S 2994 ISCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to impose an excise tax on excessive 2009 bonuses received from certain major recipients of Federal emergency economic assistance, to limit the deduction allowable for such bonuses, and for other purposes.CommentsClose CommentsPermalink

February 4, 2010CommentsClose CommentsPermalink

Mrs. BOXER (for herself and Mr. WEBB) introduced the following bill; which was read twice and referred to the Committee on FinanceCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to impose an excise tax on excessive 2009 bonuses received from certain major recipients of Federal emergency economic assistance, to limit the deduction allowable for such bonuses, and for other purposes.CommentsClose CommentsPermalink

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

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Taxpayer Fairness Act’.CommentsClose CommentsPermalink

SEC. 2. FINDINGS.

Congress finds the following:CommentsClose CommentsPermalink





(1) During the years 2008 and 2009, the Nation’s largest financial firms received extraordinary and unprecedented assistance from the public.CommentsClose CommentsPermalink





(2) Such assistance was critical to the success and in many cases the survival of these firms during the year 2009.CommentsClose CommentsPermalink





(3) High earners at such firms should contribute a portion of any excessive bonuses obtained for the year 2009 to help the Nation reduce the public debt and recover from the recession.CommentsClose CommentsPermalink

SEC. 3. EXCISE TAXES ON EXCESSIVE 2009 BONUSES RECEIVED FROM MAJOR RECIPIENTS OF FEDERAL EMERGENCY ECONOMIC ASSISTANCE.

(a) Imposition of Tax- Chapter 46 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:CommentsClose CommentsPermalink

‘SEC. 4999A. EXCESSIVE 2009 BONUSES RECEIVED FROM MAJOR RECIPIENTS OF FEDERAL EMERGENCY ECONOMIC ASSISTANCE.

‘(a) Imposition of Tax- There is hereby imposed on any person who receives a covered excessive 2009 bonus a tax equal to 50 percent of the amount of such bonus.CommentsClose CommentsPermalink





‘(b) Definition- For purposes of this section, the term ‘covered excessive 2009 bonus’ has the meaning given such term by section 280I(b).CommentsClose CommentsPermalink





‘(c) Administrative Provisions and Special Rules-CommentsClose CommentsPermalink





‘(1) WITHHOLDING-CommentsClose CommentsPermalink





‘(A) IN GENERAL- In the case of any covered excessive 2009 bonus which is treated as wages for purposes of section 3402, the amount otherwise required to be deducted and withheld under such section shall be increased by the amount of the tax imposed by this section on such bonus.CommentsClose CommentsPermalink





‘(B) BONUSES PAID BEFORE ENACTMENT- In the case of any covered excessive 2009 bonus to which subparagraph (A) applies which is paid before the date of the enactment of this section, no penalty, addition to tax, or interest shall be imposed with respect to any failure to deduct and withhold the tax imposed by this section on such bonus.CommentsClose CommentsPermalink





‘(2) TREATMENT OF TAX- For purposes of subtitle F, any tax imposed by this section shall be treated as a tax imposed by subtitle A.CommentsClose CommentsPermalink





‘(3) NOTICE REQUIREMENTS- The Secretary shall require each major Federal emergency economic assistance recipient (as defined in section 280I(d)(1)) to notify, as soon as practicable after the date of the enactment of this section and at such other times as the Secretary determines appropriate, the Secretary and each covered employee (as defined in section 280I(e)) of the amount of covered excessive 2009 bonuses to which this section applies and the amount of tax deducted and withheld on such bonuses.CommentsClose CommentsPermalink





‘(4) SECRETARIAL AUTHORITY- The Secretary may prescribe such regulations, rules, and guidance of general applicability as may be necessary to carry out the provisions of this section, including--CommentsClose CommentsPermalink





‘(A) to prescribe the due date and manner of payment of the tax imposed by this section with respect to any covered excessive 2009 bonus paid before the date of the enactment of this section, andCommentsClose CommentsPermalink





‘(B) to prevent--CommentsClose CommentsPermalink





‘(i) the recharacterization of a bonus payment as a payment which is not a bonus payment in order to avoid the purposes of this section,CommentsClose CommentsPermalink





‘(ii) the treatment as other than an additional 2009 bonus payment of any payment of increased wages or other payments to a covered employee who receives a bonus payment subject to this section in order to reimburse such covered employee for the tax imposed by this section with regard to such bonus, orCommentsClose CommentsPermalink





