Searching for Uncle #FATCA: Where is he? What does he do? Why is he a danger to America? Can Congressman Meadows and Senator Paul save America?

Outline:

April 7, 2017

Part 1: Prologue – Introducing  Uncle FATCA – Who is he? What does he mean in your life?

Part 2: What is FATCA, what are the FATCA IGAs, what is the Meadows Bill and how do these things interact?

Part 3 – What does it mean to repeal FATCA and how exactly does the Meadow Bill repeal FATCA? A section by section analysis

Part 4: An important reminder – FATCA repeal does not mean IGA repeal

Part 5: The text of FATCA and the text of the Meadows Bill (very dry and technical and not likely to be of interest to the casual reader)

Part 1: Prologue – Introducing  Uncle FATCA – Who is he? What does he mean in your life?

FATCA means so many different things to so many different people. On one level it is a transfer of wealth to the compliance industry. On another level it can be seen as an attempt to protect TaxHavenUsa from competition.

Be patient. Settle in for the ride. Historians will write much about the role FATCA played in eroding America’s role as a world power.

FromPatriotToExpatriate – Commenting on the Robert Wood article – August 2014

There is no legislative record which explains the purpose of FATCA. FATCA appeared as an “offset provision” in the HIRE Act which was signed into law by President Obama in March of 2010. Some claim that FATCA was for the purpose of preventing Homeland Americans from “stashing their wealth” in unreported “foreign bank accounts” outside the United States.

Whatever its original purpose (if there every really was one), the truth is that FATCA has had an extremely detrimental effect on:

 

Given these facts, it is clear that FATCA has a definite effect and a current purpose that was not likely the original purpose of FATCA. Regardless of past purpose or current purpose, it is clear that FATCA is considered to be an important component of the U.S. arsenal of weapons (FATCA, FBAR, PFIC, CFC, Foreign trust rules) which are designed to attack “all things foreign” and “all things offshore”. As suggested by Professor Denis Kleinfeld:

The threat of FATCA enforcement has impacted every jurisdiction in the world and the global financial industry is quaking with fear. The US Justice Department has taken the position that the entire non-US financial industry is potentially part of a continuing criminal conspiracy with some US individuals and multi-national companies to evade US income tax.  The Justice Department has unilaterally forged ahead to obtain indictments and convictions over prominent foreign banks, bankers, and some of their US customers.  The United States justification for claiming the moral high ground is that it is merely seeking to have all US taxpayers pay tax as required under US law.

In March of 2017, Professor Shu Yei Oei released an insightful paper titled: “Offshore Tax Enforcement Dragnet“. This paper describes the interaction between FATCA, FBAR, OVDP and the alphabet soup of IRS penalty-laden reporting requirements.

Part 2: What is FATCA, what are the FATCA IGAs, what is the Meadows Bill and how do these things interact? 

First, About the FATCA legislation …

2012 – The world according to FATCA  – For the compliance industry: “The Gift That Just Keeps on Giving” …

2014 – At Home In Canada – The genesis of the ADSC Lawsuit – Opposition Rising …

Tax professionals, lawyers, commentators and the general public describe FATCA as though it is one law. This is incorrect. FATCA is the sum of a collection of amendments to the Internal Revenue Code that apply to (1)  non-U.S. financial institutions and (2) individuals which the United States, in it’s sole discretion defines as “U.S. Persons”. It is important to note that the overwhelming majority of individuals affected by FATCA are the citizens and residents of other nations, which happen to have had a U.S. place of birth.

In other words, FATCA affects few individuals residing in the United States and few U.S. financial institutions. It mainly imposes U.S. law on non-U.S. financial institutions and the citizens and residents of other nations.

To make matters worse, FATCA (like many extraterritorial laws impacting Americans abroad) was added as a “revenue offset” to the HIRE Act (which is a broader legislative initiative).

For those of you who are technical, anal or “tax geeks”, you will be interested to know that FATCA is the revenue “offset provision” to the “HIRE ACT”. To be specific, FATCA is “TITLE V –OFFSET PROVISIONS” beginning with S. 501 of the “HIRE ACT” which you will find here.

The original FATCA legislation had two clear targets.

The first target wasU.S. Persons with bank and financial accounts outside the United States (primarily Americans abroad and accidental Americans). The United States has a long history of controlling the “foreign” activities of “U.S. Persons” through Title 31 (think FBAR) , Title 26 (think PFIC, CFC, Foreign Trusts, etc.) and restrictions on the issuance of passports.

The second  target was the non-U.S. financial institutions that were unfortunate enough to allow “U.S. Persons”  as clients (bank account closures of Americans abroad are a reality).  In a manner that is reminiscent of Juan Zarate’s “Treasury’s War”, FATCA has made it very dangerous and expensive for banks to have “U.S. Person” clients. Predictably a number of banks have been denying bank accounts to U.S. citizens. Interestingly the U.S. Ambassador to Switzerland has intervened and asked Swiss banks to accept the risk of having Americans as clients. (For an interesting comment on the Ambassador’s initiative see this comment which includes: “As for those most unfortunate US persons, the only advice I can give them is to do whatever it takes to stop being U.S. persons. Get rid of their US passports or green cards, quick time”.

Americans abroad are very much affected by the original FATCA legislation. The original FATCA legislation, which is in full force, imposes substantial burdens on Americans abroad. In fact, FATCA was a major step in, “freedom eroding legislative creep”, that puts most aspects of the lives of Americans abroad, under the substantial and jurisdiction control of the Internal Revenue Code of the United States. (If politics is relevant, it might be worth remembering that FATCA is and continues to be an initiative of the Democratic Party. FATCA is opposed by the Republican Party. But, I digress …)

The acronym “FATCA” is well known. “FATCA” stands for “Foreign Account Tax Compliance Act”. Although there are many people who feel strongly about FATCA (love it or hate it) there are surprisingly few people who understand what FATCA is or it’s legislative origins. The purpose of this post is to identify the FATCA legislation, its component parts and to recognize that (at least in relation to non-U.S. banks) that the FATCA legislation has been replaced by the FATCA IGAs.

Second, About the FATCA IGAs Chapter 4 of the Internal Revenue (FATAC for non-U.S. banks) Has Been Eclipsed by FATCA IGAs …

The FATCA IGAs – Why pay attention to Congressional laws when you can legislate through executive agreements (of dubious legal validity)?

FATCA discussion is dominated by a discussion of the FATCA IGAs. It’s as though FATCA no longer exists in its original legislative form.  For all practical purposes, Internal Revenue Code Sections 1471 – 1474 have been replaced the FATCA IGAs. The non-U.S. banks no longer deal with the FATCA legislation, per se. From their perspective, the FATCA legislation has been replaced by the FATCA IGAs. (Even if FATCA were repealed, the IGAs would remain.)

The world before the IGA? What was the motivation for the FATCA IGAs?

Let’s use Canadian banks as an example. (The principle applies to banks throughout the world.) Canadian banks are in Canada are subject to Canadian law. Makes sense right? Canada is a sovereign nation and has the right to make laws for Canada. But, the United States enacted FATCA and made the Canadian banks subject to U.S. laws. Does this make sense?

What did it mean for Canadian banks to be subject to both U.S. law and Canadian law? Let’s see.

According to Canadian law:

banks were prohibited from discriminating against people based on place of birth. In fact this kind of discrimination also probably violates Canada’s Charter of Rights which is part of Canada’s constitution. In addition, Canada has privacy laws that may prohibit the sharing sensitive banking information.

According to the “U.S. FATCA Law”:

(Internal Revenue Code Sections 1471 – 1474), Canadian banks were now REQUIRED to hunt for people with a U.S. place of birth and report them to the IRS. Failure to do so would subject the bank to enormous penalties.

Do you see the problem? Therefore, an ingenious solution to the FATCA dilemma (the problem of being subject to the laws of two countries) was proposed. If the problem was that, to obey the U.S. law, would require violating the Canadian law, then:

Why not just change Canadian law? Simple right?

In fact let’s change Canadian law so that:

  • discrimination based on place of birth and violations of privacy were no longer violations of Canadian law; and
  • at the same time (for clarity), simply enact the U.S. FATCA law as the law of Canada.

This is exactly what Canada agreed to do by signing the Canada U.S. FATCA IGA. By so doing, Canada agreed to:

  • allow the United States to decide which Canadian citizens/residents were to be treated as U.S. citizens (no longer having the protections of pure Canadian citizens); and
  • effectively assisting in turning them over to the IRS.

This is exactly why the “Alliance For The Defence Of Canadian Sovereignty” has brought a legal action against the Government of Canada.

The argument advanced by their legal counsel is that:

The Government of Canada violated the Canadian Constitution by entering into the FATCA IGA with the United States. The Canadian banks may like this. The Canadian people do not. A series of posts detailing the FATCA lawsuit against the Government of Canada is here.

