1.
(a)This Act may be cited
as the Foreign Account Tax Compliance
Act of 2009
.
(b)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)The table of contents for this Act is as follows:
Sec. 1. Short title, etc.
Title I—Increased disclosure of beneficial owners
Sec. 101. Reporting on certain foreign accounts.
Sec. 102. Repeal of certain foreign exceptions to registered
bond requirements.
Title II—Under reporting with respect to foreign
assets
Sec. 201. Disclosure of information with respect to foreign
financial assets.
Sec. 202. Penalties for underpayments attributable to
undisclosed foreign financial assets.
Sec. 203. Modification of statute of limitations for
significant omission of income in connection with foreign assets.
Title III—Other disclosure provisions
Sec. 301. Disclosure of assistance in acquiring or forming a
foreign entity.
Sec. 302. Reporting of activities with respect to passive
foreign investment companies.
Sec. 303. Secretary permitted to require financial institutions
to file certain returns related to withholding on foreign transfers
electronically.
Title IV—Provisions related to foreign trusts
Sec. 401. Clarifications with respect to foreign trusts which
are treated as having a United States beneficiary.
Sec. 402. Presumption that foreign trust has United States
beneficiary.
Sec. 403. Uncompensated use of trust property treated as a
distribution.
Sec. 404. Reporting requirement of United States owners of
foreign trusts.
Sec. 405. Minimum penalty with respect to failure to report on
certain foreign trusts.
Title V—Dividend equivalent payments received by foreign persons
treated as dividends
Sec. 501. Dividend equivalent payments received by foreign
persons treated as dividends.
<enum>I</enum><header>Increased
disclosure of beneficial owners </header>
<section id="H43898333AA784F088F2E290AEDE813AB"><enum>101.</enum><header>Reporting on
certain foreign accounts</header>
<subsection id="H5AC35FC90BB3497E9A336159A2669836"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">The Internal Revenue
Code of 1986 is amended by inserting after chapter 3 the following new
chapter:</text>
<quoted-block display-inline="no-display-inline" id="HF0ABB9AB1763451587AAB99A20D25BCC" style="OLC">
<chapter id="HB0284B7492814C7384BFD1D505C80FF7"><enum>4</enum><header>Taxes to enforce
reporting on certain foreign accounts</header>
<toc container-level="chapter-container" idref="HB0284B7492814C7384BFD1D505C80FF7" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="H63B603F36CD94E8A9D2CA9C13856A868" level="section">Sec. 1471. Withholdable payments to foreign financial
institutions.</toc-entry>
<toc-entry idref="H1BDFF0284C9142AEB77404D266105E7D" level="section">Sec. 1472. Withholdable payments to other foreign
entities.</toc-entry>
<toc-entry idref="H03D7765D83C8416CA464EA53AD3F5FE9" level="section">Sec. 1473. Definitions.</toc-entry>
<toc-entry idref="HD7B6B26ACB88489F946EE390324E0E53" level="section">Sec. 1474. Special rules.</toc-entry>
</toc>
<section id="H63B603F36CD94E8A9D2CA9C13856A868"><enum>1471.</enum><header>Withholdable
payments to foreign financial institutions</header>
<subsection id="H0BA60B49137E48F2BCEA915817ED6EC0"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">In the case of any
withholdable payment to a foreign financial institution which does not meet the
requirements of subsection (b), the withholding agent with respect to such
payment shall deduct and withhold from such payment a tax equal to 30 percent
of the amount of such payment.</text>
</subsection><subsection id="HBC9D9AC9742247E8AE543BFA2BFB3D29"><enum>(b)</enum><header>Reporting
requirements, etc</header>
<paragraph id="H742B4191D3994BE090AE73BEA3C6DE6E"><enum>(1)</enum><header>In
general</header><text>The requirements of this subsection are met with respect
to any foreign financial institution if an agreement is in effect between such
institution and the Secretary under which such institution agrees—</text>
<subparagraph id="HDFEF090B24854347A5CA957233B42153"><enum>(A)</enum><text>to obtain such
information from each holder of each account maintained by such institution as
is necessary to determine which (if any) of such accounts are United States
accounts,</text>
</subparagraph><subparagraph id="H128F1F6B937947A5BE15671479C06873"><enum>(B)</enum><text>to comply with
such verification and due diligence procedures as the Secretary may require
with respect to the identification of United States accounts,</text>
</subparagraph><subparagraph id="H24FFC8E2947340BAAB5AF34EC8309720"><enum>(C)</enum><text>in the case of any
United States account maintained by such institution, to report on an annual
basis (at such time and in such manner as the Secretary may provide) the
information described in subsection (c) with respect to such account,</text>
</subparagraph><subparagraph id="H719BFFE7B91945908374DC7E0177BF29"><enum>(D)</enum><text>to comply with
requests by the Secretary for additional information with respect to any United
States account maintained by such institution, and</text>
</subparagraph><subparagraph id="H0FAF3A11672345EEAF1C62228E2277FD"><enum>(E)</enum><text>in any case in
which any foreign law would (but for a waiver described in clause (i)) prevent
the reporting of any information referred to in this subsection or subsection
(c) with respect to any United States account maintained by such
institution—</text>
<clause id="H57F7308CD9634456B82DCE9B502BCFEB"><enum>(i)</enum><text>to
attempt to obtain a valid and effective waiver of such law from each holder of
such account, and</text>
</clause><clause id="H7103D2CF6F694CAEAEDC52C64EFDD529"><enum>(ii)</enum><text>if a waiver
described in clause (i) is not obtained from each such holder, to close such
account.</text>
</clause></subparagraph></paragraph><paragraph id="H2EC98E32CC5346DDB02DAB33C07B5286"><enum>(2)</enum><header>Termination of
agreement</header><text>Any agreement entered into under this subsection may be
terminated by the Secretary upon a determination by the Secretary that the
foreign financial institution is out of compliance with such agreement.</text>
</paragraph></subsection><subsection id="H19999178B8EE4F21BEEDC438693985BE"><enum>(c)</enum><header>Information
required To be reported on United States accounts</header>
<paragraph id="H751A7BE513F9446499674ADC85159E39"><enum>(1)</enum><header>In
general</header><text>The agreement described in subsection (b) shall require
the foreign financial institution to report the following with respect to each
United States account maintained by such institution:</text>
<subparagraph id="HF0595C9F35A9446FA07D29CE56FE490F"><enum>(A)</enum><text>The name, address,
and TIN of each account holder which is a specified United States person and,
in the case of any account holder which is a United States owned foreign
entity, the name, address, and TIN of each substantial United States owner of
such entity.</text>
</subparagraph><subparagraph id="HAE11272124CE497E9835EA642B1EACBC"><enum>(B)</enum><text>The account
number.</text>
</subparagraph><subparagraph id="H57B4157F25A944828804BDD7D87D2AAC"><enum>(C)</enum><text>The account
balance or value (determined at such time and in such manner as the Secretary
may provide).</text>
</subparagraph><subparagraph id="H852C458D036444B880724ABF2FFBE155"><enum>(D)</enum><text>The gross receipts
and gross withdrawals or payments from the account (determined for such period
and in such manner as the Secretary may provide).</text>
</subparagraph></paragraph><paragraph id="H8CE8BF203D884499B810A4E770C02671"><enum>(2)</enum><header>Election to be
subject to same reporting as United States financial
institutions</header><text>In the case of a foreign financial institution which
elects the application of this paragraph—</text>
<subparagraph id="H15EF74B7C57041048D518E2AD7D31BF0"><enum>(A)</enum><text>subparagraphs (C)
and (D) of paragraph (1) shall not apply, and</text>
</subparagraph><subparagraph id="HF3C37EA18FDE40DC9CFFA8F51132AE20"><enum>(B)</enum><text>the agreement
described in subsection (b) shall require such foreign financial institution to
report such information with respect to each United States account maintained
by such institution as such institution would be required to report under
sections 6041, 6042, 6045, and 6049 if—</text>
<clause id="HAAC247168ED84AFE8962AA7DCEDEB23C"><enum>(i)</enum><text>such institution
were a United States person, and</text>
</clause><clause id="H963DD0D6B16A489C9B3E0FE80CCD62A4"><enum>(ii)</enum><text>each holder of
such account which is a specified United States person or United States owned
foreign entity were a natural person and citizen of the United States.</text>
</clause><continuation-text continuation-text-level="subparagraph">An
election under this paragraph shall be made at such time, in such manner, and
subject to such conditions as the Secretary may provide.</continuation-text></subparagraph></paragraph><paragraph id="HD723E2A7A6F14A139613401BC4DCC621"><enum>(3)</enum><header>Information
supplied by account holders</header><text display-inline="yes-display-inline">The foreign financial institution may rely
on a certification from an account holder as to whether an account is a United
States account and for the information required under paragraph (1)(A) with
respect to such account holder if neither the financial institution nor any
entity which is a member of the same expanded affiliated group as such
financial institution knows, or has reason to know, that any information
provided in such certification is incorrect.</text>
</paragraph><paragraph commented="no" id="H4254951676D743D4B83261C521120E2D"><enum>(4)</enum><header>Separate
requirements for qualified intermediaries</header><text>In the case of a
foreign financial institution which is treated as a qualified intermediary by
the Secretary for purposes of section 1441 and the regulations issued
