,i #aacth ,,congress #ast ,session ,h4 ,r4 #cfff ,,in ,,the ,,house ,,of ,,representatives ,december #e1 #bjac,ms4 ,de,lauro 7for herself and ,mr4 ,doggett7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means1 and in addition to the ,committees on ,financial ,services and the ,budget1 for a period to be subsequently determined by the ,speaker1 in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned ,a ,,bill ,to alleviate the sequestration and to end offshore tax abuses1 to preserve our national defense and protect ,american families and businesses from devastating cuts1 and for other purposes4 #a4 ,short title1 etc 7a7 ,short title ,this ,act may be cited as the ,sequester ,delay and ,stop ,tax ,haven ,abuse ,act4 7b7 ,amendment of #aihf code ,except as otherwise expressly provided1 whenever in titles ,,ii through ,,iv of this ,act an amendment or repeal is expressed in terms of an amendment to1 or repeal of1 a section or other provision1 the reference shall be considered to be made to a section or other provision of the ,internal ,revenue ,code of #aihf4 7c7 ,table of contents ,the table of contents of this ,act is as follows3 ,sec4 #a4 ,short title1 etc4,sec4 #b4 ,findings4,title ,i--,extension of ,sequestration,sec4 #aja4 ,repeal the #bjad and #bjae sequesters4,sec4 #ajb4 ,modification of discretionary spending caps for fiscal year #bjaf4,title ,,ii--,deterring the use of tax havens for tax evasion,sec4 #bja4 ,authorizing special measures against foreign jurisdictions1 financial institutions1 and others that significantly impede ,united ,states tax enforcement4,sec4 #bjb4 ,strengthening the ,foreign ,account ,tax ,compliance ,act 7,,fatca74,sec4 #bjc4 ,treatment of foreign corporations managed and controlled in the ,united ,states as domestic corporations4,sec4 #bjd4 ,reporting ,united ,states beneficial owners of foreign owned financial accounts4,sec4 #bje4 ,swap payments made from the ,united ,states to persons offshore4,title ,,iii--,other measures ,to combat tax haven abuses,sec4 #cja4 ,country-by-country reporting4,sec4 #cjb4 ,penalty for failing to disclose offshore holdings4,sec4 #cjc4 ,deadline for anti-money laundering rule for investment advisers4,sec4 #cjd4 ,anti-money laundering requirements for formation agents4,sec4 #cje4 ,strengthening ,john ,doe summons proceedings4,sec4 #cjf4 ,improving enforcement of foreign financial account reporting4,title ,,iv--,ending corporate offshore tax avoidance,sec4 #dja4 ,allocation of expenses and taxes on basis of repatriation of foreign income4,sec4 #djb4 ,current taxation of royalties and other income from intangibles received from a controlled foreign corporation4,sec4 #djc4 ,limitations on income shifting through intangible property transfers4,sec4 #djd4 ,repeal of check-the-box rules for certain foreign entities and ,,cfc look-thru rules4,sec4 #dje4 ,prohibition on offshore loan abuse4 #b4 ,findings ,the ,congress finds the following3 7#a7 ,over the last three years1 ,congress has enacted several rounds of spending cuts that are negatively impacting core government programs and services including medical research1 education1 public safety1 and so much more4 ,these cuts were made worse by sequestration1 and the impact of sequestration in #bjad will be worse for the economy1 as spending cuts will be larger1 begin immediately1 and build on the previous rounds of cuts4 7#b7 ,if sequestration continues into #bjad1 discretionary spending subject to the ,budget ,control ,act caps will be #abc billion or #aa percent lower than it was in #bjaj4 7#c7 ,in ,october #bjac1 the ,international ,monetary ,fund downwardly revised the ,,gdp growth forecast for the ,united ,states by #j4b percent due to the expectation that sequestration would remain in place through #bjad4 7#d7 ,according to the ,congressional ,budget ,office1 repealing the #bjad sequestration cuts would increase real ,,gdp by #j4f percent and increase employment by #hjj1jjj jobs4 7#e7 ,the ,sequester ,delay and ,stop ,tax ,haven ,abuse ,act will repeal sequestration for #bjad and #bjae and partially reduce sequestration in #bjaf without increasing the deficit4 7#f7 ,united ,states corporations are paying historically low ,federal taxes while reaping all-time high profits4 ,corporate taxes in #bjab accounted for just #i4i percent of total revenue1 compared with #cb4a percent #fj years earlier1 according to the ,office of ,budget and ,management4 ,in #bjab1 ,united ,states corporations kept an estimated #a4i trillion in undistributed foreign earnings offshore4 7#g7 ,corporations avoid ,federal taxation in part by using tax loopholes to shift their profits offshore through an increasing number of foreign subsidiaries4 ,in #bjjh1 the ,government ,accountability ,office reported that #hc of the top #ajj publicly traded companies had subsidiaries in offshore tax havens4 ,more than two dozen large1 profitable ,united ,states corporations paid no ,federal taxes at all in #bjaa4 7#h7 ,the ,united ,states is losing an estimated #aej billion a year in revenue to offshore tax-avoidance schemes4 ,in #bjjh1 the ,government ,accountability ,office released information showing #ah1heg corporations listed their address of incorporation as the ,ugland ,house in the ,cayman ,islands1 nearly #i1jjj of which had a ,united ,states billing address4 ,according to ,audit ,analytics1 a private research firm1 the estimated #a4i trillion in ,united ,states profits being kept abroad untaxed represents a #gj percent increase over the last #e years4 7#i7 ,in #bjjh1 according to an analysis by the ,congressional ,research ,service1 ,american multinational companies collectively reported #dc percent of their foreign earnings in five tax haven countries3 ,bermuda1 ,ireland1 ,luxembourg1 the ,netherlands1 and ,switzerland4 ,yet these countries accounted for only #d percent of the companies' foreign workforce and just #g percent of their foreign investment4 7#aj7 ,according to the ,congressional ,budget ,office1 though the statutory corporate tax rate is #ce percent1 corporations were actually taxed at an effective rate of #ab4a percent in #bjaa4 7#aa7 ,the corporate tax share of the ,american economy is less than the corporate tax share of the economies of our foreign competitors4 ,at #b4g percent1 the ,united ,states ranked #ag out of #cb ,organisation for ,economic ,co-operation and ,development 7,,oecd7 countries1 behind ,great ,britain1 ,canada1 and ,japan4 7#ab7 ,corporate tax loopholes that allow ,united ,states corporations to use shell companies and accounting gimmicks to move profits offshore1 encourage ,united ,states corporations to move jobs and operations overseas1 and put domestic firms that pay taxes at a competitive disadvantage should be closed4 ,i ,extension of ,sequestration #aja4 ,repeal the #bjad and #bjae sequesters 7a7 ,calculation of total deficit reduction and allocation to functions 7#a7 ,section #bea;,a7#c7 of the ,balanced ,budget and ,emergency ,deficit ,control ,act of #aihe 7#b ,u4,s4,c4 #ija;a7 is amended by striking #bjac and inserting #bjaf4 7#b7 ,paragraph 7#d7 of such section is amended by striking #bjad;and inserting #bjaf4 7#c7 ,paragraphs 7#e7 and 7#f7 of such section are amended by striking #bjac and inserting #bjaf4 7b7 ,defense and nondefense function reductions ,paragraphs 7#e7 and 7#f7 of section #bea;,a of the ,balanced ,budget and ,emergency ,deficit ,control ,act of #aihe are amended by striking #bjac and inserting #bjaf each place it appears4 7c7 ,implementing discretionary reductions ,section #bea;,a7#g77;,b7 of such ,act is amended by striking #bjad and inserting #bjaf each place it appears4 7d7 ,conforming change ,upon the date of enactment of this ,act1 the report entitled ,,omb ,sequestration ,preview ,report to the ,president and ,congress for ,fiscal ,year #bjad and ,,omb ,report to the ,congress on the ,joint ,committee ,reductions for ,fiscal ,year #bjad1 issued on ,april #aj1 #bjac1 and corrected on ,may #bj1 #bjac1 shall have no force or effect4 #ajb4 ,modification of discretionary spending caps for fiscal year #bjaf ,section #bea7;c77#e7 of the ,balanced ,budget and ,emergency ,deficit ,control ,act of #aihe is amended by increasing the budget authority for fiscal year #bjaf for the security category by #bb1iib1jjj1jjj1jjj and for the nonsecurity category by #ae1feb1jjj1jjj1jjj4 ,,ii ,deterring the use of tax havens for tax evasion #bja4 ,authorizing special measures against foreign jurisdictions1 financial institutions1 and others that significantly impede ,united ,states tax enforcement ,section #ecah;,a of title #ca1 ,united ,states ,code1 is amended-- 7#a7 by striking the section heading and inserting the following3 #ecah;,a4 ,special measures for jurisdictions1 financial institutions1 or international transactions that are of primary money laundering concern or significantly impede ,united ,states tax enforcement 2 7#b7 in subsection 7a71 by striking the subsection heading and inserting the following3 7a7 ,special measures ,to counter money laundering and efforts to significantly impede ,united ,states tax enforcement 2 7#c7 in subsection 7c7-- 7,a7 by striking the subsection heading and inserting the following3 7c7 ,consultations and information ,to be considered in finding jurisdictions1 institutions1 types of accounts1 or transactions ,to be of primary money laundering concern or ,to be significantly impeding ,united ,states tax enforcement 2 and 7,b7 by inserting at the end of paragraph 7#b7 thereof the following new subparagraph3 7,c7 ,other considerations ,the fact that a jurisdiction or financial institution is cooperating with the ,united ,states on implementing the requirements specified in chapter #d of the ,internal ,revenue ,code of #aihf may be favorably considered in evaluating whether such jurisdiction or financial institution is significantly impeding ,united ,states tax enforcement4 2 7#d7 in subsection 7a77#a71 by inserting or is significantly impeding ,united ,states tax enforcement after primary money laundering concern2 7#e7 in subsection 7a77#d7-- 7,a7 in subparagraph 7,a7-- 7i7 by inserting in matters involving money laundering1 before shall consult2 and 7ii7 by striking and at the end2 7,b7 by redesignating subparagraph 7,b7 as subparagraph 7,c72 and 7,c7 by inserting after subparagraph 7,a7 the following3 7,b7 in matters involving ,united ,states tax enforcement1 shall consult with the ,commissioner of the ,internal ,revenue1 the ,secretary of ,state1 the ,attorney ,general of the ,united ,states1 and in the sole discretion of the ,secretary1 such other agencies and interested parties as the ,secretary may find to be appropriate2 and 2 7#f7 in each of paragraphs 7#a77;,a71 7#b71 7#c71 and 7#d7 of subsection 7b71 by inserting or to be significantly impeding ,united ,states tax enforcement after primary money laundering concern each place that term appears2 7#g7 in subsection 7b71 by striking paragraph 7#e7 and inserting the following3 7#e7 ,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 ,states1 #a or more financial institutions operating outside of the ,united ,states1 or #a 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 enforcement1 the ,secretary1 in consultation with the ,secretary of ,state1 the ,attorney ,general of the ,united ,states1 and the ,chairman of the ,board of ,governors of the ,federal ,reserve ,system1 may prohibit1 or impose conditions upon-- 7,a7 the opening or maintaining in the ,united ,states of a correspondent account or payable-through account2 or 7,b7 the authorization1 approval1 or use in the ,united ,states of a credit card1 charge card1 debit card1 or similar credit or debit financial instrument by any domestic financial institution1 financial agency1 or credit card company or association1 for or on behalf of a foreign banking institution1 if such correspondent account1 payable-through account1 credit card1 charge card1 debit card1 or similar credit or debit financial instrument1 involves any such jurisdiction or institution1 or if any such transaction may be conducted through such correspondent account1 payable-through account1 credit card1 charge card1 debit card1 or similar credit or debit financial instrument4 2 and 7#h7 in subsection 7c77#a71 by inserting or is significantly impeding ,united ,states tax enforcement after primary money laundering concern2 7#i7 in subsection 7c77#b77;,a7-- 7,a7 in clause 7ii71 by striking bank secrecy or special regulatory advantages and inserting bank1 tax1 corporate1 trust1 or financial secrecy or regulatory advantages2 7,b7 in clause 7iii71 by striking supervisory and counter-money and inserting supervisory1 international tax enforcement1 and counter-money2 7,c7 in clause 7v71 by striking banking or secrecy and inserting banking1 tax1 or secrecy2 and 7,d7 in clause 7vi71 by inserting 1 tax treaty1 or tax information exchange agreement after treaty2 7#aj7 in subsection 7c77#b77;,b7-- 7,a7 in clause 7i71 by inserting or tax evasion after money laundering2 and 7,b7 in clause 7iii71 by inserting 1 tax evasion1 after money laundering2 and 7#aa7 in subsection 7d71 by inserting involving money laundering1 and shall notify1 in writing1 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 action4 #bjb4 ,strengthening the ,foreign ,account ,tax ,compliance ,act 7,,fatca7 7a7 ,reporting activities with respect to passive foreign investment companies ,section #abih7;f7 is amended by inserting 1 or who directly or indirectly forms1 transfers assets to1 is a beneficiary of1 has a beneficial interest in1 or receives money or property or the use thereof from1 after shareholder of4 7b7 ,withholdable payments to foreign financial institutions ,section #adga7;d7 is amended-- 7#a7 by inserting or transaction after any depository in paragraph 7#b77;,a71 and 7#b7 by striking or any interest and all that follows in paragraph 7#e77;,c7 and inserting derivatives1 or any interest 7including a futures or forward contract1 swap1 or option7 in such securities1 partnership interests1 commodities1 or derivatives44 7c7 ,withholdable payments to other foreign financial institutions ,section #adgb is amended-- 7#a7 by inserting as a result of any customer identification1 anti-money laundering1 anti-corruption1 or similar obligation to identify account holders1 after reason to know1 in subsection 7b77#b71 and 7#b7 by inserting as posing a low risk of tax evasion after this subsection in subsection 7c77#a77;,g74 7d7 ,definitions ,clauses 7i7 and 7ii7 of section #adgc7b77;,a7 are each amended by inserting or as a beneficial owner after indirectly4 7e7 ,special rules ,section #adgd7;c7 is amended-- 7#a7 by inserting 1 except that information provided under sections #adga7;c7 or #adgb7;b7 may be disclosed to any ,federal law enforcement agency1 upon request or upon the initiation of the ,secretary1 to investigate or address a possible violation of ,united ,states law after shall apply in paragraph 7#a71 and 7#b7 by inserting 1 or has had an agreement terminated under such section1 after section #adga7;b7 in paragraph 7#b74 7f7 ,information with respect to foreign financial assets ,section #fjch;,d7a7 is amended by inserting ownership or beneficial ownership after holds any4 7g7 ,establishing presumptions for entities and transactions involving non-,,fatca institutions 7#a7 ,presumptions for tax purposes 7,a7 ,in general ,chapter #gf is amended by inserting after section #gdia the following new subchapter3 ,f ,presumptions for certain legal proceedings ,sec4 #gdib4 ,presumptions pertaining to entities and transactions involving non-,,fatca institutions4 #gdib4 ,presumptions pertaining to entities and transactions involving non-,,fatca institutions 7a7 ,control ,for purposes of any ,united ,states civil judicial or administrative proceeding to determine or collect tax1 there shall be a rebuttable presumption that a ,united ,states person who1 directly or indirectly1 formed1 transferred assets to1 was a beneficiary of1 had a beneficial interest in1 or received money or property or the use thereof from an entity1 including a trust1 corporation1 limited liability company1 partnership1 or foundation1 that holds an account1 or in any other manner has assets1 in a non-,,fatca institution1 exercised control over such entity4 ,the presumption of control created by this subsection shall not be applied to prevent the ,secretary from determining or arguing the absence of control4 7b7 ,transfers of income ,for purposes of any ,united ,states civil judicial or administrative proceeding to determine or collect tax1 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 account1 or in any other manner has assets1 in a non-,,fatca institution1 constitutes income of such person taxable in the year of receipt2 and any amount or thing of value paid or transferred by or on behalf of a ,united ,states person directly or indirectly to an account1 or entity that holds an account1 or in any other manner has assets1 in a non-,,fatca institution1 represents previously unreported income of such person taxable in the year of the transfer4 7c7 ,rebutting the presumptions ,the presumptions established in this section may be rebutted only by clear and convincing evidence1 including detailed documentary1 testimonial1 and transactional evidence1 establishing that-- 7#a7 in subsection 7a71 such taxpayer exercised no control1 directly or indirectly1 over account or entity at the time in question1 and 7#b7 in subsection 7b71 such amounts or things of value did not represent income related to such ,united ,states person4 ,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 document1 or any other evidence supplied by a person outside the jurisdiction of a ,united ,states court1 unless such person appears before the court4 4 7,b7 ,the table of subchapters for chapter #gf is amended by inserting after the item relating to subchapter ,e the following new item3 ,subchapter ,f--,presumptions for certain legal proceedings 4 7#b7 ,definition of non-fatca institution ,section #ggja7;a7 is amended by adding at the end the following new paragraph3 7#ea7 ,non-fatca institution ,the term non-,,fatca institution means any financial institution that does not meet the reporting requirements of section #adga7;b74 4 7#c7 ,presumptions for securities law purposes ,section #ba of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghu7 is amended by adding at the end the following new subsection3 7j7 ,presumptions pertaining to control and beneficial ownership 7#a7 ,control ,for purposes of any civil judicial or administrative proceeding under this title1 there shall be a rebuttable presumption that a ,united ,states person who1 directly or indirectly1 formed1 transferred assets to1 was a beneficiary of1 had a beneficial interest in1 or received money or property or the use thereof from an entity1 including a trust1 corporation1 limited liability company1 partnership1 or foundation1 that holds an account1 or in any other manner has assets1 in a non-,,fatca institution 7as defined in section #ggja7;a77#ea7 of the ,internal ,revenue ,code of #aihf71 exercised control over such entity4 ,the presumption of control created by this paragraph shall not be applied to prevent the ,commission from determining or arguing the absence of control4 7#b7 ,beneficial ownership ,for purposes of any civil judicial or administrative proceeding under this title1 there shall be a rebuttable presumption that securities that are nominally owned by an entity1 including a trust1 corporation1 limited liability company1 partnership1 or foundation1 and that are held in a non-,,fatca institution 7as so defined71 are beneficially owned by any ,united ,states person who directly or indirectly exercised control over such entity4 ,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 ownership4 4 7#d7 ,presumption for reporting purposes relating to foreign financial accounts ,section #ecad of title #ca1 ,united ,states ,code1 is amended by adding at the end the following new subsection3 7d7 ,rebuttable presumption ,for purposes of this section1 there shall be a rebuttable presumption that any account with a non-,,fatca institution 7as defined in section #ggja7;a77#ea7 of the ,internal ,revenue ,code of #aihf7 contains funds in an amount that is at least sufficient to require a report prescribed by regulations under this section4 4 7#e7 ,regulatory authority ,not later than #ahj days after the date of enactment of this ,act1 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 subsection4 ,the ,secretary and the ,chairman may1 by regulation or guidance1 provide that the presumption of control shall not extend to particular classes of transactions1 such as corporate reorganizations or transactions below a specified dollar threshold1 if either determines that applying such amendments to such transactions is not necessary to carry out the purposes of such amendments4 7h7 ,effective date ,the amendments made by this section shall take effect on the date which is #ahj days after the date of enactment of this ,act1 whether or not regulations are issued under subsection 7g77#e74 #bjc4 ,treatment of foreign corporations managed and controlled in the ,united ,states as domestic corporations 7a7 ,in general ,section #ggja is amended by redesignating subsection 7p7 as subsection 7q7 and by inserting after subsection 7o7 the following new subsection3 7p7 ,certain corporations managed and controlled in the ,united ,states treated as domestic for income tax 7#a7 ,in general ,notwithstanding subsection 7a77#d71 in the case of a corporation described in paragraph 7#b7 if-- 7,a7 the corporation would not otherwise be treated as a domestic corporation for purposes of this title1 but 7,b7 the management and control of the corporation occurs1 directly or indirectly1 primarily within the ,united ,states1 then1 solely for purposes of chapter #a 7and any other provision of this title relating to chapter #a71 the corporation shall be treated as a domestic corporation4 7#b7 ,corporation described 7,a7 ,in general ,a corporation is described in this paragraph if-- 7i7 the stock of such corporation is regularly traded on an established securities market1 or 7ii7 the aggregate gross assets of such corporation 7or any predecessor thereof71 including assets under management for investors1 whether held directly or indirectly1 at any time during the taxable year or any preceding taxable year is #ej1jjj1jjj or more4 7,b7 ,general exception ,a corporation shall not be treated as described in this paragraph if-- 7i7 such corporation was treated as a corporation described in this paragraph in a preceding taxable year1 7ii7 such corporation-- 7,i7 is not regularly traded on an established securities market1 and 7,,ii7 has1 and is reasonably expected to continue to have1 aggregate gross assets 7including assets under management for investors1 whether held directly or indirectly7 of less than #ej1jjj1jjj1 and 7iii7 the ,secretary grants a waiver to such corporation under this subparagraph4 7#c7 ,management and control 7,a7 ,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 ,states4 7,b7 ,executive officers and senior management ,such regulations shall provide that-- 7i7 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 strategic1 financial1 and operational policies of the corporation are located primarily within the ,united ,states1 and 7ii7 individuals