[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2676 Enrolled Bill (ENR)]

        H.R.2676

                       One Hundred Fifth Congress

                                 of the

                        United States of America


                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
the twenty-seventh day of January, one thousand nine hundred and ninety-
                                  eight


                                 An Act


 
To amend the Internal Revenue Code of 1986 to restructure and reform the 
            Internal Revenue Service, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; WAIVER OF ESTIMATED TAX 
              PENALTIES; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Internal Revenue 
Service Restructuring and Reform Act of 1998''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Waiver of Estimated Tax Penalties.--No addition to tax shall be 
made under section 6654 or 6655 of the Internal Revenue Code of 1986 
with respect to any underpayment of an installment required to be paid 
on or before the 30th day after the date of the enactment of this Act 
to the extent such underpayment was created or increased by any 
provision of this Act.
    (d) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; amendment of 1986 Code; waiver of estimated tax 
          penalties; table of contents.

  TITLE I--REORGANIZATION OF STRUCTURE AND MANAGEMENT OF THE INTERNAL 
                             REVENUE SERVICE

       Subtitle A--Reorganization of the Internal Revenue Service

Sec.1001.Reorganization of the Internal Revenue Service.
Sec.1002.Internal Revenue Service mission to focus on taxpayers' needs.

      Subtitle B--Executive Branch Governance and Senior Management

Sec.1101.Internal Revenue Service Oversight Board.
Sec.1102.Commissioner of Internal Revenue; other officials.
Sec.1103.Treasury Inspector General for Tax Administration.
Sec.1104.Other personnel.
Sec.1105.Prohibition on executive branch influence over taxpayer audits 
          and other investigations.

                   Subtitle C--Personnel Flexibilities

Sec.1201.Improvements in personnel flexibilities.
Sec.1202.Voluntary separation incentive payments.
Sec.1203.Termination of employment for misconduct.
Sec.1204.Basis for evaluation of Internal Revenue Service employees.
Sec.1205.Employee training program.

                       TITLE II--ELECTRONIC FILING

Sec.2001.Electronic filing of tax and information returns.
Sec.2002.Due date for certain information returns.
Sec.2003.Paperless electronic filing.
Sec.2004.Return-free tax system.
Sec.2005.Access to account information.

                TITLE III--TAXPAYER PROTECTION AND RIGHTS

Sec.3000.Short title.

                       Subtitle A--Burden of Proof

Sec.3001.Burden of proof.

                  Subtitle B--Proceedings by Taxpayers

Sec.3101.Expansion of authority to award costs and certain fees.
Sec.3102.Civil damages for collection actions.
Sec.3103.Increase in size of cases permitted on small case calendar.
Sec.3104.Actions for refund with respect to certain estates which have 
          elected the installment method of payment.
Sec.3105.Administrative appeal of adverse Internal Revenue Service 
          determination of tax-exempt status of bond issue.
Sec.3106.Civil action for release of erroneous lien.

  Subtitle C--Relief for Innocent Spouses and for Taxpayers Unable To 
           Manage Their Financial Affairs Due to Disabilities

Sec.3201.Relief from joint and several liability on joint return.
Sec.3202.Suspension of statute of limitations on filing refund claims 
          during periods of disability.

        Subtitle D--Provisions Relating to Interest and Penalties

Sec.3301.Elimination of interest rate differential on overlapping 
          periods of interest on tax overpayments and underpayments.
Sec.3302.Increase in overpayment rate payable to taxpayers other than 
          corporations.
Sec.3303.Mitigation of penalty on individual's failure to pay for months 
          during period of installment agreement.
Sec.3304.Mitigation of failure to deposit penalty.
Sec.3305.Suspension of interest and certain penalties where Secretary 
          fails to contact individual taxpayer.
Sec.3306.Procedural requirements for imposition of penalties and 
          additions to tax.
Sec.3307.Personal delivery of notice of penalty under section 6672.
Sec.3308.Notice of interest charges.
Sec.3309.Abatement of interest on underpayments by taxpayers in 
          Presidentially declared disaster areas.

  Subtitle E--Protections for Taxpayers Subject to Audit or Collection 
                               Activities

                           Part I--Due Process

Sec.3401.Due process in Internal Revenue Service collection actions.

                     Part II--Examination Activities

Sec.3411.Confidentiality privileges relating to taxpayer communications.
Sec.3412.Limitation on financial status audit techniques.
Sec.3413.Software trade secrets protection.
Sec.3414.Threat of audit prohibited to coerce tip reporting alternative 
          commitment agreements.
Sec.3415.Taxpayers allowed motion to quash all third-party summonses.
Sec.3416.Service of summonses to third-party recordkeepers permitted by 
          mail.
Sec.3417.Notice of Internal Revenue Service contact of third parties.

                     Part III--Collection Activities


                        SUBPART A--APPROVAL PROCESS

Sec.3421.Approval process for liens, levies, and seizures.


                        SUBPART B--LIENS AND LEVIES

Sec.3431.Modifications to certain levy exemption amounts.
Sec.3432.Release of levy upon agreement that amount is uncollectible.
Sec.3433.Levy prohibited during pendency of refund proceedings.
Sec.3434.Approval required for jeopardy and termination assessments and 
          jeopardy levies.
Sec.3435.Increase in amount of certain property on which lien not valid.
Sec.3436.Waiver of early withdrawal tax for Internal Revenue Service 
          levies on employer-sponsored retirement plans or IRAs.


                            SUBPART C--SEIZURES

Sec.3441.Prohibition of sales of seized property at less than minimum 
          bid.
Sec.3442.Accounting of sales of seized property.
Sec.3443.Uniform asset disposal mechanism.
Sec.3444.Codification of Internal Revenue Service administrative 
          procedures for seizure of taxpayer's property.
Sec.3445.Procedures for seizure of residences and businesses.

  Part IV--Provisions Relating to Examination and Collection Activities

Sec.3461.Procedures relating to extensions of statute of limitations by 
          agreement.
Sec.3462.Offers-in-compromise.
Sec.3463.Notice of deficiency to specify deadlines for filing Tax Court 
          petition.
Sec.3464.Refund or credit of overpayments before final determination.
Sec.3465.Internal Revenue Service procedures relating to appeals of 
          examinations and collections.
Sec.3466.Application of certain fair debt collection procedures.
Sec.3467.Guaranteed availability of installment agreements.
Sec.3468.Prohibition on requests to taxpayers to give up rights to bring 
          actions.

                  Subtitle F--Disclosures to Taxpayers

Sec.3501.Explanation of joint and several liability.
Sec.3502.Explanation of taxpayers' rights in interviews with the 
          Internal Revenue Service.
Sec.3503.Disclosure of criteria for examination selection.
Sec.3504.Explanations of appeals and collection process.
Sec.3505.Explanation of reason for refund disallowance.
Sec.3506.Statements regarding installment agreements.
Sec.3507.Notification of change in tax matters partner.
Sec.3508.Disclosure to taxpayers.
Sec.3509.Disclosure of Chief Counsel advice.

                 Subtitle G--Low-Income Taxpayer Clinics

Sec.3601.Low-income taxpayer clinics.

                        Subtitle H--Other Matters

Sec.3701.Cataloging complaints.
Sec.3702.Archive of records of Internal Revenue Service.
Sec.3703.Payment of taxes.
Sec.3704.Clarification of authority of Secretary relating to the making 
          of elections.
Sec.3705.Internal Revenue Service employee contacts.
Sec.3706.Use of pseudonyms by Internal Revenue Service employees.
Sec.3707.Illegal tax protester designation.
Sec.3708.Provision of confidential information to Congress by 
          whistleblowers.
Sec.3709.Listing of local Internal Revenue Service telephone numbers and 
          addresses.
Sec.3710.Identification of return preparers.
Sec.3711.Offset of past-due, legally enforceable State income tax 
          obligations against overpayments.
Sec.3712.Reporting requirements in connection with education tax credit.

                           Subtitle I--Studies

Sec.3801.Administration of penalties and interest.
Sec.3802.Confidentiality of tax return information.
Sec.3803.Study of noncompliance with internal revenue laws by taxpayers.
Sec.3804.Study of payments made for detection of underpayments and 
          fraud.

 TITLE IV--CONGRESSIONAL ACCOUNTABILITY FOR THE INTERNAL REVENUE SERVICE

                          Subtitle A--Oversight

Sec.4001.Expansion of duties of the Joint Committee on Taxation.
Sec.4002.Coordinated oversight reports.

                     Subtitle B--Century Date Change

Sec.4011.Century date change.

                     Subtitle C--Tax Law Complexity

Sec.4021.Role of the Internal Revenue Service.
Sec.4022.Tax law complexity analysis.

                     TITLE V--ADDITIONAL PROVISIONS

Sec.5001.Lower capital gains rates to apply to property held more than 1 
          year.
Sec.5002.Clarification of exclusion of meals for certain employees.
Sec.5003.Clarification of designation of normal trade relations.

                     TITLE VI--TECHNICAL CORRECTIONS

Sec.6001.Short title; coordination with other titles.
Sec.6002.Definitions.
Sec.6003.Amendments related to title I of 1997 Act.
Sec.6004.Amendments related to title II of 1997 Act.
Sec.6005.Amendments related to title III of 1997 Act.
Sec.6006.Amendment related to title IV of 1997 Act.
Sec.6007.Amendments related to title V of 1997 Act.
Sec.6008.Amendments related to title VII of 1997 Act.
Sec.6009.Amendments related to title IX of 1997 Act.
Sec.6010.Amendments related to title X of 1997 Act.
Sec.6011.Amendments related to title XI of 1997 Act.
Sec.6012.Amendments related to title XII of 1997 Act.
Sec.6013.Amendments related to title XIII of 1997 Act.
Sec.6014.Amendments related to title XIV of 1997 Act.
Sec.6015.Amendments related to title XV of 1997 Act.
Sec.6016.Amendments related to title XVI of 1997 Act.
Sec.6017.Amendment related to Transportation Equity Act for the 21st 
          Century.
Sec.6018.Amendments related to Small Business Job Protection Act of 
          1996.
Sec.6019.Amendments related to Taxpayer Bill of Rights 2.
Sec.6020.Amendment related to Omnibus Budget Reconciliation Act of 1993.
Sec.6021.Amendment related to Revenue Reconciliation Act of 1990.
Sec.6022.Amendment related to Tax Reform Act of 1986.
Sec.6023.Miscellaneous clerical and deadwood changes.
Sec.6024.Effective date.

                      TITLE VII--REVENUE PROVISIONS

Sec.7001.Clarification of deduction for deferred compensation.
Sec.7002.Termination of exception for certain real estate investment 
          trusts from the treatment of stapled entities.
Sec.7003.Certain customer receivables ineligible for mark to market 
          treatment.
Sec.7004.Modification of AGI limit for conversions to Roth IRAs.

TITLE VIII--IDENTIFICATION OF LIMITED TAX BENEFITS SUBJECT TO LINE ITEM 
                                  VETO

Sec.8001.Identification of limited tax benefits subject to line item 
          veto.

  TITLE IX--TECHNICAL CORRECTIONS TO TRANSPORTATION EQUITY ACT FOR THE 
                              21ST CENTURY

Sec.9001.Short title.
Sec.9002.Authorization and program subtitle.
Sec.9003.Restorations to general provisions subtitle.
Sec.9004.Restorations to program streamlining and flexibility subtitle.
Sec.9005.Restorations to safety subtitle.
Sec.9006.Elimination of duplicate provisions.
Sec.9007.Highway finance.
Sec.9008.High priority projects technical corrections.
Sec.9009.Federal Transit Administration programs.
Sec.9010.Motor carrier safety technical correction.
Sec.9011.Restorations to research title.
Sec.9012.Automobile safety and information.
Sec.9013.Technical corrections regarding subtitle A of title VIII.
Sec.9014.Corrections to veterans subtitle.
Sec.9015.Technical corrections regarding title IX.
Sec.9016.Effective date.

  TITLE I--REORGANIZATION OF STRUCTURE AND MANAGEMENT OF THE INTERNAL 
                            REVENUE SERVICE
       Subtitle A--Reorganization of the Internal Revenue Service

SEC. 1001. REORGANIZATION OF THE INTERNAL REVENUE SERVICE.

    (a) In General.--The Commissioner of Internal Revenue shall develop 
and implement a plan to reorganize the Internal Revenue Service. The 
plan shall--
        (1) supersede any organization or reorganization of the 
    Internal Revenue Service based on any statute or reorganization 
    plan applicable on the effective date of this section;
        (2) eliminate or substantially modify the existing organization 
    of the Internal Revenue Service which is based on a national, 
    regional, and district structure;
        (3) establish organizational units serving particular groups of 
    taxpayers with similar needs; and
        (4) ensure an independent appeals function within the Internal 
    Revenue Service, including the prohibition in the plan of ex parte 
    communications between appeals officers and other Internal Revenue 
    Service employees to the extent that such communications appear to 
    compromise the independence of the appeals officers.
    (b) Savings Provisions.--
        (1) Preservation of specific tax rights and remedies.--Nothing 
    in the plan developed and implemented under subsection (a) shall be 
    considered to impair any right or remedy, including trial by jury, 
    to recover any internal revenue tax alleged to have been 
    erroneously or illegally assessed or collected, or any penalty 
    claimed to have been collected without authority, or any sum 
    alleged to have been excessive or in any manner wrongfully 
    collected under the internal revenue laws. For the purpose of any 
    action to recover any such tax, penalty, or sum, all statutes, 
    rules, and regulations referring to the collector of internal 
    revenue, the principal officer for the internal revenue district, 
    or the Secretary, shall be deemed to refer to the officer whose act 
    or acts referred to in the preceding sentence gave rise to such 
    action. The venue of any such action shall be the same as under 
    existing law.
        (2) Continuing effect of legal documents.--All orders, 
    determinations, rules, regulations, permits, agreements, grants, 
    contracts, certificates, licenses, registrations, privileges, and 
    other administrative actions--
            (A) which have been issued, made, granted, or allowed to 
        become effective by the President, any Federal agency or 
        official thereof, or by a court of competent jurisdiction, in 
        the performance of any function transferred or affected by the 
        reorganization of the Internal Revenue Service or any other 
        administrative unit of the Department of the Treasury under 
        this section; and
            (B) which are in effect at the time this section takes 
        effect, or were final before the effective date of this section 
        and are to become effective on or after the effective date of 
        this section,
    shall continue in effect according to their terms until modified, 
    terminated, superseded, set aside, or revoked in accordance with 
    law by the President, the Secretary of the Treasury, the 
    Commissioner of Internal Revenue, or other authorized official, a 
    court of competent jurisdiction, or by operation of law.
        (3) Proceedings not affected.--The provisions of this section 
    shall not affect any proceedings, including notices of proposed 
    rulemaking, or any application for any license, permit, 
    certificate, or financial assistance pending before the Department 
    of the Treasury (or any administrative unit of the Department, 
    including the Internal Revenue Service) at the time this section 
    takes effect, with respect to functions transferred or affected by 
    the reorganization under this section but such proceedings and 
    applications shall continue. Orders shall be issued in such 
    proceedings, appeals shall be taken therefrom, and payments shall 
    be made pursuant to such orders, as if this section had not been 
    enacted, and orders issued in any such proceedings shall continue 
    in effect until modified, terminated, superseded, or revoked by a 
    duly authorized official, by a court of competent jurisdiction, or 
    by operation of law. Nothing in this paragraph shall be deemed to 
    prohibit the discontinuance or modification of any such proceeding 
    under the same terms and conditions and to the same extent that 
    such proceeding could have been discontinued or modified if this 
    section had not been enacted.
        (4) Suits not affected.--The provisions of this section shall 
    not affect suits commenced before the effective date of this 
    section, and in all such suits, proceedings shall be had, appeals 
    taken, and judgments rendered in the same manner and with the same 
    effect as if this section had not been enacted.
        (5) Nonabatement of actions.--No suit, action, or other 
    proceeding commenced by or against the Department of the Treasury 
    (or any administrative unit of the Department, including the 
    Internal Revenue Service), or by or against any individual in the 
    official capacity of such individual as an officer of the 
    Department of the Treasury, shall abate by reason of the enactment 
    of this section.
        (6) Administrative actions relating to promulgation of 
    regulations.--Any administrative action relating to the preparation 
    or promulgation of a regulation by the Department of the Treasury 
    (or any administrative unit of the Department, including the 
    Internal Revenue Service) relating to a function transferred or 
    affected by the reorganization under this section may be continued 
    by the Department of the Treasury through any appropriate 
    administrative unit of the Department, including the Internal 
    Revenue Service with the same effect as if this section had not 
    been enacted.
    (c) Effective Date.--This section shall take effect on the date of 
the enactment of this Act.

SEC. 1002. INTERNAL REVENUE SERVICE MISSION TO FOCUS ON TAXPAYERS' 
              NEEDS.

    The Internal Revenue Service shall review and restate its mission 
to place a greater emphasis on serving the public and meeting 
taxpayers' needs.

     Subtitle B--Executive Branch Governance and Senior Management

SEC. 1101. INTERNAL REVENUE SERVICE OVERSIGHT BOARD.

    (a) In General.--Section 7802 (relating to the Commissioner of 
Internal Revenue) is amended to read as follows:

``SEC. 7802. INTERNAL REVENUE SERVICE OVERSIGHT BOARD.

    ``(a) Establishment.--There is established within the Department of 
the Treasury the Internal Revenue Service Oversight Board (hereafter in 
this subchapter referred to as the `Oversight Board').
    ``(b) Membership.--
        ``(1) Composition.--The Oversight Board shall be composed of 
    nine members, as follows:
            ``(A) six members shall be individuals who are not 
        otherwise Federal officers or employees and who are appointed 
        by the President, by and with the advice and consent of the 
        Senate.
            ``(B) one member shall be the Secretary of the Treasury or, 
        if the Secretary so designates, the Deputy Secretary of the 
        Treasury.
            ``(C) one member shall be the Commissioner of Internal 
        Revenue.
            ``(D) one member shall be an individual who is a full-time 
        Federal employee or a representative of employees and who is 
        appointed by the President, by and with the advice and consent 
        of the Senate.
        ``(2) Qualifications and terms.--
            ``(A) Qualifications.--Members of the Oversight Board 
        described in paragraph (1)(A) shall be appointed without regard 
        to political affiliation and solely on the basis of their 
        professional experience and expertise in one or more of the 
        following areas:
                ``(i) Management of large service organizations.
                ``(ii) Customer service.
                ``(iii) Federal tax laws, including tax administration 
            and compliance.
                ``(iv) Information technology.
                ``(v) Organization development.
                ``(vi) The needs and concerns of taxpayers.
                ``(vii) The needs and concerns of small businesses.
        In the aggregate, the members of the Oversight Board described 
        in paragraph (1)(A) should collectively bring to bear expertise 
        in all of the areas described in the preceding sentence.
            ``(B) Terms.--Each member who is described in subparagraph 
        (A) or (D) of paragraph (1) shall be appointed for a term of 5 
        years, except that of the members first appointed under 
        paragraph (1)(A)--
                ``(i) two members shall be appointed for a term of 3 
            years,
                ``(ii) two members shall be appointed for a term of 4 
            years; and
                ``(iii) two members shall be appointed for a term of 5 
            years.
            ``(C) Reappointment.--An individual who is described in 
        subparagraph (A) or (D) of paragraph (1) may be appointed to no 
        more than two 5-year terms on the Oversight Board.
            ``(D) Vacancy.--Any vacancy on the Oversight Board shall be 
        filled in the same manner as the original appointment. Any 
        member appointed to fill a vacancy occurring before the 
        expiration of the term for which the member's predecessor was 
        appointed shall be appointed for the remainder of that term.
        ``(3) Ethical considerations.--
            ``(A) Financial disclosure.--During the entire period that 
        an individual appointed under subparagraph (A) or (D) of 
        paragraph (1) is a member of the Oversight Board, such 
        individual shall be treated as serving as an officer or 
        employee referred to in section 101(f) of the Ethics in 
        Government Act of 1978 for purposes of title I of such Act, 
        except that section 101(d) of such Act shall apply without 
        regard to the number of days of service in the position.
            ``(B) Restrictions on post-employment.--For purposes of 
        section 207(c) of title 18, United States Code, an individual 
        appointed under subparagraph (A) or (D) of paragraph (1) shall 
        be treated as an employee referred to in section 
        207(c)(2)(A)(i) of such title during the entire period the 
        individual is a member of the Board, except that subsections 
        (c)(2)(B) and (f) of section 207 of such title shall not apply.
            ``(C) Members who are special government employees.--If an 
        individual appointed under subparagraph (A) or (D) of paragraph 
        (1) is a special Government employee, the following additional 
        rules apply for purposes of chapter 11 of title 18, United 
        States Code:
                ``(i) Restriction on representation.--In addition to 
            any restriction under section 205(c) of title 18, United 
            States Code, except as provided in subsections (d) through 
            (i) of section 205 of such title, such individual (except 
            in the proper discharge of official duties) shall not, with 
            or without compensation, represent anyone to or before any 
            officer or employee of--

                    ``(I) the Oversight Board or the Internal Revenue 
                Service on any matter;
                    ``(II) the Department of the Treasury on any matter 
                involving the internal revenue laws or involving the 
                management or operations of the Internal Revenue 
                Service; or
                    ``(III) the Department of Justice with respect to 
                litigation involving a matter described in subclause 
                (I) or (II).

                ``(ii) Compensation for services provided by another.--
            For purposes of section 203 of such title--

                    ``(I) such individual shall not be subject to the 
                restrictions of subsection (a)(1) thereof for sharing 
                in compensation earned by another for representations 
                on matters covered by such section, and
                    ``(II) a person shall not be subject to the 
                restrictions of subsection (a)(2) thereof for sharing 
                such compensation with such individual.

            ``(D) Waiver.--The President may, only at the time the 
        President nominates the member of the Oversight Board described 
        in paragraph (1)(D), waive for the term of the member any 
        appropriate provision of chapter 11 of title 18, United States 
        Code, to the extent such waiver is necessary to allow such 
        member to participate in the decisions of the Board while 
        continuing to serve as a full-time Federal employee or a 
        representative of employees. Any such waiver shall not be 
        effective unless a written intent of waiver to exempt such 
        member (and actual waiver language) is submitted to the Senate 
        with the nomination of such member.
        ``(4) Quorum.--Five members of the Oversight Board shall 
    constitute a quorum. A majority of members present and voting shall 
    be required for the Oversight Board to take action.
        ``(5) Removal.--
            ``(A) In general.--Any member of the Oversight Board 
        appointed under subparagraph (A) or (D) of paragraph (1) may be 
        removed at the will of the President.
            ``(B) Secretary and commissioner.--An individual described 
        in subparagraph (B) or (C) of paragraph (1) shall be removed 
        upon termination of service in the office described in such 
        subparagraph.
        ``(6) Claims.--
            ``(A) In general.--Members of the Oversight Board who are 
        described in subparagraph (A) or (D) of paragraph (1) shall 
        have no personal liability under Federal law with respect to 
        any claim arising out of or resulting from an act or omission 
        by such member within the scope of service as a member.
            ``(B) Effect on other law.--This paragraph shall not be 
        construed--
                ``(i) to affect any other immunities and protections 
            that may be available to such member under applicable law 
            with respect to such transactions;
                ``(ii) to affect any other right or remedy against the 
            United States under applicable law; or
                ``(iii) to limit or alter in any way the immunities 
            that are available under applicable law for Federal 
            officers and employees.
    ``(c) General Responsibilities.--
        ``(1) Oversight.--
            ``(A) In general.--The Oversight Board shall oversee the 
        Internal Revenue Service in its administration, management, 
        conduct, direction, and supervision of the execution and 
        application of the internal revenue laws or related statutes 
        and tax conventions to which the United States is a party.
            ``(B) Mission of irs.--As part of its oversight functions 
        described in subparagraph (A), the Oversight Board shall ensure 
        that the organization and operation of the Internal Revenue 
        Service allows it to carry out its mission.
            ``(C) Confidentiality.--The Oversight Board shall ensure 
        that appropriate confidentiality is maintained in the exercise 
        of its duties.
        ``(2) Exceptions.--The Oversight Board shall have no 
    responsibilities or authority with respect to--
            ``(A) the development and formulation of Federal tax policy 
        relating to existing or proposed internal revenue laws, related 
        statutes, and tax conventions,
            ``(B) specific law enforcement activities of the Internal 
        Revenue Service, including specific compliance activities such 
        as examinations, collection activities, and criminal 
        investigations,
            ``(C) specific procurement activities of the Internal 
        Revenue Service, or
            ``(D) except as provided in subsection (d)(3), specific 
        personnel actions.
    ``(d) Specific Responsibilities.--The Oversight Board shall have 
the following specific responsibilities:
        ``(1) Strategic plans.--To review and approve strategic plans 
    of the Internal Revenue Service, including the establishment of--
            ``(A) mission and objectives, and standards of performance 
        relative to either, and
            ``(B) annual and long-range strategic plans.
        ``(2) Operational plans.--To review the operational functions 
    of the Internal Revenue Service, including--
            ``(A) plans for modernization of the tax system,
            ``(B) plans for outsourcing or managed competition, and
            ``(C) plans for training and education.
        ``(3) Management.--To--
            ``(A) recommend to the President candidates for appointment 
        as the Commissioner of Internal Revenue and recommend to the 
        President the removal of the Commissioner;
            ``(B) review the Commissioner's selection, evaluation, and 
        compensation of Internal Revenue Service senior executives who 
        have program management responsibility over significant 
        functions of the Internal Revenue Service; and
            ``(C) review and approve the Commissioner's plans for any 
        major reorganization of the Internal Revenue Service.
        ``(4) Budget.--To--
            ``(A) review and approve the budget request of the Internal 
        Revenue Service prepared by the Commissioner;
            ``(B) submit such budget request to the Secretary of the 
        Treasury; and
            ``(C) ensure that the budget request supports the annual 
        and long-range strategic plans.
        ``(5) Taxpayer protection.--To ensure the proper treatment of 
    taxpayers by the employees of the Internal Revenue Service.
The Secretary shall submit the budget request referred to in paragraph 
(4)(B) for any fiscal year to the President who shall submit such 
request, without revision, to Congress together with the President's 
annual budget request for the Internal Revenue Service for such fiscal 
year.
    ``(e) Board Personnel Matters.--
        ``(1) Compensation of members.--
            ``(A) In general.--Each member of the Oversight Board who--
                ``(i) is described in subsection (b)(1)(A); or
                ``(ii) is described in subsection (b)(1)(D) and is not 
            otherwise a Federal officer or employee,
        shall be compensated at a rate of $30,000 per year. All other 
        members shall serve without compensation for such service.
            ``(B) Chairperson.--In lieu of the amount specified in 
        subparagraph (A), the Chairperson of the Oversight Board shall 
        be compensated at a rate of $50,000 per year.
        ``(2) Travel expenses.--
            ``(A) In general.--The members of the Oversight Board shall 
        be allowed travel expenses, including per diem in lieu of 
        subsistence, at rates authorized for employees of agencies 
        under subchapter I of chapter 57 of title 5, United States 
        Code, to attend meetings of the Oversight Board and, with the 
        advance approval of the Chairperson of the Oversight Board, 
        while otherwise away from their homes or regular places of 
        business for purposes of duties as a member of the Oversight 
        Board.
            ``(B) Report.--The Oversight Board shall include in its 
        annual report under subsection (f)(3)(A) information with 
        respect to the travel expenses allowed for members of the 
        Oversight Board under this paragraph.
        ``(3) Staff.--
            ``(A) In general.--The Chairperson of the Oversight Board 
        may appoint and terminate any personnel that may be necessary 
        to enable the Board to perform its duties.
            ``(B) Detail of government employees.--Upon request of the 
        Chairperson of the Oversight Board, a Federal agency shall 
        detail a Federal Government employee to the Oversight Board 
        without reimbursement. Such detail shall be without 
        interruption or loss of civil service status or privilege.
        ``(4) Procurement of temporary and intermittent services.--The 
    Chairperson of the Oversight Board may procure temporary and 
    intermittent services under section 3109(b) of title 5, United 
    States Code.
    ``(f) Administrative Matters.--
        ``(1) Chair.--
            ``(A) Term.--The members of the Oversight Board shall elect 
        for a 2-year term a chairperson from among the members 
        appointed under subsection (b)(1)(A).
            ``(B) Powers.--Except as otherwise provided by a majority 
        vote of the Oversight Board, the powers of the Chairperson 
        shall include--
                ``(i) establishing committees;
                ``(ii) setting meeting places and times;
                ``(iii) establishing meeting agendas; and
                ``(iv) developing rules for the conduct of business.
        ``(2) Meetings.--The Oversight Board shall meet at least 
    quarterly and at such other times as the Chairperson determines 
    appropriate.
        ``(3) Reports.--
            ``(A) Annual.--The Oversight Board shall each year report 
        with respect to the conduct of its responsibilities under this 
        title to the President, the Committees on Ways and Means, 
        Government Reform and Oversight, and Appropriations of the 
        House of Representatives and the Committees on Finance, 
        Governmental Affairs, and Appropriations of the Senate.
            ``(B) Additional report.--Upon a determination by the 
        Oversight Board under subsection (c)(1)(B) that the 
        organization and operation of the Internal Revenue Service are 
        not allowing it to carry out its mission, the Oversight Board 
        shall report such determination to the Committee on Ways and 
        Means of the House of Representatives and the Committee on 
        Finance of the Senate.''.
    (b) Restriction on Disclosure of Return Information to Oversight 
Board Members.--Section 6103(h) (relating to disclosure to certain 
Federal officers and employees for purposes of tax administration, 
etc.) is amended by adding at the end the following new paragraph:
        ``(5) Internal revenue service oversight board.--
            ``(A) In general.--Notwithstanding paragraph (1), and 
        except as provided in subparagraph (B), no return or return 
        information may be disclosed to any member of the Oversight 
        Board described in subparagraph (A) or (D) of section 
        7802(b)(1) or to any employee or detailee of such Board by 
        reason of their service with the Board. Any request for 
        information not permitted to be disclosed under the preceding 
        sentence, and any contact relating to a specific taxpayer, made 
        by any such individual to an officer or employee of the 
        Internal Revenue Service shall be reported by such officer or 
        employee to the Secretary, the Treasury Inspector General for 
        Tax Administration, and the Joint Committee on Taxation.
            ``(B) Exception for reports to the board.--If--
                ``(i) the Commissioner or the Treasury Inspector 
            General for Tax Administration prepares any report or other 
            matter for the Oversight Board in order to assist the Board 
            in carrying out its duties; and
                ``(ii) the Commissioner or such Inspector General 
            determines it is necessary to include any return or return 
            information in such report or other matter to enable the 
            Board to carry out such duties,
        such return or return information (other than information 
        regarding taxpayer identity) may be disclosed to members, 
        employees, or detailees of the Board solely for the purpose of 
        carrying out such duties.''.
    (c) Conforming Amendments.--
        (1) Section 4946(c) (relating to definitions and special rules 
    for chapter 42) is amended by striking ``or'' at the end of 
    paragraph (5), by striking the period at the end of paragraph (6) 
    and inserting ``, or'', and by adding at the end the following new 
    paragraph:
        ``(7) a member of the Internal Revenue Service Oversight 
    Board.''.
        (2) The table of sections for subchapter A of chapter 80 is 
    amended by striking the item relating to section 7802 and inserting 
    the following new item:

        ``Sec. 7802. Internal Revenue Service Oversight Board.''.

    (d) Effective Date.--
        (1) In general.--The amendments made by this section shall take 
    effect on the date of the enactment of this Act.
        (2) Initial nominations to internal revenue service oversight 
    board.--The President shall submit the initial nominations under 
    section 7802 of the Internal Revenue Code of 1986, as added by this 
    section, to the Senate not later than 6 months after the date of 
    the enactment of this Act.
        (3) Effect on actions prior to appointment of oversight 
    board.--Nothing in this section shall be construed to invalidate 
    the actions and authority of the Internal Revenue Service prior to 
    the appointment of the members of the Internal Revenue Service 
    Oversight Board.

SEC. 1102. COMMISSIONER OF INTERNAL REVENUE; OTHER OFFICIALS.

    (a) In General.--Section 7803 (relating to other personnel) is 
amended to read as follows:

``SEC. 7803. COMMISSIONER OF INTERNAL REVENUE; OTHER OFFICIALS.

    ``(a) Commissioner of Internal Revenue.--
        ``(1) Appointment.--
            ``(A) In general.--There shall be in the Department of the 
        Treasury a Commissioner of Internal Revenue who shall be 
        appointed by the President, by and with the advice and consent 
        of the Senate, to a 5-year term. Such appointment shall be made 
        from individuals who, among other qualifications, have a 
        demonstrated ability in management.
            ``(B) Vacancy.--Any individual appointed to fill a vacancy 
        in the position of Commissioner occurring before the expiration 
        of the term for which such individual's predecessor was 
        appointed shall be appointed only for the remainder of that 
        term.
            ``(C) Removal.--The Commissioner may be removed at the will 
        of the President.
            ``(D) Reappointment.--The Commissioner may be appointed to 
        more than one 5-year term.
        ``(2) Duties.--The Commissioner shall have such duties and 
    powers as the Secretary may prescribe, including the power to--
            ``(A) administer, manage, conduct, direct, and supervise 
        the execution and application of the internal revenue laws or 
        related statutes and tax conventions to which the United States 
        is a party; and
            ``(B) recommend to the President a candidate for 
        appointment as Chief Counsel for the Internal Revenue Service 
        when a vacancy occurs, and recommend to the President the 
        removal of such Chief Counsel.
    If the Secretary determines not to delegate a power specified in 
    subparagraph (A) or (B), such determination may not take effect 
    until 30 days after the Secretary notifies the Committees on Ways 
    and Means, Government Reform and Oversight, and Appropriations of 
    the House of Representatives and the Committees on Finance, 
    Governmental Affairs, and Appropriations of the Senate.
        ``(3) Consultation with board.--The Commissioner shall consult 
    with the Oversight Board on all matters set forth in paragraphs (2) 
    and (3) (other than paragraph (3)(A)) of section 7802(d).
    ``(b) Chief Counsel for the Internal Revenue Service.--
        ``(1) Appointment.--There shall be in the Department of the 
    Treasury a Chief Counsel for the Internal Revenue Service who shall 
    be appointed by the President, by and with the consent of the 
    Senate.
        ``(2) Duties.--The Chief Counsel shall be the chief law officer 
    for the Internal Revenue Service and shall perform such duties as 
    may be prescribed by the Secretary, including the duty--
            ``(A) to be legal advisor to the Commissioner and the 
        Commissioner's officers and employees;
            ``(B) to furnish legal opinions for the preparation and 
        review of rulings and memoranda of technical advice;
            ``(C) to prepare, review, and assist in the preparation of 
        proposed legislation, treaties, regulations, and Executive 
        orders relating to laws which affect the Internal Revenue 
        Service;
            ``(D) to represent the Commissioner in cases before the Tax 
        Court; and
            ``(E) to determine which civil actions should be litigated 
        under the laws relating to the Internal Revenue Service and 
        prepare recommendations for the Department of Justice regarding 
        the commencement of such actions.
    If the Secretary determines not to delegate a power specified in 
    subparagraph (A), (B), (C), (D), or (E), such determination may not 
    take effect until 30 days after the Secretary notifies the 
    Committees on Ways and Means, Government Reform and Oversight, and 
    Appropriations of the House of Representatives and the Committees 
    on Finance, Governmental Affairs, and Appropriations of the Senate.
        ``(3) Persons to whom chief counsel reports.--The Chief Counsel 
    shall report directly to the Commissioner of Internal Revenue, 
    except that--
            ``(A) the Chief Counsel shall report to both the 
        Commissioner and the General Counsel for the Department of the 
        Treasury with respect to--
                ``(i) legal advice or interpretation of the tax law not 
            relating solely to tax policy;
                ``(ii) tax litigation; and
            ``(B) the Chief Counsel shall report to the General Counsel 
        with respect to legal advice or interpretation of the tax law 
        relating solely to tax policy.
    If there is any disagreement between the Commissioner and the 
    General Counsel with respect to any matter jointly referred to them 
    under subparagraph (A), such matter shall be submitted to the 
    Secretary or Deputy Secretary for resolution.
        ``(4) Chief counsel personnel.--All personnel in the Office of 
    Chief Counsel shall report to the Chief Counsel.
    ``(c) Office of the Taxpayer Advocate.--
        ``(1) Establishment.--
            ``(A) In general.--There is established in the Internal 
        Revenue Service an office to be known as the `Office of the 
        Taxpayer Advocate'.
            ``(B) National taxpayer advocate.--
                ``(i) In general.--The Office of the Taxpayer Advocate 
            shall be under the supervision and direction of an official 
            to be known as the `National Taxpayer Advocate'. The 
            National Taxpayer Advocate shall report directly to the 
            Commissioner of Internal Revenue and shall be entitled to 
            compensation at the same rate as the highest rate of basic 
            pay established for the Senior Executive Service under 
            section 5382 of title 5, United States Code, or, if the 
            Secretary of the Treasury so determines, at a rate fixed 
            under section 9503 of such title.
                ``(ii) Appointment.--The National Taxpayer Advocate 
            shall be appointed by the Secretary of the Treasury after 
            consultation with the Commissioner of Internal Revenue and 
            the Oversight Board and without regard to the provisions of 
            title 5, United States Code, relating to appointments in 
            the competitive service or the Senior Executive Service.
                ``(iii) Qualifications.--An individual appointed under 
            clause (ii) shall have--

                    ``(I) a background in customer service as well as 
                tax law; and
                    ``(II) experience in representing individual 
                taxpayers.

                ``(iv) Restriction on employment.--An individual may be 
            appointed as the National Taxpayer Advocate only if such 
            individual was not an officer or employee of the Internal 
            Revenue Service during the 2-year period ending with such 
            appointment and such individual agrees not to accept any 
            employment with the Internal Revenue Service for at least 5 
            years after ceasing to be the National Taxpayer Advocate. 
            Service as an officer or employee of the Office of the 
            Taxpayer Advocate shall not be taken into account in 
            applying this clause.
        ``(2) Functions of office.--
            ``(A) In general.--It shall be the function of the Office 
        of the Taxpayer Advocate to--
                ``(i) assist taxpayers in resolving problems with the 
            Internal Revenue Service;
                ``(ii) identify areas in which taxpayers have problems 
            in dealings with the Internal Revenue Service;
                ``(iii) to the extent possible, propose changes in the 
            administrative practices of the Internal Revenue Service to 
            mitigate problems identified under clause (ii); and
                ``(iv) identify potential legislative changes which may 
            be appropriate to mitigate such problems.
            ``(B) Annual reports.--
                ``(i) Objectives.--Not later than June 30 of each 
            calendar year, the National Taxpayer Advocate shall report 
            to the Committee on Ways and Means of the House of 
            Representatives and the Committee on Finance of the Senate 
            on the objectives of the Office of the Taxpayer Advocate 
            for the fiscal year beginning in such calendar year. Any 
            such report shall contain full and substantive analysis, in 
            addition to statistical information.
                ``(ii) Activities.--Not later than December 31 of each 
            calendar year, the National Taxpayer Advocate shall report 
            to the Committee on Ways and Means of the House of 
            Representatives and the Committee on Finance of the Senate 
            on the activities of the Office of the Taxpayer Advocate 
            during the fiscal year ending during such calendar year. 
            Any such report shall contain full and substantive 
            analysis, in addition to statistical information, and 
            shall--

                    ``(I) identify the initiatives the Office of the 
                Taxpayer Advocate has taken on improving taxpayer 
                services and Internal Revenue Service responsiveness;
                    ``(II) contain recommendations received from 
                individuals with the authority to issue Taxpayer 
                Assistance Orders under section 7811;
                    ``(III) contain a summary of at least 20 of the 
                most serious problems encountered by taxpayers, 
                including a description of the nature of such problems;
                    ``(IV) contain an inventory of the items described 
                in subclauses (I), (II), and (III) for which action has 
                been taken and the result of such action;
                    ``(V) contain an inventory of the items described 
                in subclauses (I), (II), and (III) for which action 
                remains to be completed and the period during which 
                each item has remained on such inventory;
                    ``(VI) contain an inventory of the items described 
                in subclauses (I), (II), and (III) for which no action 
                has been taken, the period during which each item has 
                remained on such inventory, the reasons for the 
                inaction, and identify any Internal Revenue Service 
                official who is responsible for such inaction;
                    ``(VII) identify any Taxpayer Assistance Order 
                which was not honored by the Internal Revenue Service 
                in a timely manner, as specified under section 7811(b);
                    ``(VIII) contain recommendations for such 
                administrative and legislative action as may be 
                appropriate to resolve problems encountered by 
                taxpayers;
                    ``(IX) identify areas of the tax law that impose 
                significant compliance burdens on taxpayers or the 
                Internal Revenue Service, including specific 
                recommendations for remedying these problems;
                    ``(X) identify the 10 most litigated issues for 
                each category of taxpayers, including recommendations 
                for mitigating such disputes; and
                    ``(XI) include such other information as the 
                National Taxpayer Advocate may deem advisable.

                ``(iii) Report to be submitted directly.--Each report 
            required under this subparagraph shall be provided directly 
            to the committees described in clause (i) without any prior 
            review or comment from the Commissioner, the Secretary of 
            the Treasury, the Oversight Board, any other officer or 
            employee of the Department of the Treasury, or the Office 
            of Management and Budget.
                ``(iv) Coordination with report of treasury inspector 
            general for tax administration.--To the extent that 
            information required to be reported under clause (ii) is 
            also required to be reported under paragraph (1) or (2) of 
            subsection (d) by the Treasury Inspector General for Tax 
            Administration, the National Taxpayer Advocate shall not 
            contain such information in the report submitted under such 
            clause.
            ``(C) Other responsibilities.--The National Taxpayer 
        Advocate shall--
                ``(i) monitor the coverage and geographic allocation of 
            local offices of taxpayer advocates;
                ``(ii) develop guidance to be distributed to all 
            Internal Revenue Service officers and employees outlining 
            the criteria for referral of taxpayer inquiries to local 
            offices of taxpayer advocates;
                ``(iii) ensure that the local telephone number for each 
            local office of the taxpayer advocate is published and 
            available to taxpayers served by the office; and
                ``(iv) in conjunction with the Commissioner, develop 
            career paths for local taxpayer advocates choosing to make 
            a career in the Office of the Taxpayer Advocate.
            ``(D) Personnel actions.--
                ``(i) In general.--The National Taxpayer Advocate shall 
            have the responsibility and authority to--

                    ``(I) appoint local taxpayer advocates and make 
                available at least 1 such advocate for each State; and
                    ``(II) evaluate and take personnel actions 
                (including dismissal) with respect to any employee of 
                any local office of a taxpayer advocate described in 
                subclause (I).

                ``(ii) Consultation.--The National Taxpayer Advocate 
            may consult with the appropriate supervisory personnel of 
            the Internal Revenue Service in carrying out the National 
            Taxpayer Advocate's responsibilities under this 
            subparagraph.
        ``(3) Responsibilities of commissioner.--The Commissioner shall 
    establish procedures requiring a formal response to all 
    recommendations submitted to the Commissioner by the National 
    Taxpayer Advocate within 3 months after submission to the 
    Commissioner.
        ``(4) Operation of local offices.--
            ``(A) In general.--Each local taxpayer advocate--
                ``(i) shall report to the National Taxpayer Advocate or 
            delegate thereof;
                ``(ii) may consult with the appropriate supervisory 
            personnel of the Internal Revenue Service regarding the 
            daily operation of the local office of the taxpayer 
            advocate;
                ``(iii) shall, at the initial meeting with any taxpayer 
            seeking the assistance of a local office of the taxpayer 
            advocate, notify such taxpayer that the taxpayer advocate 
            offices operate independently of any other Internal Revenue 
            Service office and report directly to Congress through the 
            National Taxpayer Advocate; and
                ``(iv) may, at the taxpayer advocate's discretion, not 
            disclose to the Internal Revenue Service contact with, or 
            information provided by, such taxpayer.
            ``(B) Maintenance of independent communications.--Each 
        local office of the taxpayer advocate shall maintain a separate 
        phone, facsimile, and other electronic communication access, 
        and a separate post office address.
    ``(d) Additional Duties of the Treasury Inspector General for Tax 
Administration.--
        ``(1) Annual reporting.--The Treasury Inspector General for Tax 
    Administration shall include in one of the semiannual reports under 
    section 5 of the Inspector General Act of 1978--
            ``(A) an evaluation of the compliance of the Internal 
        Revenue Service with--
                ``(i) restrictions under section 1204 of the Internal 
            Revenue Service Restructuring and Reform Act of 1998 on the 
            use of enforcement statistics to evaluate Internal Revenue 
            Service employees;
                ``(ii) restrictions under section 7521 on directly 
            contacting taxpayers who have indicated that they prefer 
            their representatives be contacted;
                ``(iii) required procedures under section 6320 upon the 
            filing of a notice of a lien;
                ``(iv) required procedures under subchapter D of 
            chapter 64 for seizure of property for collection of taxes, 
            including required procedures under section 6330 regarding 
            levies; and
                ``(v) restrictions under section 3707 of the Internal 
            Revenue Service Restructuring and Reform Act of 1998 on 
            designation of taxpayers;
            ``(B) a review and a certification of whether or not the 
        Secretary is complying with the requirements of section 
        6103(e)(8) to disclose information to an individual filing a 
        joint return on collection activity involving the other 
        individual filing the return;
            ``(C) information regarding extensions of the statute of 
        limitations for assessment and collection of tax under section 
        6501 and the provision of notice to taxpayers regarding 
        requests for such extension;
            ``(D) an evaluation of the adequacy and security of the 
        technology of the Internal Revenue Service;
            ``(E) any termination or mitigation under section 1203 of 
        the Internal Revenue Service Restructuring and Reform Act of 
        1998;
            ``(F) information regarding improper denial of requests for 
        information from the Internal Revenue Service identified under 
        paragraph (3)(A); and
            ``(G) information regarding any administrative or civil 
        actions with respect to violations of the fair debt collection 
        provisions of section 6304, including--
                ``(i) a summary of such actions initiated since the 
            date of the last report; and
                ``(ii) a summary of any judgments or awards granted as 
            a result of such actions.
        ``(2) Semiannual reports.--
            ``(A) In general.--The Treasury Inspector General for Tax 
        Administration shall include in each semiannual report under 
        section 5 of the Inspector General Act of 1978--
                ``(i) the number of taxpayer complaints during the 
            reporting period;
                ``(ii) the number of employee misconduct and taxpayer 
            abuse allegations received by the Internal Revenue Service 
            or the Inspector General during the period from taxpayers, 
            Internal Revenue Service employees, and other sources;
                ``(iii) a summary of the status of such complaints and 
            allegations; and
                ``(iv) a summary of the disposition of such complaints 
            and allegations, including the outcome of any Department of 
            Justice action and any monies paid as a settlement of such 
            complaints and allegations.
            ``(B) Clauses (iii) and (iv) of subparagraph (A) shall only 
        apply to complaints and allegations of serious employee 
        misconduct.
        ``(3) Other responsibilities.--The Treasury Inspector General 
    for Tax Administration shall--
            ``(A) conduct periodic audits of a statistically valid 
        sample of the total number of determinations made by the 
        Internal Revenue Service to deny written requests to disclose 
        information to taxpayers on the basis of section 6103 of this 
        title or section 552(b)(7) of title 5, United States Code; and
            ``(B) establish and maintain a toll-free telephone number 
        for taxpayers to use to confidentially register complaints of 
        misconduct by Internal Revenue Service employees and 
        incorporate the telephone number in the statement required by 
        section 6227 of the Omnibus Taxpayer Bill of Rights (Internal 
        Revenue Service Publication No. 1).''.
    (b) Notice of Right To Contact Office Included in Notice of 
Deficiency.--Section 6212(a) (relating to notice of deficiency) is 
amended by adding at the end the following new sentence: ``Such notice 
shall include a notice to the taxpayer of the taxpayer's right to 
contact a local office of the taxpayer advocate and the location and 
phone number of the appropriate office.''.
    (c) Expansion of Authority To Issue Taxpayer Assistance Orders.--
Section 7811(a) (relating to taxpayer assistance orders) is amended to 
read as follows:
    ``(a) Authority To Issue.--
        ``(1) In general.--Upon application filed by a taxpayer with 
    the Office of the Taxpayer Advocate (in such form, manner, and at 
    such time as the Secretary shall by regulations prescribe), the 
    National Taxpayer Advocate may issue a Taxpayer Assistance Order 
    if--
            ``(A) the National Taxpayer Advocate determines the 
        taxpayer is suffering or about to suffer a significant hardship 
        as a result of the manner in which the internal revenue laws 
        are being administered by the Secretary; or
            ``(B) the taxpayer meets such other requirements as are set 
        forth in regulations prescribed by the Secretary.
        ``(2) Determination of hardship.--For purposes of paragraph 
    (1), a significant hardship shall include--
            ``(A) an immediate threat of adverse action;
            ``(B) a delay of more than 30 days in resolving taxpayer 
        account problems;
            ``(C) the incurring by the taxpayer of significant costs 
        (including fees for professional representation) if relief is 
        not granted; or
            ``(D) irreparable injury to, or a long-term adverse impact 
        on, the taxpayer if relief is not granted.
        ``(3) Standard where administrative guidance not followed.--In 
    cases where any Internal Revenue Service employee is not following 
    applicable published administrative guidance (including the 
    Internal Revenue Manual), the National Taxpayer Advocate shall 
    construe the factors taken into account in determining whether to 
    issue a taxpayer assistance order in the manner most favorable to 
    the taxpayer.''.
    (d) Conforming Amendments Relating to National Taxpayer Advocate.--
        (1) The following provisions are each amended by striking 
    ``Taxpayer Advocate'' each place it appears and inserting 
    ``National Taxpayer Advocate'':
            (A) Section 6323(j)(1)(D) (relating to withdrawal of notice 
        in certain circumstances).
            (B) Section 6343(d)(2)(D) (relating to return of property 
        in certain cases).
            (C) Section 7811(b)(2)(D) (relating to terms of a Taxpayer 
        Assistance Order).
            (D) Section 7811(c) (relating to authority to modify or 
        rescind).
            (E) Section 7811(d)(2) (relating to suspension of running 
        of period of limitation).
            (F) Section 7811(e) (relating to independent action of 
        Taxpayer Advocate).
            (G) Section 7811(f) (relating to Taxpayer Advocate).
        (2) Section 7811(d)(1) (relating to suspension of running of 
    period of limitation) is amended by striking ``Taxpayer 
    Advocate's'' and inserting ``National Taxpayer Advocate's''.
        (3) The headings of subsections (e) and (f) of section 7811 are 
    each amended by striking ``Taxpayer Advocate'' and inserting 
    ``National Taxpayer Advocate''.
    (e) Additional Conforming Amendments.--
        (1) The table of sections for subchapter A of chapter 80 is 
    amended by striking the item relating to section 7803 and inserting 
    the following new item:
        ``Sec. 7803. Commissioner of Internal Revenue; other 
                  officials.''.

