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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1975 Introduced in Senate (IS)]

108th CONGRESS
  1st Session
                                S. 1975

  To amend the Internal Revenue Code of 1986 to deny a deduction for 
securities-related fines, penalties, and other amounts, and to provide 
 that revenues resulting from such denial be transferred to Fair Funds 
                       for the relief of victims.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                           November 25, 2003

 Mr. Dodd (for himself and Mr. McCain) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
  To amend the Internal Revenue Code of 1986 to deny a deduction for 
securities-related fines, penalties, and other amounts, and to provide 
 that revenues resulting from such denial be transferred to Fair Funds 
                       for the relief of victims.

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

SECTION 1. DENIAL OF DEDUCTION FOR SECURITIES-RELATED FINES, PENALTIES, 
              AND OTHER AMOUNTS.

    (a) In General.--Subsection (f) of section 162 of the Internal 
Revenue Code of 1986 (relating to trade or business expenses) is 
amended to read as follows:
    ``(f) Fines and Penalties.--
            ``(1) In general.--No deduction shall be allowed under 
        subsection (a) for any fine or similar penalty paid to a 
        government for the violation of any law.
            ``(2) Special rules for securities-related fines, 
        penalties, and other amounts.--
                    ``(A) In general.--No deduction otherwise allowable 
                (after the application of paragraph (1)) shall be 
                allowed under this chapter for any amount paid or 
                incurred (whether by suit, agreement, or otherwise) to, 
                or at the direction of, a government or self-regulatory 
                organization in relation to--
                            ``(i) the violation of the securities laws 
                        or the rules of a self-regulatory organization,
                            ``(ii) the failure to supervise any person 
                        who violates such laws or rules, or
                            ``(iii) the investigation or inquiry into 
                        the potential violation of such laws or rules.
                    ``(B) Definitions.--For purposes of this paragraph, 
                the terms `securities laws', `self-regulatory 
                organization', and `rules of a self-regulatory 
                organization' have the meanings given such terms by 
                section 3(a) of the Securities and Exchange Act of 1934 
                (15 U.S.C. 78c(a)).
                    ``(C) Transfer of certain revenues to fair funds 
                for the relief of victims.--
                            ``(i) In general.--There are hereby 
                        appropriated to the Securities and Exchange 
                        Commission amounts which the Secretary 
                        determines are equivalent to the increases in 
                        Federal revenues by reason of the application 
                        of this subsection to amounts described in 
                        subparagraph (A).
                            ``(ii) Allocation to fair funds.--The 
                        Securities and Exchange Commission shall 
                        transfer to any disgorgement fund established 
                        by the Commission with respect to any taxpayer 
                        pursuant to section 308 of the Sarbanes-Oxley 
                        Act of 2002 (15 U.S.C. 7246) the portion of the 
                        amounts appropriated under clause (i) 
                        attributable to the payment of any amount 
                        described in subparagraph (A) by the 
                        taxpayer.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to amounts paid or incurred after April 28, 2003, except that such 
amendment shall not apply to amounts paid or incurred under any binding 
order or agreement entered into on or before April 28, 2003. Such 
exception shall not apply to an order or agreement requiring court 
approval unless the approval was obtained on or before April 28, 2003.
                                 <all>
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