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subsection as if it were a lien imposed by section
6324A.
‘‘(j) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section.’’.
(b) INCLUSION IN INCOME OF GIFTS AND BEQUESTS
RECEIVED BY UNITED STATES CITIZENS AND RESIDENTS
FROM EXPATRIATES.—Section 102 (relating to gifts, etc.
not included in gross income) is amended by adding at the
end the following new subsection:
‘‘(d) GIFTS AND INHERITANCES FROM COVERED EX-
PATRIATES.—
‘‘(1) TREATMENT
OF
GIFTS
AND
INHERIT-
ANCES.—
‘‘(A) IN GENERAL.—Subsection (a) shall not
exclude from gross income the value of any prop-
erty acquired by gift, bequest, devise, or inherit-
ance from a covered expatriate after the expa-
triation date.
‘‘(B) DETERMINATION OF BASIS.—Notwith-
standing sections 1015 or 1022, the basis of any
property described in subparagraph (A) in the
hands of the donee or the person acquiring such
property from the decedent shall be equal to the
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fair market value of the property at the time of
the gift, bequest, devise, or inheritance.
‘‘(2) EXCEPTIONS FOR TRANSFERS OTHERWISE
SUBJECT TO ESTATE OR GIFT TAX.—Paragraph (1)
shall not apply to any property if either—
‘‘(A) the gift, bequest, devise, or inheritance
is—
‘‘(i) shown on a timely filed return of
tax imposed by chapter 12 as a taxable gift
by the covered expatriate, or
‘‘(ii) included in the gross estate of the
covered expatriate for purposes of chapter
11 and shown on a timely filed return of
tax imposed by chapter 11 of the estate of
the covered expatriate, or
‘‘(B) no such return was timely filed but no
such return would have been required to be filed
even if the covered expatriate were a citizen or
long-term resident of the United States.
‘‘(3) DEFINITIONS.—For purposes of this sub-
section, any term used in this subsection which is also
used in section 877A shall have the same meaning as
when used in section 877A.’’.
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(c) DEFINITION OF TERMINATION OF UNITED STATES
CITIZENSHIP.—Section 7701(a) is amended by adding at
the end the following new paragraph:
‘‘(50) TERMINATION OF UNITED STATES CITIZEN-
SHIP.—
‘‘(A) IN GENERAL.—An individual shall not
cease to be treated as a United States citizen be-
fore the date on which the individual’s citizen-
ship is treated as relinquished under section
877A(e)(3).
‘‘(B) DUAL
CITIZENS.—Under regulations
prescribed by the Secretary, subparagraph (A)
shall not apply to an individual who became at
birth a citizen of the United States and a citizen
of another country.’’.
(d) INELIGIBILITY
FOR
VISA
OR
ADMISSION
TO
UNITED STATES.—
(1) IN GENERAL.—Section 212(a)(10)(E) of the
Immigration 
and 
Nationality 
Act 
(8 
U.S.C.
1182(a)(10)(E)) is amended to read as follows:
‘‘(E) FORMER
CITIZENS
NOT
IN
COMPLI-
ANCE
WITH
EXPATRIATION
REVENUE
PROVI-
SIONS.—Any alien who is a former citizen of the
United States who relinquishes United States
citizenship (within the meaning of section
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877A(e)(3) of the Internal Revenue Code of 1986)
and who is not in compliance with section 877A
of such Code (relating to expatriation) is inad-
missible.’’.
(2) AVAILABILITY OF INFORMATION.—
(A) IN GENERAL.—Section 6103(l) (relating
to disclosure of returns and return information
for purposes other than tax administration) is
amended by adding at the end the following new
paragraph:
‘‘(21) DISCLOSURE TO DENY VISA OR ADMISSION
TO CERTAIN EXPATRIATES.—Upon written request of
the Attorney General or the Attorney General’s dele-
gate, the Secretary shall disclose whether an indi-
vidual is in compliance with section 877A (and if not
in compliance, any items of noncompliance) to offi-
cers and employees of the Federal agency responsible
for administering section 212(a)(10)(E) of the Immi-
gration and Nationality Act solely for the purpose of,
and to the extent necessary in, administering such
section 212(a)(10)(E).’’.
