Federal

DEPOSIT Act

Source: Congress.gov · 1,183 words in original text

What This Bill Does

This bill adds a new tax on bank executives who receive bonuses or make profits from selling company stock. The tax applies to executives at banks that the Federal Deposit Insurance Corporation (a government agency that insures bank deposits) takes over as conservator or receiver (takes control of). Money from this tax is intended to go back to the Deposit Insurance Fund (the account that pays depositors when banks fail).

Who It Affects

Bank executives (specifically those in high leadership positions at failed banks). The tax only applies to individuals whose income is greater than $250,000 in the year they receive the bonus or stock profits.

Key Provisions

• Executives at failed banks pay a 90 percent tax on bonuses received after March 1, 2023 if the bonus was paid within 60 days before the bank was taken over by the Federal Deposit Insurance Corporation (Sec. 3(a)) • Executives at failed banks pay a 100 percent tax on profits they make from selling stock in their bank if the sale happens within 60 days before the Federal Deposit Insurance Corporation takes over the bank (Sec. 3(a)) • An "executive officer" includes a bank's president, vice presidents in charge of major business areas, and anyone else making important policy decisions for the bank (Sec. 3(a)) • The tax applies to executives who worked at banks that are now under Federal Deposit Insurance Corporation control (Sec. 3(a))

What Changes

The Internal Revenue Code (federal tax law) adds a new tax on specific types of income for bank executives. These executives will owe additional taxes on bonuses and stock profits under the new rules instead of paying regular income tax rates on these amounts.

Important Definitions

• "Applicable individual" means an executive officer at a bank that was taken over by the Federal Deposit Insurance Corporation • "Excluded profits" means bonuses paid after March 1, 2023 within 60 days before a bank takeover, or profits from selling bank stock within 60 days before takeover • "Executive officer" means the president, vice presidents in charge of major business units, and others making policy decisions • "Insured depository institution" means a bank as defined in the Federal Deposit Insurance Act

Effective Date

The law applies to tax years ending after the bill becomes law. (Sec. 3(b))

