I 

115TH CONGRESS 

1ST SESSION H. R. 1932 

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

IN THE HOUSE OF REPRESENTATIVES 

APRIL 5, 2017 

Mr. DOGGETT (for himself, Mr. BLUMENAUER, Ms. BONAMICI, Mr. CAPUANO, 

Mr. CARTWRIGHT, Ms. JUDY CHU of California, Mr. CICILLINE, Mr. 

COHEN, Mr. CONYERS, Mr. CUMMINGS, Mr. DEFAZIO, Ms. DELAURO, 

Mr. DEUTCH, Mr. ELLISON, Mr. FOSTER, Mr. GRIJALVA, Mr. 

GUTIE ́RREZ, Mr. HASTINGS, Ms. EDDIE BERNICE JOHNSON of Texas, 

Mr. JOHNSON of Georgia, Ms. KAPTUR, Ms. KELLY of Illinois, Mr. LANGEVIN, Mr. LARSON of Connecticut, Ms. LEE, Mr. LEWIS of Georgia, Mr. 

TED LIEU of California, Mr. LOEBSACK, Mr. LYNCH, Ms. MCCOLLUM, 

Ms. MOORE, Mrs. NAPOLITANO, Ms. NORTON, Mr. PALLONE, Mr. 

POCAN, Mr. RASKIN, Ms. ROYBAL-ALLARD, Mr. RUIZ, Mr. RYAN of Ohio, 

Mr. SARBANES, Ms. SCHAKOWSKY, Ms. SLAUGHTER, Mr. TAKANO, Mr. 

TONKO, Ms. TSONGAS, Ms. VELA ́ZQUEZ, Mrs. WATSON COLEMAN, Mr. 

WELCH, Mr. HIGGINS of New York, Mr. YARMUTH, Mr. NADLER, Ms. 

PINGREE, Mr. HUFFMAN, Mr. SCOTT of Virginia, Mr. PASCRELL, Mr. 

MCGOVERN, and Mr. LIPINSKI) 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 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, 

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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—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. 

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1 TITLE I—ENDING CORPORATE 

2 OFFSHORE TAX AVOIDANCE 

3 SEC. 101. ALLOCATION OF EXPENSES AND TAXES ON BASIS 

4 OF REPATRIATION OF FOREIGN INCOME. 

5 (a) IN GENERAL.—Part III of subchapter N of chap6 ter 1 is amended by inserting after subpart G the following 

7 new subpart: 

8 ‘‘Subpart H—Special Rules for Allocation of Foreign9 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. 

10 ‘‘SEC. 975. DEDUCTIONS ALLOCATED TO DEFERRED FOR11 EIGN INCOME MAY NOT OFFSET UNITED 

12 STATES SOURCE INCOME. 

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

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

15 year— 

16 ‘‘(1) shall be taken into account for such tax17 able year only to the extent that such deductions are 

18 allocable to currently-taxed foreign income, and 

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

20 into account in subsequent taxable years as provided 

21 in subsection (b). 

22 Foreign-related deductions shall be allocated to currently23 taxed foreign income in the same proportion which curmstockstill on DSK30JT082PROD with BILLS

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1 rently-taxed foreign income bears to the sum of currently2 taxed foreign income and deferred foreign income. 

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

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

7 previously deferred deductions allocated to the repa8 triated foreign income shall be taken into account 

9 for the taxable year as a deduction allocated to in10 come from sources outside the United States. Any 

11 such amount shall not be included in foreign-related 

12 deductions for purposes of applying subsection (a) to 

13 such taxable year. 

14 ‘‘(2) PORTION OF PREVIOUSLY DEFERRED DE15 DUCTIONS.—For purposes of paragraph (1), the por16 tion of the previously deferred deductions allocated 

17 to repatriated foreign income is— 

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

19 proportion to such deductions, as 

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

21 previously deferred foreign income. 

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

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

25 term ‘foreign-related deductions’ means the total 

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1 amount of deductions and expenses which would be 

2 allocated or apportioned to gross income from 

3 sources without the United States for the taxable 

4 year if both the currently-taxed foreign income and 

5 deferred foreign income were taken into account. 

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

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

8 amount of gross income from sources without the 

9 United States for the taxable year (determined with10 out regard to repatriated foreign income for such 

11 year). 

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

13 ‘deferred foreign income’ means the excess of— 

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

15 in gross income under subpart F of this part 

16 for the taxable year if— 

17 ‘‘(i) all controlled foreign corporations 

18 were treated as one controlled foreign cor19 poration, and 

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

21 controlled foreign corporations were sub22 part F income (as defined in section 952), 

23 over 

24 ‘‘(B) the sum of— 

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1 ‘‘(i) all dividends received during the 

2 taxable year from controlled foreign cor3 porations, plus 

4 ‘‘(ii) amounts includible in gross in5 come under section 951(a). 

6 ‘‘(4) PREVIOUSLY DEFERRED FOREIGN IN7 COME.—The term ‘previously deferred foreign in8 come’ means the aggregate amount of deferred for9 eign income for all prior taxable years to which this 

10 part applies, determined as of the beginning of the 

11 taxable year, reduced by the repatriated foreign in12 come for all such prior taxable years. 

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

14 term ‘repatriated foreign income’ means the amount 

15 included in gross income on account of distributions 

16 out of previously deferred foreign income. 

17 ‘‘(6) PREVIOUSLY DEFERRED DEDUCTIONS.— 

18 The term ‘previously deferred deductions’ means the 

19 aggregate amount of foreign-related deductions not 

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

21 taxable years (determined as of the beginning of the 

22 taxable year), reduced by any amounts taken into 

23 account under subsection (b) for such prior taxable 

24 years. 

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1 ‘‘(7) TREATMENT OF CERTAIN FOREIGN

2 TAXES.— 

3 ‘‘(A) PAID BY CONTROLLED FOREIGN COR4 PORATION.—Section 78 shall not apply for pur5 poses of determining currently-taxed foreign in6 come and deferred foreign income. 

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

8 of determining currently-taxed foreign income, 

9 gross income from sources without the United 

10 States shall be reduced by the aggregate 

11 amount of taxes described in the applicable 

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

13 the taxpayer (without regard to sections 902 

14 and 960) during the taxable year. 

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

16 determining currently-taxed foreign income and de17 ferred foreign income, the amount of deemed foreign 

18 tax credits shall be determined with regard to sec19 tion 976. 

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

21 OVERALL BASIS. 

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

23 this chapter, the amount taken into account as foreign in24 come taxes for any taxable year shall be an amount which 

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

2 that taxable year as— 

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

4 taxable year, bears to 

5 ‘‘(2) the sum of the currently-taxed foreign in6 come and deferred foreign income for such year. 

7 The portion of the total foreign income taxes for any tax8 able year not taken into account under the preceding sen9 tence for a taxable year shall only be taken into account 

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

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

12 ‘‘(b) ALLOWANCE RELATED TO REPATRIATED DE13 FERRED FOREIGN INCOME.— 

14 ‘‘(1) IN GENERAL.—If there is repatriated for15 eign income for any taxable year, the portion of the 

16 previously deferred foreign income taxes paid or ac17 crued during such taxable year shall be taken into 

18 account for the taxable year as foreign taxes paid or 

19 accrued. Any such taxes so taken into account shall 

20 not be included in foreign income taxes for purposes 

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

22 ‘‘(2) PORTION OF PREVIOUSLY DEFERRED FOR23 EIGN INCOME TAXES.—For purposes of paragraph 

24 (1), the portion of the previously deferred foreign inmstockstill on DSK30JT082PROD with BILLS

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1 come taxes allocated to repatriated deferred foreign 

2 income is— 

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

4 proportion to such taxes, as 

5 ‘‘(B) the repatriated deferred income bears 

6 to the previously deferred foreign income. 

