(2) DEFINITION OF NON-FATCA INSTITUTION.— 
Section 7701(a) is amended by adding at the end 
the following new paragraph: 
‘‘(51) NON-FATCA
INSTITUTION.—The term 
‘non-FATCA institution’ means any financial insti-
tution that does not meet the reporting requirements 
of section 1471(b).’’. 
(3) PRESUMPTIONS FOR SECURITIES LAW PUR-
POSES.—Section 21 of the Securities Exchange Act 
of 1934 (15 U.S.C. 78u) is amended by adding at 
the end the following new subsection: 
‘‘(j) PRESUMPTIONS PERTAINING TO CONTROL AND 
BENEFICIAL OWNERSHIP.— 
‘‘(1) CONTROL.—For purposes of any civil judi-
cial or administrative proceeding under this title, 
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, trans-
ferred assets to, was a beneficiary of, had a bene-
ficial interest in, or received money or property or 
the use thereof from an entity, including a trust, 
corporation, limited liability company, partnership, 
or foundation (other than an entity with shares reg-
ularly traded on an established securities market), 
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that holds an account, or in any other manner has 
assets, in a non-FATCA institution (as defined in 
section 7701(a)(51) of the Internal Revenue Code of 
1986), exercised control over such entity. The pre-
sumption of control created by this paragraph shall 
not be applied to prevent the Commission from de-
termining or arguing the absence of control. 
‘‘(2) BENEFICIAL OWNERSHIP.—For purposes 
of any civil judicial or administrative proceeding 
under this title, there shall be a rebuttable presump-
tion that securities that are nominally owned by an 
entity, including a trust, corporation, limited liability 
company, partnership, or foundation (other than an 
entity with shares regularly traded on an established 
securities market), and that are held in a non- 
FATCA institution (as so defined), are beneficially 
owned by any United States person (other than an 
entity with shares regularly traded on an established 
securities market) who directly or indirectly exer-
cised control over such entity. The presumption of 
beneficial ownership created by this paragraph shall 
not be applied to prevent the Commission from de-
termining or arguing the absence of beneficial own-
ership.’’. 
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(4) PRESUMPTION FOR REPORTING PURPOSES 
RELATING TO FOREIGN FINANCIAL ACCOUNTS.—Sec-
tion 5314 of title 31, United States Code, is amend-
ed by adding at the end the following new sub-
section: 
‘‘(d) REBUTTABLE PRESUMPTION.—For purposes of 
this section, there shall be a rebuttable presumption that 
any account with a non-FATCA institution (as defined in 
section 7701(a)(51) of the Internal Revenue Code of 
1986) contains funds in an amount that is at least suffi-
cient to require a report prescribed by regulations under 
this section.’’. 
(5) REGULATORY AUTHORITY.—Not later than 
180 days after the date of the enactment of this Act, 
the Secretary of the Treasury and the Chairman of 
the Securities and Exchange Commission shall each 
adopt regulations or other guidance necessary to im-
plement the amendments made by this subsection. 
The Secretary and the Chairman may by regulation 
or guidance provide that the presumption of control 
shall not extend to particular classes of transactions, 
such as corporate reorganizations or transactions 
below a specified dollar threshold, if either deter-
mines that applying such amendments to such trans-
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actions is not necessary to carry out the purposes of 
such amendments. 
(h) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date which is 180 days 
after the date of the enactment of this Act, whether or 
not regulations are issued under subsection (g)(5). 
SEC. 103. TREATMENT OF FOREIGN CORPORATIONS MAN-
AGED AND CONTROLLED IN THE UNITED 
STATES AS DOMESTIC CORPORATIONS. 
(a) IN GENERAL.—Section 7701 is amended by re-
designating subsection (p) as subsection (q) and by insert-
ing after subsection (o) the following new subsection: 
‘‘(p) CERTAIN CORPORATIONS MANAGED AND CON-
TROLLED IN THE UNITED STATES TREATED AS DOMES-
TIC FOR INCOME TAX.— 
‘‘(1) IN GENERAL.—Notwithstanding subsection 
(a)(4), in the case of a corporation described in 
paragraph (2) if— 
‘‘(A) the corporation would not otherwise 
be treated as a domestic corporation for pur-
poses of this title, but 
‘‘(B) the management and control of the 
corporation occurs, directly or indirectly, pri-
marily within the United States, 
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then, solely for purposes of chapter 1 (and any other 
provision of this title relating to chapter 1), the cor-
poration shall be treated as a domestic corporation. 
‘‘(2) CORPORATION DESCRIBED.— 
‘‘(A) IN GENERAL.—A corporation is de-
scribed in this paragraph if— 
‘‘(i) the stock of such corporation is 
regularly traded on an established securi-
ties market, or 
‘‘(ii) the aggregate gross assets of 
such corporation (or any predecessor there-
of), including assets under management 
for investors, whether held directly or indi-
rectly, at any time during the taxable year 
or 
any 
preceding 
taxable 
year 
is 
$50,000,000 or more. 
‘‘(B) GENERAL
EXCEPTION.—A corpora-
tion shall not be treated as described in this 
paragraph if— 
‘‘(i) such corporation was treated as a 
corporation described in this paragraph in 
a preceding taxable year, 
‘‘(ii) such corporation— 
‘‘(I) is not regularly traded on an 
established securities market, and 
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‘‘(II) has, and is reasonably ex-
pected to continue to have, aggregate 
gross assets (including assets under 
management for investors, whether 
held directly or indirectly) of less than 
$50,000,000, and 
‘‘(iii) the Secretary grants a waiver to 
such corporation under this subparagraph. 
