[Congressional Record (Bound Edition), Volume 150 (2004), Part 7]
[Senate]
[Pages 8701-8705]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           TEXT OF AMENDMENTS

  SA 3119. Mr. GRASSLEY proposed an amendment to the bill S. 622, to 
amend title XIX of the Social Security Act to provide families of 
disabled children with the opportunity to purchase coverage under the 
medicaid program for such children, and for other purposes; as follows:

       In lieu of the matter proposed to be inserted, insert the 
     following:

     SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; 
                   TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Family 
     Opportunity Act of 2004'' or the ``Dylan Lee James Act''.
       (b) Amendments to Social Security Act.--Except as otherwise 
     specifically provided, whenever in this Act an amendment 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 that section or other provision of the Social 
     Security Act.
       (c) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; amendments to Social Security Act; table of 
              contents.
Sec. 2. Opportunity for families of disabled children to purchase 
              medicaid coverage for such children.
Sec. 3. Treatment of inpatient psychiatric hospital services for 
              individuals under age 21 in home or community-based 
              services waivers.
Sec. 4. Development and support of family-to-family health information 
              centers.
Sec. 5. Restoration of medicaid eligibility for certain SSI 
              beneficiaries.

     SEC. 2. OPPORTUNITY FOR FAMILIES OF DISABLED CHILDREN TO 
                   PURCHASE MEDICAID COVERAGE FOR SUCH CHILDREN.

       (a) State Option To Allow Families of Disabled Children To 
     Purchase Medicaid Coverage for Such Children.--
       (1) In general.--Section 1902 (42 U.S.C. 1396a) is 
     amended--
       (A) in subsection (a)(10)(A)(ii)--
       (i) by striking ``or'' at the end of subclause (XVII);
       (ii) by adding ``or'' at the end of subclause (XVIII); and
       (iii) by adding at the end the following new subclause:

       ``(XIX) who are disabled children described in subsection 
     (cc)(1);''; and

       (B) by adding at the end the following new subsection:
       ``(cc)(1) Individuals described in this paragraph are 
     individuals--
       ``(A) who have not attained 18 years of age;
       ``(B) who would be considered disabled under section 
     1614(a)(3)(C) but for having earnings or deemed income or 
     resources (as determined under title XVI for children) that 
     exceed the requirements for receipt of supplemental security 
     income benefits; and

[[Page 8702]]

