I 

112TH CONGRESS 

1ST SESSION H. R. 2669 

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

inappropriately avoid Federal taxation, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 27, 2011 

Mr. DOGGETT (for himself, Mr. LEVIN, Mr. LARSON of Connecticut, Ms. 

DELAURO, Mr. VAN HOLLEN, Mr. GEORGE MILLER of California, Mr. 

BLUMENAUER, Mr. MCDERMOTT, Mr. LEWIS of Georgia, Ms. BERKLEY, 

Mr. STARK, Mr. PASCRELL, Mr. WELCH, Ms. SLAUGHTER, Mr. DINGELL, Mr. YARMUTH, Ms. LINDA T. SA ́NCHEZ of California, Mr. CONYERS, Ms. SCHAKOWSKY, Mr. DAVIS of Illinois, Mr. MCGOVERN, Mr. 

FILNER, Mr. GENE GREEN of Texas, Mr. HINCHEY, Mr. GRIJALVA, Ms. 

HIRONO, Mr. JOHNSON of Georgia, Ms. LEE of California, Ms. MOORE, 

Mr. TIERNEY, Ms. KAPTUR, Ms. EDDIE BERNICE JOHNSON of Texas, 

Mr. DEFAZIO, Mr. TONKO, Mr. SHERMAN, Ms. JACKSON LEE of Texas, 

Mr. PETERS, Mr. RUSH, Mr. FARR, Mr. MORAN, Ms. BALDWIN, Ms. 

EDWARDS, Mr. MARKEY, Mr. HOLT, Mr. FATTAH, Mr. CLEAVER, Mr. 

CUMMINGS, Mr. AL GREEN of Texas, Mr. NADLER, Mr. PAYNE, Ms. 

BASS of California, Ms. SUTTON, Mr. ELLISON, and Mr. ANDREWS) introduced the following bill; which was referred to the Committee on Ways 

and Means, and in addition to the Committee on Financial Services, for 

a period to be subsequently determined by the Speaker, in each case for 

consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To restrict the use of offshore tax havens and abusive tax 

shelters to inappropriately avoid Federal taxation, and 

for other purposes. 


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

3 SECTION 1. SHORT TITLE; ETC. 

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

5 ‘‘Stop Tax Haven Abuse Act’’. 

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

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

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

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

13 this Act is as follows: 

Sec. 1. Short title; etc. 

TITLE I—DETERRING THE USE OF TAX HAVENS FOR TAX 

EVASION 

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

institutions, and others that impede United States tax enforcement. 

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

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

United States as domestic corporations. 

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

accounts. 

Sec. 105. Credit default swap payments made from the United States to persons offshore. 

Sec. 106. Tax on income of controlled foreign corporation deposited in financial 

account located in the United States. 

TITLE II—OTHER MEASURES TO COMBAT TAX HAVEN AND TAX 

SHELTER ABUSES 

Sec. 201. Country-by-country reporting. 

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

Sec. 203. Deadline for anti-money laundering rule for hedge funds and private 

equity funds. 

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

Sec. 205. Strengthening John Doe summons proceedings. 

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


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TITLE III—COMBATING TAX SHELTER PROMOTERS 

Sec. 301. Penalty for promoting abusive tax shelters. 

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

Sec. 303. Prohibited fee arrangement. 

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

Sec. 305. Information sharing for enforcement purposes. 

Sec. 306. Disclosure of information to Congress. 

Sec. 307. Tax opinion standards for tax practitioners. 

1 TITLE I—DETERRING THE USE 

2 OF TAX HAVENS FOR TAX 

3 EVASION 

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

7 STATES TAX ENFORCEMENT. 

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

9 States Code, is amended— 

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

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

13 institutions, or international transactions 

14 that are of primary money laundering 

15 concern or impede United States tax en16 forcement’’; 

17 (2) in subsection (a), by striking all before 

18 paragraph (1) and inserting the following: 

19 ‘‘(a) SPECIAL MEASURES TO COUNTER MONEY

20 LAUNDERING AND EFFORTS TO IMPEDE UNITED STATES

21 TAX ENFORCEMENT.—’’; 


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1 (3) in subsection (c), by striking all before 

2 paragraph (1) and inserting the following: 

3 ‘‘(c) CONSULTATIONS AND INFORMATION TO BE

4 CONSIDERED IN FINDING JURISDICTIONS, INSTITUTIONS, 

5 TYPES OF ACCOUNTS, OR TRANSACTIONS TO BE OF PRI6 MARY MONEY LAUNDERING CONCERN OR TO BE IMPED7 ING UNITED STATES TAX ENFORCEMENT.—’’; 

8 (4) in subsection (a)(1), by inserting ‘‘or is im9 peding United States tax enforcement’’ after ‘‘pri10 mary money laundering concern’’; 

11 (5) in subsection (a)(4)— 

12 (A) in subparagraph (A)— 

13 (i) by inserting ‘‘in matters involving 

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

15 and 

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

17 (B) by redesignating subparagraph (B) as 

18 subparagraph (C); and 

19 (C) by inserting after subparagraph (A) 

20 the following new subparagraph: 

21 ‘‘(B) in matters involving United States 

22 tax enforcement, shall consult with the Commis23 sioner of the Internal Revenue Service, the Sec24 retary of State, the Attorney General of the 

25 United States, and in the sole discretion of the 


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1 Secretary, such other agencies and interested 

2 parties as the Secretary may find to be appro3 priate; and’’; 

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

5 (4) of subsection (b), by inserting ‘‘or to be imped6 ing United States tax enforcement’’ after ‘‘primary 

7 money laundering concern’’ each place that term ap8 pears; 

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

10 and inserting the following new paragraph: 

11 ‘‘(5) PROHIBITIONS OR CONDITIONS ON OPEN12 ING OR MAINTAINING CERTAIN CORRESPONDENT OR

13 PAYABLE-THROUGH ACCOUNTS OR AUTHORIZING

14 CERTAIN PAYMENT CARDS.—If the Secretary finds a 

15 jurisdiction outside of the United States, 1 or more 

16 financial institutions operating outside of the United 

17 States, or 1 or more classes of transactions within 

18 or involving a jurisdiction outside of the United 

19 States to be of primary money laundering concern or 

20 to be impeding United States tax enforcement, the 

21 Secretary, in consultation with the Secretary of 

22 State, the Attorney General of the United States, 

23 and the Chairman of the Board of Governors of the 

24 Federal Reserve System, may prohibit, or impose 

25 conditions upon— 


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

2 United States of a correspondent account or 

3 payable-through account; or 

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

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

6 debit card, or similar credit or debit financial 

7 instrument by any domestic financial institu8 tion, financial agency, or credit card company 

9 or association, for or on behalf of a foreign 

10 banking institution, if such correspondent ac11 count, payable-through account, credit card, 

12 charge card, debit card, or similar credit or 

13 debit financial instrument, involves any such ju14 risdiction or institution, or if any such trans15 action may be conducted through such cor16 respondent account, payable-through account, 

