,,ii  #aacth ,,congress  #ast ,session  
,s4 #afed  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,november #e1  
#bjac,mr4 ,reed 7for himself and ,mr4   
,grassley7 introduced the following     
bill2 which was read twice and referred 
to the ,committee on ,finance  ,a ,,bill
  ,to amend the ,internal ,revenue ,code
 of #aihf to deny tax deductions for    
corporate regulatory violations4  #a4   
,short title ,this ,act may be cited as 
the ,government ,settlement             
,transparency and ,reform ,act4  #b4    
,denial of deduction for certain fines1 
penalties1 and other amounts  7a7 ,in   
,general ,subsection 7f7 of section #afb
 of the ,internal ,revenue ,code of     
#aihf is amended to read as follows3    
7f7 ,fines1 ,penalties1 and ,other      
,amounts  7#a7 ,in general ,except as   
provided in the following paragraphs of 
this subsection1 no deduction otherwise 
allowable shall be allowed under this   
chapter for any amount paid or incurred 
7whether by suit1 agreement1 or         

otherwise7 to1 or at the direction of1 a
 government or governmental entity in   
relation to the violation of any law or 
the investigation or inquiry by such    
government or entity into the potential 
violation of any law4  7#b7 ,exception  
for amounts constituting restitution or 
paid to come into compliance with law   
7,a7 ,in general ,paragraph 7#a7 shall  
not apply to any amount that-- 7i7 the  
taxpayer establishes-- 7,i7 constitutes 
restitution 7including remediation of   
property7 for damage or harm which was  
or may be caused by the violation of any
 law or the potential violation of any  
law1 or  7,,ii7 is paid to come into    
compliance with any law which was       
violated or otherwise involved in the   
investigation or inquiry described in   
paragraph 7#a71 and  7ii7 is identified 
as restitution or as an amount paid to  
come into compliance with such law1 as  
the case may be1 in the court order or  
settlement agreement4  ,the             
identification under clause 7ii7 alone  

shall not be sufficient to make the     
establishment required under clause 7i74
  7,b7 ,limitation ,subparagraph 7,a7   
shall not apply to any amount paid or   
incurred as reimbursement to the        
government or entity for the costs of   
any investigation or litigation4  7#c7  
,exception for amounts paid or incurred 
as the result of certain court orders   
,paragraph 7#a7 shall not apply to any  
amount paid or incurred by reason of any
 order of a court in a suit in which no 
government or governmental entity is a  
party4  7#d7 ,exception for taxes due   
,paragraph 7#a7 shall not apply to any  
amount paid or incurred as taxes due4   
7#e7 ,treatment of certain              
nongovernmental regulatory entities ,for
 purposes of this subsection1 the       
following nongovernmental entities shall
 be treated as governmental entities3   
7,a7 ,any nongovernmental entity which  
exercises self-regulatory powers        
7including imposing sanctions7 in       
connection with a qualified board or    

exchange 7as defined in section         
#abef7;g77#g774  7,b7 ,to the extent    
provided in regulations1 any            
nongovernmental entity which exercises  
self-regulatory powers 7including       
imposing sanctions7 as part of          
performing an essential governmental    
function4  4  7b7 ,effective ,date ,the 
amendment made by this section shall    
apply to amounts paid or incurred on or 
after the date of the enactment of this 
,act1 except that such amendments shall 
not apply to amounts paid or incurred   
under any binding order or agreement    
entered into before such date4 ,such    
exception shall not apply to an order or
 agreement requiring court approval     
unless the approval was obtained before 
such date4  #c4 ,reporting of deductible
 amounts  7a7 ,in general ,subpart ,b of
 part ,,iii of subchapter ,a of chapter 
#fa of the ,internal ,revenue ,code of  
#aihf is amended by inserting after     
section #fjej,w the following new       
section3  #fjej,x4 ,information with    

respect to certain fines1 penalties1 and
 other amounts  7a7 ,requirement of     
reporting  7#a7 ,in general ,the        
appropriate official of any government  
or any entity described in section      
#afb7;f77#e7 which is involved in a suit
 or agreement described in paragraph    
7#b7 shall make a return in such form as
 determined by the ,secretary setting   
forth-- 7,a7 the amount required to be  
paid as a result of the suit or         
agreement to which paragraph 7#a7 of    
section #afb7;f7 applies1  7,b7 any     
amount required to be paid as a result  
of the suit or agreement which          
constitutes restitution or remediation  
of property1 and  7,c7 any amount       
required to be paid as a result of the  
suit or agreement for the purpose of    
coming into compliance with any law     
which was violated or involved in the   
investigation or inquiry4  7#b7 ,suit or
 agreement described  7,a7 ,in general  
,a suit or agreement is described in    
this paragraph if-- 7i7 it is-- 7,i7 a  

suit with respect to a violation of any 
law over which the government or entity 
has authority and with respect to which 
there has been a court order1 or  7,,ii7
 an agreement which is entered into with
 respect to a violation of any law over 
which the government or entity has      
authority1 or with respect to an        
investigation or inquiry by the         
government or entity into the potential 
violation of any law over which such    
government or entity has authority1 and 
7ii7 the aggregate amount involved in   
all court orders and agreements with    
respect to the violation1 investigation1
 or inquiry is #fjj or more4  7,b7      
,adjustment of reporting threshold ,the 
,secretary may adjust the #fjj amount in
 subparagraph 7,a77ii7 as necessary in  
order to ensure the efficient           
administration of the internal revenue  
laws4  7#c7 ,time of filing ,the return 
required under this subsection shall be 
filed at the time the agreement is      
entered into1 as determined by the      

,secretary4  7b7 ,statements ,to be     
furnished to individuals involved in the
 settlement ,every person required to   
make a return under subsection 7a7 shall
 furnish to each person who is a party  
to the suit or agreement a written      
statement showing-- 7#a7 the name of the
 government or entity1 and  7#b7 the    
information supplied to the ,secretary  
under subsection 7a77#a74  ,the written 
statement required under the preceding  
sentence shall be furnished to the      
person at the same time the government  
or entity provides the ,secretary with  
the information required under          
subsection 7a74  7c7 ,appropriate       
official defined ,for purposes of this  
section1 the term appropriate official  
means the officer or employee having    
control of the suit1 investigation1 or  
inquiry or the person appropriately     
designated for purposes of this section4
  4  7b7 ,conforming amendment ,the     
table of sections for subpart ,b of part
 ,,iii of subchapter ,a of chapter #fa  

of the ,internal ,revenue ,code of #aihf
 is amended by inserting after the item 
relating to section #fjej,w the         
following new item3  ,sec4 #fjej,x4     
,information with respect to certain    
fines1 penalties1 and other amounts4  4 
7c7 ,effective ,date ,the amendments    
made by this section shall apply to     
amounts paid or incurred on or after the
 date of the enactment of this ,act1    
except that such amendments shall not   
apply to amounts paid or incurred under 
any binding order or agreement entered  
into before such date4 ,such exception  
shall not apply to an order or agreement
 requiring court approval unless the    
approval was obtained before such date4