To amend the Internal Revenue Code of 1986 to reduce corporate refunds by fines and penalties imposed by reason of improper accounting or reporting practices or misstatements of its financial position.

July 23, 2003

Mr. MEEKS of New York introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to reduce corporate refunds by fines and penalties imposed by reason of improper accounting or reporting practices or misstatements of its financial position.

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 `Deadbeat Corporations Tax Accountability Act of 2003'.

SEC. 2. REDUCTION OF CORPORATE REFUNDS BY FINES AND PENALTIES IMPOSED BY REASON OF IMPROPER ACCOUNTING OR REPORTING PRACTICES OR MISSTATEMENTS OF ITS FINANCIAL POSITION.

(a) IN GENERAL- Section 6402 of the Internal Revenue Code of 1986 (relating to authority to make credits or refunds) is amended by adding the following new subsection:

`(l) REDUCTION OF OVERPAYMENT IN CASE OF OVERSTATED TAXABLE INCOME DUE TO ACCOUNTING PRACTICES OR RELATED MISSTATEMENT OF FINANCIAL POSITION-

`(1) IN GENERAL- Upon receiving notice from the Securities and Exchange Commission that a corporation has not paid the full amount of a fine or penalty either imposed by a court of competent jurisdiction, or agreed to by the corporation, with respect to--

`(A) the corporation's accounting or reporting practices, or

`(B) a related misstatement of its financial position,

the Secretary shall reduce the amount of any overpayment to be refunded to such corporation by such unpaid balance.

`(2) PRIORITIES FOR OFFSET- Any overpayment by a corporation shall be reduced pursuant to this subsection after such overpayment is reduced pursuant to subsection (a) with respect to any liability for any internal revenue tax on the part of the person who made the overpayment, subsection (d) with respect to any past-due, legally enforceable debt owed to a Federal agency, subsection (e) with respect to past-due, legally enforceable state income tax obligations, and before such overpayment is credited to the future liability for any Federal internal revenue tax of such person pursuant to subsection (b).

`(3) REMITTANCE OF AMOUNT BY WHICH OVERPAYMENT IS REDUCED- The amount by which any overpayment is reduced under paragraph (1) shall be remitted by the Secretary to any disgorgement fund or account that has been established under section 308 of Public Law 107-204, 116 stat. 745 (2002) with respect to the corporation, or, if no such fund or account is established, retained by the Secretary.

`(4) NOTIFICATION- The Securities and Exchange Commission shall provide notice to the Secretary within 30 days after--

`(A) court approval of any settlement providing for less than full payment of a fine or penalty described in paragraph (1), or

`(B) the Commission determines that such fine or penalty, or some portion thereof, has become past due, whichever is earlier.

`(5) TENTATIVE CARRYBACK ADJUSTMENTS- If a tentative refund or credit of tax under section 6411 has been issued with respect to a corporation that has failed to fully pay a fine or penalty described in paragraph (1), the amount of such unpaid balance shall constitute an excessive allowance of a tentative carryback adjustment that may be assessed as a deficiency in the manner set forth in section 6213(b)(3) (relating to the assessment of an excess tentative carryback or refund adjustment as a mathematical or clerical error).

`(6) REMITTANCE OF RECAPTURED TENTATIVE CARRYBACK ADJUSTMENT- The amount of any tentative carryback adjustment assessed and collected pursuant to paragraph (5) shall be remitted or retained by the Secretary in accordance with paragraph (3). The remittance of any such amount to a fund or account described in paragraph (3) shall not result in an unpaid tax liability of the corporation.

`(7) COORDINATION WITH TITLE 11- The Secretary shall take such actions as may be necessary or appropriate to carry out the purposes of this section where the corporation that has failed to pay the full amount of a fine or penalty described in paragraph (1) is a debtor in a case under title 11 of the United States Code, including, but not limited to, the filing of an administrative expense claim for any amount that constitutes an excessive allowance of a tentative carryback adjustment.'

(b) EFFECTIVE DATE- This section shall be effective for fines and penalties imposed or agreed to with respect to a corporation's accounting or reporting practices, or a related misstatement of its financial position, that are not fully paid on the date of introduction of this Act, and for all such fines and penalties that later become unpaid or past due.

END