Bill Summary
This legislation aims to end offshore corporate tax avoidance by repealing certain tax avoidance rules, limiting deductions for interest paid by domestic corporations in international financial reporting groups, treating certain foreign corporations as domestic for tax purposes, and strengthening the Foreign Account Tax Compliance Act. It also includes provisions for presumptions and penalties for non-compliance with tax reporting and anti-money laundering rules. These changes will take effect for taxable years beginning after December 31, 2018, and will be enforced through various amendments to the Internal Revenue Code and other laws.
Possible Impacts
1. The legislation will affect multinational corporations by repealing the check-the-box and CFC look-thru rules, potentially leading to changes in their tax avoidance strategies.
2. Domestic corporations that are part of international financial reporting groups will be affected by limitations on deductions for interest paid, with changes taking effect for taxable years beginning after December 31, 2018.
3. Non-FATCA institutions and their transactions will be subject to presumptions for tax, securities, and reporting purposes, with the legislation strengthening the enforcement of the Foreign Account Tax Compliance Act and creating penalties for non-disclosure of offshore holdings.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1712 Introduced in House (IH)]
<DOC>
116th CONGRESS
1st Session
H. R. 1712
To end offshore corporate tax avoidance, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 13, 2019
Mr. Doggett (for himself, Mr. Blumenauer, Mr. Cartwright, Ms. Judy Chu
of California, Mr. Cohen, Mr. Courtney, Mr. Danny K. Davis of Illinois,
Mr. DeFazio, Ms. DeLauro, Mr. Deutch, Mr. Garamendi, Mr. Grijalva, Mr.
Higgins of New York, Mr. Huffman, Ms. Jayapal, Ms. Johnson of Texas,
Mr. Johnson of Georgia, Ms. Kaptur, Ms. Kelly of Illinois, Mr.
Langevin, Mr. Larson of Connecticut, Ms. Lee of California, Mr. Ted
Lieu of California, Mr. Loebsack, Mr. Lynch, Mr. McGovern, Ms. Moore,
Mr. Nadler, Mrs. Napolitano, Ms. Norton, Ms. Ocasio-Cortez, Ms.
Pingree, Mr. Raskin, Mr. Rush, Mr. Ryan, Mr. Sarbanes, Ms. Schakowsky,
Mr. Takano, Ms. Tlaib, Mr. Tonko, Mrs. Watson Coleman, Ms. Wild, Mr.
Yarmuth, Mr. Lewis, and Mr. Garcia of Illinois) introduced the
following bill; which was referred to the Committee on Ways and Means,
and in addition to the Committee on Financial Services, for a period to
be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A 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. Limitation on deduction of interest by domestic corporations
which are members of an international
financial reporting group.
Sec. 103. Treatment of foreign corporations managed and controlled in
the United States as domestic corporations.
Sec. 104. Swap payments made from the United States to persons
offshore.
Sec. 105. Modifications to rules relating to inverted corporations.
Sec. 106. Requirement to disclose total corporate taxes paid.
Sec. 107. Penalty for election to pay tax on deferred foreign income in
installments.
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. LIMITATION ON DEDUCTION OF INTEREST BY DOMESTIC CORPORATIONS
WHICH ARE MEMBERS OF AN INTERNATIONAL FINANCIAL REPORTING
GROUP.
(a) In General.--Section 163 is amended by redesignating subsection
(n) as subsection (p) and by inserting after subsection (m) the
following new subsection:
``(n) Limitation on Deduction of Interest by Domestic Corporations
in International Financial Reporting Groups.--
``(1) In general.--In the case of any domestic corporation
which is a member of any international financial reporting
group, the deduction under this chapter for interest paid or
accrued during the taxable year shall not exceed the sum of--
``(A) the allowable percentage of 110 percent of
the excess (if any) of--
``(i) the amount of such interest so paid
or accrued, over
``(ii) the amount described in subparagraph
(B), plus
``(B) the amount of interest includible in gross
income of such corporation for such taxable year.
``(2) International financial reporting group.--
``(A) For purposes of this subsection, the term
`international financial reporting group' means, with
respect to any reporting year, any group of entities
which--
``(i) includes--
``(I) at least one foreign
corporation engaged in a trade or
business within the United States, or
``(II) at least one domestic
corporation and one foreign
corporation,
``(ii) prepares consolidated financial
statements with respect to such year, and
``(iii) reports in such statements average
annual gross receipts (determined in the
aggregate with respect to all entities which
are part of such group) for the 3-reporting-
year period ending with such reporting year in
excess of $100,000,000.