17 credit card, charge card, debit card, or similar 

18 credit or debit financial instrument.’’; 

19 (8) in subsection (c)(1), by inserting ‘‘or is im20 peding United States tax enforcement’’ after ‘‘pri21 mary money laundering concern’’; 

22 (9) in subsection (c)(2)(A)— 

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

24 or special regulatory advantages’’ and inserting 


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

2 or regulatory advantages’’; 

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

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

5 international tax enforcement, and counter6 money’’; 

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

8 secrecy’’ and inserting ‘‘banking, tax, or se9 crecy’’; and 

10 (D) in clause (vi), by inserting ‘‘, tax trea11 ty, or tax information exchange agreement’’ 

12 after ‘‘treaty’’; 

13 (10) in subsection (c)(2)(B)— 

14 (A) in clause (i), by inserting ‘‘or tax eva15 sion’’ after ‘‘money laundering’’; and 

16 (B) in clause (iii), by inserting ‘‘, tax eva17 sion,’’ after ‘‘money laundering’’; and 

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

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

20 Committee on Finance of the Senate and the Com21 mittee on Ways and Means of the House of Rep22 resentatives of any such action involving United 

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


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

2 this section shall take effect on the date of the enactment 

3 of this Act. 

4 SEC. 102. STRENGTHENING THE FOREIGN ACCOUNT TAX 

5 COMPLIANCE ACT (FATCA). 

6 (a) REPORTING ACTIVITIES WITH RESPECT TO PAS7 SIVE FOREIGN INVESTMENT COMPANIES.—Section 

8 1298(f) is amended by inserting ‘‘, or who directly or indi9 rectly forms, transfers assets to, is a beneficiary of, has 

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

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

12 (b) WITHHOLDABLE PAYMENTS TO FOREIGN FINAN13 CIAL INSTITUTIONS.—Section 1471(d) is amended— 

14 (1) by inserting ‘‘or transaction’’ after ‘‘any de15 pository’’ in paragraph (2)(A), and 

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

17 follows in paragraph (5)(C) and inserting ‘‘deriva18 tives, or any interest (including a futures or forward 

19 contract, swap, or option) in such securities, part20 nership interests, commodities, or derivatives.’’. 

21 (c) WITHHOLDABLE PAYMENTS TO OTHER FOREIGN

22 FINANCIAL INSTITUTIONS.—Section 1472 is amended— 

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

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1 ers,’’ after ‘‘reason to know,’’ in subsection (b)(2), 

2 and 

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

4 evasion’’ after ‘‘this subsection’’ in subsection 

5 (c)(1)(G). 

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

7 1473(2)(A) are each amended by inserting ‘‘or as a bene8 ficial owner’’ after ‘‘indirectly’’. 

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

10 (1) by inserting ‘‘, except that information pro11 vided under sections 1471(c) or 1472(b) may be dis12 closed to any Federal law enforcement agency, upon 

13 request or upon the initiation of the Secretary, to in14 vestigate or address a possible violation of United 

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

16 and 

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

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

19 1471(b)’’ in paragraph (2). 

20 (f) INFORMATION WITH RESPECT TO FOREIGN FI21 NANCIAL ASSETS.—Section 6038D(a) is amended by in22 serting ‘‘ownership or beneficial ownership’’ after ‘‘holds 

23 any’’. 


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1 (g) ESTABLISHING PRESUMPTIONS FOR ENTITIES

2 AND TRANSACTIONS INVOLVING NON-FATCA INSTITU3 TIONS.— 

4 (1) PRESUMPTIONS FOR TAX PURPOSES.— 

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

6 by inserting after section 7491 the following 

7 new subchapter: 

8 ‘‘Subchapter F—Presumptions for Certain 

9 Legal Proceedings 

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

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

11 TRANSACTIONS INVOLVING NON-FATCA IN12 STITUTIONS. 

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

14 civil judicial or administrative proceeding to determine or 

15 collect tax, there shall be a rebuttable presumption that 

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

17 regularly traded on an established securities market) who, 

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

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

20 money or property or the use thereof from an entity, in21 cluding a trust, corporation, limited liability company, 

22 partnership, or foundation (other than an entity with 

23 shares regularly traded on an established securities mar24 ket), that holds an account, or in any other manner has 


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

2 such entity. The presumption of control created by this 

3 subsection shall not be applied to prevent the Secretary 

4 from determining or arguing the absence of control. 

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

6 United States civil judicial or administrative proceeding 

7 to determine or collect tax, there shall be a rebuttable pre8 sumption that any amount or thing of value received by 

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

10 regularly traded on an established securities market) di11 rectly or indirectly from an account or from an entity 

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

13 established securities market) that holds an account, or 

14 in any other manner has assets, in a non-FATCA institu15 tion, constitutes income of such person taxable in the year 

16 of receipt; and any amount or thing of value paid or trans17 ferred by or on behalf of a United States person (other 

18 than an entity with shares regularly traded on an estab19 lished securities market) directly or indirectly to an ac20 count, or entity (other than an entity with shares regularly 

21 traded on an established securities market) that holds an 

22 account, or in any other manner has assets, in a non23 FATCA institution, represents previously unreported in24 come of such person taxable in the year of the transfer. 


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1 ‘‘(c) REBUTTING THE PRESUMPTIONS.—The pre2 sumptions established in this section may be rebutted only 

3 by clear and convincing evidence, including detailed docu4 mentary, testimonial, and transactional evidence, estab5 lishing that— 

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

7 no control, directly or indirectly, over account or en8 tity at the time in question, and 

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

10 of value did not represent income related to such 

11 United States person. 

12 Any court having jurisdiction of a civil proceeding in which 

13 control of such an offshore account or offshore entity or 

14 the income character of such receipts or amounts trans15 ferred is an issue shall prohibit the introduction by the 

16 taxpayer of any foreign based document that is not au17 thenticated in open court by a person with knowledge of 

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

19 outside the jurisdiction of a United States court, unless 

20 such person appears before the court.’’. 

21 (B) The table of subchapters for chapter 

22 76 is amended by inserting after the item relat23 ing to subchapter E the following new item: 

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


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

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

3 the following new paragraph: 

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

5 ‘non-FATCA institution’ means any financial insti6 tution that does not meet the reporting requirements 

7 of section 1471(b).’’. 

8 (3) PRESUMPTIONS FOR SECURITIES LAW PUR9 POSES.—Section 21 of the Securities Exchange Act 

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

11 the end the following new subsection: 

12 ‘‘(j) PRESUMPTIONS PERTAINING TO CONTROL AND

13 BENEFICIAL OWNERSHIP.— 

14 ‘‘(1) CONTROL.—For purposes of any civil judi15 cial or administrative proceeding under this title, 

16 there shall be a rebuttable presumption that a 

17 United States person (other than an entity with 

18 shares regularly traded on an established securities 

19 market) who, directly or indirectly, formed, trans20 ferred assets to, was a beneficiary of, had a bene21 ficial interest in, or received money or property or 

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

23 corporation, limited liability company, partnership, 

24 or foundation (other than an entity with shares reg25 ularly traded on an established securities market), 


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

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

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

4 1986), exercised control over such entity. The pre5 sumption of control created by this paragraph shall 

6 not be applied to prevent the Commission from de7 termining or arguing the absence of control. 