7 ‘‘(c) DEFINITIONS AND SPECIAL RULE.—For pur8 poses of this section— 

9 ‘‘(1) PREVIOUSLY DEFERRED FOREIGN INCOME

10 TAXES.—The term ‘previously deferred foreign in11 come taxes’ means the aggregate amount of total 

12 foreign income taxes not taken into account under 

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

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

15 any amounts taken into account under subsection 

16 (b) for such prior taxable years. 

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

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

19 foreign income taxes paid or accrued during the tax20 able year (determined without regard to section 

21 904(c)) plus the increase in foreign income taxes 

22 that would be paid or accrued during the taxable 

23 year under sections 902 and 960 if— 

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1 ‘‘(A) all controlled foreign corporations 

2 were treated as one controlled foreign corpora3 tion, and 

4 ‘‘(B) all earnings and profits of all con5 trolled foreign corporations were subpart F in6 come (as defined in section 952). 

7 ‘‘(3) FOREIGN INCOME TAXES.—The term ‘for8 eign income taxes’ means any income, war profits, or 

9 excess profits taxes paid by the taxpayer to any for10 eign country or possession of the United States. 

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

12 DEFERRED FOREIGN INCOME.—The terms ‘cur13 rently-taxed foreign income’ and ‘deferred foreign in14 come’ have the meanings given such terms by sec15 tion 975(c). 

16 ‘‘SEC. 977. APPLICATION OF SUBPART. 

17 ‘‘This subpart— 

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

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

20 the categories of income specified in section 

21 904(d)(1).’’. 

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

23 for part III of subpart N of chapter 1 is amended by in24 serting after the item relating to subpart G the following 

25 new item: 

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

DEDUCTIONS AND FOREIGN TAX CREDITS’’. 

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

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 SEC. 102. EXCESS INCOME FROM TRANSFERS OF INTANGI5 BLES TO LOW-TAXED AFFILIATES TREATED 

6 AS SUBPART F INCOME. 

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

8 amended by inserting after paragraph (3) the following 

9 new paragraph: 

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

11 income for the taxable year (determined under sub12 section (f) and reduced as provided in subsection 

13 (b)(5)), and’’. 

14 (b) FOREIGN BASE COMPANY EXCESS INTANGIBLE

15 INCOME.—Section 954 is amended by inserting after sub16 section (e) the following new subsection: 

17 ‘‘(f) FOREIGN BASE COMPANY EXCESS INTANGIBLE

18 INCOME.—For purposes of subsection (a)(4) and this sub19 section: 

20 ‘‘(1) FOREIGN BASE COMPANY EXCESS INTAN21 GIBLE INCOME DEFINED.— 

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

23 base company excess intangible income’ means, 

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1 with respect to any covered intangible, the ex2 cess of— 

3 ‘‘(i) the sum of— 

4 ‘‘(I) gross income from the sale, 

5 lease, license, or other disposition of 

6 property in which such covered intan7 gible is used directly or indirectly, and 

8 ‘‘(II) gross income from the pro9 vision of services related to such cov10 ered intangible or in connection with 

11 property in which such covered intan12 gible is used directly or indirectly, 

13 over 

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

15 allocated and apportioned to the gross in16 come taken into account under clause (i) 

17 other than expenses for interest and taxes 

18 and any expenses which are not directly al19 locable to such gross income. 

20 ‘‘(B) SAME COUNTRY INCOME NOT TAKEN

21 INTO ACCOUNT.—If— 

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

23 disposition of the property referred to in 

24 subparagraph (A)(i)(I) is for use, con25 sumption, or disposition in the country 

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1 under the laws of which the controlled for2 eign corporation is created or organized, or 

3 ‘‘(ii) the services referred to in sub4 paragraph (A)(i)(II) are performed in such 

5 country, 

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

7 or other disposition, or provision of services, 

8 shall not be taken into account under subpara9 graph (A)(i). 

10 ‘‘(2) EXCEPTION BASED ON EFFECTIVE FOR11 EIGN INCOME TAX RATE.— 

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

13 excess intangible income shall not include the 

14 applicable percentage of any item of income re15 ceived by a controlled foreign corporation if the 

16 taxpayer establishes to the satisfaction of the 

17 Secretary that such income was subject to an 

18 effective rate of income tax imposed by a for19 eign country in excess of 5 percent. 

20 ‘‘(B) APPLICABLE PERCENTAGE.—For 

21 purposes of subparagraph (A), the term ‘appli22 cable percentage’ means the ratio (expressed as 

23 a percentage), not greater than 100 percent, 

24 of— 

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1 ‘‘(i) the number of percentage points 

2 by which the effective rate of income tax 

3 referred to in subparagraph (A) exceeds 5 

4 percentage points, over 

5 ‘‘(ii) 10 percentage points. 

6 ‘‘(C) TREATMENT OF LOSSES IN DETER7 MINING EFFECTIVE RATE OF FOREIGN INCOME

8 TAX.—For purposes of determining the effective 

9 rate of income tax imposed by any foreign 

10 country— 

11 ‘‘(i) such effective rate shall be deter12 mined without regard to any losses carried 

13 to the relevant taxable year, and 

14 ‘‘(ii) to the extent the income with re15 spect to such intangible reduces losses in 

16 the relevant taxable year, such effective 

17 rate shall be treated as being the effective 

18 rate which would have been imposed on 

19 such income without regard to such losses. 

20 ‘‘(3) COVERED INTANGIBLE.—The term ‘cov21 ered intangible’ means, with respect to any con22 trolled foreign corporation, any intangible property 

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

24 ‘‘(A) which is sold, leased, licensed, or oth25 erwise transferred (directly or indirectly) to 

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1 such controlled foreign corporation from a re2 lated person, or 

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

4 foreign corporation and one or more related 

5 persons has (directly or indirectly) entered into 

6 any shared risk or development agreement (in7 cluding any cost sharing agreement). 

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

9 person’ has the meaning given such term in sub10 section (d)(3).’’. 

11 (c) SEPARATE BASKET FOR FOREIGN TAX CRED12 IT.—Subsection (d) of section 904 is amended by redesig13 nating paragraph (7) as paragraph (8) and by inserting 

14 after paragraph (6) the following new paragraph: 

15 ‘‘(7) SEPARATE APPLICATION TO FOREIGN

16 BASE COMPANY EXCESS INTANGIBLE INCOME.— 

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

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

19 and 960 shall be applied separately with respect 

20 to each item of income which is taken into ac21 count under section 954(a)(4) as foreign base 

22 company excess intangible income. 

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

24 issue such regulations or other guidance as is 

25 necessary or appropriate to carry out the purmstockstill on DSK30JT082PROD with BILLS

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1 poses of this subsection, including regulations 

2 or other guidance which provides that related 

3 items of income may be aggregated for pur4 poses of this paragraph.’’. 

