[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1786 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 1786
To end offshore corporate tax avoidance, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 11, 2021
Mr. Doggett (for himself, Mr. Blumenauer, Mr. Cohen, Mr. Danny K. Davis
of Illinois, Mr. DeFazio, Ms. DeLauro, Mr. Garamendi, Mr. Grijalva, Ms.
Jayapal, Ms. Johnson of Texas, Mr. Johnson of Georgia, Mr. Mfume, Mr.
Nadler, Mr. Raskin, Mr. Sarbanes, Ms. Schakowsky, Mr. Tonko, Ms.
Waters, Mrs. Watson Coleman, and Mr. Cartwright) 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. 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 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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