No Tax Write-offs for Corporate Wrongdoers Act

Bill: 117-s-4318
Sponsor: full_name: Sen. Leahy, Patrick J. [D-VT]
Introduced: 2022-05-26
Policy area: Taxation
Subjects: Civil actions and liability

Competition and antitrust

Finance and Financial Sector

Income tax deductions

Income tax exclusion

Life, casualty, property insurance
Latest action: action_date: 2022-05-26
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2022-05-26
action_desc: Introduced in Senate
text: <p><b>No Tax Write-offs for Corporate Wrongdoers Act</b></p> <p>This bill denies a tax deduction for any amount paid or incurred for punitive damages in connection with any judgment in, or settlement of, any legal action. The bill also requires the gross income of a taxpayer to include any amount paid to or on behalf of the taxpayer as insurance or otherwise by reason of the taxpayer's liability (or agreement) to pay punitive damages.</p> <p>

tv_txt: II 117th CONGRESS 2d Session S. 4318 IN THE SENATE OF THE UNITED STATES May 26, 2022 Mr. Leahy introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to disallow any deduction for punitive damages, and for other purposes.

1. Short title This Act may be cited as the No Tax Write-offs for Corporate Wrongdoers Act . 2. Disallowance of deduction for punitive damages (a) Disallowance of deduction (1) In general Section 162(g) of the Internal Revenue Code of 1986 is amended— (A) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively; (B) by striking If and inserting: (1) Treble damages If ; and (C) by adding at the end the following new paragraph: (2) 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. . (2) Conforming amendment The heading for section 162(g) of such Code is amended by inserting or Punitive Damages after Laws . (b) Inclusion in income of punitive damages paid by insurer or otherwise (1) 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: 92. 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. . (2) 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. . (3) 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. 92. Punitive damages compensated by insurance or otherwise. . (c) Effective Date The amendments made by this section shall apply to damages paid or incurred on or after the date of the enactment of this Act.