I 

113TH CONGRESS 

1ST SESSION H. R. 1554 

To restrict the use of offshore tax havens and abusive tax shelters to 

inappropriately avoid Federal taxation, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 15, 2013 

Mr. DOGGETT (for himself, Ms. BASS, Mr. BECERRA, Mr. BLUMENAUER, Mr. 

CAPUANO, Ms. CHU, Mr. CICILLINE, Mr. CONYERS, Mr. CUMMINGS, Mr. 

DEFAZIO, Ms. DEGETTE, Ms. DELAURO, Mr. DEUTCH, Mr. DINGELL, 

Ms. EDWARDS, Mr. ELLISON, Mr. FARR, Mr. GENE GREEN of Texas, 

Mr. GRIJALVA, Mr. HIGGINS, Mr. HUFFMAN, Ms. EDDIE BERNICE

JOHNSON of Texas, Mr. JOHNSON of Georgia, Mr. LARSON of Connecticut, Ms. LEE of California, Mr. LOEBSACK, Mr. LYNCH, Mr. MARKEY, Ms. MCCOLLUM, Mr. MCDERMOTT, Mr. MCGOVERN, Mr. GEORGE

MILLER of California, Ms. MOORE, Mr. MORAN, Mr. PASCRELL, Mr. 

PETERS of Michigan, Mr. RUSH, Ms. SCHAKOWSKY, Mr. SHERMAN, Ms. 

SLAUGHTER, Mr. TIERNEY, Mr. TONKO, Ms. TSONGAS, Mr. VAN HOLLEN, Mr. WELCH, Mr. YARMUTH, Mr. LANGEVIN, Mr. HOLT, Mr. LIPINSKI, Mr. GUTIERREZ, Mr. LEWIS, Mr. GARAMENDI, Mr. PAYNE, and Mr. 

COHEN) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, 

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To restrict the use of offshore tax havens and abusive tax 

shelters to inappropriately avoid Federal taxation, 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, 


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1 SECTION 1. SHORT TITLE; ETC. 

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

3 ‘‘Stop Tax Haven Abuse Act’’. 

4 (b) AMENDMENT OF 1986 CODE.—Except as other5 wise expressly provided, whenever in this Act an amend6 ment or repeal is expressed in terms of an amendment 

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

8 shall be considered to be made to a section or other provi9 sion of the Internal Revenue Code of 1986. 

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

11 this Act is as follows: 

Sec. 1. Short title; etc. 

TITLE I—DETERRING THE USE OF TAX HAVENS FOR TAX 

EVASION 

Sec. 101. Authorizing special measures against foreign jurisdictions, financial 

institutions, and others that significantly impede United States 

tax enforcement. 

Sec. 102. Strengthening the Foreign Account Tax Compliance Act (FATCA). 

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

United States as domestic corporations. 

Sec. 104. Reporting United States beneficial owners of foreign owned financial 

accounts. 

Sec. 105. Swap payments made from the United States to persons offshore. 

TITLE II—OTHER MEASURES TO COMBAT TAX HAVEN AND TAX 

SHELTER ABUSES 

Sec. 201. Country-by-country reporting. 

Sec. 202. Penalty for failing to disclose offshore holdings. 

Sec. 203. Deadline for anti-money laundering rule for investment advisers. 

Sec. 204. Anti-money laundering requirements for formation agents. 

Sec. 205. Strengthening John Doe summons proceedings. 

Sec. 206. Improving enforcement of foreign financial account reporting. 

TITLE III—COMBATING TAX SHELTER PROMOTERS 

Sec. 301. Penalty for promoting abusive tax shelters. 

Sec. 302. Penalty for aiding and abetting the understatement of tax liability. 

Sec. 303. Prohibited fee arrangement. 

Sec. 304. Preventing tax shelter activities by financial institutions. 

Sec. 305. Information sharing for enforcement purposes. 


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Sec. 306. Disclosure of information to Congress. 

Sec. 307. Tax opinion standards for tax practitioners. 

1 TITLE I—DETERRING THE USE 

2 OF TAX HAVENS FOR TAX 

3 EVASION 

4 SEC. 101. AUTHORIZING SPECIAL MEASURES AGAINST FOR5 EIGN JURISDICTIONS, FINANCIAL INSTITU6 TIONS, AND OTHERS THAT SIGNIFICANTLY 

7 IMPEDE UNITED STATES TAX ENFORCEMENT. 

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

9 amended— 

10 (1) by striking the section heading and insert11 ing the following: 

12 ‘‘§ 5318A. Special measures for jurisdictions, financial 

13 institutions, or international transactions 

14 that are of primary money laundering 

15 concern or significantly impede United 

16 States tax enforcement’’; 

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

18 heading and inserting the following: 

19 ‘‘(a) SPECIAL MEASURES TO COUNTER MONEY

20 LAUNDERING AND EFFORTS TO SIGNIFICANTLY IMPEDE

21 UNITED STATES TAX ENFORCEMENT.—’’; 

22 (3) in subsection (c)— 

23 (A) by striking the subsection heading and 

24 inserting the following: 


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1 ‘‘(c) CONSULTATIONS AND INFORMATION TO BE

2 CONSIDERED IN FINDING JURISDICTIONS, INSTITUTIONS, 

3 TYPES OF ACCOUNTS, OR TRANSACTIONS TO BE OF PRI4 MARY MONEY LAUNDERING CONCERN OR TO BE SIGNIFI5 CANTLY IMPEDING UNITED STATES TAX ENFORCE6 MENT.—’’; and 

7 (B) by inserting at the end of paragraph 

8 (2) thereof the following new subparagraph: 

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

10 that a jurisdiction or financial institution is co11 operating with the United States on imple12 menting the requirements specified in chapter 4 

13 of the Internal Revenue Code of 1986 may be 

14 favorably considered in evaluating whether such 

15 jurisdiction or financial institution is signifi16 cantly impeding United States tax enforce17 ment.’’; 

18 (4) in subsection (a)(1), by inserting ‘‘or is sig19 nificantly impeding United States tax enforcement’’ 

20 after ‘‘primary money laundering concern’’; 

21 (5) in subsection (a)(4)— 

22 (A) in subparagraph (A)— 

23 (i) by inserting ‘‘in matters involving 

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

25 and 


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

2 (B) by redesignating subparagraph (B) as 

3 subparagraph (C); and 

4 (C) by inserting after subparagraph (A) 

5 the following: 

6 ‘‘(B) in matters involving United States 

7 tax enforcement, shall consult with the Commis8 sioner of the Internal Revenue, the Secretary of 

