Stop Deducting Damages Act of 2015

Bill: 114-hr-2486
Sponsor: full_name: Rep. Welch, Peter [D-VT-At Large]
Introduced: 2015-05-20
Policy area: Taxation
Subjects: Civil actions and liability

Income tax deductions

Income tax exclusion

Life, casualty, property insurance
Latest action: action_date: 2015-05-20
text: Referred to the House Committee on Ways and Means.

Summaries:
action_date: 2015-05-20
action_desc: Introduced in House
text: <p><strong>Stop Deducting Damages Act of 2015</strong></p> <p> Amends the Internal Revenue Code to: (1) deny a tax deduction for any amount paid or incurred for compensatory or punitive damages in connection with any judgment in, or settlement of, any action against a government; and (2) include in gross income any amount paid as insurance or otherwise due to liability for punitive damages.</p>

tv_txt: I 114th CONGRESS 1st Session H. R. 2486 IN THE HOUSE OF REPRESENTATIVES May 20, 2015 Mr. Welch (for himself and Mr. Gutiérrez ) 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 disallow deductions for the payment of compensatory and punitive damages to a government, and for other purposes.

1. Short title This Act may be cited as the Stop Deducting Damages Act of 2015 . 2. Treatment of payments of compensatory and punitive damages paid to a government (a) In general Section 162(f) of the Internal Revenue Code of 1986 is amended to read as follows: (f) Damages paid to a government (1) Fines and penalties No deduction shall be allowed under subsection (a) for any fine or similar penalty paid to a government for the violation of any law. (2) Compensatory damages No deduction shall be allowed under this chapter for any amount paid or incurred for compensatory damages in connection with any judgment in, or settlement of, any action against a government. (3) Punitive damages No deduction shall be allowed under this chapter for any amount paid or incurred for punitive damages in connection with any judgment in, or settlement of, any action against a government. This paragraph shall not apply to punitive damages described in section 104(c). . (b) Effective date The amendments made by this section shall apply to damages paid or incurred after December 31, 2014. 3. Inclusion in income of punitive damages paid by insurer or otherwise (a) In general Part II of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 91. Punitive damages compensated by insurance or otherwise Gross income shall include any amount paid to or on behalf of a taxpayer as insurance or otherwise by reason of the taxpayer’s liability (or agreement) to pay punitive damages. . (b) Reporting requirements Section 6041 of such Code is amended by adding at the end the following new subsection: (h) Section To Apply to punitive damages compensation This section shall apply to payments by a person to or on behalf of another person as insurance or otherwise by reason of the other person’s liability (or agreement) to pay punitive damages. . (c) Conforming amendment The table of sections for part II of subchapter B of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 91. Punitive damages compensated by insurance or otherwise. . (d) Effective date The amendments made by this section shall apply to damages paid or incurred after December 31, 2014.