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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 2994 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                S. 2994

 To amend the Internal Revenue Code of 1986 to impose an excise tax on 
   excessive 2009 bonuses received from certain major recipients of 
Federal emergency economic assistance, to limit the deduction allowable 
               for such bonuses, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            February 4, 2010

 Mrs. Boxer (for herself and Mr. Webb) 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 impose an excise tax on 
   excessive 2009 bonuses received from certain major recipients of 
Federal emergency economic assistance, to limit the deduction allowable 
               for such bonuses, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Taxpayer Fairness Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) During the years 2008 and 2009, the Nation's largest 
        financial firms received extraordinary and unprecedented 
        assistance from the public.
            (2) Such assistance was critical to the success and in many 
        cases the survival of these firms during the year 2009.
            (3) High earners at such firms should contribute a portion 
        of any excessive bonuses obtained for the year 2009 to help the 
        Nation reduce the public debt and recover from the recession.

SEC. 3. EXCISE TAXES ON EXCESSIVE 2009 BONUSES RECEIVED FROM MAJOR 
              RECIPIENTS OF FEDERAL EMERGENCY ECONOMIC ASSISTANCE.

    (a) Imposition of Tax.--Chapter 46 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new section:

``SEC. 4999A. EXCESSIVE 2009 BONUSES RECEIVED FROM MAJOR RECIPIENTS OF 
              FEDERAL EMERGENCY ECONOMIC ASSISTANCE.

    ``(a) Imposition of Tax.--There is hereby imposed on any person who 
receives a covered excessive 2009 bonus a tax equal to 50 percent of 
the amount of such bonus.
    ``(b) Definition.--For purposes of this section, the term `covered 
excessive 2009 bonus' has the meaning given such term by section 
280I(b).
    ``(c) Administrative Provisions and Special Rules.--
            ``(1) Withholding.--
                    ``(A) In general.--In the case of any covered 
                excessive 2009 bonus which is treated as wages for 
                purposes of section 3402, the amount otherwise required 
                to be deducted and withheld under such section shall be 
                increased by the amount of the tax imposed by this 
                section on such bonus.
                    ``(B) Bonuses paid before enactment.--In the case 
                of any covered excessive 2009 bonus to which 
                subparagraph (A) applies which is paid before the date 
                of the enactment of this section, no penalty, addition 
                to tax, or interest shall be imposed with respect to 
                any failure to deduct and withhold the tax imposed by 
                this section on such bonus.
            ``(2) Treatment of tax.--For purposes of subtitle F, any 
        tax imposed by this section shall be treated as a tax imposed 
        by subtitle A.
            ``(3) Notice requirements.--The Secretary shall require 
        each major Federal emergency economic assistance recipient (as 
        defined in section 280I(d)(1)) to notify, as soon as 
        practicable after the date of the enactment of this section and 
        at such other times as the Secretary determines appropriate, 
        the Secretary and each covered employee (as defined in section 
        280I(e)) of the amount of covered excessive 2009 bonuses to 
        which this section applies and the amount of tax deducted and 
        withheld on such bonuses.
            ``(4) Secretarial authority.--The Secretary may prescribe 
        such regulations, rules, and guidance of general applicability 
        as may be necessary to carry out the provisions of this 
        section, including--
                    ``(A) to prescribe the due date and manner of 
                payment of the tax imposed by this section with respect 
                to any covered excessive 2009 bonus paid before the 
                date of the enactment of this section, and
                    ``(B) to prevent--
                            ``(i) the recharacterization of a bonus 
                        payment as a payment which is not a bonus 
                        payment in order to avoid the purposes of this 
                        section,
                            ``(ii) the treatment as other than an 
                        additional 2009 bonus payment of any payment of 
                        increased wages or other payments to a covered 
                        employee who receives a bonus payment subject 
                        to this section in order to reimburse such 
                        covered employee for the tax imposed by this 
                        section with regard to such bonus, or
                            ``(iii) the avoidance of the purposes of 
                        this section through the use of partnerships or 
                        other pass-thru entities.''.
    (b) Clerical Amendments.--
            (1) The heading and table of sections for chapter 46 of the 
        Internal Revenue Code of 1986 are amended to read as follows:

         ``Chapter 46--Taxes on Certain Excessive Remuneration

``Sec. 4999. Golden parachute payments.
``Sec. 4999A. Excessive 2009 bonuses received from major recipients of 
                            Federal emergency economic assistance.''.
            (2) The item relating to chapter 46 in the table of 
        chapters for subtitle D of such Code is amended to read as 
        follows:

``Chapter 46. Taxes on certain excessive remuneration.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to payments of covered excessive 2009 bonuses after December 31, 
2008, in taxable years ending after such date.

SEC. 4. LIMITATION ON DEDUCTION OF AMOUNTS PAID AS EXCESSIVE 2009 
              BONUSES BY MAJOR RECIPIENTS OF FEDERAL EMERGENCY ECONOMIC 
              ASSISTANCE.

    (a) In General.--Part IX of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new section:

``SEC. 280I. EXCESSIVE 2009 BONUSES PAID BY MAJOR RECIPIENTS OF FEDERAL 
              EMERGENCY ECONOMIC ASSISTANCE.

    ``(a) General Rule.--The deduction allowed under this chapter with 
respect to the amount of any covered excessive 2009 bonus shall not 
exceed 50 percent of the amount of such bonus.
    ``(b) Covered Excessive 2009 Bonus.--For purposes of this section, 
the term `covered excessive 2009 bonus' means any 2009 bonus payment 
paid during any calendar year to a covered employee by any major 
Federal emergency economic assistance recipient, to the extent that the 
aggregate of such 2009 bonus payments (without regard to the date on 
which such payments are paid) with respect to such employee exceeds the 
dollar amount of the compensation received by the President under 
section 102 of title 3, United States Code, for calendar year 2009.
    ``(c) 2009 Bonus Payment.--
            ``(1) In general.--The term `2009 bonus payment' means any 
        payment which--
                    ``(A) is a payment for services rendered,
                    ``(B) is in addition to any amount payable to a 
                covered employee for services performed by such covered 
                employee at a regular hourly, daily, weekly, monthly, 
                or similar periodic rate,
                    ``(C) in the case of a retention bonus, is paid for 
                continued service during calendar year 2009 or 2010, 
                and
                    ``(D) in the case of a payment not described in 
                subparagraph (C), is attributable to services performed 
                by a covered employee during calendar year 2009 
                (without regard to the year in which such payment is 
                paid).
        Such term does not include payments to an employee as 
        commissions, contributions to any qualified retirement plan (as 
        defined in section 4974(c)), welfare and fringe benefits, 
        overtime pay, or expense reimbursements. In the case of a 
        payment which is attributable to services performed during 
        multiple calendar years, such payment shall be treated as a 
        2009 bonus payment to the extent it is attributable to services 
        performed during calendar year 2009.
            ``(2) Deferred deduction bonus payments.--
                    ``(A) In general.--The term `2009 bonus payment' 
                includes payments attributable to services performed in 
                2009 which are paid in the form of remuneration (within 
                the meaning of section 162(m)(4)(E)) for which the 
                deduction under this chapter (determined without regard 
                to this section) for such payment is allowable in a 
                subsequent taxable year.
                    ``(B) Timing of deferred deduction bonus 
                payments.--For purposes of this section and section 
                4999A, the amount of any payment described in 
                subparagraph (A) (as determined in the year in which 
                the deduction under this chapter, determined without 
                regard to this section, for such payment would be 
                allowable) shall be treated as having been made in the 
                calendar year in which any interest in such amount is 
                granted to a covered employee (without regard to the 
                date on which any portion of such interest vests).
            ``(3) Retention bonus.--The term `retention bonus' means 
        any bonus payment (without regard to the date such payment is 
        paid) to a covered employee which--
                    ``(A) is contingent on the completion of a period 
                of service with a major Federal emergency economic 
                assistance recipient, the completion of a specific 
                project or other activity for the major Federal 
                emergency economic assistance recipient, or such other 
                circumstances as the Secretary may prescribe, and