A list of U.S. Treasury FATCA IGAs is here.

It is important to note that the creation of FATCA in NO WAY and at NO TIME contemplated the creation of the FATCA IGAs. (The Canada U.S. FATCA IGA is the subject of the Alliance For The Defence of Canadian Sovereignty FATCA lawsuit.)

Third, About the Meadows Bill …

Congressman Mark Meadows has recently introduced H.R. 5935 – a bill to “Repeal FATCA”. The title is:

H.R.5935 – To repeal the violation of sovereign nations’ laws and privacy matters.”

The title provides strong clues of the motivation for the bill. I received an email asking exactly how the Meadows Bill would “repeal FATCA”. This post is an attempt to answer that particular question. In order to understand how the Meadows Bill would repeal FATCA, one must understand exactly what is the FATCA law that would be repealed. (Note that a repeal of FATCA would leave the FATCA IGAs intact.) I have previously written about the origins of Mr. FBAR. This  “Search For Uncle FATCA” – a search for what America has become – is a companion post.

Part 3 – What does it mean to repeal FATCA and how exactly does the Meadow Bill repeal FATCA? A section by section analysis

I apologize for the long post, but don’t have time to write a shorter one …

I was asked to answer the question:

“What exactly would it mean to repeal FATCA?” 

The short answer to the question is:

“We make FATCA go away by reversing all the changes to the Internal Revenue Code that collectively comprise FATCA.”

The real question becomes: “How do we reverse FATCA?”

The detailed answer is long and technical.  It includes (as appendixes) the complete text of Part V of the HIRE Act (which created FATCA) and the complete text of H.R. 5935 – the Meadows Bill. I would not expect people to read the text of the legislation (it is overwhelming).

The Three Faces Of FATCA

Whether you support FATCA or oppose FATCA, a broad understanding of the original FATCA legislation will help in your “FATCA Discussions”. It will also help you understand that there are actually “Three Faces To FATCA”. When you find yourself in a “FATCA Chat” you should be clear on whether you are talking about:

  • Face 1 – The part of FATCA that is aimed at foreign financial institutions (Internal Revenue Code Sections 1471 – 1474 – Chapter 4)
  • Face 2 – The FATCA IGAs that have for all practical purposes replaced “Chapter 4: Sections 1471 – 1474” (the part of FATCA that applies to non-U.S. financial institutions) of the Internal Revenue Code
  • Face 3 – The various amendments to the Internal Revenue Code (particularly Section 6038D) which presume that Americans abroad are tax evaders and (1) force disclosure of much of their financial lives and (2) impose punitive taxation (particularly in the case of “foreign trusts” and penalties (form 8938) on them.

Question: What does the Meadows bill do actually do?

Answer: It gets rid of Face 1 and Face 3 but leaves Face 2 (The FATCA IGAs intact). This is an important point. Because the FATCA IGAs were never authorized by FATCA, the repeal of FATCA would leave the FATCA IGAs intact!

The full text of Meadows Bill is here. You will see that  it reverses (section by section) the HIRE Act amendments to the Internal Revenue Code that created FATCA. It converts the Internal Revenue Code (at least in terms of FATCA provisions) to what it was before FATCA.

But, to appreciate the Meadows Bill, we must first understand FATCA in its original incarnation.

In the beginning, Congress created …

In order to understand the Meadows Bill, you must understand the legislative origins of FATCA  – specifically the HIRE Act which is found here:

https://www.gpo.gov/fdsys/pkg/PLAW-111publ147/html/PLAW-111publ147.htm

All legislation must have an “Offset Provision” (which explains how to pay for the new law). (Almost all legislation affecting Americans abroad is found in “Revenue Offset Provisions”. The effect is to force a politically powerless group to pay for a powerful majority. On this point, See the following submission made to the Senate Finance Committee in 2015.

richardsonkish-revenue-raising-measures-april-14-2015-international-tax-1-1)

In this case the “Offset Provision” (which created FATCA) is Title 5 of the HIRE Act. The “Offset Provisions” are summarized as follows. I have added IN BOLD what the significance of this is. Please note that Subtitle A is the “Income Taxes” section of the Internal Revenue Code. Remember that  FATCA contains two specific targets. Target 1 is “foreign financial institutions“. Target 2 is “Americans abroad” (and a few Homeland Americans) who have accounts (mostly for legitimate reasons) at  Foreign Financial Institutions.

Explaining the FATCA legislation …

What follows is an explanation of what the “FATCA legislation really is. It will explain how FATCA has two specific targets: (1) Foreign Financial Institutions and (2) The “U.S. Persons” who make use of their services.

At the end of the post I have included:

Appendix A – The Actual Text Of The “Offset Provision in the HIRE Act which created FATCA

Appendix B – The Actual Text Of The Meadows Bill (which in effect repeals the sections of the HIRE Act which created FATCA)

Explanation of what the FATCA legislation really is …

A Summary of the changes made to the Internal Revenue Code by the HIRE Act

I have included links to the exact sections of the Internal Revenue Code after the HIRE Act amendments. To see a discussion of the pre-HIRE Act Internal Revenue Code, see Part B (the exact text of the HIRE Act). This demonstrates how FATCA Targets:

  • non-U.S. financial institutions (FATCA Face 1); and
  • Americans abroad (FATCA Face 3).

Summary of the FATCA provisions in the HIRE Act

(NOTE THAT I HAVE ADDED MY COMMENTARY IN CAPITAL LETTERS.)

TITLE V–OFFSET PROVISIONS

Subtitle A (SUBTITLE A IS THE INCOME TAX SECTION OF THE INTERNAL REVENUE CODE) –Foreign Account Tax Compliance

Part I–Increased Disclosure of Beneficial Owners – AIMED AT FOREIGN FINANCIAL INSTITUTIONS

Sec. 501. Reporting on certain foreign accounts.

THIS CREATES CHAPTER 4 (SECTIONS 1471 – 1474) THAT ARE THE SECTIONS AIMED AT FOREIGN FINANCIAL INSTITUTIONS. IT IS WHAT MOST PEOPLE UNDERSTAND FATCA TO BE. SEE WHERE CHAPTER 4 APPEARS HERE:

screen-shot-2016-09-30-at-7-18-29-am

It’s right there. It’s Chapter 4. That said, Chapter 4 of the Internal Revenue Code has been rendered largely irrelevant by the FATCA IGAs. However, here is what Chapter 4 looks like:

screen-shot-2016-09-30-at-11-07-07-am

Sec. 502. Repeal of certain foreign exceptions to registered bond requirements

Part II–Under Reporting With Respect to Foreign Assets – AIMED SQUARELY AT AMERICANS ABROAD – INCREASES THE OVERALL REPORTING REQUIREMENTS FOR U.S. PERSONS, CREATES FORM 8938 AND IMPOSES PENALTIES ON NORMAL DAY-TO-DAY-LIVING

Sec. 511. Disclosure of information with respect to foreign financial assets. – CREATES INTERNAL REV CODE 6038D WHICH RESULTS IN FORM 8938. INTERNAL REVENUE CODE S. 6038D READS AS FOLLOWS:

26 U.S. Code § 6038D – Information with respect to foreign financial assets

(a) In general 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).
(b) Specified foreign financial assets For purposes of this section, the term “specified foreign financial asset” means—(1)any financial account (as defined in section 1471(d)(2)) maintained by a foreign financial institution (as defined in section 1471(d)(4)), and
(2) any of the following assets which are not held in an account maintained by a financial institution (as defined in section 1471(d)(5))—(A)any stock or security issued by a person other than a United States person,
(B) any financial instrument or contract held for investment that has an issuer or counterparty which is other than a United States person, and
(C) any interest in a foreign entity (as defined in section 1473).
(c) Required information The information described in this subsection with respect to any asset is: (1)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.
(2) 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.
(3) In the case of any other instrument, contract, or interest—(A) such information as is necessary to identify such instrument, contract, or interest, and
(B) the names and addresses of all issuers and counterparties with respect to such instrument, contract, or interest.
(4)The maximum value of the asset during the taxable year.
(d) Penalty for failure to disclose(1) In general 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.
(2) Increase in penalty where failure continues after notification 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.
(e) Presumption that value of specified foreign financial assets exceeds dollar threshold If—(1)the Secretary determines that an individual has an interest in one or more specified foreign financial assets, and
(2) such individual does not provide sufficient information to demonstrate the aggregate value of such assets, 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.
(f) Application to certain entities 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.
(g) Reasonable cause exception 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.
(h) Regulations 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—(1) 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,
(2) nonresident aliens, and
(3) bona fide residents of any possession of the United States.
(Added Pub. L. 111–147, title V, § 511(a), Mar. 18, 2010, 124 Stat. 109.)