       ``(C) whose family income does not exceed such income level 
     as the State establishes and does not exceed--
       ``(i) 250 percent of the poverty line (as defined in 
     section 2110(c)(5)) applicable to a family of the size 
     involved; or
       ``(ii) such higher percent of such poverty line as a State 
     may establish, except that--
       ``(I) any medical assistance provided to an individual 
     whose family income exceeds 250 percent of such poverty line 
     may only be provided with State funds; and
       ``(II) no Federal financial participation shall be provided 
     under section 1903(a) for any medical assistance provided to 
     such an individual.''.
       (2) Interaction with employer-sponsored family coverage.--
     Section 1902(cc) (42 U.S.C. 1396a(cc)), as added by paragraph 
     (1)(B), is amended by adding at the end the following new 
     paragraph:
       ``(2)(A) If an employer of a parent of an individual 
     described in paragraph (1) offers family coverage under a 
     group health plan (as defined in section 2791(a) of the 
     Public Health Service Act), the State shall--
       ``(i) require such parent to apply for, enroll in, and pay 
     premiums for, such coverage as a condition of such parent's 
     child being or remaining eligible for medical assistance 
     under subsection (a)(10)(A)(ii)(XIX) if the parent is 
     determined eligible for such coverage and the employer 
     contributes at least 50 percent of the total cost of annual 
     premiums for such coverage; and
       ``(ii) if such coverage is obtained--
       ``(I) subject to paragraph (2) of section 1916(h), reduce 
     the premium imposed by the State under that section in an 
     amount that reasonably reflects the premium contribution made 
     by the parent for private coverage on behalf of a child with 
     a disability; and
       ``(II) treat such coverage as a third party liability under 
     subsection (a)(25).
       ``(B) In the case of a parent to which subparagraph (A) 
     applies, a State, subject to paragraph (1)(C)(ii), may 
     provide for payment of any portion of the annual premium for 
     such family coverage that the parent is required to pay. Any 
     payments made by the State under this subparagraph shall be 
     considered, for purposes of section 1903(a), to be payments 
     for medical assistance.''.
       (b) State Option To Impose Income-Related Premiums.--
     Section 1916 (42 U.S.C. 1396o) is amended--
       (1) in subsection (a), by striking ``subsection (g)'' and 
     inserting ``subsections (g) and (h)''; and
       (2) by adding at the end the following new subsection:
       ``(h)(1) With respect to disabled children provided medical 
     assistance under section 1902(a)(10)(A)(ii)(XIX), subject to 
     paragraph (2), a State may (in a uniform manner for such 
     children) require the families of such children to pay 
     monthly premiums set on a sliding scale based on family 
     income.
       ``(2) A premium requirement imposed under paragraph (1) may 
     only apply to the extent that--
       ``(A) in the case of a disabled child described in that 
     paragraph whose family income does not exceed 250 percent of 
     the poverty line, the aggregate amount of such premium and 
     any premium that the parent is required to pay for family 
     coverage under section 1902(cc)(2)(A)(i) does not exceed 7.5 
     percent of the family's income; and
       ``(B) the requirement is imposed consistent with section 
     1902(cc)(2)(A)(ii)(I).
       ``(3) A State shall not require prepayment of a premium 
     imposed pursuant to paragraph (1) and shall not terminate 
     eligibility of a child under section 1902(a)(10)(A)(ii)(XIX) 
     for medical assistance under this title on the basis of 
     failure to pay any such premium until such failure continues 
     for a period of not less than 60 days from the date on which 
     the premium became past due. The State may waive payment of 
     any such premium in any case where the State determines that 
     requiring such payment would create an undue hardship.''.
       (c) Conforming Amendment.--Section 1903(f)(4) (42 U.S.C. 
     1396b(f)(4)) is amended in the matter preceding subparagraph 
     (A), by inserting ``1902(a)(10)(A)(ii)(XIX),'' after 
     ``1902(a)(10)(A)(ii)(XVIII),''.
       (d) Rule of Construction.--Notwithstanding any other 
     provision of law, nothing in the amendments made by this 
     section shall be construed as permitting the application of 
     the enhanced FMAP (as defined in section 2105(b) of the 
     Social Security Act (42 U.S.C. 1397ee(b)) to expenditures 
     that are attributable to disabled children provided medical 
     assistance under section 1902(a)(10)(A)(ii)(XIX) of such Act 
     (42 U.S.C. 1396a(a)(10)(A)(ii)(XIX)) (as added by subsection 
     (a) of this section).
       (e) Effective Date.--The amendments made by this section 
     shall apply to medical assistance for items and services 
     furnished on or after October 1, 2006.

     SEC. 3. TREATMENT OF INPATIENT PSYCHIATRIC HOSPITAL SERVICES 
                   FOR INDIVIDUALS UNDER AGE 21 IN HOME OR 
                   COMMUNITY-BASED SERVICES WAIVERS.

       (a) In General.--Section 1915(c) (42 U.S.C. 1396n(c)) is 
     amended--
       (1) in paragraph (1)--
       (A) in the first sentence, by inserting ``, or would 
     require inpatient psychiatric hospital services for 
     individuals under age 21,'' after ``intermediate care 
     facility for the mentally retarded''; and
       (B) in the second sentence, by inserting ``, or would 
     require inpatient psychiatric hospital services for 
     individuals under age 21'' before the period;
       (2) in paragraph (2)(B), by striking ``or services in an 
     intermediate care facility for the mentally retarded'' each 
     place it appears and inserting ``services in an intermediate 
     care facility for the mentally retarded, or inpatient 
     psychiatric hospital services for individuals under age 21'';
       (3) in paragraph (2)(C)--
       (A) by inserting ``, or who are determined to be likely to 
     require inpatient psychiatric hospital services for 
     individuals under age 21,'' after ``, or intermediate care 
     facility for the mentally retarded''; and
       (B) by striking ``or services in an intermediate care 
     facility for the mentally retarded'' and inserting ``services 
     in an intermediate care facility for the mentally retarded, 
     or inpatient psychiatric hospital services for individuals 
     under age 21''; and
       (4) in paragraph (7)(A)--
       (A) by inserting ``or would require inpatient psychiatric 
     hospital services for individuals under age 21,'' after 
     ``intermediate care facility for the mentally retarded,''; 
     and
       (B) by inserting ``or who would require inpatient 
     psychiatric hospital services for individuals under age 21'' 
     before the period.
       (b) Effective Date.--The amendments made by subsection (a) 
     apply with respect to medical assistance provided on or after 
     October 1, 2006.