9 State, the Attorney General of the United 

10 States, and in the sole discretion of the Sec11 retary, such other agencies and interested par12 ties as the Secretary may find to be appro13 priate; and’’; 

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

15 (4) of subsection (b), by inserting ‘‘or to be signifi16 cantly impeding United States tax enforcement’’ 

17 after ‘‘primary money laundering concern’’ each 

18 place that term appears; 

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

20 and inserting the following: 

21 ‘‘(5) PROHIBITIONS OR CONDITIONS ON OPEN22 ING OR MAINTAINING CERTAIN CORRESPONDENT OR

23 PAYABLE-THROUGH ACCOUNTS OR AUTHORIZING

24 CERTAIN PAYMENT CARDS.—If the Secretary finds a 

25 jurisdiction outside of the United States, 1 or more 


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1 financial institutions operating outside of the United 

2 States, or 1 or more classes of transactions within 

3 or involving a jurisdiction outside of the United 

4 States to be of primary money laundering concern or 

5 to be significantly impeding United States tax en6 forcement, the Secretary, in consultation with the 

7 Secretary of State, the Attorney General of the 

8 United States, and the Chairman of the Board of 

9 Governors of the Federal Reserve System, may pro10 hibit, or impose conditions upon— 

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

12 United States of a correspondent account or 

13 payable-through account; or 

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

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

16 debit card, or similar credit or debit financial 

17 instrument by any domestic financial institu18 tion, financial agency, or credit card company 

19 or association, for or on behalf of a foreign 

20 banking institution, if such correspondent ac21 count, payable-through account, credit card, 

22 charge card, debit card, or similar credit or 

23 debit financial instrument, involves any such ju24 risdiction or institution, or if any such trans25 action may be conducted through such corVerDate Mar 15 2010 02:30 Apr 20, 2013 Jkt 029200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1554.IH H1554

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1 respondent account, payable-through account, 

2 credit card, charge card, debit card, or similar 

3 credit or debit financial instrument.’’; 

4 (8) in subsection (c)(1), by inserting ‘‘or is sig5 nificantly impeding United States tax enforcement’’ 

6 after ‘‘primary money laundering concern’’; 

7 (9) in subsection (c)(2)(A)— 

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

9 or special regulatory advantages’’ and inserting 

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

11 or regulatory advantages’’; 

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

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

14 international tax enforcement, and counter15 money’’; 

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

17 secrecy’’ and inserting ‘‘banking, tax, or se18 crecy’’; and 

19 (D) in clause (vi), by inserting ‘‘, tax trea20 ty, or tax information exchange agreement’’ 

21 after ‘‘treaty’’; 

22 (10) in subsection (c)(2)(B)— 

23 (A) in clause (i), by inserting ‘‘or tax eva24 sion’’ after ‘‘money laundering’’; and 


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1 (B) in clause (iii), by inserting ‘‘, tax eva2 sion,’’ after ‘‘money laundering’’; and 

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

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

5 Committee on Finance of the Senate and the Com6 mittee on Ways and Means of the House of Rep7 resentatives of any such action involving United 

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

9 SEC. 102. STRENGTHENING THE FOREIGN ACCOUNT TAX 

10 COMPLIANCE ACT (FATCA). 

11 (a) REPORTING ACTIVITIES WITH RESPECT TO PAS12 SIVE FOREIGN INVESTMENT COMPANIES.—Section 

13 1298(f) is amended by inserting ‘‘, or who directly or indi14 rectly forms, transfers assets to, is a beneficiary of, has 

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

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

17 (b) WITHHOLDABLE PAYMENTS TO FOREIGN FINAN18 CIAL INSTITUTIONS.—Section 1471(d) is amended— 

19 (1) by inserting ‘‘or transaction’’ after ‘‘any de20 pository’’ in paragraph (2)(A), and 

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

22 follows in paragraph (5)(C) and inserting ‘‘deriva23 tives, or any interest (including a futures or forward 

24 contract, swap, or option) in such securities, part25 nership interests, commodities, or derivatives.’’. 


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1 (c) WITHHOLDABLE PAYMENTS TO OTHER FOREIGN

2 FINANCIAL INSTITUTIONS.—Section 1472 is amended— 

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

4 identification, anti-money laundering, anti-corrup5 tion, or similar obligation to identify account hold6 ers,’’ after ‘‘reason to know,’’ in subsection (b)(2), 

7 and 

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

9 evasion’’ after ‘‘this subsection’’ in subsection 

10 (c)(1)(G). 

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

12 1473(2)(A) are each amended by inserting ‘‘or as a bene13 ficial owner’’ after ‘‘indirectly’’. 

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

15 (1) by inserting ‘‘, except that information pro16 vided under sections 1471(c) or 1472(b) may be dis17 closed to any Federal law enforcement agency, upon 

18 request or upon the initiation of the Secretary, to in19 vestigate or address a possible violation of United 

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

21 and 

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

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

24 1471(b)’’ in paragraph (2). 


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1 (f) INFORMATION WITH RESPECT TO FOREIGN FI2 NANCIAL ASSETS.—Section 6038D(a) is amended by in3 serting ‘‘ownership or beneficial ownership’’ after ‘‘holds 

4 any’’. 

5 (g) ESTABLISHING PRESUMPTIONS FOR ENTITIES

6 AND TRANSACTIONS INVOLVING NON-FATCA INSTITU7 TIONS.— 

8 (1) PRESUMPTIONS FOR TAX PURPOSES.— 

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

10 by inserting after section 7491 the following 

11 new subchapter: 

12 ‘‘Subchapter F—Presumptions for Certain 

13 Legal Proceedings 

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

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

15 TRANSACTIONS INVOLVING NON-FATCA IN16 STITUTIONS. 

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

18 civil judicial or administrative proceeding to determine or 

19 collect tax, there shall be a rebuttable presumption that 

20 a United States person (other than an entity with shares 

21 regularly traded on an established securities market) who, 

22 directly or indirectly, formed, transferred assets to, was 

23 a beneficiary of, had a beneficial interest in, or received 

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1 cluding a trust, corporation, limited liability company, 

2 partnership, or foundation (other than an entity with 

3 shares regularly traded on an established securities mar4 ket), that holds an account, or in any other manner has 

5 assets, in a non-FATCA institution, exercised control over 

6 such entity. The presumption of control created by this 

7 subsection shall not be applied to prevent the Secretary 

8 from determining or arguing the absence of control. 

