[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 1140 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                S. 1140

  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 SENATE OF THE UNITED STATES

                             June 22, 1993

Mr. Kerry (for himself and Mr. Kennedy) 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 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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Sewer and Water Fee Deductibility 
Act of 1993''.

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

    (a) In General.--Subsections (b) of section 164 of the Internal 
Revenue Code of 1986 is amended by redesignating paragraphs (3) and (4) 
as paragraphs (4) and (5), respectively, and by inserting after 
paragraph (2) the following new paragraph:
            ``(3) Deduction allowed for local sewer and water fees.--
                    ``(A) In general.--To the extent that the amount of 
                local sewer and water fees paid or accrued during any 
                taxable year exceeds 1 percent of adjusted gross 
                income, such fees shall be allowed as a deduction under 
                subsection (a) in the same manner as local real 
                property taxes.
                    ``(B) Definition.--For purposes of subparagraph 
                (A), the term `local sewer and water fees' means any 
                amount imposed by a local government, State government 
                (or any agency or instrumentality thereof), or by the 
                District of Columbia as a charge for sewer or water 
                service. Such term shall not include any amount 
                allowable as a deduction without regard to this 
                paragraph.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1993.

SEC. 3. DENIAL OF DEDUCTION FOR PAYMENTS UNDER SETTLEMENT AGREEMENTS 
              AND FOR COMPENSATORY DAMAGES UNDER CERTAIN ENVIRONMENTAL 
              LAWS.

    (a) General Rule.--Part IX of subchapter B of the Internal Revenue 
Code of 1986 (relating to certain items not deductible) is amended by 
adding at the end thereof the following new section:

``SEC. 280I. DISALLOWANCE OF PAYMENTS UNDER SETTLEMENT AGREEMENTS AND 
              FOR COMPENSATORY DAMAGES UNDER CERTAIN ENVIRONMENTAL 
              LAWS.

    ``(a) General Rule.--No deduction shall be allowed for amounts 
paid--
            ``(1) to any agency of the United States pursuant to any 
        environmental settlement,
            ``(2) for costs of activities carried out pursuant to any 
        environmental settlement, or
            ``(3) to any person or government as a payment in the 
        nature of compensatory damages relating to a violation or 
        potential violation under any applicable environmental law.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Environmental settlement.--The term `environmental 
        settlement' means any settlement of a claim (or potential 
        claim) of a violation of any provision of an applicable 
        environmental law if the payment of any fine or penalty for 
        such violation would not be allowed as a deduction under this 
        chapter.
            ``(2) Applicable environmental law.--The term `applicable 
        environmental law' means--
                    ``(A) the Oil Pollution Act of 1990,
                    ``(B) the Federal Water Pollution Control Act,
                    ``(C) the Comprehensive Environmental Response, 
                Compensation, and Liability Act of 1980,
                    ``(D) the Solid Waste Disposal Act,
                    ``(E) the Marine Protection, Research and 
                Sanctuaries Act,
                    ``(F) the Clean Air Act,
                    ``(G) the Emergency Planning and Community Right-
                To-Know Act, and
                    ``(H) the Toxic Substances Control Act.
            ``(3) Settlement.--The term `settlement' includes any 
        consent degree and any contractual understanding.''.
    (b) Prohibition Against Offset by Net Operating Loss Deduction.--
Section 172 of such Code is amended by redesignating subsection (i) as 
subsection (j) and by inserting after subsection (h) the following new 
subsection:
    ``(i) Limitation on Use To Offset Deductions Disallowed Under 
Section 280I.--The deduction allowed under this section shall not 
reduce taxable income for any taxable year to an amount less than the 
amount disallowed under section 280I for such taxable year. Appropriate 
adjustments in the application of subsection (b)(2) shall be made to 
take into account the provisions of this subsection.''.
    (c) Clerical Amendment.--The table of sections for part IX of 
subchapter B of chapter 1 of such Code is amended by adding at the end 
thereof the following new item:

                              ``Sec. 280I. Disallowance of payments 
                                        under settlement agreements and 
                                        for compensatory damages under 
                                        certain environmental laws.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to amounts paid after the date of the enactment of this Act.

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