THE FOLLOWING POINTS ARE NOTEWORTHY:

  1. THE REFERENCES TO S. 1471 AND OTHER SECTIONS OF THE CHAPTER 4 FATCA PROVISIONS.
  2. THE SECRETARY HAS THE AUTHORITY TO EXEMPT NONRESIDENT ALIENS FROM THE FORM 8938 FILING OBLIGATION AND HAS CHOSEN TO DO SO. THE EXEMPTION EXTENDS TO GREEN CARD HOLDERS WHO ARE, BY VIRTUE OF TREATY TIE BREAKER RULES, NONRESIDENT ALIENS.
  3. THE SECRETARY MAY PRESCRIBE A REPORTING THRESHOLD WHICH EXCEEDS $50,000 (WHICH HAS BEEN DONE IN THE CASE OF AMERICANS ABROAD)
  4. THE SECRETARY HAS THE A BROAD AUTHORITY TO PRESCRIBE REGULATIONS TO CARRY OUT THE PURPOSES OF S. 6038D. THIS IS PROBABLY BROAD ENOUGH TO EXEMPT AMERICANS ABROAD, WHICH PRESUMABLY IS THE BASIS FOR THE SUGGESTED FATCA SAME COUNTRY EXEMPTION. NOTE THAT IN DECEMBER 2016 TREASURY SPECIFICALLY CONSIDERED AND REJECTED THE FATCA SAME COUNTRY EXEMPTION PROPOSED BY “ACA” AND “DEMOCRATS ABROAD”.
  5. IN A CONFLICT BETWEEN U.S. LAW AND THE FOREIGN LAW, THE U.S. LAW WILL TAKE PRECEDENCE – SEE INTERNAL REVENUE CODE S. 6038D.

The Secretary may prescribe – The FATCA Regulations – AND THE REGULATIONS ARE HERE …

https://www.law.cornell.edu/cfr/text/26/1.6038D-2

https://www.law.cornell.edu/cfr/text/26/1.6038D-3

https://www.law.cornell.edu/cfr/text/26/1.6038D-4

https://www.law.cornell.edu/cfr/text/26/1.6038D-5

S. 6038D gave birth to IRS Form 8938 …

FATCA Form 8938 is the Form that is used to report the “Foreign Assets” mandated by Internal Revenue Code S. 6038D.

Effects: 1. Americans abroad are required to report virtually all of their “foreign assets” (but local to them) to the IRS. 2. This creates a “paper trail” which will make it more likely that Americans abroad will pay an Exit Tax if (when) they renounce U.S. citizenship.

All of these concepts  are summarized by the IRS here …

https://www.irs.gov/businesses/corporations/do-i-need-to-file-form-8938-statement-of-specified-foreign-financial-assets

The relationship between Form 8938 and Mr. FBAR is described here …

https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

Sec. 512. Penalties for underpayments attributable to undisclosed foreign financial assets. – INCREASES PENALTIES WHEN TAXES OWED ON UNDISCLOSED ACCOUNTS ARE FOUND. THE INTERNAL REVENUE CODE REQUIRES THE FILING OF NUMEROUS INFORMATION RETURNS. AMERICANS ABROAD ARE “PERSONS SUBJECT TO SPECIAL DISCLOSURE PROVISIONS“. THESE SPECIFIC DISCLOSURE PROVISIONS  INCLUDE S. 6038 (FORM 5471 AND FORM 8865 – FOREIGN CORPORATIONS AND PARTNERSHIPS), S. 6038D (FOREIGN FINANCIAL ASSETS ON FROM 8398) AND FOREIGN TRUST REPORTING S. 6048 https://www.law.cornell.edu/uscode/text/26/subtitle-F/chapter-61/subchapter-A/part-III

Sec. 513. Modification of statute of limitations for significant omission of income in connection with foreign assets. – WHEN IT COMES TO FOREIGN ACCOUNTS THE IRS CAN AUDIT FOR 6 YEARS INTO OF THE USUAL 3 YEARS

Part III–Other Disclosure Provisions

Sec. 521. Reporting of activities with respect to passive foreign investment companies. – FOR THE FIRST TIME PFICS ARE REQUIRED TO BE DISCLOSED WHETHER THERE IS OR THERE IS NOT INCOME FROM THE FUNDS (THIS IS INCREDIBLY SIGNIFICANT) – INTERNAL REV CODE 1298(f) https://www.law.cornell.edu/uscode/text/26/1298 WHAT THIS MEANS IS THAT AMERICANS ABROAD WHO OWN A NON-U.S. MUTUAL FUND ARE REQUIRED TO REPORT THIS TO THE IRS WHETHER OR NOT THEY ARE OTHERWISE REQUIRED TO FILE A U.S. INCOME TAX RETURN!

The disclosure takes place on Form 8621. The instructions to Form 8621 are incomprehensible to all but a select group of tax preparers. IT IS VERY EXPENSIVE TO PAY A TAX PREPARER TO COMPLETE FORM 8621.

Effect: Americans abroad are effectively prohibited from owning all but U.S. mutual funds.

Sec. 522. Secretary permitted to require financial institutions to file certain returns related to withholding on foreign transfers electronically.

Part IV–Provisions Related to Foreign Trusts

Sec. 531. Clarifications with respect to foreign trusts which are treated as having a United States beneficiary. – SEE INTERNAL REV CODE S. 679(f)https://www.law.cornell.edu/uscode/text/26/679

Sec. 532. Presumption that foreign trust has United States beneficiary. CREATES A PRESUMPTION THAT THE USA CAN TAX THE BENEFICIARY OF ANY TRUST ANYWHERE. NOTE THAT THIS IS A PRESUMPTION, BUT IT DOES PUT THE ONUS ON THE TRUST/BENEFICIARY TO SHOW THAT THE BENEFICIARY IS NOT A U.S. PERSON.

Sec. 533. Uncompensated use of trust property. – BASICALLY THE USE OF TRUST PROPERTY IS NOW TREATED AS A TAXABLE DISTRIBUTION TO THE PERSON USING THE PROPERTY – IRC SECTION 643(I) https://www.law.cornell.edu/uscode/text/26/643

Sec. 534. Reporting requirement of United States owners of foreign trusts. – AMENDS THE REPORTING REQUIREMENTS WITH RESPECT TO FOREIGN TRUSTS – THE SECRETARY CAN SPECIFY WHICH INFORMATION IS REQUIRED TO BE REPORTED

Sec. 535. Minimum penalty with respect to failure to report on certain foreign trusts. – CREATES A PENALTY FOR FAILURE TO DISCLOSE THE INTEREST IN THE FOREIGN TRUST (SEE S. 534 ABOVE) WHICH IS THE GREATER OF 10,000 OR 35% OF THE VALUE OF THE REPORTABLE AMOUNT OF THE TRUST. (INTERNAL REVENUE CODE S. 677) https://www.law.cornell.edu/uscode/text/26/6677

Part V–Substitute Dividends and Dividend Equivalent Payments Received by Foreign Persons Treated as Dividends

Sec. 541. Substitute dividends and dividend equivalent payments received by foreign persons treated as dividends.

Subtitle B–Delay in Application of Worldwide Allocation of Interest

Sec. 551. Delay in application of worldwide allocation of interest.

Part 4: An important reminder – FATCA repeal does not mean IGA repeal 

The repeal of FATCA would leave the FATCA IGAs intact. Because the FATCA IGSs were NOT authorized by FATCA, a repeal of FATCA would leave the IGAs intact and operational! The fact that the FATCA IGAs are NOT authorized by the FATCA legislation has been explained by many commentators including Jim Jatras of RepealFATCA.com and McGill law professor Allison Christians.

To put it simply: The repeal of FATCA is insufficient! The FATCA IGAs must be independently terminated.

__________________________________________________________________________

Part 5: The text of FATCA and the text of the Meadows Bill (very dry and technical and not likely to be of interest to the casual reader)

Appendix A – The exact text of the HIRE Act

Appendix B – The exact text of the Meadows bill which shows how it essentially repeals the sections of the HIRE Act that created FATCA.

Appendix A – The full text of the Part V of the HIRE Act is here:

TITLE V–OFFSET PROVISIONS

Subtitle A–Foreign Account Tax Compliance

PART I–INCREASED DISCLOSURE OF BENEFICIAL OWNERS

SEC. 501. REPORTING ON CERTAIN FOREIGN ACCOUNTS.

(a) In General.–The Internal Revenue Code of 1986 is amended by
inserting after chapter 3 the following new chapter:

“CHAPTER 4–TAXES TO ENFORCE REPORTING ON CERTAIN FOREIGN ACCOUNTS

“Sec. 1471. Withholdable payments to foreign financial institutions.
“Sec. 1472. Withholdable payments to other foreign entities.
“Sec. 1473. Definitions.
“Sec. 1474. Special rules.

