[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1411 Introduced in Senate (IS)]







105th CONGRESS
  1st Session
                                S. 1411

To amend the Internal Revenue Code of 1986 to disallow a Federal income 
 tax deduction for payments to the Federal Government or any State or 
     local government in connection with any tobacco litigation or 
settlement and to use any increased Federal revenues to promote public 
                                health.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            November 7, 1997

   Mr. Mack (for himself, Mr. Harkin, Mr. DeWine, Mr. Santorum, Ms. 
 Collins, Ms. Snowe, Mr. D'Amato, Mr. Smith of Oregon, Mrs. Boxer, Mr. 
   Kennedy, Ms. Feinstein, Mr. Lautenberg, Mr. Graham, Mr. Dodd, Mr. 
  Durbin, and Mr. Wellstone) 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 a Federal income 
 tax deduction for payments to the Federal Government or any State or 
     local government in connection with any tobacco litigation or 
settlement and to use any increased Federal revenues to promote public 
                                health.

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

SECTION 1. DEDUCTION DISALLOWED FOR CERTAIN TOBACCO COMPANY PAYMENTS.

    (a) In General.--Section 162 of the Internal Revenue Code of 1986 
(defining trade or business expenses) is amended by redesignating 
subsection (o) as subsection (p) and by inserting after subsection (n) 
the following new subsection:
    ``(o) Certain Tobacco Company Payments Not Deductible.--
            ``(1) In general.--No deduction otherwise allowable shall 
        be allowed under this chapter for any amount paid or incurred 
        to the Federal Government or to any State or local government 
        pursuant to any applicable tobacco judgment or settlement.
            ``(2) Reporting of payments.--Any taxpayer to which 
        paragraph (1) applies for any taxable year shall include on its 
        return of tax imposed by this chapter for such taxable year the 
        total amount of payments for which a deduction is not allowed 
        and such other information as the Secretary may prescribe.
            ``(3) Applicable tobacco judgment or settlement.--For 
        purposes of this subsection, the term `applicable tobacco 
        judgment or settlement' means--
                    ``(A) any judgment in any civil action seeking 
                damages in connection with the manufacture or sale of 
                any tobacco product; and
                    ``(B) any settlement agreement arising out of any 
                such civil action, including the tobacco industry 
                settlement agreement of June 20, 1997 (and any 
                modification or successor thereof).
        Such term shall include any law enacted to implement any 
        settlement described in subparagraph (B).''
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to any payments made on or after November ____, 1997, 
        pursuant to any judgment entered, or settlement agreement 
        entered into, on or after such date.
            (2) Special rule for settlement agreement.--In the case of 
        the tobacco industry settlement agreement of June 20, 1997, 
        such agreement shall be treated as entered into on the date of 
        the enactment of Federal legislation implementing the 
        agreement.

SEC. 2. NATIONAL INSTITUTES OF HEALTH TRUST FUND.

    (a) In General.--Subchapter A of chapter 98 of the Internal Revenue 
Code of 1986 (relating to trust fund code) is amended by adding at the 
end the following new section:

``SEC. 9512. NATIONAL INSTITUTES OF HEALTH TRUST FUND FOR HEALTH 
              RESEARCH.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `National 
Institutes of Health Trust Fund for Health Research' (hereafter 
referred to in this section as the `Trust Fund'), consisting of such 
amounts as may be appropriated or transferred to the Trust Fund as 
provided in this section or section 9602(b).
    ``(b) Transfers to Trust Fund.--There is hereby appropriated to the 
Trust Fund an amount equivalent to the net increase in revenues 
received in the Treasury attributable to the application of section 
162(o) as estimated by the Secretary.
    ``(c) Obligations From Trust Fund.--
            ``(1) In general.--Subject to the provisions of paragraph 
        (4), with respect to the amounts made available in the Trust 
        Fund in a fiscal year, the Secretary of Health and Human 
        Services shall distribute during any fiscal year--
                    ``(A) 2 percent of such amounts to the Office of 
                the Director of the National Institutes of Health to be 
                allocated at the Director's discretion--
                            ``(i) for carrying out the responsibilities 
                        of the Office of the Director, including the 
Office of Research on Women's Health and the Office of Research on 
Minority Health, the Office of Alternative Medicine, the Office of Rare 
Disease Research, the Office of Behavioral and Social Sciences Research 
(for use for efforts to reduce tobacco use), the Office of Dietary 
Supplements, and the Office for Disease Prevention; and
                            ``(ii) for construction and acquisition of 
                        equipment for or facilities of or used by the 
                        National Institutes of Health;
                    ``(B) 2 percent of such amounts for transfer to the 
                National Center for Research Resources to carry out 
                section 1502 of the National Institutes of Health 
                Revitalization Act of 1993 concerning Biomedical and 
                Behavioral Research Facilities; and
                    ``(C) the remainder of such amounts to member 
                institutes and centers, including the Office of AIDS 
                Research, of the National Institutes of Health in the 
                same proportion to the total amount received under this 
                section, as the amount of annual appropriations under 
                appropriations Acts for each member institute and 
                Centers for the fiscal year bears to the total amount 
                of appropriations under appropriations Acts for all 
                member institutes and Centers of the National 
                Institutes of Health for the fiscal year.
            ``(2) Plans of allocation.--The amounts transferred under 
        paragraph (1)(C) shall be allocated by the Director of the 
        National Institutes of Health or the various directors of the 
        institutes and centers, as the case may be, pursuant to 
        allocation plans developed by the various advisory councils to 
        such directors, after consultation with such directors.
            ``(3) Grants and contracts fully funded in first year.--
        With respect to any grant or contract funded by amounts 
        distributed under paragraph (1), the full amount of the total 
        obligation of such grant or contract shall be funded in the 
        first year of such grant or contract, and shall remain 
        available until expended.
            ``(4) Trigger and release of monies and phase-in.--
                    ``(A) Trigger and release.--No expenditure shall be 
                made under paragraph (1) during any fiscal year in 
                which the annual amount appropriated for the National 
                Institutes of Health is less than the amount so 
                appropriated for the prior fiscal year.
                    ``(B) Phase-in.--The Secretary of Health and Human 
                Services shall phase in the distributions required 
                under paragraph (1) so that--
                            ``(i) 25 percent of the amount in the Trust 
                        Fund is distributed in the first fiscal year 
                        for which funds are available;
                            ``(ii) 50 percent of the amount in the 
                        Trust Fund is distributed in the second fiscal 
                        year for which funds are available;
                            ``(iii) 75 percent of the amount in the 
                        Trust Fund is distributed in the third fiscal 
                        year for which funds are available; and
                            ``(iv) 100 percent of the amount in the 
                        Trust Fund is distributed in the fourth and 
                        each succeeding fiscal year for which funds are 
                        available.
    ``(d) Budget Treatment of Amounts in Trust Fund.--The amounts in 
the Trust Fund shall be excluded from, and shall not be taken into 
account, for purposes of any budget enforcement procedure under the 
Congressional Budget Act of 1974 or the Balanced Budget and Emergency 
Deficit Control Act of 1985.''
    (b) Conforming Amendment.--The table of sections for such 
subchapter A is amended by adding at the end the following new item:

``Sec. 9512. National Institutes of Health Trust Fund for Health 
                            Research.''
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