Stop Subsidizing Multimillion Dollar Corporate Bonuses Act

I 117TH CONGRESS 1ST SESSION H. R. 697 To amend the Internal Revenue Code of 1986 to expand the denial of deduction for certain excessive employee remuneration, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 2, 2021 Mr. DOGGETT (for himself, Mr. BLUMENAUER, Mr. CICILLINE, Mr. COHEN, Mr. DEFAZIO, Ms. DELAURO, Mr. DESAULNIER, Mr. ESPAILLAT, Mr. GARAMENDI, Mr. GRIJALVA, Ms. MOORE of Wisconsin, Mr. PRICE of North Carolina, Ms. SCHAKOWSKY, and Mrs. WATSON COLEMAN) intro- duced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to expand the denial of deduction for certain excessive employee remuneration, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Stop Subsidizing Mul- 4 timillion Dollar Corporate Bonuses Act’’. 5 VerDate Sep 11 2014 20:35 Feb 22, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H697.IH H697 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 697 IH SEC. 2. EXPANSION OF DENIAL OF DEDUCTION FOR CER- 1 TAIN EXCESSIVE EMPLOYEE REMUNERA- 2 TION. 3 (a) IN GENERAL.— 4 (1) EXPANSION.—Section 162(m) of the Inter- 5 nal Revenue Code of 1986 is amended— 6 (A) by striking ‘‘applicable employee remu- 7 neration’’ each place it appears in paragraphs 8 (1), (4), and (5)(E) and inserting ‘‘applicable 9 remuneration’’, 10 (B) by striking ‘‘covered employee’’ each 11 place it appears in paragraphs (1) and (4) and 12 inserting ‘‘covered individual’’, and 13 (C) by striking ‘‘employee’’ each place it 14 appears in paragraph (1) and subparagraphs 15 (A), (C)(ii), and (E) of paragraph (4) and in- 16 serting ‘‘individual’’. 17 (2) COVERED INDIVIDUAL.—Paragraph (3) of 18 section 162(m) of such Code is amended to read as 19 follows: 20 ‘‘(3) COVERED INDIVIDUAL.—For purposes of 21 this subsection, the term ‘covered individual’ 22 means— 23 ‘‘(A) any individual who performs services 24 (directly or indirectly) for the taxpayer (or any 25 VerDate Sep 11 2014 20:35 Feb 22, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H697.IH H697 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 697 IH predecessor) for any taxable year beginning 1 after December 31, 2020, or 2 ‘‘(B) any employee— 3 ‘‘(i) who was the principal executive 4 officer or principal financial officer of the 5 taxpayer (or any predecessor) at any time 6 during any preceding taxable year begin- 7 ning after December 31, 2016, and before 8 January 1, 2021, or who was an individual 9 acting in such a capacity, or 10 ‘‘(ii) the total compensation of whom 11 for any taxable year described in clause (i) 12 was required to be reported to shareholders 13 under the Securities Exchange Act of 1934 14 by reason of such individual being among 15 the 3 highest compensated officers for the 16 taxable year (other than any individual de- 17 scribed in clause (i)). 18 Such term shall include any employee who would be 19 described in subparagraph (B)(ii) if the reporting 20 described in such subparagraph were required as so 21 described.’’. 22 (3) CONFORMING AMENDMENTS.— 23 VerDate Sep 11 2014 20:35 Feb 22, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H697.IH H697 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 697 IH (A) The heading for section 162(m) of the 1 Internal Revenue Code of 1986 is amended by 2 striking ‘‘EMPLOYEE’’. 3 (B) The heading for section 162(m)(4) is 4 amended by striking ‘‘EMPLOYEE’’. 5 (b) MODIFICATION OF DEFINITION OF PUBLICLY 6 HELD CORPORATION.—Section 162(m)(2) of the Internal 7 Revenue Code of 1986 is amended— 8 (1) by inserting ‘‘, with respect to any taxable 9 year,’’ after ‘‘means’’, and 10 (2) by striking subparagraph (B) and inserting 11 the following: 12 ‘‘(B) that was required to file reports 13 under section 15(d) of such Act (15 U.S.C. 14 78o(d)) at any time during the 3-taxable year 15 period ending with such taxable year.’’. 16 (c) REGULATORY AUTHORITY.— 17 (1) IN GENERAL.—Section 162(m) of the Inter- 18 nal Revenue Code of 1986 is amended by adding at 19 the end the following new paragraph: 20 ‘‘(7) REGULATIONS.—The Secretary may pre- 21 scribe such guidance, rules, or regulations as are 22 necessary to carry out the purposes of this sub- 23 section, including regulations— 24 ‘‘(A) with respect to reporting, and 25 VerDate Sep 11 2014 20:35 Feb 22, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H697.IH H697 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 697 IH ‘‘(B) to prevent avoidance of the purposes 1 of this section by providing compensation 2 through a pass-through or other entity.’’. 3 (2) CONFORMING AMENDMENT.—Paragraph (6) 4 of section 162(m) of such Code is amended by strik- 5 ing subparagraph (H). 6 (d) EFFECTIVE DATE.—The amendments made by 7 this section shall apply to taxable years beginning after 8 December 31, 2020. 9 Æ VerDate Sep 11 2014 20:35 Feb 22, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\H697.IH H697 pamtmann on DSKBC07HB2PROD with BILLS