thereunder, the requirements of this section shall be in addition to any
reporting or other requirements imposed by the Secretary for purposes of such
treatment.</text>
</paragraph></subsection><subsection id="H834E9AA4477F4C559A9741BFB7CB3CBE"><enum>(d)</enum><header>Definitions</header><text>For
purposes of this section—</text>
<paragraph id="HAEE1E6BE1E884E6DA00FA703B68ABF8B"><enum>(1)</enum><header>United States
account</header>
<subparagraph id="HFA9EB28DF0EA4097B00D4881C5029A5C"><enum>(A)</enum><header>In
general</header><text>The term <term>United States account</term> means any
financial account which is held by one or more specified United States persons
or United States owned foreign entities.</text>
</subparagraph><subparagraph id="HE0ABCF68BD1F45DA9317C4B4B5404BD4"><enum>(B)</enum><header>Exception for
certain accounts held by individuals</header><text display-inline="yes-display-inline">Unless the foreign financial institution
elects to not have this subparagraph apply, such term shall not include any
depository account maintained by such financial institution if—</text>
<clause id="H40E95B3E566545F9BF472A46C169A4FB"><enum>(i)</enum><text>each holder of
such account is a natural person, and</text>
</clause><clause id="H76F9F2856CBC4CC8A40A73A6C2053275"><enum>(ii)</enum><text>with respect to
each holder of such account, the aggregate value of all depository accounts
held (in whole or in part) by such holder and maintained by the same financial
institution which maintains such account does not exceed $10,000 ($50,000 if
all such accounts were in existence on the date of the enactment of this
section).</text>
</clause><continuation-text continuation-text-level="subparagraph">For
purposes of clause (ii), all financial institutions which are members of the
same expanded affiliated group shall be treated as a single financial
institution.</continuation-text></subparagraph></paragraph><paragraph id="HB22DC2E426EC4628A0FF192AA60DCD6C"><enum>(2)</enum><header>Financial
account</header><text display-inline="yes-display-inline">The term
<term>financial account</term> means, with respect to any financial
institution—</text>
<subparagraph id="HAD95AD9DC9724445880134D1C41701E7"><enum>(A)</enum><text>any depository
account maintained by such financial institution,</text>
</subparagraph><subparagraph id="HB9DE604BEDDE40DDB4FB86FBE411B0AC"><enum>(B)</enum><text>any custodial
account maintained by such financial institution, and</text>
</subparagraph><subparagraph commented="no" id="H63266458892C432484A8992A7E5E1EB5"><enum>(C)</enum><text>except as
otherwise provided by the Secretary, any equity or debt interest in such
financial institution (other than interests which are regularly traded on an
established securities market).</text>
</subparagraph><continuation-text continuation-text-level="paragraph">Any equity
or debt interest which constitutes a financial account under subparagraph (C)
with respect to any financial institution shall be treated for purposes of this
section as maintained by such financial institution.</continuation-text></paragraph><paragraph id="HCD3281BAF51B4B1DAC52708D6436C530"><enum>(3)</enum><header>United States
owned foreign entity</header><text>The term <term>United States owned foreign
entity</term> means any foreign entity which has one or more substantial United
States owners.</text>
</paragraph><paragraph id="H0C66731B9F1548EE874266D6D2793035"><enum>(4)</enum><header>Foreign
financial institution</header><text>The term <term>foreign financial
institution</term> means any financial institution which is a foreign
entity.</text>
</paragraph><paragraph commented="no" id="H7376B068902E49D8B3290F72A0EA2E54"><enum>(5)</enum><header>Financial
institution</header><text display-inline="yes-display-inline">Except as
otherwise provided by the Secretary, the term <term>financial
institution</term> means any entity that—</text>
<subparagraph id="H8095075DF21A4E1E8E8AFD9F73070DAA"><enum>(A)</enum><text>accepts deposits
in the ordinary course of a banking or similar business,</text>
</subparagraph><subparagraph id="HDC1B5E3BFD034BB091C8DFDD05519844"><enum>(B)</enum><text>is engaged in the
business of holding financial assets for the account of others, or</text>
</subparagraph><subparagraph id="HFC5C243BEA6B49CCA75C02C0C7414DB2"><enum>(C)</enum><text>is engaged (or
holding itself out as being engaged) primarily in the business of investing,
reinvesting, or trading in securities (as defined in section 475(c)(2) without
regard to the last sentence thereof), partnership interests, commodities (as
defined in section 475(e)(2)), or any interest (including a futures or forward
contract or option) in such securities, partnership interests, or
commodities.</text>
</subparagraph></paragraph></subsection><subsection id="HD27C54A609504C26BEE2FCD10E385836"><enum>(e)</enum><header>Affiliated
groups</header>
<paragraph id="H63E1CCF520824AEE9797170D6D05970E"><enum>(1)</enum><header>In
general</header><text>The requirements of subsections (b), (c)(1), and (c)(3)
shall apply—</text>
<subparagraph id="H5BCE0847FDED4703903B3A460C783A0B"><enum>(A)</enum><text>with respect to
United States accounts maintained by the foreign financial institution,
and</text>
</subparagraph><subparagraph id="H66CE35174B0944D988BD95826779702F"><enum>(B)</enum><text>except as
otherwise provided by the Secretary, with respect to United States accounts
maintained by each other foreign financial institution (other than any foreign
financial institution which meets the requirements of subsection (b)) which is
a member of the same expanded affiliated group as such foreign financial
institution.</text>
</subparagraph></paragraph><paragraph display-inline="no-display-inline" id="H3A8D5481E79C4F79B87AF2922BB78607"><enum>(2)</enum><header>Expanded
affiliated group</header><text display-inline="yes-display-inline">For purposes
of this section, the term <term>expanded affiliated group</term> means an
affiliated group as defined in section 1504(a), determined—</text>
<subparagraph id="HBD71F0CFF38345E79F544D07666A53F1"><enum>(A)</enum><text>by substituting
<quote>more than 50 percent</quote> for <quote>at least 80 percent</quote> each
place it appears, and</text>
</subparagraph><subparagraph id="HE60B4A25F2914EA08BCBEDBDDF87B026"><enum>(B)</enum><text>without regard to
paragraphs (2) and (3) of section 1504(b).</text>
</subparagraph><continuation-text continuation-text-level="paragraph">A
partnership or any other entity (other than a corporation) shall be treated as
a member of an expanded affiliated group if such entity is controlled (within
the meaning of section 954(d)(3)) by members of such group (including any
entity treated as a member of such group by reason of this sentence).</continuation-text></paragraph></subsection><subsection id="H0451E0D472EA495DABADE94036C12D1D"><enum>(f)</enum><header>Exception for
certain payments</header><text>Subsection (a) shall not apply to any payment if
the beneficial owner of such payment is—</text>
<paragraph id="HC89B1904F2C64F078927EF5ED1848A5F"><enum>(1)</enum><text display-inline="yes-display-inline">any foreign government, any political
subdivision of a foreign government, or any wholly owned agency or
instrumentality of any one or more of the foregoing,</text>
</paragraph><paragraph id="HD70109BB54694C1FAA7BCDDF19120F73"><enum>(2)</enum><text>any international
organization or any wholly owned agency or instrumentality thereof,</text>
</paragraph><paragraph id="H572B61FA4DFD40F4BA0E72CFB07D25EC"><enum>(3)</enum><text>any foreign
central bank of issue, or</text>
</paragraph><paragraph id="HB70A6BA7C39C4A01A0287E62B9BB4939"><enum>(4)</enum><text>any other class of
persons identified by the Secretary for purposes of this subsection as posing a
low risk of tax evasion.</text>
</paragraph></subsection></section><section id="H1BDFF0284C9142AEB77404D266105E7D"><enum>1472.</enum><header>Withholdable
payments to other foreign entities</header>
<subsection id="HF0156FD62F364106BDCCB394114345CC"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">In the case of any
withholdable payment to a non-financial foreign entity, if—</text>
<paragraph id="H758731908473438AB27C161875C49803"><enum>(1)</enum><text>the beneficial
owner of such payment is such entity or any other non-financial foreign entity,
and</text>
</paragraph><paragraph id="H4A188C8966B7418F950E7DA07E4E2D75"><enum>(2)</enum><text>the requirements
of subsection (b) are not met with respect to such beneficial owner,</text>
</paragraph><continuation-text continuation-text-level="subsection">then the
withholding agent with respect to such payment shall deduct and withhold from
such payment a tax equal to 30 percent of the amount of such payment.</continuation-text></subsection><subsection id="HEB9C123E754A45DC8667BEF0BD43C0AF"><enum>(b)</enum><header>Requirements for
waiver of withholding</header><text>The requirements of this subsection are met
with respect to the beneficial owner of a payment if—</text>
<paragraph id="HE8D0F9AA1C8F4D70A1C0047B133DAF6F"><enum>(1)</enum><text>such beneficial
owner or the payee provides the withholding agent with either—</text>
<subparagraph id="HA385F7D1B0B24EB78C8ABB03AB4A196D"><enum>(A)</enum><text>a certification
that such beneficial owner does not have any substantial United States owners,
or</text>
</subparagraph><subparagraph id="H79FCACBEA91642E59D02EEC2D7970C38"><enum>(B)</enum><text>the name, address,
and TIN of each substantial United States owner of such beneficial
owner,</text>
</subparagraph></paragraph><paragraph id="H30AC4312AEF34DC7819B1D386A703628"><enum>(2)</enum><text>the withholding
agent does not know, or have reason to know, that any information provided
under paragraph (1) is incorrect, and</text>
</paragraph><paragraph id="HCA3B1846EFB94BD99910467C6B896571"><enum>(3)</enum><text>the withholding
agent reports the information provided under paragraph (1)(B) to the Secretary
