Congress formally codified the economic substance doctrine as part of the recently-passed health care legislation. Overall, the long-debated legislation raises the bar to a higher level than the prior judicial formulation of the economic substance doctrine and increases the risk that substantial penalties will be imposed upon taxpayers found to have engaged in transactions lacking economic substance. The legislation adds a new Section 7701(o) to the Internal Revenue Code, which imposes a statutory economic substance test applicable to all transactions and establishes a series of tests that transactions must satisfy to meet the economic substance requirement. In addition, the legislation establishes new penalties applicable to "non-economic substance transactions" and provides that taxpayers may not assert reasonable cause or good faith as a defense to imposition of the new penalties.