Stop Tax Haven Abuse Act
Bill: S.725 | Sponsor: Sen. Whitehouse, Sheldon (D-RI)
Policy area: Taxation

Summary:
Stop Tax Haven Abuse Act
This bill authorizes the Department of the Treasury to impose restrictions on foreign jurisdictions or financial institutions to counter money laundering and efforts to significantly impede U.S. tax enforcement.
Among other provisions, the bill

To end offshore corporate tax avoidance, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE, ETC.

    (a) Short Title.--This Act may be cited as the ``Stop Tax Haven 
Abuse Act''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title, etc.
            TITLE I--ENDING CORPORATE OFFSHORE TAX AVOIDANCE

Sec. 101. Repeal of check-the-box rules for certain foreign entities 
                            and CFC look-thru rules.
Sec. 102. Swap payments made from the United States to persons 
                            offshore.
Sec. 103. Requirement to disclose total corporate taxes paid.
Sec. 104. Penalty for election to pay tax on deferred foreign income in 
                            installments.
Sec. 105. Modifications to base erosion and anti-abuse tax.
Sec. 106. Treatment of foreign base company oil related income as 
                            subpart F income.
Sec. 107. Modifications of foreign tax credit rules applicable to dual 
                            capacity taxpayers.
Sec. 108. Treatment of intangibles transferred to partnerships.
          TITLE II--ADDITIONAL MEASURES TO COMBAT TAX EVASION

Sec. 201. Authorizing special measures against foreign jurisdictions, 
                            financial institutions, and others that 
                            significantly impede United States tax 
                            enforcement.
Sec. 202. Strengthening the Foreign Account Tax Compliance Act (FATCA).
Sec. 203. Reporting United States beneficial owners of foreign owned 
                            financial accounts.
Sec. 204. Penalty for failing to disclose offshore holdings.
Sec. 205. Deadline for anti-money laundering rule for investment 
                            advisers.
Sec. 206. Anti-money laundering requirements for formation agents.
Sec. 207. Strengthening John Doe summons proceedings.
Sec. 208. Improving enforcement of foreign financial account reporting.

            TITLE I--ENDING CORPORATE OFFSHORE TAX AVOIDANCE

SEC. 101. REPEAL OF CHECK-THE-BOX RULES FOR CERTAIN FOREIGN ENTITIES 
              AND CFC LOOK-THRU RULES.

    (a) Check-the-Box Rules.--Paragraph (3) of section 7701(a) is 
amended--
            (1) by striking ``and'', and
            (2) by inserting after ``insurance companies'' the 
        following: ``, and any foreign business entity that--
                    ``(A) has a single owner that does not have limited 
                liability, or
                    ``(B) has one or more members all of which have 
                limited liability''.
    (b) Look-Thru Rule.--Subparagraph (C) of section 954(c)(6) is 
amended to read as follows:
                    ``(C) Termination.--Subparagraph (A) shall not 
                apply to dividends, interest, rents, and royalties 
                received or accrued after the date of the enactment of 
                the Stop Tax Haven Abuse Act.''.
    (c) Effective Date.--
            (1) The amendments made by subsection (a) shall take effect 
        on the date of the enactment of this Act.
            (2) The amendment made by subsection (b) shall apply to 
        payments received after the date of the enactment of this Act.

SEC. 102. SWAP PAYMENTS MADE FROM THE UNITED STATES TO PERSONS 
              OFFSHORE.

    (a) Tax on Swap Payments Received by Foreign Persons.--Section 
871(a)(1) is amended--
            (1) by inserting ``swap payments (as identified in section 
        1256(b)(2)(B)),'' after ``annuities,'' in subparagraph (A), and
            (2) by adding at the end the following new sentence: ``In 
        the case of swap payments, the source of a swap payment is 
        determined by reference to the location of the payor.''.
    (b) Tax on Swap Payments Received by Foreign Corporations.--Section 
881(a) is amended--
            (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 sentence: ``In 
        the case of swap payments, the source of a swap payment is 
        determined by reference to the location of the payor.''.