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

10 United States civil judicial or administrative proceeding 

11 to determine or collect tax, there shall be a rebuttable pre12 sumption that any amount or thing of value received by 

13 a United States person (other than an entity with shares 

14 regularly traded on an established securities market) di15 rectly or indirectly from an account or from an entity 

16 (other than an entity with shares regularly traded on an 

17 established securities market) that holds an account, or 

18 in any other manner has assets, in a non-FATCA institu19 tion, constitutes income of such person taxable in the year 

20 of receipt; and any amount or thing of value paid or trans21 ferred by or on behalf of a United States person (other 

22 than an entity with shares regularly traded on an estab23 lished securities market) directly or indirectly to an ac24 count, or entity (other than an entity with shares regularly 

25 traded on an established securities market) that holds an 


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1 account, or in any other manner has assets, in a non2 FATCA institution, represents previously unreported in3 come of such person taxable in the year of the transfer. 

4 ‘‘(c) REBUTTING THE PRESUMPTIONS.—The pre5 sumptions established in this section may be rebutted only 

6 by clear and convincing evidence, including detailed docu7 mentary, testimonial, and transactional evidence, estab8 lishing that— 

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

10 no control, directly or indirectly, over account or en11 tity at the time in question, and 

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

13 of value did not represent income related to such 

14 United States person. 

15 Any court having jurisdiction of a civil proceeding in which 

16 control of such an offshore account or offshore entity or 

17 the income character of such receipts or amounts trans18 ferred is an issue shall prohibit the introduction by the 

19 taxpayer of any foreign based document that is not au20 thenticated in open court by a person with knowledge of 

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

22 outside the jurisdiction of a United States court, unless 

23 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 financial insti9 tution that does not meet the reporting requirements 

10 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 (other than an entity with 

21 shares regularly traded on an established securities 

22 market) who, directly or indirectly, formed, trans23 ferred assets to, was a beneficiary of, had a bene24 ficial interest in, or received money or property or 

25 the use thereof from an entity, including a trust, 


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1 corporation, limited liability company, partnership, 

2 or foundation (other than an entity with shares reg3 ularly traded on an established securities market), 

4 that holds an account, or in any other manner has 

5 assets, in a non-FATCA institution (as defined in 

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

7 1986), exercised control over such entity. The pre8 sumption of control created by this paragraph shall 

9 not be applied to prevent the Commission from de10 termining or arguing the absence of control. 

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

12 of any civil judicial or administrative proceeding 

13 under this title, there shall be a rebuttable presump14 tion that securities that are nominally owned by an 

15 entity, including a trust, corporation, limited liability 

16 company, partnership, or foundation (other than an 

17 entity with shares regularly traded on an established 

18 securities market), and that are held in a non19 FATCA institution (as so defined), are beneficially 

20 owned by any United States person (other than an 

21 entity with shares regularly traded on an established 

22 securities market) who directly or indirectly exer23 cised control over such entity. The presumption of 

24 beneficial ownership created by this paragraph shall 

25 not be applied to prevent the Commission from deVerDate Mar 15 2010 02:30 Apr 20, 2013 Jkt 029200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\H1554.IH H1554

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1 termining or arguing the absence of beneficial own2 ership.’’. 

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 the enactment of this Act, 

17 the Secretary of the Treasury and the Chairman of 

18 the 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 the enactment of this Act, whether or 

7 not regulations are issued under subsection (g)(5). 

8 SEC. 103. TREATMENT OF FOREIGN CORPORATIONS MAN9 AGED AND CONTROLLED IN THE UNITED 

10 STATES AS DOMESTIC CORPORATIONS. 

11 (a) IN GENERAL.—Section 7701 is amended by re12 designating subsection (p) as subsection (q) and by insert13 ing after subsection (o) the following new subsection: 

14 ‘‘(p) CERTAIN CORPORATIONS MANAGED AND CON15 TROLLED IN THE UNITED STATES TREATED AS DOMES16 TIC FOR INCOME TAX.— 

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

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

19 paragraph (2) if— 

20 ‘‘(A) the corporation would not otherwise 

21 be treated as a domestic corporation for pur22 poses of this title, but 

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

24 corporation occurs, directly or indirectly, pri25 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 ‘‘(C) EXCEPTION FROM GROSS ASSETS

10 TEST.—Subparagraph (A)(ii) shall not apply to 

11 a corporation which is a controlled foreign cor12 poration (as defined in section 957) and which 

13 is a member of an affiliated group (as defined 

14 section 1504, but determined without regard to 

15 section 1504(b)(3)) the common parent of 

16 which— 

17 ‘‘(i) is a domestic corporation (deter18 mined without regard to this subsection), 

19 and 

20 ‘‘(ii) has substantial assets (other 

21 than cash and cash equivalents and other 

22 than stock of foreign subsidiaries) held for 

23 use in the active conduct of a trade or 

24 business in the United States. 

25 ‘‘(3) MANAGEMENT AND CONTROL.— 


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

2 prescribe regulations for purposes of deter3 mining cases in which the management and 

4 control of a corporation is to be treated as oc5 curring primarily within the United States. 

6 ‘‘(B) EXECUTIVE OFFICERS AND SENIOR

7 MANAGEMENT.—Such regulations shall provide 

8 that— 

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

10 corporation shall be treated as occurring 

11 primarily within the United States if sub12 stantially all of the executive officers and 

13 senior management of the corporation who 

14 exercise day-to-day responsibility for mak15 ing decisions involving strategic, financial, 

16 and operational policies of the corporation 

17 are located primarily within the United 

18 States, and 

19 ‘‘(ii) individuals who are not executive 

20 officers and senior management of the cor21 poration (including individuals who are of22 ficers or employees of other corporations in 

23 the same chain of corporations as the cor24 poration) shall be treated as executive offi25 cers and senior management if such indiVerDate Mar 15 2010 02:30 Apr 20, 2013 Jkt 029200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 E:\BILLS\H1554.IH H1554

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1 viduals exercise the day-to-day responsibil2 ities of the corporation described in clause 

3 (i). 

4 ‘‘(C) CORPORATIONS PRIMARILY HOLDING

5 INVESTMENT ASSETS.—Such regulations shall 

6 also provide that the management and control 

7 of a corporation shall be treated as occurring 

8 primarily within the United States if— 

9 ‘‘(i) the assets of such corporation (di10 rectly or indirectly) consist primarily of as11 sets being managed on behalf of investors, 

12 and 

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

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

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

16 this section shall apply to taxable years beginning on or 

17 after the date which is 2 years after the date of the enact18 ment of this Act, whether or not regulations are issued 

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

20 of 1986, as added by this section. 