        (2) Section 5109 of title 5, United States Code, is amended by 
    striking subsection (b) and redesignating subsection (c) as 
    subsection (b).
        (3) Section 7611(f)(1) (relating to restrictions on church tax 
    inquiries and examinations) is amended by striking ``Assistant 
    Commissioner for Employee Plans and Exempt Organizations of the 
    Internal Revenue Service'' and inserting ``Secretary''.
    (f) Effective Date.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendments made by this section shall take effect on the date of 
    the enactment of this Act.
        (2) Chief counsel.--Section 7803(b)(3) of the Internal Revenue 
    Code of 1986, as added by this section, shall take effect on the 
    date that is 90 days after the date of the enactment of this Act.
        (3) National taxpayer advocate.--Notwithstanding section 
    7803(c)(1)(B)(iv) of such Code, as added by this section, in 
    appointing the first National Taxpayer Advocate after the date of 
    the enactment of this Act, the Secretary of the Treasury--
            (A) shall not appoint any individual who was an officer or 
        employee of the Internal Revenue Service at any time during the 
        2-year period ending on the date of appointment; and
            (B) need not consult with the Internal Revenue Service 
        Oversight Board if the Oversight Board has not been appointed.
        (4) Current officers.--
            (A) In the case of an individual serving as Commissioner of 
        Internal Revenue on the date of the enactment of this Act who 
        was appointed to such position before such date, the 5-year 
        term required by section 7803(a)(1) of such Code, as added by 
        this section, shall begin as of the date of such appointment.
            (B) Clauses (ii), (iii), and (iv) of section 7803(c)(1)(B) 
        of such Code, as added by this section, shall not apply to the 
        individual serving as Taxpayer Advocate on the date of the 
        enactment of this Act.

SEC. 1103. TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION.

    (a) Establishment of Two Inspectors General in the Department of 
the Treasury.--Section 2 of the Inspector General Act of 1978 (5 U.S.C. 
App.) is amended by striking the matter following paragraph (3) and 
inserting the following:
``there is established--
            ``(A) in each of such establishments an office of Inspector 
        General, subject to subparagraph (B); and
            ``(B) in the establishment of the Department of the 
        Treasury--
                ``(i) an Office of Inspector General of the Department 
            of the Treasury; and
                ``(ii) an Office of Treasury Inspector General for Tax 
            Administration.''.
    (b) Amendments to Section 8D of the Inspector General Act of 
1978.--
        (1) Limitation on authority of inspector general.--Section 
    8D(a) of the Inspector General Act of 1978 (5 U.S.C. App.) is 
    amended by adding at the end the following new paragraph:
        ``(4) The Secretary of the Treasury may not exercise any power 
    under paragraph (1) or (2) with respect to the Treasury Inspector 
    General for Tax Administration.''.
        (2) Duties of inspector general of the department of the 
    treasury; relationship to the treasury inspector general for tax 
    administration.--Section 8D(b) of such Act is amended--
            (A) by inserting ``(1)'' after ``(b)''; and
            (B) by adding at the end the following new paragraphs:
        ``(2) The Inspector General of the Department of the Treasury 
    shall exercise all duties and responsibilities of an Inspector 
    General for the Department of the Treasury other than the duties 
    and responsibilities exercised by the Treasury Inspector General 
    for Tax Administration.
        ``(3) The Secretary of the Treasury shall establish procedures 
    under which the Inspector General of the Department of the Treasury 
    and the Treasury Inspector General for Tax Administration will--
            ``(A) determine how audits and investigations are allocated 
        in cases of overlapping jurisdiction; and
            ``(B) provide for coordination, cooperation, and efficiency 
        in the conduct of such audits and investigations.''.
        (3) Access to returns and return information.-- Section 8D(e) 
    of such Act is amended--
            (A) in paragraph (1), by striking ``Inspector General'' and 
        inserting ``Treasury Inspector General for Tax 
        Administration'';
            (B) in paragraph (2), by striking all beginning with 
        ``(2)'' through subparagraph (B);
            (C)(i) by redesignating subparagraph (C) of paragraph (2) 
        as paragraph (2) of such subsection; and
            (ii) in such redesignated paragraph (2), by striking 
        ``Inspector General'' and inserting ``Treasury Inspector 
        General for Tax Administration''; and
            (D)(i) by redesignating subparagraph (D) of such paragraph 
        as paragraph (3) of such subsection; and
            (ii) in such redesignated paragraph (3), by striking 
        ``Inspector General'' and inserting ``Treasury Inspector 
        General for Tax Administration''.
        (4) Effect on certain final decisions of the secretary.--
    Section 8D(f) of such Act is amended by striking ``Inspector 
    General'' and inserting ``Inspector General of the Department of 
    the Treasury or the Treasury Inspector General for Tax 
    Administration''.
        (5) Repeal of limitation on reports to the attorney general.--
    Section 8D of such Act is amended by striking subsection (g).
        (6) Transmission of reports.--Section 8D(h) of such Act is 
    amended--
            (A) by striking ``(h)'' and inserting ``(g)(1)'';
            (B) by striking ``and the Committees on Government 
        Operations and Ways and Means of the House of Representatives'' 
        and inserting ``and the Committees on Government Reform and 
        Oversight and Ways and Means of the House of Representatives''; 
        and
            (C) by adding at the end the following new paragraph:
    ``(2) Any report made by the Treasury Inspector General for Tax 
Administration that is required to be transmitted by the Secretary of 
the Treasury to the appropriate committees or subcommittees of Congress 
under section 5(d) shall also be transmitted, within the 7-day period 
specified under such subsection, to the Internal Revenue Service 
Oversight Board and the Commissioner of Internal Revenue.''.
        (7) Treasury inspector general for tax administration.--Section 
    8D of the Act is amended by adding at the end the following new 
    subsections:
    ``(h) The Treasury Inspector General for Tax Administration shall 
exercise all duties and responsibilities of an Inspector General of an 
establishment with respect to the Department of the Treasury and the 
Secretary of the Treasury on all matters relating to the Internal 
Revenue Service. The Treasury Inspector General for Tax Administration 
shall have sole authority under this Act to conduct an audit or 
investigation of the Internal Revenue Service Oversight Board and the 
Chief Counsel for the Internal Revenue Service.
    ``(i) In addition to the requirements of the first sentence of 
section 3(a), the Treasury Inspector General for Tax Administration 
should have demonstrated ability to lead a large and complex 
organization.
    ``(j) An individual appointed to the position of Treasury Inspector 
General for Tax Administration, the Assistant Inspector General for 
Auditing of the Office of the Treasury Inspector General for Tax 
Administration under section 3(d)(1), the Assistant Inspector General 
for Investigations of the Office of the Treasury Inspector General for 
Tax Administration under section 3(d)(2), or any position of Deputy 
Inspector General of the Office of the Treasury Inspector General for 
Tax Administration may not be an employee of the Internal Revenue 
Service--
        ``(1) during the 2-year period preceding the date of 
    appointment to such position; or
        ``(2) during the 5-year period following the date such 
    individual ends service in such position.
    ``(k)(1) In addition to the duties and responsibilities exercised 
by an inspector general of an establishment, the Treasury Inspector 
General for Tax Administration--
        ``(A) shall have the duty to enforce criminal provisions under 
    section 7608(b) of the Internal Revenue Code of 1986;
        ``(B) in addition to the functions authorized under section 
    7608(b)(2) of such Code, may carry firearms;
        ``(C) shall be responsible for protecting the Internal Revenue 
    Service against external attempts to corrupt or threaten employees 
    of the Internal Revenue Service, but shall not be responsible for 
    the conducting of background checks and the providing of physical 
    security; and
        ``(D) may designate any employee in the Office of the Treasury 
    Inspector General for Tax Administration to enforce such laws and 
    perform such functions referred to under subparagraphs (A), (B), 
    and (C).
    ``(2)(A) In performing a law enforcement function under paragraph 
(1), the Treasury Inspector General for Tax Administration shall report 
any reasonable grounds to believe there has been a violation of Federal 
criminal law to the Attorney General at an appropriate time as 
determined by the Treasury Inspector General for Tax Administration, 
notwithstanding section 4(d).
    ``(B) In the administration of section 5(d) and subsection (g)(2) 
of this section, the Secretary of the Treasury may transmit the 
required report with respect to the Treasury Inspector General for Tax 
Administration at an appropriate time as determined by the Secretary, 
if the problem, abuse, or deficiency relates to--
        ``(i) the performance of a law enforcement function under 
    paragraph (1); and
        ``(ii) sensitive information concerning matters under 
    subsection (a)(1)(A) through (F).
    ``(3) Nothing in this subsection shall be construed to affect the 
authority of any other person to carry out or enforce any provision 
specified in paragraph (1).
    ``(l)(1) The Commissioner of Internal Revenue or the Internal 
Revenue Service Oversight Board may request, in writing, the Treasury 
Inspector General for Tax Administration to conduct an audit or 
investigation relating to the Internal Revenue Service. If the Treasury 
Inspector General for Tax Administration determines not to conduct such 
audit or investigation, the Inspector General shall timely provide a 
written explanation for such determination to the person making the 
request.
    ``(2)(A) Any final report of an audit conducted by the Treasury 
Inspector General for Tax Administration shall be timely submitted by 
the Inspector General to the Commissioner of Internal Revenue and the 
Internal Revenue Service Oversight Board.
    ``(B) The Treasury Inspector General for Tax Administration shall 
periodically submit to the Commissioner and Board a list of 
investigations for which a final report has been completed by the 
Inspector General and shall provide a copy of any such report upon 
request of the Commissioner or Board.
    ``(C) This paragraph applies regardless of whether the applicable 
audit or investigation is requested under paragraph (1).''.
    (c) Transfer of Functions.--
        (1) In general.--Section 9(a)(1) of the Inspector General Act 
    of 1978 (5 U.S.C. App.) is amended in subparagraph (L)--
            (A) by inserting ``(i)'' after ``(L)'';
            (B) by inserting ``and'' after the semicolon; and
            (C) by adding at the end the following new clause:
                ``(ii) of the Treasury Inspector General for Tax 
            Administration, effective 180 days after the date of the 
            enactment of the Internal Revenue Service Restructuring and 
            Reform Act of 1998, the Office of Chief Inspector of the 
            Internal Revenue Service;''.
        (2) Termination of office of chief inspector.--Effective upon 
    the transfer of functions under the amendment made by paragraph 
    (1), the Office of Chief Inspector of the Internal Revenue Service 
    is terminated.
        (3) Retention of certain internal audit personnel.--In making 
    the transfer under the amendment made by paragraph (1), the 
    Commissioner of Internal Revenue shall designate and retain an 
    appropriate number (not in excess of 300) of internal audit full-
    time equivalent employee positions necessary for management 
    relating to the Internal Revenue Service.
        (4) Additional personnel transfers.--Effective 180 days after 
    the date of the enactment of this Act, the Secretary of the 
    Treasury shall transfer 21 full-time equivalent positions from the 
    Office of the Inspector General of the Department of the Treasury 
    to the Office of the Treasury Inspector General for Tax 
    Administration.
    (d) Audits and Reports of Agency Financial Statements.--Subject to 
section 3521(g) of title 31, United States Code--
        (1) the Inspector General of the Department of the Treasury 
    shall, subject to paragraph (2)--
            (A) audit each financial statement in accordance with 
        section 3521(e) of such title; and
            (B) prepare and submit each report required under section 
        3521(f) of such title; and
        (2) the Treasury Inspector General for Tax Administration 
    shall--
            (A) audit that portion of each financial statement referred 
        to under paragraph (1)(A) that relates to custodial and 
        administrative accounts of the Internal Revenue Service; and
            (B) prepare that portion of each report referred to under 
        paragraph (1)(B) that relates to custodial and administrative 
        accounts of the Internal Revenue Service.
    (e) Technical and Conforming Amendments.--
        (1) Transfer of functions.--Section 8D(b) of the Inspector 
    General Act of 1978 (5 U.S.C. App.) is amended by striking ``and 
    the internal audits and internal investigations performed by the 
    Office of Assistant Commissioner (Inspection) of the Internal 
    Revenue Service''.
        (2) Amendments relating to references to the inspector general 
    of the department of the treasury.--
            (A) Limitation on authority.--Section 8D(a) of the 
        Inspector General Act of 1978 (5 U.S.C. App.) is amended--
                (i) in the first sentence of paragraph (1), by 
            inserting ``of the Department of the Treasury'' after 
            ``Inspector General'';
                (ii) in paragraph (2), by inserting ``of the Department 
            of the Treasury'' after ``prohibit the Inspector General''; 
            and
                (iii) in paragraph (3)--

                    (I) in the first sentence, by inserting ``of the 
                Department of the Treasury'' after ``notify the 
                Inspector General''; and
                    (II) in the second sentence, by inserting ``of the 
                Department of the Treasury'' after ``notice, the 
                Inspector General''.

            (B) Duties.--Section 8D(b) of such Act is amended in the 
        second sentence by inserting ``of the Department of the 
        Treasury'' after ``Inspector General''.
            (C) Audits and investigations.--Section 8D (c) and (d) of 
        such Act are amended by inserting ``of the Department of the 
        Treasury'' after ``Inspector General'' each place it appears.
        (3) References.--The second section 8G of the Inspector General 
    Act of 1978 (relating to rule of construction of special 
    provisions) is amended--
            (A) by striking ``Sec. 8G'' and inserting ``Sec. 8H'';
            (B) by striking ``or 8E'' and inserting ``8E or 8F''; and
            (C) by striking ``section 8F(a)'' and inserting ``section 
        8G(a)''.
        (4) Amendment to internal revenue code of 1986.--Section 
    7608(b)(1) is amended by striking ``or of the Internal Security 
    Division''.

SEC. 1104. OTHER PERSONNEL.

    (a) In General.--Section 7804 (relating to the effect of 
reorganization plans) is amended to read as follows:

``SEC. 7804. OTHER PERSONNEL.

    ``(a) Appointment and Supervision.--Unless otherwise prescribed by 
the Secretary, the Commissioner of Internal Revenue is authorized to 
employ such number of persons as the Commissioner deems proper for the 
administration and enforcement of the internal revenue laws, and the 
Commissioner shall issue all necessary directions, instructions, 
orders, and rules applicable to such persons.
    ``(b) Posts of Duty of Employees in Field Service or Traveling.--
Unless otherwise prescribed by the Secretary--
        ``(1) Designation of post of duty.--The Commissioner shall 
    determine and designate the posts of duty of all such persons 
    engaged in field work or traveling on official business outside of 
    the District of Columbia.
        ``(2) Detail of personnel from field service.--The Commissioner 
    may order any such person engaged in field work to duty in the 
    District of Columbia, for such periods as the Commissioner may 
    prescribe, and to any designated post of duty outside the District 
    of Columbia upon the completion of such duty.
    ``(c) Delinquent Internal Revenue Officers and Employees.--If any 
officer or employee of the Treasury Department acting in connection 
with the internal revenue laws fails to account for and pay over any 
amount of money or property collected or received by him in connection 
with the internal revenue laws, the Secretary shall issue notice and 
demand to such officer or employee for payment of the amount which he 
failed to account for and pay over, and, upon failure to pay the amount 
demanded within the time specified in such notice, the amount so 
demanded shall be deemed imposed upon such officer or employee and 
assessed upon the date of such notice and demand, and the provisions of 
chapter 64 and all other provisions of law relating to the collection 
of assessed taxes shall be applicable in respect of such amount.''.
    (b) Conforming Amendments.--
        (1) Subsection (b) of section 6344 is amended by striking 
    ``section 7803(d)'' and inserting ``section 7804(c)''.
        (2) The table of sections for subchapter A of chapter 80 is 
    amended by striking the item relating to section 7804 and inserting 
    the following new item:
        ``Sec. 7804. Other personnel.''.

    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 1105. PROHIBITION ON EXECUTIVE BRANCH INFLUENCE OVER TAXPAYER 
              AUDITS AND OTHER INVESTIGATIONS.

    (a) In General.--Part I of subchapter A of chapter 75 (relating to 
crimes, other offenses, and forfeitures) is amended by adding after 
section 7216 the following new section:

``SEC. 7217. PROHIBITION ON EXECUTIVE BRANCH INFLUENCE OVER TAXPAYER 
              AUDITS AND OTHER INVESTIGATIONS.

    ``(a) Prohibition.--It shall be unlawful for any applicable person 
to request, directly or indirectly, any officer or employee of the 
Internal Revenue Service to conduct or terminate an audit or other 
investigation of any particular taxpayer with respect to the tax 
liability of such taxpayer.
    ``(b) Reporting Requirement.--Any officer or employee of the 
Internal Revenue Service receiving any request prohibited by subsection 
(a) shall report the receipt of such request to the Treasury Inspector 
General for Tax Administration.
    ``(c) Exceptions.--Subsection (a) shall not apply to any written 
request made--
        ``(1) to an applicable person by or on behalf of the taxpayer 
    and forwarded by such applicable person to the Internal Revenue 
    Service;
        ``(2) by an applicable person for disclosure of return or 
    return information under section 6103 if such request is made in 
    accordance with the requirements of such section; or
        ``(3) by the Secretary of the Treasury as a consequence of the 
    implementation of a change in tax policy.
    ``(d) Penalty.--Any person who willfully violates subsection (a) or 
fails to report under subsection (b) shall be punished upon conviction 
by a fine in any amount not exceeding $5,000, or imprisonment of not 
more than 5 years, or both, together with the costs of prosecution.
    ``(e) Applicable Person.--For purposes of this section, the term 
`applicable person' means--
        ``(1) the President, the Vice President, any employee of the 
    executive office of the President, and any employee of the 
    executive office of the Vice President; and
        ``(2) any individual (other than the Attorney General of the 
    United States) serving in a position specified in section 5312 of 
    title 5, United States Code.''.
    (b) Clerical Amendment.--The table of sections for part I of 
subchapter A of chapter 75 is amended by adding after the item relating 
to section 7216 the following new item:
        ``Sec. 7217. Prohibition on executive branch influence over 
                  taxpayer audits and other investigations.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to requests made after the date of the enactment of this Act.

                  Subtitle C--Personnel Flexibilities

SEC. 1201. IMPROVEMENTS IN PERSONNEL FLEXIBILITIES.

    (a) In General.--Part III of title 5, United States Code, is 
amended by adding at the end the following new subpart:

                       ``Subpart I--Miscellaneous

``CHAPTER 95--PERSONNEL FLEXIBILITIES RELATING TO THE INTERNAL REVENUE 
                                SERVICE

``Sec.
``9501. Internal Revenue Service personnel flexibilities.
``9502. Pay authority for critical positions.
``9503. Streamlined critical pay authority.
``9504. Recruitment, retention, relocation incentives, and relocation 
          expenses.
``9505. Performance awards for senior executives.
``9506. Limited appointments to career reserved Senior Executive Service 
          positions.
``9507. Streamlined demonstration project authority.
``9508. General workforce performance management system.
``9509. General workforce classification and pay.
``9510. General workforce staffing.

``Sec. 9501. Internal Revenue Service personnel flexibilities

    ``(a) Any flexibilities provided by sections 9502 through 9510 of 
this chapter shall be exercised in a manner consistent with--
        ``(1) chapter 23 (relating to merit system principles and 
    prohibited personnel practices);
        ``(2) provisions relating to preference eligibles;
        ``(3) except as otherwise specifically provided, section 5307 
    (relating to the aggregate limitation on pay);
        ``(4) except as otherwise specifically provided, chapter 71 
    (relating to labor-management relations); and
        ``(5) subject to subsections (b) and (c) of section 1104, as 
    though such authorities were delegated to the Secretary of the 
    Treasury under section 1104(a)(2).
    ``(b) The Secretary of the Treasury shall provide the Office of 
Personnel Management with any information that Office requires in 
carrying out its responsibilities under this section.
    ``(c) Employees within a unit to which a labor organization is 
accorded exclusive recognition under chapter 71 shall not be subject to 
any flexibility provided by sections 9507 through 9510 of this chapter 
unless the exclusive representative and the Internal Revenue Service 
have entered into a written agreement which specifically provides for 
the exercise of that flexibility. Such written agreement may be imposed 
by the Federal Services Impasses Panel under section 7119.

``Sec. 9502. Pay authority for critical positions

    ``(a) When the Secretary of the Treasury seeks a grant of authority 
under section 5377 for critical pay for 1 or more positions at the 
Internal Revenue Service, the Office of Management and Budget may fix 
the rate of basic pay, notwithstanding sections 5377(d)(2) and 5307, at 
any rate up to the salary set in accordance with section 104 of title 
3.
    ``(b) Notwithstanding section 5307, no allowance, differential, 
bonus, award, or similar cash payment may be paid to any employee 
receiving critical pay at a rate fixed under subsection (a), in any 
calendar year if, or to the extent that, the employee's total annual 
compensation will exceed the maximum amount of total annual 
compensation payable at the salary set in accordance with section 104 
of title 3.

``Sec. 9503. Streamlined critical pay authority

    ``(a) Notwithstanding section 9502, and without regard to the 
provisions of this title governing appointments in the competitive 
service or the Senior Executive Service and chapters 51 and 53 
(relating to classification and pay rates), the Secretary of the 
Treasury may, for a period of 10 years after the date of enactment of 
this section, establish, fix the compensation of, and appoint 
individuals to, designated critical administrative, technical, and 
professional positions needed to carry out the functions of the 
Internal Revenue Service, if--
        ``(1) the positions--
            ``(A) require expertise of an extremely high level in an 
        administrative, technical, or professional field; and
            ``(B) are critical to the Internal Revenue Service's 
        successful accomplishment of an important mission;
        ``(2) exercise of the authority is necessary to recruit or 
    retain an individual exceptionally well qualified for the position;
        ``(3) the number of such positions does not exceed 40 at any 
    one time;
        ``(4) designation of such positions are approved by the 
    Secretary of the Treasury;
        ``(5) the terms of such appointments are limited to no more 
    than 4 years;
        ``(6) appointees to such positions were not Internal Revenue 
    Service employees prior to June 1, 1998;
        ``(7) total annual compensation for any appointee to such 
    positions does not exceed the highest total annual compensation 
    payable at the rate determined under section 104 of title 3; and
        ``(8) all such positions are excluded from the collective 
    bargaining unit.
    ``(b) Individuals appointed under this section shall not be 
considered to be employees for purposes of subchapter II of chapter 75.

``Sec. 9504. Recruitment, retention, relocation incentives, and 
            relocation expenses

    ``(a) For a period of 10 years after the date of enactment of this 
section and subject to approval by the Office of Personnel Management, 
the Secretary of the Treasury may provide for variations from sections 
5753 and 5754 governing payment of recruitment, relocation, and 
retention incentives.
    ``(b) For a period of 10 years after the date of enactment of this 
section, the Secretary of the Treasury may pay from appropriations made 
to the Internal Revenue Service allowable relocation expenses under 
section 5724a for employees transferred or reemployed and allowable 
travel and transportation expenses under section 5723 for new 
appointees, for any new appointee appointed to a position for which pay 
is fixed under section 9502 or 9503 after June 1, 1998.

``Sec. 9505. Performance awards for senior executives

    ``(a) For a period of 10 years after the date of enactment of this 
section, Internal Revenue Service senior executives who have program 
management responsibility over significant functions of the Internal 
Revenue Service may be paid a performance bonus without regard to the 
limitation in section 5384(b)(2) if the Secretary of the Treasury finds 
such award warranted based on the executive's performance.
    ``(b) In evaluating an executive's performance for purposes of an 
award under this section, the Secretary of the Treasury shall take into 
account the executive's contributions toward the successful 
accomplishment of goals and objectives established under the Government 
Performance and Results Act of 1993, division E of the Clinger-Cohen 
Act of 1996 (Public Law 104-106; 110 Stat. 679), Revenue Procedure 64-
22 (as in effect on July 30, 1997), taxpayer service surveys, and other 
performance metrics or plans established in consultation with the 
Internal Revenue Service Oversight Board.
    ``(c) Any award in excess of 20 percent of an executive's rate of 
basic pay shall be approved by the Secretary of the Treasury.
    ``(d) Notwithstanding section 5384(b)(3), the Secretary of the 
Treasury shall determine the aggregate amount of performance awards 
available to be paid during any fiscal year under this section and 
section 5384 to career senior executives in the Internal Revenue 
Service. Such amount may not exceed an amount equal to 5 percent of the 
aggregate amount of basic pay paid to career senior executives in the 
Internal Revenue Service during the preceding fiscal year. The Internal 
Revenue Service shall not be included in the determination under 
section 5384(b)(3) of the aggregate amount of performance awards 
payable to career senior executives in the Department of the Treasury 
other than the Internal Revenue Service.
    ``(e) Notwithstanding section 5307, a performance bonus award may 
not be paid to an executive in a calendar year if, or to the extent 
that, the executive's total annual compensation will exceed the maximum 
amount of total annual compensation payable at the rate determined 
under section 104 of title 3.

``Sec. 9506. Limited appointments to career reserved Senior Executive 
            Service positions

    ``(a) In the application of section 3132, a `career reserved 
position' in the Internal Revenue Service means a position designated 
under section 3132(b) which may be filled only by--
        ``(1) a career appointee; or
        ``(2) a limited emergency appointee or a limited term 
    appointee--
            ``(A) who, immediately upon entering the career reserved 
        position, was serving under a career or career-conditional 
        appointment outside the Senior Executive Service; or
            ``(B) whose limited emergency or limited term appointment 
        is approved in advance by the Office of Personnel Management.
    ``(b)(1) The number of positions described under subsection (a) 
which are filled by an appointee as described under paragraph (2) of 
such subsection may not exceed 10 percent of the total number of Senior 
Executive Service positions in the Internal Revenue Service.
    ``(2) Notwithstanding section 3132--
        ``(A) the term of an appointee described under subsection 
    (a)(2) may be for any period not to exceed 3 years; and
        ``(B) such an appointee may serve--
            ``(i) two such terms; or
            ``(ii) two such terms in addition to any unexpired term 
        applicable at the time of appointment.

``Sec. 9507. Streamlined demonstration project authority

    ``(a) The exercise of any of the flexibilities under sections 9502 
through 9510 shall not affect the authority of the Secretary of the 
Treasury to implement for the Internal Revenue Service a demonstration 
project subject to chapter 47, as provided in subsection (b).
    ``(b) In applying section 4703 to a demonstration project described 
in section 4701(a)(4) which involves the Internal Revenue Service--
        ``(1) section 4703(b)(1) shall be deemed to read as follows:
        ```(1) develop a plan for such project which describes its 
    purpose, the employees to be covered, the project itself, its 
    anticipated outcomes, and the method of evaluating the project;';
        ``(2) section 4703(b)(3) shall not apply;
        ``(3) the 180-day notification period in section 4703(b)(4) 
    shall be deemed to be a notification period of 30 days;
        ``(4) section 4703(b)(6) shall be deemed to read as follows:
        ```(6) provides each House of Congress with the final version 
    of the plan.';
        ``(5) section 4703(c)(1) shall be deemed to read as follows:
        ```(1) subchapter V of chapter 63 or subpart G of part III of 
    this title;';
        ``(6) the requirements of paragraphs (1)(A) and (2) of section 
    4703(d) shall not apply; and
        ``(7) notwithstanding section 4703(d)(1)(B), based on an 
    evaluation as provided in section 4703(h), the Office of Personnel 
    Management and the Secretary of the Treasury, except as otherwise 
    provided by this subsection, may waive the termination date of a 
    demonstration project under section 4703(d).
    ``(c) At least 90 days before waiving the termination date under 
subsection (b)(7), the Office of Personnel Management shall publish in 
the Federal Register a notice of its intention to waive the termination 
date and shall inform in writing both Houses of Congress of its 
intention.

``Sec. 9508. General workforce performance management system

    ``(a) In lieu of a performance appraisal system established under 
section 4302, the Secretary of the Treasury shall, within 1 year after 
the date of enactment of this section, establish for the Internal 
Revenue Service a performance management system that--
        ``(1) maintains individual accountability by--
            ``(A) establishing one or more retention standards for each 
        employee related to the work of the employee and expressed in 
        terms of individual performance, and communicating such 
        retention standards to employees;
            ``(B) making periodic determinations of whether each 
        employee meets or does not meet the employee's established 
        retention standards; and
            ``(C) taking actions, in accordance with applicable laws 
        and regulations, with respect to any employee whose performance 
        does not meet established retention standards, including 
        denying any increases in basic pay, promotions, and credit for 
        performance under section 3502, and taking one or more of the 
        following actions:
                ``(i) Reassignment.
                ``(ii) An action under chapter 43 or chapter 75 of this 
            title.
                ``(iii) Any other appropriate action to resolve the 
            performance problem; and
        ``(2) except as provided under section 1204 of the Internal 
    Revenue Service Restructuring and Reform Act of 1998, strengthens 
    the system's effectiveness by--
            ``(A) establishing goals or objectives for individual, 
        group, or organizational performance (or any combination 
        thereof), consistent with the Internal Revenue Service's 
        performance planning procedures, including those established 
        under the Government Performance and Results Act of 1993, 
        division E of the Clinger-Cohen Act of 1996 (Public Law 104-
        106; 110 Stat. 679), Revenue Procedure 64-22 (as in effect on 
        July 30, 1997), and taxpayer service surveys, and communicating 
        such goals or objectives to employees;
            ``(B) using such goals and objectives to make performance 
        distinctions among employees or groups of employees; and
            ``(C) using performance assessments as a basis for granting 
        employee awards, adjusting an employee's rate of basic pay, and 
        other appropriate personnel actions, in accordance with 
        applicable laws and regulations.
    ``(b)(1) For purposes of subsection (a)(2), the term `performance 
assessment' means a determination of whether or not retention standards 
established under subsection (a)(1)(A) are met, and any additional 
performance determination made on the basis of performance goals and 
objectives established under subsection (a)(2)(A).
    ``(2) For purposes of this title, the term `unacceptable 
performance' with respect to an employee of the Internal Revenue 
Service covered by a performance management system established under 
this section means performance of the employee which fails to meet a 
retention standard established under this section.
    ``(c)(1) The Secretary of the Treasury may establish an awards 
program designed to provide incentives for and recognition of 
organizational, group, and individual achievements by providing for 
granting awards to employees who, as individuals or members of a group, 
contribute to meeting the performance goals and objectives established 
under this chapter by such means as a superior individual or group 
accomplishment, a documented productivity gain, or sustained superior 
performance.
    ``(2) A cash award under subchapter I of chapter 45 may be granted 
to an employee of the Internal Revenue Service without the need for any 
approval under section 4502(b).
    ``(d)(1) In applying sections 4303(b)(1)(A) and 7513(b)(1) to 
employees of the Internal Revenue Service, `30 days' may be deemed to 
be `15 days'.
    ``(2) Notwithstanding the second sentence of section 5335(c), an 
employee of the Internal Revenue Service shall not have a right to 
appeal the denial of a periodic step increase under section 5335 to the 
Merit Systems Protection Board.

``Sec. 9509. General workforce classification and pay

    ``(a) For purposes of this section, the term `broad-banded system' 
means a system for grouping positions for pay, job evaluation, and 
other purposes that is different from the system established under 
chapter 51 and subchapter III of chapter 53 as a result of combining 
grades and related ranges of rates of pay in one or more occupational 
series.
    ``(b)(1)(A) The Secretary of the Treasury may, subject to criteria 
to be prescribed by the Office of Personnel Management, establish one 
or more broad-banded systems covering all or any portion of the 
Internal Revenue Service workforce.
    ``(B) With the approval of the Office of Personnel Management, a 
broad-banded system established under this section may either include 
or consist of positions that otherwise would be subject to subchapter 
IV of chapter 53 or section 5376.
    ``(2) The Office of Personnel Management may require the Secretary 
of the Treasury to submit information relating to broad-banded systems 
at the Internal Revenue Service.
    ``(3) Except as otherwise provided under this section, employees 
under a broad-banded system shall continue to be subject to the laws 
and regulations covering employees under the pay system that otherwise 
would apply to such employees.
    ``(4) The criteria to be prescribed by the Office of Personnel 
Management shall, at a minimum--
        ``(A) ensure that the structure of any broad-banded system 
    maintains the principle of equal pay for substantially equal work;
        ``(B) establish the minimum and maximum number of grades that 
    may be combined into pay bands;
        ``(C) establish requirements for setting minimum and maximum 
    rates of pay in a pay band;
        ``(D) establish requirements for adjusting the pay of an 
    employee within a pay band;
        ``(E) establish requirements for setting the pay of a 
    supervisory employee whose position is in a pay band or who 
    supervises employees whose positions are in pay bands; and
        ``(F) establish requirements and methodologies for setting the 
    pay of an employee upon conversion to a broad-banded system, 
    initial appointment, change of position or type of appointment 
    (including promotion, demotion, transfer, reassignment, 
    reinstatement, placement in another pay band, or movement to a 
    different geographic location), and movement between a broad-banded 
    system and another pay system.
    ``(c) With the approval of the Office of Personnel Management and 
in accordance with a plan for implementation submitted by the Secretary 
of the Treasury, the Secretary may, with respect to Internal Revenue 
Service employees who are covered by a broad-banded system established 
under this section, provide for variations from the provisions of 
subchapter VI of chapter 53.

``Sec. 9510. General workforce staffing

    ``(a)(1) Except as otherwise provided by this section, an employee 
of the Internal Revenue Service may be selected for a permanent 
appointment in the competitive service in the Internal Revenue Service 
through internal competitive promotion procedures if--
        ``(A) the employee has completed, in the competitive service, 2 
    years of current continuous service under a term appointment or any 
    combination of term appointments;
        ``(B) such term appointment or appointments were made under 
    competitive procedures prescribed for permanent appointments;
        ``(C) the employee's performance under such term appointment or 
    appointments met established retention standards, or, if not 
    covered by a performance management system established under 
    section 9508, was rated at the fully successful level or higher (or 
    equivalent thereof); and
        ``(D) the vacancy announcement for the term appointment from 
    which the conversion is made stated that there was a potential for 
    subsequent conversion to a permanent appointment.
    ``(2) An appointment under this section may be made only to a 
position in the same line of work as a position to which the employee 
received a term appointment under competitive procedures.
    ``(b)(1) Notwithstanding subchapter I of chapter 33, the Secretary 
of the Treasury may establish category rating systems for evaluating 
applicants for Internal Revenue Service positions in the competitive 
service under which qualified candidates are divided into two or more 
quality categories on the basis of relative degrees of merit, rather 
than assigned individual numerical ratings.
    ``(2) Each applicant who meets the minimum qualification 
requirements for the position to be filled shall be assigned to an 
appropriate category based on an evaluation of the applicant's 
knowledge, skills, and abilities relative to those needed for 
successful performance in the position to be filled.
    ``(3) Within each quality category established under paragraph (1), 
preference eligibles shall be listed ahead of individuals who are not 
preference eligibles. For other than scientific and professional 
positions at or higher than GS-9 (or equivalent), preference eligibles 
who have a compensable service-connected disability of 10 percent or 
more, and who meet the minimum qualification standards, shall be listed 
in the highest quality category.
    ``(4) An appointing authority may select any applicant from the 
highest quality category or, if fewer than three candidates have been 
assigned to the highest quality category, from a merged category 
consisting of the highest and second highest quality categories.
    ``(5) Notwithstanding paragraph (4), the appointing authority may 
not pass over a preference eligible in the same or higher category from 
which selection is made unless the requirements of section 3317(b) or 
3318(b), as applicable, are satisfied.
    ``(c) The Secretary of the Treasury may detail employees among the 
offices of the Internal Revenue Service without regard to the 120-day 
limitation in section 3341(b).
    ``(d) Notwithstanding any other provision of law, the Secretary of 
the Treasury may establish a probationary period under section 3321 of 
up to 3 years for Internal Revenue Service positions if the Secretary 
of the Treasury determines that the nature of the work is such that a 
shorter period is insufficient to demonstrate complete proficiency in 
the position.
    ``(e) Nothing in this section exempts the Secretary of the Treasury 
from--
        ``(1) any employment priority established under direction of 
    the President for the placement of surplus or displaced employees; 
    or
        ``(2) any obligation under a court order or decree relating to 
    the employment practices of the Internal Revenue Service or the 
    Department of the Treasury.''.
    (b) Clerical Amendment.--The table of sections for part III of 
title 5, United States Code, is amended by adding at the end the 
following new items:

                       ``Subpart I--Miscellaneous

``95. Personnel flexibilities relating to the Internal Revenue 
Service..........................................................9501''.

SEC. 1202. VOLUNTARY SEPARATION INCENTIVE PAYMENTS.

    (a) Definition.--In this section, the term ``employee'' means an 
employee (as defined by section 2105 of title 5, United States Code) 
who is employed by the Internal Revenue Service serving under an 
appointment without time limitation, and has been currently employed 
for a continuous period of at least 3 years, but does not include--
        (1) a reemployed annuitant under subchapter III of chapter 83 
    or chapter 84 of title 5, United States Code, or another retirement 
    system;
        (2) an employee having a disability on the basis of which such 
    employee is or would be eligible for disability retirement under 
    the applicable retirement system referred to in paragraph (1);
        (3) an employee who is in receipt of a specific notice of 
    involuntary separation for misconduct or unacceptable performance;
        (4) an employee who, upon completing an additional period of 
    service as referred to in section 3(b)(2)(B)(ii) of the Federal 
    Workforce Restructuring Act of 1994 (5 U.S.C. 5597 note), would 
    qualify for a voluntary separation incentive payment under section 
    3 of such Act;
        (5) an employee who has previously received any voluntary 
    separation incentive payment by the Federal Government under this 
    section or any other authority and has not repaid such payment;
        (6) an employee covered by statutory reemployment rights who is 
    on transfer to another organization; or
        (7) any employee who, during the 24-month period preceding the 
    date of separation, has received a recruitment or relocation bonus 
    under section 5753 of title 5, United States Code, or who, within 
    the 12-month period preceding the date of separation, received a 
    retention allowance under section 5754 of title 5, United States 
    Code.
    (b) Authority To Provide Voluntary Separation Incentive Payments.--
        (1) In general.--The Commissioner of Internal Revenue may pay 
    voluntary separation incentive payments under this section to any 
    employee to the extent necessary to carry out the plan to 
    reorganize the Internal Revenue Service under section 1001.
        (2) Amount and treatment of payments.--A voluntary separation 
    incentive payment--
            (A) shall be paid in a lump sum after the employee's 
        separation;
            (B) shall be paid from appropriations or funds available 
        for the payment of the basic pay of the employees;
            (C) shall be equal to the lesser of--
                (i) an amount equal to the amount the employee would be 
            entitled to receive under section 5595(c) of title 5, 
            United States Code; or
                (ii) an amount determined by an agency head not to 
            exceed $25,000;
            (D) may not be made except in the case of any qualifying 
        employee who voluntarily separates (whether by retirement or 
        resignation) before January 1, 2003;
            (E) shall not be a basis for payment, and shall not be 
        included in the computation, of any other type of Government 
        benefit; and
            (F) shall not be taken into account in determining the 
        amount of any severance pay to which the employee may be 
        entitled under section 5595 of title 5, United States Code, 
        based on any other separation.
    (c) Additional Internal Revenue Service Contributions to the 
Retirement Fund.--
        (1) In general.--In addition to any other payments which it is 
    required to make under subchapter III of chapter 83 of title 5, 
    United States Code, the Internal Revenue Service shall remit to the 
    Office of Personnel Management for deposit in the Treasury of the 
    United States to the credit of the Civil Service Retirement and 
    Disability Fund an amount equal to 15 percent of the final basic 
    pay of each employee who is covered under subchapter III of chapter 
    83 or chapter 84 of title 5, United States Code, to whom a 
    voluntary separation incentive has been paid under this section.
        (2) Definition.--In paragraph (1), the term ``final basic 
    pay'', with respect to an employee, means the total amount of basic 
    pay which would be payable for a year of service by such employee, 
    computed using the employee's final rate of basic pay, and, if last 
    serving on other than a full-time basis, with appropriate 
    adjustment therefor.
    (d) Effect of Subsequent Employment With the Government.--An 
individual who has received a voluntary separation incentive payment 
under this section and accepts any employment for compensation with the 
Government of the United States, or who works for any agency of the 
United States Government through a personal services contract, within 5 
years after the date of the separation on which the payment is based 
shall be required to pay, prior to the individual's first day of 
employment, the entire amount of the incentive payment to the Internal 
Revenue Service.
    (e) Effect on Internal Revenue Service Employment Levels.--
        (1) Intended effect.--Voluntary separations under this section 
    are not intended to necessarily reduce the total number of full-
    time equivalent positions in the Internal Revenue Service.
        (2) Use of voluntary separations.--The Internal Revenue Service 
    may redeploy or use the full-time equivalent positions vacated by 
    voluntary separations under this section to make other positions 
    available to more critical locations or more critical occupations.

SEC. 1203. TERMINATION OF EMPLOYMENT FOR MISCONDUCT.

    (a) In General.--Subject to subsection (c), the Commissioner of 
Internal Revenue shall terminate the employment of any employee of the 
Internal Revenue Service if there is a final administrative or judicial 
determination that such employee committed any act or omission 
described under subsection (b) in the performance of the employee's 
official duties. Such termination shall be a removal for cause on 
charges of misconduct.
    (b) Acts or Omissions.--The acts or omissions referred to under 
subsection (a) are--
        (1) willful failure to obtain the required approval signatures 
    on documents authorizing the seizure of a taxpayer's home, personal 
    belongings, or business assets;
        (2) providing a false statement under oath with respect to a 
    material matter involving a taxpayer or taxpayer representative;
        (3) with respect to a taxpayer, taxpayer representative, or 
    other employee of the Internal Revenue Service, the violation of--
            (A) any right under the Constitution of the United States; 
        or
            (B) any civil right established under--
                (i) title VI or VII of the Civil Rights Act of 1964;
                (ii) title IX of the Education Amendments of 1972;
                (iii) the Age Discrimination in Employment Act of 1967;
                (iv) the Age Discrimination Act of 1975;
                (v) section 501 or 504 of the Rehabilitation Act of 
            1973; or
                (vi) title I of the Americans with Disabilities Act of 
            1990;
        (4) falsifying or destroying documents to conceal mistakes made 
    by any employee with respect to a matter involving a taxpayer or 
    taxpayer representative;
        (5) assault or battery on a taxpayer, taxpayer representative, 
    or other employee of the Internal Revenue Service, but only if 
    there is a criminal conviction, or a final judgment by a court in a 
    civil case, with respect to the assault or battery;
        (6) violations of the Internal Revenue Code of 1986, Department 
    of Treasury regulations, or policies of the Internal Revenue 
    Service (including the Internal Revenue Manual) for the purpose of 
    retaliating against, or harassing, a taxpayer, taxpayer 
    representative, or other employee of the Internal Revenue Service;
        (7) willful misuse of the provisions of section 6103 of the 
    Internal Revenue Code of 1986 for the purpose of concealing 
    information from a congressional inquiry;
        (8) willful failure to file any return of tax required under 
    the Internal Revenue Code of 1986 on or before the date prescribed 
    therefor (including any extensions), unless such failure is due to 
    reasonable cause and not to willful neglect;
        (9) willful understatement of Federal tax liability, unless 
    such understatement is due to reasonable cause and not to willful 
    neglect; and
        (10) threatening to audit a taxpayer for the purpose of 
    extracting personal gain or benefit.
    (c) Determination of Commissioner.--
        (1) In general.--The Commissioner of Internal Revenue may take 
    a personnel action other than termination for an act or omission 
    under subsection (a).
        (2) Discretion.--The exercise of authority under paragraph (1) 
    shall be at the sole discretion of the Commissioner of Internal 
    Revenue and may not be delegated to any other officer. The 
    Commissioner of Internal Revenue, in his sole discretion, may 
    establish a procedure which will be used to determine whether an 
    individual should be referred to the Commissioner of Internal 
    Revenue for a determination by the Commissioner under paragraph 
    (1).
        (3) No appeal.--Any determination of the Commissioner of 
    Internal Revenue under this subsection may not be appealed in any 
    administrative or judicial proceeding.
    (d) Definition.--For purposes of the provisions described in 
clauses (i), (ii), and (iv) of subsection (b)(3)(B), references to a 
program or activity receiving Federal financial assistance or an 
education program or activity receiving Federal financial assistance 
shall include any program or activity conducted by the Internal Revenue 
Service for a taxpayer.

SEC. 1204. BASIS FOR EVALUATION OF INTERNAL REVENUE SERVICE EMPLOYEES.

    (a) In General.--The Internal Revenue Service shall not use records 
of tax enforcement results--
        (1) to evaluate employees; or
        (2) to impose or suggest production quotas or goals with 
    respect to such employees.
    (b) Taxpayer Service.--The Internal Revenue Service shall use the 
fair and equitable treatment of taxpayers by employees as one of the 
standards for evaluating employee performance.
    (c) Certification.--Each appropriate supervisor shall certify 
quarterly by letter to the Commissioner of Internal Revenue whether or 
not tax enforcement results are being used in a manner prohibited by 
subsection (a).
    (d) Technical and Conforming Amendment.--Section 6231 of the 
Technical and Miscellaneous Revenue Act of 1988 (Public Law 100-647; 
102 Stat. 3734) is repealed.
    (e) Effective Date.--This section shall apply to evaluations 
conducted on or after the date of the enactment of this Act.

SEC. 1205. EMPLOYEE TRAINING PROGRAM.

    (a) In General.--Not later than 180 days after the date of the 
enactment of this Act, the Commissioner of Internal Revenue shall 
implement an employee training program and shall submit an employee 
training plan to the Committee on Finance of the Senate and the 
Committee on Ways and Means of the House of Representatives.
    (b) Contents.--The plan submitted under subsection (a) shall--
        (1) detail a comprehensive employee training program to ensure 
    adequate customer service training;
        (2) detail a schedule for training and the fiscal years during 
    which the training will occur;
        (3) detail the funding of the program and relevant information 
    to demonstrate the priority and commitment of resources to the 
    plan;
        (4) review the organizational design of customer service;
        (5) provide for the implementation of a performance development 
    system; and
        (6) provide for at least 16 hours of conflict management 
    training during fiscal year 1999 for employees conducting 
    collection activities.

                      TITLE II--ELECTRONIC FILING

SEC. 2001. ELECTRONIC FILING OF TAX AND INFORMATION RETURNS.

    (a) In General.--It is the policy of Congress that--
        (1) paperless filing should be the preferred and most 
    convenient means of filing Federal tax and information returns;
        (2) it should be the goal of the Internal Revenue Service to 
    have at least 80 percent of all such returns filed electronically 
    by the year 2007; and
        (3) the Internal Revenue Service should cooperate with and 
    encourage the private sector by encouraging competition to increase 
    electronic filing of such returns.
    (b) Strategic Plan.--
        (1) In general.--Not later than 180 days after the date of the 
    enactment of this Act, the Secretary of the Treasury or the 
    Secretary's delegate (hereafter in this section referred to as the 
    ``Secretary'') shall establish a plan to eliminate barriers, 
    provide incentives, and use competitive market forces to increase 
    electronic filing gradually over the next 10 years while 
    maintaining processing times for paper returns at 40 days. To the 
    extent practicable, such plan shall provide that all returns 
    prepared electronically for taxable years beginning after 2001 
    shall be filed electronically.
        (2) Electronic commerce advisory group.--To ensure that the 
    Secretary receives input from the private sector in the development 
    and implementation of the plan required by paragraph (1), the 
    Secretary shall convene an electronic commerce advisory group to 
    include representatives from the small business community and from 
    the tax practitioner, preparer, and computerized tax processor 
    communities and other representatives from the electronic filing 
    industry.
    (c) Promotion of Electronic Filing and Incentives.-- Section 6011 
is amended by redesignating subsection (f) as subsection (g) and by 
inserting after subsection (e) the following new subsection:
    ``(f) Promotion of Electronic Filing.--
        ``(1) In general.--The Secretary is authorized to promote the 
    benefits of and encourage the use of electronic tax administration 
    programs, as they become available, through the use of mass 
    communications and other means.
        ``(2) Incentives.--The Secretary may implement procedures to 
    provide for the payment of appropriate incentives for 
    electronically filed returns.''.
    (d) Annual Reports.--Not later than June 30 of each calendar year 
after 1998, the Chairperson of the Internal Revenue Service Oversight 
Board, the Secretary of the Treasury, and the Chairperson of the 
electronic commerce advisory group established under subsection (b)(2) 
shall report to the Committees on Ways and Means, Appropriations, 
Government Reform and Oversight, and Small Business of the House of 
Representatives and the Committees on Finance, Appropriations, 
Governmental Affairs, and Small Business of the Senate on--
        (1) the progress of the Internal Revenue Service in meeting the 
    goal of receiving electronically 80 percent of tax and information 
    returns by 2007;
        (2) the status of the plan required by subsection (b);
        (3) the legislative changes necessary to assist the Internal 
    Revenue Service in meeting such goal; and
        (4) the effects on small businesses and the self-employed of 
    electronically filing tax and information returns.

