Sets forth revenue-raising provisions, including: (1) a prohibition of any reduction of tax withholding for payments made by a U.S. subsidiary of a foreign parent corporation to a related subsidiary in any country that has a tax treaty with the United States, except for payments made directly to the foreign parent corporation; (2) recognition of gain from the transfer of securities of a controlled corporation in a reorganization; (3) the repeal of tax treatment as foreign source income of interest and dividends paid by certain resident alien individuals and U.S. corporations; (4) treating rental income from real estate as a trade or business activity for tax reporting purposes; (5) expanding the continuous tax levy on payments to vendors for good and services to include payments for all property, goods, or services and for delinquent employment taxes owed by such vendors; (6) revising requirements for grantor retained annuity trusts to require a minimum 10-year period for payments from such trusts; and (7) increasing tax penalties for failure to file correct information returns and for the intentional disregard of reporting requirements.

Requires the Commissioner of Internal Revenue to report by December 31, 2010, and then annually to the House Committee on Ways and Means and the Senate Committee on Finance on penalties relating to tax shelters and reportable transactions.

Subtitle B: Limitations and Reporting on Certain Penalties - (Sec. 111) Limits the penalty for failure to disclose a reportable transaction (a transaction determined by the Internal Revenue Service [IRS] as having a potential for tax avoidance or evasion) to 75% of the decrease in tax resulting from such transaction. Sets forth minimum and maximum penalties for failure to disclose a listed transaction (a transaction specifically identified by the IRS as a tax avoidance transaction) and reportable transactions.

(Sec. 112) Requires the Commissioner of Internal Revenue to report, annually, to the House Committee on Ways and Means and the Senate Committee on Finance on penalties relating to tax shelters and reportable transactions.

Subtitle C: Other Provisions - (Sec. 121) Revises the definition of "qualified nonrecourse financing" to include qualified nonrecourse real property or Small Business Investment Company financing as amounts at risk for purposes of determining the deductibility of losses from certain investment activities, including farming, leasing, and energy exploration.

(Sec. 122) Increases in 2010 and 2011 the tax deduction for business start-up expenditures.

Title II: Infrastructure Incentives - (Sec. 201) Extends through March 31, 2013, the period for issuing Build America Bonds and for credits allowable to issuers of such bonds. Allows expenditures for flood control projects to be financed by Build America Bonds.

(Sec. 202) Exempts private activity bonds for sewage and water supply facilities from the state volume caps applicable to such bonds. Allows Indian tribal governments to issue tax-exempt private activity bonds to provide water or sewage facilities.

(Sec. 203) Extends through 2011 the exemption from AMT treatment of interest on certain tax-exempt bonds.

(Sec. 204) Allow taxpayers to take elective payments in lieu of low-income housing tax credits for low-income buildings financed by tax-exempt bonds. Terminates such election for buildings placed in service after 2010.

(Sec. 205) Extend through 2011 the period for issuing recovery zone economic development bonds and recovery zone facility bonds.

Requires the Secretary of the Treasury to allocate 2010 national limitations on recovery bonds based upon state unemployment statistics.

(Sec. 206) Allows a full offset against the AMT for new market tax credit amounts.

Title III: Revenue Provisions - (Sec. 301) Prohibits a reduction of tax withholding for payments made by a U.S. subsidiary of a foreign parent corporation to a related subsidiary in any country that has a tax treaty with the United States, except for payments made directly to the foreign parent corporation.

(Sec. 302) Allows nonrecognition of gain in a corporate reorganization for corporations that exchange property solely for stock other than nonqualified preferred stock.

(Sec. 303) Repeals tax rules that treat as foreign source income interest or dividends paid by a resident alien individual or a U.S. corporation that meets the 80% active foreign business income requirement.

(Sec. 304) Treats rental income from real estate as a trade or business activity for tax reporting purposes.

(Sec. 305) Expands the continuous tax levy on payments to vendors for goods and services to include payments for all property, goods, or services and for delinquent employment taxes owed by such vendors.

(Sec. 307) Expands rules for valuing assets in grantor retained annuity trusts to require: (1) that the right to receive fixed amounts from an annuity last for a term of not less than 10 years and that such fixed amounts not decrease during the first 10 years of the annuity term; and (2) that the remainder interest have a value greater than zero when transferred.