SEC. 103. REQUIREMENT TO DISCLOSE TOTAL CORPORATE TAXES PAID.

    (a) In General.--Section 13 of the Securities Exchange Act of 1934 
(15 U.S.C. 78m) is amended by adding at the end the following new 
subsection:
    ``(s) Disclosure of Total Corporate Taxes Paid.--
            ``(1) Issuer disclosure requirement.--Each issuer required 
        to file an annual or quarterly report under subsection (a) 
        shall disclose in that report--
                    ``(A) the total pre-tax profit of the issuer during 
                the period covered by the report;
                    ``(B) the total amount paid by the issuer in State 
                taxes during the period covered by the report;
                    ``(C) the total amount paid by the issuer in 
                Federal taxes during the period covered by the report; 
                and
                    ``(D) the total amount paid by the issuer in 
                foreign taxes during the period covered by the report.
            ``(2) Disclosure of country-by-country reporting 
        information.--Each issuer required to file an annual or 
        quarterly report under subsection (a) shall disclose in that 
        report, for each of its subsidiaries and aggregated on a 
        country-by-country basis--
                    ``(A) revenues generated from transactions with 
                other constituent entities;
                    ``(B) revenues not generated from transactions with 
                other constituent entities;
                    ``(C) profit or loss before income tax;
                    ``(D) total income tax paid on a cash basis to all 
                tax jurisdictions, and any taxes withheld on payments 
                received by the constituent entities;
                    ``(E) total accrued tax expense recorded on taxable 
                profits or losses, reflecting only operations in the 
                relevant annual period and excluding deferred taxes or 
                provisions for uncertain tax liabilities;
                    ``(F) stated capital, except that the stated 
                capital of a permanent establishment must be reported 
                in the tax jurisdiction of residence of the legal 
                entity of which it is a permanent establishment unless 
                there is a defined capital requirement in the permanent 
                establishment tax jurisdiction for regulatory purposes;
                    ``(G) total accumulated earnings, except that 
                accumulated earnings of a permanent establishment must 
                be reported by the legal entity of which it is a 
                permanent establishment;
                    ``(H) total number of employees on a full-time 
                equivalent basis; and
                    ``(I) net book value of tangible assets, which, for 
                purposes of this section, does not include cash or cash 
                equivalents, intangibles, or financial assets.
            ``(3) Availability of information.--The Commission shall 
        make the information filed with the Commission pursuant to this 
        subsection publicly available through the Commission website in 
        a manner that is searchable, sortable, and downloadable.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to disclosures made after the date of the enactment of this Act.

SEC. 104. PENALTY FOR ELECTION TO PAY TAX ON DEFERRED FOREIGN INCOME IN 
              INSTALLMENTS.

    (a) In General.--Section 965(h) is amended by adding at the end the 
following new paragraph:
            ``(7) Penalty.--Interest on installments under this 
        subsection shall be payable as determined under section 6601 by 
        treating the last date prescribed for payment for any 
        installment as the date for payment of the first installment 
        under this subsection.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect as if included in section 14103 of Public Law 115-97.

SEC. 105. MODIFICATIONS TO BASE EROSION AND ANTI-ABUSE TAX.

