II 

111TH CONGRESS 

1ST SESSION S. 1007 

To amend the Internal Revenue Code of 1986 to deny a deduction for 

excessive compensation of any employee of an employer. 

IN THE SENATE OF THE UNITED STATES 

MAY 7, 2009 

Mr. DURBIN introduced the following bill; which was read twice and referred 

to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To amend the Internal Revenue Code of 1986 to deny a 

deduction for excessive compensation of any employee 

of an employer. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Excessive Pay Capped 

5 Deduction Act of 2009’’. 

6 SEC. 2. DENIAL OF DEDUCTION FOR PAYMENTS OF EXCES7 SIVE COMPENSATION. 

8 (a) IN GENERAL.—Section 162 of the Internal Rev9 enue Code of 1986 is amended by inserting after sub10 section (h) the following new subsection: 


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1 ‘‘(i) EXCESSIVE COMPENSATION.— 

2 ‘‘(1) IN GENERAL.—No deduction shall be al3 lowed under this chapter for any excessive com4 pensation for any employee of the taxpayer. 

5 ‘‘(2) EXCESSIVE COMPENSATION.—For pur6 poses of this subsection, the term ‘excessive com7 pensation’ means, with respect to any employee, the 

8 amount by which the compensation for services per9 formed by such employee during the taxable year ex10 ceeds the amount which is equal to 100 times the 

11 amount of the average compensation for services 

12 performed by all employees of the taxpayer during 

13 the taxable year. 

14 ‘‘(3) OTHER DEFINITIONS AND SPECIAL

15 RULES.— 

16 ‘‘(A) COMPENSATION.— 

17 ‘‘(i) IN GENERAL.—For purposes of 

18 this subsection, the term ‘compensation’ 

19 includes wages, salary, fees, commissions, 

20 fringe benefits, deferred compensation, re21 tirement contributions, options, bonuses, 

22 property, and any other form of remunera23 tion that the Secretary determines is ap24 propriate. 


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1 ‘‘(ii) PART-TIME AND PART-YEAR EM2 PLOYEES.—In the case of any employee 

3 which is a part-time employee of the tax4 payer or which is not employed by the tax5 payer for a full taxable year, the com6 pensation of such employee shall be cal7 culated for purposes of this subparagraph 

8 on an annualized basis. 

9 ‘‘(B) EMPLOYER.—All persons treated as a 

10 single employer under subsection (a) or (b) of 

11 section 52 or subsection (m) or (o) of section 

12 414 shall be treated as a single taxpayer for 

13 purposes of this subsection. 

14 ‘‘(4) REPORTING.—Each employer that pro15 vides any excessive compensation to any employee 

16 during a taxable year shall file a report with the 

17 Secretary with respect to such taxable year includ18 ing— 

19 ‘‘(A) the amount of compensation of the 

20 employee of the taxpayer receiving the lowest 

21 amount of compensation during such taxable 

22 year, 

23 ‘‘(B) the amount of compensation of the 

24 employee of the taxpayer receiving the highest 


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1 amount of compensation during such taxable 

2 year, 

3 ‘‘(C) the average compensation of all em4 ployees of the taxpayer during such taxable 

5 year, 

6 ‘‘(D) the number of employees of the tax7 payer who are receiving compensation that is 

8 more than 100 times the average compensation 

9 of all employees of the taxpayer during such 

10 taxable year, and 

11 ‘‘(E) the amounts of compensation of the 

12 employees described in subparagraph (D) dur13 ing such taxable year. 

14 Such report shall be filed at such time and in such 

15 manner as the Secretary may require.’’. 

16 (b) EFFECTIVE DATE.—The amendment made by 

17 this section shall apply to taxable years beginning after 

18 the date of the enactment of this Act. 

Æ 


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