Senators Barack Obama (D-IL)), Norm Coleman (R-MN) and Carl Levin (D-MI) have introduced a bill designed to crack down on the use of offshore jurisdictions as tax havens and toughen penalties for abusive shelter transactions.

The bill, S. 681, would establish a list of 34 "Offshore Secrecy Jurisdictions" and authorize the Treasury Department to impose sanctions on foreign jurisdictions found to be impeding the enforcement of U.S. tax laws.

Also included is a prohibition against tax shelter patents and a requirement that transactions must have a meaningful economic substance other than tax avoidance (as an aside, codifying the economic substance doctrine has been in some 51 bills since 1999, seven of which have seen committee or floor action—IRS, among others, has not looked favorably on the notion).

Targeting tax preparers, the bill would prohibit charging fees contingent upon tax savings or refund size.