S.Amdt. 3022

SA 3022. Mr. SANTORUM submitted an amendment intended to be proposed to amendment SA 3011 proposed by Mr. Frist to the bill S. 1637, to amend the Internal Revenue Code of 1986 to comply with the World Trade Organization rulings of the FSC/ETI benefit in a manner that preserves jobs and production activities in the United States, to reform and simplify the international taxation rules of the United States, and for other purposes; which was ordered to lie on the table; as follows:

At the appropriate place in the instruction insert the following:

SEC. __. TAXATION OF CERTAIN SETTLEMENT FUNDS.

(a) In General.--Subsection (g) of section 468B (relating to clarification of taxation of certain funds) 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.”.

(b) Effective Date.--The amendment made by this section shall apply to taxable years beginning after December 31, 2003.