I 
108TH CONGRESS 
1ST SESSION H. R. 3599
To prevent corporate auditors from providing tax shelter services to their 
audit clients. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 21, 2003
Mr. EMANUEL (for himself, Mr. FOLEY, Mr. STUPAK, Mr. CAMP, and Mr. 
LANTOS) introduced the following bill; which was referred to the Com-
mittee on Financial Services 
A BILL 
To prevent corporate auditors from providing tax shelter 
services to their audit clients.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Auditor Independence 
and Tax Shelters Act’’. 
SEC. 2. PROHIBITION ON AUDITORS PROVIDING TAX SHEL-
TER SERVICES TO AUDIT CLIENTS. 
Section 10A of the Securities Exchange Act of 1934 
(15 U.S.C. 78j–1) is amended—
(1) in subsection (f)—
(A) in the first sentence, by striking ‘‘sec-
tion, the term’’ and inserting the following: 
‘‘section—
‘‘(1) the term’’; 
(B) by striking ‘‘law. As used in this sec-
tion, the term’’ and inserting the following: 
‘‘law; 
‘‘(2) the term’’; and 
(C) by striking the period at the end and 
inserting the following: ‘‘; and 
‘‘(3) the term ‘tax shelter services’ means serv-
ices provided by a registered public accounting firm 
(or by an associated person of that firm) to an 
issuer, or an officer or director of an issuer, to de-
sign, organize, promote, assist, or execute any in-
vestment, entity, plan, arrangement, or transaction 
for which a significant purpose is the avoidance or 
evasion of Federal income tax by such issuer, or an 
officer or director of such issuer, whether acting as 
a direct or indirect participant, and for which such 
firm may receive fees in excess of $100,000 in the 
aggregate.’’; 
(2) in subsection (g)—
(A) in paragraph (8), by striking ‘‘and’’ at 
the end;
(B) by redesignating paragraph (9) as 
paragraph (10); and 
(C) by inserting after paragraph (8) the 
following: 
‘‘(9) tax shelter services; and’’; 
(3) in subsection (h)—
(A) by inserting ‘‘other than tax shelter 
services’’ after ‘‘tax services’’; and 
(B) by striking ‘‘(9)’’ and inserting ‘‘(10)’’; 
and 
(4) in subsection (i)(1)—
(A) by redesignating subparagraph (B) as 
subparagraph (C); and 
(B) by inserting after subparagraph (A) 
the following: 
‘‘(B) ASSURANCE OF AUDITOR INDEPEND-
ENCE.—Before preapproving a non-audit serv-
ice that is not otherwise prohibited under this 
section, the audit committee of an issuer 
shall—
‘‘(i) determine whether there is a rea-
sonable likelihood that provision of the 
non-audit service would impair the inde-
pendence of the registered public account-
ing firm by resulting in the firm—
‘‘(I) auditing its own work for 
the issuer; 
‘‘(II) performing a management 
function for the issuer; 
‘‘(III) advocating in a public 
forum for the issuer; or 
‘‘(IV) promoting the stock or 
other financial interest of the issuer; 
and 
‘‘(ii) if the audit committee deter-
mines that such a reasonable likelihood ex-
ists, the audit committee shall not provide 
advance approval of such service under this 
section.’’. 
SEC. 3. EFFECTIVE DATE. 
This Act, and the amendments made by this Act, 
shall take effect on the date of enactment of this Act, and 
shall apply to any tax shelter service, as defined in section 
10A of the Securities Exchange Act of 1934, as amended 
by this Act, that is submitted for preapproval to the audit 
committee of an issuer or is provided by a registered pub-
lic accounting firm to an issuer in accordance with that 
section 10A on or after the date of enactment of this Act.
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