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HR 6700 IH
112th CONGRESS
2d Session
H. R. 6700
To amend the Internal Revenue Code of 1986 to disallow deductions for the payment of punitive damages, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
December 20, 2012
Mr. WELCH (for himself, Mr. CONNOLLY of Virginia, and Ms. LEE of California) introduced the following bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to disallow deductions for the payment of punitive damages, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
SEC. 2. TREATMENT OF PAYMENTS FOR PUNITIVE DAMAGES.
(a) Disallowance of Deduction for Punitive Damages-
(1) IN GENERAL- Section 162(g) of the Internal Revenue Code of 1986 is amended--
(A) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively,
(B) by striking ‘If’ and inserting:
‘(1) TREBLE DAMAGES- If’, and
‘(2) PUNITIVE DAMAGES- No deduction shall be allowed under this chapter for any amount paid or incurred for punitive damages in connection with any judgment in, or settlement of, any action. This paragraph shall not apply to punitive damages described in section 104(c).’.
(2) CONFORMING AMENDMENT- The heading for section 162(g) of such Code is amended by inserting ‘and Punitive Damages’ after ‘Laws’.
(b) Inclusion in Income of Punitive Damages Paid by Insurer or Otherwise-
(1) IN GENERAL- Part II of subchapter B of chapter 1 of such Code is amended by adding at the end the following new section:
‘SEC. 91. PUNITIVE DAMAGES COMPENSATED BY INSURANCE OR OTHERWISE.
‘Gross income shall include any amount paid to or on behalf of a taxpayer as insurance or otherwise by reason of the taxpayer’s liability (or agreement) to pay punitive damages.’.
(2) REPORTING REQUIREMENTS- Section 6041 of such Code is amended by redesignating subsection (j) as subsection (k) and by inserting after subsection (i) the following new subsection:
‘(j) Section To Apply to Punitive Damages Compensation- This section shall apply to payments by a person to or on behalf of another person as insurance or otherwise by reason of the other person’s liability (or agreement) to pay punitive damages.’.
(3) CONFORMING AMENDMENT- The table of sections for part II of subchapter B of chapter 1 of such Code is amended by adding at the end the following new item:
‘Sec. 91. Punitive damages compensated by insurance or otherwise.’.
(c) Effective Date- The amendments made by this section shall apply to damages paid or incurred after December 31, 2012.
U.S. Congress - Text of H.R.6700 as Introduced in House Stop Deducting Damages Act of 2012