    (a) Reduction of Exemption Based on Annual Gross Receipts.--Section 
59A(e)(1)(B) is amended by striking ``$500,000,000'' and inserting 
``$100,000,000''.
    (b) Elimination of Exception Based on Base Erosion Percentage.--
Section 59(e)(1) is amended by inserting ``and'' at the end of 
subparagraph (A), by striking ``, and'' at the end of subparagraph (B) 
and inserting a period, and by striking subparagraph (C).
    (c) Certain Capitalized Amounts Included as Base Erosion 
Payments.--Section 59A(d) is amended by redesignating paragraphs (4) 
and (5) as paragraphs (5) and (6), respectively, and by inserting after 
paragraph (3) the following new paragraph:
            ``(4) Certain capitalized amounts.--Such term shall also 
        include any interest, royalty, or any other amount identified 
        by the Secretary that is paid or accrued by the taxpayer to a 
        foreign person which is a related party of the taxpayer and 
        with respect to which the taxpayer increases the value of 
        property under section 1016 or any other provision of this 
        title.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 106. TREATMENT OF FOREIGN BASE COMPANY OIL RELATED INCOME AS 
              SUBPART F INCOME.

    (a) In General.--Section 954(a) is amended by striking ``and'' at 
the end of paragraph (2), by striking the period at the end of 
paragraph (3) and inserting ``, and'', and by adding at the end the 
following new paragraph:
            ``(4) the foreign base company oil related income for the 
        taxable year (determined under subsection (g) and reduced as 
        provided in subsection (b)(5)).''.
    (b) Foreign Base Company Oil Related Income.--Section 954 is 
amended by inserting after subsection (e) the following new subsection:
    ``(g) Foreign Base Company Oil Related Income.--For purposes of 
this section, the term `foreign base company oil related income' means 
foreign oil related income (within the meaning of paragraphs (2) and 
(3) of section 907(c)) other than income derived from a source within a 
foreign country in connection with--
            ``(1) oil or gas which was extracted from an oil or gas 
        well located in such foreign country, or
            ``(2) oil, gas, or a primary product of oil or gas which is 
        sold by the foreign corporation or a related person for use or 
        consumption within such country or is loaded in such country on 
        a vessel or aircraft as fuel for such vessel or aircraft.
Such term shall not include any foreign personal holding company income 
(as defined in subsection (c)).''.
    (c) Conforming Amendments.--
            (1) Section 952(c)(1)(B)(iii) is amended by redesignating 
        subclauses (III) and (IV) as subclauses (IV) and (V), 
        respectively, and by inserting after subclause (II) the 
        following new subclause:
                                    ``(III) foreign base company oil 
                                related income.''.
            (2) Section 954(b) is amended--
                    (A) by striking ``and the foreign base company 
                services income'' in paragraph (5) and inserting ``the 
                foreign base company services income, and the foreign 
                base company oil related income'', and
                    (B) by adding at the end the following new 
                paragraph:
            ``(6) Foreign base company oil related income not treated 
        as another kind of base company income.--Income of a 
        corporation which is foreign base company oil related income 
        shall not be considered foreign base company income of such 
        corporation under paragraph (2) or (3) of subsection (a).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years of foreign corporations beginning after the date 
of the enactment of this Act, and to taxable years of United States 
shareholders in which or with which such taxable years of foreign 
corporations end.

SEC. 107. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE TO DUAL 
              CAPACITY TAXPAYERS.

    (a) In General.--Section 901 of the Internal Revenue Code of 1986 
is amended by redesignating subsection (n) as subsection (o) and by 
inserting after subsection (m) the following new subsection:
    ``(n) Special Rules Relating to Dual Capacity Taxpayers.--
            ``(1) General rule.--Notwithstanding any other provision of 
        this chapter, any amount paid or accrued by a dual capacity 
        taxpayer to a foreign country or possession of the United 
        States for any period with respect to combined foreign oil and 
        gas income (as defined in section 907(b)(1)) shall not be 
        considered a tax to the extent such amount exceeds the amount 
        (determined in accordance with regulations) which would have 
        been required to be paid if the taxpayer were not a dual 
        capacity taxpayer.
            ``(2) Dual capacity taxpayer.--For purposes of this 
        subsection, the term `dual capacity taxpayer' means, with 
        respect to any foreign country or possession of the United 
        States, a person who--
                    ``(A) is subject to a levy of such country or 
                possession, and
                    ``(B) receives (or will receive) directly or 
                indirectly a specific economic benefit (as determined 
                in accordance with regulations) from such country or 
                possession.''.
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to taxes paid or accrued in taxable years beginning after 
        December 31, 2020.
            (2) Contrary treaty obligations upheld.--The amendments 
        made by this section shall not apply to the extent contrary to 
        any treaty obligation of the United States.

