[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 936 Introduced in Senate (IS)]







108th CONGRESS
  1st Session
                                 S. 936

 To amend the Internal Revenue Code of 1986 to deny any deduction for 
              certain fines, penalties, and other amounts.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 29, 2003

 Mr. Baucus (for himself, Mr. Grassley, and Mr. McCain) 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 deny any deduction for 
              certain fines, penalties, and other amounts.

    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 ``Government Settlement Transparency 
Act of 2003''.

SEC. 2. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES, AND OTHER 
              AMOUNTS.

    (a) In General.--Subsection (f) of section 162 of the Internal 
Revenue Code of 1986 (relating to trade or business expenses) is 
amended to read as follows:
    ``(f) Fines, Penalties, and Other Amounts.--
            ``(1) In general.--Except as provided in paragraph (2), no 
        deduction otherwise allowable shall be allowed under this 
        chapter for any amount paid or incurred (whether by suit, 
        agreement, or otherwise) to, or at the direction of, a 
        government in relation to the violation of any law or the 
        investigation or inquiry into the potential violation of any 
        law.
            ``(2) Exception for amounts constituting restitution.--
        Paragraph (1) shall not apply to any amount which the taxpayer 
        establishes constitutes restitution for damage or harm caused 
        by the violation of any law or the potential violation of any 
        law. This paragraph shall not apply to any amount paid or 
        incurred as reimbursement to the government for the costs of 
        any investigation or litigation.
            ``(3) Treatment of certain nongovernmental regulatory 
        entities.--For purposes of paragraph (1), amounts paid or 
        incurred to, or at the direction of, the following 
        nongovernmental entities shall be treated as amounts paid or 
        incurred to, or at the direction of, a government:
                    ``(A) Any nongovernmental entity which exercises 
                self-regulatory powers (including imposing sanctions) 
                in connection with a qualified board or exchange (as 
                defined in section 1256(g)(7)).
                    ``(B) To the extent provided in regulations, any 
                nongovernmental entity which exercises self-regulatory 
                powers (including imposing sanctions) as part of 
                performing an essential governmental function.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to amounts paid or incurred after April 27, 2003, except that such 
amendment shall not apply to amounts paid or incurred under any binding 
order or agreement entered into on or before April 27, 2003. Such 
exception shall not apply to an order or agreement requiring court 
approval unless the approval was obtained on or before April 27, 2003.
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