“SEC. 1471. WITHHOLDABLE PAYMENTS TO FOREIGN FINANCIAL
INSTITUTIONS.

“(a) In General.–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.
“(b) Reporting Requirements, etc.–
“(1) In general.–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–
“(A) to obtain such information regarding each
holder of each account maintained by such institution as
is necessary to determine which (if any) of such
accounts are United States accounts,
“(B) to comply with such verification and due
diligence procedures as the Secretary may require with
respect to the identification of United States accounts,
“(C) in the case of any United States account
maintained by such institution, to report on an annual
basis

[[Page 124 STAT. 98]]

the information described in subsection (c) with respect
to such account,
“(D) to deduct and withhold a tax equal to 30
percent of–
“(i) any passthru payment which is made by
such institution to a recalcitrant account holder
or another foreign financial institution which
does not meet the requirements of this subsection,
and
“(ii) in the case of any passthru payment
which is made by such institution to a foreign
financial institution which has in effect an
election under paragraph (3) with respect to such
payment, so much of such payment as is allocable
to accounts held by recalcitrant account holders
or foreign financial institutions which do not
meet the requirements of this subsection,
“(E) to comply with requests by the Secretary for
additional information with respect to any United States
account maintained by such institution, and
“(F) 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–
“(i) to attempt to obtain a valid and
effective waiver of such law from each holder of
such account, and
“(ii) if a waiver described in clause (i) is
not obtained from each such holder within a
reasonable period of time, to close such account.
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.
“(2) Financial institutions deemed to meet requirements in
certain cases.–A foreign financial institution may be treated
by the Secretary as meeting the requirements of this subsection
if–
“(A) such institution–
“(i) complies with such procedures as the
Secretary may prescribe to ensure that such
institution does not maintain United States
accounts, and
“(ii) meets such other requirements as the
Secretary may prescribe with respect to accounts
of other foreign financial institutions maintained
by such institution, or
“(B) such institution is a member of a class of
institutions with respect to which the Secretary has
determined that the application of this section is not
necessary to carry out the purposes of this section.
“(3) Election to be withheld upon rather than withhold on
payments to recalcitrant account holders and nonparticipating
foreign financial institutions.–In the case of a foreign
financial institution which meets the requirements of this
subsection and such other requirements as the Secretary may
provide and which elects the application of this paragraph–

[[Page 124 STAT. 99]]

“(A) the requirements of paragraph (1)(D) shall not
apply,
“(B) the <> withholding tax
imposed under subsection (a) shall apply with respect to
any withholdable payment to such institution to the
extent such payment is allocable to accounts held by
recalcitrant account holders or foreign financial
institutions which do not meet the requirements of this
subsection, and
“(C) the agreement described in paragraph (1)
shall–
“(i) require such institution to notify the
withholding agent with respect to each such
payment of the institution’s election under this
paragraph and such other information as may be
necessary for the withholding agent to determine
the appropriate amount to deduct and withhold from
such payment, and
“(ii) include a waiver of any right under any
treaty of the United States with respect to any
amount deducted and withheld pursuant to an
election under this paragraph.
To the extent provided by the Secretary, the election under this
paragraph may be made with respect to certain classes or types
of accounts of the foreign financial institution.

“(c) Information Required To Be Reported on United States
Accounts.–
“(1) In general.–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:
“(A) 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.
“(B) The account number.
“(C) The account balance or value (determined at
such time and in such manner as the Secretary may
provide).
“(D) Except to the extent provided by the
Secretary, the gross receipts and gross withdrawals or
payments from the account (determined for such period
and in such manner as the Secretary may provide).
“(2) Election to be subject to same reporting as united
states financial institutions.–In the case of a foreign
financial institution which elects the application of this
paragraph–
“(A) subparagraphs (C) and (D) of paragraph (1)
shall not apply, and
“(B) 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–
“(i) such institution were a United States
person, and

[[Page 124 STAT. 100]]

“(ii) 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.
An election under this paragraph shall be made at such
time, in such manner, and subject to such conditions as
the Secretary may provide.
“(3) Separate requirements for qualified intermediaries.–
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.

“(d) Definitions.–For purposes of this section–
“(1) United states account.–
“(A) In general.–The term `United States account’
means any financial account which is held by one or more
specified United States persons or United States owned
foreign entities.
“(B) Exception for certain accounts held by
individuals.–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–
“(i) each holder of such account is a natural
person, and
“(ii) 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
$50,000.
To the extent provided by the Secretary, financial
institutions which are members of the same expanded
affiliated group shall be treated for purposes of clause
(ii) as a single financial institution.
“(C) Elimination of duplicative reporting
requirements.–Such term shall not include any financial
account in a foreign financial institution if–
“(i) such account is held by another
financial institution which meets the requirements
of subsection (b), or
“(ii) the holder of such account is otherwise
subject to information reporting requirements
which the Secretary determines would make the
reporting required by this section with respect to
United States accounts duplicative.
“(2) Financial account.–Except as otherwise provided by
the Secretary, the term `financial account’ means, with respect
to any financial institution–
“(A) any depository account maintained by such
financial institution,
“(B) any custodial account maintained by such
financial institution, and
“(C) any equity or debt interest in such financial
institution (other than interests which are regularly
traded on an established securities market).

[[Page 124 STAT. 101]]

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.
“(3) United states owned foreign entity.–The term `United
States owned foreign entity’ means any foreign entity which has
one or more substantial United States owners.
“(4) Foreign financial institution.–The term `foreign
financial institution’ means any financial institution which is
a foreign entity. Except as otherwise provided by the Secretary,
such term shall not include a financial institution which is
organized under the laws of any possession of the United States.
“(5) Financial institution.–Except as otherwise provided
by the Secretary, the term `financial institution’ means any
entity that–
“(A) accepts deposits in the ordinary course of a
banking or similar business,
“(B) as a substantial portion of its business,
holds financial assets for the account of others, or
“(C) 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.
“(6) Recalcitrant account holder.–The term `recalcitrant
account holder’ means any account holder which–
“(A) fails to comply with reasonable requests for
the information referred to in subsection (b)(1)(A) or
(c)(1)(A), or
“(B) fails to provide a waiver described in
subsection (b)(1)(F) upon request.
“(7) Passthru payment.–The term `passthru payment’ means
any withholdable payment or other payment to the extent
attributable to a withholdable payment.

“(e) Affiliated Groups.–
“(1) In general.–The <> requirements
of subsections (b) and (c)(1) shall apply–
“(A) with respect to United States accounts
maintained by the foreign financial institution, and
“(B) 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.
“(2) Expanded affiliated group.–For purposes of this
section, the term `expanded affiliated group’ means an
affiliated group as defined in section 1504(a), determined–
“(A) by substituting `more than 50 percent’ for `at
least 80 percent’ each place it appears, and
“(B) without regard to paragraphs (2) and (3) of
section 1504(b).
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

[[Page 124 STAT. 102]]

954(d)(3)) by members of such group (including any entity
treated as a member of such group by reason of this sentence).

“(f) Exception for Certain Payments.–Subsection (a) shall not
apply to any payment to the extent that the beneficial owner of such
payment is–
“(1) 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,
“(2) any international organization or any wholly owned
agency or instrumentality thereof,
“(3) any foreign central bank of issue, or
“(4) any other class of persons identified by the Secretary
for purposes of this subsection as posing a low risk of tax
evasion.
“SEC. 1472. WITHHOLDABLE PAYMENTS TO OTHER FOREIGN ENTITIES.

“(a) In General.–In the case of any withholdable payment to a non-
financial foreign entity, if–
“(1) the beneficial owner of such payment is such entity or
any other non-financial foreign entity, and
“(2) the requirements of subsection (b) are not met with
respect to such beneficial owner,

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.
“(b) Requirements for Waiver of Withholding.–The requirements of
this subsection are met with respect to the beneficial owner of a
payment if–
“(1) such beneficial owner or the payee provides the
withholding agent with either–
“(A) a certification that such beneficial owner
does not have any substantial United States owners, or
“(B) the name, address, and TIN of each substantial
United States owner of such beneficial owner,
“(2) the withholding agent does not know, or have reason to
know, that any information provided under paragraph (1) is
incorrect, and
“(3) the withholding agent reports the information provided
under paragraph (1)(B) to the Secretary in such manner as the
Secretary may provide.

“(c) Exceptions.–Subsection (a) shall not apply to–
“(1) except as otherwise provided by the Secretary, any
payment beneficially owned by–
“(A) any corporation the stock of which is
regularly traded on an established securities market,
“(B) 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),
“(C) any entity which is organized under the laws
of a possession of the United States and which is wholly
owned by one or more bona fide residents (as defined in
section 937(a)) of such possession,
“(D) 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,

[[Page 124 STAT. 103]]

“(E) any international organization or any wholly
owned agency or instrumentality thereof,
“(F) any foreign central bank of issue, or
“(G) any other class of persons identified by the
Secretary for purposes of this subsection, and
“(2) any class of payments identified by the Secretary for
purposes of this subsection as posing a low risk of tax evasion.