‘‘(C) EXCEPTION
FROM
GROSS
ASSETS 
TEST.—Subparagraph (A)(ii) shall not apply to 
a corporation which is a controlled foreign cor-
poration (as defined in section 957) and which 
is a member of an affiliated group (as defined 
section 1504, but determined without regard to 
section 1504(b)(3)) the common parent of 
which— 
‘‘(i) is a domestic corporation (deter-
mined without regard to this subsection), 
and 
‘‘(ii) has substantial assets (other 
than cash and cash equivalents and other 
than stock of foreign subsidiaries) held for 
use in the active conduct of a trade or 
business in the United States. 
‘‘(3) MANAGEMENT AND CONTROL.— 
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viduals exercise the day-to-day responsibil-
ities of the corporation described in clause 
(i). 
‘‘(C) CORPORATIONS PRIMARILY HOLDING 
INVESTMENT
ASSETS.—Such regulations shall 
also provide that the management and control 
of a corporation shall be treated as occurring 
primarily within the United States if— 
‘‘(i) the assets of such corporation (di-
rectly or indirectly) consist primarily of as-
sets being managed on behalf of investors, 
and 
‘‘(ii) decisions about how to invest the 
assets are made in the United States.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning on or 
after the date which is 2 years after the date of the enact-
ment of this Act, whether or not regulations are issued 
under section 7701(p)(3) of the Internal Revenue Code 
of 1986, as added by this section. 
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SEC. 104. REPORTING UNITED STATES BENEFICIAL OWN-
ERS OF FOREIGN OWNED FINANCIAL AC-
COUNTS. 
(a) IN GENERAL.—Subpart B of part III of sub-
chapter A of chapter 61 is amended by inserting after sec-
tion 6045B the following new sections: 
‘‘SEC. 6045C. RETURNS REGARDING UNITED STATES BENE-
FICIAL OWNERS OF FINANCIAL ACCOUNTS 
LOCATED IN THE UNITED STATES AND HELD 
IN THE NAME OF A FOREIGN ENTITY. 
‘‘(a) REQUIREMENT OF RETURN.—If— 
‘‘(1) any withholding agent under sections 1441 
and 1442 has the control, receipt, custody, disposal, 
or payment of any amount constituting gross income 
from sources within the United States of any foreign 
entity, including a trust, corporation, limited liability 
company, partnership, or foundation (other than an 
entity with shares regularly traded on an established 
securities market), and 
‘‘(2) such withholding agent determines for pur-
poses of titles 14, 18, or 31 of the United States 
Code that a United States person has any beneficial 
interest in the foreign entity or in the account in 
such entity’s name (hereafter in this section referred 
to as ‘United States beneficial owner’), 
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then the withholding agent shall make a return according 
to the forms or regulations prescribed by the Secretary. 
‘‘(b) REQUIRED INFORMATION.—For purposes of 
subsection (a) the information required to be included on 
the return shall include— 
‘‘(1) the name, address, and, if known, the tax-
payer identification number of the United States 
beneficial owner, 
‘‘(2) the known facts pertaining to the relation-
ship of such United States beneficial owner to the 
foreign entity and the account, 
‘‘(3) the gross amount of income from sources 
within the United States (including gross proceeds 
from brokerage transactions), and 
‘‘(4) such other information as the Secretary 
may by forms or regulations provide. 
‘‘(c) STATEMENTS TO BE FURNISHED TO BENE-
FICIAL OWNERS WITH RESPECT TO WHOM INFORMATION 
IS REQUIRED TO BE REPORTED.—A withholding agent 
required to make a return under subsection (a) shall fur-
nish to each United States beneficial owner whose name 
is required to be set forth in such return a statement 
showing— 
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‘‘(1) the name, address, and telephone number 
of the information contact of the person required to 
make such return, and 
‘‘(2) the information required to be shown on 
such return with respect to such United States bene-
ficial owner. 
The written statement required under the preceding sen-
tence shall be furnished to the United States beneficial 
owner on or before January 31 of the year following the 
calendar year for which the return under subsection (a) 
was required to be made. In the event the person filing 
such return does not have a current address for the United 
States beneficial owner, such written statement may be 
mailed to the address of the foreign entity. 
‘‘SEC. 6045D. RETURNS BY FINANCIAL INSTITUTIONS RE-
GARDING ESTABLISHMENT OF ACCOUNTS IN 
NON-FATCA INSTITUTIONS. 
‘‘(a) REQUIREMENT OF RETURN.—Any financial in-
stitution directly or indirectly opening a bank, brokerage, 
or other financial account for or on behalf of an offshore 
entity, including a trust, corporation, limited liability com-
pany, partnership, or foundation (other than an entity 
with shares regularly traded on an established securities 
market), in a non-FATCA institution (as defined in sec-
tion 7701(a)(51)) at the direction of, on behalf of, or for 
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the benefit of a United States person shall make a return 
according to the forms or regulations prescribed by the 
Secretary. 
‘‘(b) REQUIRED INFORMATION.—For purposes of 
subsection (a) the information required to be included on 
the return shall include— 
‘‘(1) the name, address, and taxpayer identifica-
tion number of such United States person, 
‘‘(2) the name and address of the financial in-
stitution at which a financial account is opened, the 
type of account, the account number, the name 
under which the account was opened, and the 
amount of the initial deposit, 
‘‘(3) if the account is held in the name of an 
entity, the name and address of such entity, the type 
of entity, and the name and address of any company 
formation agent or other professional employed to 
form or acquire the entity, and 
‘‘(4) such other information as the Secretary 
may by forms or regulations provide. 
