II
111th CONGRESS
1st Session
S. 1341
IN THE SENATE OF THE UNITED STATES
June 24, 2009
Mr. Menendez introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to impose an excise tax on certain proceeds received on SILO and LILO transactions.
Short title
This Act may be cited as the
Close the SILO/LILO Loophole Act of
2009
.
Excise tax on certain proceeds received on SILO and LILO transactions
In general
Subchapter F of chapter 42 of subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
Excise tax on certain proceeds received on SILO and LILO transactions
Imposition of tax
In the case of any person other than a SILO/LILO lessee that receives any ineligible amount as a party to any SILO transaction or any LILO transaction, such person shall pay a tax for the taxable year in which such ineligible amounts are received.
Amount of tax
The amount of the tax imposed under subsection (a) with respect to any person shall be an amount equal to the aggregate ineligible amounts received by such person in the taxable year.
Definitions
For purposes of this section—
Ineligible amount
The term ineligible amount means, with respect to any SILO transaction or LILO transaction, the excess of—
the aggregate proceeds received by the taxpayer attributable to or arising from any remedial action relating to such transaction, or any consensual termination or rescission of any such transaction (including the value of any property received and any additional amounts purporting to indemnify or reimburse the taxpayer for taxes assessable on any amounts received), over
the aggregate proceeds described in subparagraph (A) that are received from third parties (other than the SILO/LILO lessee) pursuant to a payment arrangement (including a defeasance escrow arrangement) entered into at the time of such transaction in which the SILO/LILO lessee’s payment obligations were economically defeased in whole or in part.
SILO transaction
The term SILO transaction means a purported sale-leaseback arrangement which is identified as a listed transaction in Notice 2005–13.
LILO transaction
The term LILO transaction means a transaction which is a lease-in/lease-out transaction described in Revenue Rulings 99–14 and 2002–69 and identified as a listed transaction in Notice 2000–15, or which is substantially similar to such a transaction.
SILO/LILO lessee
The term SILO/LILO lessee means any lessee in a SILO transaction or a LILO transaction that is—
a tax-exempt entity (within the meaning of section 168(h)(2)) or any other cooperative, nonprofit, limited dividend, or mutual association, or
any other person that does not derive a substantial economic benefit from the tax characterization of such transaction.
Certain transfers disregarded
If any person who is subject to the tax under subsection (a) is a party to any transaction that results in the transfer of such person's rights with respect to a SILO transaction or a LILO transaction to any other person who would, but for this subsection, not be subject to the full amount of the tax under subsection (a) with respect to such SILO transaction or LILO transaction, then such transfer shall be disregarded for purposes of this section and the taxpayer shall continue to be treated as the recipient of any ineligible amount.
Regulatory authority
The Secretary is authorized to promulgate regulations consistent with the purposes of this section, including regulations to prevent the avoidance of such purposes.
Coordination with other taxes and penalties
The tax imposed by this section is in addition to any other tax, addition to tax, or penalty imposed under this title.
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Clerical amendment
The table of sections for subchapter F of chapter 42 of subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Sec. 4965A. Excise tax on certain proceeds received on SILO and LILO transactions.
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Effective date
The amendments made by this section shall apply to amounts received after the date of the introduction of this Act, in taxable years ending after such date.
Denial of deduction for costs of certain actions relating to SILO and LILO transactions
In general
Part IX of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 269B the following new section:
Costs of certain actions relating to SILO and LILO transactions
General rule
If any party to a SILO transaction or a LILO transaction (other than a SILO/LILO lessee) brings a remedial action seeking to recover any ineligible amount with respect to such transaction, in computing taxable income no deduction shall be allowed for any attorney fees or other costs attributable to such action.
Definitions
For purposes of this section, the terms SILO transaction, LILO transaction, SILO/LILO lessee, and ineligible amount have the meanings given such terms by section 4965A(c).
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Clerical amendment
The table of sections for part IX of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 269B the following new item:
Sec. 269C. Costs of certain actions relating to SILO and LILO transactions.
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Effective date
The amendments made by this section shall apply to costs incurred after the date of the introduction of this Act.