5 (d) CONFORMING AMENDMENTS.— 

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

7 by inserting ‘‘foreign base company excess intangible 

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

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

10 last sentence thereof. 

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

12 adding at the end the following new paragraph: 

13 ‘‘(7) FOREIGN BASE COMPANY EXCESS INTAN14 GIBLE INCOME NOT TREATED AS ANOTHER KIND OF

15 BASE COMPANY INCOME.—Income of a corporation 

16 which is foreign base company excess intangible in17 come shall not be considered foreign base company 

18 income of such corporation under paragraph (2), 

19 (3), or (5) of subsection (a).’’. 

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

21 this section shall apply to taxable years beginning after 

22 the date of the enactment of this Act. 

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1 SEC. 103. LIMITATIONS ON INCOME SHIFTING THROUGH IN2 TANGIBLE PROPERTY TRANSFERS. 

3 (a) CLARIFICATION OF DEFINITION OF INTANGIBLE

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

5 by inserting ‘‘(including any section 197 intangible de6 scribed in subparagraph (A), (B), or (C)(i) of subsection 

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

8 (b) CLARIFICATION OF ALLOWABLE VALUATION

9 METHODS.— 

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

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

12 the following new subparagraph: 

13 ‘‘(D) REGULATORY AUTHORITY.—For pur14 poses of the last sentence of subparagraph (A), 

15 the Secretary may require— 

16 ‘‘(i) the valuation of transfers of in17 tangible property on an aggregate basis, or 

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

19 on the basis of the realistic alternatives to 

20 such a transfer, 

21 in any case in which the Secretary determines 

22 that such basis is the most reliable means of 

23 valuation of such transfers.’’. 

24 (2) ALLOCATION AMONG TAXPAYERS.—Section 

25 482 is amended by adding at the end the following: 

26 ‘‘For purposes of the preceding sentence, the Secmstockstill on DSK30JT082PROD with BILLS

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1 retary may require the valuation of transfers of in2 tangible property on an aggregate basis or the valu3 ation of such a transfer on the basis of the realistic 

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

5 the Secretary determines that such basis is the most 

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

7 (c) EFFECTIVE DATE.— 

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

9 this section shall apply to transfers in taxable years 

10 beginning after the date of the enactment of this 

11 Act. 

12 (2) NO INFERENCE.—Nothing in the amend13 ment made by subsection (a) shall be construed to 

14 create any inference with respect to the application 

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

16 1986, or the authority of the Secretary of the Treas17 ury to provide regulations for such application, on or 

18 before the date of the enactment of such amend19 ment. 

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

21 FOREIGN ENTITIES AND CFC LOOK-THRU 

22 RULES. 

23 (a) CHECK-THE-BOX RULES.—Paragraph (3) of sec24 tion 7701(a) is amended— 

25 (1) by striking ‘‘and’’, and 

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

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

3 that— 

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

5 limited liability, or 

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

7 which have limited liability’’. 

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

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

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

12 royalties received or accrued after the date of 

13 the enactment of the Stop Tax Haven Abuse 

14 Act.’’. 

15 (c) EFFECTIVE DATE.— 

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

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

18 Act. 

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

20 shall apply to payments received after the date of 

21 the enactment of this Act. 

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1 SEC. 105. RESTRICTIONS ON DEDUCTION FOR INTEREST 

2 EXPENSE OF MEMBERS OF FINANCIAL RE3 PORTING GROUPS WITH EXCESS DOMESTIC 

4 INDEBTEDNESS. 

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

7 after subsection (m) the following new subsection: 

8 ‘‘(n) RESTRICTION ON DEDUCTION FOR INTEREST

9 EXPENSE OF MEMBERS OF FINANCIAL REPORTING

10 GROUPS WITH EXCESS DOMESTIC INDEBTEDNESS.— 

11 ‘‘(1) IN GENERAL.—In the case of any corpora12 tion which is a member of an applicable financial re13 porting group the common parent of which is a for14 eign corporation, the deduction allowed under this 

15 chapter for interest paid or accrued by the corpora16 tion during the taxable year shall not exceed the ap17 plicable limitation for the taxable year. 

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

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

20 treated as interest paid or accrued in the succeeding 

21 taxable year. 

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

23 of this subsection— 

24 ‘‘(A) IN GENERAL.—The applicable limita25 tion with respect to a taxpayer for any taxable 

26 year is the sum of— 

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1 ‘‘(i) the greater of— 

2 ‘‘(I) the taxpayer’s allocable 

3 share of the applicable financial re4 porting group’s net interest expense 

5 for the taxable year, or 

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

7 adjusted taxable income for the tax8 able year, plus 

9 ‘‘(ii) the excess limitation carryfor10 wards to the taxable year from any pre11 ceding taxable year. 

12 ‘‘(B) LIMITATION NOT LESS THAN IN13 CLUDIBLE INTEREST.—The applicable limita14 tion under subparagraph (A) for any taxable 

15 year shall not be less than the amount of inter16 est includible in the gross income of the tax17 payer for the taxable year. 

18 ‘‘(C) EXCESS LIMITATION

19 CARRYFORWARD.—If the applicable limitation 

20 of a taxpayer for any taxable year (determined 

21 without regard to carryforwards under subpara22 graph (A)(ii)) exceeds the interest paid or ac23 crued by the taxpayer during the taxable year, 

24 such excess shall be an excess limitation 

25 carryforward to the 1st succeeding taxable year 

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1 and the 2nd and 3rd succeeding taxable years 

2 to the extent not previously taken into account 

3 under this paragraph. 

4 ‘‘(4) ALLOCABLE SHARE OF NET INTEREST EX5 PENSE.—For purposes of this subsection— 

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

7 share of an applicable financial reporting 

8 group’s net interest expense for any taxable 

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

10 which bears the same ratio to such net interest 

11 expense as— 

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

13 bears to 

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

15 members of the applicable financial report16 ing group. 

17 ‘‘(B) NET EARNINGS.—The term ‘net 

18 earnings’ means, with respect to any taxpayer, 

19 the earnings of the taxpayer— 

20 ‘‘(i) computed without regard to any 

21 reduction allowable for— 

22 ‘‘(I) net interest expense, 

23 ‘‘(II) taxes, or 

24 ‘‘(III) depreciation, amortization, 

25 or depletion, and 

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1 ‘‘(ii) computed with such other adjust2 ments as the Secretary may by regulations 

3 prescribe. 

4 ‘‘(C) BURDEN ON TAXPAYER.—If a tax5 payer elects not to compute its allocable share, 

6 or fails to establish to the satisfaction of the 

7 Secretary the amount of its allocable share, for 

8 any taxable year, the allocable share shall be 

9 zero. 

10 ‘‘(5) NET INTEREST EXPENSE AND NET EARN11 INGS DETERMINATIONS.—For purposes of this sub12 section— 

13 ‘‘(A) NET INTEREST EXPENSE.—Any de14 termination of net interest expense for any tax15 able year shall be made— 

16 ‘‘(i) on the basis of the applicable fi17 nancial statement of the applicable finan18 cial reporting group for the last financial 

19 reporting year ending with or within the 

20 taxable year, and 

21 ‘‘(ii) under United States tax prin22 ciples. 

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

24 of net earnings for any taxable year shall be 

25 made on the basis of the applicable financial 

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1 statement of the applicable financial reporting 

2 group for the last financial reporting year end3 ing with or within the taxable year. 