SEC. 2002. DUE DATE FOR CERTAIN INFORMATION RETURNS.

    (a) Information Returns Filed Electronically.--Section 6071 
(relating to time for filing returns and other documents) is amended by 
redesignating subsection (b) as subsection (c) and by inserting after 
subsection (a) the following new subsection:
    ``(b) Electronically Filed Information Returns.--Returns made under 
subparts B and C of part III of this subchapter which are filed 
electronically shall be filed on or before March 31 of the year 
following the calendar year to which such returns relate.''.
    (b) Study Relating to Time For Providing Notice to Recipients.--
        (1) In general.--The Secretary of the Treasury shall conduct a 
    study evaluating the effect of extending the deadline for providing 
    statements to persons with respect to whom information is required 
    to be furnished under subparts B and C of part III of subchapter A 
    of chapter 61 of the Internal Revenue Code of 1986 (other than 
    section 6051 of such Code) from January 31 to February 15 of the 
    year in which the return to which the statement relates is required 
    to be filed.
        (2) Report.--Not later than June 30, 1999, the Secretary of the 
    Treasury shall submit a report on the study under paragraph (1) to 
    the Committee on Ways and Means of the House of Representatives and 
    the Committee on Finance of the Senate.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to returns required to be filed after December 31, 1999.

SEC. 2003. PAPERLESS ELECTRONIC FILING.

    (a) In General.--Section 6061 (relating to signing of returns and 
other documents) is amended--
        (1) by striking ``Except as otherwise provided by'' and 
    inserting the following:
    ``(a) General Rule.--Except as otherwise provided by subsection (b) 
and''; and
        (2) by adding at the end the following new subsection:
    ``(b) Electronic Signatures.--
        ``(1) In general.--The Secretary shall develop procedures for 
    the acceptance of signatures in digital or other electronic form. 
    Until such time as such procedures are in place, the Secretary 
    may--
            ``(A) waive the requirement of a signature for; or
            ``(B) provide for alternative methods of signing or 
        subscribing,
    a particular type or class of return, declaration, statement, or 
    other document required or permitted to be made or written under 
    internal revenue laws and regulations.
        ``(2) Treatment of alternative methods.--Notwithstanding any 
    other provision of law, any return, declaration, statement, or 
    other document filed and verified, signed, or subscribed under any 
    method adopted under paragraph (1)(B) shall be treated for all 
    purposes (both civil and criminal, including penalties for perjury) 
    in the same manner as though signed or subscribed.
        ``(3) Published guidance.--The Secretary shall publish guidance 
    as appropriate to define and implement any waiver of the signature 
    requirements or any method adopted under paragraph (1).''.
    (b) Acknowledgment of Electronic Filing.--Section 7502(c) is 
amended to read as follows:
    ``(c) Registered and Certified Mailing; Electronic Filing.--
        ``(1) Registered mail.--For purposes of this section, if any 
    return, claim, statement, or other document, or payment, is sent by 
    United States registered mail--
            ``(A) such registration shall be prima facie evidence that 
        the return, claim, statement, or other document was delivered 
        to the agency, officer, or office to which addressed; and
            ``(B) the date of registration shall be deemed the postmark 
        date.
        ``(2) Certified mail; electronic filing.--The Secretary is 
    authorized to provide by regulations the extent to which the 
    provisions of paragraph (1) with respect to prima facie evidence of 
    delivery and the postmark date shall apply to certified mail and 
    electronic filing.''.
    (c) Establishment of Procedures for Other Information.--In the case 
of taxable periods beginning after December 31, 1999, the Secretary of 
the Treasury or the Secretary's delegate shall, to the extent 
practicable, establish procedures to accept, in electronic form, any 
other information, statements, elections, or schedules, from taxpayers 
filing returns electronically, so that such taxpayers will not be 
required to file any paper.
    (d) Internet Availability.--In the case of taxable periods 
beginning after December 31, 1998, the Secretary of the Treasury or the 
Secretary's delegate shall establish procedures for all tax forms, 
instructions, and publications created in the most recent 5-year period 
to be made available electronically on the Internet in a searchable 
database at approximately the same time such records are available to 
the public in paper form. In addition, in the case of taxable periods 
beginning after December 31, 1998, the Secretary of the Treasury or the 
Secretary's delegate shall, to the extent practicable, establish 
procedures for other taxpayer guidance to be made available 
electronically on the Internet in a searchable database at 
approximately the same time such guidance is available to the public in 
paper form.
    (e) Procedures for Authorizing Disclosure Electronically.--The 
Secretary shall establish procedures for any taxpayer to authorize, on 
an electronically filed return, the Secretary to disclose information 
under section 6103(c) of the Internal Revenue Code of 1986 to the 
preparer of the return.
    (f) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 2004. RETURN-FREE TAX SYSTEM.

    (a) In General.--The Secretary of the Treasury or the Secretary's 
delegate shall develop procedures for the implementation of a return-
free tax system under which appropriate individuals would be permitted 
to comply with the Internal Revenue Code of 1986 without making the 
return required under section 6012 of such Code for taxable years 
beginning after 2007.
    (b) Report.--Not later than June 30 of each calendar year after 
1999, the Secretary shall report to the Committee on Ways and Means of 
the House of Representatives and the Committee on Finance of the Senate 
on--
        (1) what additional resources the Internal Revenue Service 
    would need to implement such a system;
        (2) the changes to the Internal Revenue Code of 1986 that could 
    enhance the use of such a system;
        (3) the procedures developed pursuant to subsection (a); and
        (4) the number and classes of taxpayers that would be permitted 
    to use the procedures developed pursuant to subsection (a).

SEC. 2005. ACCESS TO ACCOUNT INFORMATION.

    (a) In General.--Not later than December 31, 2006, the Secretary of 
the Treasury or the Secretary's delegate shall develop procedures under 
which a taxpayer filing returns electronically (and their designees 
under section 6103(c) of the Internal Revenue Code of 1986) would be 
able to review the taxpayer's account electronically, but only if all 
necessary safeguards to ensure the privacy of such account information 
are in place.
    (b) Report.--Not later than December 31, 2003, the Secretary of the 
Treasury shall report on the progress the Secretary is making on the 
development of procedures under subsection (a) to the Committee on Ways 
and Means of the House of Representatives and the Committee on Finance 
of the Senate.

               TITLE III--TAXPAYER PROTECTION AND RIGHTS

SEC. 3000. SHORT TITLE.

    This title may be cited as the ``Taxpayer Bill of Rights 3''.

                      Subtitle A--Burden of Proof

SEC. 3001. BURDEN OF PROOF.

    (a) In General.--Chapter 76 (relating to judicial proceedings) is 
amended by adding at the end the following new subchapter:

                    ``Subchapter E--Burden of Proof

        ``Sec. 7491. Burden of proof.

``SEC. 7491. BURDEN OF PROOF.

    ``(a) Burden Shifts Where Taxpayer Produces Credible Evidence.--
        ``(1) General rule.--If, in any court proceeding, a taxpayer 
    introduces credible evidence with respect to any factual issue 
    relevant to ascertaining the liability of the taxpayer for any tax 
    imposed by subtitle A or B, the Secretary shall have the burden of 
    proof with respect to such issue.
        ``(2) Limitations.--Paragraph (1) shall apply with respect to 
    an issue only if--
            ``(A) the taxpayer has complied with the requirements under 
        this title to substantiate any item;
            ``(B) the taxpayer has maintained all records required 
        under this title and has cooperated with reasonable requests by 
        the Secretary for witnesses, information, documents, meetings, 
        and interviews; and
            ``(C) in the case of a partnership, corporation, or trust, 
        the taxpayer is described in section 7430(c)(4)(A)(ii).
        ``(3) Coordination.--Paragraph (1) shall not apply to any issue 
    if any other provision of this title provides for a specific burden 
    of proof with respect to such issue.
    ``(b) Use of Statistical Information on Unrelated Taxpayers.--In 
the case of an individual taxpayer, the Secretary shall have the burden 
of proof in any court proceeding with respect to any item of income 
which was reconstructed by the Secretary solely through the use of 
statistical information on unrelated taxpayers.
    ``(c) Penalties.--Notwithstanding any other provision of this 
title, the Secretary shall have the burden of production in any court 
proceeding with respect to the liability of any individual for any 
penalty, addition to tax, or additional amount imposed by this 
title.''.
    (b) Conforming Amendment.--The table of subchapters for chapter 76 
is amended by adding at the end the following new item:
        ``Subchapter E. Burden of proof.''.

    (c) Effective Date.--
        (1) In general.--The amendments made by this section shall 
    apply to court proceedings arising in connection with examinations 
    commencing after the date of the enactment of this Act.
        (2) Taxable periods or events after date of enactment.--In any 
    case in which there is no examination, such amendments shall apply 
    to court proceedings arising in connection with taxable periods or 
    events beginning or occurring after such date of enactment.

                  Subtitle B--Proceedings by Taxpayers

SEC. 3101. EXPANSION OF AUTHORITY TO AWARD COSTS AND CERTAIN FEES.

    (a) Increase in Attorney's Fees.--
        (1) Increase in hourly amount.--Clause (iii) of section 
    7430(c)(1)(B) (relating to reasonable litigation costs) is amended 
    by striking ``$110'' and inserting ``$125''.
        (2) Award of higher attorney's fees based on complexity of 
    issues.--Clause (iii) of section 7430(c)(1)(B) (relating to the 
    award of costs and certain fees) is amended by inserting ``the 
    difficulty of the issues presented in the case, or the local 
    availability of tax expertise,'' before ``justifies a higher 
    rate''.
    (b) Award of Administrative Costs Incurred After 30-Day Letter.--
Paragraph (2) of section 7430(c) is amended by striking the last 
sentence and inserting the following new flush sentence:
    ``Such term shall only include costs incurred on or after whichever 
    of the following is the earliest: (i) the date of the receipt by 
    the taxpayer of the notice of the decision of the Internal Revenue 
    Service Office of Appeals; (ii) the date of the notice of 
    deficiency; or (iii) the date on which the first letter of proposed 
    deficiency which allows the taxpayer an opportunity for 
    administrative review in the Internal Revenue Service Office of 
    Appeals is sent.''.
    (c) Award of Fees for Certain Additional Services.-- Paragraph (3) 
of section 7430(c) is amended to read as follows:
        ``(3) Attorneys fees.--
            ``(A) In general.--For purposes of paragraphs (1) and (2), 
        fees for the services of an individual (whether or not an 
        attorney) who is authorized to practice before the Tax Court or 
        before the Internal Revenue Service shall be treated as fees 
        for the services of an attorney.
            ``(B) Pro bono services.--The court may award reasonable 
        attorneys fees under subsection (a) in excess of the attorneys 
        fees paid or incurred if such fees are less than the reasonable 
        attorneys fees because an individual is representing the 
        prevailing party for no fee or for a fee which (taking into 
        account all the facts and circumstances) is no more than a 
        nominal fee. This subparagraph shall apply only if such award 
        is paid to such individual or such individual's employer.''.
    (d) Determination of Whether Position of United States Is 
Substantially Justified.--Subparagraph (B) of section 7430(c)(4) is 
amended by redesignating clause (iii) as clause (iv) and by inserting 
after clause (ii) the following new clause:
                ``(iii) Effect of losing on substantially similar 
            issues.--In determining for purposes of clause (i) whether 
            the position of the United States was substantially 
            justified, the court shall take into account whether the 
            United States has lost in courts of appeal for other 
            circuits on substantially similar issues.''.
    (e) Taxpayer Treated as Prevailing if Judgment Is Less Than 
Taxpayer's Offer.--
        (1) In general.--Section 7430(c)(4) (defining prevailing party) 
    is amended by adding at the end the following new subparagraph:
            ``(E) Special rules where judgment less than taxpayer's 
        offer.--
                ``(i) In general.--A party to a court proceeding 
            meeting the requirements of subparagraph (A)(ii) shall be 
            treated as the prevailing party if the liability of the 
            taxpayer pursuant to the judgment in the proceeding 
            (determined without regard to interest) is equal to or less 
            than the liability of the taxpayer which would have been so 
            determined if the United States had accepted a qualified 
            offer of the party under subsection (g).
                ``(ii) Exceptions.--This subparagraph shall not apply 
            to--

                    ``(I) any judgment issued pursuant to a settlement; 
                or
                    ``(II) any proceeding in which the amount of tax 
                liability is not in issue, including any declaratory 
                judgment proceeding, any proceeding to enforce or quash 
                any summons issued pursuant to this title, and any 
                action to restrain disclosure under section 6110(f).

                ``(iii) Special rules.--If this subparagraph applies to 
            any court proceeding--

                    ``(I) the determination under clause (i) shall be 
                made by reference to the last qualified offer made with 
                respect to the tax liability at issue in the 
                proceeding; and
                    ``(II) reasonable administrative and litigation 
                costs shall only include costs incurred on and after 
                the date of such offer.

                ``(iv) Coordination.--This subparagraph shall not apply 
            to a party which is a prevailing party under any other 
            provision of this paragraph.''.
        (2) Qualified offer.--Section 7430 is amended by adding at the 
    end the following new subsection:
    ``(g) Qualified Offer.--For purposes of subsection (c)(4)--
        ``(1) In general.--The term `qualified offer' means a written 
    offer which--
            ``(A) is made by the taxpayer to the United States during 
        the qualified offer period;
            ``(B) specifies the offered amount of the taxpayer's 
        liability (determined without regard to interest);
            ``(C) is designated at the time it is made as a qualified 
        offer for purposes of this section; and
            ``(D) remains open during the period beginning on the date 
        it is made and ending on the earliest of the date the offer is 
        rejected, the date the trial begins, or the 90th day after the 
        date the offer is made.
        ``(2) Qualified offer period.--For purposes of this subsection, 
    the term `qualified offer period' means the period--
            ``(A) beginning on the date on which the first letter of 
        proposed deficiency which allows the taxpayer an opportunity 
        for administrative review in the Internal Revenue Service 
        Office of Appeals is sent, and
            ``(B) ending on the date which is 30 days before the date 
        the case is first set for trial.''.
    (f) Award of Attorneys Fees in Unauthorized Inspection and 
Disclosure Cases.--Section 7431(c) (relating to damages) is amended by 
striking the period at the end of paragraph (2) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
        ``(3) in the case of a plaintiff which is described in section 
    7430(c)(4)(A)(ii), reasonable attorneys fees, except that if the 
    defendant is the United States, reasonable attorneys fees may be 
    awarded only if the plaintiff is the prevailing party (as 
    determined under section 7430(c)(4)).''.
    (g) Effective Date.--The amendments made by this section shall 
apply to costs incurred (and, in the case of the amendment made by 
subsection (c), services performed) more than 180 days after the date 
of the enactment of this Act.

SEC. 3102. CIVIL DAMAGES FOR COLLECTION ACTIONS.

    (a) Extension to Negligence Actions.--
        (1) In general.--Section 7433 (relating to civil damages for 
    certain unauthorized collection actions) is amended--
            (A) in subsection (a), by inserting ``, or by reason of 
        negligence,'' after ``recklessly or intentionally''; and
            (B) in subsection (b)--
                (i) in the matter preceding paragraph (1), by inserting 
            ``($100,000, in the case of negligence)'' after 
            ``$1,000,000''; and
                (ii) in paragraph (1), by inserting ``or negligent'' 
            after ``reckless or intentional''.
        (2) Requirement that administrative remedies be exhausted.--
    Paragraph (1) of section 7433(d) is amended to read as follows:
        ``(1) Requirement that administrative remedies be exhausted.--A 
    judgment for damages shall not be awarded under subsection (b) 
    unless the court determines that the plaintiff has exhausted the 
    administrative remedies available to such plaintiff within the 
    Internal Revenue Service.''.
    (b) Damages Allowed in Civil Actions by Persons Other Than 
Taxpayers.--Section 7426 is amended by redesignating subsection (h) as 
subsection (i) and by adding after subsection (g) the following new 
subsection:
    ``(h) Recovery of Damages Permitted in Certain Cases.--
        ``(1) In general.--Notwithstanding subsection (b), if, in any 
    action brought under this section, there is a finding that any 
    officer or employee of the Internal Revenue Service recklessly or 
    intentionally, or by reason of negligence, disregarded any 
    provision of this title the defendant shall be liable to the 
    plaintiff in an amount equal to the lesser of $1,000,000 ($100,000 
    in the case of negligence) or the sum of--
            ``(A) actual, direct economic damages sustained by the 
        plaintiff as a proximate result of the reckless or intentional 
        or negligent disregard of any provision of this title by the 
        officer or employee (reduced by any amount of such damages 
        awarded under subsection (b)); and
            ``(B) the costs of the action.
        ``(2) Requirement that administrative remedies be exhausted; 
    mitigation; period.--The rules of section 7433(d) shall apply for 
    purposes of this subsection.
        ``(3) Payment authority.--Claims pursuant to this section shall 
    be payable out of funds appropriated under section 1304 of title 
    31, United States Code.''.
    (c) Civil Damages for IRS Violations of Bankruptcy Procedures.--
        (1) In general.--Section 7433 (relating to civil damages for 
    certain unauthorized collection actions) is amended by adding at 
    the end the following new subsection:
    ``(e) Actions for Violations of Certain Bankruptcy Procedures.--
        ``(1) In general.--If, in connection with any collection of 
    Federal tax with respect to a taxpayer, any officer or employee of 
    the Internal Revenue Service willfully violates any provision of 
    section 362 (relating to automatic stay) or 524 (relating to effect 
    of discharge) of title 11, United States Code (or any successor 
    provision), or any regulation promulgated under such provision, 
    such taxpayer may petition the bankruptcy court to recover damages 
    against the United States.
        ``(2) Remedy to be exclusive.--
            ``(A) In general.--Except as provided in subparagraph (B), 
        notwithstanding section 105 of such title 11, such petition 
        shall be the exclusive remedy for recovering damages resulting 
        from such actions.
            ``(B) Certain other actions permitted.--Subparagraph (A) 
        shall not apply to an action under section 362(h) of such title 
        11 for a violation of a stay provided by section 362 of such 
        title; except that--
                ``(i) administrative and litigation costs in connection 
            with such an action may only be awarded under section 7430; 
            and
                ``(ii) administrative costs may be awarded only if 
            incurred on or after the date that the bankruptcy petition 
            is filed.''.
        (2) Conforming amendment.--Subsection (b) of section 7433 is 
    amended by inserting ``or petition filed under subsection (e)'' 
    after ``subsection (a)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to actions of officers or employees of the Internal Revenue 
Service after the date of the enactment of this Act.

SEC. 3103. INCREASE IN SIZE OF CASES PERMITTED ON SMALL CASE CALENDAR.

    (a) In General.--Section 7463 (relating to disputes involving 
$10,000 or less) is amended by striking ``$10,000'' each place it 
appears (including the section heading) and inserting ``$50,000''.
    (b) Conforming Amendments.--
        (1) Sections 7436(c)(1) and 7443A(b)(3) are each amended by 
    striking ``$10,000'' and inserting ``$50,000''.
        (2) The table of sections for part II of subchapter C of 
    chapter 76 is amended by striking ``$10,000'' in the item relating 
    to section 7463 and inserting ``$50,000''.
    (c) Effective Date.--The amendments made by this section shall 
apply to proceedings commenced after the date of the enactment of this 
Act.

SEC. 3104. ACTIONS FOR REFUND WITH RESPECT TO CERTAIN ESTATES WHICH 
              HAVE ELECTED THE INSTALLMENT METHOD OF PAYMENT.

    (a) In General.--Section 7422 is amended by redesignating 
subsection (j) as subsection (k) and by inserting after subsection (i) 
the following new subsection:
    ``(j) Special Rule for Actions With Respect to Estates for Which an 
Election Under Section 6166 Is Made.--
        ``(1) In general.--The district courts of the United States and 
    the United States Court of Federal Claims shall not fail to have 
    jurisdiction over any action brought by the representative of an 
    estate to which this subsection applies to determine the correct 
    amount of the estate tax liability of such estate (or for any 
    refund with respect thereto) solely because the full amount of such 
    liability has not been paid by reason of an election under section 
    6166 with respect to such estate.
        ``(2) Estates to which subsection applies.--This subsection 
    shall apply to any estate if, as of the date the action is filed--
            ``(A) no portion of the installments payable under section 
        6166 have been accelerated;
            ``(B) all such installments the due date for which is on or 
        before the date the action is filed have been paid;
            ``(C) there is no case pending in the Tax Court with 
        respect to the tax imposed by section 2001 on the estate and, 
        if a notice of deficiency under section 6212 with respect to 
        such tax has been issued, the time for filing a petition with 
        the Tax Court with respect to such notice has expired; and
            ``(D) no proceeding for declaratory judgment under section 
        7479 is pending.
        ``(3) Prohibition on collection of disallowed liability.--If 
    the court redetermines under paragraph (1) the estate tax liability 
    of an estate, no part of such liability which is disallowed by a 
    decision of such court which has become final may be collected by 
    the Secretary, and amounts paid in excess of the installments 
    determined by the court as currently due and payable shall be 
    refunded.''.
    (b) Extension of Time To File Refund Suit.--Section 7479 (relating 
to declaratory judgments relating to eligibility of estate with respect 
to installment payments under section 6166) is amended by adding at the 
end the following new subsection:
    ``(c) Extension of Time To File Refund Suit.--The 2-year period in 
section 6532(a)(1) for filing suit for refund after disallowance of a 
claim shall be suspended during the 90-day period after the mailing of 
the notice referred to in subsection (b)(3) and, if a pleading has been 
filed with the Tax Court under this section, until the decision of the 
Tax Court has become final.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to any claim for refund filed after the date of the enactment of 
this Act.

SEC. 3105. ADMINISTRATIVE APPEAL OF ADVERSE INTERNAL REVENUE SERVICE 
              DETERMINATION OF TAX-EXEMPT STATUS OF BOND ISSUE.

    The Internal Revenue Service shall amend its administrative 
procedures to provide that if, upon examination, the Internal Revenue 
Service proposes to an issuer that interest on previously issued 
obligations of such issuer is not excludable from gross income under 
section 103(a) of the Internal Revenue Code of 1986, the issuer of such 
obligations shall have an administrative appeal of right to a senior 
officer of the Internal Revenue Service Office of Appeals.

SEC. 3106. CIVIL ACTION FOR RELEASE OF ERRONEOUS LIEN.

    (a) Right of Substitution of Value.--Subsection (b) of section 6325 
(relating to release of lien or discharge of property) is amended by 
adding at the end the following new paragraph:
        ``(4) Right of substitution of value.--
            ``(A) In general.--At the request of the owner of any 
        property subject to any lien imposed by this chapter, the 
        Secretary shall issue a certificate of discharge of such 
        property if such owner--
                ``(i) deposits with the Secretary an amount of money 
            equal to the value of the interest of the United States (as 
            determined by the Secretary) in the property; or
                ``(ii) furnishes a bond acceptable to the Secretary in 
            a like amount.
            ``(B) Refund of deposit with interest and release of 
        bond.--The Secretary shall refund the amount so deposited (and 
        shall pay interest at the overpayment rate under section 6621), 
        and shall release such bond, to the extent that the Secretary 
        determines that--
                ``(i) the unsatisfied liability giving rise to the lien 
            can be satisfied from a source other than such property; or
                ``(ii) the value of the interest of the United States 
            in the property is less than the Secretary's prior 
            determination of such value.
            ``(C) Use of deposit, etc., if action to contest lien not 
        filed.--If no action is filed under section 7426(a)(4) within 
        the period prescribed therefor, the Secretary shall, within 60 
        days after the expiration of such period--
                ``(i) apply the amount deposited, or collect on such 
            bond, to the extent necessary to satisfy the unsatisfied 
            liability secured by the lien; and
                ``(ii) refund (with interest as described in 
            subparagraph (B)) any portion of the amount deposited which 
            is not used to satisfy such liability.
            ``(D) Exception.--Subparagraph (A) shall not apply if the 
        owner of the property is the person whose unsatisfied liability 
        gave rise to the lien.''.
    (b) Civil Action To Release Erroneous Lien.--
        (1) In general.--Subsection (a) of section 7426 (relating to 
    civil actions by persons other than taxpayers) is amended by adding 
    at the end the following new paragraph:
        ``(4) Substitution of value.--If a certificate of discharge is 
    issued to any person under section 6325(b)(4) with respect to any 
    property, such person may, within 120 days after the day on which 
    such certificate is issued, bring a civil action against the United 
    States in a district court of the United States for a determination 
    of whether the value of the interest of the United States (if any) 
    in such property is less than the value determined by the 
    Secretary. No other action may be brought by such person for such a 
    determination.''.
        (2) Form of relief.--
            (A) In general.--Subsection (b) of section 7426 is amended 
        by adding at the end the following new paragraph:
        ``(5) Substitution of value.--If the court determines that the 
    Secretary's determination of the value of the interest of the 
    United States in the property for purposes of section 6325(b)(4) 
    exceeds the actual value of such interest, the court shall grant a 
    judgment ordering a refund of the amount deposited, and a release 
    of the bond, to the extent that the aggregate of the amounts 
    thereof exceeds such value determined by the court.''.
            (B) Interest allowed on refund of deposit.-- Subsection (g) 
        of section 7426 is amended by striking ``and'' at the end of 
        paragraph (1), by striking the period at the end of paragraph 
        (2) and inserting ``; and'', and by adding at the end the 
        following new paragraph:
        ``(3) in the case of a judgment pursuant to subsection (b)(5) 
    which orders a refund of any amount, from the date the Secretary 
    received such amount to the date of payment of such judgment.''.
        (3) Suspension of running of statute of limitation.--Subsection 
    (f) of section 6503 is amended to read as follows:
    ``(f) Wrongful Seizure of or Lien on Property of Third Party.--
        ``(1) Wrongful seizure.--The running of the period under 
    section 6502 shall be suspended for a period equal to the period 
    from the date property (including money) of a third party is 
    wrongfully seized or received by the Secretary to the date the 
    Secretary returns property pursuant to section 6343(b) or the date 
    on which a judgment secured pursuant to section 7426 with respect 
    to such property becomes final, and for 30 days thereafter. The 
    running of such period shall be suspended under this paragraph only 
    with respect to the amount of such assessment equal to the amount 
    of money or the value of specific property returned.
        ``(2) Wrongful lien.--In the case of any assessment for which a 
    lien was made on any property, the running of the period under 
    section 6502 shall be suspended for a period equal to the period 
    beginning on the date any person becomes entitled to a certificate 
    under section 6325(b)(4) with respect to such property and ending 
    on the date which is 30 days after the earlier of--
            ``(A) the earliest date on which the Secretary no longer 
        holds any amount as a deposit or bond provided under section 
        6325(b)(4) by reason of such deposit or bond being used to 
        satisfy the unpaid tax or being refunded or released; or
            ``(B) the date that the judgment secured under section 
        7426(b)(5) becomes final.
    The running of such period shall be suspended under this paragraph 
    only with respect to the amount of such assessment equal to the 
    value of the interest of the United States in the property plus 
    interest, penalties, additions to the tax, and additional amounts 
    attributable thereto.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

  Subtitle C--Relief for Innocent Spouses and for Taxpayers Unable To 
           Manage Their Financial Affairs Due to Disabilities

SEC. 3201. RELIEF FROM JOINT AND SEVERAL LIABILITY ON JOINT RETURN.

    (a) In General.--Subpart B of part II of subchapter A of chapter 61 
is amended by inserting after section 6014 the following new section:

``SEC. 6015. RELIEF FROM JOINT AND SEVERAL LIABILITY ON JOINT RETURN.

    ``(a) In General.--Notwithstanding section 6013(d)(3)--
        ``(1) an individual who has made a joint return may elect to 
    seek relief under the procedures prescribed under subsection (b); 
    and
        ``(2) if such individual is eligible to elect the application 
    of subsection (c), such individual may, in addition to any election 
    under paragraph (1), elect to limit such individual's liability for 
    any deficiency with respect to such joint return in the manner 
    prescribed under subsection (c).
Any determination under this section shall be made without regard to 
community property laws.
    ``(b) Procedures For Relief From Liability Applicable to All Joint 
Filers.--
        ``(1) In general.--Under procedures prescribed by the 
    Secretary, if--
            ``(A) a joint return has been made for a taxable year;
            ``(B) on such return there is an understatement of tax 
        attributable to erroneous items of one individual filing the 
        joint return;
            ``(C) the other individual filing the joint return 
        establishes that in signing the return he or she did not know, 
        and had no reason to know, that there was such understatement;
            ``(D) taking into account all the facts and circumstances, 
        it is inequitable to hold the other individual liable for the 
        deficiency in tax for such taxable year attributable to such 
        understatement; and
            ``(E) the other individual elects (in such form as the 
        Secretary may prescribe) the benefits of this subsection not 
        later than the date which is 2 years after the date the 
        Secretary has begun collection activities with respect to the 
        individual making the election,
    then the other individual shall be relieved of liability for tax 
    (including interest, penalties, and other amounts) for such taxable 
    year to the extent such liability is attributable to such 
    understatement.
        ``(2) Apportionment of relief.--If an individual who, but for 
    paragraph (1)(C), would be relieved of liability under paragraph 
    (1), establishes that in signing the return such individual did not 
    know, and had no reason to know, the extent of such understatement, 
    then such individual shall be relieved of liability for tax 
    (including interest, penalties, and other amounts) for such taxable 
    year to the extent that such liability is attributable to the 
    portion of such understatement of which such individual did not 
    know and had no reason to know.
        ``(3) Understatement.--For purposes of this subsection, the 
    term `understatement' has the meaning given to such term by section 
    6662(d)(2)(A).
    ``(c) Procedures To Limit Liability for Taxpayers No Longer Married 
or Taxpayers Legally Separated or Not Living Together.--
        ``(1) In general.--Except as provided in this subsection, if an 
    individual who has made a joint return for any taxable year elects 
    the application of this subsection, the individual's liability for 
    any deficiency which is assessed with respect to the return shall 
    not exceed the portion of such deficiency properly allocable to the 
    individual under subsection (d).
        ``(2) Burden of proof.--Except as provided in subparagraph 
    (A)(ii) or (C) of paragraph (3), each individual who elects the 
    application of this subsection shall have the burden of proof with 
    respect to establishing the portion of any deficiency allocable to 
    such individual.
        ``(3) Election.--
            ``(A) Individuals eligible to make election.--
                ``(i) In general.--An individual shall only be eligible 
            to elect the application of this subsection if--

                    ``(I) at the time such election is filed, such 
                individual is no longer married to, or is legally 
                separated from, the individual with whom such 
                individual filed the joint return to which the election 
                relates; or
                    ``(II) such individual was not a member of the same 
                household as the individual with whom such joint return 
                was filed at any time during the 12-month period ending 
                on the date such election is filed.

                ``(ii) Certain taxpayers ineligible to elect.--If the 
            Secretary demonstrates that assets were transferred between 
            individuals filing a joint return as part of a fraudulent 
            scheme by such individuals, an election under this 
            subsection by either individual shall be invalid (and 
            section 6013(d)(3) shall apply to the joint return).
            ``(B) Time for election.--An election under this subsection 
        for any taxable year shall be made not later than 2 years after 
        the date on which the Secretary has begun collection activities 
        with respect to the individual making the election.
            ``(C) Election not valid with respect to certain 
        deficiencies.--If the Secretary demonstrates that an individual 
        making an election under this subsection had actual knowledge, 
        at the time such individual signed the return, of any item 
        giving rise to a deficiency (or portion thereof) which is not 
        allocable to such individual under subsection (d), such 
        election shall not apply to such deficiency (or portion). This 
        subparagraph shall not apply where the individual with actual 
        knowledge establishes that such individual signed the return 
        under duress.
        ``(4) Liability increased by reason of transfers of property to 
    avoid tax.--
            ``(A) In general.--Notwithstanding any other provision of 
        this subsection, the portion of the deficiency for which the 
        individual electing the application of this subsection is 
        liable (without regard to this paragraph) shall be increased by 
        the value of any disqualified asset transferred to the 
        individual.
            ``(B) Disqualified asset.--For purposes of this paragraph--
                ``(i) In general.--The term `disqualified asset' means 
            any property or right to property transferred to an 
            individual making the election under this subsection with 
            respect to a joint return by the other individual filing 
            such joint return if the principal purpose of the transfer 
            was the avoidance of tax or payment of tax.
                ``(ii) Presumption.--

                    ``(I) In general.--For purposes of clause (i), 
                except as provided in subclause (II), any transfer 
                which is made after the date which is 1 year before the 
                date on which the first letter of proposed deficiency 
                which allows the taxpayer an opportunity for 
                administrative review in the Internal Revenue Service 
                Office of Appeals is sent shall be presumed to have as 
                its principal purpose the avoidance of tax or payment 
                of tax.
                    ``(II) Exceptions.--Subclause (I) shall not apply 
                to any transfer pursuant to a decree of divorce or 
                separate maintenance or a written instrument incident 
                to such a decree or to any transfer which an individual 
                establishes did not have as its principal purpose the 
                avoidance of tax or payment of tax.

    ``(d) Allocation of Deficiency.--For purposes of sub- section (c)--
        ``(1) In general.--The portion of any deficiency on a joint 
    return allocated to an individual shall be the amount which bears 
    the same ratio to such deficiency as the net amount of items taken 
    into account in computing the deficiency and allocable to the 
    individual under paragraph (3) bears to the net amount of all items 
    taken into account in computing the deficiency.
        ``(2) Separate treatment of certain items.--If a deficiency (or 
    portion thereof) is attributable to--
            ``(A) the disallowance of a credit; or
            ``(B) any tax (other than tax imposed by section 1 or 55) 
        required to be included with the joint return;
    and such item is allocated to one individual under paragraph (3), 
    such deficiency (or portion) shall be allocated to such individual. 
    Any such item shall not be taken into account under paragraph (1).
        ``(3) Allocation of items giving rise to the deficiency.--For 
    purposes of this subsection--
            ``(A) In general.--Except as provided in paragraphs (4) and 
        (5), any item giving rise to a deficiency on a joint return 
        shall be allocated to individuals filing the return in the same 
        manner as it would have been allocated if the individuals had 
        filed separate returns for the taxable year.
            ``(B) Exception where other spouse benefits.--Under rules 
        prescribed by the Secretary, an item otherwise allocable to an 
        individual under subparagraph (A) shall be allocated to the 
        other individual filing the joint return to the extent the item 
        gave rise to a tax benefit on the joint return to the other 
        individual.
            ``(C) Exception for fraud.--The Secretary may provide for 
        an allocation of any item in a manner not prescribed by 
        subparagraph (A) if the Secretary establishes that such 
        allocation is appropriate due to fraud of one or both 
        individuals.
        ``(4) Limitations on separate returns disregarded.--If an item 
    of deduction or credit is disallowed in its entirety solely because 
    a separate return is filed, such disallowance shall be disregarded 
    and the item shall be computed as if a joint return had been filed 
    and then allocated between the spouses appropriately. A similar 
    rule shall apply for purposes of section 86.
        ``(5) Child's liability.--If the liability of a child of a 
    taxpayer is included on a joint return, such liability shall be 
    disregarded in computing the separate liability of either spouse 
    and such liability shall be allocated appropriately between the 
    spouses.
    ``(e) Petition for Review by Tax Court.--
        ``(1) In general.--In the case of an individual who elects to 
    have subsection (b) or (c) apply--
            ``(A) In general.--The individual may petition the Tax 
        Court (and the Tax Court shall have jurisdiction) to determine 
        the appropriate relief available to the individual under this 
        section if such petition is filed during the 90-day period 
        beginning on the date on which the Secretary mails by certified 
        or registered mail a notice to such individual of the 
        Secretary's determination of relief available to the 
        individual. Notwithstanding the preceding sentence, an 
        individual may file such petition at any time after the date 
        which is 6 months after the date such election is filed with 
        the Secretary and before the close of such 90-day period.
            ``(B) Restrictions applicable to collection of 
        assessment.--
                ``(i) In general.--Except as otherwise provided in 
            section 6851 or 6861, no levy or proceeding in court shall 
            be made, begun, or prosecuted against the individual making 
            an election under subsection (b) or (c) for collection of 
            any assessment to which such election relates until the 
            expiration of the 90-day period described in subparagraph 
            (A), or, if a petition has been filed with the Tax Court, 
            until the decision of the Tax Court has become final. Rules 
            similar to the rules of section 7485 shall apply with 
            respect to the collection of such assessment.
                ``(ii) Authority to enjoin collection actions.--
            Notwithstanding the provisions of section 7421(a), the 
            beginning of such levy or proceeding during the time the 
            prohibition under clause (i) is in force may be enjoined by 
            a proceeding in the proper court, including the Tax Court. 
            The Tax Court shall have no jurisdiction under this 
            subparagraph to enjoin any action or proceeding unless a 
            timely petition has been filed under subparagraph (A) and 
            then only in respect of the amount of the assessment to 
            which the election under subsection (b) or (c) relates.
        ``(2) Suspension of running of period of limitations.--The 
    running of the period of limitations in section 6502 on the 
    collection of the assessment to which the petition under paragraph 
    (1)(A) relates shall be suspended for the period during which the 
    Secretary is prohibited by paragraph (1)(B) from collecting by levy 
    or a proceeding in court and for 60 days thereafter.
        ``(3) Applicable rules.--
            ``(A) Allowance of credit or refund.--Except as provided in 
        subparagraph (B), notwithstanding any other law or rule of law 
        (other than section 6512(b), 7121, or 7122), credit or refund 
        shall be allowed or made to the extent attributable to the 
        application of this section.
            ``(B) Res judicata.--In the case of any election under 
        subsection (b) or (c), if a decision of the Tax Court in any 
        prior proceeding for the same taxable year has become final, 
        such decision shall be conclusive except with respect to the 
        qualification of the individual for relief which was not an 
        issue in such proceeding. The exception contained in the 
        preceding sentence shall not apply if the Tax Court determines 
        that the individual participated meaningfully in such prior 
        proceeding.
            ``(C) Limitation on tax court jurisdiction.--If a suit for 
        refund is begun by either individual filing the joint return 
        pursuant to section 6532--
                ``(i) the Tax Court shall lose jurisdiction of the 
            individual's action under this section to whatever extent 
            jurisdiction is acquired by the district court or the 
            United States Court of Federal Claims over the taxable 
            years that are the subject of the suit for refund; and
                ``(ii) the court acquiring jurisdiction shall have 
            jurisdiction over the petition filed under this subsection.
        ``(4) Notice to other spouse.--The Tax Court shall establish 
    rules which provide the individual filing a joint return but not 
    making the election under subsection (b) or (c) with adequate 
    notice and an opportunity to become a party to a proceeding under 
    either such subsection.
    ``(f) Equitable Relief.--Under procedures prescribed by the 
Secretary, if--
        ``(1) taking into account all the facts and circumstances, it 
    is inequitable to hold the individual liable for any unpaid tax or 
    any deficiency (or any portion of either); and
        ``(2) relief is not available to such individual under 
    subsection (b) or (c),
the Secretary may relieve such individual of such liability.
    ``(g) Regulations.--The Secretary shall prescribe such regulations 
as are necessary to carry out the provisions of this section, 
including--
        ``(1) regulations providing methods for allocation of items 
    other than the methods under subsection (d)(3); and
        ``(2) regulations providing the opportunity for an individual 
    to have notice of, and an opportunity to participate in, any 
    administrative proceeding with respect to an election made under 
    subsection (b) or (c) by the other individual filing the joint 
    return.''.
    (b) Equitable Relief for Individuals Not Filing Joint Return.--
Section 66(c) (relating to spouse relieved of liability in certain 
other cases) is amended by adding at the end the following new 
sentence: ``Under procedures prescribed by the Secretary, if, taking 
into account all the facts and circumstances, it is inequitable to hold 
the individual liable for any unpaid tax or any deficiency (or any 
portion of either) attributable to any item for which relief is not 
available under the preceding sentence, the Secretary may relieve such 
individual of such liability.''.
    (c) Separate Form for Applying for Spousal Relief.--Not later than 
180 days after the date of the enactment of this Act, the Secretary of 
the Treasury shall develop a separate form with instructions for use by 
taxpayers in applying for relief under section 6015(a) of the Internal 
Revenue Code of 1986, as added by this section.
    (d) Separate Notice to Each Filer.--The Secretary of the Treasury 
shall, wherever practicable, send any notice relating to a joint return 
under section 6013 of the Internal Revenue Code of 1986 separately to 
each individual filing the joint return.
    (e) Conforming Amendments.--
        (1) Section 6013 is amended by striking subsection (e).
        (2) Subparagraph (A) of section 6230(c)(5) is amended by 
    striking ``section 6013(e)'' and inserting ``section 6015''.
        (3) Section 7421(a) is amended by inserting ``6015(d),'' after 
    ``sections''.
    (f) Clerical Amendment.--The table of sections for subpart B of 
part II of subchapter A of chapter 61 is amended by inserting after the 
item relating to section 6014 the following new item:

        ``Sec. 6015. Relief from joint and several liability on joint 
                  return.''.

    (g) Effective Dates.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendments made by this section shall apply to any liability for 
    tax arising after the date of the enactment of this Act and any 
    liability for tax arising on or before such date but remaining 
    unpaid as of such date.
        (2) 2-year period.--The 2-year period under subsection 
    (b)(1)(E) or (c)(3)(B) of section 6015 of the Internal Revenue Code 
    of 1986 shall not expire before the date which is 2 years after the 
    date of the first collection activity after the date of the 
    enactment of this Act.

SEC. 3202. SUSPENSION OF STATUTE OF LIMITATIONS ON FILING REFUND CLAIMS 
              DURING PERIODS OF DISABILITY.

    (a) In General.--Section 6511 (relating to limitations on credit or 
refund) is amended by redesignating subsection (h) as subsection (i) 
and by inserting after subsection (g) the following new subsection:
    ``(h) Running of Periods of Limitation Suspended While Taxpayer Is 
Unable To Manage Financial Affairs Due to Disability.--
        ``(1) In general.--In the case of an individual, the running of 
    the periods specified in subsections (a), (b), and (c) shall be 
    suspended during any period of such individual's life that such 
    individual is financially disabled.
        ``(2) Financially disabled.--
            ``(A) In general.--For purposes of paragraph (1), an 
        individual is financially disabled if such individual is unable 
        to manage his financial affairs by reason of a medically 
        determinable physical or mental impairment of the individual 
        which can be expected to result in death or which has lasted or 
        can be expected to last for a continuous period of not less 
        than 12 months. An individual shall not be considered to have 
        such an impairment unless proof of the existence thereof is 
        furnished in such form and manner as the Secretary may require.
            ``(B) Exception where individual has guardian, etc.--An 
        individual shall not be treated as financially disabled during 
        any period that such individual's spouse or any other person is 
        authorized to act on behalf of such individual in financial 
        matters.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to periods of disability before, on, or after the date of the 
enactment of this Act but shall not apply to any claim for credit or 
refund which (without regard to such amendment) is barred by the 
operation of any law or rule of law (including res judicata) as of the 
date of the enactment of this Act.

       Subtitle D--Provisions Relating to Interest and Penalties

SEC. 3301. ELIMINATION OF INTEREST RATE DIFFERENTIAL ON OVERLAPPING 
              PERIODS OF INTEREST ON TAX OVERPAYMENTS AND 
              UNDERPAYMENTS.

    (a) In General.--Section 6621 (relating to determination of rate of 
interest) is amended by adding at the end the following new subsection:
    ``(d) Elimination of Interest on Overlapping Periods of Tax 
Overpayments and Underpayments.--To the extent that, for any period, 
interest is payable under subchapter A and allowable under subchapter B 
on equivalent underpayments and overpayments by the same taxpayer of 
tax imposed by this title, the net rate of interest under this section 
on such amounts shall be zero for such period.''.
    (b) Conforming Amendment.--Subsection (f) of section 6601 (relating 
to satisfaction by credits) is amended by adding at the end the 
following new sentence: ``The preceding sentence shall not apply to the 
extent that section 6621(d) applies.''.
    (c) Effective Dates.--
        (1) In general.--Except as provided under paragraph (2), the 
    amendments made by this section shall apply to interest for periods 
    beginning after the date of the enactment of this Act.
        (2) Special rule.--The amendments made by this section shall 
    apply to interest for periods beginning before the date of the 
    enactment of this Act if the taxpayer--
            (A) reasonably identifies and establishes periods of such 
        tax overpayments and underpayments for which the zero rate 
        applies; and
            (B) not later than December 31, 1999, requests the 
        Secretary of the Treasury to apply section 6621(d) of the 
        Internal Revenue Code of 1986, as added by subsection (a), to 
        such periods.

SEC. 3302. INCREASE IN OVERPAYMENT RATE PAYABLE TO TAXPAYERS OTHER THAN 
              CORPORATIONS.

    (a) In General.--Subparagraph (B) of section 6621(a)(1) (defining 
overpayment rate) is amended to read as follows:
            ``(B) 3 percentage points (2 percentage points in the case 
        of a corporation).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to interest for the second and succeeding calendar quarters beginning 
after the date of the enactment of this Act.

SEC. 3303. MITIGATION OF PENALTY ON INDIVIDUAL'S FAILURE TO PAY FOR 
              MONTHS DURING PERIOD OF INSTALLMENT AGREEMENT.

    (a) In General.--Section 6651 (relating to failure to file tax 
return or to pay tax) is amended by adding at the end the following new 
subsection:
    ``(h) Limitation on Penalty on Individual's Failure To Pay for 
Months During Period of Installment Agreement.--In the case of an 
individual who files a return of tax on or before the due date for the 
return (including extensions), paragraphs (2) and (3) of subsection (a) 
shall each be applied by substituting `0.25' for `0.5' each place it 
appears for purposes of determining the addition to tax for any month 
during which an installment agreement under section 6159 is in effect 
for the payment of such tax.''.
    (b) Effective Date.--The amendment made by this section shall apply 
for purposes of determining additions to the tax for months beginning 
after December 31, 1999.

SEC. 3304. MITIGATION OF FAILURE TO DEPOSIT PENALTY.

    (a) Taxpayer May Designate Periods to Which Deposits Apply.--
Section 6656 (relating to underpayment of deposits) is amended by 
adding at the end the following new subsection:
    ``(e) Designation of Periods to Which Deposits Apply.--
        ``(1) In general.--A person may, with respect to any deposit of 
    tax to be reported on such person's return for a specified tax 
    period, designate the period or periods within such specified tax 
    period to which the deposit is to be applied for purposes of this 
    section.
        ``(2) Time for making designation.--A person may make a 
    designation under paragraph (1) only during the 90-day period 
    beginning on the date of a notice that a penalty under subsection 
    (a) has been imposed for the specified tax period to which the 
    deposit relates.''.
    (b) Expansion of Exemption for First-Time Deposits.--
        (1) In general.--Paragraph (2) of section 6656(c) (relating to 
    exemption for first-time depositors of employment taxes) is amended 
    to read as follows:
        ``(2) such failure--
            ``(A) occurs during the first quarter that such person was 
        required to deposit any employment tax; or
            ``(B) if such person is required to change the frequency of 
        deposits of any employment tax, relates to the first deposit to 
        which such change applies, and''.
    (c) Periods Apply to Current Liabilities Unless Designated 
Otherwise.--Paragraph (1) of section 6656(e) (as added by subsection 
(a) of this section) is amended to read as follows:
    ``(e) Designation of Periods to Which Deposits Apply.--
        ``(1) In general.--A deposit made under this section shall be 
    applied to the most recent period or periods within the specified 
    tax period to which the deposit relates, unless the person making 
    such deposit designates a different period or periods to which such 
    deposit is to be applied.''.
    (d) Effective Date.--
        (1) In general.--The amendments made by this section shall 
    apply to deposits required to be made after the 180th day after the 
    date of the enactment of this Act.
        (2) Application to current liabilities.--The amendment made by 
    subsection (c) shall apply to deposits required to be made after 
    December 31, 2001.

SEC. 3305. SUSPENSION OF INTEREST AND CERTAIN PENALTIES WHERE SECRETARY 
              FAILS TO CONTACT INDIVIDUAL TAXPAYER.

    (a) In General.--Section 6404 (relating to abatements) is amended 
by redesignating subsection (g) as subsection (h) and by inserting 
after subsection (f) the following new subsection:
    ``(g) Suspension of Interest and Certain Penalties Where Secretary 
Fails To Contact Taxpayer.--
        ``(1) Suspension.--
            ``(A) In general.--In the case of an individual who files a 
        return of tax imposed by subtitle A for a taxable year on or 
        before the due date for the return (including extensions), if 
        the Secretary does not provide a notice to the taxpayer 
        specifically stating the taxpayer's liability and the basis for 
        the liability before the close of the 1-year period (18-month 
        period in the case of taxable years beginning before January 1, 
        2004) beginning on the later of--
                ``(i) the date on which the return is filed; or
                ``(ii) the due date of the return without regard to 
            extensions,
        the Secretary shall suspend the imposition of any interest, 
        penalty, addition to tax, or additional amount with respect to 
        any failure relating to the return which is computed by 
        reference to the period of time the failure continues to exist 
        and which is properly allocable to the suspension period.
            ``(B) Separate application.--This paragraph shall be 
        applied separately with respect to each item or adjustment.
        ``(2) Exceptions.--Paragraph (1) shall not apply to--
            ``(A) any penalty imposed by section 6651;
            ``(B) any interest, penalty, addition to tax, or additional 
        amount in a case involving fraud;
            ``(C) any interest, penalty, addition to tax, or additional 
        amount with respect to any tax liability shown on the return; 
        or
            ``(D) any criminal penalty.
        ``(3) Suspension period.--For purposes of this subsection, the 
    term `suspension period' means the period--
            ``(A) beginning on the day after the close of the 1-year 
        period (18-month period in the case of taxable years beginning 
        before January 1, 2004) under paragraph (1); and
            ``(B) ending on the date which is 21 days after the date on 
        which notice described in paragraph (1)(A) is provided by the 
        Secretary.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.

