111TH CONGRESS 

1ST SESSION H. R. 1586 

AN ACT 

To impose an additional tax on bonuses received from certain 

TARP recipients. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 
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1 SECTION 1. BONUSES RECEIVED FROM CERTAIN TARP RE2 CIPIENTS. 

3 (a) IN GENERAL.—In the case of an employee or 

4 former employee of a covered TARP recipient, the tax im5 posed by chapter 1 of the Internal Revenue Code of 1986 

6 for any taxable year shall not be less than the sum of— 

7 (1) the tax that would be determined under 

8 such chapter if the taxable income of the taxpayer 

9 for such taxable year were reduced (but not below 

10 zero) by the TARP bonus received by the taxpayer 

11 during such taxable year, plus 

12 (2) 90 percent of the TARP bonus received by 

13 the taxpayer during such taxable year. 

14 (b) TARP BONUS.—For purposes of this section— 

15 (1) IN GENERAL.—The term ‘‘TARP bonus’’ 

16 means, with respect to any individual for any taxable 

17 year, the lesser of— 

18 (A) the aggregate disqualified bonus pay19 ments received from covered TARP recipients 

20 during such taxable year, or 

21 (B) the excess of— 

22 (i) the adjusted gross income of the 

23 taxpayer for such taxable year, over 

24 (ii) $250,000 ($125,000 in the case of 

25 a married individual filing a separate re26 turn). 
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1 (2) DISQUALIFIED BONUS PAYMENT.— 

2 (A) IN GENERAL.—The term ‘‘disqualified 

3 bonus payment’’ means any retention payment, 

4 incentive payment, or other bonus which is in 

5 addition to any amount payable to such indi6 vidual for service performed by such individual 

7 at a regular hourly, daily, weekly, monthly, or 

8 similar periodic rate. 

9 (B) EXCEPTIONS.—Such term shall not in10 clude commissions, welfare or fringe benefits, or 

11 expense reimbursements. 

12 (C) WAIVER OR RETURN OF PAYMENTS.— 

13 Such term shall not include any amount if the 

14 employee irrevocably waives the employee’s enti15 tlement to such payment, or the employee re16 turns such payment to the employer, before the 

17 close of the taxable year in which such payment 

18 is due. The preceding sentence shall not apply 

19 if the employee receives any benefit from the 

20 employer in connection with the waiver or re21 turn of such payment. 

22 (3) REIMBURSEMENT OF TAX TREATED AS

23 TARP BONUS.—Any reimbursement by a covered 

24 TARP recipient of the tax imposed under subsection 
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1 (a) shall be treated as a disqualified bonus payment 

2 to the taxpayer liable for such tax. 

3 (c) COVERED TARP RECIPIENT.—For purposes of 

4 this section— 

5 (1) IN GENERAL.—The term ‘‘covered TARP 

6 recipient’’ means— 

7 (A) any person who receives after Decem8 ber 31, 2007, capital infusions under the Emer9 gency Economic Stabilization Act of 2008 

10 which, in the aggregate, exceed $5,000,000,000, 

11 (B) the Federal National Mortgage Asso12 ciation and the Federal Home Loan Mortgage 

13 Corporation, 

14 (C) any person who is a member of the 

15 same affiliated group (as defined in section 

16 1504 of the Internal Revenue Code of 1986, de17 termined without regard to paragraphs (2) and 

18 (3) of subsection (b)) as a person described in 

19 subparagraph (A) or (B), and 

20 (D) any partnership if more than 50 per21 cent of the capital or profits interests of such 

22 partnership are owned directly or indirectly by 

23 one or more persons described in subparagraph 

24 (A), (B), or (C). 
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1 (2) EXCEPTION FOR TARP RECIPIENTS WHO

2 REPAY ASSISTANCE.—A person shall be treated as 

3 described in paragraph (1)(A) for any period only 

4 if— 

5 (A) the excess of the aggregate amount of 

6 capital infusions described in paragraph (1)(A) 

7 with respect to such person over the amounts 

8 repaid by such person to the Federal Govern9 ment with respect to such capital infusions, ex10 ceeds 

11 (B) $5,000,000,000. 

12 (d) OTHER DEFINITIONS.—Terms used in this sec13 tion which are also used in the Internal Revenue Code of 

14 1986 shall have the same meaning when used in this sec15 tion as when used in such Code. 

16 (e) COORDINATION WITH INTERNAL REVENUE CODE

17 OF 1986.—Any increase in the tax imposed under chapter 

18 1 of the Internal Revenue Code of 1986 by reason of sub19 section (a) shall not be treated as a tax imposed by such 

20 chapter for purposes of determining the amount of any 

21 credit under such chapter or for purposes of section 55 

22 of such Code. 

23 (f) REGULATIONS.—The Secretary of the Treasury, 

24 or the Secretary’s delegate, shall prescribe such regula-
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1 tions or other guidance as may be necessary or appro2 priate to carry out the purposes of this section. 

3 (g) EFFECTIVE DATE.—This section shall apply to 

4 disqualified bonus payments received after December 31, 

5 2008, in taxable years ending after such date. 

Passed the House of Representatives March 19, 

2009. 

Attest: 

Clerk. 

111TH CONGRESS 

1ST SESSION H. R. 1586 

AN ACT 

To impose an additional tax on bonuses received 

from certain TARP recipients.