in such manner as the Secretary may provide.</text>
</paragraph></subsection><subsection id="H1AD4942EEFB74F7DA670FFD39C8EBAE1"><enum>(c)</enum><header>Exceptions</header><text>Subsection
(a) shall not apply to—</text>
<paragraph id="H4C27725DEF994185B67BFB1042ADFC46"><enum>(1)</enum><text>except as
otherwise provided by the Secretary, any payment beneficially owned by—</text>
<subparagraph id="HE9F7DD8F1E61450E8DF7F84F8FC5AEF5"><enum>(A)</enum><text>any corporation
the stock of which is regularly traded on an established securities
market,</text>
</subparagraph><subparagraph id="HC60EC47D06F2407791B65971028D657D"><enum>(B)</enum><text>any corporation
which is a member of the same expanded affiliated group (as defined in section
1471(e)(2) without regard to the last sentence thereof) as a corporation
described in subparagraph (A),</text>
</subparagraph><subparagraph display-inline="no-display-inline" id="H43CB8083CAC3442DBDCADF501A49CEB1"><enum>(C)</enum><text display-inline="yes-display-inline">any foreign government, any political
subdivision of a foreign government, or any wholly owned agency or
instrumentality of any one or more of the foregoing,</text>
</subparagraph><subparagraph id="HB95E34EE25FC45CF83A6545491B8E269"><enum>(D)</enum><text>any international
organization or any wholly owned agency or instrumentality thereof,</text>
</subparagraph><subparagraph id="H246648718CD64AF995A4260B687584F1"><enum>(E)</enum><text>any foreign
central bank of issue, or</text>
</subparagraph><subparagraph display-inline="no-display-inline" id="H5A881F9389504C0C9A2167B2B9C0F3E6"><enum>(F)</enum><text>any other class of
persons identified by the Secretary for purposes of this subsection, and</text>
</subparagraph></paragraph><paragraph id="H0504A92A769142A8916E1FBE1BB093D6"><enum>(2)</enum><text display-inline="yes-display-inline">any class of payments identified by the
Secretary for purposes of this subsection as posing a low risk of tax
evasion.</text>
</paragraph></subsection><subsection id="HC08608ADFC9B4A589A4EBCEA076C4BA0"><enum>(d)</enum><header>Non-Financial
foreign entity</header><text>For purposes of this section, the term
<term>non-financial foreign entity</term> means any foreign entity which is not
a financial institution (as defined in section 1471(d)(5)).</text>
</subsection></section><section id="H03D7765D83C8416CA464EA53AD3F5FE9"><enum>1473.</enum><header>Definitions</header><text display-inline="no-display-inline">For purposes of this subchapter—</text>
<paragraph id="H4AEAEE1794044E318B19D858AC8ECE14"><enum>(1)</enum><header>Withholdable
payment</header><text>The term <term>withholdable payment</term> means—</text>
<subparagraph id="H5ACB3B4CFF384BB980139120171B3BC7"><enum>(A)</enum><text>any payment of
interest (including any original issue discount), dividends, rents, salaries,
wages, premiums, annuities, compensations, remunerations, emoluments, and other
fixed or determinable annual or periodical gains, profits, and income, if such
payment is from sources within the United States, and</text>
</subparagraph><subparagraph id="H8E614602BCEB499F8466347BC6E335C5"><enum>(B)</enum><text>any gross proceeds
from the sale of any property of a type which can produce interest or dividends
from sources within the United States.</text>
</subparagraph></paragraph><paragraph id="HFE6D051798D3484087C16D70F2ECCEFC"><enum>(2)</enum><header>Substantial
United States owner</header>
<subparagraph id="HA7B1965E38E145B391EBD742AE564B49"><enum>(A)</enum><header>In
general</header><text>The term <term>substantial United States owner</term>
means—</text>
<clause id="HA6C12DC1D2FE4D09BDF74F06372739AD"><enum>(i)</enum><text>with respect to
any corporation, any specified United States person which owns, directly or
indirectly, more than 10 percent of the stock of such corporation (by vote or
value),</text>
</clause><clause id="H0A987D30EC0D452A847B5CCDBA99B71F"><enum>(ii)</enum><text>with respect to
any partnership, any specified United States person which owns, directly or
indirectly, more than 10 percent of the profits interests or capital interests
in such partnership, and</text>
</clause><clause commented="no" id="HF214FC86B027493EB5DB6A94834739D9"><enum>(iii)</enum><text>in the case of a
trust, any specified United States person treated as an owner of any portion of
such trust under subpart E of part I of subchapter J of chapter 1.</text>
</clause></subparagraph><subparagraph commented="no" id="H2AD4DD468FDC47619E5068112B93D3C5"><enum>(B)</enum><header>Special rule for
investment vehicles</header><text display-inline="yes-display-inline">In the
case of any financial institution described in section 1471(d)(5)(C), clauses
(i) and (ii) of subparagraph (A) shall be applied by substituting <quote>0
percent</quote> for <quote>10 percent</quote>.</text>
</subparagraph></paragraph><paragraph id="H31F8C60A68FC47DDB1359DE8272BBDA6"><enum>(3)</enum><header>Specified United
States person</header><text>Except as otherwise provided by the Secretary, the
term <term>specified United States person</term> means any United States person
other than—</text>
<subparagraph display-inline="no-display-inline" id="H29DEF41BD1984D328DAE3A9510BE2B1D"><enum>(A)</enum><text>any corporation
the stock of which is regularly traded on an established securities
market,</text>
</subparagraph><subparagraph display-inline="no-display-inline" id="H7A17D4024E844CBCB1A6EE36B7CF5DC2"><enum>(B)</enum><text>any corporation
which is a member of the same expanded affiliated group (as defined in section
1471(e)(2) without regard to the last sentence thereof) as a corporation
described in subparagraph (A),</text>
</subparagraph><subparagraph id="H10DC588E80104905A006B4931F2A8878"><enum>(C)</enum><text display-inline="yes-display-inline">any organization exempt from taxation under
section 501(a) or an individual retirement plan,</text>
</subparagraph><subparagraph id="HFD704AB126574857AE48867AD1C26A7E"><enum>(D)</enum><text>the United States
or any wholly owned agency or instrumentality thereof,</text>
</subparagraph><subparagraph id="HEB128F1B41C64FFD9D2148D80B8EE8DC"><enum>(E)</enum><text>any State, the
District of Columbia, any possession of the United States, any political
subdivision of any of the foregoing, or any wholly owned agency or
instrumentality of any one or more of the foregoing,</text>
</subparagraph><subparagraph id="H3F3EC9F52394449C985BF08D5F01258F"><enum>(F)</enum><text>any bank (as
defined in section 581),</text>
</subparagraph><subparagraph id="H55A2E4ED1ACC456C84BE3E351CFE3D4E"><enum>(G)</enum><text>any real estate
investment trust (as defined in section 856),</text>
</subparagraph><subparagraph id="HE0DFCBC08A1B41AF95EBC7E816451F1D"><enum>(H)</enum><text>any regulated
investment company (as defined in section 851),</text>
</subparagraph><subparagraph id="H2F4B3DC98482456186AB30628F6B9850"><enum>(I)</enum><text>any common trust
fund (as defined in section 584(a)), and</text>
</subparagraph><subparagraph id="H41F9C751215B48CD82083DC4A642AC31"><enum>(J)</enum><text>any trust
which—</text>
<clause id="HA5D768BD3A984FAAA941E65AF12B00AF"><enum>(i)</enum><text>is
exempt from tax under section 664(c), or</text>
</clause><clause id="H6FD3FFE4A24F42FE8D038B5C5A4D0B5A"><enum>(ii)</enum><text>is described in
section 4947(a)(1).</text>
</clause></subparagraph></paragraph><paragraph id="H7A41AC4E1B364D0C9B7CF56A4ABCE8BE"><enum>(4)</enum><header>Withholding
agent</header><text>The term <term>withholding agent</term> means all persons,
in whatever capacity acting, having the control, receipt, custody, disposal, or
payment of any withholdable payment.</text>
</paragraph><paragraph id="HAB2320ADD6E144EBA8EA23145157D6B7"><enum>(5)</enum><header>Foreign
entity</header><text>The term <term>foreign entity</term> means any entity
which is not a United States person.</text>
</paragraph></section><section id="HD7B6B26ACB88489F946EE390324E0E53"><enum>1474.</enum><header>Special
rules</header>
<subsection id="H7C3B2DE4B0EE419D924DF70BD86D906A"><enum>(a)</enum><header>Liability for
withheld tax</header><text display-inline="yes-display-inline">Every person
required to deduct and withhold any tax under this chapter is hereby made
liable for such tax and is hereby indemnified against the claims and demands of
any person for the amount of any payments made in accordance with the
provisions of this chapter.</text>
</subsection><subsection id="H3779038BDB7D4A088BCF7CBFB16B699F"><enum>(b)</enum><header>Credits and
refunds</header>
<paragraph id="HF81851F0DFD94856AD153F095DF23919"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), the determination of
whether any tax deducted and withheld under this chapter results in an
overpayment shall be made as if such tax had been deducted and withheld under
subchapter A of chapter 3.</text>
</paragraph><paragraph id="HE4866444AA8A448395FD22309838FE7A"><enum>(2)</enum><header>Special rule
where foreign financial institution is beneficial owner of payment</header>
<subparagraph id="H392530C6620A46F2864A1B430EBFD8C8"><enum>(A)</enum><header>In
general</header><text>In the case of any tax deducted and withheld under
section 1471(a) from a specified financial institution payment—</text>
<clause id="H7BAF73A2A49D4D5588A8DB99105EF68E"><enum>(i)</enum><text>if
the foreign financial institution referred to in subparagraph (B) with respect
to such payment is entitled to a reduced rate of tax with respect to such
payment by reason of any treaty obligation of the United States—</text>
<subclause id="H91A67F531A0F48BE98C920DC60736D74"><enum>(I)</enum><text>the amount of any
credit or refund with respect to such tax shall not exceed the amount of credit
or refund attributable to such reduction in rate, and</text>
</subclause><subclause id="H9CD8A03CBC0842B3B29FC191971169A5"><enum>(II)</enum><text>no interest shall
be allowed or paid with respect to such credit or refund, and</text>