‘(iii) the avoidance of the purposes of this section through the use of partnerships or other pass-thru entities.’.CommentsClose CommentsPermalink





(b) Clerical Amendments-CommentsClose CommentsPermalink





(1) The heading and table of sections for chapter 46 of the Internal Revenue Code of 1986 are amended to read as follows:CommentsClose CommentsPermalink

‘Chapter 46--Taxes on Certain Excessive Remuneration

‘Sec. 4999. Golden parachute payments.CommentsClose CommentsPermalink





‘Sec. 4999A. Excessive 2009 bonuses received from major recipients of Federal emergency economic assistance.’.CommentsClose CommentsPermalink





(2) The item relating to chapter 46 in the table of chapters for subtitle D of such Code is amended to read as follows:CommentsClose CommentsPermalink





‘Chapter 46. Taxes on certain excessive remuneration.’.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to payments of covered excessive 2009 bonuses after December 31, 2008, in taxable years ending after such date.CommentsClose CommentsPermalink

SEC. 4. LIMITATION ON DEDUCTION OF AMOUNTS PAID AS EXCESSIVE 2009 BONUSES BY MAJOR RECIPIENTS OF FEDERAL EMERGENCY ECONOMIC ASSISTANCE.

(a) In General- Part IX of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:CommentsClose CommentsPermalink

‘SEC. 280I. EXCESSIVE 2009 BONUSES PAID BY MAJOR RECIPIENTS OF FEDERAL EMERGENCY ECONOMIC ASSISTANCE.

‘(a) General Rule- The deduction allowed under this chapter with respect to the amount of any covered excessive 2009 bonus shall not exceed 50 percent of the amount of such bonus.CommentsClose CommentsPermalink





‘(b) Covered Excessive 2009 Bonus- For purposes of this section, the term ‘covered excessive 2009 bonus’ means any 2009 bonus payment paid during any calendar year to a covered employee by any major Federal emergency economic assistance recipient, to the extent that the aggregate of such 2009 bonus payments (without regard to the date on which such payments are paid) with respect to such employee exceeds the dollar amount of the compensation received by the President under section 102 of title 3, United States Code, for calendar year 2009.CommentsClose CommentsPermalink





‘(c) 2009 Bonus Payment-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The term ‘2009 bonus payment’ means any payment which--CommentsClose CommentsPermalink





‘(A) is a payment for services rendered,CommentsClose CommentsPermalink





‘(B) is in addition to any amount payable to a covered employee for services performed by such covered employee at a regular hourly, daily, weekly, monthly, or similar periodic rate,CommentsClose CommentsPermalink





‘(C) in the case of a retention bonus, is paid for continued service during calendar year 2009 or 2010, andCommentsClose CommentsPermalink





‘(D) in the case of a payment not described in subparagraph (C), is attributable to services performed by a covered employee during calendar year 2009 (without regard to the year in which such payment is paid).CommentsClose CommentsPermalink





Such term does not include payments to an employee as commissions, contributions to any qualified retirement plan (as defined in section 4974(c)), welfare and fringe benefits, overtime pay, or expense reimbursements. In the case of a payment which is attributable to services performed during multiple calendar years, such payment shall be treated as a 2009 bonus payment to the extent it is attributable to services performed during calendar year 2009.CommentsClose CommentsPermalink





‘(2) DEFERRED DEDUCTION BONUS PAYMENTS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘2009 bonus payment’ includes payments attributable to services performed in 2009 which are paid in the form of remuneration (within the meaning of section 162(m)(4)(E)) for which the deduction under this chapter (determined without regard to this section) for such payment is allowable in a subsequent taxable year.CommentsClose CommentsPermalink





‘(B) TIMING OF DEFERRED DEDUCTION BONUS PAYMENTS- For purposes of this section and section 4999A, the amount of any payment described in subparagraph (A) (as determined in the year in which the deduction under this chapter, determined without regard to this section, for such payment would be allowable) shall be treated as having been made in the calendar year in which any interest in such amount is granted to a covered employee (without regard to the date on which any portion of such interest vests).CommentsClose CommentsPermalink





‘(3) RETENTION BONUS- The term ‘retention bonus’ means any bonus payment (without regard to the date such payment is paid) to a covered employee which--CommentsClose CommentsPermalink





