I 

111TH CONGRESS 

1ST SESSION H. R. 3439 

To amend the Internal Revenue Code of 1986 to impose an excise tax 

on certain proceeds received on SILO and LILO transactions. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 31, 2009 

Mr. LEWIS of Georgia (for himself, Mr. DAVIS of Illinois, Mr. PASCRELL, and 

Mr. MORAN of Virginia) 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 

an excise tax on certain proceeds received on SILO and 

LILO transactions. 

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 ‘‘Close the SILO/LILO 

5 Loophole Act of 2009’’. 


srobinson on DSKHWCL6B1PROD with BILLS
2 

•HR 3439 IH

1 SEC. 2. EXCISE TAX ON CERTAIN PROCEEDS RECEIVED ON 

2 SILO AND LILO TRANSACTIONS. 

3 (a) IN GENERAL.—Subchapter F of chapter 42 of 

4 subtitle D of the Internal Revenue Code of 1986 is amend5 ed by adding at the end the following new section: 

6 ‘‘SEC. 4965A. EXCISE TAX ON CERTAIN PROCEEDS RE7 CEIVED ON SILO AND LILO TRANSACTIONS. 

8 ‘‘(a) IMPOSITION OF TAX.—In the case of any person 

9 other than a SILO/LILO lessee that receives any ineligible 

10 amount as a party to any SILO transaction or any LILO 

11 transaction, such person shall pay a tax for the taxable 

12 year in which such ineligible amounts are received. 

13 ‘‘(b) AMOUNT OF TAX.—The amount of the tax im14 posed under subsection (a) with respect to any person 

15 shall be an amount equal to the aggregate ineligible 

16 amounts received by such person in the taxable year. 

17 ‘‘(c) DEFINITIONS.—For purposes of this section— 

18 ‘‘(1) INELIGIBLE AMOUNT.—The term ‘ineli19 gible amount’ means, with respect to any SILO 

20 transaction or LILO transaction, the excess of— 

21 ‘‘(A) the aggregate proceeds received by 

22 the taxpayer attributable to or arising from any 

23 remedial action relating to such transaction (in24 cluding the value of any property received and 

25 any additional amounts purporting to indemnify 

26 or reimburse the taxpayer for taxes assessable 


srobinson on DSKHWCL6B1PROD with BILLS
3 

•HR 3439 IH

1 on any amounts received but excluding the ag2 gregate proceeds received by the taxpayer at3 tributable to or arising from any consensual 

4 termination or rescission of any such trans5 action), over 

6 ‘‘(B) the aggregate proceeds described in 

7 subparagraph (A) that are received from third 

8 parties (other than the SILO/LILO lessee) pur9 suant to a payment arrangement (including a 

10 defeasance escrow arrangement) in which the 

11 SILO/LILO lessee’s payment obligations were 

12 economically defeased in whole or in part. 

13 ‘‘(2) SILO TRANSACTION.—The term ‘SILO 

14 transaction’ means a purported sale-leaseback ar15 rangement which is identified as a listed transaction 

16 in Notice 2005–13. 

17 ‘‘(3) LILO TRANSACTION.—The term ‘LILO 

18 transaction’ means a transaction which is a ‘lease19 in/lease-out’ transaction described in Revenue Rul20 ings 99–14 and 2002–69 and identified as a listed 

21 transaction in Notice 2000–15, or which is substan22 tially similar to such a transaction. 

23 ‘‘(4) SILO/LILO LESSEE.—The term ‘SILO/ 

24 LILO lessee’ means any lessee in a SILO trans25 action or a LILO transaction that is— 


srobinson on DSKHWCL6B1PROD with BILLS
4 

•HR 3439 IH

1 ‘‘(A) a tax-exempt entity (within the mean2 ing of section 168(h)(2)) or any other coopera3 tive, nonprofit, limited dividend, or mutual as4 sociation, or 

5 ‘‘(B) any other person that does not derive 

6 a substantial economic benefit from the tax 

7 characterization of such transaction. 

8 ‘‘(d) CERTAIN TRANSFERS DISREGARDED.—If any 

9 person who is subject to the tax under subsection (a) is 

10 a party to any transaction that results in the transfer of 

11 such person’s rights with respect to a SILO transaction 

12 or a LILO transaction to any other person who would, 

13 but for this subsection, not be subject to the full amount 

14 of the tax under subsection (a) with respect to such SILO 

15 transaction or LILO transaction, then such transfer shall 

16 be disregarded for purposes of this section and the tax17 payer shall continue to be treated as the recipient of any 

18 ineligible amount. 

19 ‘‘(e) REGULATORY AUTHORITY.—The Secretary is 

20 authorized to promulgate regulations consistent with the 

21 purposes of this section, including regulations to prevent 

22 the avoidance of such purposes. 

23 ‘‘(f) COORDINATION WITH OTHER TAXES AND PEN24 ALTIES.—The tax imposed by this section is in addition 


srobinson on DSKHWCL6B1PROD with BILLS
5 

•HR 3439 IH

1 to any other tax, addition to tax, or penalty imposed under 

2 this title.’’. 

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

4 for subchapter F of chapter 42 of subtitle D of the Inter5 nal Revenue Code of 1986 is amended by adding at the 

6 end the following new item: 

‘‘Sec. 4965A. Excise tax on certain proceeds received on SILO and LILO 

transactions.’’. 

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

8 this section shall apply to amounts received after the date 

9 of the introduction of this Act, in taxable years ending 

10 after such date. 

11 SEC. 3. DENIAL OF DEDUCTION FOR COSTS OF CERTAIN 

12 ACTIONS RELATING TO SILO AND LILO 

13 TRANSACTIONS. 

14 (a) IN GENERAL.—Part IX of subchapter B of chap15 ter 1 of the Internal Revenue Code of 1986 is amended 

16 by inserting after section 269B the following new section: 

17 ‘‘SEC. 269C. COSTS OF CERTAIN ACTIONS RELATING TO 

18 SILO AND LILO TRANSACTIONS. 

19 ‘‘(a) GENERAL RULE.—If any party to a SILO trans20 action or a LILO transaction (other than a SILO/LILO 

21 lessee) brings a remedial action seeking to recover any in22 eligible amount with respect to such transaction, in com23 puting taxable income no deduction shall be allowed for 


srobinson on DSKHWCL6B1PROD with BILLS
6 

•HR 3439 IH

1 any attorney fees or other costs attributable to such ac2 tion. 

3 ‘‘(b) DEFINITIONS.—For purposes of this section, the 

4 terms ‘SILO transaction’, ‘LILO transaction’, ‘SILO/ 

5 LILO lessee’, and ‘ineligible amount’ have the meanings 

6 given such terms by section 4965A(c).’’. 

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

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

9 Revenue Code of 1986 is amended by inserting after the 

10 item relating to section 269B the following new item: 

‘‘Sec. 269C. Costs of certain actions relating to SILO and LILO transactions.’’. 

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

12 this section shall apply to costs incurred after the date 

13 of the introduction of this Act. 

Æ 


srobinson on DSKHWCL6B1PROD with BILLS