‘‘(c) STATEMENTS TO BE FURNISHED TO UNITED 
STATES PERSONS WITH RESPECT TO WHOM INFORMA-
TION IS REQUIRED TO BE REPORTED.—A financial insti-
tution required to make a return under subsection (a) 
shall furnish to each United States person whose name 
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is required to be set forth in such return a statement 
showing— 
‘‘(1) the name, address, and telephone number 
of the information contact of the person required to 
make such return, and 
‘‘(2) the information required to be shown on 
such return with respect to such United States per-
son. 
The written statement required under the preceding sen-
tence shall be furnished to such United States person on 
or before January 31 of the year following the calendar 
year for which the return under subsection (a) was re-
quired to be made. 
‘‘(d) EXEMPTION.—The Secretary may by regula-
tions exempt any class of United States persons or any 
class of accounts or entities from the requirements of this 
section if the Secretary determines that applying this sec-
tion to such persons, accounts, or entities is not necessary 
to carry out the purposes of this section.’’. 
(b) PENALTIES.— 
(1) 
RETURNS.—Section 
6724(d)(1)(B) 
is 
amended by striking ‘‘or’’ at the end of clause 
(xxiv), by striking ‘‘and’’ at the end of clause (xxv), 
and by adding after clause (xxv) the following new 
clauses: 
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‘‘(xxvi) section 6045C(a) (relating to 
returns regarding United States beneficial 
owners of financial accounts located in the 
United States and held in the name of a 
foreign entity), or 
‘‘(xxvii) section 6045D(a) (relating to 
returns by financial institutions regarding 
establishment of accounts at non-FATCA 
institutions), and’’. 
(2) PAYEE STATEMENTS.—Section 6724(d)(2) 
is amended by striking ‘‘or’’ at the end of subpara-
graph (GG), by striking the period at the end of 
subparagraph (HH), and by inserting after subpara-
graph (HH) the following new subparagraphs: 
‘‘(II) section 6045C(c) (relating to returns 
regarding United States beneficial owners of fi-
nancial accounts located in the United States 
and held in the name of a foreign entity), 
‘‘(JJ) section 6045D(c) (relating to re-
turns by financial institutions regarding estab-
lishment of accounts at non-FATCA institu-
tions).’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart B of part III of subchapter A of chapter 61 
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is amended by inserting after the item relating to section 
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 ac-
counts at non-FATCA institutions.’’. 
(d) ADDITIONAL PENALTIES.— 
(1) ADDITIONAL PENALTIES ON BANKS.—Sec-
tion 5239(b)(1) of the Revised Statutes (12 U.S.C. 
93(b)(1)) is amended by inserting ‘‘or any of the 
provisions of section 6045D of the Internal Revenue 
Code of 1986,’’ after ‘‘any regulation issued pursu-
ant to,’’. 
(2) ADDITIONAL
PENALTIES
ON
SECURITIES 
FIRMS.—Section 21(d)(3)(A) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78u(d)(3)(A)) is 
amended by inserting ‘‘any of the provisions of sec-
tion 6045D of the Internal Revenue Code of 1986,’’ 
after ‘‘the rules or regulations thereunder,’’. 
(e) REGULATORY
AUTHORITY
AND
EFFECTIVE 
DATE.— 
(1) REGULATORY AUTHORITY.—Not later than 
180 days after the date of the enactment of this Act, 
the Secretary of the Treasury shall adopt regula-
tions, forms, or other guidance necessary to imple-
ment this section. 
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(2) EFFECTIVE DATE.—Section 6045C of the 
Internal Revenue Code of 1986 (as added by this 
section) and the amendment made by subsection 
(d)(1) shall take effect with respect to amounts paid 
into foreign owned accounts located in the United 
States after December 31 of the year of the date of 
the enactment of this Act. Section 6045D of such 
Code (as so added) and the amendment made by 
subsection (d)(2) shall take effect with respect to ac-
counts opened after December 31 of the year of the 
date of the enactment of this Act. 
SEC. 105. CREDIT DEFAULT SWAP PAYMENTS MADE FROM 
THE 
UNITED 
STATES 
TO 
PERSONS 
OFF-
SHORE. 
(a) TAX ON CREDIT DEFAULT SWAP PAYMENTS RE-
CEIVED
BY FOREIGN PERSONS.—Section 871(a)(1) is 
amended— 
(1) by inserting ‘‘credit default swap pay-
ments,’’ after ‘‘annuities,’’ in subparagraph (A), and 
(2) by adding at the end the following new sen-
tence: ‘‘In the case of credit default swap payments, 
the source of a credit default swap payment is deter-
mined by reference to the location of the payor.’’. 
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(b) TAX ON CREDIT DEFAULT SWAP PAYMENTS RE-
CEIVED BY FOREIGN CORPORATIONS.—Section 881(a) is 
amended— 
(1) by inserting ‘‘credit default swap pay-
ments,’’ after ‘‘annuities,’’ in paragraph (1), and 
(2) by adding at the end the following new sen-
tence: ‘‘In the case of credit default swap payments, 
the source of a credit default swap payment is deter-
mined by reference to the location of the payor.’’. 
SEC. 106. TAX ON INCOME OF CONTROLLED FOREIGN COR-
PORATION DEPOSITED IN FINANCIAL AC-
COUNT LOCATED IN THE UNITED STATES. 
Section 952(a) is amended by adding at the end the 
following 
new 
sentence: 
‘‘Notwithstanding 
section 
956(c)(2)(A), any property (as defined in section 317(a)) 
of such controlled foreign corporation that is deposited 
and maintained, directly or indirectly, for or on behalf of 
such corporation in a financial account located in the 
United States, including in a correspondent account of a 
financial institution, is a constructive distribution with re-
spect to the stock which such United States shareholder 
owns.’’. 