4 ‘‘(C) APPLICABLE FINANCIAL STATE5 MENT.—The term ‘applicable financial state6 ment’ means a statement for financial reporting 

7 purposes which is made on the basis of— 

8 ‘‘(i) generally accepted accounting 

9 principles, 

10 ‘‘(ii) international financial reporting 

11 standards, or 

12 ‘‘(iii) any other method specified by 

13 the Secretary in regulations. 

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

15 used as an applicable financial statement by a 

16 group only if there is no statement of the group 

17 under any preceding clause. 

18 ‘‘(6) APPLICABLE FINANCIAL REPORTING

19 GROUP.—For purposes of this subsection— 

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

21 financial reporting group’ means, with respect 

22 to any corporation, a group of which such cor23 poration is a member and which files an appli24 cable financial statement. 

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1 ‘‘(B) EXCEPTION FOR GROUPS WITH MINI2 MAL DOMESTIC NET INTEREST EXPENSE.— 

3 Such term shall not include a group if the ag4 gregate net interest expense for which a deduc5 tion is allowable to all members of the group 

6 under this chapter (determined without regard 

7 to this subsection or any other limitation on de8 ductibility of interest under this chapter) is less 

9 than $5,000,000. 

10 ‘‘(C) EXCEPTION FOR CERTAIN FINANCIAL

11 ENTITIES.—A corporation which is described in 

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

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

14 (4)(C) or (5)(A) of section 864(f) (without re15 gard to whether an election is made under such 

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

17 member of an applicable financial reporting 

18 group of which it is otherwise a member and 

19 this subsection shall not apply to such corpora20 tion. 

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

22 purposes of this subsection— 

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

24 term ‘adjusted taxable income’ has the meaning 

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

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

2 ‘net interest expense’ has the meaning given 

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

4 ‘‘(C) TREATMENT OF AFFILIATED

5 GROUP.—All members of the same affiliated 

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

7 shall be treated as 1 taxpayer. 

8 ‘‘(8) REGULATIONS.—The Secretary shall pre9 scribe such regulations as may be necessary to carry 

10 out the purposes of this section, including regula11 tions providing— 

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

13 of this subsection and other provisions of this 

14 chapter relating to the deductibility of interest, 

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

16 required under United States tax principles in 

17 appropriate cases for purposes of applying this 

18 subsection, 

19 ‘‘(C) for the determination of which finan20 cial institutions are eligible for the exception 

21 from membership in an applicable financial re22 porting group under paragraph (6)(C) and the 

23 application of this subsection to the other mem24 bers of the group which are not so excepted, 

25 and 

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

2 in the case of pass thru entities and for the 

3 treatment of pass thru entities as corporations 

4 in cases where necessary to prevent the avoid5 ance of the purposes of this subsection.’’. 

6 (b) COORDINATION WITH LIMITATION ON RELATED

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

8 of the Internal Revenue Code of 1986 is amended by add9 ing at the end the following new subparagraph: 

10 ‘‘(D) COORDINATION WITH LIMITATION ON

11 EXCESS DOMESTIC INDEBTEDNESS.—This sub12 section shall not apply to any corporation for 

13 any taxable year to which subsection (n) applies 

14 to such corporation.’’. 

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

16 this section shall apply to taxable years beginning after 

17 December 31, 2016. 

18 SEC. 106. TREATMENT OF FOREIGN CORPORATIONS MAN19 AGED AND CONTROLLED IN THE UNITED 

20 STATES AS DOMESTIC CORPORATIONS. 

21 (a) IN GENERAL.—Section 7701 is amended by re22 designating subsection (p) as subsection (q) and by insert23 ing after subsection (o) the following new subsection: 

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1 ‘‘(p) CERTAIN CORPORATIONS MANAGED AND CON2 TROLLED IN THE UNITED STATES TREATED AS DOMES3 TIC FOR INCOME TAX.— 

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

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

6 paragraph (2) if— 

7 ‘‘(A) the corporation would not otherwise 

8 be treated as a domestic corporation for pur9 poses of this title, but 

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

11 corporation occurs, directly or indirectly, pri12 marily within the United States, 

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

14 provision of this title relating to chapter 1), the cor15 poration shall be treated as a domestic corporation. 

16 ‘‘(2) CORPORATION DESCRIBED.— 

17 ‘‘(A) IN GENERAL.—A corporation is de18 scribed in this paragraph if— 

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

20 regularly traded on an established securi21 ties market, or 

22 ‘‘(ii) the aggregate gross assets of 

23 such corporation (or any predecessor there24 of), including assets under management 

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1 rectly, at any time during the taxable year 

2 or any preceding taxable year is 

3 $50,000,000 or more. 

4 ‘‘(B) GENERAL EXCEPTION.—A corpora5 tion shall not be treated as described in this 

6 paragraph if— 

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

8 corporation described in this paragraph in 

9 a preceding taxable year, 

10 ‘‘(ii) such corporation— 

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

12 established securities market, and 

13 ‘‘(II) has, and is reasonably ex14 pected to continue to have, aggregate 

15 gross assets (including assets under 

16 management for investors, whether 

17 held directly or indirectly) of less than 

18 $50,000,000, and 

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

20 such corporation under this subparagraph. 

21 ‘‘(3) MANAGEMENT AND CONTROL.— 

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

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

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1 control of a corporation is to be treated as oc2 curring primarily within the United States. 

3 ‘‘(B) EXECUTIVE OFFICERS AND SENIOR

4 MANAGEMENT.—Such regulations shall provide 

5 that— 

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

7 corporation shall be treated as occurring 

8 primarily within the United States if sub9 stantially all of the executive officers and 

10 senior management of the corporation who 

11 exercise day-to-day responsibility for mak12 ing decisions involving strategic, financial, 

13 and operational policies of the corporation 

14 are located primarily within the United 

15 States, and 

16 ‘‘(ii) individuals who are not executive 

17 officers and senior management of the cor18 poration (including individuals who are of19 ficers or employees of other corporations in 

20 the same chain of corporations as the cor21 poration) shall be treated as executive offi22 cers and senior management if such indi23 viduals exercise the day-to-day responsibil24 ities of the corporation described in clause 

25 (i). 

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1 ‘‘(C) CORPORATIONS PRIMARILY HOLDING

2 INVESTMENT ASSETS.—Such regulations shall 

3 also provide that the management and control 

4 of a corporation shall be treated as occurring 

5 primarily within the United States if— 

6 ‘‘(i) the assets of such corporation (di7 rectly or indirectly) consist primarily of as8 sets being managed on behalf of investors, 

9 and 

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

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

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

13 this section shall apply to taxable years beginning on or 

14 after the date which is 2 years after the date of the enact15 ment of this Act, whether or not regulations are issued 

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

17 of 1986, as added by this section. 

18 SEC. 107. SWAP PAYMENTS MADE FROM THE UNITED 

19 STATES TO PERSONS OFFSHORE. 

20 (a) TAX ON SWAP PAYMENTS RECEIVED BY FOR21 EIGN PERSONS.—Section 871(a)(1) is amended— 

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

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

24 subparagraph (A), and 

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1 (2) by adding at the end the following new sen2 tence: ‘‘In the case of swap payments, the source of 

3 a swap payment is determined by reference to the lo4 cation of the payor.’’. 

