The bill amends the Internal Revenue Code to add a new Part VIII and section 59B that imposes an additional tax on any individual serving as a Member of Congress for days falling within a lapse in appropriations. The tax equals the "applicable percentage" of the Member’s applicable wages; the applicable percentage is the share of the Member’s service-days during the taxable year that occurred while a lapse was in effect.
This is a targeted, mechanical penalty: it converts the calendar length of an appropriations lapse into a proportionate tax liability on congressional pay. The shift matters because it places a statutory, revenue-side consequence on Members’ compensation tied to the occurrence of any lapse in appropriations (defined broadly) rather than creating a suspension of pay or an administrative withholding rule within congressional payroll practice.
At a Glance
What It Does
The bill adds section 59B to the tax code, imposing on each Member of Congress an additional tax equal to (days of lapse during the year while the Member served) divided by (days the Member served in the year), multiplied by the Member’s congressional wages for the year. The tax is 'in addition to any other tax.'
Who It Affects
All Members of the Senate and House, including Delegates and the Resident Commissioner from Puerto Rico, because it applies to wages received 'for services performed as a Member of Congress.' The IRS, congressional payroll offices, and Treasury will be implicated for administration and collection.
Why It Matters
The provision ties budget-process behavior to individual tax liability rather than to pay suspension or ethics enforcement, creating a predictable statutory penalty but leaving open how the IRS and payroll systems will compute, withhold, and collect the new tax.
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What This Bill Actually Does
The bill inserts a new part into subchapter A of the Internal Revenue Code that creates section 59B. Under that section, when there is any period during which a regular appropriations bill or continuing resolution is not in effect for any federal agency or department, the statute treats those calendar days as the trigger for a tax on Members of Congress.
The tax amount for each Member is calculated as a fraction: the number of days of such lapses that occurred during the taxable year while the Member was serving, divided by the total number of days the Member served during the taxable year; that fraction is applied to the Member’s congressional wages for the year to produce the tax liability.
The bill explicitly defines "Member of Congress" to include Senators, Representatives, Delegates, and the Resident Commissioner, and it borrows the ordinary tax-code definition of wages (section 3401(a)) to identify the compensation base. It also defines "lapse in appropriations" broadly: if any regular appropriation bill or continuing resolution for the fiscal year is not in effect with respect to any federal agency or department, the statute treats the entire period as a lapse for purposes of taxation.
The tax is phrased as an additional federal tax — the bill does not amend congressional payroll statutes to suspend pay or specify withholding or deposit procedures.Operationally, the statute creates several discrete obligations and gaps. It creates a new tax liability line for Members in the tax code and an arithmetic rule to compute the liability, but it does not specify how or when the IRS will collect the tax (for example, through withholding, estimated payments, or adjustments to annual returns).
It also leaves to implementation details whether payroll offices must report or withhold differently during or after a lapse and whether Treasury will treat these receipts as general revenues. The bill’s effective date applies to taxable years beginning after December 31, 2024, so it is written as a current-amendment to the tax code for future returns.
The Five Things You Need to Know
The tax equals the applicable percentage of a Member’s applicable wages, where applicable percentage = (days of lapse during the taxable year while the Member served) / (days the Member served during the taxable year).
The bill treats as a lapse any period when any regular appropriation bill or continuing resolution for a fiscal year is not in effect for any federal agency or department — a single-agency lapse triggers the rule for all Members.
The statutory definition of 'Member of Congress' explicitly includes Senators, Representatives, Delegates, and the Resident Commissioner from Puerto Rico.
The tax is inserted into the Internal Revenue Code as new section 59B, Part VIII of subchapter A of chapter 1 (a standalone, additional tax 'in addition to any other tax').
The amendments apply to taxable years beginning after December 31, 2024 (an explicit prospective effective date for income-tax reporting).
Section-by-Section Breakdown
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Names the Act 'SHUTDOWN Act'
This short section supplies the Act’s public name. It has no substantive legal effect on tax mechanics, but the title signals the law’s policy orientation and is the label that will appear in statutory citations and revenue rulings if the provision is enacted.