</subclause></clause><clause id="HE8112C542813418C803B94BC3A747837"><enum>(ii)</enum><text>if such foreign
financial institution is not so entitled, no credit or refund shall be allowed
or paid with respect to such tax.</text>
</clause></subparagraph><subparagraph id="HC81D84C8D37B4C6599F94B7A5828C4AC"><enum>(B)</enum><header>Specified
financial institution payment</header><text>The term <term>specified financial
institution payment</term> means any withholdable payment if the foreign
financial institution payee referred to in section 1471(a) with respect to such
payment is the beneficial owner of such payment.</text>
</subparagraph></paragraph></subsection><subsection id="HB627804D831440DEBE2A39C4BD2000EF"><enum>(c)</enum><header>Confidentiality
of information</header>
<paragraph id="H6A033BDE3A0B4D8AA6DD500B99AED0AF"><enum>(1)</enum><header>In
general</header><text>For purposes of this chapter, rules similar to the rules
of section 3406(f) shall apply.</text>
</paragraph><paragraph id="H8C7625930C11425D9A161DD2381729A7"><enum>(2)</enum><header>Disclosure of
list of qualified foreign financial institutions permitted</header><text>The
identity of a foreign financial institution which meets the requirements of
section 1471(b) shall not be treated as return information for purposes of
section 6103.</text>
</paragraph></subsection><subsection display-inline="no-display-inline" id="H7D4CCF7DFF104D45A70D5ED1F31FFD6A"><enum>(d)</enum><header>Regulations</header><text>The
Secretary shall prescribe such regulations or other guidance as may be
necessary or appropriate to carry out the purposes of this
chapter.</text>
</subsection></section></chapter><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HC7C284D8C4F943ABAFEC1DEED02949C7"><enum>(b)</enum><header>Coordination
with other withholding provisions</header>
<paragraph id="H841D174F7B754AEAB57E20E732EE8D4B"><enum>(1)</enum><header>Withholding of
tax on nonresident aliens and foreign corporations</header><text>Subsection (c)
of section 1441 is amended by adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H7C2B22ABBDBD4874844311C83272F961" style="OLC">
<paragraph id="H556B025BC9E246E4B2115A74B8140DB5"><enum>(13)</enum><header>Withholdable
payments taxed under chapter 4</header><text display-inline="yes-display-inline">No tax shall be required to be deducted and
withheld under subsection (a) from any amount with respect to which tax is
required to be deducted and withheld under chapter
4.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HF00C950C67C4472BBA936206AE460123"><enum>(2)</enum><header>Withholding of
tax on dispositions of United States real property
interests</header><text>Subsection (b) of section 1445 is amended by adding at
the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H6A5816AA203E443FAB8A9C60408AAB61" style="OLC">
<paragraph id="HAAB19EA9F8FF4AF8935943D79B3BF418"><enum>(10)</enum><header>Withholdable
payments taxed under chapter 4</header><text display-inline="yes-display-inline">No tax shall be required to be deducted and
withheld under subsection (a) from any amount with respect to which tax is
required to be deducted and withheld under chapter
4.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" id="H77898A3FAE1A4214B7333EF1D9BF1368"><enum>(c)</enum><header>Clerical
amendment</header><text display-inline="yes-display-inline">The table of
chapters of such Code is amended by adding at the end the following new
item:</text>
<quoted-block display-inline="no-display-inline" id="H2D7EAB42F4114631B10D8F9A87316E90" style="OLC">
<toc container-level="quoted-block-container" idref="HF0ABB9AB1763451587AAB99A20D25BCC" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="HB0284B7492814C7384BFD1D505C80FF7" level="chapter">Chapter 4. Taxes To enforce reporting on certain foreign
accounts.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H1368CD58B0C74374B467EEEC4F7D8B20"><enum>(d)</enum><header>Effective
date</header>
<paragraph id="H1B59BCE5FEC34F4DBFFB124D1400EA19"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), the amendments made
by this section shall apply to payments made after December 31, 2010.</text>
</paragraph><paragraph id="H6B05B7514DEB4F9CB59CB2BFF7791EE4"><enum>(2)</enum><header>Grandfathered
treatment of certain outstanding obligations</header><text>The amendments made
by this section shall not apply to any obligation outstanding on the date of
first committee action, if such obligation—</text>
<subparagraph id="HF95D7B33C4EA4E55BE2E6B3D50D858E3"><enum>(A)</enum><text>is in bearer form,
or</text>
</subparagraph><subparagraph id="H4E6C811EB4E44A35BB9E4CDEBF905200"><enum>(B)</enum><text>includes (on the
date of the issuance of such obligation) a provision under which the issuer
would (but for this paragraph) be obligated to make additional payments under
such obligation by reason of the amendments made by this section.</text>
</subparagraph></paragraph></subsection></section><section id="H106E09186F6B4304BB1728B2D133C8A0"><enum>102.</enum><header>Repeal of
certain foreign exceptions to registered bond requirements</header>
<subsection id="HEE02E305807C4ED4B505AB5D513D00DA"><enum>(a)</enum><header>Repeal of
exception to denial of deduction for interest on non-Registered bonds</header>
<paragraph id="HAFD2BCF875094B3E877D2E11E2EA20B0"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraph (2) of
section 163(f) is amended by striking subparagraph (B) and by redesignating
subparagraph (C) as subparagraph (B).</text>
</paragraph><paragraph id="H810D9B73B7DA4360B030DB0BB5AC9688"><enum>(2)</enum><header>Conforming
amendments</header>
<subparagraph id="HD09CBB820BF744B9A9FC85D70E58E4BA"><enum>(A)</enum><text>Subparagraph (A)
of section 163(f)(2) is amended by inserting <quote>or</quote> at the end of
clause (ii), by striking <quote>, or</quote> at the end of clause (iii) and
inserting a period, and by striking clause (iv).</text>
</subparagraph><subparagraph id="H75F0D21FFA4A496AAFCE1A667915D201"><enum>(B)</enum><text>Subparagraph (B)
of section 163(f)(2), as redesignated by paragraph (1), is amended—</text>
<clause id="H5B153E5A2BF244A9A618BA7B19955A10"><enum>(i)</enum><text>by
striking <quote>, and subparagraph (B),</quote> in the matter preceding clause
(i), and</text>
</clause><clause id="H1F77DD60497A4452A3D71FC62242DB75"><enum>(ii)</enum><text>by
amending clause (i) to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="H81E9AA72DE2548ACBCE6CC8E7F19356B" style="OLC">
<clause id="H65FD9029F51944AF83644A033CD82C9D"><enum>(i)</enum><text display-inline="yes-display-inline">such obligation is of a type which the
Secretary has determined by regulations to be used frequently in avoiding
Federal taxes,
and</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</clause></subparagraph><subparagraph id="H239C470B9EE949FFA180AF352F1C6EDB"><enum>(C)</enum><text>Sections
165(j)(2)(A) and 1287(b)(1) are each amended by striking <quote>except that
clause (iv) of subparagraph (A), and subparagraph (B), of such section shall
not apply</quote>.</text>
</subparagraph></paragraph></subsection><subsection id="HC63EAC77A2D54FC6BE1696A9AC35E54B"><enum>(b)</enum><header>Repeal of
treatment as portfolio debt</header>
<paragraph id="HF94EE3353AE0414686A6C1D8574DC742"><enum>(1)</enum><header>In
general</header><text>Paragraph (2) of section 871(h) is amended to read as
follows:</text>
<quoted-block display-inline="no-display-inline" id="HA6385B0E7B414F748221AA6409017580" style="OLC">
<paragraph id="H8EA42DEEE8F84214B933B510D9D78350"><enum>(2)</enum><header>Portfolio
interest</header><text display-inline="yes-display-inline">For purposes of this
subsection, the term <term>portfolio interest</term> means any interest
(including original issue discount) which—</text>
<subparagraph id="H4F5AC4EBE26A43CEB5E790B270147C50"><enum>(A)</enum><text>would be subject
to tax under subsection (a) but for this subsection, and</text>
</subparagraph><subparagraph id="H6B9F0A8709D04E7C807C49A4199A650D"><enum>(B)</enum><text>is paid on an
obligation—</text>
<clause id="H6C415EDDEE0E4C1F913913A8E8F5B39A"><enum>(i)</enum><text>which is in
registered form, and</text>
</clause><clause id="H89FFE3854F7A471BB8E164594357D656"><enum>(ii)</enum><text display-inline="yes-display-inline">with respect to which the United States
person who would otherwise be required to deduct and withhold tax from such
interest under section 1441(a) receives a statement (which meets the
requirements of paragraph (5)) that the beneficial owner of the obligation is
not a United States
person.</text>
</clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HC829F3C1BBD74C37B8B0171E91D09DB4"><enum>(2)</enum><header>Conforming
amendment</header><text display-inline="yes-display-inline">Section
871(h)(3)(A) is amended by striking <quote>subparagraph (A) or (B)
of</quote>.</text>
</paragraph></subsection><subsection id="HB6CA215CEED84B43A8DB5FC847636928"><enum>(c)</enum><header>Repeal of
exception to requirement that Treasury obligations be in registered
form</header>
<paragraph id="HEFAAB2A0B013428681C65590FE2E7A50"><enum>(1)</enum><header>In
general</header><text>Subsection (g) of section 3121 of title 31, United States
Code, is amended by striking paragraph (2) and by redesignating paragraphs (3)
and (4) as paragraphs (2) and (3), respectively.</text>
</paragraph><paragraph id="HF430A7481BC640BAA056D4361CBF4307"><enum>(2)</enum><header>Conforming
amendments</header><text>Paragraph (1) of section 3121(g) of such title is
amended—</text>
<subparagraph id="HF8B3A2CC4E284E63AD17E15E6048EEDC"><enum>(A)</enum><text>by adding
<quote>or</quote> at the end of subparagraph (A),</text>
</subparagraph><subparagraph id="H183C611B93504699A86F99ABE09FB610"><enum>(B)</enum><text>by striking
<quote>; or</quote> at the end of subparagraph (B) and inserting a period,
and</text>
</subparagraph><subparagraph id="HBCAFAB4F07844CF99A0442082D1D1669"><enum>(C)</enum><text>by striking
subparagraph (C).</text>
