I 

111TH CONGRESS 

2D SESSION H. R. 5622 

To amend the Internal Revenue Code of 1986 to provide for the identification 

of corporate tax haven countries and increased penalties for tax evasion 

practices in haven countries that ship United States jobs overseas, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 29, 2010 

Mr. MCNERNEY (for himself, Mr. BISHOP of New York, and Mr. PETERS) introduced the following bill; which was referred to the Committee on Ways 

and Means, and in addition to the Committee on Oversight and Government Reform, 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 amend the Internal Revenue Code of 1986 to provide 

for the identification of corporate tax haven countries 

and increased penalties for tax evasion practices in haven 

countries that ship United States jobs overseas, and for 

other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Stop Outsourcing and 

5 Create American Jobs Act of 2010’’. 


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1 SEC. 2. IDENTIFYING CORPORATE TAX HAVEN COUNTRIES 

2 AND INCREASING PENALTIES FOR TAX EVA3 SION PRACTICES IN HAVEN COUNTRIES THAT 

4 SHIP UNITED STATES JOBS OVERSEAS. 

5 Not later than one year after the date of the enact6 ment of this Act, the Secretary of the Treasury shall de7 velop and publish a list of countries the Secretary deter8 mines to be corporate tax haven countries. In developing 

9 such list, the Secretary may consider the following criteria: 

10 (1) Tax rate in the country. 

11 (2) Lack of effective exchange of information 

12 between governments. 

13 (3) Lack of transparency in financial services 

14 sector. 

15 (4) Lack of requirements of substantial eco16 nomic activity. 

17 (5) Incentives which may encourage a United 

18 States corporation to invest abroad rather than do19 mestically. 

20 (6) Other factors deemed relevant by the Sec21 retary. 

22 The Secretary shall review and update such list every 3 

23 years. 


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1 SEC. 3. INCREASE IN PENALTIES FOR CORPORATE TAX 

2 EVASION PRACTICES CONCERNING RETURNS, 

3 DOCUMENTS, AND ACTIVITIES RELATING TO 

4 TAX HAVEN COUNTRIES. 

5 (a) ACCURACY-RELATED PENALTY ON UNDERPAY6 MENTS.—Section 6662 of the Internal Revenue Code of 

7 1986 is amended by adding at the end the following: 

8 ‘‘(k) INCREASE IN PENALTY IN CASE OF TAX HAVEN

9 COUNTRIES.— 

10 ‘‘(1) IN GENERAL.—In the case of any portion 

11 of an underpayment by a corporation for a taxable 

12 year which involves an undisclosed foreign financial 

13 asset located in a tax haven country at any time 

14 during such taxable year, subsection (a) shall be ap15 plied with respect to such portion by substituting ‘60 

16 percent’ for ‘20 percent’. 

17 ‘‘(2) TAX HAVEN COUNTRY.—For purposes of 

18 this subsection, the term ‘tax haven country’ means 

19 a country on the list published under section 2(a) of 

20 the Stop Outsourcing and Create American Jobs Act 

21 of 2010.’’. 

22 (b) UNDERSTATEMENTS WITH RESPECT TO RE23 PORTABLE TRANSACTIONS.—Section 6662A of the Inter24 nal Revenue Code of 1986 is amended by adding at the 

25 end the following: 


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1 ‘‘(f) INCREASE IN PENALTY IN CASE OF TAX HAVEN

2 COUNTRIES.—In the case of any portion of a reportable 

3 transaction understatement by a corporation for a taxable 

4 year which involves a transaction that originates, termi5 nates, or otherwise occurs in a tax haven country (as de6 fined in section 6662(k)(2)), subsection (a) shall be ap7 plied with respect to such portion by substituting ‘40 per8 cent’ for ‘20 percent’.’’. 

9 (c) FRAUD PENALTY.—Section 6663 of the Internal 

10 Revenue Code of 1986 is amended by adding at the end 

11 the following: 

12 ‘‘(d) INCREASE IN PENALTY IN CASE OF TAX HAVEN

13 COUNTRIES.—In the case of any fraud by a corporation 

14 involving an activity occurring in a tax haven country (as 

15 defined in section 6662(k)(2)), subsection (a) shall be ap16 plied by substituting ‘100 percent’ for ‘75 percent’.’’. 

17 (d) ERRONEOUS CLAIM FOR CREDIT OR REFUND.— 

18 Section 6676 of the Internal Revenue Code of 1986 is 

19 amended by redesignating subsection (d) as subsection (e) 

20 and by inserting after subsection (c) the following new 

21 subsection: 

22 ‘‘(c) INCREASE IN PENALTY IN CASE OF TAX HAVEN

23 COUNTRIES.—In the case of claim or credit by a corpora24 tion for any excessive amount due for credits or refunds 

25 involving funds held or invested in a tax haven country 


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1 (as defined in section 6662(k)(2)), subsection (a) shall be 

2 applied by substituting ‘40 percent’ for ‘20 percent’.’’. 