I 118TH CONGRESS 1ST SESSION H. R. 1654 To amend the Internal Revenue Code of 1986 to impose a higher rate of tax on bonuses and profits from sales of stock received by executives employed by failing banks that were closed and for which the Federal Deposit Insurance Corporation has been appointed as conservator or receiver. IN THE HOUSE OF REPRESENTATIVES MARCH 17, 2023 Mr. SCHIFF (for himself, Mr. LEVIN, Mr. GOMEZ, Mr. TAKANO, Ms. MCCOL- LUM, Mrs. WATSON COLEMAN, Mr. GARAMENDI, Mr. MULLIN, Mr. GRI- JALVA, Mr. MCGOVERN, Ms. PINGREE, Mr. GOLDMAN of New York, Mr. SWALWELL, Mr. EVANS, Mr. BOYLE of Pennsylvania, Mr. POCAN, Ms. ESHOO, Mr. CARSON, and Mr. KHANNA) 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 impose a higher rate of tax on bonuses and profits from sales of stock received by executives employed by failing banks that were closed and for which the Federal Deposit In- surance Corporation has been appointed as conservator or receiver. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 02:08 Mar 30, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1654.IH H1654 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 1654 IH SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Deliver Executive Prof- 2 its On Seized Institutions to Taxpayers Act’’ or the ‘‘DE- 3 POSIT Act’’. 4 SEC. 2. SENSE OF THE CONGRESS. 5 It is the sense of the Congress that the revenue raised 6 from the tax imposed under section 1(k) of the Internal 7 Revenue Code of 1986 (as added by section 3) will be re- 8 turned to the Deposit Insurance Fund (as defined in sec- 9 tion 3 of the Federal Deposit Insurance Act (12 U.S.C. 10 1813)). 11 SEC. 3. HIGHER RATE OF TAX ON BONUSES AND STOCK 12 PROFITS RECEIVED BY CERTAIN BANK EX- 13 ECUTIVES. 14 (a) IN GENERAL.—Section 1 of the Internal Revenue 15 Code of 1986 is amended by adding at the end the fol- 16 lowing new subsection: 17 ‘‘(k) RATE OF TAX ON PROFITS RECEIVED BY CER- 18 TAIN BANK EXECUTIVES.— 19 ‘‘(1) IN GENERAL.—In the case of any applica- 20 ble individual who receives any excluded profits dur- 21 ing the taxable year, the tax imposed by this section 22 shall be equal to— 23 ‘‘(A) the tax which would be imposed by 24 this section if the taxable income of such indi- 25 vidual for the taxable year were reduced (but 26 VerDate Sep 11 2014 02:08 Mar 30, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1654.IH H1654 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 1654 IH not below zero) by the amount of the excluded 1 profits received by such individual during such 2 taxable year, plus 3 ‘‘(B) 90 percent of the excluded profits de- 4 scribed in subclause (I) of paragraph (2)(B)(i) 5 which were received by such individual during 6 such taxable year, plus 7 ‘‘(C) 100 percent of the excluded profits 8 described in subclause (II) of such paragraph 9 which were received by such individual during 10 such taxable year. 11 ‘‘(2) DEFINITIONS.—For purposes of this sub- 12 section— 13 ‘‘(A) APPLICABLE INDIVIDUAL.—The term 14 ‘applicable individual’ means any individual— 15 ‘‘(i) who— 16 ‘‘(I) was employed by an insured 17 depository institution for which the 18 Federal Deposit Insurance Corpora- 19 tion has been appointed conservator 20 or receiver, and 21 ‘‘(II) served as an executive offi- 22 cer for such institution prior to such 23 conservatorship or receivership, and 24 VerDate Sep 11 2014 02:08 Mar 30, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1654.IH H1654 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 1654 IH ‘‘(ii) with respect to the taxable year 1 in which the excluded profits were received, 2 whose adjusted gross income (reduced by 3 the amount of such excluded profits) for 4 such taxable year was greater than 5 $250,000. 6 ‘‘(B) EXCLUDED PROFITS.— 7 ‘‘(i) IN GENERAL.—The term ‘ex- 8 cluded profits’ means, with respect to any 9 applicable individual for any taxable 10 year— 11 ‘‘(I) any payment in the nature 12 of a bonus which is paid— 13 ‘‘(aa) after March 1, 2023, 14 and 15 ‘‘(bb) by any insured deposi- 16 tory institution within the 60-day 17 period prior to the date on which 18 the Federal Deposit Insurance 19 Corporation was appointed con- 20 servator or receiver for such in- 21 stitution, or 22 ‘‘(II) any profit made by such ap- 23 plicable individual from the sale of 24 any security of the insured depository 25 VerDate Sep 11 2014 02:08 Mar 30, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1654.IH H1654 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 1654 IH institution that employs such applica- 1 ble individual, if that sale occurs not 2 more than 60 days before the date on 3 which the Federal Deposit Insurance 4 Corporation is appointed conservator 5 or receiver with respect to the insured 6 depository institution. 7 ‘‘(ii) CONTROLLED GROUPS.— 8 ‘‘(I) IN GENERAL.—For purposes 9 of clause (i), all persons treated as a 10 single employer under subsection (a) 11 or (b) of section 52 or under sub- 12 section (m) or (o) of section 414 shall 13 be treated as one person. 14 ‘‘(II) INCLUSION OF FOREIGN 15 CORPORATIONS.—For purposes of 16 subclause (I), in applying subsections 17 (a) and (b) of section 52 to this sec- 18 tion, section 1563 shall be applied 19 without regard to subsection (b)(2)(C) 20 thereof. 21 ‘‘(C) EXECUTIVE OFFICER.—The term ‘ex- 22 ecutive officer’ means, with respect to any in- 23 sured depository institution, its president, any 24 vice president of such institution in charge of a 25 VerDate Sep 11 2014 02:08 Mar 30, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1654.IH H1654 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 1654 IH principal business unit, division or function 1 (such as sales, administration or finance), any 2 other officer who performs a policy making 3 function or any other person who performs 4 similar policy making functions for such institu- 5 tion. Executive officers of subsidiaries may be 6 deemed executive officers of such institution if 7 they perform such policy making functions for 8 such institution. 9 ‘‘(D) INSURED DEPOSITORY INSTITU- 10 TION.—The term ‘insured depository institu- 11 tion’ has the same meaning given such term 12 under section 3 of the Federal Deposit Insur- 13 ance Act (12 U.S.C. 1813).’’. 14 (b) EFFECTIVE DATE.—The amendment made by 15 this section shall apply to taxable years ending after the 16 date of the enactment of this Act. 17 Æ VerDate Sep 11 2014 02:08 Mar 30, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H1654.IH H1654 kjohnson on DSK79L0C42PROD with BILLS

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