II 

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. 

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 ‘‘Taxpayer Fairness 

5 Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 


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1 (1) During the years 2008 and 2009, the Na2 tion’s largest financial firms received extraordinary 

3 and unprecedented assistance from the public. 

4 (2) Such assistance was critical to the success 

5 and in many cases the survival of these firms during 

6 the year 2009. 

7 (3) High earners at such firms should con8 tribute a portion of any excessive bonuses obtained 

9 for the year 2009 to help the Nation reduce the pub10 lic debt and recover from the recession. 

11 SEC. 3. EXCISE TAXES ON EXCESSIVE 2009 BONUSES RE12 CEIVED FROM MAJOR RECIPIENTS OF FED13 ERAL EMERGENCY ECONOMIC ASSISTANCE. 

14 (a) IMPOSITION OF TAX.—Chapter 46 of the Internal 

15 Revenue Code of 1986 is amended by adding at the end 

16 the following new section: 

17 ‘‘SEC. 4999A. EXCESSIVE 2009 BONUSES RECEIVED FROM 

18 MAJOR RECIPIENTS OF FEDERAL EMER19 GENCY ECONOMIC ASSISTANCE. 

20 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 

21 on any person who receives a covered excessive 2009 bonus 

22 a tax equal to 50 percent of the amount of such bonus. 

23 ‘‘(b) DEFINITION.—For purposes of this section, the 

24 term ‘covered excessive 2009 bonus’ has the meaning 

25 given such term by section 280I(b). 


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1 ‘‘(c) ADMINISTRATIVE PROVISIONS AND SPECIAL

2 RULES.— 

3 ‘‘(1) WITHHOLDING.— 

4 ‘‘(A) IN GENERAL.—In the case of any 

5 covered excessive 2009 bonus which is treated 

6 as wages for purposes of section 3402, the 

7 amount otherwise required to be deducted and 

8 withheld under such section shall be increased 

9 by the amount of the tax imposed by this sec10 tion on such bonus. 

11 ‘‘(B) BONUSES PAID BEFORE ENACT12 MENT.—In the case of any covered excessive 

13 2009 bonus to which subparagraph (A) applies 

14 which is paid before the date of the enactment 

15 of this section, no penalty, addition to tax, or 

16 interest shall be imposed with respect to any 

17 failure to deduct and withhold the tax imposed 

18 by this section on such bonus. 

19 ‘‘(2) TREATMENT OF TAX.—For purposes of 

20 subtitle F, any tax imposed by this section shall be 

21 treated as a tax imposed by subtitle A. 

22 ‘‘(3) NOTICE REQUIREMENTS.—The Secretary 

23 shall require each major Federal emergency eco24 nomic assistance recipient (as defined in section 

25 280I(d)(1)) to notify, as soon as practicable after 


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1 the date of the enactment of this section and at such 

2 other times as the Secretary determines appropriate, 

3 the Secretary and each covered employee (as defined 

4 in section 280I(e)) of the amount of covered exces5 sive 2009 bonuses to which this section applies and 

6 the amount of tax deducted and withheld on such 

7 bonuses. 

8 ‘‘(4) SECRETARIAL AUTHORITY.—The Secretary 

9 may prescribe such regulations, rules, and guidance 

10 of general applicability as may be necessary to carry 

11 out the provisions of this section, including— 

12 ‘‘(A) to prescribe the due date and manner 

13 of payment of the tax imposed by this section 

14 with respect to any covered excessive 2009 

15 bonus paid before the date of the enactment of 

16 this section, and 

17 ‘‘(B) to prevent— 

18 ‘‘(i) the recharacterization of a bonus 

19 payment as a payment which is not a 

20 bonus payment in order to avoid the pur21 poses of this section, 

22 ‘‘(ii) the treatment as other than an 

23 additional 2009 bonus payment of any 

24 payment of increased wages or other pay25 ments to a covered employee who receives 


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1 a bonus payment subject to this section in 

2 order to reimburse such covered employee 

3 for the tax imposed by this section with re4 gard to such bonus, or 

5 ‘‘(iii) the avoidance of the purposes of 

6 this section through the use of partner7 ships or other pass-thru entities.’’. 

8 (b) CLERICAL AMENDMENTS.— 

9 (1) The heading and table of sections for chap10 ter 46 of the Internal Revenue Code of 1986 are 

11 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.’’. 

12 (2) The item relating to chapter 46 in the table 

13 of chapters for subtitle D of such Code is amended 

14 to read as follows: 

‘‘Chapter 46. Taxes on certain excessive remuneration.’’. 