(Sec. 308) Increases the penalties for failure to file correct information returns and for intentional disregard of reporting requirements.

Subtitle B: Limitations and Reporting on Certain Penalties - (Sec. 111) Limits the penalty for failure to disclose a reportable transaction (a transaction determined by the Internal Revenue Service [IRS] as having a potential for tax avoidance or evasion) to 75% of the decrease in tax resulting from such transaction. Sets forth minimum and maximum penalties for failure to disclose a listed transaction (a transaction specifically identified by the IRS as a tax avoidance transaction) and reportable transactions.

(Sec. 112) Requires the Commissioner of Internal Revenue to report, annually, to the House Committee on Ways and Means and the Senate Committee on Finance on penalties relating to tax shelters and reportable transactions.

Subtitle C: Other Provisions - (Sec. 121) Revises the definition of "qualified nonrecourse financing" to include qualified nonrecourse real property or Small Business Investment Company financing as amounts at risk for purposes of determining the deductibility of losses from certain investment activities, including farming, leasing, and energy exploration.

(Sec. 122) Increases in 2010 and 2011 the tax deduction for business start-up expenditures.

Title II: Infrastructure Incentives - (Sec. 201) Extends through March 31, 2013, the period for issuing Build America Bonds and for credits allowable to issuers of such bonds. Allows expenditures for flood control projects to be financed by Build America Bonds.

(Sec. 202) Exempts private activity bonds for sewage and water supply facilities from the state volume caps applicable to such bonds. Allows Indian tribal governments to issue tax-exempt private activity bonds to provide water or sewage facilities.

(Sec. 203) Extends through 2011 the exemption from AMT treatment of interest on certain tax-exempt bonds.

(Sec. 204) Allow taxpayers to take elective payments in lieu of low-income housing tax credits for low-income buildings financed by tax-exempt bonds. Terminates such election for buildings placed in service after 2010.

(Sec. 205) Extend through 2011 the period for issuing recovery zone economic development bonds and recovery zone facility bonds.

Requires the Secretary of the Treasury to allocate 2010 national limitations on recovery bonds based upon state unemployment statistics.

(Sec. 206) Allows a full offset against the AMT for new market tax credit amounts.

Title III: Revenue Provisions - (Sec. 301) Prohibits a reduction of tax withholding for payments made by a U.S. subsidiary of a foreign parent corporation to a related subsidiary in any country that has a tax treaty with the United States, except for payments made directly to the foreign parent corporation.

(Sec. 302) Allows nonrecognition of gain in a corporate reorganization for corporations that exchange property solely for stock other than nonqualified preferred stock.

(Sec. 303) Repeals tax rules that treat as foreign source income interest or dividends paid by a resident alien individual or a U.S. corporation that meets the 80% active foreign business income requirement.

(Sec. 304) Treats rental income from real estate as a trade or business activity for tax reporting purposes.

(Sec. 305) Expands the continuous tax levy on payments to vendors for goods and services to include payments for all property, goods, or services and for delinquent employment taxes owed by such vendors.

(Sec. 307) Expands rules for valuing assets in grantor retained annuity trusts to require: (1) that the right to receive fixed amounts from an annuity last for a term of not less than 10 years and that such fixed amounts not decrease during the first 10 years of the annuity term; and (2) that the remainder interest have a value greater than zero when transferred.

(Sec. 308) Increases the penalties for failure to file correct information returns and for intentional disregard of reporting requirements.

(Sec. 309) Excludes from the definition of "cellulosic biofuel" for purposes of the cellulosic biofuel producer tax credit any processed fuel with an acid number greater than 25. Defines "processed fuel" as a fuel consisting of more than 4% combined water and sediment or more than 1% ash.

(Sec. 310) Increases estimated tax payments for corporations with assets of $1 billion or more.

Title IV: Extension of Emergency Contingency Fund for State Temporary Assistance for Needy Families Programs - (Sec. 401) Amends part A of title IV (Temporary Assistance to Needy Families [TANF]) of the Social Security Act to extend funding for the Emergency Contingency Fund (Fund) through FY2011. Limits payments to states for the Fund in FY2009-FY2011.

Directs the Secretary of Health and Human Services to issue program guidance on payments from the Fund for subsidized employment.