SEC. 108. TREATMENT OF INTANGIBLES TRANSFERRED TO PARTNERSHIPS.

    (a) Repeal of Certain Regulatory Authority.--Section 367(d) is 
amended by striking paragraph (3).
    (b) Exception to Rules Providing Nonrecognition of Gain.--Section 
721(d) is amended to read as follows:
    ``(d) Certain Transfers of Intangible Property to Partnerships.--
            ``(1) In general.--Except as provided in regulations 
        prescribed by the Secretary, if a United States person 
        transfers any intangible property within the meaning of section 
        367(d)(4) to a specified partnership in an exchange described 
        in this section, subsection (a) shall not apply to the transfer 
        of such property and the provisions of section 367(d)(2) shall 
        apply to such transfer.
            ``(2) Specified partnership.--For purposes of this 
        subsection, the term `specified partnership' means any 
        partnership if any item of income or gain attributable to 
        intangible property is taken into account in determining any 
        distributive share of such partnership to a person that is not 
        a United States person.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to transfers after the date of the enactment of this Act, in 
taxable years ending after such date.

          TITLE II--ADDITIONAL MEASURES TO COMBAT TAX EVASION

SEC. 201. AUTHORIZING SPECIAL MEASURES AGAINST FOREIGN JURISDICTIONS, 
              FINANCIAL INSTITUTIONS, AND OTHERS THAT SIGNIFICANTLY 
              IMPEDE UNITED STATES TAX ENFORCEMENT.