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

16 this section shall apply to payments of covered excessive 

17 2009 bonuses after December 31, 2008, in taxable years 

18 ending after such date. 


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1 SEC. 4. LIMITATION ON DEDUCTION OF AMOUNTS PAID AS 

2 EXCESSIVE 2009 BONUSES BY MAJOR RECIPI3 ENTS OF FEDERAL EMERGENCY ECONOMIC 

4 ASSISTANCE. 

5 (a) IN GENERAL.—Part IX of subchapter B of chap6 ter 1 of the Internal Revenue Code of 1986 is amended 

7 by adding at the end the following new section: 

8 ‘‘SEC. 280I. EXCESSIVE 2009 BONUSES PAID BY MAJOR RE9 CIPIENTS OF FEDERAL EMERGENCY ECO10 NOMIC ASSISTANCE. 

11 ‘‘(a) GENERAL RULE.—The deduction allowed under 

12 this chapter with respect to the amount of any covered 

13 excessive 2009 bonus shall not exceed 50 percent of the 

14 amount of such bonus. 

15 ‘‘(b) COVERED EXCESSIVE 2009 BONUS.—For pur16 poses of this section, the term ‘covered excessive 2009 

17 bonus’ means any 2009 bonus payment paid during any 

18 calendar year to a covered employee by any major Federal 

19 emergency economic assistance recipient, to the extent 

20 that the aggregate of such 2009 bonus payments (without 

21 regard to the date on which such payments are paid) with 

22 respect to such employee exceeds the dollar amount of the 

23 compensation received by the President under section 102 

24 of title 3, United States Code, for calendar year 2009. 

25 ‘‘(c) 2009 BONUS PAYMENT.— 


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1 ‘‘(1) IN GENERAL.—The term ‘2009 bonus pay2 ment’ means any payment which— 

3 ‘‘(A) is a payment for services rendered, 

4 ‘‘(B) is in addition to any amount payable 

5 to a covered employee for services performed by 

6 such covered employee at a regular hourly, 

7 daily, weekly, monthly, or similar periodic rate, 

8 ‘‘(C) in the case of a retention bonus, is 

9 paid for continued service during calendar year 

10 2009 or 2010, and 

11 ‘‘(D) in the case of a payment not de12 scribed in subparagraph (C), is attributable to 

13 services performed by a covered employee dur14 ing calendar year 2009 (without regard to the 

15 year in which such payment is paid). 

16 Such term does not include payments to an em17 ployee as commissions, contributions to any qualified 

18 retirement plan (as defined in section 4974(c)), wel19 fare and fringe benefits, overtime pay, or expense re20 imbursements. In the case of a payment which is at21 tributable to services performed during multiple cal22 endar years, such payment shall be treated as a 

23 2009 bonus payment to the extent it is attributable 

24 to services performed during calendar year 2009. 


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1 ‘‘(2) DEFERRED DEDUCTION BONUS PAY2 MENTS.— 

3 ‘‘(A) IN GENERAL.—The term ‘2009 bonus 

4 payment’ includes payments attributable to 

5 services performed in 2009 which are paid in 

6 the form of remuneration (within the meaning 

7 of section 162(m)(4)(E)) for which the deduc8 tion under this chapter (determined without re9 gard to this section) for such payment is allow10 able in a subsequent taxable year. 

11 ‘‘(B) TIMING OF DEFERRED DEDUCTION

12 BONUS PAYMENTS.—For purposes of this sec13 tion and section 4999A, the amount of any pay14 ment described in subparagraph (A) (as deter15 mined in the year in which the deduction under 

16 this chapter, determined without regard to this 

17 section, for such payment would be allowable) 

18 shall be treated as having been made in the cal19 endar year in which any interest in such 

20 amount is granted to a covered employee (with21 out regard to the date on which any portion of 

22 such interest vests). 

23 ‘‘(3) RETENTION BONUS.—The term ‘retention 

24 bonus’ means any bonus payment (without regard to 


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1 the date such payment is paid) to a covered em2 ployee which— 

3 ‘‘(A) is contingent on the completion of a 

4 period of service with a major Federal emer5 gency economic assistance recipient, the comple6 tion of a specific project or other activity for 

7 the major Federal emergency economic assist8 ance recipient, or such other circumstances as 

9 the Secretary may prescribe, and 

10 ‘‘(B) is not based on the performance of 

11 the covered employee (other than a requirement 

12 that the employee not be separated from em13 ployment for cause). 

