I

103D CONGRESS

1ST SESSION H. R. 2441

To amend the Internal Revenue Code of 1986 to allow a deduction for

fees for sewer and water services to the extent such fees exceed 1

percent of adjusted gross income, and to offset the cost of such deduction

by disallowing the deduction for amounts paid pursuant to settlements

and for compensatory damages under certain environmental laws.

IN THE HOUSE OF REPRESENTATIVES

JUNE 16, 1993

Mr. STUDDS (for himself, Mr. NEAL of Massachusetts, Mr. MOAKLEY, Mr.

MARKEY, Mr. KENNEDY, Mr. MEEHAN, Mr. FRANK of Massachusetts,

Mr. OLVER, Mr. MENENDEZ, Mr. FILNER, Mr. KOPETSKI, Mr. ACKERMAN, Mr. COLEMAN, Ms. MCKINNEY, Mrs. UNSOELD, Mr. HUGHES, Mr.

THOMPSON, Mr. HAMBURG, Ms. SCHENK, Mr. DEUTSCH, Mr. HASTINGS,

and Ms. FURSE) 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 allow a

deduction for fees for sewer and water services to the

extent such fees exceed 1 percent of adjusted gross income, and to offset the cost of such deduction by disallowing the deduction for amounts paid pursuant to

settlements and for compensatory damages under certain

environmental laws.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
2

•HR 2441 IH

1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Sewer and Water Fee

3 Deductibility Act of 1993’’.

4 SEC. 2. DEDUCTION FOR LOCAL SEWER AND WATER FEES.

5 (a) IN GENERAL.—Subsection (b) of section 164 of

6 the Internal Revenue Code of 1986 is amended by redesig7 nating paragraphs (3) and (4) as paragraphs (4) and (5),

8 respectively, and by inserting after paragraph (2) the fol9 lowing new paragraph:

10 ‘‘(3) DEDUCTION ALLOWED FOR LOCAL SEWER

11 AND WATER FEES.—

12 ‘‘(A) IN GENERAL.—To the extent that the

13 amount of local sewer and water fees paid or

14 accrued during any taxable year exceeds 1 per15 cent of adjusted gross income, such fees shall

16 be allowed as a deduction under subsection (a)

17 in the same manner as local real property taxes.

18 ‘‘(B) DEFINITION.—For purposes of sub19 paragraph (A), the term ‘local sewer and water

20 fees’ means any amount imposed by a local gov21 ernment, State government (or any agency or

22 instrumentality thereof), or by the District of

23 Columbia as a charge for sewer or water serv24 ice. Such term shall not include any amount al25 lowable as a deduction without regard to this

26 paragraph.’’.
3

•HR 2441 IH

1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply to taxable years beginning after

3 December 31, 1993.

4 SEC. 3. DENIAL OF DEDUCTION FOR PAYMENTS UNDER

5 SETTLEMENT AGREEMENTS AND FOR COM6 PENSATORY DAMAGES UNDER CERTAIN EN7 VIRONMENTAL LAWS.

8 (a) GENERAL RULE.—Part IX of subchapter B of the

9 Internal Revenue Code of 1986 (relating to certain items

10 not deductible) is amended by adding at the end thereof

11 the following new section:

12 ‘‘SEC. 280I. DISALLOWANCE OF PAYMENTS UNDER SETTLE13 MENT AGREEMENTS AND FOR COMPEN14 SATORY DAMAGES UNDER CERTAIN ENVI15 RONMENTAL LAWS.

16 ‘‘(a) GENERAL RULE.—No deduction shall be allowed

17 for amounts paid—

18 ‘‘(1) to any agency of the United States pursu19 ant to any environmental settlement,

20 ‘‘(2) for costs of activities carried out pursuant

21 to any environmental settlement, or

22 ‘‘(3) to any person or government as a payment

23 in the nature of compensatory damages relating to

24 a violation or potential violation under any applica25 ble environmental law.
4

•HR 2441 IH

1 ‘‘(b) DEFINITIONS.—For purposes of this section—

2 ‘‘(1) ENVIRONMENTAL SETTLEMENT.—The

3 term ‘environmental settlement’ means any settle4 ment of a claim (or potential claim) of a violation of

5 any provision of an applicable environmental law if

6 the payment of any fine or penalty for such violation

7 would not be allowed as a deduction under this

8 chapter.

9 ‘‘(2) APPLICABLE ENVIRONMENTAL LAW.—The

10 term ‘applicable environmental law’ means—

11 ‘‘(A) the Oil Pollution Act of 1990,

12 ‘‘(B) the Federal Water Pollution Control

13 Act,

14 ‘‘(C) the Comprehensive Environmental

15 Response, Compensation, and Liability Act of

16 1980,

17 ‘‘(D) the Solid Waste Disposal Act,

18 ‘‘(E) the Marine Protection, Research and

19 Sanctuaries Act,

20 ‘‘(F) the Clean Air Act, and

21 ‘‘(G) the Emergency Planning and Com22 munity Right-To-Know Act.

23 ‘‘(3) SETTLEMENT.—The term ‘settlement’ in24 cludes any consent decree and any contractual un25 derstanding.’’
5

•HR 2441 IH

1 (b) PROHIBITION AGAINST OFFSET BY NET OPERAT2 ING LOSS DEDUCTION.—Section 172 of such Code is

3 amended by redesignating subsection (i) as subsection (j)

4 and by inserting after subsection (h) the following new

5 subsection:

6 ‘‘(i) LIMITATION ON USE TO OFFSET DEDUCTIONS

7 DISALLOWED UNDER SECTION 280I.—The deduction al8 lowed under this section shall not reduce taxable income

9 for any taxable year to an amount less than the amount

10 disallowed under section 280I for such taxable year. Ap11 propriate adjustments in the application of subsection

12 (b)(2) shall be made to take into account the provisions

13 of this subsection.’’.

14 (c) CLERICAL AMENDMENT.—The table of sections

15 for part IX of subchapter B of chapter 1 of such Code

16 is amended by adding at the end thereof the following new

17 item:

‘‘Sec. 280I. Disallowance of payments under settlement agreements and for compensatory damages under certain

environmental laws.’’

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

19 this section shall apply to amounts paid after the date of

20 the enactment of this Act.

Æ