``(B) Rules relating to determination of average
gross receipts.--For purposes of subparagraph (A)(iii),
rules similar to the rules of section 448(c)(3) shall
apply.
``(3) Allowable percentage.--For purposes of this
subsection--
``(A) In general.--The term `allowable percentage'
means, with respect to any domestic corporation for any
taxable year, the ratio (expressed as a percentage and
not greater than 100 percent) of--
``(i) such corporation's allocable share of
the international financial reporting group's
reported net interest expense for the reporting
year of such group which ends in or with such
taxable year of such corporation, over
``(ii) such corporation's reported net
interest expense for such reporting year of
such group.
``(B) Reported net interest expense.--The term
`reported net interest expense' means--
``(i) with respect to any international
financial reporting group for any reporting
year, the excess of--
``(I) the aggregate amount of
interest expense reported in such
group's consolidated financial
statements for such taxable year, over
``(II) the aggregate amount of
interest income reported in such
group's consolidated financial
statements for such taxable year, and
``(ii) with respect to any domestic
corporation for any reporting year, the excess
of--
``(I) the amount of interest
expense of such corporation reported in
the books and records of the
international financial reporting group
which are used in preparing such
group's consolidated financial
statements for such taxable year, over
``(II) the amount of interest
income of such corporation reported in
such books and records.
``(C) Allocable share of reported net interest
expense.--With respect to any domestic corporation
which is a member of any international financial
reporting group, such corporation's allocable share of
such group's reported net interest expense for any
reporting year is the portion of such expense which
bears the same ratio to such expense as--
``(i) the EBITDA of such corporation for
such reporting year, bears to
``(ii) the EBITDA of such group for such
reporting year.
``(D) EBITDA.--
``(i) In general.--The term `EBITDA' means,
with respect to any reporting year, earnings
before interest, taxes, depreciation, and
amortization--
``(I) as determined in the
international financial reporting
group's consolidated financial
statements for such year, or
``(II) for purposes of subparagraph
(A)(i), as determined in the books and
records of the international financial
reporting group which are used in
preparing such statements if not
determined in such statements.
``(ii) Treatment of disregarded entities.--
The EBITDA of any domestic corporation shall
not fail to include the EBITDA of any entity
which is disregarded for purposes of this
chapter.
``(iii) Treatment of intra-group
distributions.--The EBITDA of any domestic
corporation shall be determined without regard
to any distribution received by such
corporation from any other member of the
international financial reporting group.
``(E) Special rules for non-positive ebitda.--
``(i) Non-positive group ebitda.--In the
case of any international financial reporting
group the EBITDA of which is zero or less,
paragraph (1) shall not apply to any member of
such group the EBITDA of which is above zero.
``(ii) Non-positive entity ebitda.--In the
case of any group member the EBITDA of which is
zero or less, paragraph (1) shall be applied
without regard to subparagraph (A) thereof.
``(4) Consolidated financial statement.--For purposes of
this subsection, the term `consolidated financial statement'
means any consolidated financial statement described in
paragraph (2)(A)(ii) if such statement is--
``(A) a financial statement which is certified as
being prepared in accordance with generally accepted
accounting principles, international financial
reporting standards, or any other comparable method of
accounting identified by the Secretary, and which is--
``(i) a 10-K (or successor form), or annual
statement to shareholders, required to be filed
with the United States Securities and Exchange
Commission,
``(ii) an audited financial statement which
is used for--
``(I) credit purposes,
``(II) reporting to shareholders,
partners, or other proprietors, or to
beneficiaries, or
``(III) any other substantial
nontax purpose,
but only if there is no statement described in
clause (i), or
``(iii) filed with any other Federal or
State agency for nontax purposes, but only if
there is no statement described in clause (i)
or (ii), or
``(B) a financial statement which--
``(i) is used for a purpose described in
subclause (I), (II), or (III) of subparagraph
(A)(ii), or
``(ii) filed with any regulatory or
governmental body (whether domestic or foreign)
specified by the Secretary,
but only if there is no statement described in
subparagraph (A).
``(5) Reporting year.--For purposes of this subsection, the
term `reporting year' means, with respect to any international
financial reporting group, the year with respect to which the
consolidated financial statements are prepared.
``(6) Application to certain entities.--
``(A) Partnerships.--Except as otherwise provided
by the Secretary in paragraph (7), this subsection and
subsection (o) shall apply to any partnership which is
a member of any international financial reporting group
under rules similar to the rules of section 163(j)(4).
