[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 1341 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                S. 1341

 To amend the Internal Revenue Code of 1986 to impose an excise tax on 
        certain proceeds received on SILO and LILO transactions.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 24, 2009

 Mr. Menendez 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 impose an excise tax on 
        certain proceeds received on SILO and LILO transactions.

    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 ``Close the SILO/LILO Loophole Act of 
2009''.

SEC. 2. EXCISE TAX ON CERTAIN PROCEEDS RECEIVED ON SILO AND LILO 
              TRANSACTIONS.

    (a) In General.--Subchapter F of chapter 42 of subtitle D of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new section:

``SEC. 4965A. EXCISE TAX ON CERTAIN PROCEEDS RECEIVED ON SILO AND LILO 
              TRANSACTIONS.

    ``(a) Imposition of Tax.--In the case of any person other than a 
SILO/LILO lessee that receives any ineligible amount as a party to any 
SILO transaction or any LILO transaction, such person shall pay a tax 
for the taxable year in which such ineligible amounts are received.
    ``(b) Amount of Tax.--The amount of the tax imposed under 
subsection (a) with respect to any person shall be an amount equal to 
the aggregate ineligible amounts received by such person in the taxable 
year.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Ineligible amount.--The term `ineligible amount' 
        means, with respect to any SILO transaction or LILO 
        transaction, the excess of--
                    ``(A) the aggregate proceeds received by the 
                taxpayer attributable to or arising from any remedial 
                action relating to such transaction, or any consensual 
                termination or rescission of any such transaction 
                (including the value of any property received and any 
                additional amounts purporting to indemnify or reimburse 
                the taxpayer for taxes assessable on any amounts 
                received), over
                    ``(B) the aggregate proceeds described in 
                subparagraph (A) that are received from third parties 
                (other than the SILO/LILO lessee) pursuant to a payment 
                arrangement (including a defeasance escrow arrangement) 
                entered into at the time of such transaction in which 
                the SILO/LILO lessee's payment obligations were 
                economically defeased in whole or in part.
            ``(2) SILO transaction.--The term `SILO transaction' means 
        a purported sale-leaseback arrangement which is identified as a 
        listed transaction in Notice 2005-13.
            ``(3) LILO transaction.--The term `LILO transaction' means 
        a transaction which is a `lease-in/lease-out' transaction 
        described in Revenue Rulings 99-14 and 2002-69 and identified 
        as a listed transaction in Notice 2000-15, or which is 
        substantially similar to such a transaction.
            ``(4) SILO/LILO lessee.--The term `SILO/LILO lessee' means 
        any lessee in a SILO transaction or a LILO transaction that 
        is--
                    ``(A) a tax-exempt entity (within the meaning of 
                section 168(h)(2)) or any other cooperative, nonprofit, 
                limited dividend, or mutual association, or
                    ``(B) any other person that does not derive a 
                substantial economic benefit from the tax 
                characterization of such transaction.
    ``(d) Certain Transfers Disregarded.--If any person who is subject 
to the tax under subsection (a) is a party to any transaction that 
results in the transfer of such person's rights with respect to a SILO 
transaction or a LILO transaction to any other person who would, but 
for this subsection, not be subject to the full amount of the tax under 
subsection (a) with respect to such SILO transaction or LILO 
transaction, then such transfer shall be disregarded for purposes of 
this section and the taxpayer shall continue to be treated as the 
recipient of any ineligible amount.
    ``(e) Regulatory Authority.--The Secretary is authorized to 
promulgate regulations consistent with the purposes of this section, 
including regulations to prevent the avoidance of such purposes.
    ``(f) Coordination With Other Taxes and Penalties.--The tax imposed 
by this section is in addition to any other tax, addition to tax, or 
penalty imposed under this title.''.
    (b) Clerical Amendment.--The table of sections for subchapter F of 
chapter 42 of subtitle D of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new item:

``Sec. 4965A. Excise tax on certain proceeds received on SILO and LILO 
                            transactions.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts received after the date of the introduction of this 
Act, in taxable years ending after such date.

SEC. 3. DENIAL OF DEDUCTION FOR COSTS OF CERTAIN ACTIONS RELATING TO 
              SILO AND LILO TRANSACTIONS.

    (a) In General.--Part IX of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 
269B the following new section:

``SEC. 269C. COSTS OF CERTAIN ACTIONS RELATING TO SILO AND LILO 
              TRANSACTIONS.

    ``(a) General Rule.--If any party to a SILO transaction or a LILO 
transaction (other than a SILO/LILO lessee) brings a remedial action 
seeking to recover any ineligible amount with respect to such 
transaction, in computing taxable income no deduction shall be allowed 
for any attorney fees or other costs attributable to such action.
    ``(b) Definitions.--For purposes of this section, the terms `SILO 
transaction', `LILO transaction', `SILO/LILO lessee', and `ineligible 
amount' have the meanings given such terms by section 4965A(c).''.
    (b) Clerical Amendment.--The table of sections for part IX of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by inserting after the item relating to section 269B the 
following new item:

``Sec. 269C. Costs of certain actions relating to SILO and LILO 
                            transactions.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to costs incurred after the date of the introduction of this Act.
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