(B) SAFEGUARDS.—Section 6103(p)(4) (re-
lating to safeguards) is amended by striking ‘‘or
(20)’’ each place it appears and inserting ‘‘(20),
or (21)’’.
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(3) EFFECTIVE DATES.—The amendments made
by this subsection shall apply to individuals who re-
linquish United States citizenship on or after the date
of the enactment of this Act.
(e) CONFORMING AMENDMENTS.—
(1) Section 877 is amended by adding at the end
the following new subsection:
‘‘(h) APPLICATION.—This section shall not apply to an
expatriate (as defined in section 877A(e)) whose expatria-
tion date (as so defined) occurs on or after the date of the
enactment of this subsection.’’.
(2) Section 2107 is amended by adding at the
end the following new subsection:
‘‘(f) APPLICATION.—This section shall not apply to
any expatriate subject to section 877A.’’.
(3) Section 2501(a)(3) is amended by adding at
the end the following new subparagraph:
‘‘(C) APPLICATION.—This paragraph shall
not apply to any expatriate subject to section
877A.’’.
(4) Section 6039G(a) is amended by inserting
‘‘or 877A’’ after ‘‘section 877(b)’’.
(5) The second sentence of section 6039G(d) is
amended by inserting ‘‘or who relinquishes United
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States citizenship (within the meaning of section
877A(e)(3))’’ after ‘‘section 877(a))’’.
(f) CLERICAL AMENDMENT.—The table of sections for
subpart A of part II of subchapter N of chapter 1 is amend-
ed by inserting after the item relating to section 877 the
following new item:
‘‘Sec. 877A. Tax responsibilities of expatriation.’’.
(g) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in this
subsection, the amendments made by this section shall
apply to expatriates (within the meaning of section
877A(e) of the Internal Revenue Code of 1986, as
added by this section) whose expatriation date (as so
defined) occurs on or after the date of the enactment
of this Act.
(2) GIFTS AND BEQUESTS.—Section 102(d) of
the Internal Revenue Code of 1986 (as added by sub-
section (b)) shall apply to gifts and bequests received
on or after the date of the enactment of this Act, from
an individual or the estate of an individual whose ex-
patriation date (as so defined) occurs after such date.
(3) DUE DATE FOR TENTATIVE TAX.—The due
date under section 877A(h)(2) of the Internal Revenue
Code of 1986, as added by this section, shall in no
event occur before the 90th day after the date of the
enactment of this Act.
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SEC. 226. LIMITATION ON ANNUAL AMOUNTS WHICH MAY
BE DEFERRED UNDER NONQUALIFIED DE-
FERRED COMPENSATION ARRANGEMENTS.
(a) IN GENERAL.—Section 409A(a) of the Internal
Revenue Code of 1986 (relating to inclusion of gross income
under nonqualified deferred compensation plans) is
amended—
(1) by striking ‘‘and (4)’’ in subclause (I) of
paragraph (1)(A)(i) and inserting ‘‘(4), and (5)’’,
and
(2) by adding at the end the following new para-
graph:
‘‘(5) ANNUAL
LIMITATION
ON
AGGREGATE
DE-
FERRED AMOUNTS.—
‘‘(A) LIMITATION.—The requirements of this
paragraph are met if the plan provides that the
aggregate amount of compensation which is de-
ferred for any taxable year with respect to a par-
ticipant under the plan may not exceed the ap-
plicable dollar amount for the taxable year.
‘‘(B) INCLUSION OF FUTURE EARNINGS.—If
an amount is includible under paragraph (1) in
the gross income of a participant for any taxable
year by reason of any failure to meet the require-
ments of this paragraph, any income (whether
actual or notional) for any subsequent taxable
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year shall be included in gross income under
paragraph (1)(A) in such subsequent taxable
year to the extent such income—
‘‘(i) is attributable to compensation (or
income attributable to such compensation)
required to be included in gross income by
reason of such failure (including by reason
of this subparagraph), and
‘‘(ii) is not subject to a substantial risk
of forfeiture and has not been previously in-
cluded in gross income.
‘‘(C) AGGREGATION RULE.—For purposes of
this paragraph, all nonqualified deferred com-
pensation plans maintained by all employers
treated as a single employer under subsection
(d)(6) shall be treated as 1 plan.