3 (e) WILLFUL ATTEMPT TO EVADE OR DEFEAT

4 TAX.—Section 7201 of the Internal Revenue Code of 1986 

5 is amended by adding at the end the following new sen6 tence: ‘‘In the case of an attempt by a corporation which 

7 involves a tax haven country (as defined in section 

8 6662(k)(2)), the preceding sentence shall be applied by 

9 substituting ‘$1,000,000’ for ‘$500,000’ ’’. 

10 (f) FRAUD AND FALSE STATEMENTS.—Section 7206 

11 of the Internal Revenue Code of 1986 is amended by add12 ing at the end the following new sentence: ‘‘In the case 

13 of an offense by a corporation described in the preceding 

14 sentence which involves a tax haven country (as defined 

15 in section 6662(k)(2)), the preceding sentence shall be ap16 plied by substituting ‘$1,000,000’ for ‘$500,000’ ’’. 

17 (g) FRAUDULENT RETURNS, STATEMENTS, OR

18 OTHER DOCUMENTS.—Section 7207 of the Internal Rev19 enue Code of 1986 is amended by adding at the end the 

20 following new sentence: ‘‘In the case of an offense by a 

21 corporation described in either of the two preceding sen22 tences which involves a tax haven country (as defined in 

23 section 6662(k)(2)), the appropriate sentence shall be ap24 plied by substituting ‘$150,000’ for ‘$50,000’ ’’. 


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

2 this section shall apply to— 

3 (1) The amendments made by subsections (a) 

4 and (b) shall apply to underpayments attributable to 

5 transactions entered into after the date on which the 

6 list developed under section 2 is first published. 

7 (2) The amendment made by subsection (c) 

8 shall apply to returns the due date for which (deter9 mined without regard to extensions) is after the date 

10 on which the list developed under section 2 is first 

11 published. 

12 (3) The amendment made by subsection (d) 

13 shall apply to refunds and credits attributable to 

14 transactions entered into after the date on which the 

15 list developed under section 2 is first published. 

16 (4) The amendment made by subsection (e), (f), 

17 and (g) shall apply to offenses committed after the 

18 date on which the list developed under section 2 is 

19 first published. 

20 SEC. 4. PREFERENCES IN GOVERNMENT CONTRACTS. 

21 (a) PREFERENCE.—A Federal department or agency 

22 may give a preference in the award of a contract for the 

23 procurement of goods or services in a fiscal year to any 

24 potential contractor that has not engaged in outsourcing 


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1 during the fiscal year preceding the fiscal year in which 

2 the contract is awarded. 

3 (b) REQUIREMENT TO REQUEST OUTSOURCING IN4 FORMATION FROM POTENTIAL CONTRACTORS.— 

5 (1) IN GENERAL.—In any solicitation for offers 

6 for a contract issued by a Federal department or 

7 agency in a fiscal year, the department or agency 

8 shall request each offeror for the contract to provide 

9 information regarding whether the offeror engaged 

10 in outsourcing during the fiscal year preceding the 

11 fiscal year in which the contract is to be awarded. 

12 (2) PENALTY AND DEBARMENT.—Any offeror 

13 found to be in violation of paragraph (1), including 

14 making a false statement regarding the offeror’s en15 gagement in outsourcing— 

16 (A) shall, notwithstanding section 1001 of 

17 title 18, United States Code, be liable to the 

18 United States for a civil penalty in an amount 

19 not more than the value of the contract the of20 feror is seeking; and 

21 (B) shall be debarred, by the head of the 

22 department or agency soliciting the offer, from 

23 contracting with the Federal Government for a 

24 period of two years starting on the date on 


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1 which the offeror is found to be in violation of 

2 paragraph (1). 

3 (3) EFFECTIVE DATE.—This subsection shall 

4 apply to solicitations for contracts issued on and 

5 after the date occurring one year after the date of 

6 the enactment of this Act. 

7 (c) OUTSOURCING DEFINED.—In this section, the 

8 term ‘‘outsourcing’’ means the laying off of a United 

9 States worker from a job, and the hiring or contracting 

10 for the same job to be performed in a foreign country. 

11 SEC. 5. DEFICIT REDUCTION. 

12 Amounts which the Secretary of the Treasury esti13 mates are received in the Treasury by reason of this Act 

14 are hereby set aside for the reduction of the public debt. 

Æ 


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