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1 SEC. 104. 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 titles 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 (GG), by striking the period at the end of 

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

15 ‘‘(II) 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), 

19 ‘‘(JJ) 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 (12 U.S.C. 

6 93(b)(1)) is amended by inserting ‘‘or any of the 

7 provisions of section 6045D of the Internal Revenue 

8 Code of 1986,’’ after ‘‘any regulation issued pursu9 ant thereto,’’. 

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. 105. SWAP PAYMENTS MADE FROM THE UNITED 

13 STATES TO PERSONS OFFSHORE. 

14 (a) TAX ON SWAP PAYMENTS RECEIVED BY FOR15 EIGN PERSONS.—Section 871(a)(1) is amended— 

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

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

18 subparagraph (A), and 

19 (2) by adding at the end the following new sen20 tence: ‘‘In the case of swap payments, the source of 

21 a swap payment is determined by reference to the lo22 cation of the payor.’’. 

23 (b) TAX ON SWAP PAYMENTS RECEIVED BY FOR24 EIGN CORPORATIONS.—Section 881(a) is amended— 


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

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

3 paragraph (1), and 

4 (2) by adding at the end the following new sen5 tence: ‘‘In the case of swap payments, the source of 

6 a swap payment is determined by reference to the lo7 cation of the payor.’’. 

8 TITLE II—OTHER MEASURES TO 

9 COMBAT TAX HAVEN AND TAX 

10 SHELTER ABUSES 

11 SEC. 201. COUNTRY-BY-COUNTRY REPORTING. 

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

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

14 is amended by adding at the end the following new sub15 section: 

16 ‘‘(s) DISCLOSURE OF FINANCIAL PERFORMANCE ON

17 A COUNTRY-BY-COUNTRY BASIS.— 

18 ‘‘(1) DEFINITIONS.—In this subsection— 

19 ‘‘(A) the term ‘issuer group’ means the 

20 issuer, each subsidiary of the issuer, and each 

21 entity under the control of the issuer; and 

22 ‘‘(B) the term ‘country of operation’ means 

23 each country in which a member of the issuer 

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1 ployees, or conducts significant business activi2 ties. 

3 ‘‘(2) RULES REQUIRED.—The Commission shall 

4 issue rules that require each issuer to include in an 

5 annual report filed by the issuer with the Commis6 sion information on a country-by-country basis dur7 ing the covered period, consisting of— 

8 ‘‘(A) a list of each country of operation 

9 and the name of each entity of the issuer group 

10 domiciled in each country of operation; 

11 ‘‘(B) the number of employees physically 

12 working in each country of operation; 

13 ‘‘(C) the total pre-tax gross revenues of 

14 each member of the issuer group in each coun15 try of operation; 

16 ‘‘(D) the total amount of payments made 

17 to governments by each member of the issuer 

18 group in each country of operation, without ex19 ception, including, and set forth according to— 

20 ‘‘(i) total Federal, regional, local, and 

21 other tax assessed against each member of 

22 the issuer group with respect to each coun23 try of operation during the covered period; 

24 and 


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1 ‘‘(ii) after any tax deductions, tax 

2 credits, tax forgiveness, or other tax bene3 fits or waivers, the total amount of tax 

4 paid from the treasury of each member of 

5 the issuer group to the government of each 

6 country of operation during the covered pe7 riod; and 

8 ‘‘(E) such other financial information as 

9 the Commission may determine is necessary or 

10 appropriate in the public interest or for the pro11 tection of investors.’’. 

12 (b) RULEMAKING.— 

13 (1) DEADLINES.—The Securities and Exchange 

14 Commission (in this section referred to as the ‘‘Com15 mission’’) shall— 

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

17 of enactment of this Act, issue a proposed rule 

18 to carry out this section and the amendment 

19 made by this section; and 

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

21 enactment of this Act, issue a final rule to 

22 carry out this section and the amendment made 

23 by this section. 

24 (2) DATA FORMAT.—The information required 

25 to be provided by this section shall be provided by 


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1 the issuer in a format prescribed by the Commission, 

2 and shall be made available to the public online, in 

3 such format as the Commission shall prescribe. 

4 (3) EFFECTIVE DATE.—Subsection (s) of sec5 tion 13 of the Securities Exchange Act of 1934, as 

6 added by this section, shall become effective 1 year 

7 after the date on which the Commission issues a 

8 final rule under this section. 

9 SEC. 202. PENALTY FOR FAILING TO DISCLOSE OFFSHORE 

10 HOLDINGS. 

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

12 21(d)(3)(B) of the Securities Exchange Act of 1934 (15 

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

14 the following: 

15 ‘‘(iv) FOURTH TIER.—Notwith16 standing clauses (i), (ii), and (iii), for each 

17 violation, the amount of the penalty shall 

18 not exceed $1,000,000 for any natural per19 son or $10,000,000 for any other person, 

20 if— 

21 ‘‘(I) such person directly or indi22 rectly controlled any foreign entity, in23 cluding any trust, corporation, limited 

24 liability company, partnership, or 

25 foundation through which an issuer 


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1 purchased, sold, or held equity or debt 

2 instruments; 

3 ‘‘(II) such person knowingly or 

4 recklessly failed to disclose any such 

5 holding, purchase, or sale by the 

6 issuer; and 

7 ‘‘(III) the holding, purchase, or 

8 sale would have been otherwise sub9 ject to disclosure by the issuer or such 

10 person under this title.’’. 

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

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

13 amended by adding at the end the 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 (c) INVESTMENT ADVISERS ACT OF 1940.—Section 

9 203(i)(2) of the Investment Advisers Act of 1940 (15 

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

11 following: 

12 ‘‘(D) FOURTH TIER.—Notwithstanding 

13 subparagraphs (A), (B), and (C), for each viola14 tion, the amount of the penalty shall not exceed 

15 $1,000,000 for any natural person or 

16 $10,000,000 for any other person, if— 

17 ‘‘(i) such person directly or indirectly 

18 controlled any foreign entity, including any 

19 trust, corporation, limited liability com20 pany, partnership, or foundation through 

21 which an issuer purchased, sold, or held 

22 equity or debt instruments; 

23 ‘‘(ii) such person knowingly or reck24 lessly failed to disclose any such holding, 

25 purchase, or sale by the issuer; and 


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

2 would have been otherwise subject to dis3 closure by the issuer or such person under 

4 this title.’’. 