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TITLE II—OTHER MEASURES TO 
COMBAT TAX HAVEN AND TAX 
SHELTER ABUSES 
SEC. 201. COUNTRY-BY-COUNTRY REPORTING. 
(a) IN GENERAL.—Section 13 of the Securities Ex-
change Act of 1934 (15 U.S.C. 78m) is amended by add-
ing at the end the following new subsection: 
‘‘(r) DISCLOSURE OF FINANCIAL PERFORMANCE ON 
A COUNTRY-BY-COUNTRY BASIS.— 
‘‘(1) DEFINITIONS.—In this subsection— 
‘‘(A) the term ‘issuer group’ shall mean 
the issuer, each subsidiary of the issuer, and 
each entity under the control of the issuer; 
‘‘(B) the term ‘country of operation’ shall 
mean each country in which a member of the 
issuer group is incorporated or organized, or 
maintains employees or conducts business ac-
tivities; and 
‘‘(C) the term ‘world-wide allocation of 
group members’ shall mean each member of the 
issuer group listed according to their country of 
operation. 
‘‘(2) COUNTRY-BY-COUNTRY REPORTING.—The 
Commission shall issue rules that require each issuer 
to include in an annual report filed by the issuer 
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‘‘(ii) after taking into account any tax 
deductions, tax credits, tax forgiveness, or 
other tax benefits or waivers, total amount 
of tax paid from the treasury of the mem-
ber of the issuer group to the government 
of each country of operation during the 
covered period; and 
‘‘(iii) such other financial information 
as the Commission may determine is nec-
essary or appropriate to inform the public 
of the tax obligations of and payments by 
each member of the issuer group; and 
‘‘(E) such other financial information as 
the Commission may determine is necessary or 
appropriate in the public interest or for the pro-
tection of investors.’’. 
(b) RULEMAKING.— 
(1) DEADLINES.—Not later than 180 days 
after the date of the enactment of this Act, the 
Commission shall issue a proposed rule to carry out 
this section and, not later than 270 days after the 
date of the enactment of this Act, shall issue a final 
rule to carry out this section. 
(2) CONSULTATION.—In issuing the rules under 
this section, the Commission shall consult with the 
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Secretary of the Treasury and the Commissioner of 
Internal Revenue and, to the extent practicable and 
in furtherance of its obligation to protect investors, 
shall issue rules that support Federal efforts to re-
duce offshore tax evasion and abuses. 
(3) INTERACTIVE
DATA
FORMAT.—The rules 
issued under this section shall require that the infor-
mation provided by issuers in their annual reports 
be submitted in an interactive data format as pro-
vided in section 13(q)(2)(D) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78m(q)(2)(D)), and 
to the extent practicable, the Commission shall make 
available online, to the public, a compilation of such 
information. 
(4) AGGREGATE DATA.—The rules may allow 
issuers to provide the financial information required 
under section 13(r) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78m(r)), as added by this sec-
tion, aggregated at the level of each country of oper-
ation instead of with respect to each member of the 
issuer group individually, provided that the Commis-
sion retains the authority, at its discretion, to re-
quire further disaggregation. 
(5) EFFECTIVE DATE.—Each issuer shall be re-
quired to comply with the requirements of section 
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13(r) of the Securities Exchange Act of 1934 (15 
U.S.C. 78m(r)), as added by this section, not later 
than the date on which the issuer must file with the 
Commission its first annual report that is due not 
later than 1 year after the date on which the Com-
mission issues a final rule under this section. 
SEC. 202. PENALTY FOR FAILING TO DISCLOSE OFFSHORE 
HOLDINGS. 
(a) SECURITIES EXCHANGE ACT OF 1934.—Section 
21(d)(3)(B) of the Securities Exchange Act of 1934 (15 
U.S.C. 78u(d)(3)(B)) is amended by adding at the end 
the following: 
‘‘(iv) 
FOURTH
TIER.—Notwithstanding 
clauses (i), (ii), and (iii), the amount of the 
penalty for each such violation shall not exceed 
$1,000,000 for any person if the violation de-
scribed in subparagraph (A) involved a knowing 
failure to disclose any holding or transaction in-
volving equity or debt instruments of an issuer 
and known by such person to involve a foreign 
entity, including any trust, corporation, limited 
liability company, partnership, or foundation 
that is directly or indirectly controlled by such 
person, and which would have been otherwise 
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subject to disclosure by such person under this 
title.’’. 
(b) SECURITIES ACT OF 1933.—Section 20(d)(2) of 
the Securities Act of 1933 (15 U.S.C. 77t(d)(2)) is 
amended by adding at the end the following: 
‘‘(D) 
FOURTH
TIER.—Notwithstanding 
subparagraphs (A), (B), and (C), the amount of 
penalty for each such violation shall not exceed 
$1,000,000 for any person, if the violation de-
scribed in paragraph (1) involved a knowing 
failure to disclose any holding or transaction in-
volving equity or debt instruments of an issuer 
and known by such person to involve a foreign 
entity, including any trust, corporation, limited 
liability company, partnership, or foundation, 
directly or indirectly controlled by such person, 
and which would have been otherwise subject to 
disclosure by such person under this title.’’. 
