This bill adds a new part to the tax code that applies a 100% tax to certain settlement payments. The tax applies when a person receives money from a fund, trust, or account whose assets come from the outcome (settlement, verdict, or other) of a civil action filed by a "specified person" against the United States or a U.S. agency.
A "specified person" is defined as any individual who has served as President of the United States, that person's spouse and certain relatives (as listed in section 152(d)(2) of the tax code), and any person controlled by those people under rules like section 52(b).
The bill also says those settlement payments are not included in gross income for chapter 1 purposes and directs that the tax be treated administratively like other income taxes. It adds a penalty for willful failure to pay or willful attempts to evade the tax equal to 50% of the tax for the year.
The bill requires trustees, administrators, or other fiduciaries who make such payments to file a return reporting the aggregate amount paid to each recipient and the recipient's name and address. Those fiduciaries must send a written statement to each recipient by January 31 of the year after the payment, and the Secretary of the Treasury must make the return publicly available within one month of receipt. Failure to file the required return carries a $10,000 penalty per failure unless there is reasonable cause.
The main tax and reporting rules apply to amounts received or paid on or after May 20, 2026. The failure-to-pay penalty provision applies for taxable years ending on or after May 20, 2026.
No publicly available information on projected federal costs, revenues, or budgetary effects is included in the bill text or provided metadata.
No publicly available information on proponents' stated reasons or supporting statements is included in the bill text or provided metadata.
No publicly available information on opponents' stated reasons or objections is included in the bill text or provided metadata.