I
105TH CONGRESS
2D SESSION
H. R. 3907
To amend the Internal Revenue Code of 1986 to provide for a 95 percent
income tax rate on attorneys’ fees paid in connection with the settlement
(as part of the tobacco settlement agreement dated June 20, 1997)
of any action maintained by a State.
IN THE HOUSE OF REPRESENTATIVES
MAY 20, 1998
Mr. BRYANT 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 provide
for a 95 percent income tax rate on attorneys’ fees
paid in connection with the settlement (as part of the
tobacco settlement agreement dated June 20, 1997) of
any action maintained by a State.
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 ‘‘Attorneys’ Anti-enrich-
ment Act of 1998’’.
SEC. 2. 95 PERCENT RATE OF TAX ON TOBACCO SETTLE-
MENT ATTORNEYS’ FEES.
(a) IN GENERAL.—Subchapter A of chapter 1 of the
Internal Revenue Code of 1986 (relating to determination
of tax liability) is amended by adding at the end the fol-
lowing new part:
‘‘PART VIII—CERTAIN ATTORNEYS’ FEES
RELATED TO TOBACCO SETTLEMENT
‘‘Sec. 59B. Certain attorneys’ fees related to tobacco settlement.
SEC. 59B. CERTAIN ATTORNEYS’ FEES RELATED TO TO-
BACCO SETTLEMENT.
‘‘(a) IMPOSITION OF TAX.—In addition to any other
tax imposed by this subtitle, there is hereby imposed a
tax equal to 95 percent of the excess of—
‘‘(1) the amount of tobacco settlement-related
attorneys’ fees which would (but for subsection (c))
be includible in the gross income of the taxpayer for
the taxable year, over
‘‘(2) the deductions properly apportioned or al-
located to such fees.
‘‘(b) TOBACCO SETTLEMENT-RELATED ATTORNEYS’
FEES.—For purposes of this section, the term ‘tobacco
settlement-related attorneys’ fees’ means attorneys’ fees
paid in connection with the settlement of an action main-
tained by a State against 1 or more tobacco companies
to recover tobacco-related medicaid expenditures or for
other causes of action involved in the settlement agree-
ment dated June 20, 1997, whether such fees are paid
under any court order, settlement agreement, contingency
fee arrangement, arbitration procedure, alternative dis-
pute resolution procedure (including mediation), or other
arrangement.
‘‘(c) NO ADDITIONAL INCOME TAX.—For purposes
of this chapter, gross income shall not include any tobacco
settlement-related attorneys’ fees, and no deduction shall
be allowed which is properly apportioned or allocated to
such fees.’’
(b) CLERICAL AMENDMENT.—The table of parts of
subchapter A of chapter 1 of such Code is amended by
adding at the end the following new item:
‘‘Part VIII. Certain attorneys’ fees related to tobacco settlement.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after June
20, 1997.
SEC. 3. REVENUES APPROPRIATED BACK TO STATES PAY-
ING ATTORNEYS’ FEES.
There is hereby appropriated (from amounts in the
Treasury not otherwise appropriated) to each State which
paid any attorneys’ fees which are subject to tax under
section 59B of the Internal Revenue Code of 1986 an
amount equal to the revenues received in the Treasury
under such section 59B which are attributable to attor-
neys’ fees paid by such State.
Æ