SEC. 3306. PROCEDURAL REQUIREMENTS FOR IMPOSITION OF PENALTIES AND 
              ADDITIONS TO TAX.

    (a) In General.--Chapter 68 (relating to additions to the tax, 
additional amounts, and assessable penalties) is amended by adding at 
the end the following new subchapter:

                ``Subchapter C--Procedural Requirements

        ``Sec. 6751. Procedural requirements.

``SEC. 6751. PROCEDURAL REQUIREMENTS.

    ``(a) Computation of Penalty Included in Notice.--The Secretary 
shall include with each notice of penalty under this title information 
with respect to the name of the penalty, the section of this title 
under which the penalty is imposed, and a computation of the penalty.
    ``(b) Approval of Assessment.--
        ``(1) In general.--No penalty under this title shall be 
    assessed unless the initial determination of such assessment is 
    personally approved (in writing) by the immediate supervisor of the 
    individual making such determination or such higher level official 
    as the Secretary may designate.
        ``(2) Exceptions.--Paragraph (1) shall not apply to--
            ``(A) any addition to tax under section 6651, 6654, or 
        6655; or
            ``(B) any other penalty automatically calculated through 
        electronic means.
    ``(c) Penalties.--For purposes of this section, the term `penalty' 
includes any addition to tax or any additional amount.''.
    (b) Conforming Amendment.--The table of subchapters for chapter 68 
is amended by adding at the end the following new item:
        ``Subchapter C. Procedural requirements.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to notices issued, and penalties assessed, after December 31, 
2000.

SEC. 3307. PERSONAL DELIVERY OF NOTICE OF PENALTY UNDER SECTION 6672.

    (a) In General.--Paragraph (1) of section 6672(b) (relating to 
failure to collect and pay over tax, or attempt to evade or defeat tax) 
is amended by inserting ``or in person'' after ``section 6212(b)''.
    (b) Conforming Amendments.--
        (1) Paragraph (2) of section 6672(b) is amended by inserting 
    ``(or, in the case of such a notice delivered in person, such 
    delivery)'' after ``paragraph (1)''.
        (2) Paragraph (3) of section 6672(b) is amended by inserting 
    ``or delivered in person'' after ``mailed'' each place it appears.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 3308. NOTICE OF INTEREST CHARGES.

    (a) In General.--Chapter 67 (relating to interest) is amended by 
adding at the end the following new subchapter:

                  ``Subchapter D--Notice requirements

        ``Sec. 6631. Notice requirements.

``SEC. 6631. NOTICE REQUIREMENTS.

    ``The Secretary shall include with each notice to an individual 
taxpayer which includes an amount of interest required to be paid by 
such taxpayer under this title information with respect to the section 
of this title under which the interest is imposed and a computation of 
the interest.''.
    (b) Conforming Amendment.--The table of subchapters for chapter 67 
is amended by adding at the end the following new item:
        ``Subchapter D. Notice requirements.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to notices issued after December 31, 2000.

SEC. 3309. ABATEMENT OF INTEREST ON UNDERPAYMENTS BY TAXPAYERS IN 
              PRESIDENTIALLY DECLARED DISASTER AREAS.

    (a) In General.--Section 6404 (relating to abatements), as amended 
by section 3305, is amended by redesignating subsection (h) as 
subsection (i) and by inserting after subsection (g) the following new 
subsection:
    ``(h) Abatement of Interest on Underpayments by Taxpayers in 
Presidentially Declared Disaster Areas.--
        ``(1) In general.--If the Secretary extends for any period the 
    time for filing income tax returns under section 6081 and the time 
    for paying income tax with respect to such returns under section 
    6161 for any taxpayer located in a Presidentially declared disaster 
    area, the Secretary shall abate for such period the assessment of 
    any interest prescribed under section 6601 on such income tax.
        ``(2) Presidentially declared disaster area.--For purposes of 
    paragraph (1), the term `Presidentially declared disaster area' 
    means, with respect to any taxpayer, any area which the President 
    has determined warrants assistance by the Federal Government under 
    the Disaster Relief and Emergency Assistance Act.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to disasters declared after December 31, 1997, with respect to taxable 
years beginning after December 31, 1997.
    (c) Emergency Designation.--
        (1) For the purposes of section 252(e) of the Balanced Budget 
    and Emergency Deficit Control Act, Congress designates the 
    provisions of this section as an emergency requirement.
        (2) The amendments made by subsections (a) and (b) of this 
    section shall only take effect upon the transmittal by the 
    President to the Congress of a message designating the provisions 
    of subsections (a) and (b) as an emergency requirement pursuant to 
    section 252(e) of the Balanced Budget and Emergency Deficit Control 
    Act.

 Subtitle E--Protections for Taxpayers Subject to Audit or Collection 
                               Activities

                          PART I--DUE PROCESS

SEC. 3401. DUE PROCESS IN INTERNAL REVENUE SERVICE COLLECTION ACTIONS.

    (a) Notice and Opportunity for Hearing Upon Filing of Notice of 
Lien.--Subchapter C of chapter 64 (relating to lien for taxes) is 
amended by inserting before the table of sections the following:

        ``Part I.  Due process for liens.
        ``Part II.  Liens.

                    ``PART I--DUE PROCESS FOR LIENS

        ``Sec. 6320. Notice and opportunity for hearing upon filing of 
                  notice of lien.

``SEC. 6320. NOTICE AND OPPORTUNITY FOR HEARING UPON FILING OF NOTICE 
              OF LIEN.

    ``(a) Requirement of Notice.--
        ``(1) In general.--The Secretary shall notify in writing the 
    person described in section 6321 of the filing of a notice of lien 
    under section 6323.
        ``(2) Time and method for notice.--The notice required under 
    paragraph (1) shall be--
            ``(A) given in person;
            ``(B) left at the dwelling or usual place of business of 
        such person; or
            ``(C) sent by certified or registered mail to such person's 
        last known address,
    not more than 5 business days after the day of the filing of the 
    notice of lien.
        ``(3) Information included with notice.--The notice required 
    under paragraph (1) shall include in simple and nontechnical 
    terms--
            ``(A) the amount of unpaid tax;
            ``(B) the right of the person to request a hearing during 
        the 30-day period beginning on the day after the 5-day period 
        described in paragraph (2);
            ``(C) the administrative appeals available to the taxpayer 
        with respect to such lien and the procedures relating to such 
        appeals; and
            ``(D) the provisions of this title and procedures relating 
        to the release of liens on property.
    ``(b) Right to Fair Hearing.--
        ``(1) In general.--If the person requests a hearing under 
    subsection (a)(3)(B), such hearing shall be held by the Internal 
    Revenue Service Office of Appeals.
        ``(2) One hearing per period.--A person shall be entitled to 
    only one hearing under this section with respect to the taxable 
    period to which the unpaid tax specified in subsection (a)(3)(A) 
    relates.
        ``(3) Impartial officer.--The hearing under this subsection 
    shall be conducted by an officer or employee who has had no prior 
    involvement with respect to the unpaid tax specified in subsection 
    (a)(3)(A) before the first hearing under this section or section 
    6330. A taxpayer may waive the requirement of this paragraph.
        ``(4) Coordination with section 6330.--To the extent 
    practicable, a hearing under this section shall be held in 
    conjunction with a hearing under section 6330.
    ``(c) Conduct of Hearing; Review; Suspensions.--For purposes of 
this section, subsections (c), (d) (other than paragraph (2)(B) 
thereof), and (e) of section 6330 shall apply.

                          ``PART II--LIENS''.

    (b) Notice and Opportunity for Hearing Before Levy.--Subchapter D 
of chapter 64 (relating to seizure of property for collection of taxes) 
is amended by inserting before the table of sections the following:

        ``Part I.  Due process for collections.
        ``Part II.  Levy.

                 ``PART I--DUE PROCESS FOR COLLECTIONS

        ``Sec. 6330. Notice and opportunity for hearing before levy.

``SEC. 6330. NOTICE AND OPPORTUNITY FOR HEARING BEFORE LEVY.

    ``(a) Requirement of Notice Before Levy.--
        ``(1) In general.--No levy may be made on any property or right 
    to property of any person unless the Secretary has notified such 
    person in writing of their right to a hearing under this section 
    before such levy is made. Such notice shall be required only once 
    for the taxable period to which the unpaid tax specified in 
    paragraph (3)(A) relates.
        ``(2) Time and method for notice.--The notice required under 
    paragraph (1) shall be--
            ``(A) given in person;
            ``(B) left at the dwelling or usual place of business of 
        such person; or
            ``(C) sent by certified or registered mail, return receipt 
        requested, to such person's last known address;
    not less than 30 days before the day of the first levy with respect 
    to the amount of the unpaid tax for the taxable period.
        ``(3) Information included with notice.--The notice required 
    under paragraph (1) shall include in simple and nontechnical 
    terms--
            ``(A) the amount of unpaid tax;
            ``(B) the right of the person to request a hearing during 
        the 30-day period under paragraph (2); and
            ``(C) the proposed action by the Secretary and the rights 
        of the person with respect to such action, including a brief 
        statement which sets forth--
                ``(i) the provisions of this title relating to levy and 
            sale of property;
                ``(ii) the procedures applicable to the levy and sale 
            of property under this title;
                ``(iii) the administrative appeals available to the 
            taxpayer with respect to such levy and sale and the 
            procedures relating to such appeals;
                ``(iv) the alternatives available to taxpayers which 
            could prevent levy on property (including installment 
            agreements under section 6159); and
                ``(v) the provisions of this title and procedures 
            relating to redemption of property and release of liens on 
            property.
    ``(b) Right to Fair Hearing.--
        ``(1) In general.--If the person requests a hearing under 
    subsection (a)(3)(B), such hearing shall be held by the Internal 
    Revenue Service Office of Appeals.
        ``(2) One hearing per period.--A person shall be entitled to 
    only one hearing under this section with respect to the taxable 
    period to which the unpaid tax specified in subsection (a)(3)(A) 
    relates.
        ``(3) Impartial officer.--The hearing under this subsection 
    shall be conducted by an officer or employee who has had no prior 
    involvement with respect to the unpaid tax specified in subsection 
    (a)(3)(A) before the first hearing under this section or section 
    6320. A taxpayer may waive the requirement of this paragraph.
    ``(c) Matters Considered at Hearing.--In the case of any hearing 
conducted under this section--
        ``(1) Requirement of investigation.--The appeals officer shall 
    at the hearing obtain verification from the Secretary that the 
    requirements of any applicable law or administrative procedure have 
    been met.
        ``(2) Issues at hearing.--
            ``(A) In general.--The person may raise at the hearing any 
        relevant issue relating to the unpaid tax or the proposed levy, 
        including--
                ``(i) appropriate spousal defenses;
                ``(ii) challenges to the appropriateness of collection 
            actions; and
                ``(iii) offers of collection alternatives, which may 
            include the posting of a bond, the substitution of other 
            assets, an installment agreement, or an offer-in-
            compromise.
            ``(B) Underlying liability.--The person may also raise at 
        the hearing challenges to the existence or amount of the 
        underlying tax liability for any tax period if the person did 
        not receive any statutory notice of deficiency for such tax 
        liability or did not otherwise have an opportunity to dispute 
        such tax liability.
        ``(3) Basis for the determination.--The determination by an 
    appeals officer under this subsection shall take into 
    consideration--
            ``(A) the verification presented under paragraph (1);
            ``(B) the issues raised under paragraph (2); and
            ``(C) whether any proposed collection action balances the 
        need for the efficient collection of taxes with the legitimate 
        concern of the person that any collection action be no more 
        intrusive than necessary.
        ``(4) Certain issues precluded.--An issue may not be raised at 
    the hearing if--
            ``(A) the issue was raised and considered at a previous 
        hearing under section 6320 or in any other previous 
        administrative or judicial proceeding; and
            ``(B) the person seeking to raise the issue participated 
        meaningfully in such hearing or proceeding.
    This paragraph shall not apply to any issue with respect to which 
    subsection (d)(2)(B) applies.
    ``(d) Proceeding After Hearing.--
        ``(1) Judicial review of determination.--The person may, within 
    30 days of a determination under this section, appeal such 
    determination--
            ``(A) to the Tax Court (and the Tax Court shall have 
        jurisdiction to hear such matter); or
            ``(B) if the Tax Court does not have jurisdiction of the 
        underlying tax liability, to a district court of the United 
        States.
    If a court determines that the appeal was to an incorrect court, a 
    person shall have 30 days after the court determination to file 
    such appeal with the correct court.
        ``(2) Jurisdiction retained at irs office of appeals.--The 
    Internal Revenue Service Office of Appeals shall retain 
    jurisdiction with respect to any determination made under this 
    section, including subsequent hearings requested by the person who 
    requested the original hearing on issues regarding--
            ``(A) collection actions taken or proposed with respect to 
        such determination; and
            ``(B) after the person has exhausted all administrative 
        remedies, a change in circumstances with respect to such person 
        which affects such determination.
    ``(e) Suspension of Collections and Statute of Limitations.--
        ``(1) In general.--Except as provided in paragraph (2), if a 
    hearing is requested under subsection (a)(3)(B), the levy actions 
    which are the subject of the requested hearing and the running of 
    any period of limitations under section 6502 (relating to 
    collection after assessment), section 6531 (relating to criminal 
    prosecutions), or section 6532 (relating to other suits) shall be 
    suspended for the period during which such hearing, and appeals 
    therein, are pending. In no event shall any such period expire 
    before the 90th day after the day on which there is a final 
    determination in such hearing.
        ``(2) Levy upon appeal.--Paragraph (1) shall not apply to a 
    levy action while an appeal is pending if the underlying tax 
    liability is not at issue in the appeal and the court determines 
    that the Secretary has shown good cause not to suspend the levy.
    ``(f) Jeopardy and State Refund Collection.--If--
        ``(1) the Secretary has made a finding under the last sentence 
    of section 6331(a) that the collection of tax is in jeopardy; or
        ``(2) the Secretary has served a levy on a State to collect a 
    Federal tax liability from a State tax refund,
this section shall not apply, except that the taxpayer shall be given 
the opportunity for the hearing described in this section within a 
reasonable period of time after the levy.

                           ``PART II--LEVY''.

    (c) Review by Special Trial Judges Allowed.--
        (1) In general.--Section 7443(b) (relating to proceedings which 
    may be assigned to special trial judges) is amended by striking 
    ``and'' at the end of paragraph (3), by redesignating paragraph (4) 
    as paragraph (5), and by inserting after paragraph (3) the 
    following new paragraph:
        ``(4) any proceeding under section 6320 or 6330, and''.
        (2) Authority to make decisions.--Section 7443(c) (relating to 
    authority to make court decisions) is amended by striking ``or 
    (3)'' and inserting ``(3), or (4)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to collection actions initiated after the date which is 180 days 
after the date of the enactment of this Act.

                    PART II--EXAMINATION ACTIVITIES

SEC. 3411. CONFIDENTIALITY PRIVILEGES RELATING TO TAXPAYER 
              COMMUNICATIONS.

    (a) In General.--Chapter 77 (relating to miscellaneous provisions) 
is amended by adding at the end the following new section:

``SEC. 7525. CONFIDENTIALITY PRIVILEGES RELATING TO TAXPAYER 
              COMMUNICATIONS.

    ``(a) Uniform Application to Taxpayer Communications With Federally 
Authorized Practitioners.--
        ``(1) General rule.--With respect to tax advice, the same 
    common law protections of confidentiality which apply to a 
    communication between a taxpayer and an attorney shall also apply 
    to a communication between a taxpayer and any federally authorized 
    tax practitioner to the extent the communication would be 
    considered a privileged communication if it were between a taxpayer 
    and an attorney.
        ``(2) Limitations.--Paragraph (1) may only be asserted in--
            ``(A) any noncriminal tax matter before the Internal 
        Revenue Service; and
            ``(B) any noncriminal tax proceeding in Federal court 
        brought by or against the United States.
        ``(3) Definitions.--For purposes of this subsection--
            ``(A) Federally authorized tax practitioner.--The term 
        `federally authorized tax practitioner' means any individual 
        who is authorized under Federal law to practice before the 
        Internal Revenue Service if such practice is subject to Federal 
        regulation under section 330 of title 31, United States Code.
            ``(B) Tax advice.--The term `tax advice' means advice given 
        by an individual with respect to a matter which is within the 
        scope of the individual's authority to practice described in 
        subparagraph (A).
    ``(b) Section Not To Apply to Communications Regarding Corporate 
Tax Shelters.--The privilege under subsection (a) shall not apply to 
any written communication between a federally authorized tax 
practitioner and a director, shareholder, officer, or employee, agent, 
or representative of a corporation in connection with the promotion of 
the direct or indirect participation of such corporation in any tax 
shelter (as defined in section 6662(d)(2)(C)(iii)).''.
    (b) Conforming Amendment.--The table of sections for such chapter 
77 is amended by adding at the end the following new item:
        ``Sec. 7525. Confidentiality privileges relating to taxpayer 
                  communications.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to communications made on or after the date of the enactment of 
this Act.

SEC. 3412. LIMITATION ON FINANCIAL STATUS AUDIT TECHNIQUES.

    Section 7602 (relating to examination of books and witnesses) is 
amended by adding at the end the following new subsection:
    ``(d) Limitation on Examination on Unreported Income.--The 
Secretary shall not use financial status or economic reality 
examination techniques to determine the existence of unreported income 
of any taxpayer unless the Secretary has a reasonable indication that 
there is a likelihood of such unreported income.''.

SEC. 3413. SOFTWARE TRADE SECRETS PROTECTION.

    (a) In General.--Subchapter A of chapter 78 (relating to 
examination and inspection) is amended by redesignating section 7612 as 
section 7613 and by inserting after 7611 the following new section:

``SEC. 7612. SPECIAL PROCEDURES FOR SUMMONSES FOR COMPUTER SOFTWARE.

    ``(a) General Rule.--For purposes of this title--
        ``(1) except as provided in subsection (b), no summons may be 
    issued under this title, and the Secretary may not begin any action 
    under section 7604 to enforce any summons to produce or analyze any 
    tax-related computer software source code; and
        ``(2) any software and related materials which are provided to 
    the Secretary under this title shall be subject to the safeguards 
    under subsection (c).
    ``(b) Circumstances Under Which Computer Software Source Code May 
Be Provided.--
        ``(1) In general.--Subsection (a)(1) shall not apply to any 
    portion, item, or component of tax-related computer software source 
    code if--
            ``(A) the Secretary is unable to otherwise reasonably 
        ascertain the correctness of any item on a return from--
                ``(i) the taxpayer's books, papers, records, or other 
            data; or
                ``(ii) the computer software executable code (and any 
            modifications thereof) to which such source code relates 
            and any associated data which, when executed, produces the 
            output to ascertain the correctness of the item;
            ``(B) the Secretary identifies with reasonable specificity 
        the portion, item, or component of such source code needed to 
        verify the correctness of such item on the return; and
            ``(C) the Secretary determines that the need for the 
        portion, item, or component of such source code with respect to 
        such item outweighs the risks of unauthorized disclosure of 
        trade secrets.
        ``(2) Exceptions.--Subsection (a)(1) shall not apply to--
            ``(A) any inquiry into any offense connected with the 
        administration or enforcement of the internal revenue laws;
            ``(B) any tax-related computer software source code 
        acquired or developed by the taxpayer or a related person 
        primarily for internal use by the taxpayer or such person 
        rather than for commercial distribution;
            ``(C) any communications between the owner of the tax-
        related computer software source code and the taxpayer or 
        related persons; or
            ``(D) any tax-related computer software source code which 
        is required to be provided or made available pursuant to any 
        other provision of this title.
        ``(3) Cooperation required.--For purposes of paragraph (1), the 
    Secretary shall be treated as meeting the requirements of 
    subparagraphs (A) and (B) of such paragraph if--
            ``(A) the Secretary determines that it is not feasible to 
        determine the correctness of an item without access to the 
        computer software executable code and associated data described 
        in paragraph (1)(A)(ii);
            ``(B) the Secretary makes a formal request to the taxpayer 
        for such code and data and to the owner of the computer 
        software source code for such executable code; and
            ``(C) such code and data is not provided within 180 days of 
        such request.
        ``(4) Right to contest summons.--In any proceeding brought 
    under section 7604 to enforce a summons issued under the authority 
    of this subsection, the court shall, at the request of any party, 
    hold a hearing to determine whether the applicable requirements of 
    this subsection have been met.
    ``(c) Safeguards To Ensure Protection of Trade Secrets and Other 
Confidential Information.--
        ``(1) Entry of protective order.--In any court proceeding to 
    enforce a summons for any portion of software, the court may 
    receive evidence and issue any order necessary to prevent the 
    disclosure of trade secrets or other confidential information with 
    respect to such software, including requiring that any information 
    be placed under seal to be opened only as directed by the court.
        ``(2) Protection of software.--Notwithstanding any other 
    provision of this section, and in addition to any protections 
    ordered pursuant to paragraph (1), in the case of software that 
    comes into the possession or control of the Secretary in the course 
    of any examination with respect to any taxpayer--
            ``(A) the software may be used only in connection with the 
        examination of such taxpayer's return, any appeal by the 
        taxpayer to the Internal Revenue Service Office of Appeals, any 
        judicial proceeding (and any appeals therefrom), and any 
        inquiry into any offense connected with the administration or 
        enforcement of the internal revenue laws;
            ``(B) the Secretary shall provide, in advance, to the 
        taxpayer and the owner of the software a written list of the 
        names of all individuals who will analyze or otherwise have 
        access to the software;
            ``(C) the software shall be maintained in a secure area or 
        place, and, in the case of computer software source code, shall 
        not be removed from the owner's place of business unless the 
        owner permits, or a court orders, such removal;
            ``(D) the software may not be copied except as necessary to 
        perform such analysis, and the Secretary shall number all 
        copies made and certify in writing that no other copies have 
        been (or will be) made;
            ``(E) at the end of the period during which the software 
        may be used under subparagraph (A)--
                ``(i) the software and all copies thereof shall be 
            returned to the person from whom they were obtained and any 
            copies thereof made under subparagraph (D) on the hard 
            drive of a machine or other mass storage device shall be 
            permanently deleted; and
                ``(ii) the Secretary shall obtain from any person who 
            analyzes or otherwise had access to such software a written 
            certification under penalty of perjury that all copies and 
            related materials have been returned and that no copies 
            were made of them;
            ``(F) the software may not be decompiled or disassembled;
            ``(G) the Secretary shall provide to the taxpayer and the 
        owner of any interest in such software, as the case may be, a 
        written agreement, between the Secretary and any person who is 
        not an officer or employee of the United States and who will 
        analyze or otherwise have access to such software, which 
        provides that such person agrees not to--
                ``(i) disclose such software to any person other than 
            persons to whom such information could be disclosed for tax 
            administration purposes under section 6103; or
                ``(ii) participate for 2 years in the development of 
            software which is intended for a similar purpose as the 
            software examined; and
            ``(H) the software shall be treated as return information 
        for purposes of section 6103.
    For purposes of subparagraph (C), the owner shall make available 
    any necessary equipment or materials for analysis of computer 
    software source code required to be conducted on the owner's 
    premises. The owner of any interest in the software shall be 
    considered a party to any agreement described in subparagraph (G).
    ``(d) Definitions.--For purposes of this section--
        ``(1) Software.--The term `software' includes computer software 
    source code and computer software executable code.
        ``(2) Computer software source code.--The term `computer 
    software source code' means--
            ``(A) the code written by a programmer using a programming 
        language which is comprehensible to appropriately trained 
        persons and is not capable of directly being used to give 
        instructions to a computer;
            ``(B) related programmers' notes, design documents, 
        memoranda, and similar documentation; and
            ``(C) related customer communications.
        ``(3) Computer software executable code.--The term `computer 
    software executable code' means--
            ``(A) any object code, machine code, or other code readable 
        by a computer when loaded into its memory and used directly by 
        such computer to execute instructions; and
            ``(B) any related user manuals.
        ``(4) Owner.--The term `owner' shall, with respect to any 
    software, include the developer of the software.
        ``(5) Related person.--A person shall be treated as related to 
    another person if such persons are related persons under section 
    267 or 707(b).
        ``(6) Tax-related computer software source code.--The term 
    `tax-related computer software source code' means the computer 
    source code for any computer software program intended for 
    accounting, tax return preparation or compliance, or tax 
    planning.''.
    (b) Unauthorized Disclosure of Software.--Section 7213 (relating to 
unauthorized disclosure of information) is amended by redesignating 
subsection (d) as subsection (e) and by inserting after subsection (c) 
the following new subsection:
    ``(d) Disclosure of Software.--Any person who willfully divulges or 
makes known software (as defined in section 7612(d)(1)) to any person 
in violation of section 7612 shall be guilty of a felony and, upon 
conviction thereof, shall be fined not more than $5,000, or imprisoned 
not more than 5 years, or both, together with the costs of 
prosecution.''.
    (c) Application of Special Procedures for Third-Party Summonses.--
Paragraph (2) of section 7603(b), as amended by section 3416(a), is 
amended by striking ``and'' at the end of subparagraph (H), by striking 
a period at the end of subparagraph (I) and inserting ``, and'', and by 
adding at the end the following new subparagraph:
            ``(J) any owner or developer of a computer software source 
        code (as defined in section 7612(d)(2)).
    Subparagraph (J) shall apply only with respect to a summons 
    requiring the production of the source code referred to in 
    subparagraph (J) or the program and data described in section 
    7612(b)(1)(A)(ii) to which such source code relates.''.
    (d) Conforming Amendment.--The table of sections for subchapter A 
of chapter 78 is amended by striking the item relating to section 7612 
and by inserting the following new item:
        ``Sec. 7612. Special procedures for summonses for computer 
                  software.
        ``Sec. 7613. Cross references.''.

    (e) Effective Date.--
        (1) In general.--The amendments made by this section shall 
    apply to summonses issued, and software acquired, after the date of 
    the enactment of this Act.
        (2) Software protection.--In the case of any software acquired 
    on or before such date of enactment, the requirements of section 
    7612(a)(2) of the Internal Revenue Code of 1986 (as added by such 
    amendments) shall apply after the 90th day after such date. The 
    preceding sentence shall not apply to the requirement under section 
    7612(c)(2)(G)(ii) of such Code (as so added).

SEC. 3414. THREAT OF AUDIT PROHIBITED TO COERCE TIP REPORTING 
              ALTERNATIVE COMMITMENT AGREEMENTS.

    The Secretary of the Treasury or the Secretary's delegate shall 
instruct employees of the Internal Revenue Service that they may not 
threaten to audit any taxpayer in an attempt to coerce the taxpayer 
into entering into a Tip Reporting Alternative Commitment Agreement.

SEC. 3415. TAXPAYERS ALLOWED MOTION TO QUASH ALL THIRD-PARTY SUMMONSES.

    (a) In General.--Paragraph (1) of section 7609(a) (relating to 
summonses to which section applies) is amended by striking so much of 
such paragraph as precedes ``notice of the summons'' and inserting the 
following:
        ``(1) In general.--If any summons to which this section applies 
    requires the giving of testimony on or relating to, the production 
    of any portion of records made or kept on or relating to, or the 
    production of any computer software source code (as defined in 
    7612(d)(2)) with respect to, any person (other than the person 
    summoned) who is identified in the summons, then''.
    (b) Coordination With Other Authority.--Section 7609 (relating to 
special procedures for third-party summonses) is amended by adding at 
the end the following new subsection:
    ``(j) Use of Summons Not Required.--Nothing in this section shall 
be construed to limit the Secretary's ability to obtain information, 
other than by summons, through formal or informal procedures authorized 
by sections 7601 and 7602.''.
    (c) Conforming Amendments.--
        (1) Subsection (a) of section 7609 is amended by striking 
    paragraphs (3) and (4), by redesignating paragraph (5) as paragraph 
    (3), and by striking in paragraph (3) (as so redesignated) 
    ``subsection (c)(2)(B)'' and inserting ``subsection (c)(2)(D)''.
        (2) Subsection (c) of section 7609 is amended to read as 
    follows:
    ``(c) Summons to Which Section Applies.--
        ``(1) In general.--Except as provided in paragraph (2), this 
    section shall apply to any summons issued under paragraph (2) of 
    section 7602(a) or under section 6420(e)(2), 6421(g)(2), 
    6427(j)(2), or 7612.
        ``(2) Exceptions.--This section shall not apply to any 
    summons--
            ``(A) served on the person with respect to whose liability 
        the summons is issued, or any officer or employee of such 
        person;
            ``(B) issued to determine whether or not records of the 
        business transactions or affairs of an identified person have 
        been made or kept;
            ``(C) issued solely to determine the identity of any person 
        having a numbered account (or similar arrangement) with a bank 
        or other institution described in section 7603(b)(2)(A);
            ``(D) issued in aid of the collection of--
                ``(i) an assessment made or judgment rendered against 
            the person with respect to whose liability the summons is 
            issued; or
                ``(ii) the liability at law or in equity of any 
            transferee or fiduciary of any person referred to in clause 
            (i);
            ``(E)(i) issued by a criminal investigator of the Internal 
        Revenue Service in connection with the investigation of an 
        offense connected with the administration or enforcement of the 
        internal revenue laws; and
            ``(ii) served on any person who is not a third-party 
        recordkeeper (as defined in section 7603(b)); or
            ``(F) described in subsection (f) or (g).
        ``(3) Records.--For purposes of this section, the term 
    `records' includes books, papers, and other data.''.
        (3) Paragraph (2) of section 7609(e) is amended by striking 
    ``third-party recordkeeper's'' and all that follows through 
    ``subsection (f)'' and inserting ``summoned party's response to the 
    summons''.
        (4) Subsection (f) of section 7609 is amended--
            (A) by striking ``described in subsection (c)'' and 
        inserting ``described in subsection (c)(1)''; and
            (B) by inserting ``or testimony'' after ``records'' in 
        paragraph (3).
        (5) Subsection (g) of section 7609 is amended by striking ``In 
    the case of any summons described in subsection (c), the provisions 
    of subsections (a)(1) and (b) shall not apply if'' and inserting 
    ``A summons is described in this subsection if''.
        (6)(A) Subsection (i) of section 7609 is amended by striking 
    ``Third-Party Recordkeeper and'' in the subsection heading.
        (B) Paragraph (1) of section 7609(i) is amended by striking 
    ``described in subsection (c), the third-party recordkeeper'' and 
    inserting ``to which this section applies for the production of 
    records, the summoned party''.
        (C) Paragraph (2) of section 7609(i) is amended--
            (i) by striking ``recordkeeper'' in the heading and 
        inserting ``summoned party''; and
            (ii) by striking ``the third-party recordkeeper'' and 
        inserting ``the summoned party''.
        (D) Paragraph (3) of section 7609(i) is amended to read as 
    follows:
        ``(3) Protection for summoned party who discloses.--Any 
    summoned party, or agent or employee thereof, making a disclosure 
    of records or testimony pursuant to this section in good faith 
    reliance on the certificate of the Secretary or an order of a court 
    requiring production of records or the giving of such testimony 
    shall not be liable to any customer or other person for such 
    disclosure.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to summonses served after the date of the enactment of this Act.

SEC. 3416. SERVICE OF SUMMONSES TO THIRD-PARTY RECORDKEEPERS PERMITTED 
              BY MAIL.

    (a) In General.--Section 7603 (relating to service of summons) is 
amended by striking ``A summons issued'' and inserting ``(a) In 
General.--A summons issued'' and by adding at the end the following new 
subsection:
    ``(b) Service by Mail to Third-Party Recordkeepers.--
        ``(1) In general.--A summons referred to in subsection (a) for 
    the production of books, papers, records, or other data by a third-
    party recordkeeper may also be served by certified or registered 
    mail to the last known address of such recordkeeper.
        ``(2) Third-party recordkeeper.--For purposes of paragraph (1), 
    the term `third-party recordkeeper' means--
            ``(A) any mutual savings bank, cooperative bank, domestic 
        building and loan association, or other savings institution 
        chartered and supervised as a savings and loan or similar 
        association under Federal or State law, any bank (as defined in 
        section 581), or any credit union (within the meaning of 
        section 501(c)(14)(A));
            ``(B) any consumer reporting agency (as defined under 
        section 603(f) of the Fair Credit Reporting Act (15 U.S.C. 
        1681a(f)));
            ``(C) any person extending credit through the use of credit 
        cards or similar devices;
            ``(D) any broker (as defined in section 3(a)(4) of the 
        Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)));
            ``(E) any attorney;
            ``(F) any accountant;
            ``(G) any barter exchange (as defined in section 
        6045(c)(3));
            ``(H) any regulated investment company (as defined in 
        section 851) and any agent of such regulated investment company 
        when acting as an agent thereof, and
            ``(I) any enrolled agent.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to summonses served after the date of the enactment of this Act.

SEC. 3417. NOTICE OF INTERNAL REVENUE SERVICE CONTACT OF THIRD PARTIES.

    (a) In General.--Section 7602 (relating to examination of books and 
witnesses), as amended by section 3412, is amended by redesignating 
subsections (c) and (d) as subsections (d) and (e), respectively, and 
by inserting after subsection (b) the following new subsection:
    ``(c) Notice of Contact of Third Parties.--
        ``(1) General notice.--An officer or employee of the Internal 
    Revenue Service may not contact any person other than the taxpayer 
    with respect to the determination or collection of the tax 
    liability of such taxpayer without providing reasonable notice in 
    advance to the taxpayer that contacts with persons other than the 
    taxpayer may be made.
        ``(2) Notice of specific contacts.--The Secretary shall 
    periodically provide to a taxpayer a record of persons contacted 
    during such period by the Secretary with respect to the 
    determination or collection of the tax liability of such taxpayer. 
    Such record shall also be provided upon request of the taxpayer.
        ``(3) Exceptions.--This subsection shall not apply--
            ``(A) to any contact which the taxpayer has authorized;
            ``(B) if the Secretary determines for good cause shown that 
        such notice would jeopardize collection of any tax or such 
        notice may involve reprisal against any person; or
            ``(C) with respect to any pending criminal 
        investigation.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to contacts made after the 180th day after the date of the 
enactment of this Act.

                    PART III--COLLECTION ACTIVITIES

                      Subpart A--Approval Process

SEC. 3421. APPROVAL PROCESS FOR LIENS, LEVIES, AND SEIZURES.

    (a) In General.--The Commissioner of Internal Revenue shall develop 
and implement procedures under which--
        (1) a determination by an employee to file a notice of lien or 
    levy with respect to, or to levy or seize, any property or right to 
    property would, where appropriate, be required to be reviewed by a 
    supervisor of the employee before the action was taken; and
        (2) appropriate disciplinary action would be taken against the 
    employee or supervisor where the procedures under paragraph (1) 
    were not followed.
    (b) Review Process.--The review process under subsection (a)(1) may 
include a certification that the employee has--
        (1) reviewed the taxpayer's information;
        (2) verified that a balance is due; and
        (3) affirmed that the action proposed to be taken is 
    appropriate given the taxpayer's circumstances, considering the 
    amount due and the value of the property or right to property.
    (c) Effective Dates.--
        (1) In general.--Except as provided in paragraph (2), this 
    section shall take effect on the date of the enactment of this Act.
        (2) Automated collection system actions.--In the case of any 
    action under an automated collection system, this section shall 
    apply to actions initiated after December 31, 2000.

                      Subpart B--Liens and Levies

SEC. 3431. MODIFICATIONS TO CERTAIN LEVY EXEMPTION AMOUNTS.

    (a) Fuel, Etc.--Section 6334(a)(2) (relating to fuel, provisions, 
furniture, and personal effects) is amended by striking ``$2,500'' and 
inserting ``$6,250''.
    (b) Books, Etc.--Section 6334(a)(3) (relating to books and tools of 
a trade, business, or profession) is amended by striking ``$1,250'' and 
inserting ``$3,125''.
    (c) Conforming Amendment.--Section 6334(g)(1) (relating to 
inflation adjustment) is amended--
        (1) by striking ``1997'' and inserting ``1999''; and
        (2) by striking ``1996'' in subparagraph (B) and inserting 
    ``1998''.
    (d) Effective Date.--The amendments made by this section shall take 
effect with respect to levies issued after the date of the enactment of 
this Act.

SEC. 3432. RELEASE OF LEVY UPON AGREEMENT THAT AMOUNT IS UNCOLLECTIBLE.

    (a) In General.--Section 6343 (relating to authority to release 
levy and return property) is amended by adding at the end the following 
new subsection:
    ``(e) Release of Levy Upon Agreement That Amount is not 
Collectible.--In the case of a levy on the salary or wages payable to 
or received by the taxpayer, upon agreement with the taxpayer that the 
tax is not collectible, the Secretary shall release such levy as soon 
as practicable.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to levies imposed after December 31, 1999.

SEC. 3433. LEVY PROHIBITED DURING PENDENCY OF REFUND PROCEEDINGS.

    (a) In General.--Section 6331 (relating to levy and distraint) is 
amended by redesignating subsection (i) as subsection (j) and by 
inserting after subsection (h) the following new subsection:
    ``(i) No Levy During Pendency of Proceedings for Refund of 
Divisible Tax.--
        ``(1) In general.--No levy may be made under subsection (a) on 
    the property or rights to property of any person with respect to 
    any unpaid divisible tax during the pendency of any proceeding 
    brought by such person in a proper Federal trial court for the 
    recovery of any portion of such divisible tax which was paid by 
    such person if--
            ``(A) the decision in such proceeding would be res judicata 
        with respect to such unpaid tax; or
            ``(B) such person would be collaterally estopped from 
        contesting such unpaid tax by reason of such proceeding.
        ``(2) Divisible tax.--For purposes of paragraph (1), the term 
    `divisible tax' means--
            ``(A) any tax imposed by subtitle C; and
            ``(B) the penalty imposed by section 6672 with respect to 
        any such tax.
        ``(3) Exceptions.--
            ``(A) Certain unpaid taxes.--This subsection shall not 
        apply with respect to any unpaid tax if--
                ``(i) the taxpayer files a written notice with the 
            Secretary which waives the restriction imposed by this 
            subsection on levy with respect to such tax; or
                ``(ii) the Secretary finds that the collection of such 
            tax is in jeopardy.
            ``(B) Certain levies.--This subsection shall not apply to--
                ``(i) any levy to carry out an offset under section 
            6402; and
                ``(ii) any levy which was first made before the date 
            that the applicable proceeding under this subsection 
            commenced.
        ``(4) Limitation on collection activity; authority to enjoin 
    collection.--
            ``(A) Limitation on collection.--No proceeding in court for 
        the collection of any unpaid tax to which paragraph (1) applies 
        shall be begun by the Secretary during the pendency of a 
        proceeding under such paragraph. This subparagraph shall not 
        apply to--
                ``(i) any counterclaim in a proceeding under such 
            paragraph; or
                ``(ii) any proceeding relating to a proceeding under 
            such paragraph.
            ``(B) Authority to enjoin.--Notwithstanding section 
        7421(a), a levy or collection proceeding prohibited by this 
        subsection may be enjoined (during the period such prohibition 
        is in force) by the court in which the proceeding under 
        paragraph (1) is brought.
        ``(5) Suspension of statute of limitations on collection.--The 
    period of limitations under section 6502 shall be suspended for the 
    period during which the Secretary is prohibited under this 
    subsection from making a levy.
        ``(6) Pendency of proceeding.--For purposes of this subsection, 
    a proceeding is pending beginning on the date such proceeding 
    commences and ending on the date that a final order or judgment 
    from which an appeal may be taken is entered in such proceeding.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to unpaid tax attributable to taxable periods beginning after December 
31, 1998.

SEC. 3434. APPROVAL REQUIRED FOR JEOPARDY AND TERMINATION ASSESSMENTS 
              AND JEOPARDY LEVIES.

    (a) In General.--Paragraph (1) of section 7429(a) (relating to 
review of jeopardy levy or assessment procedures) is amended to read as 
follows:
        ``(1) Administrative review.--
            ``(A) Prior approval required.--No assessment may be made 
        under section 6851(a), 6852(a), 6861(a), or 6862, and no levy 
        may be made under section 6331(a) less than 30 days after 
        notice and demand for payment is made, unless the Chief Counsel 
        for the Internal Revenue Service (or such Counsel's delegate) 
        personally approves (in writing) such assessment or levy.
            ``(B) Information to taxpayer.--Within 5 days after the day 
        on which such an assessment or levy is made, the Secretary 
        shall provide the taxpayer with a written statement of the 
        information upon which the Secretary relied in making such 
        assessment or levy.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxes assessed and levies made after the date of the enactment of 
this Act.

SEC. 3435. INCREASE IN AMOUNT OF CERTAIN PROPERTY ON WHICH LIEN NOT 
              VALID.

    (a) Certain Property.--
        (1) In general.--Subsection (b) of section 6323 (relating to 
    validity and priority against certain persons) is amended--
            (A) by striking ``$250'' in paragraph (4) (relating to 
        personal property purchased in casual sale) and inserting 
        ``$1,000''; and
            (B) by striking ``$1,000'' in paragraph (7) (relating to 
        residential property subject to a mechanic's lien for certain 
        repairs and improvements) and inserting ``$5,000''.
        (2) Inflation adjustment.--Subsection (i) of section 6323 
    (relating to special rules) is amended by adding at the end the 
    following new paragraph:
        ``(4) Cost-of-living adjustment.--In the case of notices of 
    liens imposed by section 6321 which are filed in any calendar year 
    after 1998, each of the dollar amounts under paragraph (4) or (7) 
    of subsection (b) shall be increased by an amount equal to--
            ``(A) such dollar amount, multiplied by
            ``(B) the cost-of-living adjustment determined under 
        section 1(f)(3) for the calendar year, determined by 
        substituting `calendar year 1996' for `calendar year 1992' in 
        subparagraph (B) thereof.
    If any amount as adjusted under the preceding sentence is not a 
    multiple of $10, such amount shall be rounded to the nearest 
    multiple of $10.''.
    (b) Expansion of Treatment of Passbook Loans.--Paragraph (10) of 
section 6323(b) is amended--
        (1) by striking ``Passbook loans'' in the heading and inserting 
    ``Deposit-secured loans'';
        (2) by striking ``, evidenced by a passbook,''; and
        (3) by striking all that follows ``secured by such account'' 
    and inserting a period.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 3436. WAIVER OF EARLY WITHDRAWAL TAX FOR INTERNAL REVENUE SERVICE 
              LEVIES ON EMPLOYER-SPONSORED RETIREMENT PLANS OR IRAS.

    (a) In General.--Section 72(t)(2)(A) (relating to subsection not to 
apply to certain distributions) is amended by striking ``or'' at the 
end of clauses (iv) and (v), by striking the period at the end of 
clause (vi) and inserting ``, or'', and by adding at the end the 
following new clause:
                ``(vii) made on account of a levy under section 6331 on 
            the qualified retirement plan.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 1999.

                          Subpart C--Seizures

SEC. 3441. PROHIBITION OF SALES OF SEIZED PROPERTY AT LESS THAN MINIMUM 
              BID.

    (a) In General.--Section 6335(e)(1)(A)(i) (relating to 
determinations relating to minimum price) is amended by striking ``a 
minimum price for which such property shall be sold'' and inserting ``a 
minimum price below which such property shall not be sold''.
    (b) Reference to Penalty for Violation.--Section 6335(e) is amended 
by adding at the end the following new paragraph:
        ``(4) Cross reference.--
          ``For provision providing for civil damages for violation of 
        paragraph (1)(A)(i), see section 7433.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to sales made after the date of the enactment of this Act.

SEC. 3442. ACCOUNTING OF SALES OF SEIZED PROPERTY.

    (a) In General.--Section 6340 (relating to records of sale) is 
amended--
        (1) in subsection (a)--
            (A) by striking ``real''; and
            (B) by inserting ``or certificate of sale of personal 
        property'' after ``deed''; and
        (2) by adding at the end the following new subsection:
    ``(c) Accounting to Taxpayer.--The taxpayer with respect to whose 
liability the sale was conducted or who redeemed the property shall be 
furnished--
        ``(1) the record under subsection (a) (other than the names of 
    the purchasers);
        ``(2) the amount from such sale applied to the taxpayer's 
    liability; and
        ``(3) the remaining balance of such liability.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to seizures occurring after the date of the enactment of this 
Act.

SEC. 3443. UNIFORM ASSET DISPOSAL MECHANISM.

    Not later than the date which is 2 years after the date of the 
enactment of this Act, the Secretary of the Treasury or the Secretary's 
delegate shall implement a uniform asset disposal mechanism for sales 
under section 6335 of the Internal Revenue Code of 1986. The mechanism 
should be designed to remove any participation in such sales by revenue 
officers of the Internal Revenue Service and should consider the use of 
outsourcing.

SEC. 3444. CODIFICATION OF INTERNAL REVENUE SERVICE ADMINISTRATIVE 
              PROCEDURES FOR SEIZURE OF TAXPAYER'S PROPERTY.

    (a) In General.--Section 6331 (relating to levy and distraint), as 
amended by section 3433, is amended by redesignating subsection (j) as 
subsection (k) and by inserting after subsection (i) the following new 
subsection:
    ``(j) No Levy Before Investigation of Status of Property.--
        ``(1) In general.--For purposes of applying the provisions of 
    this subchapter, no levy may be made on any property or right to 
    property which is to be sold under section 6335 until a thorough 
    investigation of the status of such property has been completed.
        ``(2) Elements in investigation.--For purposes of paragraph 
    (1), an investigation of the status of any property shall include--
            ``(A) a verification of the taxpayer's liability;
            ``(B) the completion of an analysis under sub- section (f);
            ``(C) the determination that the equity in such property is 
        sufficient to yield net proceeds from the sale of such property 
        to apply to such liability; and
            ``(D) a thorough consideration of alternative collection 
        methods.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 3445. PROCEDURES FOR SEIZURE OF RESIDENCES AND BUSINESSES.

    (a) In General.--Section 6334(a)(13) (relating to property exempt 
from levy) is amended to read as follows:
        ``(13) Residences exempt in small deficiency cases and 
    principal residences and certain business assets exempt in absence 
    of certain approval or jeopardy.--
            ``(A) Residences in small deficiency cases.--If the amount 
        of the levy does not exceed $5,000--
                ``(i) any real property used as a residence by the 
            taxpayer; or
                ``(ii) any real property of the taxpayer (other than 
            real property which is rented) used by any other individual 
            as a residence.
            ``(B) Principal residences and certain business assets.--
        Except to the extent provided in subsection (e)--
                ``(i) the principal residence of the taxpayer (within 
            the meaning of section 121); and
                ``(ii) tangible personal property or real property 
            (other than real property which is rented) used in the 
            trade or business of an individual taxpayer.''.
    (b) Levy Allowed in Certain Circumstances.--Section 6334(e) is 
amended to read as follows:
    ``(e) Levy Allowed on Principal Residences and Certain Business 
Assets in Certain Circumstances.--
        ``(1) Principal residences.--
            ``(A) Approval required.--A principal residence shall not 
        be exempt from levy if a judge or magistrate of a district 
        court of the United States approves (in writing) the levy of 
        such residence.
            ``(B) Jurisdiction.--The district courts of the United 
        States shall have exclusive jurisdiction to approve a levy 
        under subparagraph (A).
        ``(2) Certain business assets.--Property (other than a 
    principal residence) described in subsection (a)(13)(B) shall not 
    be exempt from levy if--
            ``(A) a district director or assistant district director of 
        the Internal Revenue Service personally approves (in writing) 
        the levy of such property; or
            ``(B) the Secretary finds that the collection of tax is in 
        jeopardy.
    An official may not approve a levy under subparagraph (A) unless 
    the official determines that the taxpayer's other assets subject to 
    collection are insufficient to pay the amount due, together with 
    expenses of the proceedings.''.
    (c) State Fish and Wildlife Permits.--
        (1) In general.--With respect to permits issued by a State and 
    required under State law for the harvest of fish or wildlife in the 
    trade or business of an individual taxpayer, the term ``other 
    assets'' as used in section 6334(e)(2) of the Internal Revenue Code 
    of 1986 shall include future income which may be derived by such 
    taxpayer from the commercial sale of fish or wildlife under such 
    permit.
        (2) Construction.--Paragraph (1) shall not be construed to 
    invalidate or in any way prejudice any assertion that the privilege 
    embodied in permits described in paragraph (1) is not property or a 
    right to property under the Internal Revenue Code of 1986.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

 PART IV--PROVISIONS RELATING TO EXAMINATION AND COLLECTION ACTIVITIES

SEC. 3461. PROCEDURES RELATING TO EXTENSIONS OF STATUTE OF LIMITATIONS 
              BY AGREEMENT.

