To amend the Internal Revenue Code of 1986 to clarify that certain settlement funds established under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 are beneficially owned by the United States and are not subject to tax.

Amends the Internal Revenue Code to exempt from income taxation certain settlement funds established under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980.

[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2940 Introduced in House (IH)]






109th CONGRESS
  1st Session
                                H. R. 2940

  To amend the Internal Revenue Code of 1986 to clarify that certain 
  settlement funds established under the Comprehensive Environmental 
  Response, Compensation, and Liability Act of 1980 are beneficially 
         owned by the United States and are not subject to tax.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 16, 2005

 Mr. English of Pennsylvania (for himself, Mr. Becerra, Mr. Reynolds, 
 Mr. Boehlert, Mr. Thompson of California, and Mr. Weller) 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 clarify that certain 
  settlement funds established under the Comprehensive Environmental 
  Response, Compensation, and Liability Act of 1980 are beneficially 
         owned by the United States and are not subject to tax.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. CLARIFICATION OF TAXATION OF CERTAIN SETTLEMENT FUNDS.

    Subsection (g) of section 468B of the Internal Revenue Code of 1986 
is amended to read as follows:
    ``(g) Clarification of Taxation of Certain Funds.--
            ``(1) In general.--Except as provided in paragraph (2), 
        nothing in any provision of law shall be construed as providing 
        that an escrow account, settlement fund, or similar fund is not 
        subject to current income tax. The Secretary shall prescribe 
        regulations providing for the taxation of any such account or 
        fund whether as a grantor trust or otherwise.
            ``(2) Exemption from tax for certain settlement funds.--An 
        escrow account, settlement fund, or similar fund shall be 
        treated as beneficially owned by the United States and shall be 
        exempt from taxation under this subtitle if--
                    ``(A) it is established pursuant to a consent 
                decree entered by a judge of a United States District 
                Court,
                    ``(B) it is created for the receipt of settlement 
                payments as directed by a government entity for the 
                sole purpose of resolving or satisfying one or more 
                claims asserting liability under the Comprehensive 
                Environmental Response, Compensation, and Liability Act 
                of 1980,
                    ``(C) the authority and control over the 
                expenditure of funds therein (including the expenditure 
                of contributions thereto and any net earnings thereon) 
                is with such government entity, and
                    ``(D) upon termination, any remaining funds will be 
                disbursed upon instructions by such government entity 
                in accordance with applicable law.
        For purposes of this paragraph, the term `government entity' 
        means the United States, any State or political subdivision 
        thereof, the District of Columbia, any possession of the United 
        States, and any agency or instrumentality of any of the 
        foregoing.''.

SEC. 2. EFFECTIVE DATE.

    The amendment made by this Act shall apply as if included in the 
provision of the Tax Reform Act of 1986 to which it relates.
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