                    ``(B) is not based on the performance of the 
                covered employee (other than a requirement that the 
                employee not be separated from employment for cause).
        A bonus payment shall not be treated as based on performance 
        for purposes of subparagraph (B) solely because the amount of 
        the payment is determined by reference to a previous bonus 
        payment which was based on performance.
    ``(d) Major Federal Emergency Economic Assistance Recipient.--For 
purposes of this section--
            ``(1) In general.--The term `major Federal emergency 
        economic assistance recipient' means--
                    ``(A) any financial institution (within the meaning 
                of section 3 of the Emergency Economic Stabilization 
                Act of 2008) if at any time after December 31, 2007, 
                the Federal Government acquires--
                            ``(i) an equity interest in such person 
                        pursuant to a program authorized by the 
                        Emergency Economic Stabilization Act of 2008 or 
                        the third undesignated paragraph of section 13 
                        of the Federal Reserve Act (12 U.S.C. 343), or
                            ``(ii) any warrant (or other right) to 
                        acquire any equity interest with respect to 
                        such person pursuant to any such program,
                but only if the total value of the equity interest 
                described in clauses (i) and (ii) in such person is not 
                less than $5,000,000,000,
                    ``(B) the Federal National Mortgage Association and 
                the Federal Home Loan Mortgage Corporation, and
                    ``(C) any person which is a member of the same 
                affiliated group (as defined in section 1504, 
                determined without regard to subsection (b) thereof) as 
                a person described in subparagraph (A) or (B).
            ``(2) Treatment of controlled groups.--All persons treated 
        as a single employer under subsection (a) or (b) of section 52 
        or subsection (m) or (o) of section 414 shall be treated as a 
        single employer with respect to any covered employee.
    ``(e) Covered Employee.--For purposes of this section, the term 
`covered employee' means, with respect to any major Federal emergency 
economic assistance recipient--
            ``(1) any employee of such recipient, and
            ``(2) any director of such recipient who is not an 
        employee.
In the case of any major Federal emergency economic assistance 
recipient which is a partnership or other unincorporated trade or 
business, the term `employee' shall include employees of such recipient 
within the meaning of section 401(c)(1).
    ``(f) Regulations.--The Secretary may prescribe such regulations, 
rules, and guidance of general applicability as may be necessary to 
carry out the provisions of this section, including--
            ``(1) to prescribe the due date and manner of reporting and 
        payment of any increase in the tax imposed by this chapter due 
        to the application of this section to any covered excessive 
        2009 bonus paid before the date of the enactment of this 
        section, and
            ``(2) to prevent--
                    ``(A) the recharacterization of a bonus payment as 
                a payment which is not a bonus payment in order to 
                avoid the purposes of this section, or
                    ``(B) the avoidance of the purposes of this section 
                through the use of partnerships or other pass-thru 
                entities.''.
    (b) Clerical Amendment.--The table of sections for part IX of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new item:

``Sec. 280I. Excessive 2009 bonuses paid by major recipients of Federal 
                            emergency economic assistance.''.
    (c) Conforming Amendments.--
            (1) Subparagraph (F) of section 162(m)(4) of the Internal 
        Revenue Code of 1986 is amended--
                    (A) by inserting ``and excessive 2009 bonuses'' 
                after ``payments'' in the heading,
                    (B) by striking ``the amount'' and inserting ``the 
                total amounts'', and
                    (C) by inserting ``or 280I'' before the period.
            (2) Subparagraph (A) of section 3121(v)(2) of such Code is 
        amended by inserting ``, to any covered excessive 2009 bonus 
        (as defined in section 280I(b)),'' after ``section 280G(b))''.
    (d) Effective Date.--The amendments made by this section shall 
apply to payments of covered excessive 2009 bonuses after December 31, 
2008, in taxable years ending after such date.
                                 <all>
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