5 (b) TAX ON SWAP PAYMENTS RECEIVED BY FOR6 EIGN CORPORATIONS.—Section 881(a) is amended— 

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

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

9 paragraph (1), and 

10 (2) by adding at the end the following new sen11 tence: ‘‘In the case of swap payments, the source of 

12 a swap payment is determined by reference to the lo13 cation of the payor.’’. 

14 SEC. 108. MODIFICATIONS TO RULES RELATING TO IN15 VERTED CORPORATIONS. 

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

17 the Internal Revenue Code of 1986 is amended to read 

18 as follows: 

19 ‘‘(b) INVERTED CORPORATIONS TREATED AS DO20 MESTIC CORPORATIONS.— 

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

22 7701(a)(4), a foreign corporation shall be treated for 

23 purposes of this title as a domestic corporation if— 

24 ‘‘(A) such corporation would be a surro25 gate foreign corporation if subsection (a)(2) 

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1 were applied by substituting ‘80 percent’ for 

2 ‘60 percent’, or 

3 ‘‘(B) such corporation is an inverted do4 mestic corporation. 

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

6 purposes of this subsection, a foreign corporation 

7 shall be treated as an inverted domestic corporation 

8 if, pursuant to a plan (or a series of related trans9 actions)— 

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

11 2014, the direct or indirect acquisition of— 

12 ‘‘(i) substantially all of the properties 

13 held directly or indirectly by a domestic 

14 corporation, or 

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

16 or substantially all of the properties consti17 tuting a trade or business of, a domestic 

18 partnership, and 

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

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

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

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

23 with respect to a domestic corpora24 tion, by former shareholders of the 

25 domestic corporation by reason of 

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1 holding stock in the domestic corpora2 tion, or 

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

4 with respect to a domestic partner5 ship, by former partners of the do6 mestic partnership by reason of hold7 ing a capital or profits interest in the 

8 domestic partnership, or 

9 ‘‘(ii) the management and control of 

10 the expanded affiliated group which in11 cludes the entity occurs, directly or indi12 rectly, primarily within the United States, 

13 and such expanded affiliated group has 

14 significant domestic business activities. 

15 ‘‘(3) EXCEPTION FOR CORPORATIONS WITH

16 SUBSTANTIAL BUSINESS ACTIVITIES IN FOREIGN

17 COUNTRY OF ORGANIZATION.—A foreign corporation 

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

19 inverted domestic corporation if after the acquisition 

20 the expanded affiliated group which includes the en21 tity has substantial business activities in the foreign 

22 country in which or under the law of which the enti23 ty is created or organized when compared to the 

24 total business activities of such expanded affiliated 

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

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1 the preceding sentence, the term ‘substantial busi2 ness activities’ shall have the meaning given such 

3 term under regulations in effect on May 8, 2014, ex4 cept that the Secretary may issue regulations in5 creasing the threshold percent in any of the tests 

6 under such regulations for determining if business 

7 activities constitute substantial business activities for 

8 purposes of this paragraph. 

9 ‘‘(4) MANAGEMENT AND CONTROL.—For pur10 poses of paragraph (2)(B)(ii)— 

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

12 prescribe regulations for purposes of deter13 mining cases in which the management and 

14 control of an expanded affiliated group is to be 

15 treated as occurring, directly or indirectly, pri16 marily within the United States. The regula17 tions prescribed under the preceding sentence 

18 shall apply to periods after May 8, 2014. 

19 ‘‘(B) EXECUTIVE OFFICERS AND SENIOR

20 MANAGEMENT.—Such regulations shall provide 

21 that the management and control of an ex22 panded affiliated group shall be treated as oc23 curring, directly or indirectly, primarily within 

24 the United States if substantially all of the ex25 ecutive officers and senior management of the 

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1 expanded affiliated group who exercise day-to2 day responsibility for making decisions involving 

3 strategic, financial, and operational policies of 

4 the expanded affiliated group are based or pri5 marily located within the United States. Indi6 viduals who in fact exercise such day-to-day re7 sponsibilities shall be treated as executive offi8 cers and senior management regardless of their 

9 title. 

10 ‘‘(5) SIGNIFICANT DOMESTIC BUSINESS ACTIVI11 TIES.—For purposes of paragraph (2)(B)(ii), an ex12 panded affiliated group has significant domestic 

13 business activities if at least 25 percent of— 

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

15 in the United States, 

16 ‘‘(B) the employee compensation incurred 

17 by the group is incurred with respect to employ18 ees based in the United States, 

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

20 the United States, or 

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

22 the United States, 

23 determined in the same manner as such determina24 tions are made for purposes of determining substan25 tial business activities under regulations referred to 

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1 in paragraph (3) as in effect on May 8, 2014, but 

2 applied by treating all references in such regulations 

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

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

5 issue regulations decreasing the threshold percent in 

6 any of the tests under such regulations for deter7 mining if business activities constitute significant 

8 domestic business activities for purposes of this 

9 paragraph.’’. 

10 (b) CONFORMING AMENDMENTS.— 

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

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

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

14 9, 2014,’’. 

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

16 is amended— 

17 (A) in paragraph (2)— 

18 (i) by striking ‘‘subsection 

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

20 (a)(2)(B)(ii) and (b)(2)(B)(i)’’, and 

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

22 ‘‘(a)(2)(B)(i)’’ in subparagraph (B), 

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

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

25 ‘‘(a)(2)(B)(ii)’’, 

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1 (C) in paragraph (5), by striking ‘‘sub2 section (a)(2)(B)(ii)’’ and inserting ‘‘sub3 sections (a)(2)(B)(ii) and (b)(2)(B)(i)’’, and 

4 (D) in paragraph (6), by inserting ‘‘or in5 verted domestic corporation, as the case may 

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

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

8 this section shall apply to taxable years ending after May 

9 8, 2014. 

10 SEC. 109. COUNTRY-BY-COUNTRY REPORTING. 

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

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

13 is amended by adding at the end the following new sub14 section: 

15 ‘‘(s) DISCLOSURE OF FINANCIAL PERFORMANCE ON

16 A COUNTRY-BY-COUNTRY BASIS.— 

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

18 issue rules that require each issuer to include in an 

19 annual report filed by the issuer with the Commis20 sion information on a country-by-country basis dur21 ing the covered period for each tax jurisdiction, ag22 gregated from all subsidiaries residing in that juris23 diction, consisting of— 

24 ‘‘(A) revenues from unrelated parties, re25 lated parties, and in total, 

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1 ‘‘(B) profit or loss before taxes, 

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

3 year, 

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

5 ‘‘(E) stated capital, 

6 ‘‘(F) accumulated earnings, 

7 ‘‘(G) number of employees, 

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

9 cash equivalents, and 

10 ‘‘(I) such other financial information as 

11 the Commission may determine is necessary or 

12 appropriate in the public interest or for the pro13 tection of investors. 

14 ‘‘(2) RULES RELATING TO FOREIGN SUB15 SIDIARY.—For each foreign subsidiary, the report 

16 required by paragraph (1) shall be grouped by resi17 dent jurisdiction (including a group for subsidiaries 

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

19 and main business activity.’’. 