5 SEC. 203. DEADLINE FOR ANTI-MONEY LAUNDERING RULE 

6 FOR INVESTMENT ADVISERS. 

7 (a) ANTI-MONEY LAUNDERING OBLIGATIONS FOR

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

9 United States Code, is amended— 

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

11 the end; 

12 (2) by redesignating subparagraph (Z) as sub13 paragraph (BB); and 

14 (3) by inserting after subparagraph (Y) the fol15 lowing: 

16 ‘‘(Z) an investment adviser;’’. 

17 (b) RULES REQUIRED.—The Secretary of the Treas18 ury shall— 

19 (1) in consultation with the Chairman of the 

20 Securities and Exchange Commission and the Chair21 man of the Commodity Futures Trading Commis22 sion, not later than 270 days after the date of enact23 ment of this Act, publish a proposed rule in the Fed24 eral Register to carry out the amendments made by 

25 this section; and 


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1 (2) not later than 180 days after the date of 

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

3 Federal Register on the matter described in para4 graph (1). 

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

6 section shall require, at a minimum, each investment ad7 viser (as defined in section 202(a)(11) of the Investment 

8 Advisers Act of 1940 (15 U.S.C. 80b–2(a)(11))) reg9 istered with the Securities and Exchange Commission pur10 suant to section 203 of that Act (15 U.S.C. 80b–3)— 

11 (1) to submit suspicious activity reports and es12 tablish an anti-money laundering program under 

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

14 of title 31, United States Code; and 

15 (2) to comply with— 

16 (A) the customer identification program 

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

18 United States Code; and 

19 (B) the due diligence requirements under 

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

21 SEC. 204. ANTI-MONEY LAUNDERING REQUIREMENTS FOR 

22 FORMATION AGENTS. 

23 (a) ANTI-MONEY LAUNDERING OBLIGATIONS FOR

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

25 United States Code, as amended by section 113 of this 


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

2 following: 

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

4 of forming new corporations, limited liability 

5 companies, partnerships, trusts, or other legal 

6 entities; or’’. 

7 (b) DEADLINE FOR ANTI-MONEY LAUNDERING

8 RULE FOR FORMATION AGENTS.— 

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

10 Treasury, in consultation with the Attorney General 

11 of the United States, the Secretary of Homeland Se12 curity, and the Commissioner of Internal Revenue, 

13 shall— 

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

15 of enactment of this Act, publish a proposed 

16 rule in the Federal Register requiring persons 

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

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

19 establish anti-money laundering programs 

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

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

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

23 the Federal Register on the matter described in 

24 subparagraph (A). 


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1 (2) EXCLUSIONS.—The rule promulgated under 

2 this subsection shall exclude from the category of 

3 persons engaged in the business of forming new cor4 porations or other entities— 

5 (A) any government agency; and 

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

7 paid formation agent operating within the 

8 United States to form such corporations or 

9 other entities. 

10 SEC. 205. STRENGTHENING JOHN DOE SUMMONS PRO11 CEEDINGS. 

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

13 amended to read as follows: 

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

15 JOHN DOE SUMMONS.— 

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

17 in subsection (c)(1) which does not identify the per18 son with respect to whose liability the summons is 

19 issued may be served only after a court proceeding 

20 in which the Secretary establishes that— 

21 ‘‘(A) the summons relates to the investiga22 tion of a particular person or ascertainable 

23 group or class of persons, 

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1 sons may fail or may have failed to comply with 

2 any provision of any internal revenue law, and 

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

4 from the examination of the records or testi5 mony (and the identity of the person or persons 

6 with respect to whose liability the summons is 

7 issued) is not readily available from other 

8 sources. 

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

10 apply to any summons which specifies that it is lim11 ited to information regarding a United States cor12 respondent account (as defined in section 

13 5318A(e)(1)(B) of title 31, United States Code) or 

14 a United States payable-through account (as defined 

15 in section 5318A(e)(1)(C) of such title) of a finan16 cial institution that is held at a non-FATCA institu17 tion (as defined in section 7701(a)(51)). 

18 ‘‘(3) PRESUMPTION IN CASES INVOLVING NON19 FATCA INSTITUTIONS.—For purposes of this section, 

20 in any case in which the particular person or ascer21 tainable group or class of persons have financial ac22 counts in or transactions related to a non-FATCA 

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

24 shall be a presumption that there is a reasonable 

25 basis for believing that such person or group or class 


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1 of persons may fail or may have failed to comply 

2 with provisions of internal revenue law. 

3 ‘‘(4) PROJECT JOHN DOE SUMMONSES.— 

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

5 requirements of paragraph (1), the Secretary 

6 may issue a summons described in paragraph 

7 (1) if the summons— 

8 ‘‘(i) relates to a project which is ap9 proved under subparagraph (B), 

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

11 member of the group or class established 

12 under subparagraph (B)(i), and 

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

14 date on which such project was approved 

15 under subparagraph (B). 

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

17 may only be approved under this subparagraph 

18 after a court proceeding in which the Secretary 

19 establishes that— 

20 ‘‘(i) any summons issues with respect 

21 to the project will be issued to a member 

22 of an ascertainable group or class of per23 sons, and 


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1 ‘‘(ii) any summons issued with respect 

2 to such project will meet the requirements 

3 of paragraph (1). 

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

5 the Secretary, the court may extend the time 

6 for issuing such summonses under subpara7 graph (A)(i) for additional 3-year periods, but 

8 only if the court continues to exercise oversight 

9 of such project under subparagraph (D). 

10 ‘‘(D) ONGOING COURT OVERSIGHT.—Dur11 ing any period in which the Secretary is author12 ized to issue summonses in relation to a project 

13 approved under subparagraph (B) (including 

14 during any extension under subparagraph (C)), 

15 the Secretary shall report annually to the court 

16 on the use of such authority, provide copies of 

17 all summonses with such report, and comply 

18 with the court’s direction with respect to the 

19 issuance of any John Doe summons under such 

20 project.’’. 

21 (b) JURISDICTION OF COURT.— 

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

23 7609(h) is amended by inserting after the first sen24 tence the following new sentence: ‘‘Any United 

25 States district court in which a member of the group 


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1 or class to which a summons may be issued resides 

2 or is found shall have jurisdiction to hear and deter3 mine the approval of a project under subsection 

4 (f)(2)(B).’’. 

5 (2) CONFORMING AMENDMENT.—The first sen6 tence of section 7609(h)(1) is amended by striking 

7 ‘‘(f)’’ and inserting ‘‘(f)(1)’’. 

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

9 this section shall apply to summonses issued after the date 

10 of the enactment of this Act. 