(c) INVESTMENT COMPANY ACT OF 1940.—Section 
9(d)(2) of the Investment Company Act of 1940 (15 
U.S.C. 80a–9(d)(2)) is amended by adding at the end the 
following: 
‘‘(D) 
FOURTH
TIER.—Notwithstanding 
subparagraphs (A), (B), and (C), the amount of 
penalty for each such violation shall not exceed 
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$1,000,000 for any person, if the violation de-
scribed in paragraph (1) involved a knowing 
failure to disclose any holding or transaction in-
volving equity or debt instruments of an issuer 
and known by such person to involve a foreign 
entity, including any trust, corporation, limited 
liability company, partnership, or foundation, 
directly or indirectly controlled by such person, 
and which would have been otherwise subject to 
disclosure by such person under this title.’’. 
(d) INVESTMENT ADVISERS ACT OF 1940.—Section 
203(i)(2) of the Investment Advisers Act of 1940 (15 
U.S.C. 80b–3(i)(2)) is amended by adding at the end the 
following: 
‘‘(D) 
FOURTH
TIER.—Notwithstanding 
subparagraphs (A), (B), and (C), the amount of 
penalty for each such violation shall not exceed 
$1,000,000 for any person, if the violation de-
scribed in paragraph (1) involved a knowing 
failure to disclose any holding or transaction in-
volving equity or debt instruments of an issuer 
and known by such person to involve a foreign 
entity, including any trust, corporation, limited 
liability company, partnership, or foundation, 
directly or indirectly controlled by such person, 
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and which would have been otherwise subject to 
disclosure by such person under this title.’’. 
SEC. 203. DEADLINE FOR ANTI-MONEY LAUNDERING RULE 
FOR HEDGE FUNDS AND PRIVATE EQUITY 
FUNDS. 
(a) IN GENERAL.— 
(1) PROPOSED RULE.—Not later than 90 days 
after the date of the enactment of this Act, the Sec-
retary of the Treasury, in consultation with the 
Chairman of the Securities and Exchange Commis-
sion and the Chairman of the Commodity Futures 
Trading Commission, shall publish a proposed rule 
in the Federal Register requiring unregistered in-
vestment companies, including hedge funds or pri-
vate equity funds, to establish anti-money laundering 
programs and submit suspicious activity reports 
under subsections (g) and (h) of section 5318 of title 
31, United States Code. 
(2) FINAL
RULE.—Not later than 180 days 
after the date of the enactment of this Act, the Sec-
retary of the Treasury shall publish a final rule in 
the Federal Register on the matter described in 
paragraph (1). 
(b) CONTENTS.—The final rule published under this 
section— 
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(1) shall require, at a minimum, that to safe-
guard against terrorist financing and money laun-
dering, 
all 
unregistered 
investment 
companies 
shall— 
(A) use risk-based due diligence policies, 
procedures, and controls that are reasonably de-
signed to ascertain the identity of any foreign 
person (including the nominal and beneficial 
owner or beneficiary of a foreign corporation, 
partnership, trust, or other foreign entity) plan-
ning to supply or supplying funds to be invested 
with the advice or assistance of that unregis-
tered investment company; and 
(B) be subject to section 5318(k)(2) of 
title 31, United States Code; and 
(2) may incorporate aspects of the proposed 
rule for unregistered investment companies pub-
lished in the Federal Register on September 26, 
2002 (67 Fed. Reg. 60617) (relating to anti-money 
laundering programs). 
(c) DEFINITIONS.—In this section— 
(1) the terms ‘‘investment company’’ and 
‘‘issuer’’ have the same meanings as in section 2 of 
the Investment Company Act of 1940 (15 U.S.C. 
80a–2); and 
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(2) the term ‘‘unregistered investment com-
pany’’ means an issuer that would be an investment 
company, but for the exclusion under paragraph (1) 
or (7) of section 3(c) of the Investment Company 
Act of 1940 (15 U.S.C. 80a–3(c)). 
SEC. 204. ANTI-MONEY LAUNDERING REQUIREMENTS FOR 
FORMATION AGENTS. 
(a) ANTI-MONEY LAUNDERING OBLIGATIONS
FOR 
FORMATION AGENTS.—Section 5312(a)(2) of title 31, 
United States Code, is amended, by— 
(1) in subparagraph (Y), by striking ‘‘or’’ at 
the end; 
(2) by redesignating subparagraph (Z) as sub-
paragraph (AA); and 
(3) by inserting after subparagraph (Y) the fol-
lowing: 
‘‘(Z) persons engaged in the business of 
forming new corporations, limited liability com-
panies, partnerships, trusts, or other legal enti-
ties; or’’. 
(b) DEADLINE
FOR
ANTI-MONEY
LAUNDERING 
RULE FOR FORMATION AGENTS.— 
(1) PROPOSED RULE.—Not later than 120 days 
after the date of the enactment of this Act, the Sec-
retary of the Treasury, in consultation with the At-
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torney General of the United States, the Secretary 
of Homeland Security, and the Commissioner of In-
ternal Revenue, shall publish a proposed rule in the 
Federal Register requiring persons described in sec-
tion 5312(a)(2)(Z) of title 31, United States Code, 
as added by this section, to establish anti-money 
laundering programs under subsections (g) and (h) 
of section 5318 of that title. 
(2) FINAL
RULE.—Not later than 270 days 
after such date of enactment, the Secretary of the 
Treasury shall publish a final rule in the Federal 
Register on the matter described in paragraph (1). 
(3) EXCLUSIONS.—Any rule promulgated under 
this subsection shall exclude from the category of 
persons engaged in the business of forming new cor-
porations or other entities— 
(A) any government agency; and 
(B) any attorney or law firm that uses a 
paid formation agent operating within the 
United States to form such corporations or 
other entities. 
SEC. 205. STRENGTHENING JOHN DOE SUMMONS PRO-
CEEDINGS. 