    (a) Authority To Extend 10-Year Collection Period After 
Assessment.--Section 6502(a) (relating to length of period after 
collection) is amended--
        (1) by striking paragraph (2) and inserting:
        ``(2) if--
            ``(A) there is an installment agreement between the 
        taxpayer and the Secretary, prior to the date which is 90 days 
        after the expiration of any period for collection agreed upon 
        in writing by the Secretary and the taxpayer at the time the 
        installment agreement was entered into; or
            ``(B) there is a release of levy under section 6343 after 
        such 10-year period, prior to the expiration of any period for 
        collection agreed upon in writing by the Secretary and the 
        taxpayer before such release.''; and
        (2) by striking the first sentence in the matter following 
    paragraph (2).
    (b) Notice to Taxpayer of Right To Refuse or Limit Extension.--
Paragraph (4) of section 6501(c) (relating to the period for 
limitations on assessment and collection) is amended--
        (1) by striking ``Where'' and inserting the following:
            ``(A) In general.--Where''; and
        (2) by adding at the end the following new subparagraph:
            ``(B) Notice to taxpayer of right to refuse or limit 
        extension.--The Secretary shall notify the taxpayer of the 
        taxpayer's right to refuse to extend the period of limitations, 
        or to limit such extension to particular issues or to a 
        particular period of time, on each occasion when the taxpayer 
        is requested to provide such consent.''.
    (c) Effective Date.--
        (1) In general.--The amendments made by this section shall 
    apply to requests to extend the period of limitations made after 
    December 31, 1999.
        (2) Prior request.--If, in any request to extend the period of 
    limitations made on or before December 31, 1999, a taxpayer agreed 
    to extend such period beyond the 10-year period referred to in 
    section 6502(a) of the Internal Revenue Code of 1986, such 
    extension shall expire on the latest of--
            (A) the last day of such 10-year period;
            (B) December 31, 2002; or
            (C) in the case of an extension in connection with an 
        installment agreement, the 90th day after the end of the period 
        of such extension.

SEC. 3462. OFFERS-IN-COMPROMISE.

    (a) Standards for Evaluation of Offers-in-Compromise.--Section 7122 
(relating to offers-in-compromise) is amended by adding at the end the 
following new subsection:
    ``(c) Standards for Evaluation of Offers.--
        ``(1) In general.--The Secretary shall prescribe guidelines for 
    officers and employees of the Internal Revenue Service to determine 
    whether an offer-in-compromise is adequate and should be accepted 
    to resolve a dispute.
        ``(2) Allowances for basic living expenses.--
            ``(A) In general.--In prescribing guidelines under 
        paragraph (1), the Secretary shall develop and publish 
        schedules of national and local allowances designed to provide 
        that taxpayers entering into a compromise have an adequate 
        means to provide for basic living expenses.
            ``(B) Use of schedules.--The guidelines shall provide that 
        officers and employees of the Internal Revenue Service shall 
        determine, on the basis of the facts and circumstances of each 
        taxpayer, whether the use of the schedules published under 
        subparagraph (A) is appropriate and shall not use the schedules 
        to the extent such use would result in the taxpayer not having 
        adequate means to provide for basic living expenses.
        ``(3) Special rules relating to treatment of offers.--The 
    guidelines under paragraph (1) shall provide that--
            ``(A) an officer or employee of the Internal Revenue 
        Service shall not reject an offer-in-compromise from a low-
        income taxpayer solely on the basis of the amount of the offer; 
        and
            ``(B) in the case of an offer-in-compromise which relates 
        only to issues of liability of the taxpayer--
                ``(i) such offer shall not be rejected solely because 
            the Secretary is unable to locate the taxpayer's return or 
            return information for verification of such liability; and
                ``(ii) the taxpayer shall not be required to provide a 
            financial statement.''.
    (b) Levy Prohibited While Offer-in-Compromise Pending or 
Installment Agreement Pending or in Effect.--Section 6331 (relating to 
levy and distraint), as amended by sections 3433 and 3444, is amended 
by redesignating subsection (k) as subsection (l) and by inserting 
after subsection (j) the following new subsection:
    ``(k) No Levy While Certain Offers Pending or Installment Agreement 
Pending or in Effect.--
        ``(1) Offer-in-compromise pending.--No levy may be made under 
    subsection (a) on the property or rights to property of any person 
    with respect to any unpaid tax--
            ``(A) during the period that an offer-in-compromise by such 
        person under section 7122 of such unpaid tax is pending with 
        the Secretary; and
            ``(B) if such offer is rejected by the Secretary, during 
        the 30 days thereafter (and, if an appeal of such rejection is 
        filed within such 30 days, during the period that such appeal 
        is pending).
    For purposes of subparagraph (A), an offer is pending beginning on 
    the date the Secretary accepts such offer for processing.
        ``(2) Installment agreements.--No levy may be made under 
    subsection (a) on the property or rights to property of any person 
    with respect to any unpaid tax--
            ``(A) during the period that an offer by such person for an 
        installment agreement under section 6159 for payment of such 
        unpaid tax is pending with the Secretary;
            ``(B) if such offer is rejected by the Secretary, during 
        the 30 days thereafter (and, if an appeal of such rejection is 
        filed within such 30 days, during the period that such appeal 
        is pending);
            ``(C) during the period that such an installment agreement 
        for payment of such unpaid tax is in effect; and
            ``(D) if such agreement is terminated by the Secretary, 
        during the 30 days thereafter (and, if an appeal of such 
        termination is filed within such 30 days, during the period 
        that such appeal is pending).
        ``(3) Certain rules to apply.--Rules similar to the rules of 
    paragraphs (3), (4), and (5) of subsection (i) shall apply for 
    purposes of this subsection.''.
    (c) Review of Rejections of Offers-in-Compromise and Installment 
Agreements.--
        (1) In general.--Section 7122 (relating to compromises), as 
    amended by subsection (a), is amended by adding at the end the 
    following new subsection:
    ``(d) Administrative Review.--The Secretary shall establish 
procedures--
        ``(1) for an independent administrative review of any rejection 
    of a proposed offer-in-compromise or installment agreement made by 
    a taxpayer under this section or section 6159 before such rejection 
    is communicated to the taxpayer; and
        ``(2) which allow a taxpayer to appeal any rejection of such 
    offer or agreement to the Internal Revenue Service Office of 
    Appeals.''.
        (2) Conforming amendment.--Section 6159 (relating to 
    installment agreements) is amended by adding at the end the 
    following new subsection:
    ``(d) Cross Reference.--
          ``For rights to administrative review and appeal, see section 
        7122(d).''.

    (d) Preparation of Statement Relating to Offers-in- Compromise.--
The Secretary of the Treasury shall prepare a statement which sets 
forth in simple, nontechnical terms the rights of a taxpayer and the 
obligations of the Internal Revenue Service relating to offers-in-
compromise. Such statement shall--
        (1) advise taxpayers who have entered into a compromise of the 
    advantages of promptly notifying the Internal Revenue Service of 
    any change of address or marital status;
        (2) provide notice to taxpayers that in the case of a 
    compromise terminated due to the actions of one spouse or former 
    spouse, the Internal Revenue Service will, upon application, 
    reinstate such compromise with the spouse or former spouse who 
    remains in compliance with such compromise; and
        (3) provide notice to the taxpayer that the taxpayer may appeal 
    the rejection of an offer-in-compromise to the Internal Revenue 
    Service Office of Appeals.
    (e) Effective Dates.--
        (1) In general.--The amendments made by this section shall 
    apply to proposed offers-in-compromise and installment agreements 
    submitted after the date of the enactment of this Act.
        (2) Suspension of collection by levy.--The amendment made by 
    subsection (b) shall apply to offers-in-compromise pending on or 
    made after December 31, 1999.

SEC. 3463. NOTICE OF DEFICIENCY TO SPECIFY DEADLINES FOR FILING TAX 
              COURT PETITION.

    (a) In General.--The Secretary of the Treasury or the Secretary's 
delegate shall include on each notice of deficiency under section 6212 
of the Internal Revenue Code of 1986 the date determined by such 
Secretary (or delegate) as the last day on which the taxpayer may file 
a petition with the Tax Court.
    (b) Later Filing Deadlines Specified on Notice of Deficiency To Be 
Binding.--Subsection (a) of section 6213 (relating to restrictions 
applicable to deficiencies; petition to Tax Court) is amended by adding 
at the end the following new sentence: ``Any petition filed with the 
Tax Court on or before the last date specified for filing such petition 
by the Secretary in the notice of deficiency shall be treated as timely 
filed.''.
    (c) Effective Date.--Subsection (a) and the amendment made by 
subsection (b) shall apply to notices mailed after December 31, 1998.

SEC. 3464. REFUND OR CREDIT OF OVERPAYMENTS BEFORE FINAL DETERMINATION.

    (a) Tax Court Proceedings.--Subsection (a) of section 6213 is 
amended--
        (1) by striking ``, including the Tax Court.'' and inserting 
    ``, including the Tax Court, and a refund may be ordered by such 
    court of any amount collected within the period during which the 
    Secretary is prohibited from collecting by levy or through a 
    proceeding in court under the provisions of this subsection.''; and
        (2) by striking ``to enjoin any action or proceeding'' and 
    inserting ``to enjoin any action or proceeding or order any 
    refund''.
    (b) Other Proceedings.--Subsection (a) of section 6512 is amended 
by striking the period at the end of paragraph (4) and inserting ``, 
and'', and by inserting after paragraph (4) the following new 
paragraphs:
        ``(5) As to any amount collected within the period during which 
    the Secretary is prohibited from making the assessment or from 
    collecting by levy or through a proceeding in court under the 
    provisions of section 6213(a); and
        ``(6) As to overpayments the Secretary is authorized to refund 
    or credit pending appeal as provided in subsection (b).''.
    (c) Refund or Credit Pending Appeal.--Paragraph (1) of section 
6512(b) is amended by adding at the end the following new sentence: 
``If a notice of appeal in respect of the decision of the Tax Court is 
filed under section 7483, the Secretary is authorized to refund or 
credit the overpayment determined by the Tax Court to the extent the 
overpayment is not contested on appeal.''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 3465. INTERNAL REVENUE SERVICE PROCEDURES RELATING TO APPEALS OF 
              EXAMINATIONS AND COLLECTIONS.

    (a) Dispute Resolution Procedures.--
        (1) In general.--Chapter 74 (relating to closing agreements and 
    compromises) is amended by redesignating section 7123 as section 
    7124 and by inserting after section 7122 the following new section:

``SEC. 7123. APPEALS DISPUTE RESOLUTION PROCEDURES.

    ``(a) Early Referral to Appeals Procedures.--The Secretary shall 
prescribe procedures by which any taxpayer may request early referral 
of 1 or more unresolved issues from the examination or collection 
division to the Internal Revenue Service Office of Appeals.
    ``(b) Alternative Dispute Resolution Procedures.--
        ``(1) Mediation.--The Secretary shall prescribe procedures 
    under which a taxpayer or the Internal Revenue Service Office of 
    Appeals may request non-binding mediation on any issue unresolved 
    at the conclusion of--
            ``(A) appeals procedures; or
            ``(B) unsuccessful attempts to enter into a closing 
        agreement under section 7121 or a compromise under section 
        7122.
        ``(2) Arbitration.--The Secretary shall establish a pilot 
    program under which a taxpayer and the Internal Revenue Service 
    Office of Appeals may jointly request binding arbitration on any 
    issue unresolved at the conclusion of--
            ``(A) appeals procedures; or
            ``(B) unsuccessful attempts to enter into a closing 
        agreement under section 7121 or a compromise under section 
        7122.''.
        (2) Conforming amendment.--The table of sections for chapter 74 
    is amended by striking the item relating to section 7123 and 
    inserting the following new items:
        ``Sec. 7123. Appeals dispute resolution procedures.
        ``Sec. 7124. Cross references.''.

    (b) Appeals Officers in Each State.--The Commissioner of Internal 
Revenue shall ensure that an appeals officer is regularly available 
within each State.
    (c) Appeals Videoconferencing Alternative for Rural Areas.--The 
Commissioner of Internal Revenue shall consider the use of the 
videoconferencing of appeals conferences between appeals officers and 
taxpayers seeking appeals in rural or remote areas.

SEC. 3466. APPLICATION OF CERTAIN FAIR DEBT COLLECTION PROCEDURES.

    (a) In General.--Subchapter A of chapter 64 (relating to 
collection) is amended by inserting after section 6303 the following 
new section:

``SEC. 6304. FAIR TAX COLLECTION PRACTICES.

    ``(a) Communication With the Taxpayer.--Without the prior consent 
of the taxpayer given directly to the Secretary or the express 
permission of a court of competent jurisdiction, the Secretary may not 
communicate with a taxpayer in connection with the collection of any 
unpaid tax--
        ``(1) at any unusual time or place or a time or place known or 
    which should be known to be inconvenient to the taxpayer;
        ``(2) if the Secretary knows the taxpayer is represented by any 
    person authorized to practice before the Internal Revenue Service 
    with respect to such unpaid tax and has knowledge of, or can 
    readily ascertain, such person's name and address, unless such 
    person fails to respond within a reasonable period of time to a 
    communication from the Secretary or unless such person consents to 
    direct communication with the taxpayer; or
        ``(3) at the taxpayer's place of employment if the Secretary 
    knows or has reason to know that the taxpayer's employer prohibits 
    the taxpayer from receiving such communication.
In the absence of knowledge of circumstances to the contrary, the 
Secretary shall assume that the convenient time for communicating with 
a taxpayer is after 8 a.m. and before 9 p.m., local time at the 
taxpayer's location.
    ``(b) Prohibition of Harassment and Abuse.--The Secretary may not 
engage in any conduct the natural consequence of which is to harass, 
oppress, or abuse any person in connection with the collection of any 
unpaid tax. Without limiting the general application of the foregoing, 
the following conduct is a violation of this subsection:
        ``(1) The use or threat of use of violence or other criminal 
    means to harm the physical person, reputation, or property of any 
    person.
        ``(2) The use of obscene or profane language or language the 
    natural consequence of which is to abuse the hearer or reader.
        ``(3) Causing a telephone to ring or engaging any person in 
    telephone conversation repeatedly or continuously with intent to 
    annoy, abuse, or harass any person at the called number.
        ``(4) Except as provided under rules similar to the rules in 
    section 804 of the Fair Debt Collection Practices Act (15 U.S.C. 
    1692b), the placement of telephone calls without meaningful 
    disclosure of the caller's identity.
    ``(c) Civil Action for Violations of Section.--
          ``For civil action for violations of this section, see section 
        7433.''.

    (b) Clerical Amendment.--The table of sections for subchapter A of 
chapter 64 is amended by inserting after the item relating to section 
6303 the following new item:
        ``Sec. 6304. Fair tax collection practices.''.

    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 3467. GUARANTEED AVAILABILITY OF INSTALLMENT AGREEMENTS.

    (a) In General.--Section 6159 (relating to agreements for payment 
of tax liability in installments) is amended by redesignating 
subsection (c) as subsection (d) and by inserting after subsection (b) 
the following new subsection:
    ``(c) Secretary Required To Enter Into Installment Agreements in 
Certain Cases.--In the case of a liability for tax of an individual 
under subtitle A, the Secretary shall enter into an agreement to accept 
the payment of such tax in installments if, as of the date the 
individual offers to enter into the agreement--
        ``(1) the aggregate amount of such liability (determined 
    without regard to interest, penalties, additions to the tax, and 
    additional amounts) does not exceed $10,000;
        ``(2) the taxpayer (and, if such liability relates to a joint 
    return, the taxpayer's spouse) has not, during any of the preceding 
    5 taxable years--
            ``(A) failed to file any return of tax imposed by sub- 
        title A;
            ``(B) failed to pay any tax required to be shown on any 
        such return; or
            ``(C) entered into an installment agreement under this 
        section for payment of any tax imposed by subtitle A,
        ``(3) the Secretary determines that the taxpayer is financially 
    unable to pay such liability in full when due (and the taxpayer 
    submits such information as the Secretary may require to make such 
    determination);
        ``(4) the agreement requires full payment of such liability 
    within 3 years; and
        ``(5) the taxpayer agrees to comply with the provisions of this 
    title for the period such agreement is in effect.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 3468. PROHIBITION ON REQUESTS TO TAXPAYERS TO GIVE UP RIGHTS TO 
              BRING ACTIONS.

    (a) Prohibition.--No officer or employee of the United States may 
request a taxpayer to waive the taxpayer's right to bring a civil 
action against the United States or any officer or employee of the 
United States for any action taken in connection with the internal 
revenue laws.
    (b) Exceptions.--Subsection (a) shall not apply in any case where--
        (1) a taxpayer waives the right described in subsection (a) 
    knowingly and voluntarily; or
        (2) the request by the officer or employee is made in person 
    and the taxpayer's attorney or other federally authorized tax 
    practitioner (within the meaning of section 7525(a)(3)(A) of the 
    Internal Revenue Code of 1986) is present, or the request is made 
    in writing to the taxpayer's attorney or other representative.

                  Subtitle F--Disclosures to Taxpayers

SEC. 3501. EXPLANATION OF JOINT AND SEVERAL LIABILITY.

    (a) In General.--The Secretary of the Treasury or the Secretary's 
delegate shall, as soon as practicable, but not later than 180 days 
after the date of the enactment of this Act, establish procedures to 
clearly alert married taxpayers of their joint and several liabilities 
on all appropriate publications and instructions.
    (b) Right To Limit Liability.--The procedures under subsection (a) 
shall include requirements that notice of an individual's right to 
relief under section 6015 of the Internal Revenue Code of 1986 shall be 
included in the statement required by section 6227 of the Omnibus 
Taxpayer Bill of Rights (Internal Revenue Service Publication No. 1) 
and in any collection-related notices.

SEC. 3502. EXPLANATION OF TAXPAYERS' RIGHTS IN INTERVIEWS WITH THE 
              INTERNAL REVENUE SERVICE.

    The Secretary of the Treasury or the Secretary's delegate shall, as 
soon as practicable, but not later than 180 days after the date of the 
enactment of this Act, revise the statement required by section 6227 of 
the Omnibus Taxpayer Bill of Rights (Internal Revenue Service 
Publication No. 1) to more clearly inform taxpayers of their rights--
        (1) to be represented at interviews with the Internal Revenue 
    Service by any person authorized to practice before the Internal 
    Revenue Service; and
        (2) to suspend an interview pursuant to section 7521(b)(2) of 
    the Internal Revenue Code of 1986.

SEC. 3503. DISCLOSURE OF CRITERIA FOR EXAMINATION SELECTION.

    (a) In General.--The Secretary of the Treasury or the Secretary's 
delegate shall, as soon as practicable, but not later than 180 days 
after the date of the enactment of this Act, incorporate into the 
statement required by section 6227 of the Omnibus Taxpayer Bill of 
Rights (Internal Revenue Service Publication No. 1) a statement which 
sets forth in simple and nontechnical terms the criteria and procedures 
for selecting taxpayers for examination. Such statement shall not 
include any information the disclosure of which would be detrimental to 
law enforcement, but shall specify the general procedures used by the 
Internal Revenue Service, including whether taxpayers are selected for 
examination on the basis of information available in the media or on 
the basis of information provided to the Internal Revenue Service by 
informants.
    (b) Transmission to Committees of Congress.--The Secretary shall 
transmit drafts of the statement required under subsection (a) (or 
proposed revisions to any such statement) to the Committee on Ways and 
Means of the House of Representatives and the Committee on Finance of 
the Senate on the same day.

SEC. 3504. EXPLANATIONS OF APPEALS AND COLLECTION PROCESS.

    The Secretary of the Treasury or the Secretary's delegate shall, as 
soon as practicable, but not later than 180 days after the date of the 
enactment of this Act, include with any first letter of proposed 
deficiency which allows the taxpayer an opportunity for administrative 
review in the Internal Revenue Service Office of Appeals an explanation 
of the entire process from examination through collection with respect 
to such proposed deficiency, including the assistance available to the 
taxpayer from the National Taxpayer Advocate at various points in the 
process.

SEC. 3505. EXPLANATION OF REASON FOR REFUND DISALLOWANCE.

    (a) In General.--Section 6402 (relating to authority to make 
credits or refunds) is amended by adding at the end the following new 
subsection:
    ``(j) Explanation of Reason for Refund Disallowance.--In the case 
of a disallowance of a claim for refund, the Secretary shall provide 
the taxpayer with an explanation for such disallowance.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to disallowances after the 180th day after the date of the enactment of 
this Act.

SEC. 3506. STATEMENTS REGARDING INSTALLMENT AGREEMENTS.

    The Secretary of the Treasury or the Secretary's delegate shall, 
beginning not later than July 1, 2000, provide each taxpayer who has an 
installment agreement in effect under section 6159 of the Internal 
Revenue Code of 1986 an annual statement setting forth the initial 
balance at the beginning of the year, the payments made during the 
year, and the remaining balance as of the end of the year.

SEC. 3507. NOTIFICATION OF CHANGE IN TAX MATTERS PARTNER.

    (a) In General.--Section 6231(a)(7) (defining tax matters partner) 
is amended by adding at the end the following new sentence: ``The 
Secretary shall, within 30 days of selecting a tax matters partner 
under the preceding sentence, notify all partners required to receive 
notice under section 6223(a) of the name and address of the person 
selected.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to selections of tax matters partners made by the Secretary of the 
Treasury after the date of the enactment of this Act.

SEC. 3508. DISCLOSURE TO TAXPAYERS.

    The Secretary of the Treasury or the Secretary's delegate shall 
ensure that any instructions booklet accompanying an individual Federal 
income tax return form (including forms 1040, 1040A, 1040EZ, and any 
similar or successor forms) shall include, in clear language, in 
conspicuous print, and in a conspicuous place, a concise description of 
the conditions under which return information may be disclosed to any 
party outside the Internal Revenue Service, including disclosure to any 
State or agency, body, or commission (or legal representative) thereof.

SEC. 3509. DISCLOSURE OF CHIEF COUNSEL ADVICE.

    (a) In General.--Section 6110(b)(1) (defining written 
determination) is amended by striking ``or technical advice 
memorandum'' and inserting ``technical advice memorandum, or Chief 
Counsel advice''.
    (b) Chief Counsel Advice.--Section 6110 (relating to public 
inspection of written determinations) is amended by redesignating 
subsections (i), (j), (k), and (l) as subsections (j), (k), (l), and 
(m), respectively, and by inserting after subsection (h) the following 
new subsection:
    ``(i) Special Rules for Disclosure of Chief Counsel Advice.--
        ``(1) Chief counsel advice defined.--
            ``(A) In general.--For purposes of this section, the term 
        `Chief Counsel advice' means written advice or instruction, 
        under whatever name or designation, prepared by any national 
        office component of the Office of Chief Counsel which--
                ``(i) is issued to field or service center employees of 
            the Service or regional or district employees of the Office 
            of Chief Counsel; and
                ``(ii) conveys--

                    ``(I) any legal interpretation of a revenue 
                provision;
                    ``(II) any Internal Revenue Service or Office of 
                Chief Counsel position or policy concerning a revenue 
                provision; or
                    ``(III) any legal interpretation of State law, 
                foreign law, or other Federal law relating to the 
                assessment or collection of any liability under a 
                revenue provision.

            ``(B) Revenue provision defined.--For purposes of 
        subparagraph (A), the term `revenue provision' means any 
        existing or former internal revenue law, regulation, revenue 
        ruling, revenue procedure, other published or unpublished 
        guidance, or tax treaty, either in general or as applied to 
        specific taxpayers or groups of specific taxpayers.
        ``(2) Additional documents treated as chief counsel advice.--
    The Secretary may by regulation provide that this section shall 
    apply to any advice or instruction prepared and issued by the 
    Office of Chief Counsel which is not described in paragraph (1).
        ``(3) Deletions for chief counsel advice.--In the case of Chief 
    Counsel advice open to public inspection pursuant to this section--
            ``(A) paragraphs (2) through (7) of subsection (c) shall 
        not apply, but
            ``(B) the Secretary may make deletions of material in 
        accordance with subsections (b) and (c) of section 552 of title 
        5, United States Code, except that in applying subsection 
        (b)(3) of such section, no statutory provision of this title 
        shall be taken into account.
        ``(4) Notice of intention to disclose.--
            ``(A) Nontaxpayer-specific chief counsel advice.--In the 
        case of Chief Counsel advice which is written without reference 
        to a specific taxpayer or group of specific taxpayers--
                ``(i) subsection (f)(1) shall not apply; and
                ``(ii) the Secretary shall, within 60 days after the 
            issuance of the Chief Counsel advice, complete any 
            deletions described in subsection (c)(1) or paragraph (3) 
            and make the Chief Counsel advice, as so edited, open for 
            public inspection.
            ``(B) Taxpayer-specific chief counsel advice.--In the case 
        of Chief Counsel advice which is written with respect to a 
        specific taxpayer or group of specific taxpayers, the Secretary 
        shall, within 60 days after the issuance of the Chief Counsel 
        advice, mail the notice required by subsection (f)(1) to each 
        such taxpayer. The notice shall include a copy of the Chief 
        Counsel advice on which is indicated the information that the 
        Secretary proposes to delete pursuant to subsection (c)(1). The 
        Secretary may also delete from the copy of the text of the 
        Chief Counsel advice any of the information described in 
        paragraph (3), and shall delete the names, addresses, and other 
        identifying details of taxpayers other than the person to whom 
        the advice pertains, except that the Secretary shall not delete 
        from the copy of the Chief Counsel advice that is furnished to 
        the taxpayer any information of which that taxpayer was the 
        source.''.
    (c) Conforming Amendments.--
        (1) Section 6110(f)(1) is amended by striking ``The Secretary'' 
    and inserting ``Except as otherwise provided by subsection (i), the 
    Secretary''.
        (2) Paragraphs (1)(B) and (2) of section 6110(j)(1), as 
    redesignated by this section, are amended by striking ``subsection 
    (g)'' each place it appears and inserting ``subsection (g) or 
    (i)(4)(B)''.
        (3) Section 6110(k)(1)(B), as so redesignated, is amended by 
    striking ``subsection (c)'' and inserting ``subsection (c)(1) or 
    (i)(3)''.
    (d) Effective Dates.--
        (1) In general.--Except as otherwise provided in this 
    subsection, the amendments made by this section shall apply to any 
    Chief Counsel advice issued more than 90 days after the date of the 
    enactment of this Act.
        (2) Transition rules.--The amendments made by this section 
    shall apply to any Chief Counsel advice issued after December 31, 
    1985, and before the 91st day after the date of the enactment of 
    this Act by the offices of the associate chief counsel for 
    domestic, employee benefits and exempt organizations, and 
    international, except that any such Chief Counsel advice shall be 
    treated as made available on a timely basis if such advice is made 
    available for public inspection not later than the following dates:
            (A) One year after the date of the enactment of this Act, 
        in the case of all litigation guideline memoranda, service 
        center advice, tax litigation bulletins, criminal tax 
        bulletins, and general litigation bulletins.
            (B) Eighteen months after such date of enactment, in the 
        case of field service advice and technical assistance to the 
        field issued on or after January 1, 1994.
            (C) Three years after such date of enactment, in the case 
        of field service advice and technical assistance to the field 
        issued on or after January 1, 1992, and before January 1, 1994.
            (D) Six years after such date of enactment, in the case of 
        any other Chief Counsel advice issued after December 31, 1985.
        (3) Documents treated as chief counsel advice.--If the 
    Secretary of the Treasury by regulation provides pursuant to 
    section 6110(i)(2) of the Internal Revenue Code of 1986, as added 
    by this section, that any additional advice or instruction issued 
    by the Office of Chief Counsel shall be treated as Chief Counsel 
    advice, such additional advice or instruction shall be made 
    available for public inspection pursuant to section 6110 of such 
    Code, as amended by this section, only in accordance with the 
    effective date set forth in such regulation.
        (4) Chief counsel advice to be available electronically.--The 
    Internal Revenue Service shall make any Chief Counsel advice issued 
    more than 90 days after the date of the enactment of this Act and 
    made available for public inspection pursuant to section 6110 of 
    such Code, as amended by this section, also available by computer 
    telecommunications within 1 year after issuance.

                Subtitle G--Low-Income Taxpayer Clinics

SEC. 3601. LOW-INCOME TAXPAYER CLINICS.

    (a) In General.--Chapter 77 (relating to miscellaneous provisions), 
as amended by section 3411, is amended by adding at the end the 
following new section:

``SEC. 7526. LOW-INCOME TAXPAYER CLINICS.

    ``(a) In General.--The Secretary may, subject to the availability 
of appropriated funds, make grants to provide matching funds for the 
development, expansion, or continuation of qualified low-income 
taxpayer clinics.
    ``(b) Definitions.--For purposes of this section--
        ``(1) Qualified low-income taxpayer clinic.--
            ``(A) In general.--The term `qualified low-income taxpayer 
        clinic' means a clinic that--
                ``(i) does not charge more than a nominal fee for its 
            services (except for reimbursement of actual costs 
            incurred); and
                ``(ii)(I) represents low-income taxpayers in 
            controversies with the Internal Revenue Service; or
                ``(II) operates programs to inform individuals for whom 
            English is a second language about their rights and 
            responsibilities under this title.
            ``(B) Representation of low-income taxpayers.--A clinic 
        meets the requirements of subparagraph (A)(ii)(I) if--
                ``(i) at least 90 percent of the taxpayers represented 
            by the clinic have incomes which do not exceed 250 percent 
            of the poverty level, as determined in accordance with 
            criteria established by the Director of the Office of 
            Management and Budget; and
                ``(ii) the amount in controversy for any taxable year 
            generally does not exceed the amount specified in section 
            7463.
        ``(2) Clinic.--The term `clinic' includes--
            ``(A) a clinical program at an accredited law, business, or 
        accounting school in which students represent low-income 
        taxpayers in controversies arising under this title; and
            ``(B) an organization described in section 501(c) and 
        exempt from tax under section 501(a) which satisfies the 
        requirements of paragraph (1) through representation of 
        taxpayers or referral of taxpayers to qualified 
        representatives.
        ``(3) Qualified representative.--The term `qualified 
    representative' means any individual (whether or not an attorney) 
    who is authorized to practice before the Internal Revenue Service 
    or the applicable court.
    ``(c) Special Rules and Limitations.--
        ``(1) Aggregate limitation.--Unless otherwise provided by 
    specific appropriation, the Secretary shall not allocate more than 
    $6,000,000 per year (exclusive of costs of administering the 
    program) to grants under this section.
        ``(2) Limitation on annual grants to a clinic.--The aggregate 
    amount of grants which may be made under this section to a clinic 
    for a year shall not exceed $100,000.
        ``(3) Multi-year grants.--Upon application of a qualified low-
    income taxpayer clinic, the Secretary is authorized to award a 
    multi-year grant not to exceed 3 years.
        ``(4) Criteria for awards.--In determining whether to make a 
    grant under this section, the Secretary shall consider--
            ``(A) the numbers of taxpayers who will be served by the 
        clinic, including the number of taxpayers in the geographical 
        area for whom English is a second language;
            ``(B) the existence of other low-income taxpayer clinics 
        serving the same population;
            ``(C) the quality of the program offered by the low-income 
        taxpayer clinic, including the qualifications of its 
        administrators and qualified representatives, and its record, 
        if any, in providing service to low-income taxpayers; and
            ``(D) alternative funding sources available to the clinic, 
        including amounts received from other grants and contributions, 
        and the endowment and resources of the institution sponsoring 
        the clinic.
        ``(5) Requirement of matching funds.--A low-income taxpayer 
    clinic must provide matching funds on a dollar-for-dollar basis for 
    all grants provided under this section. Matching funds may 
    include--
            ``(A) the salary (including fringe benefits) of individuals 
        performing services for the clinic; and
            ``(B) the cost of equipment used in the clinic.
    Indirect expenses, including general overhead of the institution 
    sponsoring the clinic, shall not be counted as matching funds.''.
    (b) Clerical Amendment.--The table of sections for chapter 77, as 
amended by section 3411, is amended by adding at the end the following 
new item:
        ``Sec. 7526. Low-income taxpayer clinics.''.

    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

                       Subtitle H--Other Matters

SEC. 3701. CATALOGING COMPLAINTS.

    In collecting data for the report required under section 1211 of 
the Taxpayer Bill of Rights 2 (Public Law 104-168), the Secretary of 
the Treasury or the Secretary's delegate shall, not later than January 
1, 2000, maintain records of taxpayer complaints of misconduct by 
Internal Revenue Service employees on an individual employee basis.

SEC. 3702. ARCHIVE OF RECORDS OF INTERNAL REVENUE SERVICE.

    (a) In General.--Subsection (l) of section 6103 (relating to 
confidentiality and disclosure of returns and return information) is 
amended by adding at the end the following new paragraph:
        ``(17) Disclosure to national archives and records 
    administration.--The Secretary shall, upon written request from the 
    Archivist of the United States, disclose or authorize the 
    disclosure of returns and return information to officers and 
    employees of the National Archives and Records Administration for 
    purposes of, and only to the extent necessary in, the appraisal of 
    records for destruction or retention. No such officer or employee 
    shall, except to the extent authorized by subsection (f), (i)(7), 
    or (p), disclose any return or return information disclosed under 
    the preceding sentence to any person other than to the Secretary, 
    or to another officer or employee of the National Archives and 
    Records Administration whose official duties require such 
    disclosure for purposes of such appraisal.''.
    (b) Conforming Amendments.--Section 6103(p) is amended--
        (1) in paragraph (3)(A), by striking ``or (16)'' and inserting 
    ``(16), or (17)'';
        (2) in paragraph (4), by striking ``or (14)'' and inserting ``, 
    (14), or (17)'' in the matter preceding subparagraph (A); and
        (3) in paragraph (4)(F)(ii), by striking ``or (15)'' and 
    inserting ``, (15), or (17)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to requests made by the Archivist of the United States after the 
date of the enactment of this Act.

SEC. 3703. PAYMENT OF TAXES.

    The Secretary of the Treasury or the Secretary's delegate shall 
establish such rules, regulations, and procedures as are necessary to 
allow payment of taxes by check or money order made payable to the 
United States Treasury.

SEC. 3704. CLARIFICATION OF AUTHORITY OF SECRETARY RELATING TO THE 
              MAKING OF ELECTIONS.

    Subsection (d) of section 7805 is amended by striking ``by 
regulations or forms''.

SEC. 3705. INTERNAL REVENUE SERVICE EMPLOYEE CONTACTS.

    (a) Notice.--The Secretary of the Treasury or the Secretary's 
delegate shall provide that--
        (1) any manually generated correspondence received by a 
    taxpayer from the Internal Revenue Service shall include in a 
    prominent manner the name, telephone number, and unique identifying 
    number of an Internal Revenue Service employee the taxpayer may 
    contact with respect to the correspondence;
        (2) any other correspondence or notice received by a taxpayer 
    from the Internal Revenue Service shall include in a prominent 
    manner a telephone number that the taxpayer may contact; and
        (3) an Internal Revenue Service employee shall give a taxpayer 
    during a telephone or personal contact the employee's name and 
    unique identifying number.
    (b) Single Contact.--The Secretary of the Treasury or the 
Secretary's delegate shall develop a procedure under which, to the 
extent practicable and if advantageous to the taxpayer, one Internal 
Revenue Service employee shall be assigned to handle a taxpayer's 
matter until it is resolved.
    (c) Telephone Helpline in Spanish.--The Secretary of the Treasury 
or the Secretary's delegate shall provide, in appropriate 
circumstances, that taxpayer questions on telephone helplines of the 
Internal Revenue Service are answered in Spanish.
    (d) Other Telephone Helpline Options.--The Secretary of the 
Treasury or the Secretary's delegate shall provide, in appropriate 
circumstances, on telephone helplines of the Internal Revenue Service 
an option for any taxpayer to talk to an Internal Revenue Service 
employee during normal business hours. The person shall direct phone 
questions of the taxpayer to other Internal Revenue Service personnel 
who can provide assistance to the taxpayer.
    (e) Effective Dates.--
        (1) In general.--Except as otherwise provided in this 
    subsection, this section shall take effect 60 days after the date 
    of the enactment of this Act.
        (2) Subsection (c).--Subsection (c) shall take effect on 
    January 1, 2000.
        (3) Subsection (d).--Subsection (d) shall take effect on 
    January 1, 2000.
        (4) Unique identifying number.--Any requirement under this 
    section to provide a unique identifying number shall take effect 6 
    months after the date of the enactment of this Act.

SEC. 3706. USE OF PSEUDONYMS BY INTERNAL REVENUE SERVICE EMPLOYEES.

    (a) In General.--Any employee of the Internal Revenue Service may 
use a pseudonym only if--
        (1) adequate justification for the use of a pseudonym is 
    provided by the employee, including protection of personal safety; 
    and
        (2) such use is approved by the employee's supervisor before 
    the pseudonym is used.
    (b) Effective Date.--Subsection (a) shall apply to requests made 
after the date of the enactment of this Act.

SEC. 3707. ILLEGAL TAX PROTESTER DESIGNATION.

    (a) Prohibition.--The officers and employees of the Internal 
Revenue Service--
        (1) shall not designate taxpayers as illegal tax protesters (or 
    any similar designation); and
        (2) in the case of any such designation made on or before the 
    date of the enactment of this Act--
            (A) shall remove such designation from the individual 
        master file; and
            (B) shall disregard any such designation not located in the 
        individual master file.
    (b) Designation of Nonfilers Allowed.--An officer or employee of 
the Internal Revenue Service may designate any appropriate taxpayer as 
a nonfiler, but shall remove such designation once the taxpayer has 
filed income tax returns for 2 consecutive taxable years and paid all 
taxes shown on such returns.
    (c) Effective Date.--The provisions of this section shall take 
effect on the date of the enactment of this Act, except that the 
removal of any designation under subsection (a)(2)(A) shall not be 
required to begin before January 1, 1999.

SEC. 3708. PROVISION OF CONFIDENTIAL INFORMATION TO CONGRESS BY 
              WHISTLEBLOWERS.

    (a) In General.--Section 6103(f) (relating to disclosure to 
committees of Congress) is amended by adding at the end the following 
new paragraph:
        ``(5) Disclosure by whistleblower.--Any person who otherwise 
    has or had access to any return or return information under this 
    section may disclose such return or return information to a 
    committee referred to in paragraph (1) or any individual authorized 
    to receive or inspect information under paragraph (4)(A) if such 
    person believes such return or return information may relate to 
    possible misconduct, maladministration, or taxpayer abuse.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 3709. LISTING OF LOCAL INTERNAL REVENUE SERVICE TELEPHONE NUMBERS 
              AND ADDRESSES.

    The Secretary of the Treasury or the Secretary's delegate shall, as 
soon as practicable, provide that the local telephone numbers and 
addresses of Internal Revenue Service offices located in any particular 
area be listed in a telephone book for that area.

SEC. 3710. IDENTIFICATION OF RETURN PREPARERS.

    (a) In General.--The last sentence of section 6109(a) (relating to 
identifying numbers) is amended by striking ``For purposes of this 
subsection'' and inserting ``For purposes of paragraphs (1), (2), and 
(3)''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 3711. OFFSET OF PAST-DUE, LEGALLY ENFORCEABLE STATE INCOME TAX 
              OBLIGATIONS AGAINST OVERPAYMENTS.

    (a) In General.--Section 6402 (relating to authority to make 
credits or refunds), as amended by section 3505, is amended by 
redesignating subsections (e) through (j) as subsections (f) through 
(k), respectively, and by inserting after subsection (d) the following 
new subsection:
    ``(e) Collection of Past-Due, Legally Enforceable State Income Tax 
Obligations.--
        ``(1) In general.--Upon receiving notice from any State that a 
    named person owes a past-due, legally enforceable State income tax 
    obligation to such State, the Secretary shall, under such 
    conditions as may be prescribed by the Secretary--
            ``(A) reduce the amount of any overpayment payable to such 
        person by the amount of such State income tax obligation;
            ``(B) pay the amount by which such overpayment is reduced 
        under subparagraph (A) to such State and notify such State of 
        such person's name, taxpayer identification number, address, 
        and the amount collected; and
            ``(C) notify the person making such overpayment that the 
        overpayment has been reduced by an amount necessary to satisfy 
        a past-due, legally enforceable State income tax obligation.
    If an offset is made pursuant to a joint return, the notice under 
    subparagraph (B) shall include the names, taxpayer identification 
    numbers, and addresses of each person filing such return.
        ``(2) Offset permitted only against residents of state seeking 
    offset.--Paragraph (1) shall apply to an overpayment by any person 
    for a taxable year only if the address shown on the Federal return 
    for such taxable year of the overpayment is an address within the 
    State seeking the offset.
        ``(3) Priorities for offset.--Any overpayment by a person shall 
    be reduced pursuant to this subsection--
            ``(A) after such overpayment is reduced pursuant to--
                ``(i) subsection (a) with respect to any liability for 
            any internal revenue tax on the part of the person who made 
            the overpayment;
                ``(ii) subsection (c) with respect to past-due support; 
            and
                ``(iii) subsection (d) with respect to any past-due, 
            legally enforceable debt owed to a Federal agency; and
            ``(B) before such overpayment is credited to the future 
        liability for any Federal internal revenue tax of such person 
        pursuant to subsection (b).
    If the Secretary receives notice from one or more agencies of the 
    State of more than one debt subject to paragraph (1) that is owed 
    by such person to such an agency, any overpayment by such person 
    shall be applied against such debts in the order in which such 
    debts accrued.
        ``(4) Notice; consideration of evidence.--No State may take 
    action under this subsection until such State--
            ``(A) notifies by certified mail with return receipt the 
        person owing the past-due State income tax liability that the 
        State proposes to take action pursuant to this section;
            ``(B) gives such person at least 60 days to present 
        evidence that all or part of such liability is not past-due or 
        not legally enforceable;
            ``(C) considers any evidence presented by such person and 
        determines that an amount of such debt is past-due and legally 
        enforceable; and
            ``(D) satisfies such other conditions as the Secretary may 
        prescribe to ensure that the determination made under 
        subparagraph (C) is valid and that the State has made 
        reasonable efforts to obtain payment of such State income tax 
        obligation.
        ``(5) Past-due, legally enforceable state income tax 
    obligation.--For purposes of this subsection, the term `past-due, 
    legally enforceable State income tax obligation' means a debt--
            ``(A)(i) which resulted from--
                ``(I) a judgment rendered by a court of competent 
            jurisdiction which has determined an amount of State income 
            tax to be due; or
                ``(II) a determination after an administrative hearing 
            which has determined an amount of State income tax to be 
            due; and
            ``(ii) which is no longer subject to judicial review; or
            ``(B) which resulted from a State income tax which has been 
        assessed but not collected, the time for redetermination of 
        which has expired, and which has not been delinquent for more 
        than 10 years.
    For purposes of this paragraph, the term `State income tax' 
    includes any local income tax administered by the chief tax 
    administration agency of the State.
        ``(6) Regulations.--The Secretary shall issue regulations 
    prescribing the time and manner in which States must submit notices 
    of past-due, legally enforceable State income tax obligations and 
    the necessary information that must be contained in or accompany 
    such notices. The regulations shall specify the types of State 
    income taxes and the minimum amount of debt to which the reduction 
    procedure established by paragraph (1) may be applied. The 
    regulations may require States to pay a fee to reimburse the 
    Secretary for the cost of applying such procedure. Any fee paid to 
    the Secretary pursuant to the preceding sentence shall be used to 
    reimburse appropriations which bore all or part of the cost of 
    applying such procedure.
        ``(7) Erroneous payment to state.--Any State receiving notice 
    from the Secretary that an erroneous payment has been made to such 
    State under paragraph (1) shall pay promptly to the Secretary, in 
    accordance with such regulations as the Secretary may prescribe, an 
    amount equal to the amount of such erroneous payment (without 
    regard to whether any other amounts payable to such State under 
    such paragraph have been paid to such State).''.
    (b) Disclosure of Certain Information to States Requesting Refund 
Offsets for Past-Due, Legally Enforceable State Income Tax 
Obligations.--
        (1) Paragraph (10) of section 6103(l) is amended by striking 
    ``(c) or (d)'' each place it appears and inserting ``(c), (d), or 
    (e)''.
        (2) The heading for paragraph (10) is amended by striking 
    ``section 6402 (c) or 6402 (d)'' and inserting ``subsection (c), 
    (d), or (e) of section 6402''.
    (c) Conforming Amendments.--
        (1) Subsection (a) of section 6402 is amended by striking ``(c) 
    and (d)'' and inserting ``(c), (d), and (e)''.
        (2) Paragraph (2) of section 6402(d) is amended by striking 
    ``and before such overpayment'' and inserting ``and before such 
    overpayment is reduced pursuant to subsection (e) and before such 
    overpayment''.
        (3) Subsection (f) of section 6402, as redesignated by 
    subsection (a), is amended--
            (A) by striking ``(c) or (d)'' and inserting ``(c), (d), or 
        (e)''; and
            (B) by striking ``Federal agency'' and inserting ``Federal 
        agency or State''.
        (4) Subsection (h) of section 6402, as redesignated by 
    subsection (a), is amended by striking ``subsection (c)'' and 
    inserting ``subsection (c) or (e)''.
    (d) Effective Date.--The amendments made by this section (other 
than subsection (d)) shall apply to refunds payable under section 6402 
of the Internal Revenue Code of 1986 after December 31, 1999.

SEC. 3712. REPORTING REQUIREMENTS IN CONNECTION WITH EDUCATION TAX 
              CREDIT.

    (a) Amounts to be Reported.--Subparagraph (C) of section 
6050S(b)(2) is amended--
        (1) by redesignating clauses (ii) and (iii) as clauses (iii) 
    and (iv), respectively, and by inserting after clause (i) the 
    following new clause:
                ``(ii) the amount of any grant received by such 
            individual for payment of costs of attendance and processed 
            by the person making such return during such calendar 
            year,'';
        (2) in clause (iii) (as so redesignated), by inserting ``by the 
    person making such return'' after ``year''; and
        (3) in clause (iv) (as so redesignated), by inserting ``and'' 
    at the end.
    (b) Conforming Amendments.--
        (1) Paragraph (2) of section 6050S(d) is amended by striking 
    ``aggregate''.
        (2) Subsection (e) of section 6050S is amended by inserting 
    ``(without regard to subsection (g)(2) thereof)'' after ``section 
    25A''.
    (c) Effective Date.--The amendments made by this section shall 
apply to returns required to be filed with respect to taxable years 
beginning after December 31, 1998.

                          Subtitle I--Studies

SEC. 3801. ADMINISTRATION OF PENALTIES AND INTEREST.

    The Joint Committee on Taxation and the Secretary of the Treasury 
shall each conduct a separate study--
        (1) reviewing the administration and implementation by the 
    Internal Revenue Service of the interest and penalty provisions of 
    the Internal Revenue Code of 1986 (including the penalty reform 
    provisions of the Omnibus Budget Reconciliation Act of 1989); and
        (2) making any legislative and administrative recommendations 
    the Committee or the Secretary deems appropriate to simplify 
    penalty or interest administration and reduce taxpayer burden.
Such studies shall be submitted to the Committee on Ways and Means of 
the House of Representatives and the Committee on Finance of the Senate 
not later than 1 year after the date of the enactment of this Act.

SEC. 3802. CONFIDENTIALITY OF TAX RETURN INFORMATION.

    The Joint Committee on Taxation and the Secretary of the Treasury 
shall each conduct a separate study of the scope and use of provisions 
regarding taxpayer confidentiality, and shall report the findings of 
such study, together with such recommendations as the Committee or the 
Secretary deems appropriate, to the Congress not later than 18 months 
after the date of the enactment of this Act. Such study shall examine--
        (1) the present protections for taxpayer privacy;
        (2) any need for third parties to use tax return information;
        (3) whether greater levels of voluntary compliance may be 
    achieved by allowing the public to know who is legally required to 
    file tax returns, but does not file tax returns;
        (4) the interrelationship of the taxpayer confidentiality 
    provisions in the Internal Revenue Code of 1986 with such 
    provisions in other Federal law, including section 552a of title 5, 
    United States Code (commonly known as the ``Freedom of Information 
    Act'');
        (5) the impact on taxpayer privacy of the sharing of income tax 
    return information for purposes of enforcement of State and local 
    tax laws other than income tax laws, and including the impact on 
    the taxpayer privacy intended to be protected at the Federal, 
    State, and local levels under Public Law 105-35, the Taxpayer 
    Browsing Protection Act of 1997; and
        (6) whether the public interest would be served by greater 
    disclosure of information relating to tax exempt organizations 
    described in section 501 of the Internal Revenue Code of 1986.

SEC. 3803. STUDY OF NONCOMPLIANCE WITH INTERNAL REVENUE LAWS BY 
              TAXPAYERS.

    Not later than 1 year after the date of the enactment of this Act, 
the Secretary of the Treasury and the Commissioner of Internal Revenue 
shall jointly conduct a study, in consultation with the Joint Committee 
on Taxation, of the noncompliance with internal revenue laws by 
taxpayers (including willful noncompliance and noncompliance due to tax 
law complexity or other factors) and report the findings of such study 
to Congress.

SEC. 3804. STUDY OF PAYMENTS MADE FOR DETECTION OF UNDERPAYMENTS AND 
              FRAUD.

    Not later than 1 year after the date of the enactment of this Act, 
the Secretary of the Treasury shall conduct a study and report to 
Congress on the use of section 7623 of the Internal Revenue Code of 
1986 including--
        (1) an analysis of the present use of such section and the 
    results of such use; and
        (2) any legislative or administrative recommendations regarding 
    the provisions of such section and its application.

TITLE IV--CONGRESSIONAL ACCOUNTABILITY FOR THE INTERNAL REVENUE SERVICE
                         Subtitle A--Oversight

SEC. 4001. EXPANSION OF DUTIES OF THE JOINT COMMITTEE ON TAXATION.

    (a) In General.--Section 8021 (relating to the powers of the Joint 
Committee on Taxation) is amended by adding at the end the following 
new subsections:
    ``(e) Investigations.--The Joint Committee shall review all 
requests (other than requests by the chairman or ranking member of a 
committee or subcommittee) for investigations of the Internal Revenue 
Service by the General Accounting Office, and approve such requests 
when appropriate, with a view towards eliminating overlapping 
investigations, ensuring that the General Accounting Office has the 
capacity to handle the investigation, and ensuring that investigations 
focus on areas of primary importance to tax administration.
    ``(f) Relating to Joint Reviews.--
        ``(1) In general.--The Chief of Staff, and the staff of the 
    Joint Committee, shall provide such assistance as is required for 
    joint reviews described in paragraph (2).
        ``(2) Joint reviews.--Before June 1 of each calendar year after 
    1998 and before 2004, there shall be a joint review of the 
    strategic plans and budget for the Internal Revenue Service and 
    such other matters as the Chairman of the Joint Committee deems 
    appropriate. Such joint review shall be held at the call of the 
    Chairman of the Joint Committee and shall include two members of 
    the majority and one member of the minority from each of the 
    Committees on Finance, Appropriations, and Governmental Affairs of 
    the Senate, and the Committees on Ways and Means, Appropriations, 
    and Government Reform and Oversight of the House of 
    Representatives.''.
    (b) Effective Dates.--
        (1) Subsection (e) of section 8021 of the Internal Revenue Code 
    of 1986, as added by subsection (a) of this section, shall apply to 
    requests made after the date of the enactment of this Act.
        (2) Subsection (f) of such section shall take effect on the 
    date of the enactment of this Act.