11 SEC. 206. IMPROVING ENFORCEMENT OF FOREIGN FINAN12 CIAL ACCOUNT REPORTING. 

13 (a) CLARIFYING THE CONNECTION OF FOREIGN FI14 NANCIAL ACCOUNT REPORTING TO TAX ADMINISTRA15 TION.—Paragraph (4) of section 6103(b) is amended by 

16 adding at the end the following new sentence: 

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

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

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

20 such section 5314), shall be considered related stat21 utes.’’. 

22 (b) SIMPLIFYING THE CALCULATION OF FOREIGN

23 FINANCIAL ACCOUNT REPORTING PENALTIES.—Section 

24 5321(a)(5)(D)(ii) of title 31, United States Code, is 

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


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

2 in the account during the reporting period to which the 

3 violation relates’’. 

4 (c) CLARIFYING THE USE OF SUSPICIOUS ACTIVITY

5 REPORTS UNDER THE BANK SECRECY ACT FOR CIVIL

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

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

8 criminal enforcement divisions of the Internal Revenue 

9 Service,’’ after ‘‘including’’. 

10 TITLE III—COMBATING TAX 

11 SHELTER PROMOTERS 

12 SEC. 301. PENALTY FOR PROMOTING ABUSIVE TAX SHEL13 TERS. 

14 (a) PENALTY FOR PROMOTING ABUSIVE TAX SHEL15 TERS.—Section 6700 is amended— 

16 (1) by redesignating subsections (b) and (c) as 

17 subsections (d) and (e), respectively, 

18 (2) by striking ‘‘a penalty’’ and all that follows 

19 through the period in the first sentence of subsection 

20 (a) and inserting ‘‘a penalty determined under sub21 section (b)’’, and 

22 (3) by inserting after subsection (a) the fol23 lowing new subsections: 

24 ‘‘(b) AMOUNT OF PENALTY; CALCULATION OF PEN25 ALTY; LIABILITY FOR PENALTY.— 


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1 ‘‘(1) AMOUNT OF PENALTY.—The amount of 

2 the penalty imposed by subsection (a) shall not ex3 ceed 150 percent of the gross income derived (or to 

4 be derived) from such activity by the person or per5 sons subject to such penalty. 

6 ‘‘(2) CALCULATION OF PENALTY.—The penalty 

7 amount determined under paragraph (1) shall be 

8 calculated with respect to each instance of an activ9 ity described in subsection (a), each instance in 

10 which income was derived by the person or persons 

11 subject to such penalty, and each person who par12 ticipated in such an activity. 

13 ‘‘(3) LIABILITY FOR PENALTY.—If more than 1 

14 person is liable under subsection (a) with respect to 

15 such activity, all such persons shall be jointly and 

16 severally liable for the penalty under such sub17 section. 

18 ‘‘(c) PENALTY NOT DEDUCTIBLE.—The payment of 

19 any penalty imposed under this section or the payment 

20 of any amount to settle or avoid the imposition of such 

21 penalty shall not be considered an ordinary and necessary 

22 expense in carrying on a trade or business for purposes 

23 of this title and shall not be deductible by the person who 

24 is subject to such penalty or who makes such payment.’’. 


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1 (b) CONFORMING AMENDMENT.—Section 6700(a) is 

2 amended by striking the last sentence. 

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

4 this section shall apply to activities after the date of the 

5 enactment of this Act. 

6 SEC. 302. PENALTY FOR AIDING AND ABETTING THE UN7 DERSTATEMENT OF TAX LIABILITY. 

8 (a) IN GENERAL.—Section 6701(a) is amended— 

9 (1) by inserting ‘‘the tax liability or’’ after ‘‘re10 spect to,’’ in paragraph (1), 

11 (2) by inserting ‘‘aid, assistance, procurement, 

12 or advice with respect to such’’ before ‘‘portion’’ 

13 both places it appears in paragraphs (2) and (3), 

14 and 

15 (3) by inserting ‘‘instance of aid, assistance, 

16 procurement, or advice or each such’’ before ‘‘docu17 ment’’ in the matter following paragraph (3). 

18 (b) AMOUNT OF PENALTY.—Subsection (b) of section 

19 6701 is amended to read as follows: 

20 ‘‘(b) AMOUNT OF PENALTY; CALCULATION OF PEN21 ALTY; LIABILITY FOR PENALTY.— 

22 ‘‘(1) AMOUNT OF PENALTY.—The amount of 

23 the penalty imposed by subsection (a) shall not ex24 ceed 150 percent of the gross income derived (or to 

25 be derived) from such aid, assistance, procurement, 


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1 or advice provided by the person or persons subject 

2 to such penalty. 

3 ‘‘(2) CALCULATION OF PENALTY.—The penalty 

4 amount determined under paragraph (1) shall be 

5 calculated with respect to each instance of aid, as6 sistance, procurement, or advice described in sub7 section (a), each instance in which income was de8 rived by the person or persons subject to such pen9 alty, and each person who made such an understate10 ment of the liability for tax. 

11 ‘‘(3) LIABILITY FOR PENALTY.—If more than 1 

12 person is liable under subsection (a) with respect to 

13 providing such aid, assistance, procurement, or ad14 vice, all such persons shall be jointly and severally 

15 liable for the penalty under such subsection.’’. 

16 (c) PENALTY NOT DEDUCTIBLE.—Section 6701 is 

17 amended by adding at the end the following new sub18 section: 

19 ‘‘(g) PENALTY NOT DEDUCTIBLE.—The payment of 

20 any penalty imposed under this section or the payment 

21 of any amount to settle or avoid the imposition of such 

22 penalty shall not be considered an ordinary and necessary 

23 expense in carrying on a trade or business for purposes 

24 of this title and shall not be deductible by the person who 

25 is subject to such penalty or who makes such payment.’’. 


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

2 this section shall apply to activities after the date of the 

3 enactment of this Act. 

4 SEC. 303. PROHIBITED FEE ARRANGEMENT. 

5 (a) IN GENERAL.—Section 6701, as amended by this 

6 Act, is amended— 

7 (1) by redesignating subsections (f) and (g) as 

8 subsections (g) and (h), respectively, 

9 (2) by striking ‘‘subsection (a).’’ in paragraphs 

10 (2) and (3) of subsection (g) (as redesignated by 

11 paragraph (1)) and inserting ‘‘subsection (a) or 

12 (f).’’, and 

13 (3) by inserting after subsection (e) the fol14 lowing new subsection: 

15 ‘‘(f) PROHIBITED FEE ARRANGEMENT.— 

16 ‘‘(1) IN GENERAL.—Any person who makes an 

17 agreement for, charges, or collects a fee which is for 

18 services provided in connection with the internal rev19 enue laws, and the amount of which is calculated ac20 cording to, or is dependent upon, a projected or ac21 tual amount of— 

22 ‘‘(A) tax savings or benefits, or 

23 ‘‘(B) losses which can be used to offset 

24 other taxable income, 


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1 shall pay a penalty with respect to each such fee ac2 tivity in the amount determined under subsection 

3 (b). 