who are not executive officers and senior management of the corporation 7including individuals who are officers or employees of other corporations in the same chain of corporations as the corporation7 shall be treated as executive officers and senior management if such individuals exercise the day-to-day responsibilities of the corporation described in clause 7i74 7,c7 ,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-- 7i7 the assets of such corporation 7directly or indirectly7 consist primarily of assets being managed on behalf of investors1 and 7ii7 decisions about how to invest the assets are made in the ,united ,states4 4 7b7 ,effective date ,the amendments made by this section shall apply to taxable years beginning on or after the date which is #b years after the date of the enactment of this ,act1 whether or not regulations are issued under section #ggja7p77#c7 of the ,internal ,revenue ,code of #aihf1 as added by this section4 #bjd4 ,reporting ,united ,states beneficial owners of foreign owned financial accounts 7a7 ,in general ,subpart ,b of part ,,iii of subchapter ,a of chapter #fa is amended by inserting after section #fjde;,b the following new sections3 #fjde;,c4 ,returns regarding ,united ,states beneficial owners of financial accounts located in the ,united ,states and held in the name of a foreign entity 7a7 ,requirement of return ,if-- 7#a7 any withholding agent under sections #adda and #addb has the control1 receipt1 custody1 disposal1 or payment of any amount constituting gross income from sources within the ,united ,states of any foreign entity1 including a trust1 corporation1 limited liability company1 partnership1 or foundation 7other than an entity with shares regularly traded on an established securities market71 and 7#b7 such withholding agent determines for purposes of titles #ad1 #ah1 or #ca 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 7hereafter in this section referred to as ,united ,states beneficial owner71 then the withholding agent shall make a return according to the forms or regulations prescribed by the ,secretary4 7b7 ,required information ,for purposes of subsection 7a7 the information required to be included on the return shall include-- 7#a7 the name1 address1 and1 if known1 the taxpayer identification number of the ,united ,states beneficial owner1 7#b7 the known facts pertaining to the relationship of such ,united ,states beneficial owner to the foreign entity and the account1 7#c7 the gross amount of income from sources within the ,united ,states 7including gross proceeds from brokerage transactions71 and 7#d7 such other information as the ,secretary may by forms or regulations provide4 7c7 ,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 7a7 shall furnish to each ,united ,states beneficial owner whose name is required to be set forth in such return a statement showing-- 7#a7 the name1 address1 and telephone number of the information contact of the person required to make such return1 and 7#b7 the information required to be shown on such return with respect to such ,united ,states beneficial owner4 ,the written statement required under the preceding sentence shall be furnished to the ,united ,states beneficial owner on or before ,january #ca of the year following the calendar year for which the return under subsection 7a7 was required to be made4 ,in the event the person filing such return does not have a current address for the ,united ,states beneficial owner1 such written statement may be mailed to the address of the foreign entity4 #fjde;,d4 ,returns by financial institutions regarding establishment of accounts in non-,,fatca institutions 7a7 ,requirement of return ,any financial institution directly or indirectly opening a bank1 brokerage1 or other financial account for or on behalf of an offshore entity1 including a trust1 corporation1 limited liability company1 partnership1 or foundation 7other than an entity with shares regularly traded on an established securities market71 in a non-,,fatca institution 7as defined in section #ggja7;a77#ea77 at the direction of1 on behalf of1 or for the benefit of a ,united ,states person shall make a return according to the forms or regulations prescribed by the ,secretary4 7b7 ,required information ,for purposes of subsection 7a7 the information required to be included on the return shall include-- 7#a7 the name1 address1 and taxpayer identification number of such ,united ,states person1 7#b7 the name and address of the financial institution at which a financial account is opened1 the type of account1 the account number1 the name under which the account was opened1 and the amount of the initial deposit1 7#c7 if the account is held in the name of an entity1 the name and address of such entity1 the type of entity1 and the name and address of any company formation agent or other professional employed to form or acquire the entity1 and 7#d7 such other information as the ,secretary may by forms or regulations provide4 7c7 ,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 7a7 shall furnish to each ,united ,states person whose name is required to be set forth in such return a statement showing-- 7#a7 the name1 address1 and telephone number of the information contact of the person required to make such return1 and 7#b7 the information required to be shown on such return with respect to such ,united ,states person4 ,the written statement required under the preceding sentence shall be furnished to such ,united ,states person on or before ,january #ca of the year following the calendar year for which the return under subsection 7a7 was required to be made4 7d7 ,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 persons1 accounts1 or entities is not necessary to carry out the purposes of this section4 4 7b7 ,penalties 7#a7 ,returns ,section #fgbd7;d77#a77;,b7 is amended by striking or at the end of clause 7xxiv71 by striking and at the end of clause 7xxv71 and by adding after clause 7xxv7 the following new clauses3 7xxvi7 section #fjde;,c7a7 7relating to returns regarding ,united ,states beneficial owners of financial accounts located in the ,united ,states and held in the name of a foreign entity71 or 7xxvii7 section #fjde;,d7a7 7relating to returns by financial institutions regarding establishment of accounts at non-,,fatca institutions71 and 4 7#b7 ,payee statements ,section #fgbd7;d77#b7 is amended by striking or at the end of subparagraph 7,,gg71 by striking the period at the end of subparagraph 7,,hh71 and by inserting after subparagraph 7,,hh7 the following new subparagraphs3 7,,ii7 section #fjde;,c7c7 7relating to returns regarding ,united ,states beneficial owners of financial accounts located in the ,united ,states and held in the name of a foreign entity71 7,,jj7 section #fjde;,d7c7 7relating to returns by financial institutions regarding establishment of accounts at non-,,fatca institutions74 4 7c7 ,clerical amendment ,the table of sections for subpart ,b of part ,,iii of subchapter ,a of chapter #fa is amended by inserting after the item relating to section #fjde;,b the following new items3 ,sec4 #fjde;,c4 ,returns regarding ,united ,states beneficial owners of financial accounts located in the ,united ,states and held in the name of a foreign entity4,sec4 #fjde;,d4 ,returns by financial institutions regarding establishment of accounts at non-,,fatca institutions4 4 7d7 ,additional penalties 7#a7 ,additional penalties on banks ,section #ebci7;b77#a7 of the ,revised ,statutes of the ,united ,states 7#ab ,u4,s4,c4 #ic7;b77#a77 is amended by inserting or any of the provisions of section #fjde;,d of the ,internal ,revenue ,code of #aihf1 after any regulation issued pursuant to14 7#b7 ,additional penalties on securities firms ,section #ba7;d77#c77;,a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghu7d77#c77;,a77 is amended by inserting any of the provisions of section #fjde;,d of the ,internal ,revenue ,code of #aihf1 after the rules or regulations thereunder14 7e7 ,regulatory authority and effective date 7#a7 ,regulatory ,authority ,not later than #ahj days after the date of the enactment of this ,act1 the ,secretary of the ,treasury shall adopt regulations1 forms1 or other guidance necessary to implement this section4 7#b7 ,effective ,date ,section #fjde;,c of the ,internal ,revenue ,code of #aihf 7as added by this section7 and the amendment made by subsection 7d77#a7 shall take effect with respect to amounts paid into foreign owned accounts located in the ,united ,states after ,december #ca of the year of the date of the enactment of this ,act4 ,section #fjde;,d of such ,code 7as so added7 and the amendment made by subsection 7d77#b7 shall take effect with respect to accounts opened after ,december #ca of the year of the date of the enactment of this ,act4 #bje4 ,swap payments made from the ,united ,states to persons offshore 7a7 ,tax on swap payments received by foreign persons ,section #hga7;a77#a7 is amended-- 7#a7 by inserting swap payments 7as identified in section #abef7;b77#b77;,b771 after annuities1 in subparagraph 7,a71 and 7#b7 by adding at the end the following new sentence3 ,in the case of swap payments1 the source of a swap payment is determined by reference to the location of the payor44 7b7 ,tax on swap payments received by foreign corporations ,section #hha7;a7 is amended-- 7#a7 by inserting swap payments 7as identified in section #abef7;b77#b77;,b771 after annuities1 in paragraph 7#a71 and 7#b7 by adding at the end the following new sentence3 ,in the case of swap payments1 the source of a swap payment is determined by reference to the location of the payor44 ,,iii ,other measures ,to combat tax haven abuses #cja4 ,country-by-country reporting 7a7 ,country-by-,country reporting ,section #ac of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghm7 is amended by adding at the end the following new subsection3 7s7 ,disclosure of financial performance on a country-by-,country basis 7#a7 ,definitions ,in this subsection-- 7,a7 the term issuer group means the issuer1 each subsidiary of the issuer1 and each entity under the control of the issuer2 and 7,b7 the term country of operation means each country in which a member of the issuer group is incorporated1 organized1 maintains employees1 or conducts significant business activities4 7#b7 ,rules required ,the ,commission shall issue rules that require each issuer to include in an annual report filed by the issuer with the ,commission information on a country-by-country basis during the covered period1 consisting of-- 7,a7 a list of each country of operation and the name of each entity of the issuer group domiciled in each country of operation2 7,b7 the number of employees physically working in each country of operation2 7,c7 the total pre-tax gross revenues of each member of the issuer group in each country of operation2 7,d7 the total amount of payments made to governments by each member of the issuer group in each country of operation1 without exception1 including1 and set forth according to-- 7i7 total ,federal1 regional1 local1 and other tax assessed against each member of the issuer group with respect to each country of operation during the covered period2 and 7ii7 after any tax deductions1 tax credits1 tax forgiveness1 or other tax benefits or waivers1 the total amount of tax paid from the treasury of each member of the issuer group to the government of each country of operation during the covered period2 and 7,e7 such other financial information as the ,commission may determine is necessary or appropriate in the public interest or for the protection of investors4 4 7b7 ,rulemaking 7#a7 ,deadlines ,the ,securities and ,exchange ,commission 7in this section referred to as the ,commission7 shall-- 7,a7 not later than #bgj days after the date of enactment of this ,act1 issue a proposed rule to carry out this section and the amendment made by this section2 and 7,b7 not later than #a year after the date of enactment of this ,act1 issue a final rule to carry out this section and the amendment made by this section4 7#b7 ,data format ,the information required to be provided by this section shall be provided by the issuer in a report in a format prescribed by the ,commission1 and such report shall be made available to the public online1 in such format as the ,commission shall prescribe4 7#c7 ,effective date ,subsection 7s7 of section #ac of the ,securities ,exchange ,act of #aicd1 as added by this section1 shall become effective #a year after the date on which the ,commission issues a final rule under this section4 #cjb4 ,penalty for failing to disclose offshore holdings 7a7 ,securities ,exchange ,act of #aicd ,section #ba7;d77#c77;,b7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghu7d77#c77;,b77 is amended by adding at the end the following3 7iv7 ,fourth tier ,notwithstanding clauses 7i71 7ii71 and 7iii71 for each violation1 the amount of the penalty shall not exceed #a1jjj1jjj for any natural person or #aj1jjj1jjj for any other person1 if-- 7,i7 such person directly or indirectly controlled any foreign entity1 including any trust1 corporation1 limited liability company1 partnership1 or foundation through which an issuer purchased1 sold1 or held equity or debt instruments2 7,,ii7 such person knowingly or recklessly failed to disclose any such holding1 purchase1 or sale by the issuer2 and 7,,iii7 the holding1 purchase1 or sale would have been otherwise subject to disclosure by the issuer or such person under this title4 4 7b7 ,securities ,act of #aicc ,section #bj7;d77#b7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #ggt7d77#b77 is amended by adding at the end the following3 7,d7 ,fourth tier ,notwithstanding subparagraphs 7,a71 7,b71 and 7,c71 for each violation1 the amount of the penalty shall not exceed #a1jjj1jjj for any natural person or #aj1jjj1jjj for any other person1 if-- 7i7 such person directly or indirectly controlled any foreign entity1 including any trust1 corporation1 limited liability company1 partnership1 or foundation through which an issuer purchased1 sold1 or held equity or debt instruments2 7ii7 such person knowingly or recklessly failed to disclose any such holding1 purchase1 or sale by the issuer2 and 7iii7 the holding1 purchase1 or sale would have been otherwise subject to disclosure by the issuer or such person under this title4 4 7c7 ,investment ,advisers ,act of #aidj ,section #bjc7;i77#b7 of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#c7;i77#b77 is amended by adding at the end the following3 7,d7 ,fourth tier ,notwithstanding subparagraphs 7,a71 7,b71 and 7,c71 for each violation1 the amount of the penalty shall not exceed #a1jjj1jjj for any natural person or #aj1jjj1jjj for any other person1 if-- 7i7 such person directly or indirectly controlled any foreign entity1 including any trust1 corporation1 limited liability company1 partnership1 or foundation through which an issuer purchased1 sold1 or held equity or debt instruments2 7ii7 such person knowingly or recklessly failed to disclose any such holding1 purchase1 or sale by the issuer2 and 7iii7 the holding1 purchase1 or sale would have been otherwise subject to disclosure by the issuer or such person under this title4 4 #cjc4 ,deadline for anti-money laundering rule for investment advisers 7a7 ,anti-,money laundering obligations for investment advisers ,section #ecab7;a77#b7 of title #ca1 ,united ,states ,code1 is amended-- 7#a7 in subparagraph 7,y71 by striking or at the end2 7#b7 by redesignating subparagraph 7,z7 as subparagraph 7,,bb72 and 7#c7 by inserting after subparagraph 