20 (b) RULEMAKING.— 

21 (1) DEADLINES.—The Securities and Exchange 

22 Commission (in this section referred to as the ‘‘Com23 mission’’) shall— 

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

25 of enactment of this Act, issue a proposed rule 

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1 to carry out this section and the amendment 

2 made by this section; and 

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

4 enactment of this Act, issue a final rule to 

5 carry out this section and the amendment made 

6 by this section. 

7 (2) DATA FORMAT.—The information required 

8 to be provided by this section shall be provided by 

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

10 Commission, and such report shall be made available 

11 to the public online, in such format as the Commis12 sion shall prescribe. 

13 (3) EFFECTIVE DATE.—Subsection (s) of sec14 tion 13 of the Securities Exchange Act of 1934, as 

15 added by this section, shall become effective 1 year 

16 after the date on which the Commission issues a 

17 final rule under this section. 

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1 TITLE II—ADDITIONAL MEAS2 URES TO COMBAT TAX EVA3 SION 

4 SEC. 201. 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 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 cormstockstill on DSK30JT082PROD with BILLS

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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. 202. 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 section 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 who, directly or indirectly, formed, 

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

22 interest in, or received money or property or the use there23 of from an entity, including a trust, corporation, limited 

24 liability company, partnership, or foundation, that holds 

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•HR 1932 IH

1 an account, or in any other manner has assets, in a non2 FATCA institution, exercised control over such entity. The 

3 presumption of control created by this subsection shall not 

4 be applied to prevent the Secretary from determining or 

5 arguing the absence of control. 

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

7 United States civil judicial or administrative proceeding 

8 to determine or collect tax, there shall be a rebuttable pre9 sumption that any amount or thing of value received by 

10 a United States person directly or indirectly from an ac11 count or from an entity that holds an account, or in any 

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

13 constitutes income of such person taxable in the year of 

14 receipt; and any amount or thing of value paid or trans15 ferred by or on behalf of a United States person directly 

16 or indirectly to an account, or entity that holds an ac17 count, or in any other manner has assets, in a non18 FATCA institution, represents previously unreported in19 come of such person taxable in the year of the transfer. 

20 ‘‘(c) REBUTTING THE PRESUMPTIONS.—The pre21 sumptions established in this section may be rebutted only 

22 by clear and convincing evidence, including detailed docu23 mentary, testimonial, and transactional evidence, estab24 lishing that— 

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

2 no control, directly or indirectly, over account or en3 tity at the time in question, and 

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

5 of value did not represent income related to such 

6 United States person. 

7 Any court having jurisdiction of a civil proceeding in which 

8 control of such an offshore account or offshore entity or 

9 the income character of such receipts or amounts trans10 ferred is an issue shall prohibit the introduction by the 

11 taxpayer of any foreign based document that is not au12 thenticated in open court by a person with knowledge of 

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

14 outside the jurisdiction of a United States court, unless 

15 such person appears before the court.’’. 

16 (B) The table of subchapters for chapter 

17 76 is amended by inserting after the item relat18 ing to subchapter E the following new item: 

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

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

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

21 the following new paragraph: 

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

23 ‘non-FATCA institution’ means any foreign financial 

24 institution that does not meet the reporting require25 ments of section 1471(b).’’. 

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1 (3) PRESUMPTIONS FOR SECURITIES LAW PUR2 POSES.—Section 21 of the Securities Exchange Act 

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

4 the end the following new subsection: 

5 ‘‘(j) PRESUMPTIONS PERTAINING TO CONTROL AND

6 BENEFICIAL OWNERSHIP.— 

7 ‘‘(1) CONTROL.—For purposes of any civil judi8 cial or administrative proceeding under this title, 

9 there shall be a rebuttable presumption that a 

10 United States person who, directly or indirectly, 

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

12 had a beneficial interest in, or received money or 

13 property or the use thereof from an entity, including 

14 a trust, corporation, limited liability company, part15 nership, or foundation, that holds an account, or in 

16 any other manner has assets, in a non-FATCA insti17 tution (as defined in section 7701(a)(51) of the In18 ternal Revenue Code of 1986), exercised control over 

19 such entity. The presumption of control created by 

20 this paragraph shall not be applied to prevent the 

21 Commission from determining or arguing the ab22 sence of control. 

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

24 of any civil judicial or administrative proceeding 

25 under this title, there shall be a rebuttable presumpmstockstill on DSK30JT082PROD with BILLS

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•HR 1932 IH

1 tion that securities that are nominally owned by an 

2 entity, including a trust, corporation, limited liability 

3 company, partnership, or foundation, and that are 

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

5 beneficially owned by any United States person who 

6 directly or indirectly exercised control over such enti7 ty. The presumption of beneficial ownership created 

8 by this paragraph shall not be applied to prevent the 

9 Commission from determining or arguing the ab10 sence of beneficial ownership.’’. 

11 (4) PRESUMPTION FOR REPORTING PURPOSES

12 RELATING TO FOREIGN FINANCIAL ACCOUNTS.—Sec13 tion 5314 of title 31, United States Code, is amend14 ed by adding at the end the following new sub15 section: 

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

17 this section, there shall be a rebuttable presumption that 

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

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

20 1986) contains funds in an amount that is at least suffi21 cient to require a report prescribed by regulations under 

22 this section.’’. 

23 (5) REGULATORY AUTHORITY.—Not later than 

24 180 days after the date of enactment of this Act, the 

25 Secretary of the Treasury and the Chairman of the 

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1 Securities and Exchange Commission shall each 

2 adopt regulations or other guidance necessary to im3 plement the amendments made by this subsection. 

4 The Secretary and the Chairman may, by regulation 

5 or guidance, provide that the presumption of control 

6 shall not extend to particular classes of transactions, 

7 such as corporate reorganizations or transactions 

8 below a specified dollar threshold, if either deter9 mines that applying such amendments to such trans10 actions is not necessary to carry out the purposes of 

11 such amendments. 

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

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

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

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

16 SEC. 203. REPORTING UNITED STATES BENEFICIAL OWN17 ERS OF FOREIGN OWNED FINANCIAL AC18 COUNTS. 

19 (a) IN GENERAL.—Subpart B of part III of sub20 chapter A of chapter 61 is amended by inserting after sec21 tion 6045B the following new sections: 

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1 ‘‘SEC. 6045C. RETURNS REGARDING UNITED STATES BENE2 FICIAL OWNERS OF FINANCIAL ACCOUNTS 

3 LOCATED IN THE UNITED STATES AND HELD 

4 IN THE NAME OF A FOREIGN ENTITY. 

5 ‘‘(a) REQUIREMENT OF RETURN.—If— 

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

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

8 or payment of any amount constituting gross income 

9 from sources within the United States of any foreign 

10 entity, including a trust, corporation, limited liability 

11 company, partnership, or foundation (other than an 

12 entity with shares regularly traded on an established 

13 securities market), and 

14 ‘‘(2) such withholding agent determines for pur15 poses of title 14, 18, or 31 of the United States 

16 Code that a United States person has any beneficial 

17 interest in the foreign entity or in the account in 

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

19 to as ‘United States beneficial owner’), 

20 then the withholding agent shall make a return according 

21 to the forms or regulations prescribed by the Secretary. 