4 ‘‘(2) RULES.—The Secretary may issue rules to 

5 carry out the purposes of this subsection and may 

6 provide exceptions for fee arrangements that are in 

7 the public interest.’’. 

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

9 this section shall apply to fee agreements, charges, and 

10 collections made after the date of the enactment of this 

11 Act. 

12 SEC. 304. PREVENTING TAX SHELTER ACTIVITIES BY FI13 NANCIAL INSTITUTIONS. 

14 (a) EXAMINATIONS.— 

15 (1) DEVELOPMENT OF EXAMINATION TECH16 NIQUES.—Each of the Federal banking agencies and 

17 the Commission shall, in consultation with the Inter18 nal Revenue Service, develop examination techniques 

19 to detect potential violations of section 6700 or 6701 

20 of the Internal Revenue Code of 1986, by depository 

21 institutions, brokers, dealers, and investment advis22 ers, as appropriate. 

23 (2) IMPLEMENTATION.—Each of the Federal 

24 banking agencies and the Commission shall imple25 ment the examination techniques developed under 


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1 paragraph (1) with respect to each of the depository 

2 institutions, brokers, dealers, or investment advisers 

3 subject to their enforcement authority. Such exam4 ination shall, to the extent possible, be combined 

5 with any examination by such agency otherwise re6 quired or authorized by Federal law. 

7 (b) REPORT TO INTERNAL REVENUE SERVICE.—In 

8 any case in which an examination conducted under this 

9 section with respect to a financial institution or other enti10 ty reveals a potential violation, such agency shall promptly 

11 notify the Internal Revenue Service of such potential viola12 tion for investigation and enforcement by the Internal 

13 Revenue Service, in accordance with applicable provisions 

14 of law. 

15 (c) REPORT TO CONGRESS.—The Federal banking 

16 agencies and the Commission shall submit a joint written 

17 report to Congress in 2013 on their progress in preventing 

18 violations of sections 6700 and 6701 of the Internal Rev19 enue Code of 1986, by depository institutions, brokers, 

20 dealers, and investment advisers, as appropriate. 

21 (d) DEFINITIONS.—For purposes of this section— 

22 (1) the terms ‘‘broker’’, ‘‘dealer’’, and ‘‘invest23 ment adviser’’ have the same meanings as in section 

24 3 of the Securities Exchange Act of 1934 (15 U.S.C. 

25 78c); 


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1 (2) the term ‘‘Commission’’ means the Securi2 ties and Exchange Commission; 

3 (3) the term ‘‘depository institution’’ has the 

4 same meaning as in section 3(c) of the Federal De5 posit Insurance Act (12 U.S.C. 1813(c)); 

6 (4) the term ‘‘Federal banking agencies’’ has 

7 the same meaning as in section 3(q) of the Federal 

8 Deposit Insurance Act (12 U.S.C. 1813(q)); and 

9 (5) the term ‘‘Secretary’’ means the Secretary 

10 of the Treasury. 

11 SEC. 305. INFORMATION SHARING FOR ENFORCEMENT 

12 PURPOSES. 

13 (a) PROMOTION OF PROHIBITED TAX SHELTERS OR

14 TAX AVOIDANCE SCHEMES.—Section 6103(h) is amended 

15 by adding at the end the following new paragraph: 

16 ‘‘(7) DISCLOSURE OF RETURNS AND RETURN

17 INFORMATION RELATED TO PROMOTION OF PROHIB18 ITED TAX SHELTERS OR TAX AVOIDANCE

19 SCHEMES.— 

20 ‘‘(A) WRITTEN REQUEST.—Upon receipt 

21 by the Secretary of a written request which 

22 meets the requirements of subparagraph (B) 

23 from the head of the United States Securities 

24 and Exchange Commission, an appropriate 

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1 tion 1813(q) of title 12, United States Code, or 

2 the Public Company Accounting Oversight 

3 Board, a return or return information shall be 

4 disclosed to such requestor’s officers and em5 ployees who are personally and directly engaged 

6 in an investigation, examination, or proceeding 

7 by such requestor to evaluate, determine, penal8 ize, or deter conduct by a financial institution, 

9 issuer, or public accounting firm, or associated 

10 person, in connection with a potential or actual 

11 violation of section 6700 (promotion of abusive 

12 tax shelters), 6701 (aiding and abetting under13 statement of tax liability), or activities related 

14 to promoting or facilitating inappropriate tax 

15 avoidance or tax evasion. Such disclosure shall 

16 be solely for use by such officers and employees 

17 in such investigation, examination, or pro18 ceeding. In the discretion of the Secretary, such 

19 disclosure may take the form of the participa20 tion of Internal Revenue Service employees in a 

21 joint investigation, examination, or proceeding 

22 with the Securities and Exchange Commission, 

23 Federal banking agency, or Public Company 

24 Accounting Oversight Board. 


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1 ‘‘(B) REQUIREMENTS.—A request meets 

2 the requirements of this subparagraph if it sets 

3 forth— 

4 ‘‘(i) the nature of the investigation, 

5 examination, or proceeding, 

6 ‘‘(ii) the statutory authority under 

7 which such investigation, examination, or 

8 proceeding is being conducted, 

9 ‘‘(iii) the name or names of the finan10 cial institution, issuer, or public accounting 

11 firm to which such return information re12 lates, 

13 ‘‘(iv) the taxable period or periods to 

14 which such return information relates, and 

15 ‘‘(v) the specific reason or reasons 

16 why such disclosure is, or may be, relevant 

17 to such investigation, examination or pro18 ceeding. 

19 ‘‘(C) FINANCIAL INSTITUTION.—For the 

20 purposes of this paragraph, the term ‘financial 

21 institution’ means a depository institution, for22 eign bank, insured institution, industrial loan 

23 company, broker, dealer, investment company, 

24 investment advisor, or other entity subject to 

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1 curities and Exchange Commission or an appro2 priate Federal banking agency.’’. 