“(d) Non-Financial Foreign Entity.–For purposes of this section,
the term `non-financial foreign entity’ means any foreign entity which
is not a financial institution (as defined in section 1471(d)(5)).
“SEC. 1473. DEFINITIONS.

“For purposes of this chapter–
“(1) Withholdable payment.–Except as otherwise provided by
the Secretary–
“(A) In general.–The term `withholdable payment’
means–
“(i) 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
“(ii) any gross proceeds from the sale or
other disposition of any property of a type which
can produce interest or dividends from sources
within the United States.
“(B) Exception for income connected with united
states business.–Such term shall not include any item
of income which is taken into account under section
871(b)(1) or 882(a)(1) for the taxable year.
“(C) Special rule for sourcing interest paid by
foreign branches of domestic financial institutions.–
Subparagraph (B) of section 861(a)(1) shall not apply.
“(2) Substantial united states owner.–
“(A) In general.–The term `substantial United
States owner’ means–
“(i) 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),
“(ii) 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
“(iii) in the case of a trust–
“(I) 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, and
“(II) to the extent provided by the
Secretary in regulations or other
guidance, any specified United States
person which holds, directly or
indirectly, more than 10 percent of the
beneficial interests of such trust.

[[Page 124 STAT. 104]]

“(B) Special rule for investment vehicles.–In the
case of any financial institution described in section
1471(d)(5)(C), clauses (i), (ii), and (iii) of
subparagraph (A) shall be applied by substituting `0
percent’ for `10 percent’.
“(3) Specified united states person.–Except as otherwise
provided by the Secretary, the term `specified United States
person’ means any United States person other than–
“(A) any corporation the stock of which is
regularly traded on an established securities market,
“(B) 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 the stock of which is regularly traded
on an established securities market,
“(C) any organization exempt from taxation under
section 501(a) or an individual retirement plan,
“(D) the United States or any wholly owned agency
or instrumentality thereof,
“(E) 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,
“(F) any bank (as defined in section 581),
“(G) any real estate investment trust (as defined
in section 856),
“(H) any regulated investment company (as defined
in section 851),
“(I) any common trust fund (as defined in section
584(a)), and
“(J) any trust which–
“(i) is exempt from tax under section 664(c),
or
“(ii) is described in section 4947(a)(1).
“(4) Withholding agent.–The term `withholding agent’ means
all persons, in whatever capacity acting, having the control,
receipt, custody, disposal, or payment of any withholdable
payment.
“(5) Foreign entity.–The term `foreign entity’ means any
entity which is not a United States person.
“SEC. 1474. SPECIAL RULES.

“(a) Liability for Withheld Tax.–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.
“(b) Credits and Refunds.–
“(1) In general.–Except as provided in paragraph (2), the
determination of whether any tax deducted and withheld under
this chapter results in an overpayment by the beneficial owner
of the payment to which such tax is attributable shall be made
as if such tax had been deducted and withheld under subchapter A
of chapter 3.
“(2) Special rule where foreign financial institution is
beneficial owner of payment.–

[[Page 124 STAT. 105]]

“(A) In general.–In the case of any tax properly
deducted and withheld under section 1471 from a
specified financial institution payment–
“(i) 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–
“(I) 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
“(II) no interest shall be allowed
or paid with respect to such credit or
refund, and
“(ii) if such foreign financial institution
is not so entitled, no credit or refund shall be
allowed or paid with respect to such tax.
“(B) Specified financial institution payment.–The
term `specified financial institution payment’ means any
payment if the beneficial owner of such payment is a
foreign financial institution.
“(3) Requirement to identify substantial united states
owners.–No credit or refund shall be allowed or paid with
respect to any tax properly deducted and withheld under this
chapter unless the beneficial owner of the payment provides the
Secretary such information as the Secretary may require to
determine whether such beneficial owner is a United States owned
foreign entity (as defined in section 1471(d)(3)) and the
identity of any substantial United States owners of such entity.

“(c) Confidentiality of Information.–
“(1) In <> general.–For purposes of
this chapter, rules similar to the rules of section 3406(f)
shall apply.
“(2) Disclosure of list of participating foreign financial
institutions permitted.–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.

“(d) Coordination With Other Withholding Provisions.–The Secretary
shall provide for the coordination of this chapter with other
withholding provisions under this title, including providing for the
proper crediting of amounts deducted and withheld under this chapter
against amounts required to be deducted and withheld under such other
provisions.
“(e) Treatment of Withholding Under Agreements.–Any tax deducted
and withheld pursuant to an agreement described in section 1471(b) shall
be treated for purposes of this title as a tax deducted and withheld by
a withholding agent under section 1471(a).
“(f) Regulations.–The Secretary shall prescribe such regulations
or other guidance as may be necessary or appropriate to carry out the
purposes of, and prevent the avoidance of, this chapter.”.
(b) Special Rule for Interest on Overpayments.–Subsection (e) of
section 6611 <> is amended by adding at the end the
following new paragraph:

[[Page 124 STAT. 106]]

“(4) Certain <> withholding taxes.–
In the case of any overpayment resulting from tax deducted and
withheld under chapter 3 or 4, paragraphs (1), (2), and (3)
shall be applied by substituting `180 days’ for `45 days’ each
place it appears.”.

(c) Conforming Amendments.–
(1) Section 6414 <> is amended by
inserting “or 4” after “chapter 3”.
(2) Paragraph (1) of section 6501(b) is amended by inserting
“4,” after “chapter 3,”.
(3) Paragraph (2) of section 6501(b) is amended–
(A) by inserting “4,” after “chapter 3,” in the
text thereof, and
(B) by striking “taxes and tax imposed by chapter
3” in the heading thereof and inserting “and
withholding taxes”.
(4) Paragraph (3) of section 6513(b) is amended–
(A) by inserting “or 4” after “chapter 3”, and
(B) by inserting “or 1474(b)” after “section
1462”.
(5) Subsection (c) of section 6513 is amended by inserting
“4,” after “chapter 3,”.
(6) Paragraph (1) of section 6724(d) is amended by inserting
“under chapter 4 or” after “filed with the Secretary” in the
last sentence thereof.
(7) Paragraph (2) of section 6724(d) is amended by inserting
“or 4” after “chapter 3”.
(8) The table of chapters of the Internal Revenue Code of
1986 is amended by adding at the end the following new item:

“Chapter 4–Taxes To Enforce Reporting on Certain Foreign Accounts.”.

(d) Effective <> Date.–
(1) In general.–Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
payments made after December 31, 2012.
(2) Grandfathered treatment of outstanding obligations.–The
amendments made by this section shall not require any amount to
be deducted or withheld from any payment under any obligation
outstanding on the date which is 2 years after the date of the
enactment of this Act or from the gross proceeds from any
disposition of such an obligation.
(3) Interest on overpayments.–The amendment made by
subsection (b) shall apply–
(A) in the case of such amendment’s application to
paragraph (1) of section 6611(e) of the Internal Revenue
Code of 1986, to returns the due date for which
(determined without regard to extensions) is after the
date of the enactment of this Act,
(B) in the case of such amendment’s application to
paragraph (2) of such section, to claims for credit or
refund of any overpayment filed after the date of the
enactment of this Act (regardless of the taxable period
to which such refund relates), and
(C) in the case of such amendment’s application to
paragraph (3) of such section, to refunds paid after the
date of the enactment of this Act (regardless of the
taxable period to which such refund relates).

[[Page 124 STAT. 107]]

SEC. 502. REPEAL OF CERTAIN FOREIGN EXCEPTIONS TO REGISTERED BOND
REQUIREMENTS.

(a) Repeal of Exception to Denial of Deduction for Interest on Non-
Registered Bonds.–
(1) In general.–Paragraph (2) of section 163(f) <> is amended by striking subparagraph (B) and by
redesignating subparagraph (C) as subparagraph (B).
(2) Conforming amendments.–
(A) Paragraph (2) of section 149(a) is amended by
inserting “or” at the end of subparagraph (A), by
striking “, or” at the end of subparagraph (B) and
inserting a period, and by striking subparagraph (C).
(B) Subparagraph (A) of section 163(f)(2) is amended
by inserting “or” at the end of clause (ii), by
striking “, or” at the end of clause (iii) and
inserting a period, and by striking clause (iv).
(C) Subparagraph (B) of section 163(f)(2), as
redesignated by paragraph (1), is amended–
(i) by striking “, and subparagraph (B),” in
the matter preceding clause (i), and
(ii) by amending clause (i) to read as
follows:
“(i) such obligation is of a type which the
Secretary has determined by regulations to be used
frequently in avoiding Federal taxes, and”.
(D) Sections 165(j)(2)(A) and 1287(b)(1) are each
amended by striking “except that clause (iv) of
subparagraph (A), and subparagraph (B), of such section
shall not apply”.