    (a) In General.--Section 5318A of title 31, United States Code, is 
amended--
            (1) by striking the section heading and inserting the 
        following: ``Special measures for jurisdictions, financial 
        institutions, or international transactions that are of primary 
        money laundering concern or significantly impede United States 
        tax enforcement'';
            (2) in subsection (a), by striking the subsection heading 
        and inserting the following: ``Special Measures To Counter 
        Money Laundering and Efforts To Significantly Impede United 
        States Tax Enforcement'';
            (3) in subsection (c)--
                    (A) by striking the subsection heading and 
                inserting the following: ``Consultations and 
                Information To Be Considered in Finding Jurisdictions, 
                Institutions, Types of Accounts, or Transactions To Be 
                of Primary Money Laundering Concern or To Be 
                Significantly Impeding United States Tax Enforcement''; 
                and
                    (B) in paragraph (2), by adding at the end the 
                following:
                    ``(C) Other considerations.--The fact that a 
                jurisdiction or financial institution is cooperating 
                with the United States on implementing the requirements 
                specified in chapter 4 of the Internal Revenue Code of 
                1986 may be favorably considered in evaluating whether 
                such jurisdiction or financial institution is 
                significantly impeding United States tax 
                enforcement.'';
            (4) in subsection (a)(1), by inserting ``or is 
        significantly impeding United States tax enforcement'' after 
        ``primary money laundering concern'';
            (5) in subsection (a)(4)--
                    (A) in subparagraph (A)--
                            (i) by inserting ``in matters involving 
                        money laundering,'' before ``shall consult''; 
                        and
                            (ii) by striking ``and'' at the end;
                    (B) by redesignating subparagraph (B) as 
                subparagraph (C); and
                    (C) by inserting after subparagraph (A) the 
                following:
                    ``(B) in matters involving United States tax 
                enforcement, shall consult with the Commissioner of 
                Internal Revenue, the Secretary of State, the Attorney 
                General of the United States, and in the sole 
                discretion of the Secretary, such other agencies and 
                interested parties as the Secretary may find to be 
                appropriate; and'';
            (6) in each of paragraphs (1)(A), (2), (3), and (4) of 
        subsection (b), by inserting ``or to be significantly impeding 
        United States tax enforcement'' after ``primary money 
        laundering concern'' each place that term appears;
            (7) in subsection (b), by striking paragraph (5) and 
        inserting the following:
            ``(5) Prohibitions or conditions on opening or maintaining 
        certain correspondent or payable-through accounts or 
        authorizing certain payment cards.--If the Secretary finds a 
        jurisdiction outside of the United States, 1 or more financial 
        institutions operating outside of the United States, or 1 or 
        more classes of transactions within or involving a jurisdiction 
        outside of the United States to be of primary money laundering 
        concern or to be significantly impeding United States tax 
        enforcement, the Secretary, in consultation with the Secretary 
        of State, the Attorney General of the United States, and the 
        Chairman of the Board of Governors of the Federal Reserve 
        System, may prohibit, or impose conditions upon--
                    ``(A) the opening or maintaining in the United 
                States of a correspondent account or payable-through 
                account by any domestic financial institution or 
                domestic financial agency for or on behalf of a foreign 
                banking institution, if such correspondent account or 
                payable-through account involves any such jurisdiction 
                or institution, or if any such transaction may be 
                conducted through such correspondent account or 
                payable-through account; or
                    ``(B) the authorization, approval, or use in the 
                United States of a credit card, charge card, debit 
                card, or similar credit or debit financial instrument 
                by any domestic financial institution, domestic 
                financial agency, or credit card company or association 
                for or on behalf of a foreign banking institution, if 
                such credit card, charge card, debit card, or similar 
                credit or debit financial instrument involves any such 
                jurisdiction or institution, or if any such transaction 
                may be conducted through such credit card, charge card, 
                debit card, or similar credit or debit financial 
                instrument.'';
            (8) in subsection (c)(1), by inserting ``or is 
        significantly impeding United States tax enforcement'' after 
        ``primary money laundering concern'';
            (9) in subsection (c)(2)(A)--
                    (A) in clause (ii), by striking ``bank secrecy or 
                special regulatory advantages'' and inserting ``bank, 
                tax, corporate, trust, or financial secrecy or 
                regulatory advantages'';
                    (B) in clause (iii), by striking ``supervisory and 
                counter-money'' and inserting ``supervisory, 
                international tax enforcement, and counter-money'';
                    (C) in clause (v), by striking ``banking or 
                secrecy'' and inserting ``banking, tax, or secrecy''; 
                and
                    (D) in clause (vi), by inserting ``, tax treaty, or 
                tax information exchange agreement'' after ``treaty'';
            (10) in subsection (c)(2)(B)--
                    (A) in clause (i), by inserting ``or tax evasion'' 
                after ``money laundering''; and
                    (B) in clause (iii), by inserting ``, tax 
                evasion,'' after ``money laundering''; and
            (11) in subsection (d), by inserting ``involving money 
        laundering, and shall notify, in writing, the Committee on 
        Finance of the Senate and the Committee on Ways and Means of 
        the House of Representatives of any such action involving 
        United States tax enforcement'' after ``such action''.
    (b) Clerical Amendment.--The table of contents for chapter 53 of 
title 31, United States Code, is amended by striking the item relating 
to section 5318A and inserting the following:

``5318A. Special measures for jurisdictions, financial institutions, or 
                            international transactions that are of 
                            primary money laundering concern or 
                            significantly impede United States tax 
                            enforcement.''.

SEC. 202. STRENGTHENING THE FOREIGN ACCOUNT TAX COMPLIANCE ACT (FATCA).

