)(11))) reg12 istered with the Securities and Exchange Commission pur13 suant to section 203 of that Act (15 U.S.C. 80b–3)— 

14 (1) to submit suspicious activity reports and es15 tablish an anti-money laundering program under 

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

17 of title 31, United States Code; and 

18 (2) to comply with— 

19 (A) the customer identification program 

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

21 United States Code; and 

22 (B) the due diligence requirements under 

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


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1 SEC. 206. ANTI-MONEY LAUNDERING REQUIREMENTS FOR 

2 FORMATION AGENTS. 

3 (a) ANTI-MONEY LAUNDERING OBLIGATIONS FOR

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

5 United States Code, as amended by section 203 of this 

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

7 following: 

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

9 of forming new corporations, limited liability 

10 companies, partnerships, trusts, or other legal 

11 entities; or’’. 

12 (b) DEADLINE FOR ANTI-MONEY LAUNDERING

13 RULE FOR FORMATION AGENTS.— 

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

15 Treasury, in consultation with the Attorney General 

16 of the United States, the Secretary of Homeland Se17 curity, and the Commissioner of Internal Revenue, 

18 shall— 

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

20 of enactment of this Act, publish a proposed 

21 rule in the Federal Register requiring persons 

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

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

24 establish anti-money laundering programs 

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


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

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

3 the Federal Register on the matter described in 

4 subparagraph (A). 

5 (2) EXCLUSIONS.—The rule promulgated under 

6 this subsection shall exclude from the category of 

7 persons engaged in the business of forming new cor8 porations or other entities— 

9 (A) any government agency; and 

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

11 paid formation agent operating within the 

12 United States to form such corporations or 

13 other entities. 

14 SEC. 207. STRENGTHENING JOHN DOE SUMMONS PRO15 CEEDINGS. 

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

17 amended to read as follows: 

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

19 JOHN DOE SUMMONS.— 

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

21 in subsection (c)(1) which does not identify the per22 son with respect to whose liability the summons is 

23 issued may be served only after a court proceeding 

24 in which the Secretary establishes that— 


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1 ‘‘(A) the summons relates to the investiga2 tion of a particular person or ascertainable 

3 group or class of persons, 

4 ‘‘(B) there is a reasonable basis for believ5 ing that such person or group or class of per6 sons may fail or may have failed to comply with 

7 any provision of any internal revenue law, and 

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

9 from the examination of the records or testi10 mony (and the identity of the person or persons 

11 with respect to whose liability the summons is 

12 issued) is not readily available from other 

13 sources. 

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

15 apply to any summons which specifies that it is lim16 ited to information regarding a United States cor17 respondent account (as defined in section 

18 5318A(e)(1)(B) of title 31, United States Code) or 

19 a United States payable-through account (as defined 

20 in section 5318A(e)(1)(C) of such title) of a finan21 cial institution that is held at a non-FATCA institu22 tion (as defined in section 7701(a)(51)). 

23 ‘‘(3) PRESUMPTION IN CASES INVOLVING NON24 FATCA INSTITUTIONS.—For purposes of this section, 

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1 tainable group or class of persons have financial ac2 counts in or transactions related to a non-FATCA 

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

4 shall be a presumption that there is a reasonable 

5 basis for believing that such person or group or class 

6 of persons may fail or may have failed to comply 

7 with provisions of internal revenue law. 

8 ‘‘(4) PROJECT JOHN DOE SUMMONSES.— 

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

10 requirements of paragraph (1), the Secretary 

11 may issue a summons described in paragraph 

12 (1) if the summons— 

13 ‘‘(i) relates to a project which is ap14 proved under subparagraph (B), 

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

16 member of the group or class established 

17 under subparagraph (B)(i), and 

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

19 date on which such project was approved 

20 under subparagraph (B). 

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

22 may only be approved under this subparagraph 

23 after a court proceeding in which the Secretary 

24 establishes that— 


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1 ‘‘(i) any summons issued with respect 

2 to the project will be issued to a member 

3 of an ascertainable group or class of per4 sons, and 

5 ‘‘(ii) any summons issued with respect 

6 to such project will meet the requirements 

7 of paragraph (1). 

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

9 the Secretary, the court may extend the time 

10 for issuing such summonses under subpara11 graph (A)(i) for additional 3-year periods, but 

12 only if the court continues to exercise oversight 

13 of such project under subparagraph (D). 

14 ‘‘(D) ONGOING COURT OVERSIGHT.—Dur15 ing any period in which the Secretary is author16 ized to issue summonses in relation to a project 

17 approved under subparagraph (B) (including 

18 during any extension under subparagraph (C)), 

19 the Secretary shall report annually to the court 

20 on the use of such authority, provide copies of 

21 all summonses with such report, and comply 

22 with the court’s direction with respect to the 

23 issuance of any John Doe summons under such 

24 project.’’. 

25 (b) JURISDICTION OF COURT.— 


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

2 7609(h) is amended by inserting after the first sen3 tence the following new sentence: ‘‘Any United 

4 States district court in which a member of the group 

5 or class to which a summons may be issued resides 

6 or is found shall have jurisdiction to hear and deter7 mine the approval of a project under subsection 

8 (f)(4)(B).’’. 

9 (2) CONFORMING AMENDMENT.—The first sen10 tence of section 7609(h)(1) is amended by striking 

11 ‘‘(f)’’ and inserting ‘‘(f)(1)’’. 

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

13 this section shall apply to summonses issued after the date 

14 of the enactment of this Act. 

15 SEC. 208. IMPROVING ENFORCEMENT OF FOREIGN FINAN16 CIAL ACCOUNT REPORTING. 

17 (a) CLARIFYING THE CONNECTION OF FOREIGN FI18 NANCIAL ACCOUNT REPORTING TO TAX ADMINISTRA19 TION.—Paragraph (4) of section 6103(b) is amended by 

20 adding at the end the following new sentence: 

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

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

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

24 such section 5314), shall be considered related stat25 utes.’’. 


SSpencer on DSK4SPTVN1PROD with BILLS
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•S 851 IS

1 (b) SIMPLIFYING THE CALCULATION OF FOREIGN

2 FINANCIAL ACCOUNT REPORTING PENALTIES.—Section 

3 5321(a)(5)(D)(ii) of title 31, United States Code, is 

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

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

6 in the account during the reporting period to which the 

7 violation relates’’. 

8 (c) CLARIFYING THE USE OF SUSPICIOUS ACTIVITY

9 REPORTS UNDER THE BANK SECRECY ACT FOR CIVIL

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

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

12 criminal enforcement divisions of the Internal Revenue 

13 Service,’’ after ‘‘including’’. 

Æ 


SSpencer on DSK4SPTVN1PROD with BILLS