‘‘(D) APPLICABLE
DOLLAR
AMOUNT.—For
purposes of this paragraph—
‘‘(i) IN GENERAL.—The term ‘applica-
ble dollar amount’ means, with respect to
any participant, the lesser of—
‘‘(I) the average annual com-
pensation which was payable during
the base period to the participant by
the employer maintaining the non-
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qualified deferred compensation plan
(or any predecessor of the employer)
and which was includible in the par-
ticipant’s gross income for taxable
years in the base period, or
‘‘(II) $1,000,000.
‘‘(ii) BASE PERIOD.—
‘‘(I) IN GENERAL.—The term ‘base
period’ means, with respect to any
computation year, the 5-taxable year
period ending with the taxable year
preceding the computation year.
‘‘(II) ELECTIONS
MADE
BEFORE
COMPUTATION YEAR.—If, before the be-
ginning of the computation year, an
election described in paragraph (4)(B)
is made by the participant to have
compensation for services performed in
the computation year deferred under a
nonqualified 
deferred 
compensation
plan, the base period shall be the 5-tax-
able year period ending with the tax-
able year preceding the taxable year in
which the election is made.
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‘‘(III) COMPUTATION YEAR.—For
purposes of this clause, the term ‘com-
putation year’ means any taxable year
of the participant for which the limita-
tion under subparagraph (A) is being
determined.
‘‘(IV) SPECIAL
RULE
FOR
EM-
PLOYEES OF LESS THAN 5 YEARS.—If
a participant did not perform services
for the employer maintaining the non-
qualified deferred compensation plan
(or any predecessor of the employer)
during the entire 5-taxable year period
referred to in subparagraph (A) or (B),
only the portion of such period during
which the participant performed such
services shall be taken into account.’’.
(b) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendments made by
this section shall apply to taxable years beginning
after December 31, 2006, except that—
(A) the amendments shall only apply to
amounts deferred after December 31, 2006 (and
to earnings on such amounts), and
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(B) taxable years beginning on or before
December 31, 2006, shall be taken into account
in determining the average annual compensation
of a participant during any base period for pur-
poses of section 409A(a)(5)(D) of the Internal
Revenue Code of 1986 (as added by such amend-
ments).
(2) GUIDANCE RELATING TO CERTAIN EXISTING
ARRANGEMENTS.—Not later than 60 days after the
date of the enactment of this Act, the Secretary of the
Treasury shall issue guidance providing a limited pe-
riod during which a nonqualified deferred compensa-
tion plan adopted before December 31, 2006, may,
without violating the requirements of section 409A(a)
of such Code, be amended—
(A) to provide that a participant may, no
later than December 31, 2007, cancel or modify
an outstanding deferral election with regard to
all or a portion of amounts deferred after Decem-
ber 31, 2006, to the extent necessary for the plan
to meet the requirements of section 409A(a)(5) of
such Code (as added by the amendments made by
this section), but only if amounts subject to the
cancellation or modification are, to the extent
not previously included in gross income, includ-
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ible in income of the participant when no longer
subject to substantial risk of forfeiture, and
(B) to conform to the requirements of sec-
tion 409A(a)(5) of such Code (as added by the
amendments made by this section) with regard
to amounts deferred after December 31, 2006.
SEC. 227. INCREASE IN CRIMINAL MONETARY PENALTY LIM-
ITATION FOR THE UNDERPAYMENT OR OVER-
PAYMENT OF TAX DUE TO FRAUD.
(a) IN GENERAL.—Section 7206 (relating to fraud and
false statements) is amended—
(1) by striking ‘‘Any person who—’’ and insert-
ing ‘‘(a) IN GENERAL.—’’, and
(2) by adding at the end the following new sub-
section:
‘‘(b) INCREASE IN MONETARY LIMITATION FOR UN-
DERPAYMENT OR OVERPAYMENT OF TAX DUE TO FRAUD.—
If any portion of any underpayment (as defined in section
6664(a)) or overpayment (as defined in section 6401(a)) of
tax required to be shown on a return is attributable to
fraudulent action described in subsection (a), the applicable
dollar amount under subsection (a) shall in no event be less
than an amount equal to such portion. A rule similar to
the rule under section 6663(b) shall apply for purposes of
determining the portion so attributable.’’.
