I 

111TH CONGRESS 

1ST SESSION H. R. 1801 

To amend the Internal Revenue Code of 1986 to impose a 70 percent 

tax on certain compensation received from certain companies receiving 

Federal bailout funds. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 30, 2009 

Mr. SHERMAN (for himself, Ms. KAPTUR, Mr. FILNER, Mr. KUCINICH, and 

Mr. DEFAZIO) 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 impose 

a 70 percent tax on certain compensation received from 

certain companies receiving Federal bailout funds. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. TAX ON CERTAIN COMPENSATION RECEIVED 

4 FROM CERTAIN COMPANIES RECEIVING 

5 BAILOUT FUNDS. 

6 (a) IN GENERAL.—Subchapter A of chapter 1 of the 

7 Internal Revenue Code of 1986 is amended by adding at 

8 the end the following new part: 


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1 ‘‘PART VIII—CERTAIN COMPENSATION RECEIVED 

2 FROM CERTAIN COMPANIES RECEIVING 

3 BAILOUT FUNDS 

‘‘Sec. 59C. Certain compensation received from certain companies receiving 

bailout funds. 

4 ‘‘SEC. 59C. CERTAIN COMPENSATION RECEIVED FROM CER5 TAIN COMPANIES RECEIVING BAILOUT 

6 FUNDS. 

7 ‘‘(a) IN GENERAL.—In the case of any employee (or 

8 former employee) of a bailout recipient, there is hereby 

9 imposed (in addition to any other tax imposed by this sub10 title) a tax equal to 70 percent of the amount of excess 

11 compensation received by the taxpayer during the taxable 

12 year from any relevant employer. 

13 ‘‘(b) EXCESS COMPENSATION.—For purposes of this 

14 section— 

15 ‘‘(1) IN GENERAL.—The term ‘excess com16 pensation’ means the value of all property paid or 

17 transferred to the employee during the taxable year 

18 (including any loan that is not reasonably secured) 

19 which is in excess of $1,000,000. 

20 ‘‘(2) EXCEPTIONS.—Such term shall not in21 clude any of the following: 

22 ‘‘(A) Any amount returned by the em23 ployee to the employer within 60 days of receipt 

24 thereof or within 60 days of the enactment of 


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1 this Act, whichever is later. Any amount re2 turned under this subparagraph shall also be 

3 excluded from the definition of gross income. 

4 ‘‘(B) To the extent explicitly allowed by 

5 any regulation adopted by the Secretary, shares 

6 of common stock of the employer (or any affil7 iate thereof) but only if the employee is re8 quired to hold such shares until the date on 

9 which the employer ceases to be a relevant em10 ployer. 

11 ‘‘(C) Any amount received before the em12 ployer became a relevant employer or after the 

13 employer ceases to be a relevant employer, 

14 whether or not for services provided during the 

15 period when the employer was classified as a 

16 relevant employer, but this provision shall not 

17 apply if the payment is made out of assets 

18 which were held in trusts, or otherwise made 

19 unavailable to the claims of general creditors. 

20 ‘‘(D) Any commission received by a com21 missioned sales person. For purposes of this 

22 subparagraph, a commission is an amount of 

23 compensation payable determinable solely by 

24 reference to the products sold by the commis25 sioned sales person through direct interaction 


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1 with purchasers. For purposes of this subpara2 graph, a commissioned sales person is a person 

3 who receives commissions, who spends the ma4 jority of their work time selling products di5 rectly to purchasers, and who is not one of the 

6 persons defined in Rule 16a1–(f) promulgated 

7 under the Securities Exchange Act of 1934. 

8 ‘‘(3) SPECIAL RULES FOR CERTAIN TRUSTS.— 

9 In the event that a relevant employer puts funds for 

10 the benefit of an employee, or a class of employees, 

11 in a trust fund (other than a qualified deferred com12 pensation plan) or other device, which fund is ex13 empt from the claims of the relevant employer’s gen14 eral creditors, it shall be deemed paid to the employ15 ees for whom it is being held. 

16 ‘‘(c) RELEVANT EMPLOYER.—For purposes of this 

17 section, the term ‘relevant employer’ means any entity (in18 cluding any subsidiary or affiliate of such entity) that has 

19 received, in the aggregate, more than $500,000,000 pur20 suant to title I of the Emergency Economic Stabilization 

21 Act of 2008 or pursuant to section 1117 of the Housing 

22 and Economic Recovery Act of 2008, regardless of wheth23 er such funds are received in return for any class of securi24 ties of the employer or any other asset. An employer 


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1 ceases to be a relevant employer when it has fully repaid 

2 to the Federal Government all such funds. 

3 ‘‘(d) REGULATIONS.—The Secretary shall prescribe 

4 such regulations or other guidance as may be necessary 

5 or appropriate to carry out the purposes of this section.’’. 

6 (b) CLERICAL AMENDMENT.—The table of parts for 

7 subchapter A of chapter 1 of such Code is amended by 

8 adding at the end the following new item: 

‘‘PART VIII—CERTAIN COMPENSATION RECEIVED FROM CERTAIN

COMPANIES RECEIVING BAILOUT FUNDS’’. 

9 (c) EFFECTIVE DATE.—The amendments made by 

10 this section shall apply to compensation received after De11 cember 31, 2007, in taxable years ending after such date. 

Æ 


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