7,y7 the following3 7,z7 an investment adviser2 4 7b7 ,rules required ,the ,secretary of the ,treasury shall-- 7#a7 in consultation with the ,chairman of the ,securities and ,exchange ,commission and the ,chairman of the ,commodity ,futures ,trading ,commission1 not later than #bgj days after the date of enactment of this ,act1 publish a proposed rule in the ,federal ,register to carry out the amendments made by this section2 and 7#b7 not later than #ahj days after the date of enactment of this ,act1 publish a final rule in the ,federal ,register on the matter described in paragraph 7#a74 7c7 ,contents ,the final rule published under this section shall require1 at a minimum1 each investment adviser 7as defined in section #bjb7;a77#aa7 of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#b7;a77#aa777 registered with the ,securities and ,exchange ,commission pursuant to section #bjc of that ,act 7#ae ,u4,s4,c4 #hj;b-#c7-- 7#a7 to submit suspicious activity reports and establish an anti-money laundering program under subsections 7g7 and 7h71 respectively1 of section #ecah of title #ca1 ,united ,states ,code2 and 7#b7 to comply with-- 7,a7 the customer identification program requirements under section #ecah7l7 of title #ca1 ,united ,states ,code2 and 7,b7 the due diligence requirements under section #ecah7;i7 of title #ca1 ,united ,states ,code4 #cjd4 ,anti-money laundering requirements for formation agents 7a7 ,anti-,money laundering obligations for formation agents ,section #ecab7;a77#b7 of title #ca1 ,united ,states ,code1 as amended by section #cjc of this ,act1 is amended by inserting after subparagraph 7,z7 the following3 7,,aa7 any person engaged in the business of forming new corporations1 limited liability companies1 partnerships1 trusts1 or other legal entities2 or 4 7b7 ,deadline for anti-,money laundering rule for formation agents 7#a7 ,proposed rule ,the ,secretary of the ,treasury1 in consultation with the ,attorney ,general of the ,united ,states1 the ,secretary of ,homeland ,security1 and the ,commissioner of ,internal ,revenue1 shall-- 7,a7 not later than #abj days after the date of enactment of this ,act1 publish a proposed rule in the ,federal ,register requiring persons described in section #ecab7;a77#b77;,,aa7 of title #ca1 ,united ,states ,code1 as added by this section1 to establish anti-money laundering programs under section #ecah7;h7 of that title2 and 7,b7 not later than #bgj days after the date of enactment of this ,act1 publish a final rule in the ,federal ,register on the matter described in subparagraph 7,a74 7#b7 ,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-- 7,a7 any government agency2 and 7,b7 any attorney or law firm that uses a paid formation agent operating within the ,united ,states to form such corporations or other entities4 #cje4 ,strengthening ,john ,doe summons proceedings 7a7 ,in general ,subsection 7f7 of section #gfji is amended to read as follows3 7f7 ,additional requirement in the case of a ,john ,doe summons 7#a7 ,general ,rule ,any summons described in subsection 7c77#a7 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-- 7,a7 the summons relates to the investigation of a particular person or ascertainable group or class of persons1 7,b7 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 law1 and 7,c7 the information sought to be obtained from the examination of the records or testimony 7and the identity of the person or persons with respect to whose liability the summons is issued7 is not readily available from other sources4 7#b7 ,exception ,paragraph 7#a7 shall not apply to any summons which specifies that it is limited to information regarding a ,united ,states correspondent account 7as defined in section #ecah;,a7e77#a77;,b7 of title #ca1 ,united ,states ,code7 or a ,united ,states payable-through account 7as defined in section #ecah;,a7e77#a77;,c7 of such title7 of a financial institution that is held at a non-,,fatca institution 7as defined in section #ggja7;a77#ea774 7#c7 ,presumption in cases involving non-fatca institutions ,for purposes of this section1 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 7as defined in section #ggja7;a77#ea771 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 law4 7#d7 ,project ,john ,doe summonses 7,a7 ,in general ,notwithstanding the requirements of paragraph 7#a71 the ,secretary may issue a summons described in paragraph 7#a7 if the summons-- 7i7 relates to a project which is approved under subparagraph 7,b71 7ii7 is issued to a person who is a member of the group or class established under subparagraph 7,b77i71 and 7iii7 is issued within #c years of the date on which such project was approved under subparagraph 7,b74 7,b7 ,approval of projects ,a project may only be approved under this subparagraph after a court proceeding in which the ,secretary establishes that-- 7i7 any summons issued with respect to the project will be issued to a member of an ascertainable group or class of persons1 and 7ii7 any summons issued with respect to such project will meet the requirements of paragraph 7#a74 7,c7 ,extension ,upon application of the ,secretary1 the court may extend the time for issuing such summonses under subparagraph 7,a77i7 for additional #c-year periods1 but only if the court continues to exercise oversight of such project under subparagraph 7,d74 7,d7 ,ongoing court oversight ,during any period in which the ,secretary is authorized to issue summonses in relation to a project approved under subparagraph 7,b7 7including during any extension under subparagraph 7,c771 the ,secretary shall report annually to the court on the use of such authority1 provide copies of all summonses with such report1 and comply with the court's direction with respect to the issuance of any ,john ,doe summons under such project4 4 7b7 ,jurisdiction of court 7#a7 ,in general ,paragraph 7#a7 of section #gfji7;h7 is amended by inserting after the first sentence the following new sentence3 ,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 7f77#b77;,b744 7#b7 ,conforming amendment ,the first sentence of section #gfji7;h77#a7 is amended by striking 7f7 and inserting 7f77#a74 7c7 ,effective date ,the amendments made by this section shall apply to summonses issued after the date of the enactment of this ,act4 #cjf4 ,improving enforcement of foreign financial account reporting 7a7 ,clarifying the connection of foreign financial account reporting to tax administration ,paragraph 7#d7 of section #fajc7;b7 is amended by adding at the end the following new sentence3 ,for purposes of subparagraph 7,a77i71 section #ecad of title #ca1 ,united ,states ,code1 and sections #ecba and #ecbb of such title 7as such sections pertain to such section #ecad71 shall be considered related statutes4 4 7b7 ,simplifying the calculation of foreign financial account reporting penalties ,section #ecba7;a77#e77;,d77ii7 of title #ca1 ,united ,states ,code1 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 relates4 7c7 ,clarifying the use of suspicious activity reports under the ,bank ,secrecy ,act for civil tax law enforcement ,section #ecai of title #ca1 ,united ,states ,code1 is amended by inserting the civil and criminal enforcement divisions of the ,internal ,revenue ,service1 after including4 ,,iv ,ending corporate offshore tax avoidance #dja4 ,allocation of expenses and taxes on basis of repatriation of foreign income 7a7 ,in general ,part ,,iii of subchapter ,n of chapter #a is amended by inserting after subpart ,g the following new subpart3 ,h ,special ,rules for ,allocation of ,foreign-,related ,deductions and ,foreign ,tax ,credits ,sec4 #ige4 ,deductions allocated to deferred foreign income may not offset ,united ,states source income4,sec4 #igf4 ,amount of foreign taxes computed on overall basis4,sec4 #igg4 ,application of subpart4 #ige4 ,deductions allocated to deferred foreign income may not offset ,united ,states source income 7a7 ,current year deductions ,for purposes of this chapter1 foreign-related deductions for any taxable year-- 7#a7 shall be taken into account for such taxable year only to the extent that such deductions are allocable to currently-taxed foreign income1 and 7#b7 to the extent not so allowed1 shall be taken into account in subsequent taxable years as provided in subsection 7b74 ,foreign-related deductions shall be allocated to currently taxed foreign income in the same proportion which currently taxed foreign income bears to the sum of currently taxed foreign income and deferred foreign income4 7b7 ,deductions related to repatriated deferred foreign income 7#a7 ,in general ,if there is repatriated foreign income for a taxable year1 the portion of the previously deferred deductions allocated to the repatriated foreign income shall be taken into account for the taxable year as a deduction allocated to income from sources outside the ,united ,states4 ,any such amount shall not be included in foreign-related deductions for purposes of applying subsection 7a7 to such taxable year4 7#b7 ,portion of previously deferred deductions ,for purposes of paragraph 7#a71 the portion of the previously deferred deductions allocated to repatriated foreign income is-- 7,a7 the amount which bears the same proportion to such deductions1 as 7,b7 the repatriated income bears to the previously deferred foreign income4 7c7 ,definitions and special rule ,for purposes of this section-- 7#a7 ,foreign-related deductions ,the term foreign-related deductions means the total amount of deductions and expenses which would be allocated or apportioned to gross income from sources without the ,united ,states for the taxable year if both the currently-taxed foreign income and deferred foreign income were taken into account4 7#b7 ,currently-taxed foreign income ,the term currently-taxed foreign income means the amount of gross income from sources without the ,united ,states for the taxable year 7determined without regard to repatriated foreign income for such year74 7#c7 ,deferred foreign income ,the term deferred foreign income means the excess of-- 7,a7 the amount that would be includible in gross income under subpart ,f of this part for the taxable year if-- 7i7 all controlled foreign corporations were treated as one controlled foreign corporation1 and 7ii7 all earnings and profits of all controlled foreign corporations were subpart ,f income 7as defined in section #ieb71 over 7,b7 the sum of-- 7i7 all dividends received during the taxable year from controlled foreign corporations1 plus 7ii7 amounts includible in gross income under section #iea7;a74 7#d7 ,previously deferred foreign income ,the term previously deferred foreign income means the aggregate amount of deferred foreign income for all prior taxable years to which this part applies1 determined as of the beginning of the taxable year1 reduced by the repatriated foreign income for all such prior taxable years4 7#e7 ,repatriated foreign income ,the term repatriated foreign income means the amount included in gross income on account of distributions out of previously deferred foreign income4 7#f7 ,previously deferred deductions ,the term previously deferred deductions means the aggregate amount of foreign-related deductions not taken into account under subsection 7a7 for all prior taxable years 7determined as of the beginning of the taxable year71 reduced by any amounts taken into account under subsection 7b7 for such prior taxable years4 7#g7 ,treatment of certain foreign taxes 7,a7 ,paid by controlled foreign corporation ,section #gh shall not apply for purposes of determining currently-taxed foreign income and deferred foreign income4 7,b7 ,paid by taxpayer ,for purposes of determining currently-taxed foreign income1 gross income from sources without the ,united ,states shall be reduced by the aggregate amount of taxes described in the applicable paragraph of section #ija7;b7 which are paid by the taxpayer 7without regard to sections #ijb and #ifj7 during the taxable year4 7#h7 ,coordination with section #igf ,in determining currently-taxed foreign income and deferred foreign income1 the amount of deemed foreign tax credits shall be determined with regard to section #igf4 #igf4 ,amount of foreign taxes computed on overall basis 7a7 ,current year allowance ,for purposes of this chapter1 the amount taken into account as foreign income taxes for any taxable year shall be an amount which bears the same ratio to the total foreign income taxes for that taxable year as-- 7#a7 the currently-taxed foreign income for such taxable year1 bears to 7#b7 the sum of the currently-taxed foreign income and deferred foreign income for such year4 ,the portion of the total foreign income taxes for any taxable year not taken into account under the preceding sentence for a taxable year shall only be taken into account as provided in subsection 7b7 7and shall not be taken into account for purposes of applying sections #ijb and #ifj74 7b7 ,allowance related to repatriated deferred foreign income 7#a7 ,in general ,if there is repatriated foreign income for any taxable year1 the portion of the previously deferred foreign income taxes paid or accrued during such taxable year shall be taken into account for the taxable year as foreign taxes paid or accrued4 ,any such taxes so taken into account shall not be included in foreign income taxes for purposes of applying subsection 7a7 to such taxable year4 7#b7 ,portion of previously deferred foreign income taxes ,for purposes of paragraph 7#a71 the portion of the previously deferred foreign income taxes allocated to repatriated deferred foreign income is-- 7,a7 the amount which bears the same proportion to such taxes1 as 7,b7 the repatriated deferred income bears to the previously deferred foreign income4 7c7 ,definitions and special rule ,for purposes of this section-- 7#a7 ,previously deferred foreign income taxes ,the term previously deferred foreign income taxes means the aggregate amount of total foreign income taxes not taken into account under subsection 7a7 for all prior taxable years 7determined as of the beginning of the taxable year71 reduced by any amounts taken into account under subsection 7b7 for such prior taxable years4 7#b7 ,total foreign income taxes ,the term total foreign income taxes means the sum of foreign income taxes paid or accrued during the taxable year 7determined without regard to section #ijd7;c77 plus the increase in foreign income taxes that would be paid or accrued during the taxable year under sections #ijb and #ifj if-- 7,a7 all controlled foreign corporations were treated as one controlled foreign corporation1 and 7,b7 all earnings and profits of all controlled foreign corporations were subpart ,f income 7as defined in section #ieb74 7#c7 ,foreign income taxes ,the term foreign income taxes means any income1 war profits1 or excess profits taxes paid by the taxpayer to any foreign country or possession of the ,united ,states4 7#d7 ,currently-taxed foreign income and deferred foreign income ,the terms currently-taxed foreign income and deferred foreign income have the meanings given such terms by section #ige7;c774 #igg4 ,application of subpart ,this subpart-- 7#a7 shall be applied before subpart ,a1 and 7#b7 shall be applied separately with respect to the categories of income specified in section #ijd7;d77#a74 4 7b7 ,clerical amendment ,the table of subparts for part ,,iii of subpart ,n of chapter #a is amended by inserting after the item relating to subpart ,g the following new item3 ,subpart ,h4 ,special ,rules for ,allocation of ,foreign-,related ,deductions and ,foreign ,tax ,credits 