    (a) Reporting Activities With Respect to Passive Foreign Investment 
Companies.--Section 1298(f) is amended by inserting ``, or who directly 
or indirectly forms, transfers assets to, is a beneficiary of, has a 
beneficial interest in, or receives money or property or the use 
thereof from,'' after ``shareholder of''.
    (b) Withholdable Payments to Foreign Financial Institutions.--
Section 1471(d) is amended--
            (1) in paragraph (2)(A), by inserting ``or transaction'' 
        after ``any depository'', and
            (2) in paragraph (5)(C), by striking ``or any interest'' 
        and all that follows and inserting ``derivatives, or any 
        interest (including a futures or forward contract, swap, or 
        option) in such securities, partnership interests, commodities, 
        or derivatives.''.
    (c) Withholdable Payments to Other Foreign Financial 
Institutions.--Section 1472 is amended--
            (1) by inserting ``as a result of any customer 
        identification, anti-money laundering, anti-corruption, or 
        similar obligation to identify account holders,'' after 
        ``reason to know,'' in subsection (b)(2), and
            (2) by inserting ``as posing a low risk of tax evasion'' 
        after ``this subsection'' in subsection (c)(1)(G).
    (d) Definitions.--Clauses (i) and (ii) of section 1473(2)(A) are 
each amended by inserting ``or as a beneficial owner'' after 
``indirectly''.
    (e) Special Rules.--Section 1474(c) is amended--
            (1) by inserting ``, except that information provided under 
        section 1471(c) or 1472(b) may be disclosed to any Federal law 
        enforcement agency, upon request or upon the initiation of the 
        Secretary, to investigate or address a possible violation of 
        United States law'' after ``shall apply'' in paragraph (1), and
            (2) by inserting ``, or has had an agreement terminated 
        under such section,'' after ``section 1471(b)'' in paragraph 
        (2).
    (f) Information With Respect to Foreign Financial Assets.--Section 
6038D(a) is amended by inserting ``ownership or beneficial ownership'' 
after ``holds any''.
    (g) Establishing Presumptions for Entities and Transactions 
Involving Non-FATCA Institutions.--
            (1) Presumptions for tax purposes.--
                    (A) In general.--Chapter 76 is amended by inserting 
                after section 7491 the following new subchapter:

       ``Subchapter F--Presumptions for Certain Legal Proceedings

``Sec. 7492. Presumptions pertaining to entities and transactions 
                            involving non-FATCA institutions.

``SEC. 7492. PRESUMPTIONS PERTAINING TO ENTITIES AND TRANSACTIONS 
              INVOLVING NON-FATCA INSTITUTIONS.

    ``(a) Control.--For purposes of any United States civil judicial or 
administrative proceeding to determine or collect tax, there shall be a 
rebuttable presumption that a United States person who, directly or 
indirectly, formed, transferred assets to, was a beneficiary of, had a 
beneficial interest in, or received money or property or the use 
thereof from an entity, including a trust, corporation, limited 
liability company, partnership, or foundation, that holds an account, 
or in any other manner has assets, in a non-FATCA institution, 
exercised control over such entity. The presumption of control created 
by this subsection shall not be applied to prevent the Secretary from 
determining or arguing the absence of control.
    ``(b) Transfers of Income.--For purposes of any United States civil 
judicial or administrative proceeding to determine or collect tax, 
there shall be a rebuttable presumption that any amount or thing of 
value received by a United States person directly or indirectly from an 
account or from an entity that holds an account, or in any other manner 
has assets, in a non-FATCA institution, constitutes income of such 
person taxable in the year of receipt; and any amount or thing of value 
paid or transferred by or on behalf of a United States person directly 
or indirectly to an account, or entity that holds an account, or in any 
other manner has assets, in a non-FATCA institution, represents 
previously unreported income of such person taxable in the year of the 
transfer.
    ``(c) Rebutting the Presumptions.--The presumptions established in 
this section may be rebutted only by clear and convincing evidence, 
including detailed documentary, testimonial, and transactional 
evidence, establishing that--
            ``(1) in subsection (a), such taxpayer exercised no 
        control, directly or indirectly, over account or entity at the 
        time in question, and
            ``(2) in subsection (b), such amounts or things of value 
        did not represent income related to such United States person.
Any court having jurisdiction of a civil proceeding in which control of 
such an offshore account or offshore entity or the income character of 
such receipts or amounts transferred is an issue shall prohibit the 
introduction by the taxpayer of any foreign based document that is not 
authenticated in open court by a person with knowledge of such 
document, or any other evidence supplied by a person outside the 
jurisdiction of a United States court, unless such person appears 
before the court.''.
                    (B) The table of subchapters for chapter 76 is 
                amended by inserting after the item relating to 
                subchapter E the following new item:

     ``subchapter f. presumptions for certain legal proceedings''.

            (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 foreign financial institution that does 
        not meet the reporting requirements of section 1471(b).''.
            (3) Presumptions for securities law purposes.--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 judicial or 
        administrative proceeding under this title, there shall be a 
        rebuttable presumption that a United States person who, 
        directly or indirectly, formed, transferred assets to, was a 
        beneficiary of, had a beneficial interest in, or received money 
        or property or the use thereof from an entity, including a 
        trust, corporation, limited liability company, partnership, or 
        foundation, 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 presumption of control created by 
        this paragraph shall not be applied to prevent the Commission 
        from determining 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 presumption that securities that are 
        nominally owned by an entity, including a trust, corporation, 
        limited liability company, partnership, or foundation, and that 
        are held in a non-FATCA institution (as so defined), are 
        beneficially owned by any United States person who directly or 
        indirectly exercised control over such entity. The presumption 
        of beneficial ownership created by this paragraph shall not be 
        applied to prevent the Commission from determining or arguing 
        the absence of beneficial ownership.''.
            (4) Presumption for reporting purposes relating to foreign 
        financial accounts.--Section 5314 of title 31, United States 
        Code, is amended by adding at the end the following new 
        subsection:
    ``(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 sufficient 
to require a report prescribed by regulations under this section.''.
            (5) Regulatory authority.--Not later than 180 days after 
        the date of 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 implement 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 determines that applying such amendments 
        to such transactions 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 enactment of 
this Act, whether or not regulations are issued under subsection 
(g)(5).

SEC. 203. REPORTING UNITED STATES BENEFICIAL OWNERS OF FOREIGN OWNED 
              FINANCIAL ACCOUNTS.

    (a) In General.--Subpart B of part III of subchapter A of chapter 
61 is amended by inserting after section 6045B the following new 
sections:

``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.

    ``(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 purposes of 
        title 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'),
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 taxpayer 
        identification number of the United States beneficial owner,
            ``(2) the known facts pertaining to the relationship 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 Beneficial Owners With Respect 
to Whom Information Is Required To Be Reported.--A withholding agent 
required to make a return under subsection (a) shall furnish to each 
United States beneficial owner whose name 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 beneficial owner.
The written statement required under the preceding sentence 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 REGARDING ESTABLISHMENT 
              OF ACCOUNTS AT NON-FATCA INSTITUTIONS.