     SEC. 4. DEVELOPMENT AND SUPPORT OF FAMILY-TO-FAMILY HEALTH 
                   INFORMATION CENTERS.

       Section 501 (42 U.S.C. 701) is amended by adding at the end 
     the following new subsection:
       ``(c)(1)(A) For the purpose of enabling the Secretary 
     (through grants, contracts, or otherwise) to provide for 
     special projects of regional and national significance for 
     the development and support of family-to-family health 
     information centers described in paragraph (2)--
       ``(i) there is appropriated to the Secretary, out of any 
     money in the Treasury not otherwise appropriated--
       ``(I) $3,000,000 for fiscal year 2006;
       ``(II) $4,000,000 for fiscal year 2007; and
       ``(III) $5,000,000 for fiscal year 2008; and
       ``(ii) there is authorized to be appropriated to the 
     Secretary, $5,000,000 for each of fiscal years 2009 and 2010.
       ``(B) Funds appropriated or authorized to be appropriated 
     under subparagraph (A) shall--
       ``(i) be in addition to amounts appropriated under 
     subsection (a) and retained under section 502(a)(1) for the 
     purpose of carrying out activities described in subsection 
     (a)(2); and
       ``(ii) remain available until expended.
       ``(2) The family-to-family health information centers 
     described in this paragraph are centers that--
       ``(A) assist families of children with disabilities or 
     special health care needs to make informed choices about 
     health care in order to promote good treatment decisions, 
     cost-effectiveness, and improved health outcomes for such 
     children;
       ``(B) provide information regarding the health care needs 
     of, and resources available for, children with disabilities 
     or special health care needs;
       ``(C) identify successful health delivery models for such 
     children;
       ``(D) develop with representatives of health care 
     providers, managed care organizations, health care 
     purchasers, and appropriate State agencies a model for 
     collaboration between families of such children and health 
     professionals;
       ``(E) provide training and guidance regarding caring for 
     such children;
       ``(F) conduct outreach activities to the families of such 
     children, health professionals, schools, and other 
     appropriate entities and individuals; and
       ``(G) are staffed by families of children with disabilities 
     or special health care needs who have expertise in Federal 
     and State public and private health care systems and health 
     professionals.
       ``(3) The Secretary shall develop family-to-family health 
     information centers described in paragraph (2) in accordance 
     with the following:
       ``(A) With respect to fiscal year 2006, such centers shall 
     be developed in not less than 25 States.
       ``(B) With respect to fiscal year 2007, such centers shall 
     be developed in not less than 40 States.
       ``(C) With respect to fiscal year 2008, such centers shall 
     be developed in all States.
       ``(4) The provisions of this title that are applicable to 
     the funds made available to the Secretary under section 
     502(a)(1) apply in the same manner to funds made available to 
     the Secretary under paragraph (1)(A).
       ``(5) For purposes of this subsection, the term `State' 
     means each of the 50 States and the District of Columbia.''.

     SEC. 5. RESTORATION OF MEDICAID ELIGIBILITY FOR CERTAIN SSI 
                   BENEFICIARIES.

       (a) In General.--Section 1902(a)(10)(A)(i)(II) (42 U.S.C. 
     1396a(a)(10)(A)(i)(II)) is amended--
       (1) by inserting ``(aa)'' after ``(II)'';
       (2) by striking ``) and'' and inserting ``and'';

[[Page 8703]]

       (3) by striking ``section or who are'' and inserting 
     ``section), (bb) who are''; and
       (4) by inserting before the comma at the end the following: 
     ``, or (cc) who are under 21 years of age and with respect to 
     whom supplemental security income benefits would be paid 
     under title XVI if subparagraphs (A) and (B) of section 
     1611(c)(7) were applied without regard to the phrase `the 
     first day of the month following'''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to medical assistance for items and services 
     furnished on or after January 1, 2006.
                                 ______
                                 
  SA 3120. Mr. LEVIN submitted an amendment intended to be proposed by 
him to the bill S. 1637, to amend the Internal Revenue Code of 1986 to 
comply with the World Trade Organization rulings on the FSC/ETI benefit 
in a manner that preserves jobs and production activities in the United 
States, to reform and simplify the international taxation rules of the 
United States, and for other purposes; which was ordered to lie on the 
table; as follows:

       At the end add the following:

 TITLE IX--PROVISIONS DESIGNED TO RESTRICT USE OF ABUSIVE TAX SHELTERS

     SEC. 901. PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS.

