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Member, Beacon International Group, Ltd.
WASHINGTON—The chairman of the Senate Finance Committee has retained a provision that would end the federal tax deductibility of punitive damages in the newest version of a tax bill introduced Thursday.
The American Jobs and Closing Tax Loopholes Act, proposed by Sen. Max Baucus, D-Mont., would deny a tax deduction for any punitive damage payments. If the punitive damages are covered by insurance, as some state laws allow, the amount paid by insurance would be included in the taxpayer’s gross income. The provision would apply to damages paid or incurred after Dec. 31, 2011.
An analysis of the bill released by the committee said that ending the tax deductibility of punitive damages would raise $315 million over 10 years.
Another provision would increase the assessment paid by oil companies to fund the Oil Spill Liability Trust Fund to 29 cents per barrel from 8 cents per barrel. A previous proposal made by Sen. Baucus would have increased the tax to 49 cents per barrel.
WASHINGTON—The future of a tax bill with a provision that would change the tax deductibility of punitive damage awards is in doubt after Senate Democrats failed to garner enough votes to stop debate on the bill.