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

9 of any civil judicial or administrative proceeding 

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

12 entity, including a trust, corporation, limited liability 

13 company, partnership, or foundation (other than an 

14 entity with shares regularly traded on an established 

15 securities market), and that are held in a non16 FATCA institution (as so defined), are beneficially 

17 owned by any United States person (other than an 

18 entity with shares regularly traded on an established 

19 securities market) who directly or indirectly exer20 cised control over such entity. The presumption of 

21 beneficial ownership created by this paragraph shall 

22 not be applied to prevent the Commission from de23 termining or arguing the absence of beneficial own24 ership.’’. 


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1 (4) PRESUMPTION FOR REPORTING PURPOSES

2 RELATING TO FOREIGN FINANCIAL ACCOUNTS.—Sec3 tion 5314 of title 31, United States Code, is amend4 ed by adding at the end the following new sub5 section: 

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

7 this section, there shall be a rebuttable presumption that 

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

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

10 1986) contains funds in an amount that is at least suffi11 cient to require a report prescribed by regulations under 

12 this section.’’. 

13 (5) REGULATORY AUTHORITY.—Not later than 

14 180 days after the date of the enactment of this Act, 

15 the Secretary of the Treasury and the Chairman of 

16 the Securities and Exchange Commission shall each 

17 adopt regulations or other guidance necessary to im18 plement the amendments made by this subsection. 

19 The Secretary and the Chairman may by regulation 

20 or guidance provide that the presumption of control 

21 shall not extend to particular classes of transactions, 

22 such as corporate reorganizations or transactions 

23 below a specified dollar threshold, if either deter24 mines that applying such amendments to such transVerDate Mar 15 2010 05:33 Jul 28, 2011 Jkt 099200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\H2669.IH H2669

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1 actions is not necessary to carry out the purposes of 

2 such amendments. 

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

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

5 after the date of the enactment of this Act, whether or 

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

7 SEC. 103. TREATMENT OF FOREIGN CORPORATIONS MAN8 AGED AND CONTROLLED IN THE UNITED 

9 STATES AS DOMESTIC CORPORATIONS. 

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

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

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

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

18 paragraph (2) if— 

19 ‘‘(A) the corporation would not otherwise 

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

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

23 corporation occurs, directly or indirectly, pri24 marily within the United States, 


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

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

4 ‘‘(2) CORPORATION DESCRIBED.— 

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

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

8 regularly traded on an established securi9 ties market, or 

10 ‘‘(ii) the aggregate gross assets of 

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

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

15 or any preceding taxable year is 

16 $50,000,000 or more. 

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

19 paragraph if— 

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

21 corporation described in this paragraph in 

22 a preceding taxable year, 

23 ‘‘(ii) such corporation— 

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

25 established securities market, and 


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

3 gross assets (including assets under 

4 management for investors, whether 

5 held directly or indirectly) of less than 

6 $50,000,000, and 

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

8 such corporation under this subparagraph. 

9 ‘‘(C) EXCEPTION FROM GROSS ASSETS

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

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

13 is a member of an affiliated group (as defined 

14 section 1504, but determined without regard to 

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

16 which— 

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

19 and 

20 ‘‘(ii) has substantial assets (other 

21 than cash and cash equivalents and other 

22 than stock of foreign subsidiaries) held for 

23 use in the active conduct of a trade or 

24 business in the United States. 

25 ‘‘(3) MANAGEMENT AND CONTROL.— 


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

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

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

6 ‘‘(B) EXECUTIVE OFFICERS AND SENIOR

7 MANAGEMENT.—Such regulations shall provide 

8 that— 

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

10 corporation shall be treated as occurring 

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

13 senior management of the corporation who 

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

16 and operational policies of the corporation 

17 are located primarily within the United 

18 States, and 

19 ‘‘(ii) individuals who are not executive 

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

23 the same chain of corporations as the cor24 poration) shall be treated as executive offi25 cers and senior management if such indiVerDate Mar 15 2010 05:33 Jul 28, 2011 Jkt 099200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 E:\BILLS\H2669.IH H2669

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

3 (i). 

4 ‘‘(C) CORPORATIONS PRIMARILY HOLDING

5 INVESTMENT ASSETS.—Such regulations shall 

6 also provide that the management and control 

7 of a corporation shall be treated as occurring 

8 primarily within the United States if— 

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

12 and 

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

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

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

16 this section shall apply to taxable years beginning on or 

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

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

20 of 1986, as added by this section. 


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1 SEC. 104. REPORTING UNITED STATES BENEFICIAL OWN2 ERS OF FOREIGN OWNED FINANCIAL AC3 COUNTS. 

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

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

9 LOCATED IN THE UNITED STATES AND HELD 

10 IN THE NAME OF A FOREIGN ENTITY. 

11 ‘‘(a) REQUIREMENT OF RETURN.—If— 

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

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

14 or payment of any amount constituting gross income 

15 from sources within the United States of any foreign 

16 entity, including a trust, corporation, limited liability 

17 company, partnership, or foundation (other than an 

18 entity with shares regularly traded on an established 

19 securities market), and 

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

22 Code that a United States person has any beneficial 

23 interest in the foreign entity or in the account in 

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

25 to as ‘United States beneficial owner’), 


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1 then the withholding agent shall make a return according 

2 to the forms or regulations prescribed by the Secretary. 

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

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

5 the return shall include— 

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

8 beneficial owner, 

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

11 foreign entity and the account, 

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

13 within the United States (including gross proceeds 

14 from brokerage transactions), and 

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

16 may by forms or regulations provide. 

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

19 IS REQUIRED TO BE REPORTED.—A withholding agent 

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

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

23 showing— 


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

2 of the information contact of the person required to 

3 make such return, and 

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

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

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

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

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

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

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

13 States beneficial owner, such written statement may be 

14 mailed to the address of the foreign entity. 

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

17 NON-FATCA INSTITUTIONS. 

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

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

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

23 with shares regularly traded on an established securities 

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


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

2 according to the forms or regulations prescribed by the 

3 Secretary. 

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

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

6 the return shall include— 

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

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

11 type of account, the account number, the name 

12 under which the account was opened, and the 

13 amount of the initial deposit, 

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

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

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

17 formation agent or other professional employed to 

18 form or acquire the entity, and 

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

20 may by forms or regulations provide. 

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

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

25 shall furnish to each United States person whose name 


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

2 showing— 

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

4 of the information contact of the person required to 

5 make such return, and 

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

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

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

11 or before January 31 of the year following the calendar 

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

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

16 class of accounts or entities from the requirements of this 

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

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

20 (b) PENALTIES.— 

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

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

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

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

25 clauses: 


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

2 returns regarding United States beneficial 

3 owners of financial accounts located in the 

4 United States and held in the name of a 

5 foreign entity), or 

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

7 returns by financial institutions regarding 

8 establishment of accounts at non-FATCA 

9 institutions), and’’. 