       (a) Penalty for Promoting Abusive Tax Shelters.--Section 
     6700 (relating to promoting abusive tax shelters, etc.) is 
     amended--
       (1) by redesignating subsections (b) and (c) as subsections 
     (d) and (e), respectively,
       (2) by striking ``a penalty'' and all that follows through 
     the period in the first sentence of subsection (a) and 
     inserting ``a penalty determined under subsection (b)'', and
       (3) by inserting after subsection (a) the following new 
     subsections:
       ``(b) Amount of Penalty; Calculation of Penalty; Liability 
     for Penalty.--
       ``(1) Amount of penalty.--The amount of the penalty imposed 
     by subsection (a) shall not exceed 150 percent of the gross 
     income derived (or to be derived) from such activity by the 
     person or persons subject to such penalty.
       ``(2) Calculation of penalty.--The penalty amount 
     determined under paragraph (1) shall be calculated with 
     respect to each instance of an activity described in 
     subsection (a), each instance in which income was derived by 
     the person or persons subject to such penalty, and each 
     person who participated in such an activity.
       ``(3) Liability for penalty.--If more than 1 person is 
     liable under subsection (a) with respect to such activity, 
     all such persons shall be jointly and severally liable for 
     the penalty under such subsection.
       ``(c) Penalty Not Deductible.--The payment of any penalty 
     imposed under this section or the payment of any amount to 
     settle or avoid the imposition of such penalty shall not be 
     considered an ordinary and necessary expense in carrying on a 
     trade or business for purposes of this title and shall not be 
     deductible by the person who is subject to such penalty or 
     who makes such payment.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to activities after the date of the enactment of 
     this Act.
       (c) Prior Section To Have No Effect.--Notwithstanding 
     section 415(b) of this Act, such section, and the amendment 
     made by such section, shall not take effect.

     SEC. 902. PENALTY FOR AIDING AND ABETTING THE UNDERSTATEMENT 
                   OF TAX LIABILITY.

       (a) In General.--Section 6701(a) (relating to imposition of 
     penalty) is amended--
       (1) by inserting ``the tax liability or'' after ``respect 
     to,'' in paragraph (1),
       (2) by inserting ``aid, assistance, procurement, or advice 
     with respect to such'' before ``portion'' both places it 
     appears in paragraphs (2) and (3), and
       (3) by inserting ``instance of aid, assistance, 
     procurement, or advice or each such'' before ``document'' in 
     the matter following paragraph (3).
       (b) Amount of Penalty.--Subsection (b) of section 6701 
     (relating to penalties for aiding and abetting understatement 
     of tax liability) is amended to read as follows:
       ``(b) Amount of Penalty; Calculation of Penalty; Liability 
     for Penalty.--
       ``(1) Amount of penalty.--The amount of the penalty imposed 
     by subsection (a) shall not exceed 150 percent of the gross 
     income derived (or to be derived) from such aid, assistance, 
     procurement, or advice provided by the person or persons 
     subject to such penalty.
       ``(2) Calculation of penalty.--The penalty amount 
     determined under paragraph (1) shall be calculated with 
     respect to each instance of aid, assistance, procurement, or 
     advice described in subsection (a), each instance in which 
     income was derived by the person or persons subject to such 
     penalty, and each person who made such an understatement of 
     the liability for tax.
       ``(3) Liability for penalty.--If more than 1 person is 
     liable under subsection (a) with respect to providing such 
     aid, assistance, procurement, or advice, all such persons 
     shall be jointly and severally liable for the penalty under 
     such subsection.''.
       (c) Penalty Not Deductible.--Section 6701 is amended by 
     adding at the end the following new subsection:
       ``(g) Penalty Not Deductible.--The payment of any penalty 
     imposed under this section or the payment of any amount to 
     settle or avoid the imposition of such penalty shall not be 
     considered an ordinary and necessary expense in carrying on a 
     trade or business for purposes of this title and shall not be 
     deductible by the person who is subject to such penalty or 
     who makes such payment.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to activities after the date of the enactment of 
     this Act.
       (e) Prior Section To Have No Effect.--Notwithstanding 
     section 419 of this Act, such section, and the amendment made 
     by such section, shall not take effect.

     SEC. 903. PENALTY FOR FAILURE TO REGISTER TAX SHELTER.

       (a) In General.--Section 6707 (relating to failure to 
     furnish information regarding tax shelters) is amended to 
     read as follows:

     ``SEC. 6707. FAILURE TO FURNISH INFORMATION ON POTENTIALLY 
                   ABUSIVE TAX SHELTER OR LISTED TRANSACTION.