SEC. 4002. COORDINATED OVERSIGHT REPORTS.

    (a) In General.--Paragraph (3) of section 8022 (relating to the 
duties of the Joint Committee on Taxation) is amended to read as 
follows:
        ``(3) Reports.--
            ``(A) To report, from time to time, to the Committee on 
        Finance and the Committee on Ways and Means, and, in its 
        discretion, to the Senate or House of Representatives, or both, 
        the results of its investigations, together with such 
        recommendations as it may deem advisable.
            ``(B) Subject to amounts specifically appropriated to carry 
        out this subparagraph, to report, at least once each Congress, 
        to the Committee on Finance and the Committee on Ways and Means 
        on the overall state of the Federal tax system, together with 
        recommendations with respect to possible simplification 
        proposals and other matters relating to the administration of 
        the Federal tax system as it may deem advisable.
            ``(C) To report, for each calendar year after 1998 and 
        before 2004, to the Committees on Finance, Appropriations, and 
        Governmental Affairs of the Senate, and to the Committees on 
        Ways and Means, Appropriations, and Government Reform and 
        Oversight of the House of Representatives, with respect to--
                ``(i) strategic and business plans for the Internal 
            Revenue Service;
                ``(ii) progress of the Internal Revenue Service in 
            meeting its objectives;
                ``(iii) the budget for the Internal Revenue Service and 
            whether it supports its objectives;
                ``(iv) progress of the Internal Revenue Service in 
            improving taxpayer service and compliance;
                ``(v) progress of the Internal Revenue Service on 
            technology modernization; and
                ``(vi) the annual filing season.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

                    Subtitle B--Century Date Change

SEC. 4011. CENTURY DATE CHANGE.

    It is the sense of the Congress that--
        (1) the Internal Revenue Service should place a high priority 
    on resolving the century date change computing problems; and
        (2) the Internal Revenue Service efforts to resolve the century 
    date change computing problems should be funded fully to provide 
    for certain resolution of such problems.

                     Subtitle C--Tax Law Complexity

SEC. 4021. ROLE OF THE INTERNAL REVENUE SERVICE.

    It is the sense of the Congress that the Internal Revenue Service 
should provide Congress with an independent view of tax administration, 
and that during the legislative process, the tax writing committees of 
Congress should hear from front-line technical experts at the Internal 
Revenue Service with respect to the administrability of pending 
amendments to the Internal Revenue Code of 1986.

SEC. 4022. TAX LAW COMPLEXITY ANALYSIS.

    (a) Commissioner Study.--
        (1) In general.--The Commissioner of Internal Revenue shall 
    conduct each year after 1998 an analysis of the sources of 
    complexity in administration of the Federal tax laws. Such analysis 
    may include an analysis of--
            (A) questions frequently asked by taxpayers with respect to 
        return filing;
            (B) common errors made by taxpayers in filling out their 
        returns;
            (C) areas of law which frequently result in disagreements 
        between taxpayers and the Internal Revenue Service;
            (D) major areas of law in which there is no (or incomplete) 
        published guidance or in which the law is uncertain;
            (E) areas in which revenue officers make frequent errors 
        interpreting or applying the law;
            (F) the impact of recent legislation on complexity; and
            (G) forms supplied by the Internal Revenue Service, 
        including the time it takes for taxpayers to complete and 
        review forms, the number of taxpayers who use each form, and 
        how recent legislation has affected the time it takes to 
        complete and review forms.
        (2) Report.--The Commissioner shall not later than March 1 of 
    each year report the results of the analysis conducted under 
    paragraph (1) for the preceding year to the Committee on Ways and 
    Means of the House of Representatives and the Committee on Finance 
    of the Senate. The report shall include any recommendations--
            (A) for reducing the complexity of the administration of 
        Federal tax laws; and
            (B) for repeal or modification of any provision the 
        Commissioner believes adds undue and unnecessary complexity to 
        the administration of the Federal tax laws.
    (b) Analysis to Accompany Certain Legislation.--
        (1) In general.--The Joint Committee on Taxation, in 
    consultation with the Internal Revenue Service and the Department 
    of the Treasury, shall include a tax complexity analysis in each 
    report for legislation, or provide such analysis to members of the 
    committee reporting the legislation as soon as practicable after 
    the report is filed, if--
            (A) such legislation is reported by the Committee on 
        Finance in the Senate, the Committee on Ways and Means of the 
        House of Representatives, or any committee of conference; and
            (B) such legislation includes a provision which would 
        directly or indirectly amend the Internal Revenue Code of 1986 
        and which has widespread applicability to individuals or small 
        businesses.
        (2) Tax complexity analysis.--For purposes of this subsection, 
    the term ``tax complexity analysis'' means, with respect to any 
    legislation, a report on the complexity and administrative 
    difficulties of each provision described in paragraph (1)(B) 
    which--
            (A) includes--
                (i) an estimate of the number of taxpayers affected by 
            the provision; and
                (ii) if applicable, the income level of taxpayers 
            affected by the provision; and
            (B) should include (if determinable)--
                (i) the extent to which tax forms supplied by the 
            Internal Revenue Service would require revision and whether 
            any new forms would be required;
                (ii) the extent to which taxpayers would be required to 
            keep additional records;
                (iii) the estimated cost to taxpayers to comply with 
            the provision;
                (iv) the extent to which enactment of the provision 
            would require the Internal Revenue Service to develop or 
            modify regulatory guidance;
                (v) the extent to which the provision may result in 
            disagreements between taxpayers and the Internal Revenue 
            Service; and
                (vi) any expected impact on the Internal Revenue 
            Service from the provision (including the impact on 
            internal training, revision of the Internal Revenue Manual, 
            reprogramming of computers, and the extent to which the 
            Internal Revenue Service would be required to divert or 
            redirect resources in response to the provision).
        (3) Legislation subject to point of order in house of 
    representatives.--
            (A) Legislation reported by committee on ways and means.--
        Clause 2(l) of rule XI of the Rules of the House of 
        Representatives is amended by adding at the end the following 
        new subparagraph:
    ``(8) The report of the Committee on Ways and Means on any bill or 
joint resolution containing any provision amending the Internal Revenue 
Code of 1986 shall include a Tax Complexity Analysis prepared by the 
Joint Committee on Taxation in accordance with section 4022(b) of the 
Internal Revenue Service Restructuring and Reform Act of 1998 unless 
the Committee on Ways and Means causes to have such Analysis printed in 
the Congressional Record prior to the consideration of the bill or 
joint resolution.''.
            (B) Conference reports.--Rule XXVIII of the Rules of the 
        House of Representatives is amended by adding at the end the 
        following new clause:
    ``7. It shall not be in order to consider the report of a committee 
of conference which contains any provision amending the Internal 
Revenue Code of 1986 unless--
        ``(a) the accompanying joint explanatory statement contains a 
    Tax Complexity Analysis prepared by the Joint Committee on Taxation 
    in accordance with section 4022(b) of the Internal Revenue Service 
    Restructuring and Reform Act of 1998; or
        ``(b) such Analysis is printed in the Congressional Record 
    prior to the consideration of the report.''.
            (C) Rules of house of representatives.--This paragraph is 
        enacted by the House of Representatives--
                (i) as an exercise of the rulemaking power of the House 
            of Representatives, and as such it is deemed a part of the 
            Rules of the House, and it supersedes other rules only to 
            the extent that it is inconsistent therewith; and
                (ii) with full recognition of the constitutional right 
            of the House to change its rules at any time, in the same 
            manner and to the same extent as in the case of any other 
            rule of the House.
        (4) Effective date.--This subsection shall apply to legislation 
    considered on and after January 1, 1999.

                     TITLE V--ADDITIONAL PROVISIONS

SEC. 5001. LOWER CAPITAL GAINS RATES TO APPLY TO PROPERTY HELD MORE 
              THAN 1 YEAR.

    (a) General Rule.--
        (1) Paragraph (5) of section 1(h) is amended to read as 
    follows:
        ``(5) 28-percent rate gain.--For purposes of this subsection, 
    the term `28-percent rate gain' means the excess (if any) of--
            ``(A) the sum of--
                ``(i) collectibles gain; and
                ``(ii) section 1202 gain, over
            ``(B) the sum of--
                ``(i) collectibles loss;
                ``(ii) the net short-term capital loss; and
                ``(iii) the amount of long-term capital loss carried 
            under section 1212(b)(1)(B) to the taxable year.''.
        (2) Subparagraph (A) of section 1(h)(6) is amended by striking 
    ``18 months'' and inserting ``1 year''.
        (3) Clauses (i) and (ii) of section 1(h)(7)(A) are amended to 
    read as follows:
                ``(i) the amount of long-term capital gain (not 
            otherwise treated as ordinary income) which would be 
            treated as ordinary income if section 1250(b)(1) included 
            all depreciation and the applicable percentage under 
            section 1250(a) were 100 percent, over
                ``(ii) the excess (if any) of--

                    ``(I) the amount described in paragraph (5)(B); 
                over
                    ``(II) the amount described in paragraph (5)(A).''.

        (4) So much of paragraph (13) of section 1(h) as precedes 
    subparagraph (C) is amended to read as follows:
        ``(13) Special rules.--
            ``(A) Determination of 28-percent rate gain.--In applying 
        paragraph (5)--
                ``(i) the amount determined under subparagraph (A) of 
            paragraph (5) shall include long-term capital gain (not 
            otherwise described in such subparagraph)--

                    ``(I) which is properly taken into account for the 
                portion of the taxable year before May 7, 1997; or
                    ``(II) from property held not more than 18 months 
                which is properly taken into account for the portion of 
                the taxable year after July 28, 1997, and before 
                January 1, 1998;

                ``(ii) the amount determined under subparagraph (B) of 
            paragraph (5) shall include long-term capital loss (not 
            otherwise described in such subparagraph)--

                    ``(I) which is properly taken into account for the 
                portion of the taxable year before May 7, 1997; or
                    ``(II) from property held not more than 18 months 
                which is properly taken into account for the portion of 
                the taxable year after July 28, 1997, and before 
                January 1, 1998; and

                ``(iii) subparagraph (B) of paragraph (5) (as in effect 
            immediately before the enactment of this clause) shall 
            apply to amounts properly taken into account before January 
            1, 1998.
            ``(B) Determination of unrecaptured section 1250 gain.--The 
        amount determined under paragraph (7)(A) shall not include 
        gain--
                ``(i) which is properly taken into account for the 
            portion of the taxable year before May 7, 1997; or
                ``(ii) from property held not more than 18 months which 
            is properly taken into account for the portion of the 
            taxable year after July 28, 1997, and before January 1, 
            1998.''.
        (5) Paragraphs (11) and (12) of section 1223, and section 
    1235(a), are each amended by striking ``18 months'' each place it 
    appears and inserting ``1 year''.
    (b) Effective Dates.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendments made by this section shall apply to taxable years ending 
    after December 31, 1997.
        (2) Subsection (a)(5).--The amendments made by subsection 
    (a)(5) shall take effect on January 1, 1998.

SEC. 5002. CLARIFICATION OF EXCLUSION OF MEALS FOR CERTAIN EMPLOYEES.

    (a) In General.--Subsection (b) of section 119 (relating to meals 
or lodging furnished for the convenience of the employer) is amended by 
adding at the end the following new paragraph:
        ``(4) Meals furnished to employees on business premises where 
    meals of most employees are otherwise excludable.--All meals 
    furnished on the business premises of an employer to such 
    employer's employees shall be treated as furnished for the 
    convenience of the employer if, without regard to this paragraph, 
    more than half of the employees to whom such meals are furnished on 
    such premises are furnished such meals for the convenience of the 
    employer.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning before, on, or after the date of the 
enactment of this Act.

SEC. 5003. CLARIFICATION OF DESIGNATION OF NORMAL TRADE RELATIONS.

    (a) Findings and Policy.--
        (1) Findings.--The Congress makes the following findings:
            (A) Since the 18th century, the principle of 
        nondiscrimination among countries with which the United States 
        has trade relations, commonly referred to as ``most-favored-
        nation'' treatment, has been a cornerstone of United States 
        trade policy.
            (B) Although the principle remains firmly in place as a 
        fundamental concept in United States trade relations, the term 
        ``most-favored-nation'' is a misnomer which has led to public 
        misunderstanding.
            (C) It is neither the purpose nor the effect of the most-
        favored-nation principle to treat any country as ``most 
        favored''. To the contrary, the principle reflects the 
        intention to confer on a country the same trade benefits that 
        are conferred on any other country, that is, the intention not 
        to discriminate among trading partners.
            (D) The term ``normal trade relations'' is a more accurate 
        description of the principle of nondiscrimination as it applies 
        to the tariffs applicable generally to imports from United 
        States trading partners, that is, the general rates of duty set 
        forth in column 1 of the Harmonized Tariff Schedule of the 
        United States.
        (2) Policy.--It is the sense of the Congress that--
            (A) the language used in United States laws, treaties, 
        agreements, executive orders, directives, and regulations 
        should more clearly and accurately reflect the underlying 
        principles of United States trade policy; and
            (B) accordingly, the term ``normal trade relations'' 
        should, where appropriate, be substituted for the term ``most-
        favored-nation''.
    (b) Change in Terminology.--
        (1) Trade expansion act of 1962.--The heading for section 251 
    of the Trade Expansion Act of 1962 (19 U.S.C. 1881) is amended to 
    read as follows: ``normal trade relations''.
        (2) Trade act of 1974.--(A) Section 402 of the Trade Act of 
    1974 (19 U.S.C. 2432) is amended by striking ``(most-favored-nation 
    treatment)'' each place it appears and inserting ``(normal trade 
    relations)''.
        (B) Section 601(9) of the Trade Act of 1974 (19 U.S.C. 2481(9)) 
    is amended by striking ``most-favored-nation treatment'' and 
    inserting ``trade treatment based on normal trade relations (known 
    under international law as most-favored-nation treatment)''.
        (3) CFTA.--Section 302(a)(3)(C) of the United States Canada 
    Free-Trade Agreement Implementation Act of 1988 (19 U.S.C. 2112 
    note) is amended by striking ``the most-favored-nation rate of 
    duty'' each place it appears and inserting ``the general subcolumn 
    of the column 1 rate of duty set forth in the Harmonized Tariff 
    Schedule of the United States''.
        (4) NAFTA.--Section 202(n) of the North American Free Trade 
    Agreement Implementation Act (19 U.S.C. 3332(n)) is amended by 
    striking ``most-favored-nation''.
        (5) Uruguay round agreements act.--Section 135(a)(2) of the 
    Uruguay Round Agreements Act (19 U.S.C. 3555(a)(2)) is amended by 
    striking ``most-favored-nation'' and inserting ``normal trade 
    relations''.
        (6) SEED act.--Section 2(c)(11) of the Support for East 
    European Democracy (SEED) Act of 1989 (22 U.S.C. 5401(c)(11)) is 
    amended--
            (A) by striking ``(commonly referred to as `most favored 
        nation status')''; and
            (B) by striking ``Most favored nation trade status'' in the 
        heading and inserting ``Normal trade relations''.
        (7) United States-Hong Kong Policy Act of 1992.--Section 103(4) 
    of the United States-Hong Kong Policy Act of 1992 (22 U.S.C. 
    5713(4)) is amended by striking ``(commonly referred to as `most-
    favored-nation status')''.
    (c) Savings Provisions.--Nothing in this section shall affect the 
meaning of any provision of law, Executive order, Presidential 
proclamation, rule, regulation, delegation of authority, other 
document, or treaty or other international agreement of the United 
States relating to the principle of ``most-favored-nation'' (or ``most 
favored nation'') treatment. Any Executive order, Presidential 
proclamation, rule, regulation, delegation of authority, other 
document, or treaty or other international agreement of the United 
States that has been issued, made, granted, or allowed to become 
effective and that is in effect on the effective date of this Act, or 
was to become effective on or after the effective date of this Act, 
shall continue in effect according to its terms until modified, 
terminated, superseded, set aside, or revoked in accordance with law.

                    TITLE VI--TECHNICAL CORRECTIONS

SEC. 6001. SHORT TITLE; COORDINATION WITH OTHER TITLES.

    (a) Short Title.--This title may be cited as the ``Tax Technical 
Corrections Act of 1998''.
    (b) Coordination With Other Titles.--For purposes of applying the 
amendments made by any title of this Act other than this title, the 
provisions of this title shall be treated as having been enacted 
immediately before the provisions of such other titles.

SEC. 6002. DEFINITIONS.

    For purposes of this title--
        (1) 1986 code.--The term ``1986 Code'' means the Internal 
    Revenue Code of 1986.
        (2) 1997 act.--The term ``1997 Act'' means the Taxpayer Relief 
    Act of 1997.

SEC. 6003. AMENDMENTS RELATED TO TITLE I OF 1997 ACT.

    (a) Amendments Related to Section 101(a) of 1997 Act.--
        (1) Subsection (d) of section 24 of the 1986 Code is amended--
            (A) by striking paragraphs (3) and (4);
            (B) by redesignating paragraph (5) as paragraph (3); and
            (C) by striking paragraphs (1) and (2) and inserting the 
        following new paragraphs:
        ``(1) In general.--In the case of a taxpayer with three or more 
    qualifying children for any taxable year, the aggregate credits 
    allowed under subpart C shall be increased by the lesser of--
            ``(A) the credit which would be allowed under this section 
        without regard to this subsection and the limitation under 
        section 26(a); or
            ``(B) the amount by which the aggregate amount of credits 
        allowed by this subpart (without regard to this subsection) 
        would increase if the limitation imposed by section 26(a) were 
        increased by the excess (if any) of--
                ``(i) the taxpayer's Social Security taxes for the 
            taxable year, over
                ``(ii) the credit allowed under section 32 (determined 
            without regard to subsection (n)) for the taxable year.
    The amount of the credit allowed under this subsection shall not be 
    treated as a credit allowed under this subpart and shall reduce the 
    amount of credit otherwise allowable under subsection (a) without 
    regard to section 26(a).
        ``(2) Reduction of credit to taxpayer subject to alternative 
    minimum tax.--The credit determined under this subsection for the 
    taxable year shall be reduced by the excess (if any) of--
            ``(A) the amount of tax imposed by section 55 (relating to 
        alternative minimum tax) with respect to such taxpayer for such 
        taxable year, over
            ``(B) the amount of the reduction under section 32(h) with 
        respect to such taxpayer for such taxable year.''.
        (2) Paragraph (3) of section 24(d) of the 1986 Code (as 
    redesignated by paragraph (1)) is amended by striking ``paragraph 
    (3)'' and inserting ``paragraph (1)''.
    (b) Amendments Related to Section 101(b) of 1997 Act.--
        (1) The subsection (m) of section 32 of the 1986 Code added by 
    section 101(b) of the 1997 Act is amended to read as follows:
    ``(n) Supplemental Child Credit.--
        ``(1) In general.--In the case of a taxpayer with respect to 
    whom a credit is allowed under section 24(a) for the taxable year, 
    the credit otherwise allowable under this section shall be 
    increased by the lesser of--
            ``(A) the excess of--
                ``(i) the credits allowed under subpart A (determined 
            after the application of section 26 and without regard to 
            this subsection), over
                ``(ii) the credits which would be allowed under subpart 
            A after the application of section 26, determined without 
            regard to section 24 and this subsection; or
            ``(B) the excess of--
                ``(i) the sum of the credits allowed under this part 
            (determined without regard to sections 31, 33, and 34 and 
            this subsection), over
                ``(ii) the sum of the regular tax and the Social 
            Security taxes (as defined in section 24(d)).
    The credit determined under this subsection shall be allowed 
    without regard to any other provision of this section, including 
    subsection (d).
        ``(2) Coordination with other credits.--The amount of the 
    credit under this subsection shall reduce the amount of the credits 
    otherwise allowable under subpart A for the taxable year 
    (determined after the application of section 26), but the amount of 
    the credit under this subsection (and such reduction) shall not be 
    taken into account in determining the amount of any other credit 
    allowable under this part.''.

SEC. 6004. AMENDMENTS RELATED TO TITLE II OF 1997 ACT.

    (a) Amendments Related to Section 201 of 1997 Act.--
        (1) The item relating to section 25A in the table of sections 
    for subpart A of part IV of subchapter A of chapter 1 of the 1986 
    Code is amended to read as follows:
        ``Sec. 25A. Hope and Lifetime Learning credits.''.

        (2) Subsection (a) of section 6050S of the 1986 Code is amended 
    to read as follows:
    ``(a) In General.--Any person--
        ``(1) which is an eligible educational institution--
            ``(A) which receives payments for qualified tuition and 
        related expenses with respect to any individual for any 
        calendar year; or
            ``(B) which makes reimbursements or refunds (or similar 
        amounts) to any individual of qualified tuition and related 
        expenses;
        ``(2) which is engaged in a trade or business of making 
    payments to any individual under an insurance arrangement as 
    reimbursements or refunds (or similar amounts) of qualified tuition 
    and related expenses; or
        ``(3) except as provided in regulations, which is engaged in a 
    trade or business and, in the course of which, receives from any 
    individual interest aggregating $600 or more for any calendar year 
    on one or more qualified education loans,
shall make the return described in subsection (b) with respect to the 
individual at such time as the Secretary may by regulations 
prescribe.''.
        (3) Subparagraph (A) of section 201(c)(2) of the 1997 Act is 
    amended to read as follows:
            ``(A) Subparagraph (B) of section 6724(d)(1) (relating to 
        definitions) is amended by redesignating clauses (x) through 
        (xv) as clauses (xi) through (xvi), respectively, and by 
        inserting after clause (ix) the following new clause:
                ```(x) section 6050S (relating to returns relating to 
            payments for qualified tuition and related expenses),'''.
    (b) Amendments Related to Section 202 of 1997 Act.--
        (1) Paragraph (1) of section 221(e) of the 1986 Code is amended 
    by inserting ``by the taxpayer solely'' after ``incurred'' the 
    first place it appears.
            (2) Subsection (d) of section 221 of the 1986 Code is 
        amended by adding at the end the following new sentence: ``Such 
        60 months shall be determined in the manner prescribed by the 
        Secretary in the case of multiple loans which are refinanced 
        by, or serviced as, a single loan and in the case of loans 
        incurred before the date of the enactment of this section.''.
    (c) Amendments Related to Section 211 of 1997 Act.--
        (1) Paragraph (3) of section 135(c) of the 1986 Code is amended 
    to read as follows:
        ``(3) Eligible educational institution.--The term `eligible 
    educational institution' has the meaning given such term by section 
    529(e)(5).''.
        (2) Subparagraph (A) of section 529(c)(3) of the 1986 Code is 
    amended by striking ``section 72(b)'' and inserting ``section 72''.
        (3) Paragraph (2) of section 529(e) of the 1986 Code is amended 
    to read as follows:
        ``(2) Member of family.--The term `member of the family' means, 
    with respect to any designated beneficiary--
            ``(A) the spouse of such beneficiary;
            ``(B) an individual who bears a relationship to such 
        beneficiary which is described in paragraphs (1) through (8) of 
        section 152(a); and
            ``(C) the spouse of any individual described in 
        subparagraph (B).''.
    (d) Amendments Related to Section 213 of 1997 Act.--
        (1) Section 530(b)(1) of the 1986 Code (defining education 
    individual retirement account) is amended by inserting ``an 
    individual who is'' before ``the designated beneficiary'' in the 
    material preceding subparagraph (A).
        (2)(A) Section 530(b)(1)(E) of the 1986 Code (defining 
    education individual retirement account) is amended to read as 
    follows:
            ``(E) Except as provided in subsection (d)(7), any balance 
        to the credit of the designated beneficiary on the date on 
        which the beneficiary attains age 30 shall be distributed 
        within 30 days after such date to the beneficiary or, if the 
        beneficiary dies before attaining age 30, shall be distributed 
        within 30 days after the date of death of such beneficiary.''.
        (B) Paragraph (7) of section 530(d) of the 1986 Code is amended 
    by inserting at the end the following new sentence: ``In applying 
    the preceding sentence, members of the family (as so defined) of 
    the designated beneficiary shall be treated in the same manner as 
    the spouse under such paragraph (8).''.
        (C) Subsection (d) of section 530 of the 1986 Code is amended 
    by adding at the end the following new paragraph:
        ``(8) Deemed distribution on required distribution date.--In 
    any case in which a distribution is required under subsection 
    (b)(1)(E), any balance to the credit of a designated beneficiary as 
    of the close of the 30-day period referred to in such subsection 
    for making such distribution shall be deemed distributed at the 
    close of such period.''.
        (3)(A) Paragraph (1) of section 530(d) of the 1986 Code is 
    amended by striking ``section 72(b)'' and inserting ``section 72''.
        (B) Subsection (e) of section 72 of the 1986 Code is amended by 
    inserting after paragraph (8) the following new paragraph:
        ``(9) Extension of paragraph (2)(b) to qualified state tuition 
    programs and educational individual retirement accounts.--
    Notwithstanding any other provision of this subsection, paragraph 
    (2)(B) shall apply to amounts received under a qualified State 
    tuition program (as defined in section 529(b)) or under an 
    education individual retirement account (as defined in section 
    530(b)). The rule of paragraph (8)(B) shall apply for purposes of 
    this paragraph.''.
        (4) Paragraph (2) of section 135(d) of the 1986 Code is amended 
    to read as follows:
        ``(2) Coordination with other higher education benefits.--The 
    amount of the qualified higher education expenses otherwise taken 
    into account under subsection (a) with respect to the education of 
    an individual shall be reduced (before the application of 
    subsection (b)) by--
            ``(A) the amount of such expenses which are taken into 
        account in determining the credit allowable to the taxpayer or 
        any other person under section 25A with respect to such 
        expenses; and
            ``(B) the amount of such expenses which are taken into 
        account in determining the exclusion under section 
        530(d)(2).''.
        (5) Section 530(d)(2) of the 1986 Code (relating to 
    distributions for qualified higher education expenses) is amended 
    by adding at the end the following new subparagraph:
            ``(D) Disallowance of excluded amounts as credit or 
        deduction.--No deduction or credit shall be allowed to the 
        taxpayer under any other section of this chapter for any 
        qualified education expenses to the extent taken into account 
        in determining the amount of the exclusion under this 
        paragraph.''.
        (6) Section 530(d)(4)(B) of the 1986 Code (relating to 
    exceptions) is amended by striking ``or'' at the end of clause 
    (ii), by striking the period at the end of clause (iii) and 
    inserting ``; or'', and by adding at the end the following new 
    clause:
                ``(iv) an amount which is includible in gross income 
            solely because the taxpayer elected under paragraph (2)(C) 
            to waive the application of paragraph (2) for the taxable 
            year.''.
        (7) So much of section 530(d)(4)(C) of the 1986 Code as 
    precedes clause (ii) thereof is amended to read as follows:
            ``(C) Contributions returned before due date of return.--
        Subparagraph (A) shall not apply to the distribution of any 
        contribution made during a taxable year on behalf of the 
        designated beneficiary if--
                ``(i) such distribution is made on or before the day 
            prescribed by law (including extensions of time) for filing 
            the beneficiary's return of tax for the taxable year or, if 
            the beneficiary is not required to file such a return, the 
            15th day of the 4th month of the taxable year following the 
            taxable year; and''.
        (8)(A) Paragraph (5) of section 530(d) of the 1986 Code is 
    amended by striking the first sentence and inserting the following 
    new sentence: ``Paragraph (1) shall not apply to any amount paid or 
    distributed from an education individual retirement account to the 
    extent that the amount received is paid, not later than the 60th 
    day after the date of such payment or distribution, into another 
    education individual retirement account for the benefit of the same 
    beneficiary or a member of the family (within the meaning of 
    section 529(e)(2)) of such beneficiary who has not attained age 30 
    as of such date.''.
        (B) Paragraph (6) of section 530(d) of the 1986 Code is amended 
    by inserting before the period ``and has not attained age 30 as of 
    the date of such change''.
        (9) Subparagraph (C) of section 135(c)(2) of the 1986 Code is 
    amended--
            (A) by inserting ``and education individual retirement 
        accounts'' in the heading after ``program''; and
            (B) by striking ``section 529(c)(3)(A)'' and inserting 
        ``section 72''.
        (10)(A) Paragraph (1) of section 4973(e) of the 1986 Code is 
    amended to read as follows:
        ``(1) In general.--In the case of education individual 
    retirement accounts maintained for the benefit of any one 
    beneficiary, the term `excess contributions' means the sum of--
            ``(A) the amount by which the amount contributed for the 
        taxable year to such accounts exceeds $500 (or, if less, the 
        sum of the maximum amounts permitted to be contributed under 
        section 530(c) by the contributors to such accounts for such 
        year);
            ``(B) if any amount is contributed (other than a 
        contribution described in section 530(b)(2)(B)) during such 
        year to a qualified State tuition program for the benefit of 
        such beneficiary, any amount contributed to such accounts for 
        such taxable year; and
            ``(C) the amount determined under this subsection for the 
        preceding taxable year, reduced by the sum of--
                ``(i) the distributions out of the accounts for the 
            taxable year (other than rollover distributions); and
                ``(ii) the excess (if any) of the maximum amount which 
            may be contributed to the accounts for the taxable year 
            over the amount contributed to the accounts for the taxable 
            year.''.
        (B) Paragraph (2) of section 4973(e) of the 1986 Code is 
    amended by striking subparagraph (B) and by redesignating 
    subparagraph (C) as subparagraph (B).
    (e) Amendments Related to Section 224 of 1997 Act.--
        (1) Clauses (vi) and (vii) of section 170(e)(6)(B) of the 1986 
    Code are each amended by striking ``entity's'' and inserting 
    ``donee's''.
        (2) Clause (iv) of section 170(e)(6)(B) of the 1986 Code is 
    amended by striking ``organization or entity'' and inserting 
    ``donee''.
        (3) Subclause (I) of section 170(e)(6)(C)(ii) of the 1986 Code 
    is amended by striking ``an entity'' and inserting ``a donee''.
        (4) Section 170(e)(6)(F) of the 1986 Code (relating to 
    termination) is amended by striking ``1999'' and inserting 
    ``2000''.
    (f) Amendments Related to Section 225 of 1997 Act.--
        (1) The last sentence of section 108(f)(2) of the 1986 Code is 
    amended to read as follows:
    ``The term `student loan' includes any loan made by an educational 
    organization described in section 170(b)(1)(A)(ii) or by an 
    organization exempt from tax under section 501(a) to refinance a 
    loan to an individual to assist the individual in attending any 
    such educational organization but only if the refinancing loan is 
    pursuant to a program of the refinancing organization which is 
    designed as described in subparagraph (D)(ii).''.
        (2) Section 108(f)(3) of the 1986 Code is amended by striking 
    ``(or by an organization described in paragraph (2)(E) from funds 
    provided by an organization described in paragraph (2)(D))''.
    (g) Amendments Related to Section 226 of 1997 Act.--
        (1) Section 226(a) of the 1997 Act is amended by striking 
    ``section 1397E'' and inserting ``section 1397D''.
        (2) Section 1397E(d)(4)(B) of the 1986 Code is amended by 
    striking ``local education agency as defined'' and inserting 
    ``local educational agency as defined''.
        (3) Section 1397E is amended by adding at the end the following 
    new subsection:
    ``(h) Credit Treated as Allowed Under Part IV of Subchapter A.--For 
purposes of subtitle F, the credit allowed by this section shall be 
treated as a credit allowable under part IV of subchapter A of this 
chapter.''.
        (4) Subsection (g) of section 1397E of the 1986 Code is amended 
    by inserting ``(determined without regard to subsection (c))'' 
    after ``section''.
        (5) Subparagraph (D) of section 42(j)(4) of the 1986 Code is 
    amended by striking ``subpart A, B, D, or G of this part'' and 
    inserting ``this chapter''.
        (6) Paragraph (4) of section 49(b) of the 1986 Code is amended 
    by striking ``subpart A, B, D, or G'' and inserting ``this 
    chapter''.
        (7) Subparagraph (C) of section 50(a)(5) of the 1986 Code is 
    amended by striking ``subpart A, B, D, or G'' and inserting ``this 
    chapter''.

SEC. 6005. AMENDMENTS RELATED TO TITLE III OF 1997 ACT.

    (a) Amendments Related to Section 301 of 1997 Act.--
        (1) Section 219(g) of the 1986 Code is amended--
            (A) by inserting ``or the individual's spouse'' after 
        ``individual'' in paragraph (1); and
            (B) by striking paragraph (7) and inserting:
        ``(7) Special rule for spouses who are not active 
    participants.--If this subsection applies to an individual for any 
    taxable year solely because their spouse is an active participant, 
    then, in applying this subsection to the individual (but not their 
    spouse)--
            ``(A) the applicable dollar amount under paragraph 
        (3)(B)(i) shall be $150,000; and
            ``(B) the amount applicable under paragraph (2)(A)(ii) 
        shall be $10,000.''.
        (2) Paragraph (2) of section 301(a) of the 1997 Act is amended 
    by inserting ``after `$10,000''' before the period.
    (b) Amendments Related to Section 302 of 1997 Act.--
        (1) Section 408A(c)(3)(A) of the 1986 Code is amended by 
    striking ``shall be reduced'' and inserting ``shall not exceed an 
    amount equal to the amount determined under paragraph (2)(A) for 
    such taxable year, reduced''.
        (2) Section 408A(c)(3) of the 1986 Code (relating to limits 
    based on modified adjusted gross income) is amended--
            (A) by inserting ``or a married individual filing a 
        separate return'' after ``joint return'' in subparagraph 
        (A)(ii),
            (B) in subparagraph (B)--
                (i) by inserting ``, for the taxable year of the 
            distribution to which such contribution relates'' after 
            ``if''; and
                (ii) by striking ``for such taxable year'' in clause 
            (i), and
            (C) by striking ``and the deduction under section 219 shall 
        be taken into account'' in subparagraph (C)(i).
        (3)(A) Section 408A(d)(2) of the 1986 Code (defining qualified 
    distribution) is amended by striking subparagraph (B) and inserting 
    the following new subparagraph:
            ``(B) Distributions within nonexclusion period.--A payment 
        or distribution from a Roth IRA shall not be treated as a 
        qualified distribution under subparagraph (A) if such payment 
        or distribution is made within the 5-taxable year period 
        beginning with the first taxable year for which the individual 
        made a contribution to a Roth IRA (or such individual's spouse 
        made a contribution to a Roth IRA) established for such 
        individual.''.
        (B) Section 408A(d)(2) of the 1986 Code is amended by adding at 
    the end the following new subparagraph:
            ``(C) Distributions of excess contributions and earnings.--
        The term `qualified distribution' shall not include any 
        distribution of any contribution described in section 408(d)(4) 
        and any net income allocable to the contribution.''.
        (4) Section 408A(d)(3) of the 1986 Code (relating to rollovers 
    from IRAs other than Roth IRAs) is amended--
            (A) by striking clause (iii) of subparagraph (A) and 
        inserting:
                ``(iii) unless the taxpayer elects not to have this 
            clause apply for any taxable year, any amount required to 
            be included in gross income for such taxable year by reason 
            of this paragraph for any distribution before January 1, 
            1999, shall be so included ratably over the 4-taxable year 
            period beginning with such taxable year.
        Any election under clause (iii) for any distributions during a 
        taxable year may not be changed after the due date for such 
        taxable year.''; and
            (B) by adding at the end the following new subparagraph:
            ``(F) Special rules for contributions to which 4-year 
        averaging applies.--In the case of a qualified rollover 
        contribution to a Roth IRA of a distribution to which 
        subparagraph (A)(iii) applied, the following rules shall apply:
                ``(i) Acceleration of inclusion.--

                    ``(I) In general.--The amount required to be 
                included in gross income for each of the first 3 
                taxable years in the 4-year period under subparagraph 
                (A)(iii) shall be increased by the aggregate 
                distributions from Roth IRAs for such taxable year 
                which are allocable under paragraph (4) to the portion 
                of such qualified rollover contribution required to be 
                included in gross income under subparagraph (A)(i).
                    ``(II) Limitation on aggregate amount included.--
                The amount required to be included in gross income for 
                any taxable year under subparagraph (A)(iii) shall not 
                exceed the aggregate amount required to be included in 
                gross income under subparagraph (A)(iii) for all 
                taxable years in the 4-year period (without regard to 
                subclause (I)) reduced by amounts included for all 
                preceding taxable years.

                ``(ii) Death of distributee.--

                    ``(I) In general.--If the individual required to 
                include amounts in gross income under such subparagraph 
                dies before all of such amounts are included, all 
                remaining amounts shall be included in gross income for 
                the taxable year which includes the date of death.
                    ``(II) Special rule for surviving spouse.--If the 
                spouse of the individual described in subclause (I) 
                acquires the individual's entire interest in any Roth 
                IRA to which such qualified rollover contribution is 
                properly allocable, the spouse may elect to treat the 
                remaining amounts described in subclause (I) as 
                includible in the spouse's gross income in the taxable 
                years of the spouse ending with or within the taxable 
                years of such individual in which such amounts would 
                otherwise have been includible. Any such election may 
                not be made or changed after the due date for the 
                spouse's taxable year which includes the date of death.

            ``(G) Special rule for applying section 72.--
                ``(i) In general.--If--

                    ``(I) any portion of a distribution from a Roth IRA 
                is properly allocable to a qualified rollover 
                contribution described in this paragraph; and
                    ``(II) such distribution is made within the 5-
                taxable year period beginning with the taxable year in 
                which such contribution was made,

            then section 72(t) shall be applied as if such portion were 
            includible in gross income.
                ``(ii) Limitation.--Clause (i) shall apply only to the 
            extent of the amount of the qualified rollover contribution 
            includible in gross income under subparagraph (A)(i).''.
        (5)(A) Section 408A(d)(4) of the 1986 Code is amended to read 
    as follows:
        ``(4) Aggregation and ordering rules.--
            ``(A) Aggregation rules.--Section 408(d)(2) shall be 
        applied separately with respect to Roth IRAs and other 
        individual retirement plans.
            ``(B) Ordering rules.--For purposes of applying this 
        section and section 72 to any distribution from a Roth IRA, 
        such distribution shall be treated as made--
                ``(i) from contributions to the extent that the amount 
            of such distribution, when added to all previous 
            distributions from the Roth IRA, does not exceed the 
            aggregate contributions to the Roth IRA; and
                ``(ii) from such contributions in the following order:

                    ``(I) Contributions other than qualified rollover 
                contributions to which paragraph (3) applies.
                    ``(II) Qualified rollover contributions to which 
                paragraph (3) applies on a first-in, first-out basis.

        Any distribution allocated to a qualified rollover contribution 
        under clause (ii)(II) shall be allocated first to the portion 
        of such contribution required to be included in gross 
        income.''.
        (B) Section 408A(d)(1) of the 1986 Code is amended to read as 
    follows:
        ``(1) Exclusion.--Any qualified distribution from a Roth IRA 
    shall not be includible in gross income.''.
        (6)(A) Section 408A(d) of the 1986 Code (relating to 
    distribution rules) is amended by adding at the end the following 
    new paragraph:
        ``(6) Taxpayer may make adjustments before due date.--
            ``(A) In general.--Except as provided by the Secretary, if, 
        on or before the due date for any taxable year, a taxpayer 
        transfers in a trustee-to-trustee transfer any contribution to 
        an individual retirement plan made during such taxable year 
        from such plan to any other individual retirement plan, then, 
        for purposes of this chapter, such contribution shall be 
        treated as having been made to the transferee plan (and not the 
        transferor plan).
            ``(B) Special rules.--
                ``(i) Transfer of earnings.--Subparagraph (A) shall not 
            apply to the transfer of any contribution unless such 
            transfer is accompanied by any net income allocable to such 
            contribution.
                ``(ii) No deduction.--Subparagraph (A) shall apply to 
            the transfer of any contribution only to the extent no 
            deduction was allowed with respect to the contribution to 
            the transferor plan.''.
        (B) Section 408A(d)(3) of the 1986 Code, as amended by this 
    subsection, is amended by striking subparagraph (D) and by 
    redesignating subparagraphs (E), (F), and (G) as subparagraphs (D), 
    (E), and (F), respectively.
        (7) Section 408A(d) of the 1986 Code, as amended by paragraph 
    (6), is amended by adding at the end the following new paragraph:
        ``(7) Due date.--For purposes of this subsection, the due date 
    for any taxable year is the date prescribed by law (including 
    extensions of time) for filing the taxpayer's return for such 
    taxable year.''.
        (8)(A) Section 4973(f) of the 1986 Code is amended--
            (i) by striking ``such accounts'' in paragraph (1)(A) and 
        inserting ``Roth IRAs''; and
            (ii) by striking ``to the accounts'' in paragraph (2)(B) 
        and inserting ``by the individual to all individual retirement 
        plans''.
        (B) Section 4973(b) of the 1986 Code is amended--
            (i) by inserting ``a contribution to a Roth IRA or'' after 
        ``other than'' in paragraph (1)(A); and
            (ii) by inserting ``(including the amount contributed to a 
        Roth IRA)'' after ``annuities'' in paragraph (2)(C).
        (C) Section 302(b) of the 1997 Act is amended by striking 
    ``Section 4973(b)'' and inserting ``Section 4973''.
        (9) Section 408A of the 1986 Code is amended by adding at the 
    end the following new subsection:
    ``(f) Individual Retirement Plan.--For purposes of this section--
        ``(1) a simplified employee pension or a simple retirement 
    account may not be designated as a Roth IRA; and
        ``(2) contributions to any such pension or account shall not be 
    taken into account for purposes of subsection (c)(2)(B).''.
    (c) Amendments Related to Section 303 of 1997 Act.--
        (1) Section 72(t)(8)(E) of the 1986 Code is amended--
            (A) by striking ``120 days'' and inserting ``120th day''; 
        and
            (B) by striking ``60 days'' and inserting ``60th day''.
        (2)(A) Section 402(c)(4) of the 1986 Code is amended by 
    striking ``and'' at the end of subparagraph (A), by striking the 
    period at the end of subparagraph (B) and inserting ``, and'', by 
    inserting at the end the following new subparagraph:
            ``(C) any hardship distribution described in section 
        401(k)(2)(B)(i)(IV).''.
        (B) Section 403(b)(8)(B) of the 1986 Code is amended by 
    inserting ``(including paragraph (4)(C) thereof)'' after ``section 
    402(c)''.
        (C) The amendments made by this paragraph shall apply to 
    distributions after December 31, 1998.
    (d) Amendments Related to Section 311 of 1997 Act.--
        (1) Subsection (h) of section 1 of the 1986 Code (relating to 
    maximum capital gains rate) is amended to read as follows:
    ``(h) Maximum Capital Gains Rate.--
        ``(1) In general.--If a taxpayer has a net capital gain for any 
    taxable year, the tax imposed by this section for such taxable year 
    shall not exceed the sum of--
            ``(A) a tax computed at the rates and in the same manner as 
        if this subsection had not been enacted on the greater of--
                ``(i) taxable income reduced by the net capital gain; 
            or
                ``(ii) the lesser of--

                    ``(I) the amount of taxable income taxed at a rate 
                below 28 percent; or
                    ``(II) taxable income reduced by the adjusted net 
                capital gain;

            ``(B) 10 percent of so much of the adjusted net capital 
        gain (or, if less, taxable income) as does not exceed the 
        excess (if any) of--
                ``(i) the amount of taxable income which would (without 
            regard to this paragraph) be taxed at a rate below 28 
            percent, over
                ``(ii) the taxable income reduced by the adjusted net 
            capital gain;
            ``(C) 20 percent of the adjusted net capital gain (or, if 
        less, taxable income) in excess of the amount on which a tax is 
        determined under subparagraph (B);
            ``(D) 25 percent of the excess (if any) of--
                ``(i) the unrecaptured section 1250 gain (or, if less, 
            the net capital gain), over
                ``(ii) the excess (if any) of--

                    ``(I) the sum of the amount on which tax is 
                determined under subparagraph (A) plus the net capital 
                gain, over
                    ``(II) taxable income; and

            ``(E) 28 percent of the amount of taxable income in excess 
        of the sum of the amounts on which tax is determined under the 
        preceding subparagraphs of this paragraph.
        ``(2) Reduced capital gain rates for qualified 5-year gain.--
            ``(A) Reduction in 10-percent rate.--In the case of any 
        taxable year beginning after December 31, 2000, the rate under 
        paragraph (1)(B) shall be 8 percent with respect to so much of 
        the amount to which the 10-percent rate would otherwise apply 
        as does not exceed qualified 5-year gain, and 10 percent with 
        respect to the remainder of such amount.
            ``(B) Reduction in 20-percent rate.--The rate under 
        paragraph (1)(C) shall be 18 percent with respect to so much of 
        the amount to which the 20-percent rate would otherwise apply 
        as does not exceed the lesser of--
                ``(i) the excess of qualified 5-year gain over the 
            amount of such gain taken into account under subparagraph 
            (A) of this paragraph; or
                ``(ii) the amount of qualified 5-year gain (determined 
            by taking into account only property the holding period for 
            which begins after December 31, 2000),
        and 20 percent with respect to the remainder of such amount. 
        For purposes of determining under the preceding sentence 
        whether the holding period of property begins after December 
        31, 2000, the holding period of property acquired pursuant to 
        the exercise of an option (or other right or obligation to 
        acquire property) shall include the period such option (or 
        other right or obligation) was held.
        ``(3) Net capital gain taken into account as investment 
    income.--For purposes of this subsection, the net capital gain for 
    any taxable year shall be reduced (but not below zero) by the 
    amount which the taxpayer takes into account as investment income 
    under section 163(d)(4)(B)(iii).
        ``(4) Adjusted net capital gain.--For purposes of this 
    subsection, the term `adjusted net capital gain' means net capital 
    gain reduced (but not below zero) by the sum of--
            ``(A) unrecaptured section 1250 gain; and
            ``(B) 28-percent rate gain.
        ``(5) 28-percent rate gain.--For purposes of this subsection--
            ``(A) In general.--The term `28-percent rate gain' means 
        the excess (if any) of--
                ``(i) the sum of--

                    ``(I) the aggregate long-term capital gain from 
                property held for more than 1 year but not more than 18 
                months;
                    ``(II) collectibles gain; and
                    ``(III) section 1202 gain, over

                ``(ii) the sum of--

                    ``(I) the aggregate long-term capital loss (not 
                described in subclause (IV)) from property referred to 
                in clause (i)(I);
                    ``(II) collectibles loss;
                    ``(III) the net short-term capital loss; and
                    ``(IV) the amount of long-term capital loss carried 
                under section 1212(b)(1)(B) to the taxable year.

            ``(B) Special rules.--
                ``(i) Short sale gains and holding periods.--Rules 
            similar to the rules of section 1233(b) shall apply where 
            the substantially identical property has been held more 
            than 1 year but not more than 18 months; except that, for 
            purposes of such rules--

                    ``(I) section 1233(b)(1) shall be applied by 
                substituting `18 months' for `1 year' each place it 
                appears; and
                    ``(II) the holding period of such property shall be 
                treated as being 1 year on the day before the earlier 
                of the date of the closing of the short sale or the 
                date such property is disposed of.

                ``(ii) Long-term losses.--Section 1233(d) shall be 
            applied separately by substituting `18 months' for `1 year' 
            each place it appears.
                ``(iii) Options.--A rule similar to the rule of section 
            1092(f) shall apply where the stock was held for more than 
            18 months.
                ``(iv) Section 1256 contracts.--Amounts treated as 
            long-term capital gain or loss under section 1256(a)(3) 
            shall be treated as attributable to property held for more 
            than 18 months.
        ``(6) Collectibles gain and loss.--For purposes of this 
    subsection--
            ``(A) In general.--The terms `collectibles gain' and 
        `collectibles loss' mean gain or loss (respectively) from the 
        sale or exchange of a collectible (as defined in section 408(m) 
        without regard to paragraph (3) thereof) which is a capital 
        asset held for more than 18 months but only to the extent such 
        gain is taken into account in computing gross income and such 
        loss is taken into account in computing taxable income.
            ``(B) Partnerships, etc.--For purposes of subparagraph (A), 
        any gain from the sale of an interest in a partnership, S 
        corporation, or trust which is attributable to unrealized 
        appreciation in the value of collectibles shall be treated as 
        gain from the sale or exchange of a collectible. Rules similar 
        to the rules of section 751 shall apply for purposes of the 
        preceding sentence.
        ``(7) Unrecaptured section 1250 gain.--For purposes of this 
    subsection--
            ``(A) In general.--The term `unrecaptured section 1250 
        gain' means the excess (if any) of--
                ``(i) the amount of long-term capital gain (not 
            otherwise treated as ordinary income) which would be 
            treated as ordinary income if--

                    ``(I) section 1250(b)(1) included all depreciation 
                and the applicable percentage under section 1250(a) 
                were 100 percent, and
                    ``(II) only gain from property held for more than 
                18 months were taken into account, over

                ``(ii) the excess (if any) of--

                    ``(I) the amount described in paragraph (5)(A)(ii), 
                over
                    ``(II) the amount described in paragraph (5)(A)(i).