Creates a distinct tax-code home for lapse-related tax
The bill adds a new Part VIII to subchapter A to house the new rule as an independent tax provision. Placing the rule in its own part clarifies that the statute is a stand-alone tax provision, separate from existing income brackets or exclusions, which matters for drafting, cross-references, and future amendment.
Imposes an additional tax on Members during lapses
Subsection (a) imposes the tax 'in addition to any other tax' on each individual serving as a Member of Congress on any day during a lapse. Practically, this creates a new federal tax liability for Members tied to calendar days of a lapse rather than a direct payroll deduction or pay suspension mechanism.
Defines the calculation base, who is covered, and what counts as a lapse
Subsection (b) provides the formula for the applicable percentage using day counts; (c) adopts the tax-code definition of wages for the compensation base; and (d) defines 'Member of Congress' and 'lapse in appropriations.' The broad 'any agency or department' definition means even a lapse affecting a single agency triggers the tax calculation for all Members, and the day-count method adjusts the tax for partial-year service.
Table of parts update and prospective application
The bill updates the subchapter’s table of parts to list Part VIII and sets the effective date for taxable years beginning after December 31, 2024. That effective date makes the provision applicable to returns for the first tax year entirely after 2024 and signals the legislature’s intent that the rule operate on ordinary income-tax timelines rather than immediately changing payroll procedures.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Federal taxpayers concerned about shutdowns — the bill creates an explicit financial penalty on Members that could alter incentives around appropriations, potentially shortening or deterring funding lapses and reducing operational harm to agencies and grant recipients.
- Treasury/IRS (as recipient of tax revenue) — if collected, the statute generates additional receipts to the federal treasury without requiring appropriations for that revenue stream.
- Budget-focused policy advocates and oversight offices — the statute provides a quantifiable, administrable metric (days of lapse) that can be cited in oversight reports or cost–benefit analyses of shutdowns.
Who Bears the Cost
- Members of Congress (Senators, Representatives, Delegates, Resident Commissioner) — they incur the additional tax liability proportionate to the days of any appropriations lapse during the tax year.
- Congressional payroll and administrative offices — these units will face implementation work to reconcile pay records, report wages consistent with section 3401(a), and coordinate with IRS guidance; they may need system changes to track lapse days against individual service days.
- Internal Revenue Service — the IRS must interpret, implement, and collect a novel tax tied to legislative calendar events without explicit withholding instructions, creating administrative and compliance costs and likely guidance needs.
Key Issues
The Core Tension
The bill’s central dilemma is between accountability and administrability: it seeks to hold individual legislators financially accountable for funding lapses by creating a clear, formulaic tax, but doing so through the tax code—without specifying collection, withholding, or narrow triggers—creates practical, legal, and perverse-incentive problems that may undermine both enforcement and the policy goal it intends to advance.
The bill converts political behavior into a tax metric but leaves multiple implementation questions unresolved. It creates a statutory liability without specifying collection mechanics: section 59B does not require withholding, estimated payments, or changes to payroll timing, so in practice the IRS would need to develop rules that determine when and how Members actually pay the tax (withholding from pay, estimated tax payments, or settlement at filing).
That gap affects cash flow and compliance risk for Members and administrative workload for payroll offices.
The statutory definition of a 'lapse in appropriations' is unusually broad: any agency-level lapse triggers the tax for all Members nationwide. That creates a mismatch between the scope of the funding problem and the persons taxed — a single-agency lapse could produce a tax on every Member regardless of relevance.
The day-count formula reduces the bluntness of a flat penalty, but it also creates perverse incentives: Members might alter service dates, resign, or take leave to change denominators or numerators; employers and payroll systems may face edge cases for mid-term vacancies, contested seats, or Members who take unpaid leave. Lastly, the provision could prompt legal and political challenges about the proper mechanism for disciplining legislative behavior versus altering pay through tax law, but the bill does not address constitutional or separation-of-powers questions or administrative pathways to enforce or resolve disputes.
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