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

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

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

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

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

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

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

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

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


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1 is amended by inserting after the item relating to section 

2 6045B the following new items: 

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

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

a foreign entity. 

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

3 (d) ADDITIONAL PENALTIES.— 

4 (1) ADDITIONAL PENALTIES ON BANKS.—Sec5 tion 5239(b)(1) of the Revised Statutes (12 U.S.C. 

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

7 provisions of section 6045D of the Internal Revenue 

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

10 (2) ADDITIONAL PENALTIES ON SECURITIES

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

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

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

16 (e) REGULATORY AUTHORITY AND EFFECTIVE

17 DATE.— 

18 (1) REGULATORY AUTHORITY.—Not later than 

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

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


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

2 Internal Revenue Code of 1986 (as added by this 

3 section) and the amendment made by subsection 

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

5 into foreign owned accounts located in the United 

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

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

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

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

11 date of the enactment of this Act. 

12 SEC. 105. CREDIT DEFAULT SWAP PAYMENTS MADE FROM 

13 THE UNITED STATES TO PERSONS OFF14 SHORE. 

15 (a) TAX ON CREDIT DEFAULT SWAP PAYMENTS RE16 CEIVED BY FOREIGN PERSONS.—Section 871(a)(1) is 

17 amended— 

18 (1) by inserting ‘‘credit default swap pay19 ments,’’ after ‘‘annuities,’’ in subparagraph (A), and 

20 (2) by adding at the end the following new sen21 tence: ‘‘In the case of credit default swap payments, 

22 the source of a credit default swap payment is deter23 mined by reference to the location of the payor.’’. 


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1 (b) TAX ON CREDIT DEFAULT SWAP PAYMENTS RE2 CEIVED BY FOREIGN CORPORATIONS.—Section 881(a) is 

3 amended— 

4 (1) by inserting ‘‘credit default swap pay5 ments,’’ after ‘‘annuities,’’ in paragraph (1), and 

6 (2) by adding at the end the following new sen7 tence: ‘‘In the case of credit default swap payments, 

8 the source of a credit default swap payment is deter9 mined by reference to the location of the payor.’’. 

10 SEC. 106. TAX ON INCOME OF CONTROLLED FOREIGN COR11 PORATION DEPOSITED IN FINANCIAL AC12 COUNT LOCATED IN THE UNITED STATES. 

13 Section 952(a) is amended by adding at the end the 

14 following new sentence: ‘‘Notwithstanding section 

15 956(c)(2)(A), any property (as defined in section 317(a)) 

16 of such controlled foreign corporation that is deposited 

17 and maintained, directly or indirectly, for or on behalf of 

18 such corporation in a financial account located in the 

19 United States, including in a correspondent account of a 

20 financial institution, is a constructive distribution with re21 spect to the stock which such United States shareholder 

22 owns.’’. 


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1 TITLE II—OTHER MEASURES TO 

2 COMBAT TAX HAVEN AND TAX 

3 SHELTER ABUSES 

4 SEC. 201. COUNTRY-BY-COUNTRY REPORTING. 

5 (a) IN GENERAL.—Section 13 of the Securities Ex6 change Act of 1934 (15 U.S.C. 78m) is amended by add7 ing at the end the following new subsection: 

8 ‘‘(r) DISCLOSURE OF FINANCIAL PERFORMANCE ON

9 A COUNTRY-BY-COUNTRY BASIS.— 

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

11 ‘‘(A) the term ‘issuer group’ shall mean 

12 the issuer, each subsidiary of the issuer, and 

13 each entity under the control of the issuer; 

14 ‘‘(B) the term ‘country of operation’ shall 

15 mean each country in which a member of the 

16 issuer group is incorporated or organized, or 

17 maintains employees or conducts business ac18 tivities; and 

19 ‘‘(C) the term ‘world-wide allocation of 

20 group members’ shall mean each member of the 

21 issuer group listed according to their country of 

22 operation. 

23 ‘‘(2) COUNTRY-BY-COUNTRY REPORTING.—The 

24 Commission shall issue rules that require each issuer 

25 to include in an annual report filed by the issuer 


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1 with the Commission information indicative of finan2 cial performance on a country-by-country basis dur3 ing the covered period, including— 

4 ‘‘(A) a list of each country of operation; 

5 ‘‘(B) the world-wide allocation of group 

6 members; 

7 ‘‘(C) the financial performance of each 

8 member of the issuer group in each country of 

9 operation, without exception, including, and set 

10 forth according to— 

11 ‘‘(i) total number of employees phys12 ically working in the country of operation; 

13 ‘‘(ii) total sales by the member of the 

14 issuer group to third parties; 

15 ‘‘(iii) total sales by the member of the 

16 issuer group to other members of the 

17 issuer group and total sales to each such 

18 member; 

19 ‘‘(iv) total purchases by the member 

20 of the issuer group from third parties; 

21 ‘‘(v) total purchases by the member of 

22 the issuer group from other members of 

23 the issuer group and total purchases from 

24 each such member; 


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1 ‘‘(vi) total financing payments made 

2 by the member of the issuer group to third 

3 parties; 

4 ‘‘(vii) total financing payments made 

5 by the member of the issuer group to other 

6 members of the issuer group and total fi7 nancing payments made to each such 

8 member; 

9 ‘‘(viii) pre-tax gross revenues of the 

10 member of the issuer group; 

11 ‘‘(ix) pre-tax net revenues of the 

12 member of the issuer group; and 

13 ‘‘(x) such other financial information 

14 as the Commission may determine is indic15 ative of the financial performance of the 

16 issuer; 

17 ‘‘(D) the tax paid by each member of the 

18 issuer group in each country of operation, with19 out exception, including, and set forth accord20 ing to— 

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

22 other tax assessed against each member of 

23 the issuer group with respect to each coun24 try of operation during the covered period; 


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1 ‘‘(ii) after taking into account any tax 

2 deductions, tax credits, tax forgiveness, or 

3 other tax benefits or waivers, total amount 

4 of tax paid from the treasury of the mem5 ber of the issuer group to the government 

6 of each country of operation during the 

7 covered period; and 

8 ‘‘(iii) such other financial information 

9 as the Commission may determine is nec10 essary or appropriate to inform the public 

11 of the tax obligations of and payments by 

12 each member of the issuer group; and 

13 ‘‘(E) such other financial information as 

14 the Commission may determine is necessary or 

15 appropriate in the public interest or for the pro16 tection of investors.’’. 

17 (b) RULEMAKING.— 

18 (1) DEADLINES.—Not later than 180 days 

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

20 Commission shall issue a proposed rule to carry out 

21 this section and, not later than 270 days after the 

22 date of the enactment of this Act, shall issue a final 

23 rule to carry out this section. 

