[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3622 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 3622

    To amend the Internal Revenue Code of 1986 to extend the golden 
 parachute excise tax to sales of company stock by corporate insiders 
   occurring when the company prevents rank-and-file employees from 
  selling company stock held in their 401(k) plan, and to ensure more 
     accurate reporting of liabilities to workers and shareholders.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 24, 2002

   Mr. Rangel (for himself, Mr. Gephardt, Mr. Stark, Mr. Matsui, Mr. 
 Coyne, Mr. McDermott, Mr. Kleczka, Mr. Lewis of Georgia, Mr. Neal of 
 Massachusetts, Mr. Jefferson, Mr. Becerra, Mr. Doggett, Mr. LaFalce, 
 Mr. Levin, and Mr. McNulty) 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 extend the golden 
 parachute excise tax to sales of company stock by corporate insiders 
   occurring when the company prevents rank-and-file employees from 
  selling company stock held in their 401(k) plan, and to ensure more 
     accurate reporting of liabilities to workers and shareholders.

    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 ``Emergency Worker and Investor 
Protection Act of 2002''.

SEC. 2. CERTAIN SALES OF COMPANY STOCK BY CORPORATE INSIDERS TO BE 
              SUBJECT TO EXCISE TAX ON GOLDEN PARACHUTE PAYMENTS.

    (a) In General.--Section 4999 of the Internal Revenue Code of 1986 
(relating to golden parachute payments) is amended by redesignating 
subsection (c) as subsection (d) and by inserting after subsection (b) 
the following new subsection:
    ``(c) Certain Sales of Company Stock by Corporate Insiders.--
            ``(1) In general.--For purposes of this section, the term 
        `excess parachute payment' includes any amount realized by a 
        corporate insider on the sale or exchange of stock in the 
        corporation with respect to which the individual is a corporate 
        insider if such sale or exchange occurs while such corporation 
        (or any other entity consolidated with such corporation for 
        purposes of reporting to the Securities and Exchange 
        Commission) maintains a transfer-restricted 401(k) plan.
            ``(2) Corporate insider.--For purposes of this subsection, 
        the term `corporate insider' means, with respect to a 
        corporation, any individual who is subject to the requirements 
        of section 16(a) of the Securities Exchange Act of 1934 with 
        respect to such corporation.
            ``(3) Transfer-restricted 401(k) plan.--For purposes of 
        this subsection, the term `transfer-restricted 401(k) plan' 
        means, with respect to any period, any qualified cash or 
        deferred arrangement (as defined in section 401(k)(2)) if, 
        during such period, any participant in such arrangement is not 
        able to freely sell employer stock--
                    ``(A) which is held in such participant's account 
                under such arrangement, and
                    ``(B) which is attributable to employee 
                contributions, employer contributions, or earnings 
                thereon.
            ``(4) Application of subsection.--This subsection shall 
        apply to sales and exchanges during the 6-month period 
        beginning on the date of the enactment of this subsection.''
    (b) Effective Date.--The amendment made by this section shall apply 
to sales and exchanges on or after the date of the enactment of this 
Act.

SEC. 3. DENIAL OF DEDUCTION FOR PAYMENTS ON DEBT INSTRUMENTS NOT 
              INCLUDED AS LIABILITIES FOR PURPOSES OF SHAREHOLDER 
              REPORTING.

    (a) In General.--Paragraph (2) of section 163(l) of the Internal 
Revenue Code of 1986 (relating to disallowance of deduction on certain 
debt instruments of corporations) is amended to read as follows:
            ``(2) Disqualified debt instrument.--For purposes of this 
        subsection, the term `disqualified debt instrument' means--
                    ``(A) any indebtedness of a corporation which is 
                payable in equity of the issuer or a related party, and
                    ``(B) in the case of an SEC registrant--
                            ``(i) any indebtedness of such registrant 
                        if such indebtedness is not shown in the 
                        certified annual report as part of the total 
                        liabilities of such registrant, and
                            ``(ii) any indebtedness of an off-balance-
                        sheet entity if the proceeds from the issuance 
                        of such indebtedness are used directly or 
                        indirectly to acquire stock (or other ownership 
                        interest) in such registrant.''
    (b) Definitions.--Subsection (l) of section 163 of such Code is 
amended by redesignating paragraph (5) as paragraph (8) and by 
inserting after paragraph (4) the following new paragraphs:
            ``(5) Certified annual report.--For purposes of this 
        subsection, the term `certified annual report' means, with 
        respect to any taxable year, any annual report (or financial 
        statement) covering all or part of such taxable year--
                    ``(A) which is required to be filed with the 
                Securities and Exchange Commission, and
                    ``(B) which is required to be certified by an 
                independent public accountant.
            ``(6) SEC registrant.--The term `SEC registrant' means--
                    ``(A) any corporation which is required to file a 
                certified annual report with the Securities and 
                Exchange Commission, and
                    ``(B) any other entity the assets and liabilities 
                of which are consolidated with a corporation described 
                in subparagraph (A) for purposes of such a report.
            ``(7) Off-balance-sheet entity.--For purposes of this 
        subsection, the term `off-balance-sheet entity' means, with 
        respect to any SEC registrant, an entity in which such 
        registrant holds an ownership interest if--
                    ``(A) the assets and liabilities of such entity are 
                not consolidated as part of the assets and liabilities 
                of the registrant for purposes of such registrant's 
                certified annual report, and
                    ``(B) for purposes of this title, such entity is 
                treated as a partnership or trust or is disregarded as 
                an entity separate from its owner pursuant to 
                regulations issued by the Secretary.''
    (c) Effective Date.--The amendments made by this section shall 
apply to instruments issued after the date of the enactment of this 
Act.
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