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

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

24 the return shall include— 

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1 ‘‘(1) the name, address, and, if known, the tax2 payer identification number of the United States 

3 beneficial owner, 

4 ‘‘(2) the known facts pertaining to the relation5 ship of such United States beneficial owner to the 

6 foreign entity and the account, 

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

8 within the United States (including gross proceeds 

9 from brokerage transactions), and 

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

11 may by forms or regulations provide. 

12 ‘‘(c) STATEMENTS TO BE FURNISHED TO BENE13 FICIAL OWNERS WITH RESPECT TO WHOM INFORMATION

14 IS REQUIRED TO BE REPORTED.—A withholding agent 

15 required to make a return under subsection (a) shall fur16 nish to each United States beneficial owner whose name 

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

18 showing— 

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

20 of the information contact of the person required to 

21 make such return, and 

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

23 such return with respect to such United States bene24 ficial owner. 

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1 The written statement required under the preceding sen2 tence shall be furnished to the United States beneficial 

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

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

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

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

7 States beneficial owner, such written statement may be 

8 mailed to the address of the foreign entity. 

9 ‘‘SEC. 6045D. RETURNS BY FINANCIAL INSTITUTIONS RE10 GARDING ESTABLISHMENT OF ACCOUNTS IN 

11 NON-FATCA INSTITUTIONS. 

12 ‘‘(a) REQUIREMENT OF RETURN.—Any financial in13 stitution directly or indirectly opening a bank, brokerage, 

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

15 entity, including a trust, corporation, limited liability com16 pany, partnership, or foundation (other than an entity 

17 with shares regularly traded on an established securities 

18 market), in a non-FATCA institution (as defined in sec19 tion 7701(a)(51)) at the direction of, on behalf of, or for 

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

21 according to the forms or regulations prescribed by the 

22 Secretary. 

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

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

25 the return shall include— 

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1 ‘‘(1) the name, address, and taxpayer identifica2 tion number of such United States person, 

3 ‘‘(2) the name and address of the financial in4 stitution at which a financial account is opened, the 

5 type of account, the account number, the name 

6 under which the account was opened, and the 

7 amount of the initial deposit, 

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

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

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

11 formation agent or other professional employed to 

12 form or acquire the entity, and 

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

14 may by forms or regulations provide. 

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

16 STATES PERSONS WITH RESPECT TO WHOM INFORMA17 TION IS REQUIRED TO BE REPORTED.—A financial insti18 tution required to make a return under subsection (a) 

19 shall furnish to each United States person whose name 

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

21 showing— 

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

23 of the information contact of the person required to 

24 make such return, and 

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

2 such return with respect to such United States per3 son. 

4 The written statement required under the preceding sen5 tence shall be furnished to such United States person on 

6 or before January 31 of the year following the calendar 

7 year for which the return under subsection (a) was re8 quired to be made. 

9 ‘‘(d) EXEMPTION.—The Secretary may by regula10 tions exempt any class of United States persons or any 

11 class of accounts or entities from the requirements of this 

12 section if the Secretary determines that applying this sec13 tion to such persons, accounts, or entities is not necessary 

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

15 (b) PENALTIES.— 

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

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

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

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

20 clauses: 

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

22 returns regarding United States beneficial 

23 owners of financial accounts located in the 

24 United States and held in the name of a 

25 foreign entity), or 

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

2 returns by financial institutions regarding 

3 establishment of accounts at non-FATCA 

4 institutions), and’’. 

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

6 is amended by striking ‘‘or’’ at the end of subpara7 graph (GG), by striking the period at the end of 

8 subparagraph (HH), and by inserting after subpara9 graph (HH) the following new subparagraphs: 

10 ‘‘(II) section 6045C(c) (relating to returns 

11 regarding United States beneficial owners of fi12 nancial accounts located in the United States 

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

14 ‘‘(JJ) section 6045D(c) (relating to re15 turns by financial institutions regarding estab16 lishment of accounts at non-FATCA institu17 tions).’’. 

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

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

20 is amended by inserting after the item relating to section 

21 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.’’. 

22 (d) ADDITIONAL PENALTIES.— 

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1 (1) ADDITIONAL PENALTIES ON BANKS.—Sec2 tion 5239(b)(1) of the Revised Statutes of the 

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

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

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

6 regulation issued pursuant to,’’. 

7 (2) ADDITIONAL PENALTIES ON SECURITIES

8 FIRMS.—Section 21(d)(3)(A) of the Securities Ex9 change Act of 1934 (15 U.S.C. 78u(d)(3)(A)) is 

10 amended by inserting ‘‘any of the provisions of sec11 tion 6045D of the Internal Revenue Code of 1986,’’ 

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

13 (e) REGULATORY AUTHORITY AND EFFECTIVE

14 DATE.— 

15 (1) REGULATORY AUTHORITY.—Not later than 

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

17 the Secretary of the Treasury shall adopt regula18 tions, forms, or other guidance necessary to imple19 ment this section. 

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

21 Internal Revenue Code of 1986 (as added by this 

22 section) and the amendment made by subsection 

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

24 into foreign owned accounts located in the United 

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

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•HR 1932 IH

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

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

3 subsection (d)(2) shall take effect with respect to ac4 counts opened after December 31 of the year of the 

5 date of the enactment of this Act. 

6 SEC. 204. PENALTY FOR FAILING TO DISCLOSE OFFSHORE 

7 HOLDINGS. 

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

9 21(d)(3)(B) of the Securities Exchange Act of 1934 (15 

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

11 the following: 

12 ‘‘(iv) FOURTH TIER.—Notwith13 standing clauses (i), (ii), and (iii), for each 

14 violation, the amount of the penalty shall 

15 not exceed $1,000,000 for any natural per16 son or $10,000,000 for any other person, 

17 if— 

18 ‘‘(I) such person directly or indi19 rectly controlled any foreign entity, in20 cluding any trust, corporation, limited 

21 liability company, partnership, or 

22 foundation through which an issuer 

23 purchased, sold, or held equity or debt 

24 instruments; 

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1 ‘‘(II) such person knowingly or 

2 recklessly failed to disclose any such 

3 holding, purchase, or sale by the 

4 issuer; and 

5 ‘‘(III) the holding, purchase, or 

6 sale would have been otherwise sub7 ject to disclosure by the issuer or such 

8 person under this title.’’. 

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

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

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

6 203(i)(2) of the Investment Advisers Act of 1940 (15 

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

8 following: 

9 ‘‘(D) FOURTH TIER.—Notwithstanding 

10 subparagraphs (A), (B), and (C), for each viola11 tion, the amount of the penalty shall not exceed 

12 $1,000,000 for any natural person or 

13 $10,000,000 for any other person, if— 

14 ‘‘(i) such person directly or indirectly 

15 controlled any foreign entity, including any 

16 trust, corporation, limited liability com17 pany, partnership, or foundation through 

18 which an issuer purchased, sold, or held 

19 equity or debt instruments; 

20 ‘‘(ii) such person knowingly or reck21 lessly failed to disclose any such holding, 

22 purchase, or sale by the issuer; and 

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

24 would have been otherwise subject to dismstockstill on DSK30JT082PROD with BILLS

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1 closure by the issuer or such person under 

2 this title.’’. 

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

4 FOR INVESTMENT ADVISERS. 

5 (a) ANTI-MONEY LAUNDERING OBLIGATIONS FOR

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

7 United States Code, is amended— 

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

9 the end; 

10 (2) by redesignating subparagraph (Z) as sub11 paragraph (BB); and 

12 (3) by inserting after subparagraph (Y) the fol13 lowing: 

14 ‘‘(Z) an investment adviser;’’. 

