mines that applying such amendments to such trans-
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, 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
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 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
‘‘(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.— 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
‘‘(A) IN
GENERAL.—The Secretary shall 
prescribe regulations for purposes of deter-
mining cases in which the management and 
control of a corporation is to be treated as oc-
curring primarily within the United States. 
‘‘(B) EXECUTIVE OFFICERS AND SENIOR 
MANAGEMENT.—Such regulations shall provide 
that— 
‘‘(i) the management and control of a 
corporation shall be treated as occurring 
primarily within the United States if sub-
stantially all of the executive officers and 
senior management of the corporation who 
exercise day-to-day responsibility for mak-
ing decisions involving strategic, financial, 
and operational policies of the corporation 
are located primarily within the United 
States, and 
‘‘(ii) individuals who are not executive 
officers and senior management of the cor-
poration (including individuals who are of-
ficers or employees of other corporations in 
the same chain of corporations as the cor-
poration) shall be treated as executive offi-
cers and senior management if such indi-
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
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. 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
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’), 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
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— 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
‘‘(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 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
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 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
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: 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00025
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
‘‘(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 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00026
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
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 thereto,’’. 
(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. 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00027
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
(1) by inserting ‘‘swap payments (as identified 
in section 1256(b)(2)(B)),’’ after ‘‘annuities,’’ in 
paragraph (1), and 
(2) by adding at the end the following new sen-
tence: ‘‘In the case of swap payments, the source of 
a swap payment is determined by reference to the lo-
cation of the payor.’’. 
TITLE II—OTHER MEASURES TO 
COMBAT TAX HAVEN AND TAX 
SHELTER ABUSES 
SEC. 201. COUNTRY-BY-COUNTRY REPORTING. 
(a) COUNTRY-BY-COUNTRY REPORTING.—Section 13 
of the Securities Exchange Act of 1934 (15 U.S.C. 78m) 
is amended by adding at the end the following new sub-
section: 
‘‘(s) DISCLOSURE OF FINANCIAL PERFORMANCE ON 
A COUNTRY-BY-COUNTRY BASIS.— 
‘‘(1) DEFINITIONS.—In this subsection— 
‘‘(A) the term ‘issuer group’ means the 
issuer, each subsidiary of the issuer, and each 
entity under the control of the issuer; and 
‘‘(B) the term ‘country of operation’ means 
each country in which a member of the issuer 
group is incorporated, organized, maintains em-
VerDate Mar 15 2010 
04:15 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00029
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
ployees, or conducts significant business activi-
ties. 
‘‘(2) RULES REQUIRED.—The Commission shall 
issue rules that require each issuer to include in an 
annual report filed by the issuer with the Commis-
sion information on a country-by-country basis dur-
ing the covered period, consisting of— 
‘‘(A) a list of each country of operation 
and the name of each entity of the issuer group 
domiciled in each country of operation; 
‘‘(B) the number of employees physically 
working in each country of operation; 
‘‘(C) the total pre-tax gross revenues of 
each member of the issuer group in each coun-
try of operation; 
‘‘(D) the total amount of payments made 
to governments by each member of the issuer 
group in each country of operation, without ex-
ception, including, and set forth according to— 
‘‘(i) total Federal, regional, local, and 
other tax assessed against each member of 
the issuer group with respect to each coun-
try of operation during the covered period; 
and 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00030
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
‘‘(ii) after any tax deductions, tax 
credits, tax forgiveness, or other tax bene-
fits or waivers, the total amount of tax 
paid from the treasury of each member of 
the issuer group to the government of each 
country of operation during the covered pe-
riod; 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.—The Securities and Exchange 
Commission (in this section referred to as the ‘‘Com-
mission’’) shall— 
(A) not later than 270 days after the date 
of enactment of this Act, issue a proposed rule 
to carry out this section and the amendment 
made by this section; and 
(B) not later than 1 year after the date of 
enactment of this Act, issue a final rule to 
carry out this section and the amendment made 
by this section. 
(2) DATA FORMAT.—The information required 
to be provided by this section shall be provided by 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00031
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
the issuer in a format prescribed by the Commission, 
and shall be made available to the public online, in 
such format as the Commission shall prescribe. 
(3) EFFECTIVE DATE.—Subsection (s) of sec-
tion 13 of the Securities Exchange Act of 1934, as 
added by this section, shall become effective 1 year 
after the date on which the Commission 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.—Notwith-
standing clauses (i), (ii), and (iii), for each 
violation, the amount of the penalty shall 
not exceed $1,000,000 for any natural per-
son or $10,000,000 for any other person, 
if— 
‘‘(I) such person directly or indi-
rectly controlled any foreign entity, in-
cluding any trust, corporation, limited 
liability 
company, 
partnership, 
or 
foundation through which an issuer 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00032
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
purchased, sold, or held equity or debt 
instruments; 
‘‘(II) such person knowingly or 
recklessly failed to disclose any such 
holding, purchase, or sale by the 
issuer; and 
‘‘(III) the holding, purchase, or 
sale would have been otherwise sub-
ject to disclosure by the issuer or 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), for each viola-
tion, the amount of the penalty shall not exceed 
$1,000,000 
for 
any 
natural 
person 
or 
$10,000,000 for any other person, if— 
‘‘(i) such person directly or indirectly 
controlled any foreign entity, including any 
trust, corporation, limited liability com-
pany, partnership, or foundation through 
which an issuer purchased, sold, or held 
equity or debt instruments; 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00033
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
‘‘(ii) such person knowingly or reck-
lessly failed to disclose any such holding, 
purchase, or sale by the issuer; and 
‘‘(iii) the holding, purchase, or sale 
would have been otherwise subject to dis-
closure by the issuer or such person under 
this title.’’. 