3 (b) FINANCIAL AND ACCOUNTING FRAUD INVESTIGA4 TIONS.—Section 6103(i) is amended by adding at the end 

5 the following new paragraph: 

6 ‘‘(9) DISCLOSURE OF RETURNS AND RETURN

7 INFORMATION FOR USE IN FINANCIAL AND AC8 COUNTING FRAUD INVESTIGATIONS.— 

9 ‘‘(A) WRITTEN REQUEST.—Upon receipt 

10 by the Secretary of a written request which 

11 meets the requirements of subparagraph (B) 

12 from the head of the United States Securities 

13 and Exchange Commission or the Public Com14 pany Accounting Oversight Board, a return or 

15 return information shall be disclosed to such re16 questor’s officers and employees who are per17 sonally and directly engaged in an investigation, 

18 examination, or proceeding by such requester to 

19 evaluate the accuracy of a financial statement 

20 or report, or to determine whether to require a 

21 restatement, penalize, or deter conduct by an 

22 issuer, investment company, or public account23 ing firm, or associated person, in connection 

24 with a potential or actual violation of auditing 

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1 leading statements or omissions in financial 

2 statements or reports. Such disclosure shall be 

3 solely for use by such officers and employees in 

4 such investigation, examination, or proceeding. 

5 ‘‘(B) REQUIREMENTS.—A request meets 

6 the requirements of this subparagraph if it sets 

7 forth— 

8 ‘‘(i) the nature of the investigation, 

9 examination, or proceeding, 

10 ‘‘(ii) the statutory authority under 

11 which such investigation, examination, or 

12 proceeding is being conducted, 

13 ‘‘(iii) the name or names of the issuer, 

14 investment company, or public accounting 

15 firm to which such return information re16 lates, 

17 ‘‘(iv) the taxable period or periods to 

18 which such return information relates, and 

19 ‘‘(v) the specific reason or reasons 

20 why such disclosure is, or may be, relevant 

21 to such investigation, examination or pro22 ceeding.’’. 

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

24 this section shall apply to disclosures and to information 


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1 and document requests made after the date of the enact2 ment of this Act. 

3 SEC. 306. DISCLOSURE OF INFORMATION TO CONGRESS. 

4 (a) DISCLOSURE BY TAX RETURN PREPARER.— 

5 (1) IN GENERAL.—Subparagraph (B) of section 

6 7216(b)(1) is amended to read as follows: 

7 ‘‘(B) pursuant to any one of the following 

8 documents, if clearly identified: 

9 ‘‘(i) The order of any Federal, State, 

10 or local court of record. 

11 ‘‘(ii) A subpoena issued by a Federal 

12 or State grand jury. 

13 ‘‘(iii) An administrative order, sum14 mons, or subpoena which is issued in the 

15 performance of its duties by— 

16 ‘‘(I) any Federal agency, includ17 ing Congress or any committee or 

18 subcommittee thereof, or 

19 ‘‘(II) any State agency, body, or 

20 commission charged under the laws of 

21 the State or a political subdivision of 

22 the State with the licensing, registra23 tion, or regulation of tax return pre24 parers.’’. 


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1 (2) EFFECTIVE DATE.—The amendment made 

2 by this subsection shall apply to disclosures made 

3 after the date of the enactment of this Act pursuant 

4 to any document in effect on or after such date. 

5 (b) DISCLOSURE BY SECRETARY.—Paragraph (2) of 

6 section 6104(a) is amended to read as follows: 

7 ‘‘(2) INSPECTION BY CONGRESS.— 

8 ‘‘(A) IN GENERAL.—Upon receipt of a 

9 written request from a committee or sub10 committee of Congress, copies of documents re11 lated to a determination by the Secretary to 

12 grant, deny, revoke, or restore an organization’s 

13 exemption from taxation under section 501 

14 shall be provided to such committee or sub15 committee, including any application, notice of 

16 status, or supporting information provided by 

17 such organization to the Internal Revenue Serv18 ice; any letter, analysis, or other document pro19 duced by or for the Internal Revenue Service 

20 evaluating, determining, explaining, or relating 

21 to the tax exempt status of such organization 

22 (other than returns, unless such returns are 

23 available to the public under this section or sec24 tion 6103 or 6110); and any communication be25 tween the Internal Revenue Service and any 


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1 other party relating to the tax exempt status of 

2 such organization. 

3 ‘‘(B) ADDITIONAL INFORMATION.—Section 

4 6103(f) shall apply with respect to— 

5 ‘‘(i) the application for exemption of 

6 any organization described in subsection 

7 (c) or (d) of section 501 which is exempt 

8 from taxation under section 501(a) for any 

9 taxable year and any application referred 

10 to in subparagraph (B) of subsection 

11 (a)(1) of this section, and 

12 ‘‘(ii) any other papers which are in 

13 the possession of the Secretary and which 

14 relate to such application, 

15 as if such papers constituted returns.’’. 

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

17 this section shall apply to disclosures and to information 

18 and document requests made after the date of the enact19 ment of this Act. 

20 SEC. 307. TAX OPINION STANDARDS FOR TAX PRACTI21 TIONERS. 

22 Section 330(d) of title 31, United States Code, is 

23 amended to read as follows: 

24 ‘‘(d) The Secretary of the Treasury shall impose 

25 standards applicable to the rendering of written advice 


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1 with respect to any listed transaction or any entity, plan, 

2 arrangement, or other transaction which has a potential 

3 for tax avoidance or evasion. Such standards shall ad4 dress, but not be limited to, the following issues: 

5 ‘‘(1) Independence of the practitioner issuing 

6 such written advice from persons promoting, mar7 keting, or recommending the subject of the advice. 

8 ‘‘(2) Collaboration among practitioners, or be9 tween a practitioner and other party, which could re10 sult in such collaborating parties having a joint fi11 nancial interest in the subject of the advice. 

12 ‘‘(3) Avoidance of conflicts of interest which 

13 would impair auditor independence. 

14 ‘‘(4) For written advice issued by a firm, stand15 ards for reviewing the advice and ensuring the con16 sensus support of the firm for positions taken. 

17 ‘‘(5) Reliance on reasonable factual representa18 tions by the taxpayer and other parties. 

19 ‘‘(6) Appropriateness of the fees charged by the 

20 practitioner for the written advice. 

21 ‘‘(7) Preventing practitioners and firms from 

22 aiding or abetting the understatement of tax liability 

23 by clients. 


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1 ‘‘(8) Banning the promotion of potentially abu2 sive or illegal tax shelters.’’. 

Æ 


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