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.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to activities after the date of the 
enactment of this Act. 
SEC. 303. TAX PLANNING INVENTIONS NOT PATENTABLE. 
(a) IN GENERAL.—Section 101 of title 35, United 
States Code, is amended— 
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(1) by striking ‘‘Whoever’’ and inserting ‘‘(A) 
PATENTABLE INVENTIONS.—Whoever’’, and 
(2) by adding at the end the following: 
‘‘(b) TAX PLANNING INVENTIONS.— 
‘‘(1) UNPATENTABLE
SUBJECT
MATTER.—A 
patent may not be obtained for a tax planning inven-
tion. 
‘‘(2) DEFINITIONS.—For purposes of paragraph 
(1)— 
‘‘(A) the term ‘tax planning invention’ 
means a plan, strategy, technique, scheme, 
process, or system that is designed to reduce, 
minimize, determine, avoid, or defer, or has, 
when implemented, the effect of reducing, mini-
mizing, determining, avoiding, or deferring, a 
taxpayer’s tax liability or is designed to facili-
tate compliance with tax laws, but does not in-
clude tax preparation software and other tools 
or systems used solely to prepare tax or infor-
mation returns, 
‘‘(B) the term ‘taxpayer’ means an indi-
vidual, entity, or other person (as defined in 
section 7701 of the Internal Revenue Code of 
1986), 
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‘‘(C) the terms ‘tax’, ‘tax laws’, ‘tax liabil-
ity’, and ‘taxation’ refer to any Federal, State, 
county, city, municipality, foreign, or other gov-
ernmental levy, assessment, or imposition, 
whether measured by income, value, or other-
wise, and 
‘‘(D) the term ‘State’ means each of the 
several States, the District of Columbia, and 
any commonwealth, territory, or possession of 
the United States.’’. 
(b) APPLICABILITY.—The amendments made by this 
section— 
(1) shall take effect on the date of the enact-
ment of this Act, 
(2) shall apply to any application for patent or 
application for a reissue patent that is— 
(A) filed on or after the date of the enact-
ment of this Act, or 
(B) filed before that date if a patent or re-
issue patent has not been issued pursuant to 
the application as of that date, and 
(3) shall not be construed as validating any pat-
ent issued before the date of the enactment of this 
Act for an invention described in section 101(b) of 
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title 35, United States Code, as added by this sec-
tion. 
SEC. 304. 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, 
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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. 305. 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 
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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 2010 and 2013 on their progress 
in preventing violations of sections 6700 and 6701 of the 
Internal Revenue 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); 
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(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. 306. INFORMATION SHARING FOR ENFORCEMENT 
PURPOSES. 
(a) PROMOTION OF PROHIBITED TAX SHELTERS OR 
TAX AVOIDANCE SCHEMES.—Section 6103(h) (relating to 
disclosure to certain Federal officers and employees for 
purposes of tax administration, etc.) 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 
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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, 
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-
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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, 
‘‘(iii) the name or names of the finan-
cial institution, issuer, or public accounting 
firm to which such return information re-
lates, 
‘‘(iv) the taxable period or periods to 
which such return information relates, and 
‘‘(v) the specific reason or reasons 
why such disclosure is, or may be, relevant 
to such investigation, examination or pro-
ceeding. 
‘‘(C) FINANCIAL
INSTITUTION.—For the 
purposes of this paragraph, the term ‘financial 
institution’ means a depository institution, for-
eign bank, insured institution, industrial loan 
company, broker, dealer, investment company, 
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investment advisor, or other entity subject to 
regulation or oversight by the United States Se-
curities and Exchange Commission or an appro-
priate Federal banking agency.’’. 
(b) FINANCIAL AND ACCOUNTING FRAUD INVESTIGA-
TIONS.—Section 6103(i) (relating to disclosure to Federal 
officers or employees for administration of Federal laws 
not relating to tax administration) is amended by adding 
at the end the following new paragraph: 
‘‘(9) DISCLOSURE OF RETURNS AND RETURN 
INFORMATION
FOR
USE
IN
FINANCIAL
AND
AC-
COUNTING FRAUD INVESTIGATIONS.— 
‘‘(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 or the Public Com-
pany Accounting Oversight Board, a return or 
return information shall be disclosed to such re-
questor’s officers and employees who are per-
sonally and directly engaged in an investigation, 
examination, or proceeding by such requester to 
evaluate the accuracy of a financial statement 
or report, or to determine whether to require a 
restatement, penalize, or deter conduct by an 
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issuer, investment company, or public account-
ing firm, or associated person, in connection 
with a potential or actual violation of auditing 
standards or prohibitions against false or mis-
leading statements or omissions in financial 
statements or reports. Such disclosure shall be 
solely for use by such officers and employees in 
such investigation, examination, or proceeding. 
‘‘(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, 
‘‘(iii) the name or names of the issuer, 
investment company, or public accounting 
firm to which such return information re-
lates, 
‘‘(iv) the taxable period or periods to 
which such return information relates, and 
‘‘(v) the specific reason or reasons 
why such disclosure is, or may be, relevant 
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