(c) 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), for each viola-
tion, the amount of the penalty shall not exceed 
$1,000,000 
for 
any 
natural 
person 
or 
$10,000,000 for any other person, if— 
‘‘(i) such person directly or indirectly 
controlled any foreign entity, including any 
trust, corporation, limited liability com-
pany, partnership, or foundation through 
which an issuer purchased, sold, or held 
equity or debt instruments; 
‘‘(ii) such person knowingly or reck-
lessly failed to disclose any such holding, 
purchase, or sale by the issuer; and 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00034
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
‘‘(iii) the holding, purchase, or sale 
would have been otherwise subject to dis-
closure by the issuer or such person under 
this title.’’. 
SEC. 203. DEADLINE FOR ANTI-MONEY LAUNDERING RULE 
FOR INVESTMENT ADVISERS. 
(a) ANTI-MONEY LAUNDERING OBLIGATIONS
FOR 
INVESTMENT ADVISERS.—Section 5312(a)(2) of title 31, 
United States Code, is amended— 
(1) in subparagraph (Y), by striking ‘‘or’’ at 
the end; 
(2) by redesignating subparagraph (Z) as sub-
paragraph (BB); and 
(3) by inserting after subparagraph (Y) the fol-
lowing: 
‘‘(Z) an investment adviser;’’. 
(b) RULES REQUIRED.—The Secretary of the Treas-
ury shall— 
(1) in consultation with the Chairman of the 
Securities and Exchange Commission and the Chair-
man of the Commodity Futures Trading Commis-
sion, not later than 270 days after the date of enact-
ment of this Act, publish a proposed rule in the Fed-
eral Register to carry out the amendments made by 
this section; and 
VerDate Mar 15 2010 
04:15 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00035
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
(2) not later than 180 days after the date of 
enactment of this Act, publish a final rule in the 
Federal Register on the matter described in para-
graph (1). 
(c) CONTENTS.—The final rule published under this 
section shall require, at a minimum, each investment ad-
viser (as defined in section 202(a)(11) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b–2(a)(11))) reg-
istered with the Securities and Exchange Commission pur-
suant to section 203 of that Act (15 U.S.C. 80b–3)— 
(1) to submit suspicious activity reports and es-
tablish an anti-money laundering program under 
subsections (g) and (h), respectively, of section 5318 
of title 31, United States Code; and 
(2) to comply with— 
(A) the customer identification program 
requirements under section 5318(l) of title 31, 
United States Code; and 
(B) the due diligence requirements under 
section 5318(i) of title 31, United States Code. 
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, as amended by section 113 of this 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00036
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
Act, is amended by inserting after subparagraph (Z) the 
following: 
‘‘(AA) any person engaged in the business 
of forming new corporations, limited liability 
companies, partnerships, trusts, or other legal 
entities; or’’. 
(b) DEADLINE
FOR
ANTI-MONEY
LAUNDERING 
RULE FOR FORMATION AGENTS.— 
(1) PROPOSED
RULE.—The Secretary of the 
Treasury, in consultation with the Attorney General 
of the United States, the Secretary of Homeland Se-
curity, and the Commissioner of Internal Revenue, 
shall— 
(A) not later than 120 days after the date 
of enactment of this Act, publish a proposed 
rule in the Federal Register requiring persons 
described in section 5312(a)(2)(AA) of title 31, 
United States Code, as added by this section, to 
establish 
anti-money 
laundering 
programs 
under section 5318(h) of that title; and 
(B) not later than 270 days after the date 
of enactment of this Act, publish a final rule in 
the Federal Register on the matter described in 
subparagraph (A). 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00037
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
(2) EXCLUSIONS.—The 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: 
‘‘(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-
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00038
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
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 
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 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00039
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
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 
‘‘(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 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00040
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
‘‘(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)), 
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 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00041
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
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. 
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 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00042
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
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 
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.— 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00043
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
‘‘(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 
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.’’. 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00044
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
(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— 
(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, 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00045
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
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-
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.’’. 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00046
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
(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, 
(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, 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00047
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
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 
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 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00048
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
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-
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); 
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00049
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
(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 
(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-
VerDate Mar 15 2010 
02:30 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00050
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS
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, 
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 and Exchange Commission, 
Federal banking agency, or Public Company 
Accounting Oversight Board. 
VerDate Mar 15 2010 
04:15 Apr 20, 2013
Jkt 029200
PO 00000
Frm 00051
Fmt 6652
Sfmt 6201
E:\BILLS\H1554.IH
H1554
tjames on DSK6SPTVN1PROD with BILLS