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(b) INCREASE IN PENALTIES.—
(1) ATTEMPT TO EVADE OR DEFEAT TAX.—Sec-
tion 7201 is amended—
(A) by striking ‘‘$100,000’’ and inserting
‘‘$500,000’’,
(B) by striking ‘‘$500,000’’ and inserting
‘‘$1,000,000’’, and
(C) by striking ‘‘5 years’’ and inserting ‘‘10
years’’.
(2) WILLFUL FAILURE TO FILE RETURN, SUPPLY
INFORMATION, 
OR
PAY
TAX.—Section 
7203 
is
amended—
(A) in the first sentence—
(i) by striking ‘‘Any person’’ and in-
serting the following:
‘‘(a) IN GENERAL.—Any person’’, and
(ii) by striking ‘‘$25,000’’ and insert-
ing ‘‘$50,000’’,
(B) in the third sentence, by striking ‘‘sec-
tion’’ and inserting ‘‘subsection’’, and
(C) by adding at the end the following new
subsection:
‘‘(b) AGGRAVATED FAILURE TO FILE.—
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‘‘(1) IN GENERAL.—In the case of any failure de-
scribed in paragraph (2), the first sentence of sub-
section (a) shall be applied by substituting—
‘‘(A) ‘felony’ for ‘misdemeanor’,
‘‘(B) ‘$500,000 ($1,000,000’ for ‘$25,000
($100,000’, and
‘‘(C) ‘10 years’ for ‘1 year’.’’.
‘‘(2) FAILURE DESCRIBED.—A failure described
in this paragraph is a failure to make a return de-
scribed in subsection (a) for a period of 3 or more
consecutive taxable years if the aggregate tax liability
for such period is not less than $100,000.’’.
(3) FRAUD
AND
FALSE
STATEMENTS.—Section
7206(a) (as redesignated by subsection (a)) is
amended—
(A) by striking ‘‘$100,000’’ and inserting
‘‘$500,000’’,
(B) by striking ‘‘$500,000’’ and inserting
‘‘$1,000,000’’, and
(C) by striking ‘‘3 years’’ and inserting ‘‘5
years’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to actions, and failures to act, occurring
after the date of the enactment of this Act.
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SEC. 228. DOUBLING OF CERTAIN PENALTIES, FINES, AND
INTEREST ON UNDERPAYMENTS RELATED TO
CERTAIN OFFSHORE FINANCIAL ARRANGE-
MENTS.
(a) DETERMINATION OF PENALTY.—
(1) IN
GENERAL.—Notwithstanding any other
provision of law, in the case of an applicable
taxpayer—
(A) the determination as to whether any in-
terest or applicable penalty is to be imposed with
respect to any arrangement described in para-
graph (2), or to any underpayment of Federal
income tax attributable to items arising in con-
nection with any such arrangement, shall be
made without regard to the rules of subsections
(b), (c), and (d) of section 6664 of the Internal
Revenue Code of 1986, and
(B) if any such interest or applicable pen-
alty is imposed, the amount of such interest or
penalty shall be equal to twice that determined
without regard to this section.
(2) APPLICABLE
TAXPAYER.—For purposes of
this subsection—
(A) IN
GENERAL.—The term ‘‘applicable
taxpayer’’ means a taxpayer which—
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(i) has underreported its United States
income tax liability with respect to any
item which directly or indirectly involves—
(I) any financial arrangement
which in any manner relies on the use
of offshore payment mechanisms (in-
cluding credit, debit, or charge cards)
issued by banks or other entities in for-
eign jurisdictions, or
(II) any offshore financial ar-
rangement (including any arrange-
ment with foreign banks, financial in-
stitutions, corporations, partnerships,
trusts, or other entities), and
(ii) has neither signed a closing agree-
ment pursuant to the Voluntary Offshore
Compliance Initiative established by the De-
partment of the Treasury under Revenue
Procedure 2003–11 nor voluntarily dis-
closed its participation in such arrange-
ment by notifying the Internal Revenue
Service of such arrangement prior to the
issue being raised by the Internal Revenue
Service during an examination.