S AMDT 1007

S 1007 IS

To amend the Internal Revenue Code of 1986 to deny a deduction for excessive compensation of any employee of an employer.

May 7, 2009

Mr. DURBIN introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

To amend the Internal Revenue Code of 1986 to deny a deduction for excessive compensation of any employee of an employer.

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 ‘Excessive Pay Capped Deduction Act of 2009’.

SEC. 2. DENIAL OF DEDUCTION FOR PAYMENTS OF EXCESSIVE COMPENSATION.

(a) In General- Section 162 of the Internal Revenue Code of 1986 is amended by inserting after subsection (h) the following new subsection:

‘(i) Excessive Compensation-

‘(1) IN GENERAL- No deduction shall be allowed under this chapter for any excessive compensation for any employee of the taxpayer.

‘(2) EXCESSIVE COMPENSATION- For purposes of this subsection, the term ‘excessive compensation’ means, with respect to any employee, the amount by which the compensation for services performed by such employee during the taxable year exceeds the amount which is equal to 100 times the amount of the average compensation for services performed by all employees of the taxpayer during the taxable year.

‘(3) OTHER DEFINITIONS AND SPECIAL RULES-

‘(A) COMPENSATION-

‘(i) IN GENERAL- For purposes of this subsection, the term ‘compensation’ includes wages, salary, fees, commissions, fringe benefits, deferred compensation, retirement contributions, options, bonuses, property, and any other form of remuneration that the Secretary determines is appropriate.

‘(ii) PART-TIME AND PART-YEAR EMPLOYEES- In the case of any employee which is a part-time employee of the taxpayer or which is not employed by the taxpayer for a full taxable year, the compensation of such employee shall be calculated for purposes of this subparagraph on an annualized basis.

‘(B) EMPLOYER- All persons treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as a single taxpayer for purposes of this subsection.

‘(4) REPORTING- Each employer that provides any excessive compensation to any employee during a taxable year shall file a report with the Secretary with respect to such taxable year including--

‘(A) the amount of compensation of the employee of the taxpayer receiving the lowest amount of compensation during such taxable year,

‘(B) the amount of compensation of the employee of the taxpayer receiving the highest amount of compensation during such taxable year,

‘(C) the average compensation of all employees of the taxpayer during such taxable year,

‘(D) the number of employees of the taxpayer who are receiving compensation that is more than 100 times the average compensation of all employees of the taxpayer during such taxable year, and

‘(E) the amounts of compensation of the employees described in subparagraph (D) during such taxable year.

Such report shall be filed at such time and in such manner as the Secretary may require.’.

(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.