14 A bonus payment shall not be treated as based on 

15 performance for purposes of subparagraph (B) solely 

16 because the amount of the payment is determined by 

17 reference to a previous bonus payment which was 

18 based on performance. 

19 ‘‘(d) MAJOR FEDERAL EMERGENCY ECONOMIC AS20 SISTANCE RECIPIENT.—For purposes of this section— 

21 ‘‘(1) IN GENERAL.—The term ‘major Federal 

22 emergency economic assistance recipient’ means— 

23 ‘‘(A) any financial institution (within the 

24 meaning of section 3 of the Emergency Eco25 nomic Stabilization Act of 2008) if at any time 


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1 after December 31, 2007, the Federal Govern2 ment acquires— 

3 ‘‘(i) an equity interest in such person 

4 pursuant to a program authorized by the 

5 Emergency Economic Stabilization Act of 

6 2008 or the third undesignated paragraph 

7 of section 13 of the Federal Reserve Act 

8 (12 U.S.C. 343), or 

9 ‘‘(ii) any warrant (or other right) to 

10 acquire any equity interest with respect to 

11 such person pursuant to any such pro12 gram, 

13 but only if the total value of the equity interest 

14 described in clauses (i) and (ii) in such person 

15 is not less than $5,000,000,000, 

16 ‘‘(B) the Federal National Mortgage Asso17 ciation and the Federal Home Loan Mortgage 

18 Corporation, and 

19 ‘‘(C) any person which is a member of the 

20 same affiliated group (as defined in section 

21 1504, determined without regard to subsection 

22 (b) thereof) as a person described in subpara23 graph (A) or (B). 

24 ‘‘(2) TREATMENT OF CONTROLLED GROUPS.— 

25 All persons treated as a single employer under subVerDate Nov 24 2008 02:22 Feb 09, 2010 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2994.IS S2994

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1 section (a) or (b) of section 52 or subsection (m) or 

2 (o) of section 414 shall be treated as a single em3 ployer with respect to any covered employee. 

4 ‘‘(e) COVERED EMPLOYEE.—For purposes of this 

5 section, the term ‘covered employee’ means, with respect 

6 to any major Federal emergency economic assistance re7 cipient— 

8 ‘‘(1) any employee of such recipient, and 

9 ‘‘(2) any director of such recipient who is not 

10 an employee. 

11 In the case of any major Federal emergency economic as12 sistance recipient which is a partnership or other unincor13 porated trade or business, the term ‘employee’ shall in14 clude employees of such recipient within the meaning of 

15 section 401(c)(1). 

16 ‘‘(f) REGULATIONS.—The Secretary may prescribe 

17 such regulations, rules, and guidance of general applica18 bility as may be necessary to carry out the provisions of 

19 this section, including— 

20 ‘‘(1) to prescribe the due date and manner of 

21 reporting and payment of any increase in the tax 

22 imposed by this chapter due to the application of 

23 this section to any covered excessive 2009 bonus 

24 paid before the date of the enactment of this section, 

25 and 


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1 ‘‘(2) to prevent— 

2 ‘‘(A) the recharacterization of a bonus pay3 ment as a payment which is not a bonus pay4 ment in order to avoid the purposes of this sec5 tion, or 

6 ‘‘(B) the avoidance of the purposes of this 

7 section through the use of partnerships or other 

8 pass-thru entities.’’. 

9 (b) CLERICAL AMENDMENT.—The table of sections 

10 for part IX of subchapter B of chapter 1 of the Internal 

11 Revenue Code of 1986 is amended by adding at the end 

12 the following new item: 

‘‘Sec. 280I. Excessive 2009 bonuses paid by major recipients of Federal emergency economic assistance.’’. 

13 (c) CONFORMING AMENDMENTS.— 

14 (1) Subparagraph (F) of section 162(m)(4) of 

15 the Internal Revenue Code of 1986 is amended— 

16 (A) by inserting ‘‘AND EXCESSIVE 2009 BO17 NUSES’’ after ‘‘PAYMENTS’’ in the heading, 

18 (B) by striking ‘‘the amount’’ and insert19 ing ‘‘the total amounts’’, and 

20 (C) by inserting ‘‘or 280I’’ before the pe21 riod. 

22 (2) Subparagraph (A) of section 3121(v)(2) of 

23 such Code is amended by inserting ‘‘, to any covered 


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1 excessive 2009 bonus (as defined in section 

2 280I(b)),’’ after ‘‘section 280G(b))’’. 

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to payments of covered excessive 

5 2009 bonuses after December 31, 2008, in taxable years 

6 ending after such date. 

Æ 


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