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

17 (1) in consultation with the Chairman of the 

18 Securities and Exchange Commission and the Chair19 man of the Commodity Futures Trading Commis20 sion, not later than 180 days after the date of enact21 ment of this Act, publish a proposed rule in the Fed22 eral Register to carry out the amendments made by 

23 this section; and 

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

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

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1 Federal Register on the matter described in para2 graph (1). 

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

4 section shall require, at a minimum, each investment ad5 viser (as defined in section 202(a)(11) of the Investment 

6 Advisers Act of 1940 (15 U.S.C. 80b–2(a)(11))) reg7 istered with the Securities and Exchange Commission pur8 suant to section 203 of that Act (15 U.S.C. 80b–3)— 

9 (1) to submit suspicious activity reports and es10 tablish an anti-money laundering program under 

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

12 of title 31, United States Code; and 

13 (2) to comply with— 

14 (A) the customer identification program 

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

16 United States Code; and 

17 (B) the due diligence requirements under 

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

19 SEC. 206. ANTI-MONEY LAUNDERING REQUIREMENTS FOR 

20 FORMATION AGENTS. 

21 (a) ANTI-MONEY LAUNDERING OBLIGATIONS FOR

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

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

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

25 following: 

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

2 of forming new corporations, limited liability 

3 companies, partnerships, trusts, or other legal 

4 entities; or’’. 

5 (b) DEADLINE FOR ANTI-MONEY LAUNDERING

6 RULE FOR FORMATION AGENTS.— 

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

8 Treasury, in consultation with the Attorney General 

9 of the United States, the Secretary of Homeland Se10 curity, and the Commissioner of Internal Revenue, 

11 shall— 

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

13 of enactment of this Act, publish a proposed 

14 rule in the Federal Register requiring persons 

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

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

17 establish anti-money laundering programs 

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

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

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

21 the Federal Register on the matter described in 

22 subparagraph (A). 

23 (2) EXCLUSIONS.—The rule promulgated under 

24 this subsection shall exclude from the category of 

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1 persons engaged in the business of forming new cor2 porations or other entities— 

3 (A) any government agency; and 

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

5 paid formation agent operating within the 

6 United States to form such corporations or 

7 other entities. 

8 SEC. 207. STRENGTHENING JOHN DOE SUMMONS PRO9 CEEDINGS. 

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

11 amended to read as follows: 

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

13 JOHN DOE SUMMONS.— 

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

15 in subsection (c)(1) which does not identify the per16 son with respect to whose liability the summons is 

17 issued may be served only after a court proceeding 

18 in which the Secretary establishes that— 

19 ‘‘(A) the summons relates to the investiga20 tion of a particular person or ascertainable 

21 group or class of persons, 

22 ‘‘(B) there is a reasonable basis for believ23 ing that such person or group or class of per24 sons may fail or may have failed to comply with 

25 any provision of any internal revenue law, and 

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

2 from the examination of the records or testi3 mony (and the identity of the person or persons 

4 with respect to whose liability the summons is 

5 issued) is not readily available from other 

6 sources. 

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

8 apply to any summons which specifies that it is lim9 ited to information regarding a United States cor10 respondent account (as defined in section 

11 5318A(e)(1)(B) of title 31, United States Code) or 

12 a United States payable-through account (as defined 

13 in section 5318A(e)(1)(C) of such title) of a finan14 cial institution that is held at a non-FATCA institu15 tion (as defined in section 7701(a)(51)). 

16 ‘‘(3) PRESUMPTION IN CASES INVOLVING NON17 FATCA INSTITUTIONS.—For purposes of this section, 

18 in any case in which the particular person or ascer19 tainable group or class of persons have financial ac20 counts in or transactions related to a non-FATCA 

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

22 shall be a presumption that there is a reasonable 

23 basis for believing that such person or group or class 

24 of persons may fail or may have failed to comply 

25 with provisions of internal revenue law. 

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1 ‘‘(4) PROJECT JOHN DOE SUMMONSES.— 

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

3 requirements of paragraph (1), the Secretary 

4 may issue a summons described in paragraph 

5 (1) if the summons— 

6 ‘‘(i) relates to a project which is ap7 proved under subparagraph (B), 

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

9 member of the group or class established 

10 under subparagraph (B)(i), and 

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

12 date on which such project was approved 

13 under subparagraph (B). 

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

15 may only be approved under this subparagraph 

16 after a court proceeding in which the Secretary 

17 establishes that— 

18 ‘‘(i) any summons issued with respect 

19 to the project will be issued to a member 

20 of an ascertainable group or class of per21 sons, and 

22 ‘‘(ii) any summons issued with respect 

23 to such project will meet the requirements 

24 of paragraph (1). 

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

2 the Secretary, the court may extend the time 

3 for issuing such summonses under subpara4 graph (A)(i) for additional 3-year periods, but 

5 only if the court continues to exercise oversight 

6 of such project under subparagraph (D). 

7 ‘‘(D) ONGOING COURT OVERSIGHT.—Dur8 ing any period in which the Secretary is author9 ized to issue summonses in relation to a project 

10 approved under subparagraph (B) (including 

11 during any extension under subparagraph (C)), 

12 the Secretary shall report annually to the court 

13 on the use of such authority, provide copies of 

14 all summonses with such report, and comply 

15 with the court’s direction with respect to the 

16 issuance of any John Doe summons under such 

17 project.’’. 

18 (b) JURISDICTION OF COURT.— 

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

20 7609(h) is amended by inserting after the first sen21 tence the following new sentence: ‘‘Any United 

22 States district court in which a member of the group 

23 or class to which a summons may be issued resides 

24 or is found shall have jurisdiction to hear and determstockstill on DSK30JT082PROD with BILLS

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1 mine the approval of a project under subsection 

2 (f)(4)(B).’’. 

3 (2) CONFORMING AMENDMENT.—The first sen4 tence of section 7609(h)(1) is amended by striking 

5 ‘‘(f)’’ and inserting ‘‘(f)(1)’’. 

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

7 this section shall apply to summonses issued after the date 

8 of the enactment of this Act. 

9 SEC. 208. IMPROVING ENFORCEMENT OF FOREIGN FINAN10 CIAL ACCOUNT REPORTING. 

11 (a) CLARIFYING THE CONNECTION OF FOREIGN FI12 NANCIAL ACCOUNT REPORTING TO TAX ADMINISTRA13 TION.—Paragraph (4) of section 6103(b) is amended by 

14 adding at the end the following new sentence: 

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

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

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

18 such section 5314), shall be considered related stat19 utes.’’. 

20 (b) SIMPLIFYING THE CALCULATION OF FOREIGN

21 FINANCIAL ACCOUNT REPORTING PENALTIES.—Section 

22 5321(a)(5)(D)(ii) of title 31, United States Code, is 

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

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

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72 

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1 in the account during the reporting period to which the 

2 violation relates’’. 

3 (c) CLARIFYING THE USE OF SUSPICIOUS ACTIVITY

4 REPORTS UNDER THE BANK SECRECY ACT FOR CIVIL

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

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

7 criminal enforcement divisions of the Internal Revenue 

8 Service,’’ after ‘‘including’’. 

Æ 

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