    ``(a) Requirement of Return.--Any financial institution 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 company, partnership, or foundation (other than an 
entity with shares regularly traded on an established securities 
market), in a non-FATCA institution (as defined in section 7701(a)(51)) 
at the direction of, on behalf of, or for 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 identification number 
        of such United States person,
            ``(2) the name and address of the financial institution 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 Information Is Required To Be Reported.--A financial 
institution required to make a return under subsection (a) shall 
furnish to each United States person whose name 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 person.
The written statement required under the preceding sentence 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 required to be made.
    ``(d) Exemption.--The Secretary may by regulations 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 section 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 (xxv), by striking ``and'' at the 
        end of clause (xxvi), and by adding after clause (xxvi) the 
        following new clauses:
                            ``(xxvii) 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
                            ``(xxviii) 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 
        redesignating the second subparagraph (JJ) as (KK), by striking 
        ``or'' at the end of subparagraph (JJ), by striking the period 
        at the end of subparagraph (KK), and by inserting after 
        subparagraph (KK) the following new subparagraphs:
                    ``(LL) section 6045C(c) (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
                    ``(MM) section 6045D(c) (relating to returns by 
                financial institutions regarding establishment of 
                accounts at non-FATCA institutions).''.
    (c) Clerical Amendment.--The table of sections for subpart B of 
part III of subchapter A of chapter 61 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 accounts at non-FATCA institutions.''.
    (d) Additional Penalties.--
            (1) Additional penalties on banks.--Section 5239(b)(1) of 
        the Revised Statutes of the United States (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 pursuant to,''.
            (2) Additional penalties on securities firms.--Section 
        21(d)(3)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 
        78u(d)(3)(A)) is amended by inserting ``any of the provisions 
        of section 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 regulations, forms, or other guidance 
        necessary to implement this section.
            (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 accounts opened 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 accounts opened after December 31 
        of the year of the date of the enactment of this Act, whether 
        or not regulations are issued under Section 6045D.

SEC. 204. 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), for each such 
                        violation, the amount of 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 company, 
                                partnership, or foundation through 
                                which an issuer 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 subject 
                                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 such violation, the amount 
                of 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 company, 
                        partnership, or foundation through which an 
                        issuer 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 subject to disclosure 
                        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 such violation, the amount 
                of 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 company, 
                        partnership, or foundation through which an 
                        issuer 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 subject to disclosure 
                        by the issuer or such person under this 
                        title.''.

SEC. 205. 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 subparagraph (BB); 
        and
            (3) by inserting after subparagraph (Y) the following:
                    ``(Z) an investment adviser (as defined in section 
                202(a) of the Investment Advisers Act of 1940);''.
    (b) Rules Required.--The Secretary of the Treasury shall--
            (1) in consultation with the Securities and Exchange 
        Commission and the Commodity Futures Trading Commission, not 
        later than 180 days after the date of enactment of this Act, 
        publish a proposed rule in the Federal Register to carry out 
        the amendments made by this section; and
            (2) 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 paragraph (1).
    (c) Contents.--The final rule published under this section shall 
require, at a minimum, each investment adviser (as defined in section 
202(a)(11) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
2(a)(11))) registered with the Securities and Exchange Commission 
pursuant to section 203 of that Act (15 U.S.C. 80b-3)--
            (1) to submit suspicious activity reports and establish 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. 206. 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 205 of this 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 Security, 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).
            (2) Exclusions.--The rule promulgated under this subsection 
        shall exclude from the category of persons engaged in the 
        business of forming new corporations 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. 207. STRENGTHENING JOHN DOE SUMMONS PROCEEDINGS.

    (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 person 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 investigation of a 
                particular person or ascertainable group or class of 
                persons,
                    ``(B) 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 any provision of any 
                internal revenue law, and
                    ``(C) the information sought to be obtained from 
                the examination of the records or testimony (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 limited to information 
        regarding a United States correspondent 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 financial institution that 
        is held at a non-FATCA institution (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 ascertainable group or class of 
        persons have financial accounts 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 
                        approved 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 issued with respect to 
                        the project will be issued to a member of an 
                        ascertainable group or class of persons, 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 subparagraph (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.--During any period 
                in which the Secretary is authorized 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 sentence 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 determine the 
        approval of a project under subsection (f)(4)(B).''.
            (2) Conforming amendment.--The first sentence 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. 208. IMPROVING ENFORCEMENT OF FOREIGN FINANCIAL ACCOUNT REPORTING.

    (a) Clarifying the Connection of Foreign Financial Account 
Reporting to Tax Administration.--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 statutes.''.
    (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 
criminal enforcement divisions of the Internal Revenue Service,'' after 
``including''.
                                 <all>