       ``(a) In General.--If a person who is required to file a 
     return under section 6111 with respect to any potentially 
     abusive tax shelter--
       ``(1) fails to file such return on or before the date 
     prescribed therefor, or
       ``(2) files false or incomplete information with the 
     Secretary with respect to such shelter,

     such person shall pay a penalty with respect to such return 
     in the amount determined under subsection (b).
       ``(b) Amount of Penalty.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     penalty imposed under subsection (a) with respect to any 
     failure shall be not less than $50,000 and not more than 
     $100,000.
       ``(2) Listed transactions.--The penalty imposed under 
     subsection (a) with respect to any listed transaction shall 
     be an amount equal to the greater of--
       ``(A) $200,000, or
       ``(B) 100 percent of the gross income derived by such 
     person for providing aid, assistance, procurement, advice, or 
     other services with respect to the listed transaction before 
     the date the return including the transaction is filed under 
     section 6111.

     Subparagraph (B) shall be applied by substituting `150 
     percent' for `100 percent' in the case of an intentional 
     failure or act described in subsection (a).
       ``(c) Certain Rules To Apply.--The provisions of section 
     6707A(d) allowing the Commissioner of Internal Revenue to 
     rescind a penalty under certain circumstances shall apply to 
     any penalty imposed under this section.
       ``(d) Potentially Abusive Tax Shelters and Listed 
     Transactions.--The terms `potentially abusive tax shelter' 
     and `listed transaction' have the respective meanings given 
     to such terms by section 6707A(c).
       ``(e) Penalty Not Deductible.--The payment of any penalty 
     imposed under this section or the payment of any amount to 
     settle or avoid the imposition of such penalty shall not be 
     considered an ordinary and necessary expense in carrying on a 
     trade or business for purposes of this title and shall not be 
     deductible by the person who is subject to such penalty or 
     who makes such payment.''.
       (b) Clerical Amendment.--The item relating to section 6707 
     in the table of sections for part I of subchapter B of 
     chapter 68 is amended by striking ``regarding tax shelters'' 
     and inserting ``on potentially abusive tax shelter or listed 
     transaction''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns the due date for which is after the 
     date of the enactment of this Act.
       (d) Prior Section To Have No Effect.--Notwithstanding 
     section 408(c) of this Act, such section, and the amendments 
     made by such section, shall not take effect.

     SEC. 904. PENALTY FOR FAILING TO MAINTAIN CLIENT LIST.

       (a) In General.--Subsection (a) of section 6708 (relating 
     to failure to maintain lists of investors in potentially 
     abusive tax shelters) is amended to read as follows:
       ``(a) Imposition of Penalty.--
       ``(1) In general.--If any person who is required to 
     maintain a list under section 6112(a) fails to make such list 
     available upon written request to the Secretary in accordance 
     with section 6112(b)(1)(A) within 20 business days after the 
     date of the Secretary's request, such person shall pay a 
     penalty of $10,000 for each day of such failure after such 
     20th day. If such person makes available an incomplete list 
     upon such request, such person shall pay a penalty of $100 
     per each omitted name for each day of such omission after 
     such 20th day.
       ``(2) Good cause exception.--No penalty shall be imposed by 
     paragraph (1) with respect to the failure on any day if, in 
     the judgment of the Secretary, such failure is due to good 
     cause.''.
       (b) Penalty Not Deductible.--Section 6708 is amended by 
     adding at the end the following new subsection:
       ``(c) Penalty Not Deductible.--The payment of any penalty 
     imposed under this section or the payment of any amount to 
     settle or avoid the imposition of such penalty shall

[[Page 8704]]

     not be considered an ordinary and necessary expense in 
     carrying on a trade or business for purposes of this title 
     and shall not be deductible by the person who is subject to 
     such penalty or who makes such payment.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to requests made by the Secretary of the Treasury 
     after the date of the enactment of this Act.
       (d) Prior Section To Have No Effect.--Notwithstanding 
     section 409(b) of this Act, such section, and the amendment 
     made by such section, shall not take effect.

     SEC. 905. PENALTY FOR FAILING TO DISCLOSE POTENTIALLY ABUSIVE 
                   TAX SHELTER.

       (a) In General.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by inserting 
     after section 6707 the following new section:

     ``SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE POTENTIALLY 
                   ABUSIVE TAX SHELTER INFORMATION WITH RETURN OR 
                   STATEMENT.