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #djb4 ,current taxation of royalties and other income from intangibles received from a controlled foreign corporation 7a7 ,repeal of look-,thru rule for royalties received from controlled foreign corporations ,paragraph 7#f7 of section #ied7;c7 is amended-- 7#a7 by striking rents1 and royalties in subparagraph 7,a7 and inserting and rents1 and 7#b7 by striking 1 rent1 or royalty both places it appears in subparagraph 7,b7 and inserting or rent4 7b7 ,entities not permitted ,to be disregarded in determining royalties ,subsection 7c7 of section #ied is amended by adding at the end the following new paragraph3 7#g7 ,all royalties taken into account ,for purposes of determining the foreign personal holding company income which consists of royalties1 this subsection shall be applied without regard to any election to disregard any entity which would be taken into account for ,federal income tax purposes but for such election4 4 7c7 ,certain other income derived from united states intangibles taken into account as subpart f income ,subsection 7d7 of section #ied is amended by adding at the end the following new paragraph3 7#e7 ,special rule for certain products produced pursuant to intangibles made available by united states persons ,for purposes of this subsection1 personal property shall be treated as having been purchased from a related person if any intangible property 7within the meaning of section #icf7;h77#c77;,b77 made available to a controlled foreign corporation1 directly or indirectly1 by a related person which is a ,united ,states person contributes1 directly or indirectly1 to the production of such personal property by the controlled foreign corporation4 ,the preceding sentence shall not apply to any personal property produced directly by the controlled foreign corporation1 without regard to any election to disregard any entity which would be taken into account for ,federal income tax purposes but for such election4 4 7d7 ,effective date ,the amendments made by this section shall apply to taxable years of foreign corporations beginning after ,december #ca1 #bjac1 and to taxable years of ,united ,states shareholders within which or with which such tax years of such foreign corporations end4 #djc4 ,limitations on income shifting through intangible property transfers 7a7 ,clarification of definition of intangible asset ,clause 7vi7 of section #icf7;h77#c77;,b7 is amended by inserting 7including any section #aig intangible described in subparagraph 7,a71 7,b71 or 7,c77i7 of subsection 7d77#a7 of such section7 after item4 7b7 ,clarification of allowable valuation methods 7#a7 ,foreign corporations ,paragraph 7#b7 of section #cfg7;d7 is amended by adding at the end the following new subparagraph3 7,d7 ,regulatory authority ,for purposes of the last sentence of subparagraph 7,a71 the ,secretary may require-- 7i7 the valuation of transfers of intangible property on an aggregate basis1 or 7ii7 the valuation of such a transfer on the basis of the realistic alternatives to such a transfer1 in any case in which the ,secretary determines that such basis is the most reliable means of valuation of such transfers4 4 7#b7 ,allocation among taxpayers ,section #dhb is amended by adding at the end the following3 ,for purposes of the preceding sentence1 the ,secretary may require the valuation of transfers of intangible property on an aggregate basis or the valuation of such a transfer on the basis of the realistic alternatives to such a transfer1 in any case in which the ,secretary determines that such basis is the most reliable means of valuation of such transfers44 7c7 ,effective date 7#a7 ,in general ,the amendments made by this section shall apply to transfers in taxable years beginning after the date of the enactment of this ,act4 7#b7 ,no inference ,nothing in the amendment made by subsection 7a7 shall be construed to create any inference with respect to the application of section #icf7;h77#c7 of the ,internal ,revenue ,code of #aihf1 or the authority of the ,secretary of the ,treasury to provide regulations for such application1 on or before the date of the enactment of such amendment4 #djd4 ,repeal of check-the-box rules for certain foreign entities and ,,cfc look-thru rules 7a7 ,check-the-,box rules ,paragraph 7#c7 of section #ggja7;a7 is amended-- 7#a7 by striking and1 and 7#b7 by inserting after insurance companies the following3 1 and any foreign business entity that-- 7,a7 has a single owner that does not have limited liability1 or 7,b7 has one or more members all of which have limited liability 4 7b7 ,look-,thru rule ,subparagraph 7,c7 of section #ied7;c77#f7 is amended to read as follows3 7,c7 ,termination ,subparagraph 7,a7 shall not apply to dividends1 interest1 rents1 and royalties received or accrued after the date of the enactment of the ,sequester ,delay and ,stop ,tax ,haven ,abuse ,act4 4 #dje4 ,prohibition on offshore loan abuse 7a7 ,in general ,subpart ,f of part ,,iii of subchapter ,n of chapter #a is amended by adding at the end the following new section3 #iff4 ,income inclusion for loans to ,united ,states shareholders from controlled foreign corporations 7a7 ,in general ,in the case of a ,united ,states shareholder1 there shall be included in income for the taxable year an amount equal to the disqualified ,,cfc loan amount4 7b7 ,disqualified ,,cfc loan amount 7#a7 ,in general ,for purposes of this section1 the disqualified ,,cfc loan amount for any taxable year is an amount equal to the lesser of-- 7,a7 the aggregate amount of obligations of the ,united ,states shareholder which originated in such taxable year and are held 7directly or indirectly7 by controlled foreign corporations1 or 7,b7 the foreign group earnings amount4 7#b7 ,exception ,in determining the amount of obligations under subparagraph 7,a71 there shall be excluded any obligation described in section #ief7;c77#b77;,c74 7#c7 ,carryforward of certain amounts ,if1 for any taxable year1 the amount under subparagraph 7,a7 exceeds the amount under subparagraph 7,b71 such excess shall be taken into account as an obligation to which subparagraph 7,a7 applies for the succeeding taxable year4 7#d7 ,foreign group earnings amount ,for purposes of this section1 the term foreign group earnings amount means the aggregate earnings and profits of all controlled foreign corporations in the worldwide affiliated group 7as defined in section #hfd7;f77#a77;,c77 of the ,united ,states shareholder1 determined-- 7,a7 as of the last day of the taxable year of the ,united ,states shareholder1 and 7,b7 without regard to any distributions made during such taxable year4 7c7 ,denial of interest deduction ,no deduction shall be allowed for interest paid or accrued with respect to obligations taken into account under subsection 7b74 7d7 ,treatment of income source ,any amount included in income under subsection 7a7 shall be treated as income from sources within the ,united ,states4 4 7b7 ,coordination with section #ief ,paragraph 7#b7 of section #ief7;c7 is amended by striking and at the end of subparagraph 7,k71 by striking the period at the end of subparagraph 7,l77ii7 and inserting 2 and1 and by inserting after subparagraph 7,l7 the following new subparagraph3 7,m7 any obligation which is taken into account in determining the disqualified ,,cfc loan amount under section #iff4 4 7c7 ,clerical amendment ,the table of sections for subpart ,f of part ,,iii of subchapter ,n of chapter #a is amended by adding at the end the following new item3 ,sec4 #iff4 ,income inclusion for loans to certain ,united ,states shareholders from controlled foreign corporations4 4 7d7 ,effective date ,the amendments made by this section shall apply to obligations originated after the date of the of this ,act4