Six-year statute of limitations for investigations involving offshore secrecy jurisdictions

(a)

In general

Section 6501(c) of the Internal Revenue Code of 1986 (relating to exceptions from limitations on assessment and collection) is amended by adding at the end the following new paragraph:

(11)

Returns involving offshore secrecy jurisdictions

If, for any taxable year, any item of a taxpayer (other than an entity the ownership interests in which are regularly traded on an established securities market) is an offshore secrecy jurisdiction item (as defined in subsection (n)), the tax imposed by this title for such taxable year may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time within 6 years after the return of such tax was filed.

(b)

Terms relating to offshore secrecy jurisdiction items

Section 6501 of the Internal Revenue Code of 1986 (relating to limitations on assessment and collection) is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) the following new subsection:

(n)

Terms relating to offshore secrecy jurisdiction items

For purposes of subsection (c)(11)— (1)

Offshore secrecy jurisdiction item

The term offshore secrecy jurisdiction item means any item of a taxpayer which is directly or indirectly attributable to any account, entity, or transaction involving an offshore secrecy jurisdiction. Such term shall include any item directly or indirectly attributable to— (A)the formation or ownership by the taxpayer of any applicable account or entity (or any interest in such account or entity), (B)the transfer of any money or other property by the taxpayer to any applicable account or entity or the transfer by the taxpayer of any interest in such account or entity, or (C)the receipt, or use, by the taxpayer of any money or other property from any applicable account or entity. (2)

Applicable account or entity

The term applicable account or entity means any financial account, or any entity (including a trust, corporation, limited liability company, partnership, or foundation), which is formed, located, domiciled, or operating in an offshore secrecy jurisdiction. Such term shall not include an entity the ownership interests in which are regularly traded on an established securities market. (3)

Offshore secrecy jurisdiction

(A)

In general

The term offshore secrecy jurisdiction means any foreign jurisdiction which the Secretary determines for purposes of this subsection is a jurisdiction which— (i)has corporate, business, bank, or tax secrecy rules or practices which, in the judgment of the Secretary, unreasonably restrict the ability of the United States to obtain information relevant to the enforcement of this title, and (ii)does not have effective information exchange practices. (B)

Secrecy or confidentiality rules and practices

For purposes of subparagraph (A)(i), corporate, business, bank, or tax secrecy or confidentiality rules and practices include both formal laws and regulations and informal government or business practices which have the effect of inhibiting access of law enforcement and tax administration authorities to information regarding beneficial ownership and other financial information. (C)

Ineffective information exchange practices

For purposes of subparagraph (A)(ii), a jurisdiction shall be deemed to have ineffective information exchange practices unless the Secretary determines, on an annual basis, that— (i)such jurisdiction has in effect a treaty or other information exchange agreement with the United States which provides for the prompt and obligatory exchange of such information which is relevant for carrying out the provisions of the treaty or agreement or the administration or enforcement of this title, (ii)during the 12-month period preceding the annual determination, the exchange of information between the United States and such jurisdiction was in practice adequate to carry out the provisions of the treaty or agreement; and (iii)during the 12-month period preceding the annual determination, such jurisdiction was not identified by an intergovernmental group or organization of which the United States is a member as uncooperative with international tax enforcement or information exchange and the United States concurs in such identification.

Suspension of statute of limitations while summons for foreign based records is pending

Section 6503 of the Internal Revenue Code of 1986 (relating to suspension of running of period of limitation) is amended by redesignating subsection (k) as subsection (l) and by inserting after subsection (j) the following new subsection:

(l)

Suspension while summons for records of foreign account, entity, or transaction is pending

(1)

In general

If any summons is issued by the Secretary to a taxpayer (or to any other person to whom the taxpayer has transferred records) with respect to a return of tax by such taxpayer, and such summons requires the production of records relating to an account, entity, or transaction involving a foreign jurisdiction, the running of any period of limitations under section 6501 on the assessment of such tax shall be suspended during any judicial enforcement period (as defined in subsection (j)(3)) with respect to such summons and for 120 days thereafter. This subsection shall not apply to a summons for the production of records relating to a foreign entity the ownership interests in which are regularly traded on an established securities market designated by the Secretary for purposes of this subsection. (2)

Specific application

Except as provided in the last sentence of paragraph (1), this subsection shall apply in any case where the summons referred to in paragraph (1) relates to— (A)a financial account, or an entity (including a trust, corporation, limited liability company, partnership, or foundation), formed, located, domiciled or operating in a foreign jurisdiction, or (B)a case in which the taxpayer directly or indirectly transferred money or other property to, or received money or property from, such an account or entity or any other person in a foreign jurisdiction.

Extension of statute of limitations during failure to notify secretary of certain foreign transfers

Section 6501(c)(8) of the Internal Revenue Code of 1986 (relating to failure to notify Secretary of certain foreign transfers) is amended by striking event and inserting tax return.

Exception to statute of limitations on collection in case of attempt To evade collection

Section 6502 of the Internal Revenue Code of 1986 (relating to collection after assessment) is amended by adding at the end the following new subsection:

(c)

Exception in case of attempt to evade payment

In a case of a willful attempt in any manner to evade or defeat the payment of any tax that has been assessed under this title, the time for collection of such tax by levy or by a proceeding in court shall not expire before the date which is 10 years after such attempt.

Effective dates

(a)

In general

The amendments made by this Act (other than section 4) shall apply to— (1)returns filed after the date of the enactment of this Act; and (2)returns filed on or before such date if the period specified in section 6501 of the Internal Revenue Code of 1986 (determined without regard to such amendments) for assessment of such taxes has not expired as of such date. (b)

Collections

The amendment made by section 4 shall apply to— (1)assessments made after the date of the enactment of this Act; and (2)assessments made on or before such date if the period specified in section 6502 of the Internal Revenue Code of 1986 (determined without regard to such amendment) for collection of such taxes has not expired as of such date.