24 (2) CONSULTATION.—In issuing the rules under 

25 this section, the Commission shall consult with the 


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1 Secretary of the Treasury and the Commissioner of 

2 Internal Revenue and, to the extent practicable and 

3 in furtherance of its obligation to protect investors, 

4 shall issue rules that support Federal efforts to re5 duce offshore tax evasion and abuses. 

6 (3) INTERACTIVE DATA FORMAT.—The rules 

7 issued under this section shall require that the infor8 mation provided by issuers in their annual reports 

9 be submitted in an interactive data format as pro10 vided in section 13(q)(2)(D) of the Securities Ex11 change Act of 1934 (15 U.S.C. 78m(q)(2)(D)), and 

12 to the extent practicable, the Commission shall make 

13 available online, to the public, a compilation of such 

14 information. 

15 (4) AGGREGATE DATA.—The rules may allow 

16 issuers to provide the financial information required 

17 under section 13(r) of the Securities Exchange Act 

18 of 1934 (15 U.S.C. 78m(r)), as added by this sec19 tion, aggregated at the level of each country of oper20 ation instead of with respect to each member of the 

21 issuer group individually, provided that the Commis22 sion retains the authority, at its discretion, to re23 quire further disaggregation. 

24 (5) EFFECTIVE DATE.—Each issuer shall be re25 quired to comply with the requirements of section 


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1 13(r) of the Securities Exchange Act of 1934 (15 

2 U.S.C. 78m(r)), as added by this section, not later 

3 than the date on which the issuer must file with the 

4 Commission its first annual report that is due not 

5 later than 1 year after the date on which the Com6 mission issues a final rule under this section. 

7 SEC. 202. PENALTY FOR FAILING TO DISCLOSE OFFSHORE 

8 HOLDINGS. 

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

10 21(d)(3)(B) of the Securities Exchange Act of 1934 (15 

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

12 the following: 

13 ‘‘(iv) FOURTH TIER.—Notwithstanding 

14 clauses (i), (ii), and (iii), the amount of the 

15 penalty for each such violation shall not exceed 

16 $1,000,000 for any person if the violation de17 scribed in subparagraph (A) involved a knowing 

18 failure to disclose any holding or transaction in19 volving equity or debt instruments of an issuer 

20 and known by such person to involve a foreign 

21 entity, including any trust, corporation, limited 

22 liability company, partnership, or foundation 

23 that is directly or indirectly controlled by such 

24 person, and which would have been otherwise 


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1 subject to disclosure by such person under this 

2 title.’’. 

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

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

5 amended by adding at the end the following: 

6 ‘‘(D) FOURTH TIER.—Notwithstanding 

7 subparagraphs (A), (B), and (C), the amount of 

8 penalty for each such violation shall not exceed 

9 $1,000,000 for any person, if the violation de10 scribed in paragraph (1) involved a knowing 

11 failure to disclose any holding or transaction in12 volving equity or debt instruments of an issuer 

13 and known by such person to involve a foreign 

14 entity, including any trust, corporation, limited 

15 liability company, partnership, or foundation, 

16 directly or indirectly controlled by such person, 

17 and which would have been otherwise subject to 

18 disclosure by such person under this title.’’. 

19 (c) INVESTMENT COMPANY ACT OF 1940.—Section 

20 9(d)(2) of the Investment Company Act of 1940 (15 

21 U.S.C. 80a–9(d)(2)) is amended by adding at the end the 

22 following: 

23 ‘‘(D) FOURTH TIER.—Notwithstanding 

24 subparagraphs (A), (B), and (C), the amount of 

25 penalty for each such violation shall not exceed 


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1 $1,000,000 for any person, if the violation de2 scribed in paragraph (1) involved a knowing 

3 failure to disclose any holding or transaction in4 volving equity or debt instruments of an issuer 

5 and known by such person to involve a foreign 

6 entity, including any trust, corporation, limited 

7 liability company, partnership, or foundation, 

8 directly or indirectly controlled by such person, 

9 and which would have been otherwise subject to 

10 disclosure by such person under this title.’’. 

11 (d) INVESTMENT ADVISERS ACT OF 1940.—Section 

12 203(i)(2) of the Investment Advisers Act of 1940 (15 

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

14 following: 

15 ‘‘(D) FOURTH TIER.—Notwithstanding 

16 subparagraphs (A), (B), and (C), the amount of 

17 penalty for each such violation shall not exceed 

18 $1,000,000 for any person, if the violation de19 scribed in paragraph (1) involved a knowing 

20 failure to disclose any holding or transaction in21 volving equity or debt instruments of an issuer 

22 and known by such person to involve a foreign 

23 entity, including any trust, corporation, limited 

24 liability company, partnership, or foundation, 

25 directly or indirectly controlled by such person, 


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1 and which would have been otherwise subject to 

2 disclosure by such person under this title.’’. 

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

4 FOR HEDGE FUNDS AND PRIVATE EQUITY 

5 FUNDS. 

6 (a) IN GENERAL.— 

7 (1) PROPOSED RULE.—Not later than 90 days 

8 after the date of the enactment of this Act, the Sec9 retary of the Treasury, in consultation with the 

10 Chairman of the Securities and Exchange Commis11 sion and the Chairman of the Commodity Futures 

12 Trading Commission, shall publish a proposed rule 

13 in the Federal Register requiring unregistered in14 vestment companies, including hedge funds or pri15 vate equity funds, to establish anti-money laundering 

16 programs and submit suspicious activity reports 

17 under subsections (g) and (h) of section 5318 of title 

18 31, United States Code. 

19 (2) FINAL RULE.—Not later than 180 days 

20 after the date of the enactment of this Act, the Sec21 retary of the Treasury shall publish a final rule in 

22 the Federal Register on the matter described in 

23 paragraph (1). 

24 (b) CONTENTS.—The final rule published under this 

25 section— 


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1 (1) shall require, at a minimum, that to safe2 guard against terrorist financing and money laun3 dering, all unregistered investment companies 

4 shall— 

5 (A) use risk-based due diligence policies, 

6 procedures, and controls that are reasonably de7 signed to ascertain the identity of any foreign 

8 person (including the nominal and beneficial 

9 owner or beneficiary of a foreign corporation, 

10 partnership, trust, or other foreign entity) plan11 ning to supply or supplying funds to be invested 

12 with the advice or assistance of that unregis13 tered investment company; and 

14 (B) be subject to section 5318(k)(2) of 

15 title 31, United States Code; and 

16 (2) may incorporate aspects of the proposed 

17 rule for unregistered investment companies pub18 lished in the Federal Register on September 26, 

19 2002 (67 Fed. Reg. 60617) (relating to anti-money 

20 laundering programs). 

21 (c) DEFINITIONS.—In this section— 

22 (1) the terms ‘‘investment company’’ and 

23 ‘‘issuer’’ have the same meanings as in section 2 of 

24 the Investment Company Act of 1940 (15 U.S.C. 

