I 
110TH CONGRESS 
1ST SESSION H. R. 2136 
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 
MAY 3, 2007 
Mr. DOGGETT (for himself, Mr. EMANUEL, Mr. LEVIN, Ms. DELAURO, Ms. 
LEE, Mr. MCGOVERN, Mr. PASCRELL, Ms. SCHAKOWSKY, Mr. STARK, 
Ms. SUTTON, Mr. VAN HOLLEN, Mr. GRIJALVA, Mr. LYNCH, Mr. NAD-
LER, Mr. LEWIS of Georgia, Mr. FATTAH, Mr. STUPAK, Ms. KAPTUR, 
Mr. RUSH, Mr. MCNULTY, Mr. GEORGE MILLER of California, Mr. AN-
DREWS, Ms. SOLIS, Ms. WATSON, Mr. PAYNE, Mr. COSTELLO, Mr. CON-
YERS, Ms. SLAUGHTER, Mr. FARR, Mr. FILNER, Mr. HINCHEY, Mr. 
CLEAVER, Mr. JOHNSON of Georgia, Mr. WELCH of Vermont, Mr. 
ELLISON, Mr. BISHOP of New York, Mr. NEAL of Massachusetts, Mr. 
TIERNEY, Mr. DEFAZIO, Mr. ABERCROMBIE, and Ms. CLARKE) intro-
duced the following bill; which was referred to the Committee on Ways 
and Means, and in addition to the Committees on Financial Services and 
the Judiciary, for a period to be subsequently determined by the Speaker, 
in each case for consideration of such provisions as fall within the juris-
diction 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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE; ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Stop Tax Haven Abuse Act’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; etc. 
TITLE I—DETERRING THE USE OF TAX HAVENS FOR TAX 
EVASION 
Sec. 101. Establishing presumptions for entities and transactions involving off-
shore secrecy jurisdictions. 
Sec. 102. Authorizing special measures against foreign jurisdictions, financial 
institutions, and others that impede United States tax enforce-
ment. 
Sec. 103. Allowing more time for investigations involving offshore secrecy juris-
dictions. 
Sec. 104. Reporting United States beneficial owners of foreign owned financial 
accounts. 
Sec. 105. Preventing misuse of foreign trusts for tax evasion. 
Sec. 106. Limitation on legal opinion protection from penalties with respect to 
transactions involving offshore secrecy jurisdictions. 
TITLE II—OTHER MEASURES TO COMBAT TAX HAVEN AND TAX 
SHELTER ABUSES 
Sec. 201. Penalty for failing to disclose offshore holdings. 
Sec. 202. Deadline for anti-money laundering rule for hedge funds and private 
equity funds. 
Sec. 203. Anti-money laundering requirements for formation agents. 
Sec. 204. Strengthening summons in cases involving offshore secrecy jurisdic-
tions. 
Sec. 205. Improving enforcement of foreign financial account reporting. 
TITLE III—COMBATING TAX SHELTER PROMOTERS 
Sec. 301. Penalty for promoting abusive tax shelters. 
Sec. 302. Penalty for aiding and abetting the understatement of tax liability. 
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Sec. 303. Prohibition on tax shelter patents. 
Sec. 304. Prohibited fee arrangement. 
Sec. 305. Preventing tax shelter activities by financial institutions. 
Sec. 306. Information sharing for enforcement purposes. 
Sec. 307. Disclosure of information to Congress. 
Sec. 308. Tax opinion standards for tax practitioners. 
Sec. 309. Denial of deduction for certain fines, penalties, and other amounts. 
TITLE IV—REQUIRING ECONOMIC SUBSTANCE 
Sec. 401. Clarification of economic substance doctrine. 
Sec. 402. Penalty for understatements attributable to transactions lacking eco-
nomic substance, etc. 
Sec. 403. Denial of deduction for interest on underpayments attributable to 
noneconomic substance transactions. 
TITLE I—DETERRING THE USE 
OF TAX HAVENS FOR TAX 
EVASION 
SEC. 101. ESTABLISHING PRESUMPTIONS FOR ENTITIES 
AND TRANSACTIONS INVOLVING OFFSHORE 
SECRECY JURISDICTIONS. 
(a) PRESUMPTIONS FOR INTERNAL REVENUE CODE 
OF 1986.— 
(1) IN GENERAL.—Chapter 76 is amended by 
inserting after section 7491 the following new sub-
chapter: 
‘‘Subchapter F—Presumptions for Certain 
Legal Proceedings 
‘‘Sec. 7492. Presumptions pertaining to entities and transactions involving off-
shore secrecy jurisdictions. 
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‘‘SEC. 7492. PRESUMPTIONS PERTAINING TO ENTITIES AND 
TRANSACTIONS INVOLVING OFFSHORE SE-
CRECY JURISDICTIONS. 
‘‘(a) CONTROL.—For purposes of any United States 
civil judicial or administrative proceeding to determine or 
collect tax, there shall be a rebuttable presumption that 
a United States person (other than an entity with shares 
regularly traded on an established securities market) who 
directly or indirectly formed, transferred assets to, was a 
beneficiary of, or received money or property or the use 
thereof from an entity, including a trust, corporation, lim-
ited liability company, partnership, or foundation (other 
than an entity with shares regularly traded on an estab-
lished securities market), formed, domiciled, or operating 
in an offshore secrecy jurisdiction, exercised control over 
such entity. The presumption of control created by this 
subsection shall not be applied to prevent the Secretary 
from determining or arguing the absence of control. 
‘‘(b) TRANSFERS OF INCOME.—For purposes of any 
United States civil judicial or administrative proceeding 
to determine or collect tax, there shall be a rebuttable pre-
sumption that any amount or thing of value received by 
a United States person (other than an entity with shares 
regularly traded on an established securities market) di-
rectly or indirectly from an account or entity (other than 
an entity with shares regularly traded on an established 
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securities market) in an offshore secrecy jurisdiction, con-
stitutes income of such person taxable in the year of re-
ceipt, and any amount or thing of value paid or trans-
ferred by or on behalf of a United States person (other 
than an entity with shares regularly traded on an estab-
lished securities market) directly or indirectly to an ac-
count or entity (other than an entity with shares regularly 
traded on an established securities market) in any such 
jurisdiction represents previously unreported income of 
such person taxable in the year of the transfer. 
‘‘(c) REBUTTING
THE PRESUMPTIONS.—The pre-
sumptions established in this section may be rebutted only 
by clear and convincing evidence, including detailed docu-
mentary, testimonial, and transactional evidence, estab-
lishing that— 
‘‘(1) in subsection (a), such taxpayer exercised 
no control, directly or indirectly, over such entity at 
the time in question, and 
‘‘(2) in subsection (b), such amounts or things 
of value did not represent income related to such 
United States person. 
Any court having jurisdiction of a civil proceeding in which 
control of such an offshore entity or the income character 
of such receipts or amounts transferred is an issue shall 
prohibit the introduction by the taxpayer of any foreign 
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