</subparagraph></paragraph></subsection><subsection id="H3CCFA6D1EF74400289CA1F102995FF48"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to
obligations issued after the date which is 180 days after the date of the
enactment of this Act.</text>
</subsection></section><enum>II</enum><header>Under reporting
with respect to foreign assets</header>
<section id="HD1D072784B9643909E562C0E9C2A4891"><enum>201.</enum><header>Disclosure of
information with respect to foreign financial assets</header>
<subsection id="H2505A8869D3141DD9210ED71806567BF"><enum>(a)</enum><header>In
general</header><text>Subpart A of part III of subchapter A of chapter 61 is
amended by inserting after section 6038C the following new section:</text>
<quoted-block display-inline="no-display-inline" id="HC92839D9C7014D98A9BA1E002EC51F2C" style="OLC">
<section id="HEA555290F6CD4F04BA8EC27B15C31A9B"><enum>6038D.</enum><header>Information
with respect to foreign financial assets</header>
<subsection id="H446736EE423C43A589F4E09AE3D624D2"><enum>(a)</enum><header>In
general</header><text>Any individual who, during any taxable year, holds any
interest in a specified foreign financial asset shall attach to such person’s
return of tax imposed by subtitle A for such taxable year the information
described in subsection (c) with respect to each such asset if the aggregate
value of all such assets exceeds $50,000 (or such higher dollar amount as the
Secretary may prescribe).</text>
</subsection><subsection id="H9294540ECC4A449DB5EA28F5DC611437"><enum>(b)</enum><header>Specified
foreign financial assets</header><text>For purposes of this section, the term
<term>specified foreign financial asset</term> means—</text>
<paragraph id="H576F01B779474752862DC9F778A3F407"><enum>(1)</enum><text display-inline="yes-display-inline">any financial account (as defined in
section 1471(d)(2)) maintained by a foreign financial institution (as defined
in section 1471(d)(4)), and</text>
</paragraph><paragraph id="HF8B14DE7D2274227B389B6BDC15E97A5"><enum>(2)</enum><text>any of the
following assets which are not held in an account maintained by a financial
institution (as defined in section 1471(d)(5))—</text>
<subparagraph id="HE452F8856C7046C6ABE146A0B9023448"><enum>(A)</enum><text>any stock or
security issued by a person other than a United States person,</text>
</subparagraph><subparagraph id="H2AB01B431DA44D7686EB476D242323D2"><enum>(B)</enum><text display-inline="yes-display-inline">any financial instrument or contract held
for investment that has an issuer or counterparty which is other than a United
States person, and</text>
</subparagraph><subparagraph id="HCD917A3C39094FF6A2D0DC61EB2D2013"><enum>(C)</enum><text display-inline="yes-display-inline">any interest in a foreign entity (as
defined in section 1473).</text>
</subparagraph></paragraph></subsection><subsection id="H1AF4B7E30FDA4434AA421979C642E67B"><enum>(c)</enum><header>Required
information</header><text>The information described in this subsection with
respect to any asset is:</text>
<paragraph id="H2D6A7CC10A644FC0842EEA78F0F9C09A"><enum>(1)</enum><text>In the case of any
account, the name and address of the financial institution in which such
account is maintained and the number of such account.</text>
</paragraph><paragraph id="HE273F0A21D7048F4A553A300357B56A5"><enum>(2)</enum><text>In the case of any
stock or security, the name and address of the issuer and such information as
is necessary to identify the class or issue of which such stock or security is
a part.</text>
</paragraph><paragraph id="H828B085E22764EA986E0E5BD3D7C2C79"><enum>(3)</enum><text>In the case of any
other instrument, contract, or interest—</text>
<subparagraph id="H60F1C94A21D64DE6B6C5D17637D68C8E"><enum>(A)</enum><text>such information
as is necessary to identify such instrument, contract, or interest, and</text>
</subparagraph><subparagraph id="HD69CA7EE2C32456C9D41089E1C1D4F2E"><enum>(B)</enum><text>the names and
addresses of all issuers and counterparties with respect to such instrument,
contract, or interest.</text>
</subparagraph></paragraph><paragraph id="HFA08BC36934643FA9352DF661B14B22D"><enum>(4)</enum><text>The maximum value
of the asset during the taxable year.</text>
</paragraph></subsection><subsection id="H088FF3ECA0C84F4A9223964DB280E42A"><enum>(d)</enum><header>Penalty for
failure To disclose</header>
<paragraph id="HC721ADCCD21B4A3FBCD2B5CBC7C25B98"><enum>(1)</enum><header>In
general</header><text>If any individual fails to furnish the information
described in subsection (c) with respect to any taxable year at the time and in
the manner described in subsection (a), such person shall pay a penalty of
$10,000.</text>
</paragraph><paragraph id="H9538941D54BF49F8BD7DD33A381146D7"><enum>(2)</enum><header>Increase in
penalty where failure continues after notification</header><text>If any failure
described in paragraph (1) continues for more than 90 days after the day on
which the Secretary mails notice of such failure to the individual, such
individual shall pay a penalty (in addition to the penalties under paragraph
(1)) of $10,000 for each 30-day period (or fraction thereof) during which such
failure continues after the expiration of such 90-day period. The penalty
imposed under this paragraph with respect to any failure shall not exceed
$50,000.</text>
</paragraph></subsection><subsection commented="no" id="HD3060D303C09474ABBF8776808C545B5"><enum>(e)</enum><header>Presumption that
value of specified foreign financial assets exceeds dollar
threshold</header><text display-inline="yes-display-inline">If—</text>
<paragraph id="H1E2DE3E88C414FBBB6F7F698DAAF5F93"><enum>(1)</enum><text>the Secretary
determines that an individual has an interest in one or more specified foreign
financial assets, and</text>
</paragraph><paragraph id="H0DD205E230044679956B7A180930BB44"><enum>(2)</enum><text>such individual
does not provide sufficient information to demonstrate the aggregate value of
such assets,</text>
</paragraph><continuation-text continuation-text-level="subsection">then the
aggregate value of such assets shall be treated as being in excess of $50,000
(or such higher dollar amount as the Secretary prescribes for purposes of
subsection (a)) for purposes of assessing the penalties imposed under this
section.</continuation-text></subsection><subsection id="HD357A1ECEED6437C8F83CA051DC95EBF"><enum>(f)</enum><header>Application to
certain entities</header><text>To the extent provided by the Secretary in
regulations or other guidance, the provisions of this section shall apply to
any domestic entity which is formed or availed of for purposes of holding,
directly or indirectly, specified foreign financial assets, in the same manner
as if such entity were an individual.</text>
</subsection><subsection id="HFB90278F2BE04925A02F4F75D1253F04"><enum>(g)</enum><header>Reasonable cause
exception</header><text>No penalty shall be imposed by this section on any
failure which is shown to be due to reasonable cause and not due to willful
neglect. The fact that a foreign jurisdiction would impose a civil or criminal
penalty on the taxpayer (or any other person) for disclosing the required
information is not reasonable cause.</text>
</subsection><subsection id="HDCB7D53F540147578B816B54FFFB89FF"><enum>(h)</enum><header>Regulations</header><text display-inline="yes-display-inline">The Secretary shall prescribe such
regulations or other guidance as may be necessary or appropriate to carry out
the purposes of this section, including regulations or other guidance which
provide appropriate exceptions from the application of this section in the case
of—</text>
<paragraph id="H88B637F8DF3C4BB5B04F31D782A165D6"><enum>(1)</enum><text>classes of assets
identified by the Secretary, including any assets with respect to which the
Secretary determines that disclosure under this section would be duplicative of
other disclosures, and</text>
</paragraph><paragraph id="HBB7C0E3A353C478E914FC289853BD909"><enum>(2)</enum><text>nonresident
aliens.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H127FDC52F8EE467E8F706760E150EE56"><enum>(b)</enum><header>Clerical
amendment</header><text display-inline="yes-display-inline">The table of
sections for subpart A of part III of subchapter A of chapter 61 is amended by
inserting after the item relating to section 6038C the following new
item:</text>
<quoted-block display-inline="no-display-inline" id="H00F0202BE3C344FC8132DF5BD855ABC1" style="OLC">
<toc container-level="quoted-block-container" idref="HC92839D9C7014D98A9BA1E002EC51F2C" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="HEA555290F6CD4F04BA8EC27B15C31A9B" level="section">Sec. 6038D. Information with respect to foreign financial
assets.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H7DEDF5A6FE314B06B17A2AF293A86728"><enum>(c)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to taxable years beginning after the date of the
enactment of this Act.</text>
</subsection></section><section display-inline="no-display-inline" id="HF85622283E6D486592BD405B69E5233E" section-type="subsequent-section"><enum>202.</enum><header>Penalties for
underpayments attributable to undisclosed foreign financial assets</header>
<subsection id="H1C48D8EA819E403B8DEA084890E40AF0"><enum>(a)</enum><header>In
general</header><text>Section 6662 is amended—</text>
<paragraph id="HB3D45CEBE1A34F658BDC9A2ACFECB1A5"><enum>(1)</enum><text display-inline="yes-display-inline">in subsection (b), by inserting after
paragraph (5) the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H7F21C9E8CC1746E280A7164731F2F473" style="OLC">
<paragraph id="H4CF720471E8F4D60B57B2E7AB69496B3"><enum>(6)</enum><text display-inline="yes-display-inline">Any undisclosed foreign financial asset
understatement.</text>
</paragraph><after-quoted-block>,
and</after-quoted-block></quoted-block>
</paragraph><paragraph id="HACEF2B20CC06437394E5BDF62C5BBD65"><enum>(2)</enum><text>by adding at the