            ``(B) Limitation with respect to section 1231 property.--
        The amount described in subparagraph (A)(i) from sales, 
        exchanges, and conversions described in section 1231(a)(3)(A) 
        for any taxable year shall not exceed the net section 1231 gain 
        (as defined in section 1231(c)(3)) for such year.
        ``(8) Section 1202 gain.--For purposes of this subsection, the 
    term `section 1202 gain' means an amount equal to the gain excluded 
    from gross income under section 1202(a).
        ``(9) Qualified 5-year gain.--For purposes of this subsection, 
    the term `qualified 5-year gain' means the aggregate long-term 
    capital gain from property held for more than 5 years. The 
    determination under the preceding sentence shall be made without 
    regard to collectibles gain, gain described in paragraph (7)(A)(i), 
    and section 1202 gain.
        ``(10) Coordination with recapture of net ordinary losses under 
    section 1231.--If any amount is treated as ordinary income under 
    section 1231(c), such amount shall be allocated among the separate 
    categories of net section 1231 gain (as defined in section 
    1231(c)(3)) in such manner as the Secretary may by forms or 
    regulations prescribe.
        ``(11) Regulations.--The Secretary may prescribe such 
    regulations as are appropriate (including regulations requiring 
    reporting) to apply this subsection in the case of sales and 
    exchanges by pass-thru entities and of interests in such entities.
        ``(12) Pass-thru entity defined.--For purposes of this 
    subsection, the term `pass-thru entity' means--
            ``(A) a regulated investment company;
            ``(B) a real estate investment trust;
            ``(C) an S corporation;
            ``(D) a partnership;
            ``(E) an estate or trust;
            ``(F) a common trust fund;
            ``(G) a foreign investment company which is described in 
        section 1246(b)(1) and for which an election is in effect under 
        section 1247; and
            ``(H) a qualified electing fund (as defined in section 
        1295).
        ``(13) Special rules for periods during 1997.--
            ``(A) Determination of 28-percent rate gain.--In applying 
        paragraph (5)--
                ``(i) the amount determined under subclause (I) of 
            paragraph (5)(A)(i) shall include long-term capital gain 
            (not otherwise described in paragraph (5)(A)(i)) which is 
            properly taken into account for the portion of the taxable 
            year before May 7, 1997;
                ``(ii) the amounts determined under subclause (I) of 
            paragraph (5)(A)(ii) shall include long-term capital loss 
            (not otherwise described in paragraph (5)(A)(ii)) which is 
            properly taken into account for the portion of the taxable 
            year before May 7, 1997; and
                ``(iii) clauses (i)(I) and (ii)(I) of paragraph (5)(A) 
            shall be applied by not taking into account any gain and 
            loss on property held for more than 1 year but not more 
            than 18 months which is properly taken into account for the 
            portion of the taxable year after May 6, 1997, and before 
            July 29, 1997.
            ``(B) Other special rules.--
                ``(i) Determination of unrecaptured section 1250 gain 
            not to include pre-may 7, 1997 gain.--The amount determined 
            under paragraph (7)(A)(i) shall not include gain properly 
            taken into account for the portion of the taxable year 
            before May 7, 1997.
                ``(ii) Other transitional rules for 18-month holding 
            period.--Paragraphs (6)(A) and (7)(A)(i)(II) shall be 
            applied by substituting `1 year' for `18 months' with 
            respect to gain properly taken into account for the portion 
            of the taxable year after May 6, 1997, and before July 29, 
            1997.
            ``(C) Special rules for pass-thru entities.--In applying 
        this paragraph with respect to any pass-thru entity, the 
        determination of when gains and loss are properly taken into 
        account shall be made at the entity level.''.
        (2) Paragraph (3) of section 55(b) of the 1986 Code is amended 
    to read as follows:
        ``(3) Maximum rate of tax on net capital gain of noncorporate 
    taxpayers.--The amount determined under the first sentence of 
    paragraph (1)(A)(i) shall not exceed the sum of--
            ``(A) the amount determined under such first sentence 
        computed at the rates and in the same manner as if this 
        paragraph had not been enacted on the taxable excess reduced by 
        the lesser of--
                ``(i) the net capital gain; or
                ``(ii) the sum of--

                    ``(I) the adjusted net capital gain, plus
                    ``(II) the unrecaptured section 1250 gain, plus

            ``(B) 10 percent of so much of the adjusted net capital 
        gain (or, if less, taxable excess) as does not exceed the 
        amount on which a tax is determined under section 1(h)(1)(B), 
        plus
            ``(C) 20 percent of the adjusted net capital gain (or, if 
        less, taxable excess) in excess of the amount on which tax is 
        determined under subparagraph (B), plus
            ``(D) 25 percent of the amount of taxable excess in excess 
        of the sum of the amounts on which tax is determined under the 
        preceding subparagraphs of this paragraph.
    In the case of taxable years beginning after December 31, 2000, 
    rules similar to the rules of section 1(h)(2) shall apply for 
    purposes of subparagraphs (B) and (C). Terms used in this paragraph 
    which are also used in section 1(h) shall have the respective 
    meanings given such terms by section 1(h) but computed with the 
    adjustments under this part.''.
        (3) Section 57(a)(7) of the 1986 Code is amended by adding at 
    the end the following new sentence: ``In the case of stock the 
    holding period of which begins after December 31, 2000 (determined 
    with the application of the last sentence of section 1(h)(2)(B)), 
    the preceding sentence shall be applied by substituting `28 
    percent' for `42 percent'.''.
        (4) Paragraphs (11) and (12) of section 1223, and section 
    1235(a), of the 1986 Code are each amended by striking ``1 year'' 
    each place it appears and inserting ``18 months''.
    (e) Amendments Related to Section 312 of 1997 Act.--
        (1) Paragraph (2) of section 121(b) of the 1986 Code is amended 
    to read as follows:
        ``(2) Special rules for joint returns.--In the case of a 
    husband and wife who make a joint return for the taxable year of 
    the sale or exchange of the property--
            ``(A) $500,000 Limitation for certain joint returns.--
        Paragraph (1) shall be applied by substituting `$500,000' for 
        `$250,000' if--
                ``(i) either spouse meets the ownership requirements of 
            subsection (a) with respect to such property;
                ``(ii) both spouses meet the use requirements of 
            subsection (a) with respect to such property; and
                ``(iii) neither spouse is ineligible for the benefits 
            of subsection (a) with respect to such property by reason 
            of paragraph (3).
            ``(B) Other joint returns.--If such spouses do not meet the 
        requirements of subparagraph (A), the limitation under 
        paragraph (1) shall be the sum of the limitations under 
        paragraph (1) to which each spouse would be entitled if such 
        spouses had not been married. For purposes of the preceding 
        sentence, each spouse shall be treated as owning the property 
        during the period that either spouse owned the property.''.
        (2) Section 121(c)(1) of the 1986 Code is amended to read as 
    follows:
        ``(1) In general.--In the case of a sale or exchange to which 
    this subsection applies, the ownership and use requirements of 
    subsection (a), and subsection (b)(3), shall not apply; but the 
    dollar limitation under paragraph (1) or (2) of subsection (b), 
    whichever is applicable, shall be equal to--
            ``(A) the amount which bears the same ratio to such 
        limitation (determined without regard to this paragraph) as
            ``(B)(i) the shorter of--
                ``(I) the aggregate periods, during the 5-year period 
            ending on the date of such sale or exchange, such property 
            has been owned and used by the taxpayer as the taxpayer's 
            principal residence; or
                ``(II) the period after the date of the most recent 
            prior sale or exchange by the taxpayer to which subsection 
            (a) applied and before the date of such sale or exchange, 
            bears to
            ``(ii) 2 years.''.
        (3) Section 312(d)(2) of the 1997 Act (relating to sales before 
    date of the enactment) is amended by inserting ``on or'' before 
    ``before'' each place it appears in the text and heading.
    (f) Amendments Related to Section 313 of 1997 Act.--
        (1) Subsection (a) of section 1045 of such Code is amended--
            (A) by striking ``an individual'' and inserting ``a 
        taxpayer other than a corporation''; and
            (B) by striking ``such individual'' and inserting ``such 
        taxpayer''.
        (2) Subsection (b) of section 1045 of the 1986 Code is amended 
    by adding at the end the following new paragraph:
        ``(5) Certain rules to apply.--Rules similar to the rules of 
    subsections (f), (g), (h), (i), (j), and (k) of section 1202 shall 
    apply.''.

SEC. 6006. AMENDMENT RELATED TO TITLE IV OF 1997 ACT.

    (a) Amendment Related to Section 401 of 1997 Act.--Paragraph (1) of 
section 55(e) of the 1986 Code is amended to read as follows:
        ``(1) In general.--
            ``(A) $7,500,000 gross receipts test.--The tentative 
        minimum tax of a corporation shall be zero for any taxable year 
        if the corporation's average annual gross receipts for all 3-
        taxable-year periods ending before such taxable year does not 
        exceed $7,500,000. For purposes of the preceding sentence, only 
        taxable years beginning after December 31, 1993, shall be taken 
        into account.
            ``(B) $5,000,000 gross receipts test for first 3-year 
        period.--Subparagraph (A) shall be applied by substituting 
        `$5,000,000' for `$7,500,000' for the first 3-taxable-year 
        period (or portion thereof) of the corporation which is taken 
        into account under subparagraph (A).
            ``(C) First taxable year corporation in existence.--If such 
        taxable year is the first taxable year that such corporation is 
        in existence, the tentative minimum tax of such corporation for 
        such year shall be zero.
            ``(D) Special rules.--For purposes of this paragraph, the 
        rules of paragraphs (2) and (3) of section 448(c) shall 
        apply.''.
    (b) Amendment Related to Section 402 of 1997 Act.-- Subsection (c) 
of section 168 of the 1986 Code is amended--
        (1) by striking paragraph (2), and
        (2) by striking the portion of such subsection preceding the 
    table in paragraph (1) and inserting the following:
    ``(c) Applicable Recovery Period.--For purposes of this section, 
the applicable recovery period shall be determined in accordance with 
the following table:''.

SEC. 6007. AMENDMENTS RELATED TO TITLE V OF 1997 ACT.

    (a) Amendments Related to Section 501 of 1997 Act.--
        (1) Subsection (c) of section 2631 of the 1986 Code is amended 
    to read as follows:
    ``(c) Inflation Adjustment.--
        ``(1) In general.--In the case of any calendar year after 1998, 
    the $1,000,000 amount contained in subsection (a) shall be 
    increased by an amount equal to--
            ``(A) $1,000,000, multiplied by
            ``(B) the cost-of-living adjustment determined under 
        section 1(f)(3) for such calendar year by substituting 
        `calendar year 1997' for `calendar year 1992' in subparagraph 
        (B) thereof.
    If any amount as adjusted under the preceding sentence is not a 
    multiple of $10,000, such amount shall be rounded to the next 
    lowest multiple of $10,000.
        ``(2) Allocation of increase.--Any increase under paragraph (1) 
    for any calendar year shall apply only to generation-skipping 
    transfers made during or after such calendar year; except that no 
    such increase for calendar years after the calendar year in which 
    the transferor dies shall apply to transfers by such transferor.''.
        (2) Subsection (f) of section 501 of the 1997 Act is amended by 
    inserting ``(other than the amendment made by subsection (d))'' 
    after ``this section''.
    (b) Amendments Related to Section 502 of 1997 Act.--
        (1)(A) Section 2033A of the 1986 Code is hereby moved to the 
    end of part IV of subchapter A of chapter 11 of the 1986 Code and 
    redesignated as section 2057.
        (B) So much of such section 2057 (as so redesignated) as 
    precedes subsection (b) thereof is amended to read as follows:

``SEC. 2057. FAMILY-OWNED BUSINESS INTERESTS.

    ``(a) General Rule.--
        ``(1) Allowance of deduction.--For purposes of the tax imposed 
    by section 2001, in the case of an estate of a decedent to which 
    this section applies, the value of the taxable estate shall be 
    determined by deducting from the value of the gross estate the 
    adjusted value of the qualified family-owned business interests of 
    the decedent which are described in subsection (b)(2).
        ``(2) Maximum deduction.--The deduction allowed by this section 
    shall not exceed $675,000.
        ``(3) Coordination with unified credit.--
            ``(A) In general.--Except as provided in subparagraph (B), 
        if this section applies to an estate, the applicable exclusion 
        amount under section 2010 shall be $625,000.
            ``(B) Increase in unified credit if deduction is less than 
        $675,000.--If the deduction allowed by this section is less 
        than $675,000, the amount of the applicable exclusion amount 
        under section 2010 shall be increased (but not above the amount 
        which would apply to the estate without regard to this section) 
        by the excess of $675,000 over the amount of the deduction 
        allowed.''.
        (C) Subparagraph (A) of section 2057(b)(2) of the 1986 Code (as 
    so redesignated) is amended by striking ``(without regard to this 
    section)''.
        (D) Subsection (c) of section 2057 of the 1986 Code (as so 
    redesignated) is amended by striking ``(determined without regard 
    to this section)''.
        (E) The table of sections for part III of subchapter A of 
    chapter 11 of the 1986 Code is amended by striking the item 
    relating to section 2033A.
        (F) The table of sections for part IV of such subchapter is 
    amended by adding at the end the following new item:
        ``Sec. 2057. Family-owned business interests.''.

        (2) Section 2057(b)(3) of the 1986 Code (as so redesignated) is 
    amended to read as follows:
        ``(3) Includible gifts of interests.--The amount of the gifts 
    of qualified family-owned business interests determined under this 
    paragraph is the sum of--
            ``(A) the amount of such gifts from the decedent to members 
        of the decedent's family taken into account under section 
        2001(b)(1)(B), plus
            ``(B) the amount of such gifts otherwise excluded under 
        section 2503(b),
    to the extent such interests are continuously held by members of 
    such family (other than the decedent's spouse) between the date of 
    the gift and the date of the decedent's death.''.
        (3)(A) Section 2057(e)(2)(C) of the 1986 Code (as so 
    redesignated) is amended by striking ``(as defined in section 
    543(a))'' and inserting ``(as defined in section 543(a) without 
    regard to paragraph (2)(B) thereof) if such trade or business were 
    a corporation''.
        (B) Clause (ii) of section 2057(e)(2)(D) of the 1986 Code (as 
    so redesignated) is amended by striking ``income of which is 
    described in section 543(a) or'' and inserting ``personal holding 
    company income (as defined in subparagraph (C)) or income 
    described''.
        (C) Paragraph (2) of section 2057(e) of the 1986 Code (as so 
    redesignated) is amended by adding at the end the following new 
    flush sentence:
    ``In the case of a lease of property on a net cash basis by the 
    decedent to a member of the decedent's family, income from such 
    lease shall not be treated as personal holding company income for 
    purposes of subparagraph (C), and such property shall not be 
    treated as an asset described in subparagraph (D)(ii), if such 
    income and property would not be so treated if the lessor had 
    engaged directly in the activities engaged in by the lessee with 
    respect to such property.''.
        (4) Paragraph (2) of section 2057(f) of the 1986 Code (as so 
    redesignated) is amended--
            (A) by striking ``(as determined under rules similar to the 
        rules of section 2032A(c)(2)(B))''; and
            (B) by adding at the end the following new subparagraph:
            ``(C) Adjusted tax difference.--For purposes of 
        subparagraph (A)--
                ``(i) In general.--The adjusted tax difference 
            attributable to a qualified family-owned business interest 
            is the amount which bears the same ratio to the adjusted 
            tax difference with respect to the estate (determined under 
            clause (ii)) as the value of such interest bears to the 
            value of all qualified family-owned business interests 
            described in subsection (b)(2).
                ``(ii) Adjusted tax difference with respect to the 
            estate.--For purposes of clause (i), the term `adjusted tax 
            difference with respect to the estate' means the excess of 
            what would have been the estate tax liability but for the 
            election under this section over the estate tax liability. 
            For purposes of this clause, the term `estate tax 
            liability' means the tax imposed by section 2001 reduced by 
            the credits allowable against such tax.''.
        (5)(A) Paragraph (1) of section 2057(e) of the 1986 Code (as so 
    redesignated) is amended by adding at the end the following new 
    flush sentence:
    ``For purposes of the preceding sentence, a decedent shall be 
    treated as engaged in a trade or business if any member of the 
    decedent's family is engaged in such trade or business.''.
        (B) Subsection (f) of section 2057 of the 1986 Code (as so 
    redesignated) is amended by adding at the end the following new 
    paragraph:
        ``(3) Use in trade or business by family members.--A qualified 
    heir shall not be treated as disposing of an interest described in 
    subsection (e)(1)(A) by reason of ceasing to be engaged in a trade 
    or business so long as the property to which such interest relates 
    is used in a trade or business by any member of such individual's 
    family.''.
        (6) Paragraph (1) of section 2057(g) of the 1986 Code (as so 
    redesignated) is amended by striking ``or (M)''.
        (7) Paragraph (3) of section 2057(i) of the 1986 Code (as so 
    redesignated) is amended by redesignating subparagraphs (L), (M), 
    and (N) as subparagraphs (N), (O), and (P), respectively, and by 
    inserting after subparagraph (K) the following new subparagraphs:
            ``(L) Section 2032A(g) (relating to application to 
        interests in partnerships, corporations, and trusts).
            ``(M) Subsections (h) and (i) of section 2032A.''.
    (c) Amendments Related to Section 503 of the 1997 Act.--
        (1) Clause (iii) of section 6166(b)(7)(A) of the 1986 Code is 
    amended to read as follows:
                ``(iii) for purposes of applying section 6601(j), the 
            2-percent portion (as defined in such section) shall be 
            treated as being zero.''.
        (2) Clause (iii) of section 6166(b)(8)(A) of the 1986 Code is 
    amended to read as follows:
                ``(iii) 2-percent interest rate not to apply.--For 
            purposes of applying section 6601(j), the 2-percent portion 
            (as defined in such section) shall be treated as being 
            zero.''.
    (d) Amendment Related to Section 505 of the 1997 Act.--Paragraphs 
(1) and (2) of section 7479(a) of the 1986 Code are each amended by 
striking ``an estate,'' and inserting ``an estate (or with respect to 
any property included therein),''.
    (e) Amendments Related to Section 506 of the 1997 Act.--
        (1) Paragraph (1) of section 506(e) of the 1997 Act is amended 
    by striking ``and (c)'' and inserting ``, (c), and (d)''.
        (2)(A) Paragraph (9) of section 6501(c) of the 1986 Code is 
    amended by striking the last sentence.
        (B) Subsection (f) of section 2001 of the 1986 Code is amended 
    to read as follows:
    ``(f) Valuation of Gifts.--
        ``(1) In general--If the time has expired under section 6501 
    within which a tax may be assessed under chapter 12 (or under 
    corresponding provisions of prior laws) on--
            ``(A) the transfer of property by gift made during a 
        preceding calendar period (as defined in section 2502(b)); or
            ``(B) an increase in taxable gifts required under section 
        2701(d),
    the value thereof shall, for purposes of computing the tax under 
    this chapter, be the value as finally determined for purposes of 
    chapter 12.
        ``(2) Final determination.--For purposes of paragraph (1), a 
    value shall be treated as finally determined for purposes of 
    chapter 12 if--
            ``(A) the value is shown on a return under such chapter and 
        such value is not contested by the Secretary before the 
        expiration of the time referred to in paragraph (1) with 
        respect to such return;
            ``(B) in a case not described in subparagraph (A), the 
        value is specified by the Secretary and such value is not 
        timely contested by the taxpayer; or
            ``(C) the value is determined by a court or pursuant to a 
        settlement agreement with the Secretary.''.
        (B) Subsection (c) of section 2504 of the 1986 Code is amended 
    to read as follows:
    ``(c) Valuation of Gifts.--If the time has expired under section 
6501 within which a tax may be assessed under this chapter 12 (or under 
corresponding provisions of prior laws) on--
        ``(1) the transfer of property by gift made during a preceding 
    calendar period (as defined in section 2502(b)); or
        ``(2) an increase in taxable gifts required under section 
    2701(d),
the value thereof shall, for purposes of computing the tax under this 
chapter, be the value as finally determined (within the meaning of 
section 2001(f)(2)) for purposes of this chapter.''.
    (f) Amendments Related to Section 507 of 1997 Act.--
        (1) Paragraph (3) of section 1(g) of the 1986 Code is amended 
    by striking subparagraph (C) and by redesignating subparagraph (D) 
    as subparagraph (C).
        (2) Section 641 of the 1986 Code is amended by striking 
    subsection (c) and by redesignating subsection (d) as subsection 
    (c).
        (3) Paragraph (4) of section 1361(e) of the 1986 Code is 
    amended by striking ``section 641(d)'' and inserting ``section 
    641(c)''.
        (4) Subparagraph (A) of section 6103(e)(1) of the 1986 Code is 
    amended by striking clause (ii) and by redesignating clauses (iii) 
    and (iv) as clauses (ii) and (iii), respectively.
    (g) Amendments Related to Section 508 of 1997 Act.--
        (1) Subsection (c) of section 2031 of the 1986 Code is amended 
    by redesignating paragraph (9) as paragraph (10) and by inserting 
    after paragraph (8) the following new paragraph:
        ``(9) Treatment of easements granted after death.--In any case 
    in which the qualified conservation easement is granted after the 
    date of the decedent's death and on or before the due date 
    (including extensions) for filing the return of tax imposed by 
    section 2001, the deduction under section 2055(f) with respect to 
    such easement shall be allowed to the estate but only if no 
    charitable deduction is allowed under chapter 1 to any person with 
    respect to the grant of such easement.''.
        (2) The first sentence of paragraph (6) of section 2031(c) of 
    the 1986 Code is amended by striking all that follows ``shall be 
    made'' and inserting ``on or before the due date (including 
    extensions) for filing the return of tax imposed by section 2001 
    and shall be made on such return.''.

SEC. 6008. AMENDMENTS RELATED TO TITLE VII OF 1997 ACT.

    (a) Amendment Related to Section 1400 of 1986 Code.--Section 
1400(b)(2)(B) of the 1986 Code is amended by inserting ``as determined 
on the basis of the 1990 census'' after ``percent''.
    (b) Amendment Related to Section 1400A of 1986 Code.--Subsection 
(a) of section 1400A of the 1986 Code is amended by inserting before 
the period ``and section 1394(b)(3)(B)(iii) shall be applied without 
regard to the employee residency requirement''.
    (c) Amendments Related to Section 1400B of 1986 Code.--
        (1) Section 1400B(b) of the 1986 Code is amended by inserting 
    after paragraph (4) the following new paragraph:
        ``(5) Treatment of dc zone termination.--The termination of the 
    designation of the DC Zone shall be disregarded for purposes of 
    determining whether any property is a DC Zone asset.''.
        (2) Paragraph (6) of section 1400B(b) of the 1986 Code is 
    amended by striking ``(4)(A)(ii)'' and inserting ``(4)(A)(i) or 
    (ii)''.
        (3) Section 1400B(c) of the 1986 Code is amended by striking 
    ``entity which is an''.
        (4) Section 1400B(d)(2) of the 1986 Code is amended by 
    inserting ``as determined on the basis of the 1990 census'' after 
    ``percent''.
    (d) Amendments Related to Section 1400C of 1986 Code.--
        (1) Paragraph (1) of section 1400C(b) of the 1986 Code is 
    amended by inserting ``and subsection (d)'' after ``this 
    subsection''.
        (2) Paragraph (1) of section 1400C(c) of the 1986 Code is 
    amended to read as follows:
        ``(1) In general.--The term `first-time homebuyer' means any 
    individual if such individual (and if married, such individual's 
    spouse) had no present ownership interest in a principal residence 
    in the District of Columbia during the 1-year period ending on the 
    date of the purchase of the principal residence to which this 
    section applies.''.
        (3) Subparagraph (B) of section 1400C(e)(2) of the 1986 Code is 
    amended by inserting before the period ``on the date the taxpayer 
    first occupies such residence''.
        (4) Paragraph (3) of section 1400C(e) of the 1986 Code is 
    amended by striking all that follows ``principal residence'' and 
    inserting ``on the date such residence is purchased.''.
        (5) Subsection (i) of section 1400C of the 1986 Code is amended 
    to read as follows:
    ``(i) Application of Section.--This section shall apply to property 
purchased after August 4, 1997, and before January 1, 2001.''.
        (6) Subsection (c) of section 23 of the 1986 Code is amended by 
    inserting ``and section 1400C'' after ``other than this section''.
        (7) Subparagraph (C) of section 25(e)(1) of the 1986 Code is 
    amended by striking ``section 23'' and inserting ``sections 23 and 
    1400C''.

SEC. 6009. AMENDMENTS RELATED TO TITLE IX OF 1997 ACT.

    (a) Amendment Related to Section 908 of 1997 Act.-- Paragraph (6) 
of section 5041(b) of the 1986 Code is amended by inserting ``which is 
a still wine'' after ``hard cider''.
    (b) Amendment Related to Section 964 of 1997 Act.--
        (1) In general.--Subparagraph (C) of section 7704(g)(3) of the 
    1986 Code is amended by striking the period at the end and 
    inserting ``and shall be paid by the partnership. Section 6655 
    shall be applied to such partnership with respect to such tax in 
    the same manner as if the partnership were a corporation, such tax 
    were imposed by section 11, and references in such section to 
    taxable income were references to the gross income referred to in 
    subparagraph (A).''.
        (2) Effective date.--The second sentence of section 
    7704(g)(3)(C) of the 1986 Code (as added by paragraph (1)) shall 
    apply to taxable years beginning after the date of the enactment of 
    this Act.
    (c) Amendment Related to Section 971 of 1997 Act.--Clause (ii) of 
section 280F(a)(1)(C) is amended by striking ``subparagraph (A)'' and 
inserting ``subparagraphs (A) and (B)''.
    (d) Amendment Related to Section 976 of 1997 Act.--Section 
6103(d)(5) of the 1986 Code is amended by striking ``section 967 of the 
Taxpayer Relief Act of 1997.'' and inserting ``section 976 of the 
Taxpayer Relief Act of 1997. Subsections (a)(2) and (p)(4) and sections 
7213 and 7213A shall not apply with respect to disclosures or 
inspections made pursuant to this paragraph.''.
    (e) Amendment Related to Section 977 of 1997 Act.--Paragraph (2) of 
section 977(e) of the 1997 Act is amended to read as follows:
        ``(2) Non-amtrak state.--The term `non-Amtrak State' means any 
    State which is not receiving intercity passenger rail service from 
    the Corporation as of the date of the enactment of this Act.''.

SEC. 6010. AMENDMENTS RELATED TO TITLE X OF 1997 ACT.

    (a) Amendments Related to Section 1001 of 1997 Act.--
        (1) Paragraph (2) of section 1259(b) of the 1986 Code is 
    amended--
            (A) by striking ``debt'' each place it appears in clauses 
        (i), (ii), and (iii) of subparagraph (A) and inserting 
        ``position'';
            (B) by striking ``and'' at the end of subparagraph (A); and
            (C) by redesignating subparagraph (B) as subparagraph (C) 
        and by inserting after subparagraph (A) the following new 
        subparagraph:
            ``(B) any hedge with respect to a position described in 
        subparagraph (A), and''.
        (2) Section 1259(d)(1) of the 1986 Code is amended by inserting 
    ``(including cash)'' after ``property''.
        (3) Subparagraph (D) of section 475(f)(1) of the 1986 Code is 
    amended by adding at the end the following new sentence: 
    ``Subsection (d)(3) shall not apply under the preceding sentence 
    for purposes of applying sections 1402 and 7704.''.
        (4) Subparagraph (C) of section 1001(d)(3) of the 1997 Act is 
    amended by striking ``within the 30-day period beginning on'' and 
    inserting ``before the close of the 30th day after''.
    (b) Amendment Related to Section 1011 of 1997 Act.--Paragraph (1) 
of section 1059(g) of the 1986 Code is amended by striking ``and in the 
case of stock held by pass-thru entities'' and inserting ``, in the 
case of stock held by pass-thru entities, and in the case of 
consolidated groups''.
    (c) Amendments Related to Section 1012 of 1997 Act.--
        (1) Paragraph (1) of section 1012(d) of the 1997 Act is amended 
    by striking ``1997, pursuant'' and inserting ``1997; except that 
    the amendment made by subsection (a) shall apply to such 
    distributions only if pursuant''.
        (2) Subparagraph (A) of section 355(e)(3) of the 1986 Code is 
    amended--
            (A) by striking ``shall not be treated as described in'' 
        and inserting ``shall not be taken into account in applying''; 
        and
            (B) by striking clause (iv) and inserting the following new 
        clause:
                ``(iv) The acquisition of stock in the distributing 
            corporation or any controlled corporation to the extent 
            that the percentage of stock owned directly or indirectly 
            in such corporation by each person owning stock in such 
            corporation immediately before the acquisition does not 
            decrease.''.
        (3)(A) Subsection (c) of section 351 of the 1986 Code is 
    amended to read as follows:
    ``(c) Special Rules Where Distribution to Shareholders.--
        ``(1) In general.--In determining control for purposes of this 
    section, the fact that any corporate transferor distributes part or 
    all of the stock in the corporation which it receives in the 
    exchange to its shareholders shall not be taken into account.
        ``(2) Special rule for section 355.--If the requirements of 
    section 355 (or so much of section 356 as relates to section 355) 
    are met with respect to a distribution described in paragraph (1), 
    then, solely for purposes of determining the tax treatment of the 
    transfers of property to the controlled corporation by the 
    distributing corporation, the fact that the shareholders of the 
    distributing corporation dispose of part or all of the distributed 
    stock shall not be taken into account in determining control for 
    purposes of this section.''.
        (B) Clause (ii) of section 368(a)(2)(H) of the 1986 Code is 
    amended to read as follows:
                ``(ii) in the case of a transaction with respect to 
            which the requirements of section 355 (or so much of 
            section 356 as relates to section 355) are met, the fact 
            that the shareholders of the distributing corporation 
            dispose of part or all of the distributed stock shall not 
            be taken into account.''.
    (d) Amendments Related to Section 1013 of 1997 Act.--
        (1) Paragraph (5) of section 304(b) of the 1986 Code is amended 
    by striking subparagraph (B) and by redesignating subparagraph (C) 
    as subparagraph (B).
        (2) Subsection (b) of section 304 of the 1986 Code is amended 
    by adding at the end the following new paragraph:
        ``(6) Avoidance of multiple inclusions, etc.--In the case of 
    any acquisition to which subsection (a) applies in which the 
    acquiring corporation or the issuing corporation is a foreign 
    corporation, the Secretary shall prescribe such regulations as are 
    appropriate in order to eliminate a multiple inclusion of any item 
    in income by reason of this subpart and to provide appropriate 
    basis adjustments (including modifications to the application of 
    sections 959 and 961).''.
    (e) Amendments Related to Section 1014 of 1997 Act.--
        (1) Paragraph (1) of section 351(g) of the 1986 Code is amended 
    by adding ``and'' at the end of subparagraph (A) and by striking 
    subparagraphs (B) and (C) and inserting the following new 
    subparagraph:
            ``(B) if (and only if) the transferor receives stock other 
        than nonqualified preferred stock--
                ``(i) subsection (b) shall apply to such transferor; 
            and
                ``(ii) such nonqualified preferred stock shall be 
            treated as other property for purposes of applying 
            subsection (b).''.
        (2) Clause (ii) of section 354(a)(2)(C) of 1986 Code is amended 
    by adding at the end the following new subclause:

                    ``(III) Extension of statute of limitations.--The 
                statutory period for the assessment of any deficiency 
                attributable to a corporation failing to be a family-
                owned corporation shall not expire before the 
                expiration of 3 years after the date the Secretary is 
                notified by the corporation (in such manner as the 
                Secretary may prescribe) of such failure, and such 
                deficiency may be assessed before the expiration of 
                such 3-year period notwithstanding the provisions of 
                any other law or rule of law which would otherwise 
                prevent such assessment.''.

    (f) Amendment Related to Section 1024 of 1997 Act.--Section 
6331(h)(1) of the 1986 Code is amended by striking ``The effect of a 
levy'' and inserting ``If the Secretary approves a levy under this 
subsection, the effect of such levy''.
    (g) Amendments Related to Section 1031 of 1997 Act.--
        (1) Subsection (l) of section 4041 of the 1986 Code is amended 
    by striking ``subsection (e) or (f)'' and inserting ``subsection 
    (f) or (g)''.
        (2) Subsection (b) of section 9502 of the 1986 Code is amended 
    by moving the sentence added at the end of paragraph (1) to the end 
    of such subsection.
        (3) Subsection (c) of section 6421 of the 1986 Code is 
    amended--
            (A) by striking ``(2)(A)'' and inserting ``(2)''; and
            (B) by adding at the end the following sentence: 
        ``Subsection (a) shall not apply to gasoline to which this 
        subsection applies.''.
    (h) Amendments Related to Section 1032 of 1997 Act.--
        (1) Section 1032(a) of the 1997 Act is amended by striking 
    ``Subsection (a) of section 4083'' and inserting ``Paragraph (1) of 
    section 4083(a)''.
        (2) Section 1032(e)(12)(A) of the 1997 Act shall be applied as 
    if ``gasoline, diesel fuel,'' were the material proposed to be 
    stricken.
        (3) Paragraph (1) of section 4082(d) of the 1986 Code is 
    amended to read as follows:
        ``(1) Aviation-grade kerosene.--Subsection (a)(2) shall not 
    apply to aviation-grade kerosene (as determined under regulations 
    prescribed by the Secretary) which the Secretary determines is 
    destined for use as a fuel in an aircraft.''.
        (4) Paragraph (3) of section 4082(d) of the 1986 Code is 
    amended by striking ``a removal, entry, or sale of kerosene to'' 
    and inserting ``kerosene received by''.
        (5) Paragraph (1) of section 4101(e) of the 1986 Code is 
    amended by striking ``dyed diesel fuel and kerosene'' and inserting 
    ``such fuel in a dyed form''.
    (i) Amendment Related to Section 1034 of 1997 Act.--Paragraph (3) 
of section 4251(d) of the 1986 Code is amended by striking ``other 
similar arrangement'' and inserting ``any other similar arrangement''.
    (j) Amendments Related to Section 1041 of 1997 Act.--
        (1) Subparagraph (A) of section 512(b)(13) of the 1986 Code is 
    amended by inserting ``or accrues'' after ``receives''.
        (2) Subclause (I) of section 512(b)(13)(B)(i) of the 1986 Code 
    is amended by striking ``(as defined in section 513A(a)(5)(A))''.
        (3) Paragraph (2) of section 1041(b) of the 1997 Act is amended 
    to read as follows:
        ``(2) Binding contracts.--The amendments made by this section 
    shall not apply to any amount received or accrued during the first 
    2 taxable years beginning on or after the date of the enactment of 
    this Act if such amount is received or accrued pursuant to a 
    written binding contract in effect on June 8, 1997, and at all 
    times thereafter before such amount is received or accrued. The 
    preceding sentence shall not apply to any amount which would (but 
    for the exercise of an option to accelerate payment of such amount) 
    be received or accrued after such 2 taxable years.''.
    (k) Amendments Related to Section 1053 of 1997 Act.--
        (1) Section 853 of the 1986 Code is amended by redesignating 
    subsection (e) as subsection (f) and by inserting after subsection 
    (d) the following new subsection:
    ``(e) Treatment of Taxes Not Allowed as a Credit Under Section 
901(k).--This section shall not apply to any tax with respect to which 
the regulated investment company is not allowed a credit under section 
901 by reason of section 901(k).''.
        (2) Subsection (c) of section 853 of the 1986 Code is amended 
    by striking the last sentence.
        (3) Subparagraph (A) of section 901(k)(4) of the 1986 Code is 
    amended by striking ``securities business'' and inserting 
    ``business as a securities dealer''.
    (l) Amendment Related to Section 1055 of 1997 Act.--Section 
6611(g)(1) of the 1986 Code is amended by striking ``(e), and (h)'' and 
inserting ``and (e)''.
    (m) Amendment Related to Section 1061 of 1997 Act.--Subsection (c) 
of section 751 of the 1986 Code is amended by striking ``731'' each 
place it appears and inserting ``731, 732,''.
    (n) Amendment Related to Section 1083 of 1997 Act.--Section 
1083(a)(2) of the 1997 Act is amended--
        (1) by striking ``21'' and inserting ``20''; and
        (2) by striking ``22'' and inserting ``21''.
    (o) Amendments Related to Section 1084 of 1997 Act.--
        (1) Paragraph (3) of section 264(a) of the 1986 Code is amended 
    by striking ``subsection (c)'' and inserting ``subsection (d)''.
        (2) Paragraph (4) of section 264(a) of the 1986 Code is amended 
    by striking ``subsection (d)'' and inserting ``subsection (e)''.
        (3)(A) Paragraph (4) of section 264(f) of the 1986 Code is 
    amended by adding at the end the following new subparagraph:
            ``(E) Master contracts.--If coverage for each insured under 
        a master contract is treated as a separate contract for 
        purposes of sections 817(h), 7702, and 7702A, coverage for each 
        such insured shall be treated as a separate contract for 
        purposes of subparagraph (A). For purposes of the preceding 
        sentence, the term `master contract' shall not include any 
        group life insurance contract (as defined in section 
        848(e)(2)).''.
        (B) The second sentence of section 1084(d) of the 1997 Act is 
    amended by striking ``but'' and all that follows and inserting 
    ``except that, in the case of a master contract (within the meaning 
    of section 264(f)(4)(E) of the Internal Revenue Code of 1986), the 
    addition of covered lives shall be treated as a new contract only 
    with respect to such additional covered lives.''.
        (4)(A) Clause (iv) of section 264(f)(5)(A) of the 1986 Code is 
    amended by striking the second sentence.
        (B) Subparagraph (B) of section 6724(d)(1) of the 1986 Code is 
    amended by striking ``or'' at the end of clause (xv), by striking 
    the period at the end of clause (xvi) and inserting ``; or'', and 
    by adding at the end the following new clause:
                ``(xvii) section 264(f)(5)(A)(iv) (relating to 
            reporting with respect to certain life insurance and 
            annuity contracts).''.
        (C) Paragraph (2) of section 6724(d) of the 1986 Code is 
    amended by striking ``or'' at the end of subparagraph (Y), by 
    striking the period at the end of subparagraph (Z) and inserting 
    ``or'', and by adding at the end the following new subparagraph:
            ``(AA) section 264(f)(5)(A)(iv) (relating to reporting with 
        respect to certain life insurance and annuity contracts).''.
        (5) Subparagraph (A) of section 264(f)(8) of the 1986 Code is 
    amended by striking ``subsection (d)(5)(B)'' and inserting 
    ``subsection (e)(5)(B)''.
    (p) Amendments Related to Section 1085 of 1997 Act.--
        (1) Paragraph (5) of section 32(c) of the 1986 Code is 
    amended--
            (A) by inserting before the period at the end of 
        subparagraph (A) ``and increased by the amounts described in 
        subparagraph (C)'';
            (B) by adding ``or'' at the end of clause (iii) of 
        subparagraph (B); and
            (C) by striking all that follows subclause (II) of 
        subparagraph (B)(iv) and inserting the following:

                    ``(III) other trades or businesses.

            For purposes of clause (iv), there shall not be taken into 
            account items which are attributable to a trade or business 
            which consists of the performance of services by the 
            taxpayer as an employee.
            ``(C) Certain amounts included.--An amount is described in 
        this subparagraph if it is--
                ``(i) interest received or accrued during the taxable 
            year which is exempt from tax imposed by this chapter; or
                ``(ii) amounts received as a pension or annuity, and 
            any distributions or payments received from an individual 
            retirement plan, by the taxpayer during the taxable year to 
            the extent not included in gross income.
        Clause (ii) shall not include any amount which is not 
        includible in gross income by reason of a trustee-to-trustee 
        transfer or a rollover distribution.''.
        (2) Clause (v) of section 32(c)(2)(B) of the 1986 Code is 
    amended by inserting ``shall be taken into account'' before ``, but 
    only''.
        (3) The text of paragraph (3) of section 1085(a) of the 1997 
    Act is amended to read as follows: ``Paragraph (2) of section 
    6213(g) (relating to the definition of mathematical or clerical 
    errors) is amended by striking ``and'' at the end of subparagraph 
    (I), by striking the period at the end of subparagraph (J) and 
    inserting ``, and'', and by inserting after subparagraph (J) the 
    following new subparagraph:
            ``(K) an omission of information required by section 
        32(k)(2) (relating to taxpayers making improper prior claims of 
        earned income credit).''.
    (q) Amendment Related to Section 1088 of 1997 Act.--Section 
1088(b)(2)(C) of the 1997 Act is amended by inserting ``more than 1 
year'' before ``after''.
    (r) Amendment Related to Section 1089 of 1997 Act.--Paragraphs 
(1)(C) and (2)(C) of section 664(d) of the 1986 Code are each amended 
by adding ``, and'' at the end.

SEC. 6011. AMENDMENTS RELATED TO TITLE XI OF 1997 ACT.

    (a) Amendment Related to Section 1103 of 1997 Act.--Paragraph (3) 
of section 59(a) added by section 1103 of the 1997 Act is redesignated 
as paragraph (4).
    (b) Amendments Related to Section 1121 of 1997 Act.--
        (1) Subsection (e) of section 1297 of the 1986 Code is amended 
    by adding at the end the following new paragraph:
        ``(4) Treatment of holders of options.--Paragraph (1) shall not 
    apply to stock treated as owned by a person by reason of section 
    1298(a)(4) (relating to the treatment of a person that has an 
    option to acquire stock as owning such stock) unless such person 
    establishes that such stock is owned (within the meaning of section 
    958(a)) by a United States shareholder (as defined in section 
    951(b)) who is not exempt from tax under this chapter.''.
        (2) Section 1298(a)(2)(B) of the 1986 Code is amended by adding 
    at the end the following new sentence: ``Section 1297(e) shall not 
    apply in determining whether a corporation is a passive foreign 
    investment company for purposes of this subparagraph.''.
    (c) Amendments Related to Section 1122 of 1997 Act.--
        (1) Section 672(f)(3)(B) of the 1986 Code is amended by 
    striking ``section 1296'' and inserting ``section 1297''.
        (2) Paragraph (1) of section 1291(d) of the 1986 Code is 
    amended by adding at the end the following new sentence: ``In the 
    case of stock which is marked to market under section 475 or any 
    other provision of this chapter, this section shall not apply, 
    except that rules similar to the rules of section 1296(j) shall 
    apply.''.
        (3) Subsection (d) of section 1296 of the 1986 Code is amended 
    by adding at the end the following new sentence: ``In the case of a 
    regulated investment company which elected to mark to market the 
    stock held by such company as of the last day of the taxable year 
    preceding such company's first taxable year for which such company 
    elects the application of this section, the amount referred to in 
    paragraph (1) shall include amounts included in gross income under 
    such mark to market with respect to such stock for prior taxable 
    years.''.
    (d) Amendment Related to Section 1123 of 1997 Act.--Subsection (e) 
of section 1297 of the 1986 Code added by section 1123 of the 1997 Act 
is redesignated as subsection (f).
    (e) Amendments Related to Section 1131 of 1997 Act.--
        (1) Section 991 of the 1986 Code is amended by striking 
    ``except for the tax imposed by chapter 5''.
        (2) Section 6013 of the 1986 Code is amended by striking 
    ``chapters 1 and 5'' each place it appears in paragraphs (1)(A) and 
    (5) of subsection (g) and in subsection (h)(1) and inserting 
    ``chapter 1''.
    (f) Amendment Related to Section 1142 of 1997 Act.--
        (1) Paragraph (2) of section 6038(a) of the 1986 Code is 
    amended by striking ``by regulations''.
        (2) Paragraph (3) of section 6038(a) of the 1986 Code is 
    amended by striking ``such information'' and all that follows 
    through the period and inserting ``the Secretary has prescribed the 
    furnishing of such information on or before the first day of such 
    annual accounting period.''.
        (3) Paragraph (4) of section 6038(e) of the 1986 Code is 
    amended by striking ``corporation'' and inserting ``foreign 
    business entity'' each place it appears.
    (g) Amendment Related to Section 1144 of 1997 Act.--Paragraphs (1) 
and (2) of section 1144(c) of the 1997 Act are each amended by striking 
``6038B(b)'' and inserting ``6038B(c) (as redesignated by subsection 
(b))''.

SEC. 6012. AMENDMENTS RELATED TO TITLE XII OF 1997 ACT.

    (a) Amendment Related to Section 1204 of 1997 Act.--The last 
sentence of section 162(a) of the 1986 Code is amended by striking 
``investigate'' and all that follows and inserting ``investigate or 
prosecute, or provide support services for the investigation or 
prosecution of, a Federal crime.''.
    (b) Amendments Related to Section 1205 of 1997 Act.--
        (1) Section 6311(e)(1) of the 1986 Code is amended by striking 
    ``section 6103(k)(8)'' and inserting ``section 6103(k)(9)''.
        (2) Paragraph (8) of section 6103(k) of the 1986 Code (as added 
    by section 1205(c)(1) of the 1997 Act) is redesignated as paragraph 
    (9).
        (3) Subsection (g) of section 7431 of the 1986 Code added by 
    section 1205 of the 1997 Act is redesignated as subsection (h) and 
    is amended by striking ``(8)'' in the heading and inserting 
    ``(9)''.
        (4) Section 1205(c)(3) of the 1997 Act shall be applied as if 
    it read as follows:
        ``(3) Section 6103(p)(3)(A), as amended by section 
    1026(b)(1)(A) of the 1997 Act, is amended by striking ``or (8)'' 
    and inserting ``(8), or (9)''.
        (5) Section 1213(b) of the 1997 Act is amended by striking 
    ``section 6724(d)(1)(A)'' and inserting ``section 6724(d)(1)''.
    (c) Amendment Related to Section 1221 of 1997 Act.--Paragraph (2) 
of section 774(d) of the 1986 Code is amended by inserting before the 
period ``or 857(b)(3)(D)''.
    (d) Amendment Related to Section 1223 of 1997 Act.--Subsection (c) 
of section 6724 of the 1986 Code is amended by inserting before the 
period ``(more than 100 information returns in the case of a 
partnership having more than 100 partners)''.
    (e) Amendment Related to Section 1226 of 1997 Act.--Section 1226 of 
the 1997 Act is amended by striking ``ending on or'' and inserting 
``beginning''.
    (f) Amendment Related to Section 1231 of 1997 Act.--Subsection (c) 
of section 6211 of the 1986 Code is amended--
        (1) by striking ``Subchapter C'' in the heading and inserting 
    ``Subchapters C and D''; and
        (2) by striking ``subchapter C'' in the text and inserting 
    ``subchapters C and D''.
    (g) Amendment Related to Section 1256 of 1997 Act.--Subparagraph 
(A) of section 857(d)(3) of the 1986 Code is amended by striking 
``earliest accumulated earnings and profits (other than earnings and 
profits to which subsection (a)(2)(A) applies)'' and inserting 
``earliest earnings and profits accumulated in any taxable year to 
which the provisions of this part did not apply''.
    (h) Amendment Related to Section 1285 of 1997 Act.--Section 7430(b) 
of the 1986 Code is amended by redesignating paragraph (5) as paragraph 
(4).

SEC. 6013. AMENDMENTS RELATED TO TITLE XIII OF 1997 ACT.

    (a) Amendments Related to Section 1305 of 1997 Act.--
        (1) Section 646 of the 1986 Code is redesignated as section 
    645.
        (2) The item relating to section 646 in the table of sections 
    for subpart A of part I of subchapter J of chapter 1 of the 1986 
    Code is amended by striking ``Sec. 646'' and inserting ``Sec. 
    645''.
        (3) Paragraph (1) of section 2652(b) of the 1986 Code is 
    amended by striking ``section 646'' and inserting ``section 645''.
        (4)(A) Paragraph (1) of section 2652(b) of the 1986 Code is 
    amended by striking the second sentence.
        (B) Subsection (b) of section 2654 of the 1986 Code is amended 
    by adding at the end the following new sentence: ``For purposes of 
    this subsection, a trust shall be treated as part of an estate 
    during any period that the trust is so treated under section 
    645.''.
    (b) Amendments Related to Section 1309 of 1997 Act.--
        (1) Subsection (b) of section 685 of the 1986 Code is amended 
    by adding at the end the following new flush sentence:
``A trust shall not fail to be treated as meeting the requirement of 
paragraph (6) by reason of the death of an individual but only during 
the 60-day period beginning on the date of such death.''.
        (2) Subsection (f) of section 685 of the 1986 Code is amended 
    by inserting before the period at the end ``and of trusts 
    terminated during the year''.

SEC. 6014. AMENDMENTS RELATED TO TITLE XIV OF 1997 ACT.

    (a) Amendments Related to Section 1421 of 1997 Act.--
        (1) Paragraph (1) of section 5054(a) of the 1986 Code is 
    amended--
            (A) by inserting ``, or imported into the United States and 
        transferred to a brewery free of tax under section 5418,'' 
        after ``produced in the United States'' in the text; and
            (B) by inserting ``; certain imported beer'' after 
        ``produced in the united states'' in the heading.
        (2) Paragraph (2) of section 5054(a) of the 1986 Code is 
    amended by inserting ``and not transferred to a brewery free of tax 
    under section 5418'' after ``United States''.
        (3) Section 5056 of the 1986 Code is amended by striking 
    ``produced in the United States'' each place it appears and 
    inserting ``removed for consumption or sale''.
    (b) Amendments Related to Section 1422 of 1997 Act.--
        (1) Paragraph (2) of section 5043(a) of the 1986 Code is 
    amended by inserting ``which are not transferred to a bonded wine 
    cellar free of tax under section 5364'' after ``foreign wines''.
        (2) Subsection (a) of section 5044 of the 1986 Code is amended 
    by striking ``produced in the United States'' and inserting 
    ``removed from a bonded wine cellar''.
        (3) Section 5364 of the 1986 Code is amended by striking ``Wine 
    imported or brought into'' and inserting ``Natural wine (as defined 
    in section 5381) imported or brought into''.
    (c) Amendment Related to Section 1434 of 1997 Act.--Paragraph (2) 
of section 4052(f) of the 1986 Code is amended by striking ``this 
section'' and inserting ``such section''.
    (d) Amendment Related to Section 1436 of 1997 Act.--Paragraph (2) 
of section 4091(a) of the 1986 Code is amended by inserting ``or on 
which tax has been credited or refunded'' after ``such paragraph''.
    (e) Amendment Related to Section 1453 of 1997 Act.--Subparagraph 
(D) of section 7430(c)(4) of the 1986 Code is amended by striking 
``subparagraph (A)(iii)'' and inserting ``subparagraph (A)(ii)''.