(a) IN GENERAL.—Subsection (f) of section 7609 is 
amended to read as follows: 
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‘‘(f) ADDITIONAL REQUIREMENT IN THE CASE OF A 
JOHN DOE SUMMONS.— 
‘‘(1) GENERAL RULE.—Any summons described 
in subsection (c)(1) which does not identify the per-
son with respect to whose liability the summons is 
issued may be served only after a court proceeding 
in which the Secretary establishes that— 
‘‘(A) the summons relates to the investiga-
tion of a particular person or ascertainable 
group or class of persons, 
‘‘(B) there is a reasonable basis for believ-
ing that such person or group or class of per-
sons may fail or may have failed to comply with 
any provision of any internal revenue law, and 
‘‘(C) the information sought to be obtained 
from the examination of the records or testi-
mony (and the identity of the person or persons 
with respect to whose liability the summons is 
issued) is not readily available from other 
sources. 
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply to any summons which specifies that it is lim-
ited to information regarding a United States cor-
respondent 
account 
(as 
defined 
in 
section 
5318A(e)(1)(B) of title 31, United States Code) or 
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a United States payable-through account (as defined 
in section 5318A(e)(1)(C) of such title) of a finan-
cial institution that is held at a non-FATCA institu-
tion (as defined in section 7701(a)(51)). 
‘‘(3) PRESUMPTION IN CASES INVOLVING NON- 
FATCA INSTITUTIONS.—For purposes of this section, 
in any case in which the particular person or ascer-
tainable group or class of persons have financial ac-
counts in or transactions related to a non-FATCA 
institution (as defined in section 7701(a)(51)), there 
shall be a presumption that there is a reasonable 
basis for believing that such person or group or class 
of persons may fail or may have failed to comply 
with provisions of internal revenue law. 
‘‘(4) PROJECT JOHN DOE SUMMONSES.— 
‘‘(A) IN
GENERAL.—Notwithstanding the 
requirements of paragraph (1), the Secretary 
may issue a summons described in paragraph 
(1) if the summons— 
‘‘(i) relates to a project which is ap-
proved under subparagraph (B), 
‘‘(ii) is issued to a person who is a 
member of the group or class established 
under subparagraph (B)(i), and 
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‘‘(iii) is issued within 3 years of the 
date on which such project was approved 
under subparagraph (B). 
‘‘(B) APPROVAL OF PROJECTS.—A project 
may only be approved under this subparagraph 
after a court proceeding in which the Secretary 
establishes that— 
‘‘(i) any summons issues with respect 
to the project will be issued to a member 
of an ascertainable group or class of per-
sons, and 
‘‘(ii) any summons issued with respect 
to such project will meet the requirements 
of paragraph (1). 
‘‘(C) EXTENSION.—Upon application of 
the Secretary, the court may extend the time 
for issuing such summonses under subpara-
graph (A)(i) for additional 3-year periods, but 
only if the court continues to exercise oversight 
of such project under subparagraph (D). 
‘‘(D) ONGOING COURT OVERSIGHT.—Dur-
ing any period in which the Secretary is author-
ized to issue summonses in relation to a project 
approved under subparagraph (B) (including 
during any extension under subparagraph (C)), 
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the Secretary shall report annually to the court 
on the use of such authority, provide copies of 
all summonses with such report, and comply 
with the court’s direction with respect to the 
issuance of any John Doe summons under such 
project.’’. 
(b) JURISDICTION OF COURT.— 
(1) IN
GENERAL.—Paragraph (1) of section 
7609(h) is amended by inserting after the first sen-
tence the following new sentence: ‘‘Any United 
States district court in which a member of the group 
or class to which a summons may be issued resides 
or is found shall have jurisdiction to hear and deter-
mine the approval of a project under subsection 
(f)(2)(B).’’. 
(2) CONFORMING AMENDMENT.—The first sen-
tence of section 7609(h)(1) is amended by striking 
‘‘(f)’’ and inserting ‘‘(f)(1)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to summonses issued after the date 
of the enactment of this Act. 
(d) GAO REPORT.—Not later than the date which 
is 5 years after the date of the enactment of this Act, 
the Comptroller General of the United States shall issue 
a report on the implementation of section 7609(f)(2) of 
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the Internal Revenue Code of 1986, as added by this sec-
tion. 
SEC. 206. IMPROVING ENFORCEMENT OF FOREIGN FINAN-
CIAL ACCOUNT REPORTING. 
(a) CLARIFYING THE CONNECTION OF FOREIGN FI-
NANCIAL ACCOUNT REPORTING
TO TAX ADMINISTRA-
TION.—Paragraph (4) of section 6103(b) is amended by 
adding at the end the following new sentence: 
‘‘For purposes of subparagraph (A)(i), section 5314 
of title 31, United States Code, and sections 5321 
and 5322 of such title (as such sections pertain to 
such section 5314), shall be considered related stat-
utes.’’. 
(b) SIMPLIFYING THE CALCULATION OF FOREIGN 
FINANCIAL ACCOUNT REPORTING PENALTIES.—Section 
5321(a)(5)(D)(ii) of title 31, United States Code, is 
amended by striking ‘‘the balance in the account at the 
time of the violation’’ and inserting ‘‘the highest balance 
in the account during the reporting period to which the 
violation relates’’. 
(c) CLARIFYING THE USE OF SUSPICIOUS ACTIVITY 
REPORTS UNDER THE BANK SECRECY ACT FOR CIVIL 
TAX LAW ENFORCEMENT.—Section 5319 of title 31, 
United States Code, is amended by inserting ‘‘the civil and 
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criminal enforcement divisions of the Internal Revenue 
Service,’’ after ‘‘including’’. 