25 80a–2); and 


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1 (2) the term ‘‘unregistered investment com2 pany’’ means an issuer that would be an investment 

3 company, but for the exclusion under paragraph (1) 

4 or (7) of section 3(c) of the Investment Company 

5 Act of 1940 (15 U.S.C. 80a–3(c)). 

6 SEC. 204. ANTI-MONEY LAUNDERING REQUIREMENTS FOR 

7 FORMATION AGENTS. 

8 (a) ANTI-MONEY LAUNDERING OBLIGATIONS FOR

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

10 United States Code, is amended, by— 

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

12 the end; 

13 (2) by redesignating subparagraph (Z) as sub14 paragraph (AA); and 

15 (3) by inserting after subparagraph (Y) the fol16 lowing: 

17 ‘‘(Z) persons engaged in the business of 

18 forming new corporations, limited liability com19 panies, partnerships, trusts, or other legal enti20 ties; or’’. 

21 (b) DEADLINE FOR ANTI-MONEY LAUNDERING

22 RULE FOR FORMATION AGENTS.— 

23 (1) PROPOSED RULE.—Not later than 120 days 

24 after the date of the enactment of this Act, the Sec25 retary of the Treasury, in consultation with the AtVerDate Mar 15 2010 05:33 Jul 28, 2011 Jkt 099200 PO 00000 Frm 00040 Fmt 6652 Sfmt 6201 E:\BILLS\H2669.IH H2669

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1 torney General of the United States, the Secretary 

2 of Homeland Security, and the Commissioner of In3 ternal Revenue, shall publish a proposed rule in the 

4 Federal Register requiring persons described in sec5 tion 5312(a)(2)(Z) of title 31, United States Code, 

6 as added by this section, to establish anti-money 

7 laundering programs under subsections (g) and (h) 

8 of section 5318 of that title. 

9 (2) FINAL RULE.—Not later than 270 days 

10 after such date of enactment, the Secretary of the 

11 Treasury shall publish a final rule in the Federal 

12 Register on the matter described in paragraph (1). 

13 (3) EXCLUSIONS.—Any rule promulgated under 

14 this subsection shall exclude from the category of 

15 persons engaged in the business of forming new cor16 porations or other entities— 

17 (A) any government agency; and 

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

19 paid formation agent operating within the 

20 United States to form such corporations or 

21 other entities. 

22 SEC. 205. STRENGTHENING JOHN DOE SUMMONS PRO23 CEEDINGS. 

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

25 amended to read as follows: 


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

2 JOHN DOE SUMMONS.— 

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

4 in subsection (c)(1) which does not identify the per5 son with respect to whose liability the summons is 

6 issued may be served only after a court proceeding 

7 in which the Secretary establishes that— 

8 ‘‘(A) the summons relates to the investiga9 tion of a particular person or ascertainable 

10 group or class of persons, 

11 ‘‘(B) there is a reasonable basis for believ12 ing that such person or group or class of per13 sons may fail or may have failed to comply with 

14 any provision of any internal revenue law, and 

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

16 from the examination of the records or testi17 mony (and the identity of the person or persons 

18 with respect to whose liability the summons is 

19 issued) is not readily available from other 

20 sources. 

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

22 apply to any summons which specifies that it is lim23 ited to information regarding a United States cor24 respondent account (as defined in section 

25 5318A(e)(1)(B) of title 31, United States Code) or 


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1 a United States payable-through account (as defined 

2 in section 5318A(e)(1)(C) of such title) of a finan3 cial institution that is held at a non-FATCA institu4 tion (as defined in section 7701(a)(51)). 

5 ‘‘(3) PRESUMPTION IN CASES INVOLVING NON6 FATCA INSTITUTIONS.—For purposes of this section, 

7 in any case in which the particular person or ascer8 tainable group or class of persons have financial ac9 counts in or transactions related to a non-FATCA 

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

11 shall be a presumption that there is a reasonable 

12 basis for believing that such person or group or class 

13 of persons may fail or may have failed to comply 

14 with provisions of internal revenue law. 

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

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

17 requirements of paragraph (1), the Secretary 

18 may issue a summons described in paragraph 

19 (1) if the summons— 

20 ‘‘(i) relates to a project which is ap21 proved under subparagraph (B), 

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

23 member of the group or class established 

24 under subparagraph (B)(i), and 


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

2 date on which such project was approved 

3 under subparagraph (B). 

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

5 may only be approved under this subparagraph 

6 after a court proceeding in which the Secretary 

7 establishes that— 

8 ‘‘(i) any summons issues with respect 

9 to the project will be issued to a member 

10 of an ascertainable group or class of per11 sons, and 

12 ‘‘(ii) any summons issued with respect 

13 to such project will meet the requirements 

14 of paragraph (1). 

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

16 the Secretary, the court may extend the time 

17 for issuing such summonses under subpara18 graph (A)(i) for additional 3-year periods, but 

19 only if the court continues to exercise oversight 

20 of such project under subparagraph (D). 

21 ‘‘(D) ONGOING COURT OVERSIGHT.—Dur22 ing any period in which the Secretary is author23 ized to issue summonses in relation to a project 

24 approved under subparagraph (B) (including 

25 during any extension under subparagraph (C)), 


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1 the Secretary shall report annually to the court 

2 on the use of such authority, provide copies of 

3 all summonses with such report, and comply 

4 with the court’s direction with respect to the 

5 issuance of any John Doe summons under such 

6 project.’’. 

7 (b) JURISDICTION OF COURT.— 

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

9 7609(h) is amended by inserting after the first sen10 tence the following new sentence: ‘‘Any United 

11 States district court in which a member of the group 

12 or class to which a summons may be issued resides 

13 or is found shall have jurisdiction to hear and deter14 mine the approval of a project under subsection 

15 (f)(2)(B).’’. 

16 (2) CONFORMING AMENDMENT.—The first sen17 tence of section 7609(h)(1) is amended by striking 

18 ‘‘(f)’’ and inserting ‘‘(f)(1)’’. 

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

20 this section shall apply to summonses issued after the date 

21 of the enactment of this Act. 

22 (d) GAO REPORT.—Not later than the date which 

23 is 5 years after the date of the enactment of this Act, 

24 the Comptroller General of the United States shall issue 

25 a report on the implementation of section 7609(f)(2) of 


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1 the Internal Revenue Code of 1986, as added by this sec2 tion. 

3 SEC. 206. IMPROVING ENFORCEMENT OF FOREIGN FINAN4 CIAL ACCOUNT REPORTING. 

5 (a) CLARIFYING THE CONNECTION OF FOREIGN FI6 NANCIAL ACCOUNT REPORTING TO TAX ADMINISTRA7 TION.—Paragraph (4) of section 6103(b) is amended by 

8 adding at the end the following new sentence: 

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

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

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

12 such section 5314), shall be considered related stat13 utes.’’. 

14 (b) SIMPLIFYING THE CALCULATION OF FOREIGN

15 FINANCIAL ACCOUNT REPORTING PENALTIES.—Section 

16 5321(a)(5)(D)(ii) of title 31, United States Code, is 

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

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

19 in the account during the reporting period to which the 

20 violation relates’’. 