end the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H806E5A165397455D9FC1F0EC20A1761A" style="OLC">
<subsection id="H7DB57FCA828B4695A1BB1D6225CFC3B4"><enum>(i)</enum><header>Undisclosed
foreign financial asset understatement</header>
<paragraph id="HA77EAE4E509C4348BBF3A3EDB6749F00"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">For purposes of this
section, the term <term>undisclosed foreign financial asset
understatement</term> means, for any taxable year, the portion of the
understatement for such taxable year which is attributable to any transaction
involving an undisclosed foreign financial asset.</text>
</paragraph><paragraph id="H73BA7041B4544905A04035635C5D6171"><enum>(2)</enum><header>Undisclosed
foreign financial asset</header><text>For purposes of this subsection, the term
<term>undisclosed foreign financial asset</term> means, with respect to any
taxable year, any asset with respect to which information was required to be
provided under section 6038, 6038B, 6038D, 6046A, or 6048 for such taxable year
but was not provided by the taxpayer as required under the provisions of those
sections.</text>
</paragraph><paragraph id="H5B5544CB9CFD47E5ABDC5E225DF09067"><enum>(3)</enum><header>Increase in
penalty for undisclosed foreign financial asset
understatements</header><text>In the case of any portion of an underpayment
which is attributable to any undisclosed foreign financial asset
understatement, subsection (a) shall be applied with respect to such portion by
substituting <quote>40 percent</quote> for <quote>20
percent</quote>.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="HBA1B87E12F3D4951B69D1F4D072D35DF"><enum>(b)</enum><header display-inline="yes-display-inline">Effective
Date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to taxable years beginning after the date of the
enactment of this Act.</text>
</subsection></section><section id="H6A532D70A17A4DBCA5ED3B0AB4033EF1"><enum>203.</enum><header>Modification of
statute of limitations for significant omission of income in connection with
foreign assets</header>
<subsection id="HA7A2C04B3A9E4BEAB882CCEFBC292534"><enum>(a)</enum><header>Extension of
statute of limitations</header>
<paragraph id="HCC1C54E33548464FA920E6EEEBFA8F6E"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraph (1) of
section 6501(e) is amended by redesignating subparagraphs (A) and (B) as
subparagraphs (B) and (C), respectively, and by inserting before subparagraph
(B) (as so redesignated) the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="H4533E0D68BCA483199282D53FE928B86" style="OLC">
<subparagraph id="H382AE4E03F784826867BC6270E514BAB"><enum>(A)</enum><header>General
rule</header><text display-inline="yes-display-inline">If the taxpayer omits
from gross income an amount properly includible therein and—</text>
<clause id="H8134BC337FCF4E32B2AAAB075CE34315"><enum>(i)</enum><text>such amount is in
excess of 25 percent of the amount of gross income stated in the return,
or</text>
</clause><clause id="HA1790DBD5BAF4C79B37296365E2341B3"><enum>(ii)</enum><text>such
amount—</text>
<subclause id="H21644EA564084A6F88A68E57199F65D2"><enum>(I)</enum><text>is attributable to
one or more assets with respect to which information is required to be reported
under section 6038D (or would be so required if such section were applied
without regard to the dollar threshold specified in subsection (a) thereof and
without regard to any exceptions provided pursuant to subsection (h)(1)
thereof), and</text>
</subclause><subclause id="HE56756D8C181419C84471EF117C6986C"><enum>(II)</enum><text>is in excess of
$5,000,</text>
</subclause></clause><continuation-text continuation-text-level="subparagraph">the tax
may be assessed, or a proceeding in court for collection of such tax may be
begun without assessment, at any time within 6 years after the return was
filed.</continuation-text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="H647676ED09654267A072E8DC17C7B78C"><enum>(2)</enum><header>Conforming
amendments</header>
<subparagraph id="HBF9A9F90111F47ED97144C1798DAC24C"><enum>(A)</enum><text>Subparagraph (B)
of section 6501(e)(1), as redesignated by paragraph (1), is amended by striking
all that precedes clause (i) and inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="H5CCACEE08D2249F2A475D56242BFA902" style="OLC">
<subparagraph id="H3D96DDCDA3FF4F03B7A8F6E5763DAE4B"><enum>(B)</enum><header>Determination of
gross income</header><text display-inline="yes-display-inline">For purposes of
subparagraph
(A)—</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="H184FFC7C41CE4F5596CEA9AF3906F687"><enum>(B)</enum><text>Paragraph (2) of
section 6229(c) is amended by striking <quote>which is in excess of 25 percent
of the amount of gross income stated in its return</quote> and inserting
<quote>and such amount is described in clause (i) or (ii) of section
6501(e)(1)(A)</quote>.</text>
</subparagraph></paragraph></subsection><subsection id="H703EFE601DC54C3B9A153E351E95B216"><enum>(b)</enum><header>Additional
reports subject to extended period</header><text>Paragraph (8) of section
6501(c) is amended—</text>
<paragraph id="H2D14F3BBAC244F6E960C62ED8502D8F9"><enum>(1)</enum><text>by inserting
<quote>pursuant to an election under section 1295(b) or</quote> before
<quote>under section 6038</quote>,</text>
</paragraph><paragraph id="HD6B38C44F15E4FE2875579CD8DFCE2E1"><enum>(2)</enum><text>by inserting
<quote>1298(f),</quote> before <quote>6038</quote>, and</text>
</paragraph><paragraph id="H639D58DE963A41A388038D104C710100"><enum>(3)</enum><text>by inserting
<quote>6038D,</quote> after <quote>6038B,</quote>.</text>
</paragraph></subsection><subsection id="HC12315E665034FA0B1391557E30180FC"><enum>(c)</enum><header>Clarifications
related to failure To disclose foreign transfers</header><text display-inline="yes-display-inline">Paragraph (8) of section 6501(c) is amended
by striking <quote>event</quote> and inserting <quote>tax return,
event,</quote>.</text>
</subsection><subsection id="H0B7CBE1372B84152973125B0ADD6958A"><enum>(d)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to—</text>
<paragraph id="HF6780882B460467EB1E7C56EA90254DC"><enum>(1)</enum><text>returns filed
after the date of the enactment of this Act; and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="HA9C05A0306C04A7FB040524918B7FFCB"><enum>(2)</enum><text>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.</text>
</paragraph></subsection></section><enum>III</enum><header>Other disclosure
provisions </header>
<section id="H179F843345E94E3CBF5A4A18D281761B"><enum>301.</enum><header>Disclosure of
assistance in acquiring or forming a foreign entity</header>
<subsection id="H96F6CF4BAEAD4895AE49F617032B4534"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subchapter B of
chapter 61 is amended by redesignating section 6116 as section 6117 and by
inserting after 6115 the following new section:</text>
<quoted-block display-inline="no-display-inline" id="H3ADB4CB6382B404FAF87B8A5DEB0B2FA" style="OLC">
<section id="H6DAEA0714FE74EB19AD2539ECF0235D3"><enum>6116.</enum><header>Disclosure of
assistance in acquiring or forming a foreign entity</header>
<subsection id="H294C43F678494D7D9360258B5B61364D"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Each material advisor
with respect to any foreign entity transaction shall make a return (in such
form as the Secretary may prescribe) setting forth—</text>
<paragraph id="HB8C0181BBDA74E6E804779290063E8A1"><enum>(1)</enum><text>the identity of
the foreign entity referred to in subsection (d),</text>
</paragraph><paragraph id="H940D9BEA7AC743A0920A02AF94DFAF36"><enum>(2)</enum><text>the identity of
the citizen or resident of the United States referred to in subsection (d),
and</text>
</paragraph><paragraph id="H3C4BCD697ECE401AA86730C2D65B7905"><enum>(3)</enum><text>such other
information as the Secretary may prescribe.</text>
</paragraph><continuation-text continuation-text-level="subsection">Such
return shall be filed not later than the date specified by the
Secretary.</continuation-text></subsection><subsection id="H4AE7C9A275BE4C7799713F638C493F64"><enum>(b)</enum><header>Penalty for
nondisclosure</header><text>Any person who is required to file a return under
subsection (a) with respect to any foreign entity transaction and fails to file
such return on or before the date prescribed therefor (or files false or
incomplete information with respect to such transaction) shall pay a penalty
equal to the greater of—</text>
<paragraph id="HBC08D5DB64C94130A8EA90909E3A93E6"><enum>(1)</enum><text>$10,000, or</text>
</paragraph><paragraph id="HEB4F58E2C9754EB5B22A45962636A834"><enum>(2)</enum><text>50 percent of the
gross income derived by such person with respect to aid, assistance or advice
which is provided with respect to such transaction before the date the return
is filed under subsection (a).</text>
</paragraph></subsection><subsection id="H527E85292247471E86AAD75C07E1A8BC"><enum>(c)</enum><header>Material
advisor</header><text>For purposes of this section, the term <term>material
advisor</term> means any person—</text>
<paragraph id="HF5AE9505299A4E62BC11DD8132F14776"><enum>(1)</enum><text>who provides any
material aid, assistance, or advice with respect to carrying out one or more
foreign entity transactions, and</text>
</paragraph><paragraph id="HAEC7F642935940DF9928DD880EF835B3"><enum>(2)</enum><text>who directly or
indirectly derives gross income in excess of $100,000 for providing such aid,
assistance or advice during the calendar year.</text>
</paragraph></subsection><subsection id="H89CC32CAB9F84158B3EED71E36639D84"><enum>(d)</enum><header>Foreign entity
transaction</header><text>For purposes of this section, the term <term>foreign
entity transaction</term> means the direct or indirect acquisition of any
interest in a foreign entity (including any interest acquired in connection
