I 

111TH CONGRESS 

1ST SESSION H. R. 3153 

To amend the Internal Revenue Code of 1986 to impose a tax on overthe-counter derivatives transactions, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 9, 2009 

Mr. LARSON of Connecticut introduced the following bill; which was referred 

to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to impose 

a tax on over-the-counter derivatives transactions, 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 ‘‘Transparent Markets 

5 Act of 2009’’. 

6 SEC. 2. OVER-THE-COUNTER DERIVATIVES TRANSACTION 

7 TAX. 

8 (a) IN GENERAL.—Chapter 36 of the Internal Rev9 enue Code of 1986 is amended by inserting after sub10 chapter B the following new subchapter: 


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1 ‘‘Subchapter C—Tax on Over-the-Counter 

2 Derivatives 

‘‘Sec. 4475. Tax on over-the-counter derivatives. 

3 ‘‘SEC. 4475. TAX ON OVER-THE-COUNTER DERIVATIVES. 

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

5 a tax on each covered derivative transaction. 

6 ‘‘(b) RATE OF TAX.—The rate of such tax shall be 

7 equal to 0.25 percent of the fair market value of the un8 derlying property with respect to, or the notional principal 

9 amount of, the derivative financial instrument involved in 

10 such transaction. 

11 ‘‘(c) BY WHOM PAID.—All parties to a covered deriv12 ative transaction shall be jointly and severally liable for 

13 the tax imposed on such transaction by this section. 

14 ‘‘(d) COVERED DERIVATIVES TRANSACTION.—For 

15 purposes of this section, the term ‘covered derivative 

16 transaction’ means becoming a party to a derivative finan17 cial instrument which is not traded on (or subject to the 

18 rules of) a qualified board or exchange (as defined in sec19 tion 1256(g)(7), determined without regard to subpara20 graph (C) thereof). 

21 ‘‘(e) DERIVATIVE FINANCIAL INSTRUMENT.—For 

22 purposes of this section— 

23 ‘‘(1) IN GENERAL.—The term ‘derivative finan24 cial instrument’ means any option, forward contract, 


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1 short position, notional principal contract, credit de2 fault swap, or similar financial instrument in any— 

3 ‘‘(A) share of stock in a corporation, 

4 ‘‘(B) partnership or beneficial ownership 

5 interest in a widely held or publicly traded part6 nership or trust, 

7 ‘‘(C) note, bond, debenture, or other evi8 dence of indebtedness, 

9 ‘‘(D) commodity which is actively traded 

10 (within the meaning of section 1092(d)(1)), 

11 ‘‘(E) any foreign currency, or 

12 ‘‘(F) any specified index. 

13 ‘‘(2) SPECIFIED INDEX.—The term ‘specified 

14 index’ means any one or more or any combination 

15 of— 

16 ‘‘(A) a fixed rate, price, or amount, or 

17 ‘‘(B) a variable rate, price, or amount 

18 which is based on any current, objectively deter19 minable information which is not within the control 

20 of any of the parties to the contract or instrument 

21 and is not unique to any of the parties’ cir22 cumstances. 

23 ‘‘(f) METHOD OF COLLECTION.— 


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1 ‘‘(1) IN GENERAL.—The tax imposed by sub2 section (a) shall be collected on the basis of an an3 nual return. 

4 ‘‘(2) CONTENT OF RETURN.—Such return shall 

5 include the following information: 

6 ‘‘(A) A description of the derivative finan7 cial instrument involved in such transaction. 

8 ‘‘(B) The parties to the covered derivatives 

9 transaction (and each such party’s tax resi10 dence). 

11 ‘‘(C) The fair market value of the under12 lying property with respect to, or the notional 

13 principal amount of, the derivative financial in14 strument involved in such transaction. 

15 ‘‘(D) A description of any underlying asset 

16 or specified index with respect to such trans17 action, including a description of how each 

18 party to such transaction characterizes any 

19 such asset for tax purposes. 

20 ‘‘(E) A description of any provision for 

21 physical settlement of such transaction. 

22 ‘‘(g) REGULATIONS.—The Secretary shall prescribe 

23 such regulations as may be necessary or appropriate to 

24 carry out the purposes of this section, including the fol25 lowing: 


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1 ‘‘(1) Prescribing the time for filing the annual 

2 return of tax imposed under subsection (a) and the 

3 time for payment of such tax. 

4 ‘‘(2) Excluding or including certain transactions 

5 from such tax as may be consistent with the pur6 poses of this section. 

7 ‘‘(3) Guidance for determining such tax if the 

8 fair market value or notional principal amount is un9 clear on the face of the instrument.’’. 

10 (b) CLERICAL AMENDMENT.—The table of sub11 chapters for chapter 36 of such Code is amended by in12 serting after the item relating to subchapter B the fol13 lowing new item: 

‘‘SUBCHAPTER C. TAX ON OVER-THE-COUNTER DERIVATIVES’’. 

14 (c) REPORT.— 

15 (1) IN GENERAL.—Not later than 180 days 

16 after the first deadline established by the Secretary 

17 of the Treasury for filing a return of the tax im18 posed under section 4475 of the Internal Revenue 

19 Code of 1986, and each deadline for filing such re20 turn thereafter, the Secretary shall submit a report 

21 to Congress. 

22 (2) CONTENT.—Such report shall include— 

23 (A) a description and a statistical analysis 

24 of the information included on the returns of 

25 such tax for the previous filing period, and 


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1 (B) a detailed analysis of the scope and 

2 nature of over-the-counter derivatives markets 

3 and the feasibility and advisability of regulating 

4 such markets. 

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

6 this section shall apply to transactions entered into on or 

7 after the date of the enactment of this Act. 

Æ 


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