(b) Repeal of Treatment as Portfolio Debt.–
(1) In general.–Paragraph (2) of section 871(h) is amended
to read as follows:
“(2) Portfolio interest.–For purposes of this subsection,
the term `portfolio interest’ means any interest (including
original issue discount) which–
“(A) would be subject to tax under subsection (a)
but for this subsection, and
“(B) is paid on an obligation–
“(i) which is in registered form, and
“(ii) with respect to which–
“(I) 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, or
“(II) the Secretary has determined
that such a statement is not required in
order to carry out the purposes of this
subsection.”.
(2) Conforming amendments.–
(A) Section 871(h)(3)(A) is amended by striking
“subparagraph (A) or (B) of”.
(B) Paragraph (2) of section 881(c) is amended to
read as follows:
“(2) Portfolio interest.–For purposes of this subsection,
the term `portfolio interest’ means any interest (including
original issue discount) which–

[[Page 124 STAT. 108]]

“(A) would be subject to tax under subsection (a)
but for this subsection, and
“(B) is paid on an obligation–
“(i) which is in registered form, and
“(ii) with respect to which–
“(I) the person who would otherwise
be required to deduct and withhold tax
from such interest under section 1442(a)
receives a statement which meets the
requirements of section 871(h)(5) that
the beneficial owner of the obligation
is not a United States person, or
“(II) the Secretary has determined
that such a statement is not required in
order to carry out the purposes of this
subsection.”.

(c) Dematerialized Book Entry Systems Treated as Registered Form.–
Paragraph (3) of section 163(f) <> is amended by
inserting “, except that a dematerialized book entry system or other
book entry system specified by the Secretary shall be treated as a book
entry system described in such section” before the period at the end.

(d) Repeal of Exception to Requirement That Treasury Obligations Be
in Registered Form.–
(1) In general.–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.
(2) Conforming amendments.–Paragraph (1) of section 3121(g)
of such title is amended–
(A) by adding “or” at the end of subparagraph (A),
(B) by striking “; or” at the end of subparagraph
(B) and inserting a period, and
(C) by striking subparagraph (C).

(e) Preservation of Exception for Excise Tax Purposes.–Paragraph
(1) of section 4701(b) <> is amended to read as
follows:
“(1) Registration-required obligation.–
“(A) In general.–The term `registration-required
obligation’ has the same meaning as when used in section
163(f), except that such term shall not include any
obligation which–
“(i) is required to be registered under
section 149(a), or
“(ii) is described in subparagraph (B).
“(B) Certain obligations not included.–An
obligation is described in this subparagraph if–
“(i) there are arrangements reasonably
designed to ensure that such obligation will be
sold (or resold in connection with the original
issue) only to a person who is not a United States
person,
“(ii) interest on such obligation is payable
only outside the United States and its
possessions, and
“(iii) on the face of such obligation there
is a statement that any United States person who
holds such obligation will be subject to
limitations under the United States income tax
laws.”.

(f) Effective <> Date.–The
amendments made by this section shall apply to obligations issued after
the date which is 2 years after the date of the enactment of this Act.

[[Page 124 STAT. 109]]

PART II–UNDER REPORTING WITH RESPECT TO FOREIGN ASSETS

SEC. 511. DISCLOSURE OF INFORMATION WITH RESPECT TO FOREIGN
FINANCIAL ASSETS.

(a) In General.–Subpart A of part III of subchapter A of chapter 61
is amended by inserting after section 6038C the following new section:
“SEC. 6038D. INFORMATION WITH RESPECT TO FOREIGN FINANCIAL
ASSETS.

“(a) In General.–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).
“(b) Specified Foreign Financial Assets.–For purposes of this
section, the term `specified foreign financial asset’ means–
“(1) any financial account (as defined in section
1471(d)(2)) maintained by a foreign financial institution (as
defined in section 1471(d)(4)), and
“(2) any of the following assets which are not held in an
account maintained by a financial institution (as defined in
section 1471(d)(5))–
“(A) any stock or security issued by a person other
than a United States person,
“(B) any financial instrument or contract held for
investment that has an issuer or counterparty which is
other than a United States person, and
“(C) any interest in a foreign entity (as defined
in section 1473).

“(c) Required Information.–The information described in this
subsection with respect to any asset is:
“(1) 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.
“(2) 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.
“(3) In the case of any other instrument, contract, or
interest–
“(A) such information as is necessary to identify
such instrument, contract, or interest, and
“(B) the names and addresses of all issuers and
counterparties with respect to such instrument,
contract, or interest.
“(4) The maximum value of the asset during the taxable
year.

“(d) Penalty for Failure To Disclose.–
“(1) In general.–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.

[[Page 124 STAT. 110]]

“(2) Increase in penalty where failure continues after
notification.–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.

“(e) Presumption That Value of Specified Foreign Financial Assets
Exceeds Dollar Threshold.–If–
“(1) <> the Secretary determines that
an individual has an interest in one or more specified foreign
financial assets, and
“(2) such individual does not provide sufficient
information to demonstrate the aggregate value of such assets,

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.
“(f) Application to Certain Entities.–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.
“(g) Reasonable Cause Exception.–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.
“(h) Regulations.–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–
“(1) 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,
“(2) nonresident aliens, and
“(3) bona fide residents of any possession of the United
States.”.

(b) Clerical Amendment.–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:

“Sec. 6038D. Information with respect to foreign financial assets.”.

(c) Effective <> Date.–The
amendments made by this section shall apply to taxable years beginning
after the date of the enactment of this Act.
SEC. 512. PENALTIES FOR UNDERPAYMENTS ATTRIBUTABLE TO UNDISCLOSED
FOREIGN FINANCIAL ASSETS.

(a) In General.–Section 6662, <> as amended by
this Act, is amended–

[[Page 124 STAT. 111]]

(1) in subsection (b), by inserting after paragraph (6) the
following new paragraph:
“(7) Any undisclosed foreign financial asset
understatement.”, and
(2) by adding at the end the following new subsection:

“(j) Undisclosed Foreign Financial Asset Understatement.–
“(1) In general.–For purposes of this section, the term
`undisclosed foreign financial asset understatement’ 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.
“(2) Undisclosed foreign financial asset.–For purposes of
this subsection, the term `undisclosed foreign financial asset’
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.
“(3) Increase in penalty for undisclosed foreign financial
asset understatements.–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 `40 percent’ for
`20 percent’.”.

(b) Effective <> Date.–The
amendments made by this section shall apply to taxable years beginning
after the date of the enactment of this Act.
SEC. 513. MODIFICATION OF STATUTE OF LIMITATIONS FOR SIGNIFICANT
OMISSION OF INCOME IN CONNECTION WITH
FOREIGN ASSETS.

(a) Extension of Statute of Limitations.–
(1) In general.–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:
“(A) General <> rule.–If the
taxpayer omits from gross income an amount properly
includible therein and–
“(i) such amount is in excess of 25 percent
of the amount of gross income stated in the
return, or
“(ii) such amount–
“(I) 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
“(II) is in excess of $5,000,
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.”.
(2) Conforming amendments.–

[[Page 124 STAT. 112]]

(A) 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:
“(B) Determination of gross income.–For purposes
of subparagraph (A)–”.
(B) Paragraph (2) of section 6229(c) is amended by
striking “which is in excess of 25 percent of the
amount of gross income stated in its return” and
inserting “and such amount is described in clause (i)
or (ii) of section 6501(e)(1)(A)”.

(b) Additional Reports Subject to Extended Period.–Paragraph (8) of
section 6501(c) is amended–
(1) by inserting “pursuant to an election under section
1295(b) or” before “under section 6038”,
(2) by inserting “1298(f),” before “6038”, and
(3) by inserting “6038D,” after “6038B,”.

(c) Clarifications Related to Failure To Disclose Foreign
Transfers.–Paragraph (8) of section 6501(c) is amended by striking
“event” and inserting “tax return, event,”.
(d) Effective <> Date.–The
amendments made by this section shall apply to–
(1) returns filed after the date of the enactment of this
Act; and
(2) returns filed on or before such date if the period
specified in section 6501 of the Internal Revenue Code of 1986
(determined without regard to such amendments) for assessment of
such taxes has not expired as of such date.

PART III–OTHER DISCLOSURE PROVISIONS

SEC. 521. REPORTING OF ACTIVITIES WITH RESPECT TO PASSIVE FOREIGN
INVESTMENT COMPANIES.