with the formation of such entity) if any citizen or resident of the United
States is required to file a report under section 6038, 6038B, 6046, 6046A, or
6048 in connection with such acquisition.</text>
</subsection><subsection id="HAD57FD28EC6B4D1187170B1789DE67D2"><enum>(e)</enum><header>Reasonable cause
exception</header><text>No penalty shall be imposed by this section on any
failure which is shown to be due to reasonable cause and not due to willful
neglect.</text>
</subsection><subsection id="H2B25EE4A8E44451396444F57A297D210"><enum>(f)</enum><header>Regulations</header><text>The
Secretary may prescribe regulations or other guidance which provide—</text>
<paragraph id="H56651C0A03ED4D29B4684274B9DBC8E2"><enum>(1)</enum><text display-inline="yes-display-inline">that only 1 person shall be required to
meet the requirements of subsection (a) in cases in which 2 or more persons
would otherwise be required to meet such requirements,</text>
</paragraph><paragraph id="HD0B66EFBF21E40F2892C57FA571A6415"><enum>(2)</enum><text>exemptions from
the requirements of this section, and</text>
</paragraph><paragraph id="HFB3C2472B91F48169FE971597AFBBA9F"><enum>(3)</enum><text>such rules as may
be necessary or appropriate to carry out the purposes of this
section.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H9D960FBC773647DA81A25DD2408898B7"><enum>(b)</enum><header>Clerical
amendment</header><text display-inline="yes-display-inline">The table of
sections for subchapter B of chapter 61 is amended by redesignating the item
relating to section 6116 as an item relating to section 6117 and by inserting
after the item relating to section 6115 the following new item:</text>
<quoted-block display-inline="no-display-inline" id="H051725014C8046D7849D1EC18E208D9C" style="OLC">
<toc container-level="quoted-block-container" idref="H3ADB4CB6382B404FAF87B8A5DEB0B2FA" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="H6DAEA0714FE74EB19AD2539ECF0235D3" level="section">Sec. 6116. Disclosure of assistance in acquiring or forming a
foreign
entity.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HCD96D41E123B414D9DA9D5BEFCF248B7"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to aid,
assistance, and advice provided after the date of the enactment of this
Act.</text>
</subsection></section><section id="H12F03A2DDA9B44CF94987BFF82BBC0A6"><enum>302.</enum><header>Reporting of
activities with respect to passive foreign investment companies</header>
<subsection id="H644F96C204824902918C6803FF0616B3"><enum>(a)</enum><header>In
general</header><text>Section 1298 is amended by redesignating subsection (f)
as subsection (g) and by inserting after subsection (e) the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="HC0C55CBFB87E4C0FAB74EEB2780C824B" style="OLC">
<subsection id="HE1D69DF6B51F47A8AAEE533408B42246"><enum>(f)</enum><header>Reporting
requirement</header><text>Each person who is a shareholder of a passive foreign
investment company shall file an annual report containing such information as
the Secretary may
require.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HD773B6B0B73440C2A97B4569D8BAA514"><enum>(b)</enum><header>Conforming
amendment</header><text>Subsection (e) of section 1291 is amended by striking
<quote>, (d), and (f)</quote> and inserting <quote>and (d)</quote>.</text>
</subsection><subsection id="H8CD6292CE9664FB185914C5F2CC299D0"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section take effect on the date
of the enactment of this Act.</text>
</subsection></section><section id="HF46B18C06FFF4087B307F63D396FA591"><enum>303.</enum><header>Secretary
permitted to require financial institutions to file certain returns related to
withholding on foreign transfers electronically</header>
<subsection id="H045E355AD16242FF97C50B2AE54CB694"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (e) of
section 6011 is amended by adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HF310F28BDF38425589167694E6BAE2C8" style="OLC">
<paragraph id="H8422E114EDDC4F4880406AC522A21142"><enum>(3)</enum><header>Special rule for
returns filed by financial institutions with respect to withholding on foreign
transfers</header><text display-inline="yes-display-inline">Paragraph (2)(A)
shall not apply to any return filed by a financial institution (as defined in
section 1471(d)(5)) with respect to tax for which such institution is made
liable under section 1461 or
1474(a).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H3639E313A39545D584A4DA6BD28E96C1"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to returns
the due date for which (determined without regard to extensions) is after the
date of the enactment of this Act.</text>
</subsection></section><enum>IV</enum><header>Provisions
related to foreign trusts</header>
<section id="H3E2BDF72EFF24889B2881E737AB48AC9"><enum>401.</enum><header>Clarifications
with respect to foreign trusts which are treated as having a United States
beneficiary</header>
<subsection id="H5527EA9AE99E4BA9A8BC85D4A1771037"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraph (1) of
section 679(c) is amended by adding at the end the following:</text>
<quoted-block display-inline="no-display-inline" id="H67278A7B04354A22B3B486C488C6F163" style="OLC">
<quoted-block-continuation-text quoted-block-continuation-text-level="paragraph">For
purposes of subparagraph (A), an amount shall be treated as accumulated for the
benefit of a United States person even if the United States person’s interest
in the trust is contingent on a future
event.</quoted-block-continuation-text><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H7926B5AE740B434C861143537C49B6FD"><enum>(b)</enum><header>Clarification
regarding discretion To identify beneficiaries</header><text>Subsection (c) of
section 679 is amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H1A3958F91A8B46C8A8C8E96AF35879E7" style="OLC">
<paragraph id="HAC1AD854A67C46F8A081A76681AEA851"><enum>(4)</enum><header>Special rule in
case of discretion To identify beneficiaries</header><text display-inline="yes-display-inline">For purposes of paragraph (1)(A), if any
person has the discretion (by authority given in the trust agreement, by power
of appointment, or otherwise) of making a distribution from the trust to, or
for the benefit of, any person, such trust shall be treated as having a
beneficiary who is a United States person unless—</text>
<subparagraph id="HCC5B36C29EC0475C8A9D9842ADF77133"><enum>(A)</enum><text>the terms of the
trust specifically identify the class of persons to whom such distributions may
be made, and</text>
</subparagraph><subparagraph id="H08991732ADF4453993708A8D257BA689"><enum>(B)</enum><text>none of those
persons are United States persons during the taxable
year.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H21F3F79F758C4BC1B6016C4E10996298"><enum>(c)</enum><header>Clarification
that certain agreements and understandings are terms of the
trust</header><text>Subsection (c) of section 679, as amended by subsection
(b), is amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HFA376E1F8208427CA1CB06399E2D5E08" style="OLC">
<paragraph commented="no" id="H786D448BF7ED439595D85C2C6775D892"><enum>(5)</enum><header>Certain
agreements and understandings treated as terms of the trust</header><text>For
purposes of paragraph (1)(A), if any United States person who directly or
indirectly transfers property to the trust is directly or indirectly involved
in any agreement or understanding (whether written, oral, or otherwise) that
may result in the income or corpus of the trust being paid or accumulated to or
for the benefit of a United States person, such agreement or understanding
shall be treated as a term of the
trust.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="HE3467C9CACB54CD2960F30CCACBA2307"><enum>402.</enum><header>Presumption
that foreign trust has United States beneficiary</header>
<subsection id="H26E00A5455654FCD89629B90D7721643"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 679 is
amended by redesignating subsection (d) as subsection (e) and inserting after
subsection (c) the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="HE96D41D070394C598161587BA503D3A2" style="OLC">
<subsection id="H021F0625B3304F5ABF1D9BCE8CB2C1A6"><enum>(d)</enum><header>Presumption that
foreign trust has United States beneficiary</header><text display-inline="yes-display-inline">If a United States person directly or
indirectly transfers property to a foreign trust (other than a trust described
in section 6048(a)(3)(B)(ii)), such trust shall be presumed to have a United
States beneficiary for purposes of applying this section to such transfer
unless such person—</text>
<paragraph id="H78C2A47ACC8D466A8DB8AEEF1EB5CF16"><enum>(1)</enum><text>submits such
information to the Secretary as the Secretary may require with respect to such
transfer, and</text>
</paragraph><paragraph id="H7FBDD855682147588C01AE016D4911C6"><enum>(2)</enum><text>demonstrates to
the satisfaction of the Secretary that such trust satisfies the requirements of
subparagraphs (A) and (B) of subsection
(c)(1).</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HB1AECE67E2AD43728D692358162063FA"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to transfers
of property after the date of the enactment of this Act.</text>
</subsection></section><section commented="no" id="HAE04F1F65D5F488EB1BF736F8E7B682A"><enum>403.</enum><header>Uncompensated
use of trust property treated as a distribution</header>
<subsection commented="no" id="H2DA86C8B8CC34C069737AEECA60626E8"><enum>(a)</enum><header>In
general</header><text>Paragraph (1) of section 643(i) is amended—</text>
<paragraph commented="no" id="HCBE749480D424C40B0ACBAF75D9D1F37"><enum>(1)</enum><text>by striking
<quote>directly or indirectly to</quote> and inserting <quote>(or permits the