       ``(a) Imposition of Penalty.--Any person who fails to 
     include on any return or statement any information with 
     respect to a potentially abusive tax shelter which is 
     required under section 6011 to be included with such return 
     or statement shall pay a penalty in the amount determined 
     under subsection (b).
       ``(b) Amount of Penalty.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the amount of the penalty under subsection (a) shall be 
     $50,000.
       ``(2) Listed transaction.--Except as provided in paragraph 
     3, the amount of the penalty under subsection (a) with 
     respect to a listed transaction shall be $100,000.
       ``(3) Increase in penalty for intentional nondisclosure.--
     In the case of an intentional failure by any person under 
     subsection (a), the penalty under paragraph (1) shall be 
     $100,000 and the penalty under paragraph (2) shall be 
     $200,000.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Potentially abusive tax shelter.--The term 
     `potentially abusive tax shelter' means any transaction with 
     respect to which information is required to be included with 
     a return or statement, because the Secretary has determined 
     by regulation or otherwise that such transaction has a 
     potential for tax avoidance or evasion.
       ``(2) Listed transaction.--Except as provided in 
     regulations, the term `listed transaction' means a 
     potentially abusive tax shelter which is the same as, or 
     substantially similar to, a transaction specifically 
     identified by the Secretary as a tax avoidance transaction 
     for purposes of section 6011.
       ``(d) Authority To Rescind Penalty.--
       ``(1) In general.--The Commissioner of Internal Revenue may 
     rescind all or any portion of a penalty imposed by this 
     section with respect to any violation if--
       ``(A) the violation is with respect to a potentially 
     abusive tax shelter other than a listed transaction,

       ``(B) the person on whom the penalty is imposed has a 
     history of complying with the requirements of this title,
       ``(C) it is shown that the violation is due to an 
     unintentional mistake of fact,
       ``(D) imposing the penalty would be against equity and good 
     conscience, and
       ``(E) rescinding the penalty would promote compliance with 
     the requirements of this title and effective tax 
     administration.
       ``(2) Discretion.--The exercise of authority under 
     paragraph (1) shall be at the sole discretion of the 
     Commissioner and may be delegated only to the head of the 
     Office of Tax Shelter Analysis. The Commissioner, in the 
     Commissioner's sole discretion, may establish a procedure to 
     determine if a penalty should be referred to the Commissioner 
     or the head of such Office for a determination under 
     paragraph (1).
       ``(3) No appeal.--Notwithstanding any other provision of 
     law, any determination under this subsection may not be 
     reviewed in any administrative or judicial proceeding.
       ``(4) Records.--If a penalty is rescinded under paragraph 
     (1), the Commissioner shall place in the file in the Office 
     of the Commissioner the opinion of the Commissioner or the 
     head of the Office of Tax Shelter Analysis with respect to 
     the determination, including--
       ``(A) the facts and circumstances of the transaction,
       ``(B) the reasons for the rescission, and
       ``(C) the amount of the penalty rescinded.
     A copy of such opinion shall be provided upon written request 
     to the Committee on Ways and Means of the House of 
     Representatives, the Committee on Finance of the Senate, the 
     Joint Committee on Taxation, or the General Accounting 
     Office.
       ``(5) Report.--The Commissioner shall each year report to 
     the Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate--
       ``(A) a summary of the total number and aggregate amount of 
     penalties imposed, and rescinded, under this section, and
       ``(B) a description of each penalty rescinded under this 
     subsection and the reasons therefor.
       ``(e) Penalty Reported to SEC.--In the case of a person--
       ``(1) which is required to file periodic reports under 
     section 13 or 15(d) of the Securities Exchange Act of 1934 or 
     is required to be consolidated with another person for 
     purposes of such reports, and
       ``(2) which--
       ``(A) is required to pay a penalty under this section with 
     respect to a listed transaction,
       ``(B) is required to pay a penalty under section 6662A with 
     respect to any potentially abusive tax shelter at a rate 
     prescribed under section 6662A(c), or
       ``(C) is required to pay a penalty under section 6662B with 
     respect to any noneconomic substance transaction,
     the requirement to pay such penalty shall be disclosed in 
     such reports filed by such person for such periods as the 
     Secretary shall specify. Failure to make a disclosure in 
     accordance with the preceding sentence shall be treated as a 
     failure to which the penalty under subsection (b)(2) applies.
       ``(f) Penalty in Addition to Other Penalties.--The penalty 
     imposed by this section shall be in addition to any other 
     penalty provided by law.
       ``(g) Penalty Not Deductible.--The payment of any penalty 
     imposed under this section or the payment of any amount to 
     settle or avoid the imposition of such penalty shall not be 
     considered an ordinary and necessary expense in carrying on a 
     trade or business for purposes of this title and shall not be 
     deductible by the person who is subject to such penalty or 
     who makes such payment.''.
       (b) Conforming Amendment.--The table of sections for part I 
     of subchapter B of chapter 68 is amended by inserting after 
     the item relating to section 6707 the following:

``Sec. 6707A. Penalty for failure to include potentially abusive tax 
              shelter information with return or statement.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns and statements the due date for which 
     is after the date of the enactment of this Act.
       (d) Prior Section To Have No Effect.--Notwithstanding 
     section 402(c) of this Act, such section, and the amendments 
     made by such section, shall not take effect.

     SEC. 906. IMPROVED DISCLOSURE OF POTENTIALLY ABUSIVE TAX 
                   SHELTERS.

       (a) In General.--Section 6111 (relating to registration of 
     tax shelters) is amended to read as follows:

     ``SEC. 6111. DISCLOSURE OF POTENTIALLY ABUSIVE TAX SHELTERS.

       ``(a) In General.--Each material advisor with respect to 
     any potentially abusive tax shelter shall make a return (in 
     such form as the Secretary may prescribe) setting forth--
       ``(1) information identifying and describing such shelter,
       ``(2) information describing any potential tax benefits 
     expected to result from the shelter, and
       ``(3) such other information as the Secretary may 
     prescribe.

     Such return shall be filed not later than the date which is 
     30 days before the date on which the first sale of such 
     shelter occurs or on any other date specified by the 
     Secretary.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Material advisor.--
       ``(A) In general.--The term `material advisor' means any 
     person--
       ``(i) who provides any material aid, assistance, or advice 
     with respect to designing, organizing, managing, promoting, 
     selling, implementing, or carrying out any potentially 
     abusive tax shelter, and
       ``(ii) who directly or indirectly derives gross income in 
     excess of the threshold amount for such aid, assistance, or 
     advice.
       ``(B) Threshold amount.--For purposes of subparagraph (A), 
     the threshold amount is--
       ``(i) $50,000 in the case of a potentially abusive tax 
     shelter substantially all of the tax benefits from which are 
     provided to natural persons, and
       ``(ii) $100,000 in any other case.
       ``(2) Potentially abusive tax shelter.--The term 
     `potentially abusive tax shelter' has the meaning given to 
     such term by section 6707A(c).
       ``(c) Regulations.--The Secretary may prescribe regulations 
     which provide--
       ``(1) 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,
       ``(2) exemptions from the requirements of this section, and
       ``(3) such rules as may be necessary or appropriate to 
     carry out the purposes of this section.''.
       (b) Conforming Amendments.--
       (1) The item relating to section 6111 in the table of 
     sections for subchapter B of chapter 61 is amended to read as 
     follows:

``Sec. 6111. Disclosure of potentially abusive tax shelters.''.
       (2)(A) So much of section 6112 as precedes subsection (c) 
     thereof is amended to read as follows:

     ``SEC. 6112. MATERIAL ADVISORS OF POTENTIALLY ABUSIVE TAX 
                   SHELTERS MUST KEEP CLIENT LISTS.

       ``(a) In General.--Each material advisor (as defined in 
     section 6111) with respect to any potentially abusive tax 
     shelter (as defined in section 6707A(c)) shall maintain, in 
     such manner as the Secretary may by regulations prescribe, a 
     list--

[[Page 8705]]

       ``(1) identifying each person with respect to whom such 
     advisor acted as such a material advisor with respect to such 
     shelter, and
       ``(2) containing such other information as the Secretary 
     may by regulations require.

     This section shall apply without regard to whether a material 
     advisor is required to file a return under section 6111 with 
     respect to such transaction.''.
       (B) Section 6112 is amended by redesignating subsection (c) 
     as subsection (b).
       (C) Section 6112(b), as redesignated by subparagraph (B), 
     is amended--
       (i) by inserting ``written'' before ``request'' in 
     paragraph (1)(A), and
       (ii) by striking ``shall prescribe'' in paragraph (2) and 
     inserting ``may prescribe''.
       (D) The item relating to section 6112 in the table of 
     sections for subchapter B of chapter 61 is amended to read as 
     follows:

``Sec. 6112. Material advisors of potentially abusive tax shelters must 
              keep client lists.''.
       (3)(A) The heading for section 6708 is amended to read as 
     follows:

     ``SEC. 6708. FAILURE TO MAINTAIN CLIENT LISTS WITH RESPECT TO 
                   POTENTIALLY ABUSIVE TAX SHELTERS.''.