``(B) Foreign corporations engaged in trade or
business within the united states.--Except as otherwise
provided by the Secretary in paragraph (7), any
deduction for interest paid or accrued by a foreign
corporation engaged in a trade or business within the
United States shall be limited in a manner consistent
with the principles of this subsection.
``(C) Consolidated groups.--For purposes of this
subsection, the members of any group that file (or are
required to file) a consolidated return with respect to
the tax imposed by chapter 1 for a taxable year shall
be treated as a single corporation.
``(7) Regulations.--The Secretary may issue such
regulations or other guidance as are necessary or appropriate
to carry out the purposes of this subsection.''.
(b) Carryforward of Disallowed Interest.--
(1) In general.--Section 163 is amended by inserting after
subsection (n), as added by subsection (a), the following new
subsection:
``(o) Carryforward of Certain Disallowed Interest.--The amount of
any interest not allowed as a deduction for any taxable year by reason
of subsection (j)(1) or (n)(1) (whichever imposes the lower limitation
with respect to such taxable year) shall be treated as interest (and as
business interest for purposes of subsection (j)(1)) paid or accrued in
the succeeding taxable year. Interest paid or accrued in any taxable
year (determined without regard to the preceding sentence) shall not be
carried past the fifth taxable year following such taxable year,
determined by treating interest as allowed as a deduction on a first-
in, first-out basis.''.
(2) Conforming amendments.--
(A) Section 163(j)(2) is amended to read as
follows:
``(2) Carryforward cross-reference.--For carryforward
treatment, see subsection (o).''.
(B) Section 163(j)(4)(B)(i)(I) is amended by
striking ``paragraph (2)'' and inserting ``subsection
(o)''.
(C) Section 381(c)(20) is amended to read as
follows:
``(20) Carryforward of disallowed interest.--The carryover
of disallowed interest described in section 163(o) to taxable
years ending after the date of distribution or transfer.''.
(D) Section 382(d)(3) is amended to read as
follows:
``(3) Application to carryforward of disallowed interest.--
The term `pre-change loss' shall include any carryover of
disallowed interest described in section 163(o) under rules
similar to the rules of paragraph (1).''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2018.
SEC. 103. TREATMENT OF FOREIGN CORPORATIONS MANAGED AND CONTROLLED IN
THE UNITED STATES AS DOMESTIC CORPORATIONS.
(a) In General.--Section 7701 is amended by redesignating
subsection (p) as subsection (q) and by inserting after subsection (o)
the following new subsection:
``(p) Certain Corporations Managed and Controlled in the United
States Treated as Domestic 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 purposes of this
title, but
``(B) the management and control of the corporation
occurs, directly or indirectly, primarily within the
United States,
then, solely for purposes of chapter 1 (and any other provision
of this title relating to chapter 1), the corporation shall be
treated as a domestic corporation.
``(2) Corporation described.--
``(A) In general.--A corporation is described in
this paragraph if--
``(i) the stock of such corporation is
regularly traded on an established securities
market, or
``(ii) the aggregate gross assets of such
corporation (or any predecessor thereof),
including assets under management for
investors, whether held directly or indirectly,
at any time during the taxable year or any
preceding taxable year is $50,000,000 or more.
``(B) General exception.--A corporation 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
``(II) has, and is reasonably
expected 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.
``(3) Management and control.--
``(A) In general.--The Secretary shall prescribe
regulations for purposes of determining cases in which
the management and control of a corporation is to be
treated as occurring 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
substantially all of the executive officers and
senior management of the corporation who
exercise day-to-day responsibility for making
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
corporation (including individuals who are
officers or employees of other corporations in
the same chain of corporations as the
corporation) shall be treated as executive
officers and senior management if such
individuals exercise the day-to-day
responsibilities 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
(directly or indirectly) consist primarily of
assets 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 enactment 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.
SEC. 104. 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. 105. MODIFICATIONS TO RULES RELATING TO INVERTED CORPORATIONS.
(a) In General.--Subsection (b) of section 7874 is amended to read
as follows:
``(b) Inverted Corporations Treated as Domestic Corporations.--
``(1) In general.--Notwithstanding section 7701(a)(4), a
foreign corporation shall be treated for purposes of this title
as a domestic corporation if--
``(A) such corporation would be a surrogate foreign
corporation if subsection (a)(2) were applied by
substituting `80 percent' for `60 percent', or
``(B) such corporation is an inverted domestic
corporation.