TITLE III—COMBATING TAX 
SHELTER PROMOTERS 
SEC. 301. PENALTY FOR PROMOTING ABUSIVE TAX SHEL-
TERS. 
(a) PENALTY FOR PROMOTING ABUSIVE TAX SHEL-
TERS.—Section 6700 is amended— 
(1) by redesignating subsections (b) and (c) as 
subsections (d) and (e), respectively, 
(2) by striking ‘‘a penalty’’ and all that follows 
through the period in the first sentence of subsection 
(a) and inserting ‘‘a penalty determined under sub-
section (b)’’, and 
(3) by inserting after subsection (a) the fol-
lowing new subsections: 
‘‘(b) AMOUNT OF PENALTY; CALCULATION OF PEN-
ALTY; LIABILITY FOR PENALTY.— 
‘‘(1) AMOUNT OF PENALTY.—The amount of 
the penalty imposed by subsection (a) shall not ex-
ceed 150 percent of the gross income derived (or to 
be derived) from such activity by the person or per-
sons subject to such penalty. 
‘‘(2) CALCULATION OF PENALTY.—The penalty 
amount determined under paragraph (1) shall be 
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calculated with respect to each instance of an activ-
ity described in subsection (a), each instance in 
which income was derived by the person or persons 
subject to such penalty, and each person who par-
ticipated in such an activity. 
‘‘(3) LIABILITY FOR PENALTY.—If more than 1 
person is liable under subsection (a) with respect to 
such activity, all such persons shall be jointly and 
severally liable for the penalty under such sub-
section. 
‘‘(c) PENALTY NOT DEDUCTIBLE.—The payment of 
any penalty imposed under this section or the payment 
of any amount to settle or avoid the imposition of such 
penalty shall not be considered an ordinary and necessary 
expense in carrying on a trade or business for purposes 
of this title and shall not be deductible by the person who 
is subject to such penalty or who makes such payment.’’. 
(b) CONFORMING AMENDMENT.—Section 6700(a) is 
amended by striking the last sentence. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to activities after the date of the 
enactment of this Act. 
SEC. 302. PENALTY FOR AIDING AND ABETTING THE UN-
DERSTATEMENT OF TAX LIABILITY. 
(a) IN GENERAL.—Section 6701(a) is amended— 
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(1) by inserting ‘‘the tax liability or’’ after ‘‘re-
spect to,’’ in paragraph (1), 
(2) by inserting ‘‘aid, assistance, procurement, 
or advice with respect to such’’ before ‘‘portion’’ 
both places it appears in paragraphs (2) and (3), 
and 
(3) by inserting ‘‘instance of aid, assistance, 
procurement, or advice or each such’’ before ‘‘docu-
ment’’ in the matter following paragraph (3). 
(b) AMOUNT OF PENALTY.—Subsection (b) of section 
6701 is amended to read as follows: 
‘‘(b) AMOUNT OF PENALTY; CALCULATION OF PEN-
ALTY; LIABILITY FOR PENALTY.— 
‘‘(1) AMOUNT OF PENALTY.—The amount of 
the penalty imposed by subsection (a) shall not ex-
ceed 150 percent of the gross income derived (or to 
be derived) from such aid, assistance, procurement, 
or advice provided by the person or persons subject 
to such penalty. 
‘‘(2) CALCULATION OF PENALTY.—The penalty 
amount determined under paragraph (1) shall be 
calculated with respect to each instance of aid, as-
sistance, procurement, or advice described in sub-
section (a), each instance in which income was de-
rived by the person or persons subject to such pen-
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alty, and each person who made such an understate-
ment of the liability for tax. 
‘‘(3) LIABILITY FOR PENALTY.—If more than 1 
person is liable under subsection (a) with respect to 
providing such aid, assistance, procurement, or ad-
vice, all such persons shall be jointly and severally 
liable for the penalty under such subsection.’’. 
(c) PENALTY NOT DEDUCTIBLE.—Section 6701 is 
amended by adding at the end the following new sub-
section: 
‘‘(g) PENALTY NOT DEDUCTIBLE.—The payment of 
any penalty imposed under this section or the payment 
of any amount to settle or avoid the imposition of such 
penalty shall not be considered an ordinary and necessary 
expense in carrying on a trade or business for purposes 
of this title and shall not be deductible by the person who 
is subject to such penalty or who makes such payment.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to activities after the date of the 
enactment of this Act. 
SEC. 303. PROHIBITED FEE ARRANGEMENT. 
(a) IN GENERAL.—Section 6701, as amended by this 
Act, is amended— 
(1) by redesignating subsections (f) and (g) as 
subsections (g) and (h), respectively, 
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(2) by striking ‘‘subsection (a).’’ in paragraphs 
(2) and (3) of subsection (g) (as redesignated by 
paragraph (1)) and inserting ‘‘subsection (a) or 
(f).’’, and 
(3) by inserting after subsection (e) the fol-
lowing new subsection: 
‘‘(f) PROHIBITED FEE ARRANGEMENT.— 
‘‘(1) IN GENERAL.—Any person who makes an 
agreement for, charges, or collects a fee which is for 
services provided in connection with the internal rev-
enue laws, and the amount of which is calculated ac-
cording to, or is dependent upon, a projected or ac-
tual amount of— 
‘‘(A) tax savings or benefits, or 
‘‘(B) losses which can be used to offset 
other taxable income, 
shall pay a penalty with respect to each such fee ac-
tivity in the amount determined under subsection 
(b). 