(a) In General.–Section 1298 is amended by redesignating subsection
(f) as subsection (g) and by inserting after subsection (e) the
following new subsection:
“(f) Reporting Requirement.–Except as otherwise provided by the
Secretary, each United States person who is a shareholder of a passive
foreign investment company shall file an annual report containing such
information as the Secretary may require.”.
(b) Conforming Amendment.–Subsection (e) of section 1291 is amended
by striking “, (d), and (f)” and inserting “and (d)”.
(c) <> Effective Date.–The amendments
made by this section take effect on the date of the enactment of this
Act.
SEC. 522. SECRETARY PERMITTED TO REQUIRE FINANCIAL INSTITUTIONS TO
FILE CERTAIN RETURNS RELATED TO
WITHHOLDING ON FOREIGN TRANSFERS
ELECTRONICALLY.

(a) In General.–Subsection (e) of section 6011 is amended by adding
at the end the following new paragraph:
“(4) Special rule for returns filed by financial
institutions with respect to withholding on foreign transfers.–
The numerical limitation under 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).”.

[[Page 124 STAT. 113]]

(b) Conforming Amendment.–Subsection (c) of section <> 6724 is amended by inserting “or with respect to a return
described in section 6011(e)(4)” before the end period.

(c) Effective <> Date.–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.

PART IV–PROVISIONS RELATED TO FOREIGN TRUSTS

SEC. 531. CLARIFICATIONS WITH RESPECT TO FOREIGN TRUSTS WHICH ARE
TREATED AS HAVING A UNITED STATES
BENEFICIARY.

(a) In General.–Paragraph (1) of section 679(c) is amended by
adding at the end the following:
“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.”.

(b) Clarification Regarding Discretion To Identify Beneficiaries.–
Subsection (c) of section 679 is amended by adding at the end the
following new paragraph:
“(4) Special rule in case of discretion to identify
beneficiaries.–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–
“(A) the terms of the trust specifically identify
the class of persons to whom such distributions may be
made, and
“(B) none of those persons are United States
persons during the taxable year.”.

(c) Clarification That Certain Agreements and Understandings Are
Terms of the Trust.–Subsection (c) of section 679, as amended by
subsection (b), is amended by adding at the end the following new
paragraph:
“(5) Certain agreements and understandings treated as terms
of the trust.–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.”.
SEC. 532. PRESUMPTION THAT FOREIGN TRUST HAS UNITED STATES
BENEFICIARY.

(a) In General.–Section 679 is amended by redesignating subsection
(d) as subsection (e) and inserting after subsection (c) the following
new subsection:
“(d) Presumption That Foreign Trust Has United States
Beneficiary.–If a United States person directly or indirectly transfers
property to a foreign trust (other than a trust described in

[[Page 124 STAT. 114]]

section 6048(a)(3)(B)(ii)), the Secretary may treat such trust as having
a United States beneficiary for purposes of applying this section to
such transfer unless such person–
“(1) submits such information to the Secretary as the
Secretary may require with respect to such transfer, and
“(2) demonstrates to the satisfaction of the Secretary that
such trust satisfies the requirements of subparagraphs (A) and
(B) of subsection (c)(1).”.

(b) Effective <> Date.–The
amendments made by this section shall apply to transfers of property
after the date of the enactment of this Act.
SEC. 533. UNCOMPENSATED USE OF TRUST PROPERTY.

(a) In General.–Paragraph (1) of section <> 643(i) is amended–
(1) by striking “directly or indirectly to” and inserting
“(or permits the use of any other trust property) directly or
indirectly to or by”, and
(2) by inserting “(or the fair market value of the use of
such property)” after “the amount of such loan”.

(b) Exception for Compensated Use.–Paragraph (2) of section 643(i)
is amended by adding at the end the following new subparagraph:
“(E) Exception for compensated use of property.–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.”.

(c) Application to Grantor Trusts.–Subsection (c) of section 679,
as amended by this Act, is amended by adding at the end the following
new paragraph:
“(6) Uncompensated use of trust property treated as a
payment.–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.”.

(d) Conforming Amendments.–Paragraph (3) of section 643(i) is
amended–
(1) by inserting “(or use of property)” after “If any
loan”,
(2) by inserting “or the return of such property” before
“shall be disregarded”, and
(3) by striking “regarding loan principal” in the heading
thereof.

(e) Effective <> Date.–The
amendments made by this section shall apply to loans made, and uses of
property, after the date of the enactment of this Act.
SEC. 534. REPORTING REQUIREMENT OF UNITED STATES OWNERS OF FOREIGN
TRUSTS.

(a) In General.–Paragraph (1) of section 6048(b) is amended by
inserting “shall submit such information as the Secretary may

[[Page 124 STAT. 115]]

prescribe with respect to such trust for such year and” before “shall
be responsible to ensure”.
(b) Effective <> Date.–The
amendment made by this section shall apply to taxable years beginning
after the date of the enactment of this Act.
SEC. 535. MINIMUM PENALTY WITH RESPECT TO FAILURE TO REPORT ON
CERTAIN FOREIGN TRUSTS.

(a) In General.–Subsection (a) of section <> 6677 is amended–
(1) by inserting “the greater of $10,000 or” before “35
percent”, and
(2) by striking the last sentence and inserting the
following: “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).”

(b) Effective <> Date.–The
amendments made by this section shall apply to notices and returns
required to be filed after December 31, 2009.

PART V–SUBSTITUTE DIVIDENDS AND DIVIDEND EQUIVALENT PAYMENTS RECEIVED
BY FOREIGN PERSONS TREATED AS DIVIDENDS

SEC. 541. SUBSTITUTE DIVIDENDS AND DIVIDEND EQUIVALENT PAYMENTS
RECEIVED BY FOREIGN PERSONS TREATED AS
DIVIDENDS.

(a) In General.–Section 871 is amended by redesignating subsection
(l) as subsection (m) and by inserting after subsection (k) the
following new subsection:
“(l) Treatment <> of Dividend Equivalent
Payments.–
“(1) In general.–For purposes of subsection (a), 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.
“(2) Dividend equivalent.–For purposes of this subsection,
the term `dividend equivalent’ means–
“(A) any substitute dividend made pursuant to a
securities lending or a sale-repurchase transaction that
(directly or indirectly) is contingent upon, or
determined by reference to, the payment of a dividend
from sources within the United States,
“(B) any payment made pursuant to a specified
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
“(C) any other payment determined by the Secretary
to be substantially similar to a payment described in
subparagraph (A) or (B).

[[Page 124 STAT. 116]]

“(3) Specified notional principal contract.–For purposes
of this subsection, the term `specified notional principal
contract’ means–
“(A) any notional principal contract if–
“(i) in connection with entering into such
contract, any long party to the contract transfers
the underlying security to any short party to the
contract,
“(ii) in connection with the termination of
such contract, any short party to the contract
transfers the underlying security to any long
party to the contract,
“(iii) the underlying security is not readily
tradable on an established securities market,
“(iv) in connection with entering into such
contract, the underlying security is posted as
collateral by any short party to the contract with
any long party to the contract, or
“(v) such contract is identified by the
Secretary as a specified notional principal
contract,
“(B) in the case of payments made after the date
which is 2 years after the date of the enactment of this
subsection, any notional principal contract unless the
Secretary determines that such contract is of a type
which does not have the potential for tax avoidance.
“(4) Definitions.–For purposes of paragraph (3)(A)–
“(A) Long party.–The term `long party’ means, with
respect to any underlying security of any notional
principal contract, any party to the contract which is
entitled to receive any payment pursuant to such
contract which is contingent upon, or determined by
reference to, the payment of a dividend from sources
within the United States with respect to such underlying
security.
“(B) Short party.–The term `short party’ means,
with respect to any underlying security of any notional
principal contract, any party to the contract which is
not a long party with respect to such underlying
security.
“(C) Underlying security.–The term `underlying
security’ means, with respect to any notional principal
contract, the security with respect to which the
dividend referred to in paragraph (2)(B) is paid. For
purposes of this paragraph, any index or fixed basket of
securities shall be treated as a single security.
“(5) Payments determined on gross basis.–For purposes of
this subsection, the term `payment’ includes any gross amount
which is used in computing any net amount which is transferred
to or from the taxpayer.
“(6) Prevention of over-withholding.–In the case of any
chain of dividend equivalents one or more of which is subject to
tax under subsection (a) or section 881, the Secretary may
reduce such tax, but only to the extent that the taxpayer can
establish that such tax has been paid with respect to another
dividend equivalent in such chain, or is not otherwise due, or
as the Secretary determines is appropriate to address the role
of financial intermediaries in such chain. For purposes of this
paragraph, a dividend shall be treated as a dividend equivalent.
“(7) Coordination <> with chapters 3 and
4.–For purposes of chapters 3 and 4, each person that is a
party to any contract

[[Page 124 STAT. 117]]

or other arrangement that provides for the payment of a dividend
equivalent shall be treated as having control of such
payment.”.