use of any other trust property) directly or indirectly to or by</quote>,
and</text>
</paragraph><paragraph commented="no" id="H1D1F9250ACF641ED9B770DBC343AFF58"><enum>(2)</enum><text>by inserting
<quote>(or the fair market value of the use of such property)</quote> after
<quote>the amount of such loan</quote>.</text>
</paragraph></subsection><subsection id="HDA6BE54B280C4B909DDB17DB7EE48BDA"><enum>(b)</enum><header>Exception for
compensated use</header><text>Paragraph (2) of section 643(i) is amended by
adding at the end the following new subparagraph:</text>
<quoted-block display-inline="no-display-inline" id="HE66A79A716BC43078D1299C4E2F975CE" style="OLC">
<subparagraph id="H214F62F887DA4CBC8314FB2738F796FD"><enum>(E)</enum><header>Exception for
compensated use of property</header><text display-inline="yes-display-inline">In the case of the use of any trust
property other than a loan of cash or marketable securities, paragraph (1)
shall not apply to the extent that the trust is paid the fair market value of
such use within a reasonable period of time of such
use.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HA4694B0BDEDC4C1C9B86D2D304384CF0"><enum>(c)</enum><header>Application to
grantor trusts</header><text>Subsection (c) of section 679, as amended by
section 401, is amended by adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HEFEFE7102F2046EE808778A208869E30" style="OLC">
<paragraph id="H38F951331C8046D48F279AE6F6B9EF47"><enum>(6)</enum><header>Uncompensated
use of trust property treated as a payment</header><text display-inline="yes-display-inline">For purposes of this subsection, a loan of
cash or marketable securities (or the use of any other trust property) directly
or indirectly to or by any United States person (whether or not a beneficiary
under the terms of the trust) shall be treated as paid or accumulated for the
benefit of a United States person. The preceding sentence shall not apply to
the extent that the United States person repays the loan at a market rate of
interest (or pays the fair market value of the use of such property) within a
reasonable period of
time.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" id="HA5A441FD15864D78B0F0181F4DEA5B62"><enum>(d)</enum><header>Conforming
amendments</header><text>Paragraph (3) of section 643(i) is amended—</text>
<paragraph commented="no" id="HAE22C8AE84E84B4CBDA164E535D64776"><enum>(1)</enum><text>by inserting
<quote>(or use of property)</quote> after <quote>If any loan</quote>,</text>
</paragraph><paragraph commented="no" id="H62C950DA0597437A96CE736B04CE1FE0"><enum>(2)</enum><text>by inserting
<quote>or the return of such property</quote> before <quote>shall be
disregarded</quote>, and</text>
</paragraph><paragraph commented="no" id="H935017B6ECE9405B9BB4369C3F3D4D18"><enum>(3)</enum><text>by striking
<quote><header-in-text level="paragraph" style="OLC">regarding loan
principal</header-in-text></quote> in the heading thereof.</text>
</paragraph></subsection><subsection id="H27A5F32F63E8475481A05D461E266C75"><enum>(e)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to loans made, and uses of property, after the date of
the enactment of this Act.</text>
</subsection></section><section id="H3178FACDF7A14600AF32407811EA17FB"><enum>404.</enum><header>Reporting
requirement of United States owners of foreign trusts</header>
<subsection id="HCE429E06FB6D4BA19729318350934EFE"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraph (1) of
section 6048(b) is amended by inserting <quote>shall submit such information as
the Secretary may prescribe with respect to such trust for such year
and</quote> before <quote>shall be responsible to ensure</quote>.</text>
</subsection><subsection id="HC242F86916C44CDE970AA2BE48B3E1AE"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.</text>
</subsection></section><section display-inline="no-display-inline" id="HD5C6C92CDF2B4202B0BAA5175565C742" section-type="subsequent-section"><enum>405.</enum><header>Minimum penalty with
respect to failure to report on certain foreign trusts</header>
<subsection id="HB5050012EA064A3A9AD9A477988FF41A"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (a) of
section 6677 is amended—</text>
<paragraph id="H2B6FFCA8BD8A4229A7C76194895269ED"><enum>(1)</enum><text>by inserting
<quote>the greater of $10,000 or</quote> before <quote>35 percent</quote>,
and</text>
</paragraph><paragraph id="H0FE6DED3676A4A3D95B9325517DDF02C"><enum>(2)</enum><text>by striking the
last sentence and inserting the following: <quote>At such time as the gross
reportable amount with respect to any failure can be determined by the
Secretary, any subsequent penalty imposed under this subsection with respect to
such failure shall be reduced as necessary to assure that the aggregate amount
of such penalties do not exceed the gross reportable amount (and to the extent
that such aggregate amount already exceeds the gross reportable amount the
Secretary shall refund such excess to the taxpayer).</quote></text>
</paragraph></subsection><subsection id="H981E8F26FD46410A87E8569A5E529E58"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to notices
and returns required to be filed after December 31, 2009.</text>
</subsection></section><enum>V</enum><header>Dividend
equivalent payments received by foreign persons treated as dividends</header>
<section display-inline="no-display-inline" id="H315487B757E749029DDB8C7F1C3F5989" section-type="subsequent-section"><enum>501.</enum><header>Dividend equivalent
payments received by foreign persons treated as dividends</header>
<subsection id="HFF0E7A69F3D245B9A54BC39756860D9D"><enum>(a)</enum><header>In
general</header><text>Section 871 is amended by redesignating subsection (l) as
subsection (m) and by inserting after subsection (k) the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="H8444159183E448B694ABB6BB006A2519" style="OLC">
<subsection display-inline="no-display-inline" id="H2FC867D075FB489487E1F3FF802C2A0D"><enum>(l)</enum><header>Treatment of
dividend equivalent payments</header>
<paragraph id="HE132F16E0966402BB64FE02593FEDD18"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">For purposes of this
section, sections 881 and 4948(a), and chapters 3 and 4, a dividend equivalent
shall be treated as a dividend from sources within the United States.</text>
</paragraph><paragraph id="H0ACF444C702747E0A3A66616DC1A6B8F"><enum>(2)</enum><header>Dividend
equivalent</header><text>For purposes of this subsection—</text>
<subparagraph id="HBB2A5410C96E4965AC40DBB685CC7941"><enum>(A)</enum><header>In
general</header><text>The term <term>dividend equivalent</term> means—</text>
<clause id="H43F464E6AC6946C9AACDE9ABA53382BA"><enum>(i)</enum><text display-inline="yes-display-inline">any payment made pursuant to a notional
principal contract that (directly or indirectly) is contingent upon, or
determined by reference to, the payment of a dividend from sources within the
United States, and</text>
</clause><clause id="H92CB5269C1794A619505B387BB57BB2F"><enum>(ii)</enum><text display-inline="yes-display-inline">any other payment determined by the
Secretary to be substantially similar to a payment described in clause
(i).</text>
</clause></subparagraph><subparagraph id="H14F99FA810944D5C98DBF5868ED255E2"><enum>(B)</enum><header>Exceptions</header><text>Such
term does not include any payment pursuant to any contract or other arrangement
which the Secretary determines does not have the potential for tax avoidance.
In making such determination, the Secretary may take into account the following
factors with respect to such contract or arrangement:</text>
<clause id="HA576677BF457467A9D96FF8292135D19"><enum>(i)</enum><text display-inline="yes-display-inline">The term (including provisions for early
terminations and offsetting financial contracts).</text>
</clause><clause id="H6D0BE56DEB9541CBA632565C78FB4D16"><enum>(ii)</enum><text display-inline="yes-display-inline">The amount of each party’s investment and
the amounts of any collateral posted.</text>
</clause><clause id="H7872A9F6649245C9BFDA488602165A58"><enum>(iii)</enum><text>Whether the
price of the equity used to measure the parties’ entitlements or obligations is
based on an objectively observable price.</text>
</clause><clause id="H4C15A00FE75D4DE78F277F891ED85A24"><enum>(iv)</enum><text display-inline="yes-display-inline">Whether either party sells (directly or
indirectly) to the other party the security giving rise to dividends from
sources within the United States.</text>
</clause><clause id="HE27C54DD1E5B47DDBD929DAA4D8F0E0A"><enum>(v)</enum><text display-inline="yes-display-inline">Whether there are terms that address the
hedge position of either party or other conditions which would compel either
party to hold or acquire the security giving rise to dividends from sources
within the United States.</text>
</clause><clause id="H23871E52082847E0A939316FD93BA5F6"><enum>(vi)</enum><text>Such other
factors as the Secretary determines appropriate.</text>
</clause></subparagraph><subparagraph id="HF8B339CD57B04AA9A55CEA0528186BF8"><enum>(C)</enum><header>Payments
determined on gross basis</header><text display-inline="yes-display-inline">The
term <term>payment</term> includes any gross amount which is used in computing
any net amount which is transferred to or from the taxpayer.</text>
</subparagraph><subparagraph id="H42789589EAA346EEB0E5A0517856BD23"><enum>(D)</enum><header>Coordination
with chapters 3 and 4</header><text>For purposes of chapters 3 and 4, each
person that is a party to any contract or other arrangement that provides for
the payment of a dividend equivalent shall be treated as having control of such
payment.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HA03FC0263C9245DE87658E3C17D3A245"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to payments
made on or after the date that is 90 days after the date of the enactment of
this Act.</text>
</subsection></section>