21 (c) CLARIFYING THE USE OF SUSPICIOUS ACTIVITY

22 REPORTS UNDER THE BANK SECRECY ACT FOR CIVIL

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

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


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1 criminal enforcement divisions of the Internal Revenue 

2 Service,’’ after ‘‘including’’. 

3 TITLE III—COMBATING TAX 

4 SHELTER PROMOTERS 

5 SEC. 301. PENALTY FOR PROMOTING ABUSIVE TAX SHEL6 TERS. 

7 (a) PENALTY FOR PROMOTING ABUSIVE TAX SHEL8 TERS.—Section 6700 is amended— 

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

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

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

12 through the period in the first sentence of subsection 

13 (a) and inserting ‘‘a penalty determined under sub14 section (b)’’, and 

15 (3) by inserting after subsection (a) the fol16 lowing new subsections: 

17 ‘‘(b) AMOUNT OF PENALTY; CALCULATION OF PEN18 ALTY; LIABILITY FOR PENALTY.— 

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

20 the penalty imposed by subsection (a) shall not ex21 ceed 150 percent of the gross income derived (or to 

22 be derived) from such activity by the person or per23 sons subject to such penalty. 

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

25 amount determined under paragraph (1) shall be 


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1 calculated with respect to each instance of an activ2 ity described in subsection (a), each instance in 

3 which income was derived by the person or persons 

4 subject to such penalty, and each person who par5 ticipated in such an activity. 

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

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

8 such activity, all such persons shall be jointly and 

9 severally liable for the penalty under such sub10 section. 

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

12 any penalty imposed under this section or the payment 

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

14 penalty shall not be considered an ordinary and necessary 

15 expense in carrying on a trade or business for purposes 

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

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

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

19 amended by striking the last sentence. 

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

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

22 enactment of this Act. 

23 SEC. 302. PENALTY FOR AIDING AND ABETTING THE UN24 DERSTATEMENT OF TAX LIABILITY. 

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


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1 (1) by inserting ‘‘the tax liability or’’ after ‘‘re2 spect to,’’ in paragraph (1), 

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

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

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

6 and 

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

8 procurement, or advice or each such’’ before ‘‘docu9 ment’’ in the matter following paragraph (3). 

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

11 6701 is amended to read as follows: 

12 ‘‘(b) AMOUNT OF PENALTY; CALCULATION OF PEN13 ALTY; LIABILITY FOR PENALTY.— 

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

15 the penalty imposed by subsection (a) shall not ex16 ceed 150 percent of the gross income derived (or to 

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

18 or advice provided by the person or persons subject 

19 to such penalty. 

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

21 amount determined under paragraph (1) shall be 

22 calculated with respect to each instance of aid, as23 sistance, procurement, or advice described in sub24 section (a), each instance in which income was de25 rived by the person or persons subject to such penVerDate Mar 15 2010 05:33 Jul 28, 2011 Jkt 099200 PO 00000 Frm 00049 Fmt 6652 Sfmt 6201 E:\BILLS\H2669.IH H2669

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1 alty, and each person who made such an understate2 ment of the liability for tax. 

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

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

5 providing such aid, assistance, procurement, or ad6 vice, all such persons shall be jointly and severally 

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

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

9 amended by adding at the end the following new sub10 section: 

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

12 any penalty imposed under this section or the payment 

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

14 penalty shall not be considered an ordinary and necessary 

15 expense in carrying on a trade or business for purposes 

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

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

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

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

20 enactment of this Act. 

21 SEC. 303. PROHIBITED FEE ARRANGEMENT. 

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

23 Act, is amended— 

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

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


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

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

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

4 (f).’’, and 

5 (3) by inserting after subsection (e) the fol6 lowing new subsection: 

7 ‘‘(f) PROHIBITED FEE ARRANGEMENT.— 

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

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

10 services provided in connection with the internal rev11 enue laws, and the amount of which is calculated ac12 cording to, or is dependent upon, a projected or ac13 tual amount of— 

14 ‘‘(A) tax savings or benefits, or 

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

16 other taxable income, 

17 shall pay a penalty with respect to each such fee ac18 tivity in the amount determined under subsection 

19 (b). 

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

21 carry out the purposes of this subsection and may 

22 provide exceptions for fee arrangements that are in 

23 the public interest.’’. 

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

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


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1 collections made after the date of the enactment of this 

2 Act. 

3 SEC. 304. PREVENTING TAX SHELTER ACTIVITIES BY FI4 NANCIAL INSTITUTIONS. 

5 (a) EXAMINATIONS.— 

6 (1) DEVELOPMENT OF EXAMINATION TECH7 NIQUES.—Each of the Federal banking agencies and 

8 the Commission shall, in consultation with the Inter9 nal Revenue Service, develop examination techniques 

10 to detect potential violations of section 6700 or 6701 

11 of the Internal Revenue Code of 1986, by depository 

12 institutions, brokers, dealers, and investment advis13 ers, as appropriate. 

14 (2) IMPLEMENTATION.—Each of the Federal 

15 banking agencies and the Commission shall imple16 ment the examination techniques developed under 

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

18 institutions, brokers, dealers, or investment advisers 

19 subject to their enforcement authority. Such exam20 ination shall, to the extent possible, be combined 

21 with any examination by such agency otherwise re22 quired or authorized by Federal law. 

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

24 any case in which an examination conducted under this 

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1 ty reveals a potential violation, such agency shall promptly 

2 notify the Internal Revenue Service of such potential viola3 tion for investigation and enforcement by the Internal 

4 Revenue Service, in accordance with applicable provisions 

5 of law. 

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

7 agencies and the Commission shall submit a joint written 

8 report to Congress in 2013 on their progress in preventing 

9 violations of sections 6700 and 6701 of the Internal Rev10 enue Code of 1986, by depository institutions, brokers, 

11 dealers, and investment advisers, as appropriate. 

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

13 (1) the terms ‘‘broker’’, ‘‘dealer’’, and ‘‘invest14 ment adviser’’ have the same meanings as in section 

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

16 78c); 

17 (2) the term ‘‘Commission’’ means the Securi18 ties and Exchange Commission; 

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

20 same meaning as in section 3(c) of the Federal De21 posit Insurance Act (12 U.S.C. 1813(c)); 

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

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

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


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

2 of the Treasury. 