‘(A) is contingent on the completion of a period of service with a major Federal emergency economic assistance recipient, the completion of a specific project or other activity for the major Federal emergency economic assistance recipient, or such other circumstances as the Secretary may prescribe, andCommentsClose CommentsPermalink





‘(B) is not based on the performance of the covered employee (other than a requirement that the employee not be separated from employment for cause).CommentsClose CommentsPermalink





A bonus payment shall not be treated as based on performance for purposes of subparagraph (B) solely because the amount of the payment is determined by reference to a previous bonus payment which was based on performance.CommentsClose CommentsPermalink





‘(d) Major Federal Emergency Economic Assistance Recipient- For purposes of this section--CommentsClose CommentsPermalink





‘(1) IN GENERAL- The term ‘major Federal emergency economic assistance recipient’ means--CommentsClose CommentsPermalink





‘(A) any financial institution (within the meaning of section 3 of the Emergency Economic Stabilization Act of 2008) if at any time after December 31, 2007, the Federal Government acquires--CommentsClose CommentsPermalink





‘(i) an equity interest in such person pursuant to a program authorized by the Emergency Economic Stabilization Act of 2008 or the third undesignated paragraph of section 13 of the Federal Reserve Act (12 U.S.C. 343), orCommentsClose CommentsPermalink





‘(ii) any warrant (or other right) to acquire any equity interest with respect to such person pursuant to any such program,CommentsClose CommentsPermalink





but only if the total value of the equity interest described in clauses (i) and (ii) in such person is not less than $5,000,000,000,CommentsClose CommentsPermalink





‘(B) the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, andCommentsClose CommentsPermalink





‘(C) any person which is a member of the same affiliated group (as defined in section 1504, determined without regard to subsection (b) thereof) as a person described in subparagraph (A) or (B).CommentsClose CommentsPermalink





‘(2) TREATMENT OF CONTROLLED GROUPS- All persons treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as a single employer with respect to any covered employee.CommentsClose CommentsPermalink





‘(e) Covered Employee- For purposes of this section, the term ‘covered employee’ means, with respect to any major Federal emergency economic assistance recipient--CommentsClose CommentsPermalink





‘(1) any employee of such recipient, andCommentsClose CommentsPermalink





‘(2) any director of such recipient who is not an employee.CommentsClose CommentsPermalink





In the case of any major Federal emergency economic assistance recipient which is a partnership or other unincorporated trade or business, the term ‘employee’ shall include employees of such recipient within the meaning of section 401(c)(1).CommentsClose CommentsPermalink





‘(f) Regulations- The Secretary may prescribe such regulations, rules, and guidance of general applicability as may be necessary to carry out the provisions of this section, including--CommentsClose CommentsPermalink





‘(1) to prescribe the due date and manner of reporting and payment of any increase in the tax imposed by this chapter due to the application of this section to any covered excessive 2009 bonus paid before the date of the enactment of this section, andCommentsClose CommentsPermalink





‘(2) to prevent--CommentsClose CommentsPermalink





‘(A) the recharacterization of a bonus payment as a payment which is not a bonus payment in order to avoid the purposes of this section, orCommentsClose CommentsPermalink





‘(B) the avoidance of the purposes of this section through the use of partnerships or other pass-thru entities.’.CommentsClose CommentsPermalink





(b) Clerical Amendment- The table of sections for part IX of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:CommentsClose CommentsPermalink





‘Sec. 280I. Excessive 2009 bonuses paid by major recipients of Federal emergency economic assistance.’.CommentsClose CommentsPermalink





(c) Conforming Amendments-CommentsClose CommentsPermalink





(1) Subparagraph (F) of section 162(m)(4) of the Internal Revenue Code of 1986 is amended--CommentsClose CommentsPermalink





(A) by inserting ‘AND EXCESSIVE 2009 BONUSES’ after ‘PAYMENTS’ in the heading,CommentsClose CommentsPermalink





(B) by striking ‘the amount’ and inserting ‘the total amounts’, andCommentsClose CommentsPermalink





(C) by inserting ‘or 280I’ before the period.CommentsClose CommentsPermalink





(2) Subparagraph (A) of section 3121(v)(2) of such Code is amended by inserting ‘, to any covered excessive 2009 bonus (as defined in section 280I(b)),’ after ‘section 280G(b))’.CommentsClose CommentsPermalink





(d) Effective Date- The amendments made by this section shall apply to payments of covered excessive 2009 bonuses after December 31, 2008, in taxable years ending after such date.CommentsClose CommentsPermalink