‘‘(2) RULES.—The Secretary may issue rules to 
carry out the purposes of this subsection and may 
provide exceptions for fee arrangements that are in 
the public interest.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to fee agreements, charges, and 
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collections made after the date of the enactment of this 
Act. 
SEC. 304. PREVENTING TAX SHELTER ACTIVITIES BY FI-
NANCIAL INSTITUTIONS. 
(a) EXAMINATIONS.— 
(1) DEVELOPMENT
OF
EXAMINATION
TECH-
NIQUES.—Each of the Federal banking agencies and 
the Commission shall, in consultation with the Inter-
nal Revenue Service, develop examination techniques 
to detect potential violations of section 6700 or 6701 
of the Internal Revenue Code of 1986, by depository 
institutions, brokers, dealers, and investment advis-
ers, as appropriate. 
(2) IMPLEMENTATION.—Each of the Federal 
banking agencies and the Commission shall imple-
ment the examination techniques developed under 
paragraph (1) with respect to each of the depository 
institutions, brokers, dealers, or investment advisers 
subject to their enforcement authority. Such exam-
ination shall, to the extent possible, be combined 
with any examination by such agency otherwise re-
quired or authorized by Federal law. 
(b) REPORT TO INTERNAL REVENUE SERVICE.—In 
any case in which an examination conducted under this 
section with respect to a financial institution or other enti-
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ty reveals a potential violation, such agency shall promptly 
notify the Internal Revenue Service of such potential viola-
tion for investigation and enforcement by the Internal 
Revenue Service, in accordance with applicable provisions 
of law. 
(c) REPORT TO CONGRESS.—The Federal banking 
agencies and the Commission shall submit a joint written 
report to Congress in 2013 on their progress in preventing 
violations of sections 6700 and 6701 of the Internal Rev-
enue Code of 1986, by depository institutions, brokers, 
dealers, and investment advisers, as appropriate. 
(d) DEFINITIONS.—For purposes of this section— 
(1) the terms ‘‘broker’’, ‘‘dealer’’, and ‘‘invest-
ment adviser’’ have the same meanings as in section 
3 of the Securities Exchange Act of 1934 (15 U.S.C. 
78c); 
(2) the term ‘‘Commission’’ means the Securi-
ties and Exchange Commission; 
(3) the term ‘‘depository institution’’ has the 
same meaning as in section 3(c) of the Federal De-
posit Insurance Act (12 U.S.C. 1813(c)); 
(4) the term ‘‘Federal banking agencies’’ has 
the same meaning as in section 3(q) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(q)); and 
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(5) the term ‘‘Secretary’’ means the Secretary 
of the Treasury. 
SEC. 305. INFORMATION SHARING FOR ENFORCEMENT 
PURPOSES. 
(a) PROMOTION OF PROHIBITED TAX SHELTERS OR 
TAX AVOIDANCE SCHEMES.—Section 6103(h) is amended 
by adding at the end the following new paragraph: 
‘‘(7) DISCLOSURE OF RETURNS AND RETURN 
INFORMATION RELATED TO PROMOTION OF PROHIB-
ITED
TAX
SHELTERS
OR
TAX
AVOIDANCE 
SCHEMES.— 
‘‘(A) WRITTEN
REQUEST.—Upon receipt 
by the Secretary of a written request which 
meets the requirements of subparagraph (B) 
from the head of the United States Securities 
and Exchange Commission, an appropriate 
Federal banking agency as defined under sec-
tion 1813(q) of title 12, United States Code, or 
the Public Company Accounting Oversight 
Board, a return or return information shall be 
disclosed to such requestor’s officers and em-
ployees who are personally and directly engaged 
in an investigation, examination, or proceeding 
by such requestor to evaluate, determine, penal-
ize, or deter conduct by a financial institution, 
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issuer, or public accounting firm, or associated 
person, in connection with a potential or actual 
violation of section 6700 (promotion of abusive 
tax shelters), 6701 (aiding and abetting under-
statement of tax liability), or activities related 
to promoting or facilitating inappropriate tax 
avoidance or tax evasion. Such disclosure shall 
be solely for use by such officers and employees 
in such investigation, examination, or pro-
ceeding. In the discretion of the Secretary, such 
disclosure may take the form of the participa-
tion of Internal Revenue Service employees in a 
joint investigation, examination, or proceeding 
with the Securities Exchange Commission, Fed-
eral banking agency, or Public Company Ac-
counting Oversight Board. 
‘‘(B) REQUIREMENTS.—A request meets 
the requirements of this subparagraph if it sets 
forth— 
‘‘(i) the nature of the investigation, 
examination, or proceeding, 
‘‘(ii) the statutory authority under 
which such investigation, examination, or 
proceeding is being conducted, 
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sult in such collaborating parties having a joint fi-
nancial interest in the subject of the advice. 
‘‘(3) Avoidance of conflicts of interest which 
would impair auditor independence. 
‘‘(4) For written advice issued by a firm, stand-
ards for reviewing the advice and ensuring the con-
sensus support of the firm for positions taken. 
‘‘(5) Reliance on reasonable factual representa-
tions by the taxpayer and other parties. 
‘‘(6) Appropriateness of the fees charged by the 
practitioner for the written advice. 
‘‘(7) Preventing practitioners and firms from 
aiding or abetting the understatement of tax liability 
by clients. 
‘‘(8) Banning the promotion of potentially abu-
sive or illegal tax shelters.’’. 
Æ 
VerDate Mar 15 2010 
05:33 Jul 28, 2011
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E:\BILLS\H2669.IH
H2669
rfrederick on DSKD9S0YB1PROD with BILLS