(b) Effective <> Date.–The
amendments made by this section shall apply to payments made on or after
the date that is 180 days after the date of the enactment of this Act.

Subtitle B–Delay in Application of Worldwide Allocation of Interest

SEC. 551. DELAY IN APPLICATION OF WORLDWIDE ALLOCATION OF
INTEREST.

(a) In General.–Paragraphs (5)(D) and (6) of <> section 864(f) are each amended by striking “December 31, 2017”
and inserting “December 31, 2020”.

(b) Effective <> Date.–The amendments made
by this section shall take effect on the date of the enactment of this
Act.

Subtitle C–Budgetary Provisions

SEC. 561. TIME <> FOR PAYMENT OF
CORPORATE ESTIMATED TAXES.

Notwithstanding section 6655 of the Internal Revenue Code of 1986,
in the case of a corporation with assets of not less than $1,000,000,000
(determined as of the end of the preceding taxable year)–
(1) the percentage under paragraph (1) of section 202(b) of
the Corporate Estimated Tax Shift Act of 2009 in effect on the
date of the enactment of this Act is increased by 23 percentage
points,
(2) the amount of any required installment of corporate
estimated tax which is otherwise due in July, August, or
September of 2015 shall be 121.5 percent of such amount,
(3) the amount of any required installment of corporate
estimated tax which is otherwise due in July, August, or
September of 2019 shall be 106.5 percent of such amount, and
(4) the amount of the next required installment after an
installment referred to in paragraph (2) or (3) shall be
appropriately reduced to reflect the amount of the increase by
reason of such paragraph.
SEC. 562. PAYGO COMPLIANCE.

The budgetary effects of this Act, for purposes of complying with
the Statutory Pay-As-You-Go-Act of 2010, shall be determined by
reference to the latest statement titled “Budgetary Effects of PAYGO
Legislation” for this Act, jointly submitted for printing in the
Congressional Record by the Chairman of the House and Senate Budget
Committees, provided that such statement has been

[[Page 124 STAT. 118]]

submitted prior to the vote on passage in the House acting first on this
conference report or amendments between the Houses.

Approved March 18, 2010.

LEGISLATIVE HISTORY–H.R. 2847:
—————————————————————————

HOUSE REPORTS: No. 111-149 (Comm. on Appropriations).
SENATE REPORTS: No. 111-34 (Comm. on Appropriations).
CONGRESSIONAL RECORD:
Vol. 155 (2009):
June 16-18, considered and passed
House.
Oct. 7, 8, 13, Nov. 5, considered
and passed Senate, amended.
Dec. 16, House concurred in Senate
amendment with an amendment.
Vol. 156 (2010):
Feb. 11, 22-24, Senate considered
and concurred in House amendment
with an amendment.
Mar. 4, House concurred in Senate
amendment with an amendment.
Mar. 11, 15, 17, Senate considered
and concurred in House
amendment.
DAILY COMPILATION OF PRESIDENTIAL DOCUMENTS (2010):
Mar. 18, Presidential remarks.

 

___________________________________________________________________
  Appendix B – Full text of Meadows bill

The full text of Meadows bill is here. You will see that what it does is to reverse (section by section) the HIRE Act amendments to the Internal Revenue Code. It converts the Internal Revenue Code to what it was before FATCA.

A BILL

To repeal the violation of sovereign nations’ laws and privacy matters.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

SECTION 1. REPEAL OF WITHHOLDING AND REPORTING WITH RESPECT TO CERTAIN
FOREIGN ACCOUNTS.

(a) In General.–The Internal Revenue Code of 1986 is amended by
striking chapter 4.
(b) Conforming Amendments for Rules for Electronically Filed
Returns.–Section 6011(e)(4) of such Code is amended–
(1) by striking “(as defined in section 1471(d)(5))” and
inserting “(as defined in section 6038D(h)(3))”, and
(2) by striking “or 1474(a)”.
(c) Conforming Amendment Related to Substitute Dividends.–Section
871(l) of such Code is amended by striking “chapters 3 and 4” both
places it appears and inserting “chapter 3”.
(d) Other Conforming Amendments.–
(1) Section 6414 of such Code is amended by striking “or
4”.
(2) Paragraph (1) of section 6501(b) of such Code is
amended by striking “4,”.
(3) Paragraph (2) of section 6501(b) of such Code is
amended–
(A) by striking “4,”, and
(B) by striking “and witholding taxes” in the
heading and inserting “taxes and tax imposed by
chapter 3”.
(4) Paragraph (3) of section 6513(b) of such Code is
amended–
(A) by striking “or 4”, and
(B) by striking “or 1474(b)”.
(5) Section 6513(c) of such Code is amended by striking
“4,”.
(6) Section 6611(e)(4) of such Code is amended by striking
“or 4”.
(7) Paragraph (1) of section 6724(d) of such Code is
amended by striking “under chapter 4 or”.
(8) Paragraph (2) of section 6724(d) of such Code is
amended by striking “or 4”.
(e) Effective Date.–The amendments made by this section shall
apply to payments made after the date of the enactment of this Act.

SEC. 2. REPEAL OF INFORMATION REPORTING WITH RESPECT TO FOREIGN
FINANCIAL ASSETS.

(a) In General.–Subpart A of part III of subchapter A of chapter
61 of the Internal Revenue Code of 1986 is amended by striking section
6038D.
(b) Repeal of Modification of Statute of Limitations for
Significant Omission of Income in Connection With Foreign Assets.–
(1) Paragraph (1) of section 6501(e) of the Internal
Revenue Code of 1986 is amended by striking subparagraph (A)
and by redesignating subparagraphs (B) and (C) as subparagraphs
(A) and (B), respectively.
(2) Subparagraph (A) of section 6501(e) of such Code, as
redesignated by paragraph (1), is amended by striking all that
precedes clause (i) and inserting the following:
“(A) General rule.–If the taxpayer omits from
gross income an amount properly included therein which
is in excess of 25 percent of the amount of gross
income stated in the return, the tax may be assessed,
or a proceeding in court for the collection of such tax
may be begun without assessment, at any time within 6
years after the return was filed. For purposes of this
subparagraph–”.
(3) Paragraph (2) of section 6501(e) of such Code is
amended by striking “and such amount is described in clause
(i) or (ii) of section 6501(e)(1)(A)” and inserting “which is
in excess of 25 percent of the amount of gross income stated in
its return”.
(4) Paragraph (8) of section 6501(c) of such Code is
amended–
(A) by striking “pursuant to an election under
section 1295(b) or”,
(B) by striking “1298(f)”, and
(C) by striking “6038D,”.
(c) Clerical Amendment.–The table of sections for subpart A of
part III of subchapter A of chapter 61 of such Code is amended by
striking the item related to section 6038D.
(d) Effective Date.–
(1) In general.–Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
ending after the date of the enactment of this Act.
(2) Returns.–The amendments made by subsection (b) shall
apply to returns filed after the date of the enactment of this
Act.

SEC. 3. REPEAL OF PENALTIES FOR UNDERPAYMENTS ATTRIBUTABLE TO
UNDISCLOSED FOREIGN FINANCIAL ASSETS.

(a) In General.–Section 6662 of the Internal Revenue Code of 1986
is amended–
(1) in subsection (b), by striking paragraph (7), and
(2) by striking subsection (j).
(b) Effective Date.–The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.

SEC. 4. REPEAL OF REPORTING OF ACTIVITIES WITH RESPECT TO PASSIVE
FOREIGN INVESTMENT COMPANIES.

(a) In General.–Section 1298 of the Internal Revenue Code of 1986
is amended by striking subsection (f) and by redesignating subsection
(g) as subsection (f).
(b) Conforming Amendment.–Section 1291(e) of such Code is amended
by striking “and (d)” and inserting “, (d), and (f)”.
(c) Effective Date.–The amendments made by this section shall take
effect on the date of the enactment of this Act.

SEC. 5. REPEAL OF REPORTING REQUIREMENT FOR UNITED STATES OWNERS OF
FOREIGN TRUSTS.

(a) In General.–Paragraph (1) of section 6048(b) of the Internal
Revenue Code of 1986 is amended by striking “shall submit such
information as the Secretary may prescribe with respect to such trust
for such year and”.
(b) Effective Date.–The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.

SEC. 6. REPEAL OF MINIMUM PENALTY WITH RESPECT TO FAILURE TO REPORT ON
CERTAIN FOREIGN TRUSTS.

(a) In General.–Section 6677(a) of the Internal Revenue Code of
1986 is amended–
(1) by striking “the greater of $10,000 or”, and
(2) by striking the last sentence and inserting the
following: “In no event shall the penalty under this
subsection with respect to any failure exceed the gross
reportable amount.”.
(b) Effective Date.–The amendments made by this section shall
apply to notices and returns required to be filed after the date of the
enactment of this Act.

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