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 

JUNE 2, 2009 

Committee discharged; referred to the Committee on Finance 

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’’. 


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1 SEC. 2. DENIAL OF DEDUCTION FOR PAYMENTS OF EXCES2 SIVE COMPENSATION. 

3 (a) IN GENERAL.—Section 162 of the Internal Rev4 enue Code of 1986 is amended by inserting after sub5 section (h) the following new subsection: 

6 ‘‘(i) EXCESSIVE COMPENSATION.— 

7 ‘‘(1) IN GENERAL.—No deduction shall be al8 lowed under this chapter for any excessive com9 pensation for any employee of the taxpayer. 

10 ‘‘(2) EXCESSIVE COMPENSATION.—For pur11 poses of this subsection, the term ‘excessive com12 pensation’ means, with respect to any employee, the 

13 amount by which the compensation for services per14 formed by such employee during the taxable year ex15 ceeds the amount which is equal to 100 times the 

16 amount of the average compensation for services 

17 performed by all employees of the taxpayer during 

18 the taxable year. 

19 ‘‘(3) OTHER DEFINITIONS AND SPECIAL

20 RULES.— 

21 ‘‘(A) COMPENSATION.— 

22 ‘‘(i) IN GENERAL.—For purposes of 

23 this subsection, the term ‘compensation’ 

24 includes wages, salary, fees, commissions, 

25 fringe benefits, deferred compensation, re26 tirement contributions, options, bonuses, 


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1 property, and any other form of remunera2 tion that the Secretary determines is ap3 propriate. 

4 ‘‘(ii) PART-TIME AND PART-YEAR EM5 PLOYEES.—In the case of any employee 

6 which is a part-time employee of the tax7 payer or which is not employed by the tax8 payer for a full taxable year, the com9 pensation of such employee shall be cal10 culated for purposes of this subparagraph 

11 on an annualized basis. 

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

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

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

15 414 shall be treated as a single taxpayer for 

16 purposes of this subsection. 

17 ‘‘(4) REPORTING.—Each employer that pro18 vides any excessive compensation to any employee 

19 during a taxable year shall file a report with the 

20 Secretary with respect to such taxable year includ21 ing— 

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

23 employee of the taxpayer receiving the lowest 

24 amount of compensation during such taxable 

25 year, 


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

2 employee of the taxpayer receiving the highest 

3 amount of compensation during such taxable 

4 year, 

5 ‘‘(C) the average compensation of all em6 ployees of the taxpayer during such taxable 

7 year, 

8 ‘‘(D) the number of employees of the tax9 payer who are receiving compensation that is 

10 more than 100 times the average compensation 

11 of all employees of the taxpayer during such 

12 taxable year, and 

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

14 employees described in subparagraph (D) dur15 ing such taxable year. 

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

17 manner as the Secretary may require.’’. 

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

19 this section shall apply to taxable years beginning after 

20 the date of the enactment of this Act. 

Æ 


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