I
107TH CONGRESS
2D SESSION
H. R. 3622
To amend the Internal Revenue Code of 1986 to extend the golden parachute
excise tax to sales of company stock by corporate insiders occurring
when the company prevents rank-and-file employees from selling company
stock held in their 401(k) plan, and to ensure more accurate reporting
of liabilities to workers and shareholders.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 24, 2002
Mr. RANGEL (for himself, Mr. GEPHARDT, Mr. STARK, Mr. MATSUI, Mr.
COYNE, Mr. MCDERMOTT, Mr. KLECZKA, Mr. LEWIS of Georgia, Mr.
NEAL of Massachusetts, Mr. JEFFERSON, Mr. BECERRA, Mr. DOGGETT,
Mr. LAFALCE, Mr. LEVIN, and Mr. MCNULTY) 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 extend
the golden parachute excise tax to sales of company
stock by corporate insiders occurring when the company
prevents rank-and-file employees from selling company
stock held in their 401(k) plan, and to ensure more
accurate reporting of liabilities to workers and share-
holders.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Emergency Worker
and Investor Protection Act of 2002’’.
SEC. 2. CERTAIN SALES OF COMPANY STOCK BY COR-
PORATE INSIDERS TO BE SUBJECT TO EX-
CISE TAX ON GOLDEN PARACHUTE PAY-
MENTS.
(a) IN GENERAL.—Section 4999 of the Internal Rev-
enue Code of 1986 (relating to golden parachute pay-
ments) is amended by redesignating subsection (c) as sub-
section (d) and by inserting after subsection (b) the fol-
lowing new subsection:
‘‘(c) CERTAIN SALES OF COMPANY STOCK BY COR-
PORATE INSIDERS.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘excess parachute payment’ includes
any amount realized by a corporate insider on the
sale or exchange of stock in the corporation with re-
spect to which the individual is a corporate insider
if such sale or exchange occurs while such corpora-
tion (or any other entity consolidated with such cor-
poration for purposes of reporting to the Securities
and Exchange Commission) maintains a transfer-re-
stricted 401(k) plan.
‘‘(2) CORPORATE
INSIDER.—For purposes of
this subsection, the term ‘corporate insider’ means,
with respect to a corporation, any individual who is
subject to the requirements of section 16(a) of the
Securities Exchange Act of 1934 with respect to
such corporation.
‘‘(3) TRANSFER-RESTRICTED
401(k) PLAN.—
For purposes of this subsection, the term ‘transfer-
restricted 401(k) plan’ means, with respect to any
period, any qualified cash or deferred arrangement
(as defined in section 401(k)(2)) if, during such pe-
riod, any participant in such arrangement is not able
to freely sell employer stock—
‘‘(A) which is held in such participant’s ac-
count under such arrangement, and
‘‘(B) which is attributable to employee con-
tributions, employer contributions, or earnings
thereon.
‘‘(4) APPLICATION OF SUBSECTION.—This sub-
section shall apply to sales and exchanges during the
6-month period beginning on the date of the enact-
ment of this subsection.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to sales and exchanges on or after
the date of the enactment of this Act.
SEC. 3. DENIAL OF DEDUCTION FOR PAYMENTS ON DEBT
INSTRUMENTS NOT INCLUDED AS LIABIL-
ITIES FOR PURPOSES OF SHAREHOLDER RE-
PORTING.
(a) IN GENERAL.—Paragraph (2) of section 163(l)
of the Internal Revenue Code of 1986 (relating to dis-
allowance of deduction on certain debt instruments of cor-
porations) is amended to read as follows:
‘‘(2) DISQUALIFIED DEBT INSTRUMENT.—For
purposes of this subsection, the term ‘disqualified
debt instrument’ means—
‘‘(A) any indebtedness of a corporation
which is payable in equity of the issuer or a re-
lated party, and
‘‘(B) in the case of an SEC registrant—
‘‘(i) any indebtedness of such reg-
istrant if such indebtedness is not shown
in the certified annual report as part of
the total liabilities of such registrant, and
‘‘(ii) any indebtedness of an off-bal-
ance-sheet entity if the proceeds from the
issuance of such indebtedness are used di-
rectly or indirectly to acquire stock (or
other ownership interest) in such reg-
istrant.’’
an entity in which such registrant holds an owner-
ship interest if—
‘‘(A) the assets and liabilities of such enti-
ty are not consolidated as part of the assets
and liabilities of the registrant for purposes of
such registrant’s certified annual report, and
‘‘(B) for purposes of this title, such entity
is treated as a partnership or trust or is dis-
regarded as an entity separate from its owner
pursuant to regulations issued by the Sec-
retary.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to instruments issued after the
date of the enactment of this Act.
Æ