       (B) The item relating to section 6708 in the table of 
     sections for part I of subchapter B of chapter 68 is amended 
     to read as follows:

``Sec. 6708. Failure to maintain client lists with respect to 
              potentially abusive tax shelters.''.
       (c) Required Disclosure Not Subject to Claim of 
     Confidentiality.--Section 6112(b)(1), as redesignated by 
     subsection (b)(2)(B), is amended by adding at the end the 
     following new flush sentence:

     ``For purposes of this section, the identity of any person on 
     such list shall not be privileged.''.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to transactions 
     with respect to which material aid, assistance, or advice 
     referred to in section 6111(b)(1)(A)(i) of the Internal 
     Revenue Code of 1986 (as added by this section) is provided 
     after the date of the enactment of this Act.
       (2) No claim of confidentiality against disclosure.--The 
     amendment made by subsection (c) shall take effect as if 
     included in the amendments made by section 142 of the Deficit 
     Reduction Act of 1984.
       (e) Prior Section To Have No Effect.--Notwithstanding 
     section 407(d) of this Act, such section, and the amendments 
     made by such section, shall not take effect.

     SEC. 907. EXTENSION OF STATUTE OF LIMITATIONS FOR UNDISCLOSED 
                   TAX SHELTER.

       (a) In General.--Section 6501(c) (relating to exceptions) 
     is amended by adding at the end the following new paragraph:
       ``(10) Potentially abusive tax shelters.--If a taxpayer 
     fails to include on any return or statement for any taxable 
     year any information with respect to a potentially abusive 
     tax shelter (as defined in section 6707A(c)) which is 
     required under section 6011 to be included with such return 
     or statement, the time for assessment of any tax imposed by 
     this title with respect to such transaction shall not expire 
     before the date which is 2 years after the earlier of--
       ``(A) the date on which the Secretary is furnished the 
     information so required; or
       ``(B) the date that a material advisor (as defined in 
     section 6111) meets the requirements of section 6112 with 
     respect to a request by the Secretary under section 6112(b) 
     relating to such transaction with respect to such 
     taxpayer.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years with respect to which the period 
     for assessing a deficiency did not expire before the date of 
     the enactment of this Act.
       (c) Prior Section To Have No Effect.--Notwithstanding 
     section 416(b) of this Act, such section, and the amendment 
     made by such section, shall not take effect.

     SEC. 908. PENALTY FOR FAILING TO REPORT INTERESTS IN FOREIGN 
                   FINANCIAL ACCOUNTS.

       (a) In General.--Section 5321(a)(5) of title 31, United 
     States Code, is amended to read as follows:
       ``(5) Foreign financial agency transaction violation.--
       ``(A) Penalty authorized.--The Secretary of the Treasury 
     may impose a civil money penalty on any person who violates, 
     or causes any violation of, any provision of section 5314.
       ``(B) Amount of penalty.--
       ``(i) In general.--Except as provided in subparagraph (C), 
     the amount of any civil penalty imposed under subparagraph 
     (A) shall not exceed $10,000.
       ``(ii) Reasonable cause exception.--No penalty shall be 
     imposed under subparagraph (A) with respect to any violation 
     if--

       ``(I) such violation was due to reasonable cause, and
       ``(II) the amount of the transaction or the balance in the 
     account at the time of the transaction was properly reported.

       ``(C) Willful violations.--In the case of any person 
     willfully violating, or willfully causing any violation of, 
     any provision of section 5314, the amount of the civil 
     penalty imposed under subparagraph (A) shall be--
       ``(i) not less than $5,000,
       ``(ii) not more than 50 percent of the amount determined 
     under subparagraph (D), and
       ``(iii) subparagraph (B)(ii) shall not apply.
       ``(D) Amount.--The amount determined under this 
     subparagraph is--
       ``(i) in the case of a violation involving a transaction, 
     the amount of the transaction, or
       ``(ii) in the case of a violation involving a failure to 
     report the existence of an account or any identifying 
     information required to be provided with respect to an 
     account, the balance in the account at the time of the 
     violation.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to violations occurring after the date of the 
     enactment of this Act.
       (c) Prior Section To Have No Effect.--Notwithstanding 
     section 412(b) of this Act, such section, and the amendment 
     made by such section, shall not take effect.

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