3 SEC. 305. INFORMATION SHARING FOR ENFORCEMENT 

4 PURPOSES. 

5 (a) PROMOTION OF PROHIBITED TAX SHELTERS OR

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

7 by adding at the end the following new paragraph: 

8 ‘‘(7) DISCLOSURE OF RETURNS AND RETURN

9 INFORMATION RELATED TO PROMOTION OF PROHIB10 ITED TAX SHELTERS OR TAX AVOIDANCE

11 SCHEMES.— 

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

13 by the Secretary of a written request which 

14 meets the requirements of subparagraph (B) 

15 from the head of the United States Securities 

16 and Exchange Commission, an appropriate 

17 Federal banking agency as defined under sec18 tion 1813(q) of title 12, United States Code, or 

19 the Public Company Accounting Oversight 

20 Board, a return or return information shall be 

21 disclosed to such requestor’s officers and em22 ployees who are personally and directly engaged 

23 in an investigation, examination, or proceeding 

24 by such requestor to evaluate, determine, penal25 ize, or deter conduct by a financial institution, 


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1 issuer, or public accounting firm, or associated 

2 person, in connection with a potential or actual 

3 violation of section 6700 (promotion of abusive 

4 tax shelters), 6701 (aiding and abetting under5 statement of tax liability), or activities related 

6 to promoting or facilitating inappropriate tax 

7 avoidance or tax evasion. Such disclosure shall 

8 be solely for use by such officers and employees 

9 in such investigation, examination, or pro10 ceeding. In the discretion of the Secretary, such 

11 disclosure may take the form of the participa12 tion of Internal Revenue Service employees in a 

13 joint investigation, examination, or proceeding 

14 with the Securities Exchange Commission, Fed15 eral banking agency, or Public Company Ac16 counting Oversight Board. 

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

18 the requirements of this subparagraph if it sets 

19 forth— 

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

21 examination, or proceeding, 

22 ‘‘(ii) the statutory authority under 

23 which such investigation, examination, or 

24 proceeding is being conducted, 


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1 ‘‘(iii) the name or names of the finan2 cial institution, issuer, or public accounting 

3 firm to which such return information re4 lates, 

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

6 which such return information relates, and 

7 ‘‘(v) the specific reason or reasons 

8 why such disclosure is, or may be, relevant 

9 to such investigation, examination or pro10 ceeding. 

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

12 purposes of this paragraph, the term ‘financial 

13 institution’ means a depository institution, for14 eign bank, insured institution, industrial loan 

15 company, broker, dealer, investment company, 

16 investment advisor, or other entity subject to 

17 regulation or oversight by the United States Se18 curities and Exchange Commission or an appro19 priate Federal banking agency.’’. 

20 (b) FINANCIAL AND ACCOUNTING FRAUD INVESTIGA21 TIONS.—Section 6103(i) is amended by adding at the end 

22 the following new paragraph: 

23 ‘‘(9) DISCLOSURE OF RETURNS AND RETURN

24 INFORMATION FOR USE IN FINANCIAL AND AC25 COUNTING FRAUD INVESTIGATIONS.— 


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

2 by the Secretary of a written request which 

3 meets the requirements of subparagraph (B) 

4 from the head of the United States Securities 

5 and Exchange Commission or the Public Com6 pany Accounting Oversight Board, a return or 

7 return information shall be disclosed to such re8 questor’s officers and employees who are per9 sonally and directly engaged in an investigation, 

10 examination, or proceeding by such requester to 

11 evaluate the accuracy of a financial statement 

12 or report, or to determine whether to require a 

13 restatement, penalize, or deter conduct by an 

14 issuer, investment company, or public account15 ing firm, or associated person, in connection 

16 with a potential or actual violation of auditing 

17 standards or prohibitions against false or mis18 leading statements or omissions in financial 

19 statements or reports. Such disclosure shall be 

20 solely for use by such officers and employees in 

21 such investigation, examination, or proceeding. 

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

23 the requirements of this subparagraph if it sets 

24 forth— 


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

2 examination, or proceeding, 

3 ‘‘(ii) the statutory authority under 

4 which such investigation, examination, or 

5 proceeding is being conducted, 

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

7 investment company, or public accounting 

8 firm to which such return information re9 lates, 

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

11 which such return information relates, and 

12 ‘‘(v) the specific reason or reasons 

13 why such disclosure is, or may be, relevant 

14 to such investigation, examination or pro15 ceeding.’’. 

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

17 this section shall apply to disclosures and to information 

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

20 SEC. 306. DISCLOSURE OF INFORMATION TO CONGRESS. 

21 (a) DISCLOSURE BY TAX RETURN PREPARER.— 

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

23 7216(b)(1) is amended to read as follows: 

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

25 documents, if clearly identified: 


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

2 or local court of record. 

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

4 or State grand jury. 

5 ‘‘(iii) An administrative order, sum6 mons, or subpoena which is issued in the 

7 performance of its duties by— 

8 ‘‘(I) any Federal agency, includ9 ing Congress or any committee or 

10 subcommittee thereof, or 

11 ‘‘(II) any State agency, body, or 

12 commission charged under the laws of 

13 the State or a political subdivision of 

14 the State with the licensing, registra15 tion, or regulation of tax return pre16 parers.’’. 

17 (2) EFFECTIVE DATE.—The amendment made 

18 by this subsection shall apply to disclosures made 

19 after the date of the enactment of this Act pursuant 

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

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

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

23 ‘‘(2) INSPECTION BY CONGRESS.— 

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

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1 committee of Congress, copies of documents re2 lated to a determination by the Secretary to 

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

4 exemption from taxation under section 501 

5 shall be provided to such committee or sub6 committee, including any application, notice of 

7 status, or supporting information provided by 

8 such organization to the Internal Revenue Serv9 ice; any letter, analysis, or other document pro10 duced by or for the Internal Revenue Service 

11 evaluating, determining, explaining, or relating 

12 to the tax exempt status of such organization 

13 (other than returns, unless such returns are 

14 available to the public under this section or sec15 tion 6103 or 6110); and any communication be16 tween the Internal Revenue Service and any 

17 other party relating to the tax exempt status of 

18 such organization. 

19 ‘‘(B) ADDITIONAL INFORMATION.—Section 

20 6103(f) shall apply with respect to— 

21 ‘‘(i) the application for exemption of 

22 any organization described in subsection 

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

24 from taxation under section 501(a) for any 

25 taxable year and any application referred 


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1 to in subparagraph (B) of subsection 

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

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

4 the possession of the Secretary and which 

5 relate to such application, 

6 as if such papers constituted returns.’’. 

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

8 this section shall apply to disclosures and to information 

9 and document requests made after the date of the enact10 ment of this Act. 

11 SEC. 307. TAX OPINION STANDARDS FOR TAX PRACTI12 TIONERS. 

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

14 amended to read as follows: 

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

16 standards applicable to the rendering of written advice 

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

18 arrangement, or other transaction which has a potential 

19 for tax avoidance or evasion. Such standards shall ad20 dress, but not be limited to, the following issues: 

21 ‘‘(1) Independence of the practitioner issuing 

22 such written advice from persons promoting, mar23 keting, or recommending the subject of the advice. 

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1 sult in such collaborating parties having a joint fi2 nancial interest in the subject of the advice. 

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

4 would impair auditor independence. 

5 ‘‘(4) For written advice issued by a firm, stand6 ards for reviewing the advice and ensuring the con7 sensus support of the firm for positions taken. 

8 ‘‘(5) Reliance on reasonable factual representa9 tions by the taxpayer and other parties. 

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

11 practitioner for the written advice. 

12 ‘‘(7) Preventing practitioners and firms from 

13 aiding or abetting the understatement of tax liability 

14 by clients. 

15 ‘‘(8) Banning the promotion of potentially abu16 sive or illegal tax shelters.’’. 

Æ 


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