``(2) Inverted domestic corporation.--For purposes of this
subsection, a foreign corporation shall be treated as an
inverted domestic corporation if, pursuant to a plan (or a
series of related transactions)--
``(A) the entity completes after December 22, 2017,
the direct or indirect acquisition of--
``(i) substantially all of the properties
held directly or indirectly by a domestic
corporation, or
``(ii) substantially all of the assets of,
or substantially all of the properties
constituting a trade or business of, a domestic
partnership, and
``(B) after the acquisition, either--
``(i) more than 50 percent of the stock (by
vote or value) of the entity is held--
``(I) in the case of an acquisition
with respect to a domestic corporation,
by former shareholders of the domestic
corporation by reason of holding stock
in the domestic corporation, or
``(II) in the case of an
acquisition with respect to a domestic
partnership, by former partners of the
domestic partnership by reason of
holding a capital or profits interest
in the domestic partnership, or
``(ii) the management and control of the
expanded affiliated group which includes the
entity occurs, directly or indirectly,
primarily within the United States, and such
expanded affiliated group has significant
domestic business activities.
``(3) Exception for corporations with substantial business
activities in foreign country of organization.--A foreign
corporation described in paragraph (2) shall not be treated as
an inverted domestic corporation if after the acquisition the
expanded affiliated group which includes the entity has
substantial business activities in the foreign country in which
or under the law of which the entity is created or organized
when compared to the total business activities of such expanded
affiliated group. For purposes of subsection (a)(2)(B)(iii) and
the preceding sentence, the term `substantial business
activities' shall have the meaning given such term under
regulations in effect on December 22, 2017, except that the
Secretary may issue regulations increasing the threshold
percent in any of the tests under such regulations for
determining if business activities constitute substantial
business activities for purposes of this paragraph.
``(4) Management and control.--For purposes of paragraph
(2)(B)(ii)--
``(A) In general.--The Secretary shall prescribe
regulations for purposes of determining cases in which
the management and control of an expanded affiliated
group is to be treated as occurring, directly or
indirectly, primarily within the United States. The
regulations prescribed under the preceding sentence
shall apply to periods after December 22, 2017.
``(B) Executive officers and senior management.--
Such regulations shall provide that the management and
control of an expanded affiliated group shall be
treated as occurring, directly or indirectly, primarily
within the United States if substantially all of the
executive officers and senior management of the
expanded affiliated group who exercise day-to-day
responsibility for making decisions involving
strategic, financial, and operational policies of the
expanded affiliated group are based or primarily
located within the United States. Individuals who in
fact exercise such day-to-day responsibilities shall be
treated as executive officers and senior management
regardless of their title.
``(5) Significant domestic business activities.--For
purposes of paragraph (2)(B)(ii), an expanded affiliated group
has significant domestic business activities if at least 25
percent of--
``(A) the employees of the group are based in the
United States,
``(B) the employee compensation incurred by the
group is incurred with respect to employees based in
the United States,
``(C) the assets of the group are located in the
United States, or
``(D) the income of the group is derived in the
United States,
determined in the same manner as such determinations are made
for purposes of determining substantial business activities
under regulations referred to in paragraph (3) as in effect on
December 22, 2017, but applied by treating all references in
such regulations to `foreign country' and `relevant foreign
country' as references to `the United States'. The Secretary
may issue regulations decreasing the threshold percent in any
of the tests under such regulations for determining if business
activities constitute significant domestic business activities
for purposes of this paragraph.''.
(b) Conforming Amendments.--
(1) Clause (i) of section 7874(a)(2)(B) is amended by
striking ``after March 4, 2003,'' and inserting ``after March
4, 2003, and before December 23, 2017,''.
(2) Subsection (c) of section 7874 is amended--
(A) in paragraph (2)--
(i) by striking ``subsection
(a)(2)(B)(ii)'' and inserting ``subsections
(a)(2)(B)(ii) and (b)(2)(B)(i)''; and
(ii) by inserting ``or (b)(2)(A)'' after
``(a)(2)(B)(i)'' in subparagraph (B);
(B) in paragraph (3), by inserting ``or
(b)(2)(B)(i), as the case may be,'' after
``(a)(2)(B)(ii)'';
(C) in paragraph (5), by striking ``subsection
(a)(2)(B)(ii)'' and inserting ``subsections
(a)(2)(B)(ii) and (b)(2)(B)(i)''; and
(D) in paragraph (6), by inserting ``or inverted
domestic corporation, as the case may be,'' after
``surrogate foreign corporation''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years ending after December 22, 2017.
SEC. 106. 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. 107. 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.
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 IN 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''.
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