SEC. 6015. AMENDMENTS RELATED TO TITLE XV OF 1997 ACT.

    (a) Amendment Related to Section 1501 of 1997 Act.--Paragraph (8) 
of section 408(p) of the 1986 Code added by section 1501(b) of the 1997 
Act is redesignated as paragraph (9).
    (b) Amendment Related to Section 1505 of 1997 Act.--Section 
1505(d)(2) of the 1997 Act is amended by striking ``(b)(12)'' and 
inserting ``(b)(12)(A)(i)''.
    (c) Amendments Related to Section 1529 of 1997 Act.--
        (1) Section 1529(a) of the 1997 Act is amended to read as 
    follows:
    ``(a) General Rule.--Amounts to which this section applies which 
are received by an individual (or the survivors of the individual) as a 
result of hypertension or heart disease of the individual shall be 
excludable from gross income under section 104(a)(1) of the Internal 
Revenue Code of 1986.''.
        (2) Section 1529(b)(1)(B) of the 1997 Act is amended to read as 
    follows:
            ``(B) under--
                ``(i) a State law (as amended on May 19, 1992) which 
            irrebuttably presumed that heart disease and hypertension 
            are work-related illnesses but only for employees hired 
            before July 1, 1992; or
                ``(ii) any other statute, ordinance, labor agreement, 
            or similar provision as a disability pension payment or in 
            the nature of a disability pension payment attributable to 
            employment as a police officer or fireman, but only if the 
            individual is referred to in the State law described in 
            clause (i); and''.
    (d) Amendment Related to Section 1530 of 1997 Act.--Subparagraph 
(C) of section 404(a)(9) of the 1986 Code (as added by section 1530 of 
the 1997 Act) is redesignated as subparagraph (D) and is amended by 
striking ``A qualified'' and inserting ``Qualified gratuitous 
transfers.--A qualified''.
    (e) Amendment Related to Section 1531 of 1997 Act.--Subsection (f) 
of section 9811 of the 1986 Code (as added by section 1531 of the 1997 
Act) is redesignated as subsection (e).

SEC. 6016. AMENDMENTS RELATED TO TITLE XVI OF 1997 ACT.

    (a) Amendments Related to Section 1601(d) of 1997 Act.--
        (1) Amendments related to section 1601(d)(1)--
            (A) Section 408(p)(2)(D)(i) of the 1986 Code is amended by 
        striking ``or (B)'' in the last sentence.
            (B) Section 408(p) of the 1986 Code is amended by adding at 
        the end the following new paragraph:
        ``(10) Special rules for acquisitions, dispositions, and 
    similar transactions.--
            ``(A) In general.--An employer which fails to meet any 
        applicable requirement by reason of an acquisition, 
        disposition, or similar transaction shall not be treated as 
        failing to meet such requirement during the transition period 
        if--
                ``(i) the employer satisfies requirements similar to 
            the requirements of section 410(b)(6)(C)(i)(II); and
                ``(ii) the qualified salary reduction arrangement 
            maintained by the employer would satisfy the requirements 
            of this subsection after the transaction if the employer 
            which maintained the arrangement before the transaction had 
            remained a separate employer.
            ``(B) Applicable requirement.--For purposes of this 
        paragraph, the term `applicable requirement' means--
                ``(i) the requirement under paragraph (2)(A)(i) that an 
            employer be an eligible employer;
                ``(ii) the requirement under paragraph (2)(D) that an 
            arrangement be the only plan of an employer; and
                ``(iii) the participation requirements under paragraph 
            (4).
            ``(C) Transition period.--For purposes of this paragraph, 
        the term `transition period' means the period beginning on the 
        date of any transaction described in subparagraph (A) and 
        ending on the last day of the second calendar year following 
        the calendar year in which such transaction occurs.''.
            (C) Section 408(p)(2) of the 1986 Code is amended--
                (i) by striking ``the preceding sentence shall apply 
            only in accordance with rules similar to the rules of 
            section 410(b)(6)(C)(i)'' in the last sentence of 
            subparagraph (C)(i)(II) and inserting ``the preceding 
            sentence shall not apply''; and
                (ii) by striking clause (iii) of subparagraph (D).
        (2) Amendment to section 1601 (d)(4).--Section 1601(d)(4)(A) of 
    the 1997 Act is amended--
            (A) by striking ``Section 403(b)(11)'' and inserting 
        ``Paragraphs (7)(A)(ii) and (11) of section 403(b)''; and
            (B) by striking ``403(b)(1)'' in clause (ii) and inserting 
        ``403(b)(10)''.
    (b) Amendment Related to Section 1601(f)(4) of 1997 Act.--
Subsection (d) of section 6427 of the 1986 Code is amended--
        (1) by striking ``Helicopters'' in the heading and inserting 
    ``Other Aircraft Uses''; and
        (2) by inserting ``or a fixed-wing aircraft'' after 
    ``helicopter''.

SEC. 6017. AMENDMENT RELATED TO TRANSPORTATION EQUITY ACT FOR THE 21ST 
              CENTURY.

    (a) In General.--Subparagraph (B) of section 6427(i)(2) of the 1986 
Code is amended to read as follows:
            ``(B) Time for filing claim.--No claim filed under this 
        paragraph shall be allowed unless filed during the first 
        quarter following the last quarter included in the claim.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect as if included in the amendments made by section 9009 of 
the Transportation Equity Act for the 21st Century.

SEC. 6018. AMENDMENTS RELATED TO SMALL BUSINESS JOB PROTECTION ACT OF 
              1996.

    (a) Amendment Related to Section 1116.--Subparagraph (C) of section 
1116(b)(2) of the Small Business Job Protection Act of 1996 is amended 
by striking ``chapter 68'' and inserting ``chapter 61''.
    (b) Amendment Related to Section 1421.--Section 408(d)(7) of the 
1986 Code is amended--
        (1) by inserting ``or 402(k)'' after ``section 402(h)'' in 
    subparagraph (B) thereof; and
        (2) by inserting ``or simple retirement accounts'' after 
    ``pensions'' in the heading thereof.
    (c) Amendment Related to Section 1431.--Subparagraph (E) of section 
1431(c)(1) of the Small Business Job Protection Act of 1996 is amended 
to read as follows:
        ``(E) Section 414(q)(5), as redesignated by subparagraph (A), 
    is amended by striking `under paragraph (4) or the number of 
    officers taken into account under paragraph (5)'''.
    (d) Amendment Related to Section 1604.--Paragraph (3) of section 
1604(b) of such Act is amended--
        (1) by striking ``such Code'' and inserting ``the Internal 
    Revenue Code of 1986''; and
        (2) by striking ``such date of enactment'' and inserting ``the 
    date of the enactment of this Act''.
    (e) Amendment Related to Section 1609.--Paragraph (1) of section 
1609(h) of such Act is amended by striking ``paragraph (3)(A)(i)'' and 
inserting ``paragraph (3)(A)''.
    (f) Amendments Related to Section  1807.--
        (1) Subparagraph (A) of section 23(b)(2) of the 1986 Code 
    (relating to income limitation on credit for adoption expenses) is 
    amended by inserting ``(determined without regard to subsection 
    (c))'' after ``for any taxable year''.
        (2) Paragraph (3) of section 1807(c) of the Small Business Job 
    Protection Act of 1996 is amended by striking ``Clause (i)'' and 
    inserting ``Clause (ii)''.
    (g) Amendment Related to Section 1903.--Subsection (b) of section 
1903 of such Act shall be applied as if ``or'' in the material proposed 
to be stricken were capitalized.
    (h) Effective Date.--The amendments made by this section shall take 
effect as if included in the provisions of the Small Business Job 
Protection Act of 1996 to which they relate.

SEC.6019.AMENDMENTS RELATED TO TAXPAYER BILL OF RIGHTS 2.

    (a) In General.--Subsection (b) of section 6104 of the 1986 Code is 
amended by adding at the end the following new sentence: ``In the case 
of an organization described in section 501(d), this subsection shall 
not apply to copies referred to in section 6031(b) with respect to such 
organization.''.
    (b) Public Inspection.--Subparagraph (C) of section 6104(e)(1) of 
the 1986 Code is amended by adding at the end the following new 
sentence: ``In the case of an organization described in section 501(d), 
subparagraph (A) shall not require the disclosure of the copies 
referred to in section 6031(b) with respect to such organization.''.
    (c) Disclosure to Authorized Representatives of the Taxpayer.--
Paragraph (6) of section 6103(e) of the 1986 Code is amended by 
striking ``or (5)'' and inserting ``(5), (8), or (9)''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 6020. AMENDMENT RELATED TO OMNIBUS BUDGET RECONCILIATION ACT OF 
              1993.

    (a) In General.--Section 196(c) of the 1986 Code is amended by 
striking ``and'' at the end of paragraph (6), by striking the period at 
the end of paragraph (7), and insert ``, and'', and by adding at the 
end the following new paragraph:
        ``(8) the employer Social Security credit determined under 
    section 45B(a).''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in the amendments made by section 13443 of the 
Revenue Reconciliation Act of 1993.

SEC. 6021. AMENDMENT RELATED TO REVENUE RECONCILIATION ACT OF 1990.

    (a) Identification Requirement for Individuals Eligible for Earned 
Income Credit.--Subparagraph (F) of section 32(c)(1) of the 1986 Code 
is amended by striking ``The term `eligible individual' does not 
include any individual who does not include on the return of tax for 
the taxable year--'' and inserting ``No credit shall be allowed under 
this section to an eligible individual who does not include on the 
return of tax for the taxable year--''.
    (b) Identification Requirement for Qualifying Children Under Earned 
Income Credit.--
        (1) In general.--Clause (i) of section 32(c)(3)(D) of the 1986 
    Code is amended to read as follows:
                ``(i) In general.--A qualifying child shall not be 
            taken into account under subsection (b) unless the taxpayer 
            includes the name, age, and TIN of the qualifying child on 
            the return of tax for the taxable year.''.
        (2) Individuals who do not include tin, etc., of any qualifying 
    child.--Paragraph (1) of section 32(c) of the 1986 Code is amended 
    by adding at the end the following new subparagraph:
            ``(G) Individuals who do not include tin, etc., of any 
        qualifying child.--No credit shall be allowed under this 
        section to any eligible individual who has one or more 
        qualifying children if no qualifying child of such individual 
        is taken into account under subsection (b) by reason of 
        paragraph (3)(D).''.
        (3) Conforming amendment.--Subparagraph (A) of section 32(c)(3) 
    is amended by inserting ``and'' at the end of clause (ii), by 
    striking ``, and'' at the end of clause (iii) and inserting a 
    period, and by striking clause (iv).
    (c) Effective Dates.--
        (1) Eligible individuals.--The amendment made by subsection (a) 
    shall take effect as if included in the amendments made by section 
    451 of the Personal Responsibility and Work Opportunity 
    Reconciliation Act of 1996.
        (2) Qualifying children.--The amendments made by subsection (b) 
    shall take effect as if included in the amendments made by section 
    11111 of Revenue Reconciliation Act of 1990.

SEC. 6022. AMENDMENT RELATED TO TAX REFORM ACT OF 1986.

    (a) In General.--Section 6401(b)(1) of the 1986 Code is amended by 
striking ``and D'' and inserting ``D, and G''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect as if included in the amendments made by section 701(b) of 
the Tax Reform Act of 1986.

SEC. 6023. MISCELLANEOUS CLERICAL AND DEADWOOD CHANGES.

        (1) The heading for subparagraph (B) of section 45A(b)(1) of 
    the 1986 Code is amended by striking ``targeted jobs credit'' and 
    inserting ``work opportunity credit''.
        (2) The subsection heading for section 59(b) of the 1986 Code 
    is amended by striking ``Section 936 Credit'' and inserting 
    ``Credits Under Section 30A or 936''.
        (3) Subsection (n) of section 72 of the 1986 Code is amended by 
    inserting ``(as in effect on the day before the date of the 
    enactment of the Small Business Job Protection Act of 1996)'' after 
    ``section 101(b)(2)(D)''.
        (4) Subparagraph (A) of section 72(t)(3) of the 1986 Code is 
    amended by striking ``(A)(v),'' and inserting ``(A)(v)''.
        (5) Clause (ii) of section 142(f)(3)(A) of the 1986 Code is 
    amended by striking ``1997, ('' and inserting ``1997 (''.
        (6) The last sentence of paragraph (3) of section 501(n) of the 
    1986 Code is amended by striking ``subparagraph (C)(ii)'' and 
    inserting ``subparagraph (E)(ii)''.
        (7) Subsection (o) of section 501 of the 1986 Code is amended 
    by striking ``section 1853(e)'' and inserting ``section 1855(d)''.
        (8) The heading for subclause (II) of section 512(b)(17)(B)(ii) 
    of the 1986 Code is amended by striking ``Rule'' and inserting 
    ``rule''.
        (9) Clause (ii) of section 543(d)(5)(A) of the 1986 Code is 
    amended by striking ``section 563(c)'' and inserting ``section 
    563(d)''.
        (10) Subparagraph (B) of section 871(f)(2) of the 1986 Code is 
    amended by striking ``(19 U.S.C. 2462)'' and inserting ``19 U.S.C. 
    2461 et seq.)''.
        (11) Paragraph (2) of section 1017(a) of the 1986 Code is 
    amended by striking ``(b)(2)(D)'' and inserting ``(b)(2)(E)''.
        (12) Subparagraph (D) of section 1250(d)(4) of the 1986 Code is 
    amended by striking ``the last sentence of section 1033(b)'' and 
    inserting ``section 1033(b)(2)''.
        (13) Paragraph (5) of section 3121(a) of the 1986 Code is 
    amended--
            (A) by striking the semicolon at the end of subparagraph 
        (F) and inserting a comma;
            (B) by striking ``or'' at the end of subparagraph (G); and
            (C) by striking the period at the end of subparagraph (I) 
        and inserting a semicolon.
        (14) Paragraph (19) of section 3401(a) of the 1986 Code is 
    amended by inserting ``for'' before ``any benefit provided to''.
        (15) Paragraph (21) of section 3401(a) of the 1986 Code is 
    amended by inserting ``for'' before ``any payment made''.
        (16) Sections 4092(b) and 6427(q)(2) of the 1986 Code are each 
    amended by striking ``section 4041(c)(4)'' and inserting ``section 
    4041(c)(2)''.
        (17) Sections 4221(c) and 4222(d) of the 1986 Code are each 
    amended by striking ``4053(a)(6)'' and inserting ``4053(6)''.
        (18)(A) The heading of section 4973 of the 1986 Code is amended 
    to read as follows:

``SEC. 4973. TAX ON EXCESS CONTRIBUTIONS TO CERTAIN TAX-FAVORED 
              ACCOUNTS AND ANNUITIES.''.

        (B) The item relating to section 4973 in the table of sections 
    for chapter 43 of the 1986 Code is amended to read as follows:
        ``Sec. 4973. Tax on excess contributions to certain tax-favored 
                  accounts and annuities.''.

        (19) Section 4975 of the 1986 Code is amended--
            (A) in subsection (c)(3) by striking ``exempt for the tax'' 
        and inserting ``exempt from the tax''; and
            (B) in subsection (i) by striking ``Secretary of Treasury'' 
        and inserting ``Secretary of the Treasury''.
        (20) Paragraph (1) of section 6039(a) of the 1986 Code is 
    amended by inserting ``to any person'' after ``transfers''.
        (21) Subparagraph (A) of section 6050R(b)(2) of the 1986 Code 
    is amended by striking the semicolon at the end thereof and 
    inserting a comma.
        (22) Subparagraph (A) of section 6103(h)(4) of the 1986 Code is 
    amended by inserting ``if'' before ``the taxpayer is a party to''.
        (23) Paragraph (5) of section 6416(b) of the 1986 Code is 
    amended by striking ``section 4216(e)(1)'' each place it appears 
    and inserting ``section 4216(d)(1)''.
        (24)(A) Section 6421 of the 1986 Code is amended by 
    redesignating subsections (j) and (k) as subsections (i) and (j), 
    respectively.
        (B) Subsection (b) of section 34 of the 1986 Code is amended by 
    striking ``section 6421(j)'' and inserting ``section 6421(i)''.
        (C) Subsections (a) and (b) of section 6421 of the 1986 Code 
    are each amended by striking ``subsection (j)'' and inserting 
    ``subsection (i)''.
        (25) Paragraph (3) of section 6427(f) of the 1986 Code is 
    amended by striking ``, (e),''.
        (26)(A) Section 6427 of the 1986 Code, as amended by paragraph 
    (16), is amended by redesignating subsections (n), (p), (q), and 
    (r) as subsections (m), (n), (o), and (p), respectively.
        (B) Paragraphs (1) and (2)(A) of section 6427(i) of the 1986 
    Code are each amended by striking ``(q)'' and inserting ``(o)''.
        (27) Subsection (m) of section 6501 of the 1986 Code is amended 
    by striking ``election under'' and all that follows through ``(or 
    any'' and inserting ``election under section 30(d)(4), 40(f), 43, 
    45B, 45C(d)(4), or 51(j) (or any''.
        (28) The paragraph heading of paragraph (2) of section 7702B(e) 
    of the 1986 Code is amended by inserting ``section'' after 
    ``Application of''.
        (29) Paragraph (3) of section 7434(b) of the 1986 Code is 
    amended by striking ``attorneys fees'' and inserting ``attorneys' 
    fees''.
        (30) Subparagraph (B) of section 7872(f)(2) of the 1986 Code is 
    amended by striking ``foregone'' and inserting ``forgone''.
        (31) Subsection (e) of section 9502 of the 1986 Code is amended 
    to read as follows:
    ``(e) Certain Taxes on Alcohol Mixtures To Remain in General 
Fund.--For purposes of this section, the amounts which would (but for 
this subsection) be required to be appropriated under subparagraphs 
(A), (C), and (D) of subsection (b)(1) shall be reduced by--
        ``(1) 0.6 cent per gallon in the case of taxes imposed on any 
    mixture at least 10 percent of which is alcohol (as defined in 
    section 4081(c)(3)) if any portion of such alcohol is ethanol; and
        ``(2) 0.67 cent per gallon in the case of fuel used in 
    producing a mixture described in paragraph (1).''.
        (32) The amendments made by this section shall take effect on 
    the date of the enactment of this Act.

SEC. 6024. EFFECTIVE DATE.

    Except as otherwise provided in this title, the amendments made by 
this title shall take effect as if included in the provisions of the 
Taxpayer Relief Act of 1997 to which they relate.

                     TITLE VII--REVENUE PROVISIONS

SEC. 7001. CLARIFICATION OF DEDUCTION FOR DEFERRED COMPENSATION.

    (a) In General.--Section 404(a) (relating to deduction for 
contributions of an employer to an employee's trust or annuity plan and 
compensation under a deferred-payment plan) is amended by adding at the 
end the following new paragraph:
        ``(11) Determinations relating to deferred compensation.--For 
    purposes of determining under this section--
            ``(A) whether compensation of an employee is deferred 
        compensation; and
            ``(B) when deferred compensation is paid,
    no amount shall be treated as received by the employee, or paid, 
    until it is actually received by the employee.''.
    (b) Effective Date.--
        (1) In general.--The amendment made by subsection (a) shall 
    apply to taxable years ending after the date of the enactment of 
    this Act.
        (2) Change in method of accounting.--In the case of any 
    taxpayer required by the amendment made by subsection (a) to change 
    its method of accounting for its first taxable year ending after 
    the date of the enactment of this Act--
            (A) such change shall be treated as initiated by the 
        taxpayer,
            (B) such change shall be treated as made with the consent 
        of the Secretary of the Treasury; and
            (C) the net amount of the adjustments required to be taken 
        into account by the taxpayer under section 481 of the Internal 
        Revenue Code of 1986 shall be taken into account ratably over 
        the 3-taxable year period beginning with such first taxable 
        year.

SEC. 7002. TERMINATION OF EXCEPTION FOR CERTAIN REAL ESTATE INVESTMENT 
              TRUSTS FROM THE TREATMENT OF STAPLED ENTITIES.

    (a) In General.--Notwithstanding paragraph (3) of section 136(c) of 
the Tax Reform Act of 1984 (relating to stapled stock; stapled 
entities), the REIT gross income provisions shall be applied by 
treating the activities and gross income of members of the stapled REIT 
group properly allocable to any nonqualified real property interest 
held by the exempt REIT or any stapled entity which is a member of such 
group (or treated under subsection (c) as held by such REIT or stapled 
entity) as the activities and gross income of the exempt REIT in the 
same manner as if the exempt REIT and such group were one entity.
    (b) Nonqualified Real Property Interest.--For purposes of this 
section--
        (1) In general.--The term ``nonqualified real property 
    interest'' means, with respect to any exempt REIT, any interest in 
    real property acquired after March 26, 1998, by the exempt REIT or 
    any stapled entity.
        (2) Exception for binding contracts, etc.--Such term shall not 
    include any interest in real property acquired after March 26, 
    1998, by the exempt REIT or any stapled entity if--
            (A) the acquisition is pursuant to a written agreement 
        (including a put option, buy-sell agreement, and an agreement 
        relating to a third party default) which was binding on such 
        date and at all times thereafter on such REIT or stapled 
        entity; or
            (B) the acquisition is described on or before such date in 
        a public announcement or in a filing with the Securities and 
        Exchange Commission.
        (3) Improvements and leases.--
            (A) In general.--Except as otherwise provided in this 
        paragraph, the term ``nonqualified real property interest'' 
        shall not include--
                (i) any improvement to land owned or leased by the 
            exempt REIT or any member of the stapled REIT group; and
                (ii) any repair to, or improvement of, any improvement 
            owned or leased by the exempt REIT or any member of the 
            stapled REIT group,
        if such ownership or leasehold interest is a qualified real 
        property interest.
            (B) Leases.--The term ``nonqualified real property 
        interest'' shall not include--
                (i) any lease of a qualified real property interest if 
            such lease is not otherwise such an interest; or
                (ii) any renewal of a lease which is a qualified real 
            property interest,
        but only if the rent on any lease referred to in clause (i) or 
        any renewal referred to in clause (ii) does not exceed an arm's 
        length rate.
            (C) Termination where change in use.--
                (i) In general.--Subparagraph (A) shall not apply to 
            any improvement placed in service after December 31, 1999, 
            which is part of a change in the use of the property to 
            which such improvement relates unless the cost of such 
            improvement does not exceed 200 percent of--

                    (I) the cost of such property; or
                    (II) if such property is substituted basis property 
                (as defined in section 7701(a)(42) of the Internal 
                Revenue Code of 1986), the fair market value of the 
                property at the time of acquisition.

                (ii) Binding contracts.--For purposes of clause (i), an 
            improvement shall be treated as placed in service before 
            January 1, 2000, if such improvement is placed in service 
            before January 1, 2004, pursuant to a binding contract in 
            effect on December 31, 1999, and at all times thereafter.
        (4) Exception for permitted transfers, etc.--The term 
    ``nonqualified real property interest'' shall not include any 
    interest in real property acquired solely as a result of a direct 
    or indirect contribution, distribution, or other transfer of such 
    interest from the exempt REIT or any member of the stapled REIT 
    group to such REIT or any such member, but only to the extent the 
    aggregate of the interests of the exempt REIT and all stapled 
    entities in such interest in real property (determined in 
    accordance with subsection (c)(1)) is not increased by reason of 
    the transfer.
        (5) Treatment of entities which are not stapled, etc. on march 
    26, 1998.--Notwithstanding any other provision of this section, all 
    interests in real property held by an exempt REIT or any stapled 
    entity with respect to such REIT (or treated under subsection (c) 
    as held by such REIT or stapled entity) shall be treated as 
    nonqualified real property interests unless--
            (A) such stapled entity was a stapled entity with respect 
        to such REIT as of March 26, 1998, and at all times thereafter; 
        and
            (B) as of March 26, 1998, and at all times thereafter, such 
        REIT was a real estate investment trust.
        (6) Qualified real property interest.--The term ``qualified 
    real property interest'' means any interest in real property other 
    than a nonqualified real property interest.
    (c) Treatment of Property Held by 10-Percent Sub- sidiaries.--For 
purposes of this section--
        (1) In general.--Any exempt REIT and any stapled entity shall 
    be treated as holding their proportionate shares of each interest 
    in real property held by any 10-percent subsidiary entity of the 
    exempt REIT or stapled entity, as the case may be.
        (2) Property held by 10-percent subsidiaries treated as 
    nonqualified.--
            (A) In general.--Except as provided in subparagraph (B), 
        any interest in real property held by a 10-percent subsidiary 
        entity of an exempt REIT or stapled entity shall be treated as 
        a nonqualified real property interest.
            (B) Exception for interests in real property held on march 
        26, 1998, etc.--In the case of an entity which was a 10-percent 
        subsidiary entity of an exempt REIT or stapled entity on March 
        26, 1998, and at all times thereafter, an interest in real 
        property held by such subsidiary entity shall be treated as a 
        qualified real property interest if such interest would be so 
        treated if held or acquired directly by the exempt REIT or the 
        stapled entity.
        (3) Reduction in qualified real property interests if increase 
    in ownership of subsidiary.--If, after March 26, 1998, an exempt 
    REIT or stapled entity increases its ownership interest in a 
    subsidiary entity to which paragraph (2)(B) applies above its 
    ownership interest in such subsidiary entity as of such date, the 
    additional portion of each interest in real property which is 
    treated as held by the exempt REIT or stapled entity by reason of 
    such increased ownership shall be treated as a nonqualified real 
    property interest.
        (4) Special rules for determining ownership.--For purposes of 
    this subsection--
            (A) percentage ownership of an entity shall be determined 
        in accordance with subsection (e)(4);
            (B) interests in the entity which are acquired by an exempt 
        REIT or a member of the stapled REIT group in any acquisition 
        described in an agreement, announcement, or filing described in 
        subsection (b)(2) shall be treated as acquired on March 26, 
        1998; and
            (C) except as provided in guidance prescribed by the 
        Secretary, any change in proportionate ownership which is 
        attributable solely to fluctuations in the relative fair market 
        values of different classes of stock shall not be taken into 
        account.
        (5) Treatment of 60-percent partnerships.--
            (A) In general.--If, as of March 26, 1998--
                (i) an exempt REIT or stapled entity held directly or 
            indirectly at least 60 percent of the capital or profits 
            interest in a partnership; and
                (ii) 90 percent or more of the capital interests and 90 
            percent or more of the profits interests in such 
            partnership (other than interests held directly or 
            indirectly by the exempt REIT or stapled entity) are, or 
            will be, redeemable or exchangeable for consideration the 
            amount of which is determined by reference to the value of 
            shares of stock in the exempt REIT or stapled entity (or 
            both),
        paragraph (3) shall not apply to such partnership, and such 
        REIT or entity shall be treated for all purposes of this 
        section as holding all of the capital and profits interests in 
        such partnership.
            (B) Limitation to one partnership.--If, as of January 1, 
        1999, more than one partnership owned by any exempt REIT or 
        stapled entity meets the requirements of subparagraph (A), only 
        the largest such partnership on such date (determined by 
        aggregate asset bases) shall be treated as meeting such 
        requirements.
            (C) Mirror entity.--For purposes of subparagraph (A), an 
        interest in a partnership formed after March 26, 1998, shall be 
        treated as held by an exempt REIT or stapled entity on March 
        26, 1998, if such partnership is formed to mirror the stapling 
        of an exempt REIT and a stapled entity in connection with an 
        acquisition agreed to or announced on or before March 26, 1998.
    (d) Treatment of Property Secured by Mortgage Held by Exempt REIT 
or Member of Stapled REIT Group.--
        (1) In general.--In the case of any nonqualified obligation 
    held by an exempt REIT or any member of the stapled REIT group, the 
    REIT gross income provisions shall be applied by treating the 
    exempt REIT as having impermissible tenant service income equal 
    to--
            (A) the interest income from such obligation which is 
        properly allocable to the property described in paragraph (2); 
        and
            (B) the income of any member of the stapled REIT group from 
        services described in paragraph (2) with respect to such 
        property.
    If the income referred to in subparagraph (A) or (B) is of a 10-
    percent subsidiary entity, only the portion of such income which is 
    properly allocable to the exempt REIT's or the stapled entity's 
    interest in the subsidiary entity shall be taken into account.
        (2) Nonqualified obligation.--Except as otherwise provided in 
    this subsection, the term ``nonqualified obligation'' means any 
    obligation secured by a mortgage on an interest in real property if 
    the income of any member of the stapled REIT group for services 
    furnished with respect to such property would be impermissible 
    tenant service income were such property held by the exempt REIT 
    and such services furnished by the exempt REIT.
        (3) Exception for certain market rate obligations.--Such term 
    shall not include any obligation--
            (A) payments under which would be treated as interest if 
        received by a REIT; and
            (B) the rate of interest on which does not exceed an arm's 
        length rate.
        (4) Exception for existing obligations.--Such term shall not 
    include any obligation--
            (A) which is secured on March 26, 1998, by an interest in 
        real property; and
            (B) which is held on such date by the exempt REIT or any 
        entity which is a member of the stapled REIT group on such date 
        and at all times thereafter,
    but only so long as such obligation is secured by such interest, 
    and the interest payable on such obligation is not changed to a 
    rate which exceeds an arm's length rate unless such change is 
    pursuant to the terms of the obligation in effect on March 26, 
    1998. The preceding sentence shall not cease to apply by reason of 
    the refinancing of the obligation if (immediately after the 
    refinancing) the principal amount of the obligation resulting from 
    the refinancing does not exceed the principal amount of the 
    refinanced obligation (immediately before the refinancing) and the 
    interest payable on such refinanced obligation does not exceed an 
    arm's length rate.
        (5) Treatment of entities which are not stapled, etc. on march 
    26, 1998.--A rule similar to the rule of subsection (b)(5) shall 
    apply for purposes of this subsection.
        (6) Increase in amount of nonqualified obligations if increase 
    in ownership of subsidiary.--A rule similar to the rule of 
    subsection (c)(3) shall apply for purposes of this subsection.
        (7) Coordination with subsection (a).--This subsection shall 
    not apply to the portion of any interest in real property that the 
    exempt REIT or stapled entity holds or is treated as holding under 
    this section without regard to this subsection.
    (e) Definitions.--For purposes of this section--
        (1) REIT gross income provisions.--The term ``REIT gross income 
    provisions'' means--
            (A) paragraphs (2), (3), and (6) of section 856(c) of the 
        Internal Revenue Code of 1986; and
            (B) section 857(b)(5) of such Code.
        (2) Exempt reit.--The term ``exempt REIT'' means a real estate 
    investment trust to which section 269B of the Internal Revenue Code 
    of 1986 does not apply by reason of paragraph (3) of section 136(c) 
    of the Tax Reform Act of 1984.
        (3) Stapled reit group.--The term ``stapled REIT group'' means, 
    with respect to an exempt REIT, the group consisting of--
            (A) all entities which are stapled entities with respect to 
        the exempt REIT; and
            (B) all entities which are 10-percent subsidiary entities 
        of the exempt REIT or any such stapled entity.
        (4) 10-percent subsidiary entity.--
            (A) In general.--The term ``10-percent subsidiary entity'' 
        means, with respect to any exempt REIT or stapled entity, any 
        entity in which the exempt REIT or stapled entity (as the case 
        may be) directly or indirectly holds at least a 10-percent 
        interest.
            (B) Exception for certain c corporation subsidiaries of 
        reits.--A corporation which would, but for this subparagraph, 
        be treated as a 10-percent subsidiary of an exempt REIT shall 
        not be so treated if such corporation is taxable under section 
        11 of the Internal Revenue Code of 1986.
            (C) 10-percent interest.--The term ``10-percent interest'' 
        means--
                (i) in the case of an interest in a corporation, 
            ownership of 10 percent (by vote or value) of the stock in 
            such corporation;
                (ii) in the case of an interest in a partnership, 
            ownership of 10 percent of the capital or profits interest 
            in the partnership; and
                (iii) in any other case, ownership of 10 percent of the 
            beneficial interests in the entity.
        (5) Other definitions.--Terms used in this section which are 
    used in section 269B or section 856 of such Code shall have the 
    respective meanings given such terms by such section.
    (f) Guidance.--The Secretary may prescribe such guidance as may be 
necessary or appropriate to carry out the purposes of this section, 
including guidance to prevent the avoidance of such purposes and to 
prevent the double counting of income.
    (g) Effective Date.--This section shall apply to taxable years 
ending after March 26, 1998.

SEC. 7003. CERTAIN CUSTOMER RECEIVABLES INELIGIBLE FOR MARK TO MARKET 
              TREATMENT.

    (a) Certain Receivables Not Eligible for Mark to Market.--Section 
475(c) (relating to definitions) is amended by adding at the end the 
following new paragraph:
        ``(4) Special rules for certain receivables.--
            ``(A) In general.--Paragraph (2)(C) shall not include any 
        nonfinancial customer paper.
            ``(B) Nonfinancial customer paper.--For purposes of 
        subparagraph (A), the term `nonfinancial customer paper' means 
        any receivable which--
                ``(i) is a note, bond, debenture, or other evidence of 
            indebtedness;
                ``(ii) arises out of the sale of nonfinancial goods or 
            services by a person the principal activity of which is the 
            selling or providing of nonfinancial goods or services; and
                ``(iii) is held by such person (or a person who bears a 
            relationship to such person described in section 267(b) or 
            707(b)) at all times since issue.''.
    (b) Regulations.--Section 475(g) is amended by striking ``and'' at 
the end of paragraph (1), by striking the period at the end of 
paragraph (2) and inserting ``, and'', and by adding at the end the 
following new paragraph:
        ``(3) to prevent the use by taxpayers of subsection (c)(4) to 
    avoid the application of this section to a receivable that is 
    inventory in the hands of the taxpayer (or a person who bears a 
    relationship to the taxpayer described in sections 267(b) of 
    707(b)).''.
    (c) Effective Date.--
        (1) In general.--The amendments made by this section shall 
    apply to taxable years ending after the date of the enactment of 
    this Act.
        (2) Change in method of accounting.--In the case of any 
    taxpayer required by the amendments made by this section to change 
    its method of accounting for its first taxable year ending after 
    the date of the enactment of this Act--
            (A) such change shall be treated as initiated by the 
        taxpayer;
            (B) such change shall be treated as made with the consent 
        of the Secretary of the Treasury; and
            (C) the net amount of the adjustments required to be taken 
        into account by the taxpayer under section 481 of the Internal 
        Revenue Code of 1986 shall be taken into account ratably over 
        the 4-taxable-year period beginning with such first taxable 
        year.

SEC. 7004. MODIFICATION OF AGI LIMIT FOR CONVERSIONS TO ROTH IRAS.

    (a) In General.--Section 408A(c)(3)(C)(i) (relating to limits based 
on modified adjusted gross income) is amended to read as follows:
                ``(i) adjusted gross income shall be determined in the 
            same manner as under section 219(g)(3), except that--

                    ``(I) any amount included in gross income under 
                subsection (d)(3) shall not be taken into account; and
                    ``(II) any amount included in gross income by 
                reason of a required distribution under a provision 
                described in paragraph (5) shall not be taken into 
                account for purposes of subparagraph (B)(i).''.

    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2004.

TITLE VIII--IDENTIFICATION OF LIMITED TAX BENEFITS SUBJECT TO LINE ITEM 
                                  VETO

SEC. 8001. IDENTIFICATION OF LIMITED TAX BENEFITS SUBJECT TO LINE ITEM 
              VETO.

    Section 1021(a)(3) of the Congressional Budget and Impoundment 
Control Act of 1974 shall only apply to--
        (1) section 3105 (relating to administrative appeal of adverse 
    IRS determination of tax-exempt status of bond issue); and
        (2) section 3445(c) (relating to State fish and wildlife 
    permits).

 TITLE IX--TECHNICAL CORRECTIONS TO TRANSPORTATION EQUITY ACT FOR THE 
                              21ST CENTURY

SEC. 9001. SHORT TITLE.

    This title may be cited as the ``TEA 21 Restoration Act''.

SEC. 9002. AUTHORIZATION AND PROGRAM SUBTITLE.

    (a) Authorization of Appropriations.--Section 1101(a) of the 
Transportation Equity Act for the 21st Century is amended--
        (1) in paragraph (13)--
            (A) by striking ``$1,025,695,000'' and inserting 
        ``$1,029,583,500'';
            (B) by striking ``$1,398,675,000'' and inserting 
        ``$1,403,977,500'';
            (C) by striking ``$1,678,410,000'' the first place it 
        appears and inserting ``$1,684,773,000'';
            (D) by striking ``$1,678,410,000'' the second place it 
        appears and inserting ``$1,684,773,000'';
            (E) by striking ``$1,771,655,000'' the first place it 
        appears and inserting ``$1,778,371,500''; and
            (F) by striking ``$1,771,655,000'' the second place it 
        appears and inserting ``$1,778,371,500''; and
        (2) in paragraph (14)--
            (A) by striking ``1998'' and inserting ``1999''; and
            (B) by inserting before ``$5,000,000'' the following: 
        ``$10,000,000 for fiscal year 1998 and''.
    (b) Obligation Limitations.--
        (1) General limitation.--Section 1102(a) of such Act is 
    amended--
            (A) in paragraph (2) by striking ``$25,431,000,000'' and 
        inserting ``$25,511,000,000'';
            (B) in paragraph (3) by striking ``$26,155,000,000'' and 
        inserting ``$26,245,000,000'';
            (C) in paragraph (4) by striking ``$26,651,000,000'' and 
        inserting ``$26,761,000,000'';
            (D) in paragraph (5) by striking ``$27,235,000,000'' and 
        inserting ``$27,355,000,000''; and
            (E) in paragraph (6) by striking ``$27,681,000,000'' and 
        inserting ``$27,811,000,000''.
        (2) Transportation research programs.--Section 1102(e) of such 
    Act is amended--
            (A) by striking ``3'' and inserting ``5'';
            (B) by striking ``VI'' and inserting ``V''; and
            (C) by inserting before the period at the end the 
        following: ``; except that obligation authority made available 
        for such programs under such limitations shall remain available 
        for a period of 3 fiscal years''.
        (3) Redistribution of certain authorized funds.-- Section 
    1102(f) of such Act is amended by striking ``(other than the 
    program under section 160 of title 23, United States Code)''.
    (c) Apportionments.--Section 1103 of such Act is amended--
        (1) in subsection (l) by adding at the end the following:
        ``(5) Section 150 of such title, and the item relating to such 
    section in the analysis for chapter 1 of such title, are 
    repealed.'';
        (2) in subsection (n) by inserting ``of title 23, United States 
    Code'' after ``206''; and
        (3) by adding at the end the following:
    ``(o) Technical Adjustments.--Section 104 of title 23, United 
States Code, is amended--
        ``(1) in subsection (a)(1) (as amended by subsection (a) of 
    this section) by striking `under section 103';
        ``(2) in subsection (b) (as amended by subsection (b) of this 
    section)--
            ``(A) in paragraph (1)(A) by striking `1999 through 2003' 
        and inserting `1998 through 2002'; and
            ``(B) in paragraph (4)(B)(i) by striking `on lanes on 
        Interstate System' and all that follows through `in each State' 
        and inserting `on Interstate System routes open to traffic in 
        each State'; and
        ``(3) in subsection (e)(2) (as added by subsection (d)(6) of 
    this section) by striking `104, 144, or 157' and inserting `104, 
    105, or 144'.''.
    (d) Minimum Guarantee.--Section 1104 of such Act is amended by 
adding at the end the following:
    ``(c) Technical Adjustments.--Section 105 of title 23, United 
States Code (as amended by subsection (a) of this section), is 
amended--
        ``(1) in subsection (a) by adding at the end the following: 
    `The minimum amount allocated to a State under this section for a 
    fiscal year shall be $1,000,000.';
        ``(2) in subsection (c)(1) by striking `50 percent of';
        ``(3) in subsection (c)(1)(A) by inserting `(other than 
    metropolitan planning, minimum guarantee, high priority projects, 
    Appalachian development highway system, and recreational trails 
    programs)' after `subsection (a)';
        ``(4) in subsection (c)(1)(B) by striking `all States' and 
    inserting `each State';
        ``(5) in subsection (c)(2)--
            ``(A) by striking `apportion' and inserting `administer'; 
        and
            ``(B) by striking `apportioned' and inserting 
        `administered'; and
        ``(6) in subsection (f)--
            ``(A) by inserting `percentage' before `return' each place 
        it appears;
            ``(B) in paragraph (2) by striking `for the preceding 
        fiscal year was equal to or less than' and inserting `in the 
        table in subsection (b) was equal to'; and
            ``(C) in paragraph (3)--
                ``(i) by inserting `proportionately' before `adjust';
                ``(ii) by striking `set forth'; and
                ``(iii) by striking `do not exceed' and inserting `is 
            equal to'.''.
    (e) Revenue Aligned Budget Authority.--Section 1105 of such Act is 
amended by adding at the end the following:
    ``(c) Technical Corrections.--Section 110 of such title (as amended 
by subsection (a)) is amended--
        ``(1) by striking subsection (a) and inserting the following:
    `(a) In General.--
        `(1) Allocation.--On October 15 of fiscal year 2000 and each 
    fiscal year thereafter, the Secretary shall allocate for such 
    fiscal year an amount of funds equal to the amount determined 
    pursuant to section 251(b)(1)(B)(ii)(I)(cc) of the Balanced Budget 
    and Emergency Deficit Control Act of 1985 (2 U.S.C 
    901(b)(2)(B)(ii)(I)(cc)) if the amount determined pursuant to such 
    section for such fiscal year is greater than zero.
        `(2) Reduction.--If the amount determined pursuant to section 
    251(b)(1)(B)(ii)(I)(cc) of the Balanced Budget and Emergency 
    Deficit Control Act of 1985 (2 U.S.C 901(b)(2)(B)(ii)(I)(cc)) for 
    fiscal year 2000 or any fiscal year thereafter is less than zero, 
    the Secretary on October 1 of the succeeding fiscal year shall 
    reduce proportionately the amount of sums authorized to be 
    appropriated from the Highway Trust Fund (other than the Mass 
    Transit Account) to carry out each of the Federal-aid highway and 
    highway safety construction programs (other than emergency relief) 
    by an aggregate amount equal to the amount determined pursuant to 
    such section.';
        ``(2) in subsections (b)(2) and (b)(4) by striking `subsection 
    (a)' and inserting `subsection (a)(1)'; and
        ``(3) in subsection (c) by striking `Maintenance program, the' 
    and inserting `and'.''.
    (f) Interstate Maintenance Program.--Section 1107 of such Act is 
amended by adding at the end the following:
    ``(d) Technical Amendments.--Section 119 of such title (as amended 
by subsection (a)) is amended--
        ``(1) in subsection (b)--
            ``(A) by striking `104(b)(5)(B)' and inserting `104(b)(4)'; 
        and
            ``(B) by striking `104(b)(5)(A)' each place it appears and 
        inserting `104(b)(5)(A) (as in effect on the date before the 
        date of enactment of the Transportation Equity Act for the 21st 
        Century)'; and
        ``(2) in subsection (c) by striking `104(b)(5)(B)' each place 
    it appears and inserting `104(b)(4)'.''.
    (g) Congestion Mitigation and Air Quality Improvement Program.--
Section 1110(d)(2) of such Act is amended--
        (1) by striking ``149(c)'' and inserting ``149(e)''; and
        (2) by striking ``that reduce'' and inserting ``reduce''.
    (h) Highway Use Tax Evasion Projects.--Section 1114 of such Act is 
amended by adding at the end the following:
    ``(c) Technical Adjustments.--Section 143 of title 23, United 
States Code (as amended by subsection (a) of this section), is 
amended--
        ``(1) in subsection (c)(1) by striking `April 1' and inserting 
    `August 1';
        ``(2) in subsection (c)(3) by inserting `priority' after 
    `Funding'; and
        ``(3) in subsection (c)(3) by inserting `and prior to funding 
    any other activity under this section,' after `2003,'.''.
    (i) Federal Lands Highways Program.--Section 1115 of the 
Transportation Equity Act for the 21st Century is amended by adding at 
the end the following:
    ``(f) Conforming Amendments.--
        ``(1) Federal share.--Subsections (j) and (k) of section 120 of 
    title 23, United States Code (as added by subsection (a) of this 
    section), are redesignated as subsections (k) and (l), 
    respectively.
        ``(2) Reservation of funds.--Section 202(d)(4)(B) of such title 
    (as added by subsection (b)(4) of this section) is amended by 
    striking `to, apply sodium acetate/formate de-icer to,' and 
    inserting `, sodium acetate/formate, or other environmentally 
    acceptable, minimally corrosive anti-icing and de-icing 
    compositions'.
        ``(3) Elimination of duplicative provision.--Section 144(g) of 
    such title is amended by striking paragraph (4).''.
    (j) Woodrow Wilson Memorial Bridge Correction.--Section 1116 of 
such Act is amended by adding at the end the following:
    ``(e) Technical Correction.--Sections 404(5) and 407(c)(2)(C)(iii) 
of such Act (as amended by subsections (a)(2) and (b)(2), respectively) 
are amended by striking `the record of decision' each place it appears 
and inserting `a record of decision'.''.
    (k) Technical Correction.--Section 1117 of such Act is amended in 
subsections (a) and (b) by striking ``section 102'' each place it 
appears and inserting ``section 1101(a)(6)''.

SEC. 9003. RESTORATIONS TO GENERAL PROVISIONS SUBTITLE.

    (a) In General.--Subtitle B of title I of the Transportation Equity 
Act for the 21st Century is amended by adding at the end the following:

``SEC. 1224. NATIONAL HISTORIC COVERED BRIDGE PRESERVATION.

    ``(a) Historic Covered Bridge Defined.--In this section, the term 
`historic covered bridge' means a covered bridge that is listed or 
eligible for listing on the National Register of Historic Places.
    ``(b) Historic Covered Bridge Preservation.--Subject to the 
availability of appropriations under subsection (d), the Secretary 
shall--
        ``(1) collect and disseminate information concerning historic 
    covered bridges;
        ``(2) foster educational programs relating to the history and 
    construction techniques of historic covered bridges;
        ``(3) conduct research on the history of historic covered 
    bridges; and
        ``(4) conduct research, and study techniques, on protecting 
    historic covered bridges from rot, fire, natural disasters, or 
    weight-related damage.
    ``(c) Direct Federal Assistance.--
        ``(1) In general.--Subject to the availability of 
    appropriations, the Secretary shall make a grant to a State that 
    submits an application to the Secretary that demonstrates a need 
    for assistance in carrying out 1 or more historic covered bridge 
    projects described in paragraph (2).
        ``(2) Types of project.--A grant under paragraph (1) may be 
    made for a project--
            ``(A) to rehabilitate or repair a historic covered bridge; 
        and
            ``(B) to preserve a historic covered bridge, including 
        through--
                ``(i) installation of a fire protection system, 
            including a fireproofing or fire detection system and 
            sprinklers;
                ``(ii) installation of a system to prevent vandalism 
            and arson; or
                ``(iii) relocation of a bridge to a preservation site.
        ``(3) Authenticity.--A grant under paragraph (1) may be made 
    for a project only if--
            ``(A) to the maximum extent practicable, the project--
                ``(i) is carried out in the most historically 
            appropriate manner; and
                ``(ii) preserves the existing structure of the historic 
            covered bridge; and
            ``(B) the project provides for the replacement of wooden 
        components with wooden components, unless the use of wood is 
        impracticable for safety reasons.
        ``(4) Federal share.--The Federal share of the cost of a 
    project carried out with a grant under this subsection shall be 80 
    percent.
    ``(d) Funding.--There is authorized to be appropriated to carry out 
this section $10,000,000 for each of fiscal years 1999 through 2003. 
Such funds shall remain available until expended.

``SEC. 1225. SUBSTITUTE PROJECT.

    ``(a) Approval of Project.--Notwithstanding any other provision of 
law, upon the request of the Mayor of the District of Columbia, the 
Secretary may approve substitute highway and transit projects under 
section 103(e)(4) of title 23, United States Code (as in effect on the 
day before the date of enactment of this Act), in lieu of construction 
of the Barney Circle Freeway project in the District of Columbia, as 
identified in the 1991 Interstate Cost Estimate.
    ``(b) Eligibility for Federal Assistance.--Upon approval of any 
substitute project or projects under subsection (a)--
        ``(1) the cost of construction of the Barney Circle Freeway 
    Modification project shall not be eligible for funds authorized 
    under section 108(b) of the Federal-Aid Highway Act of 1956; and
        ``(2) substitute projects approved pursuant to this section 
    shall be funded from interstate construction funds apportioned or 
    allocated to the District of Columbia that are not expended and not 
    subject to lapse on the date of enactment of this Act.
    ``(c) Federal Share.--The Federal share payable on account of a 
project or activity approved under this section shall be 85 percent of 
the cost thereof; except that the exception set forth in section 
120(b)(2) of title 23, United States Code, shall apply.
    ``(d) Limitation on Eligibility.--Any substitute project approved 
pursuant to subsection (a) (for which the Secretary finds that 
sufficient Federal funds are available) must be under contract for 
construction, or construction must have commenced, before the last day 
of the 4-year period beginning on the date of enactment of this Act. If 
the substitute project is not under contract for construction, or 
construction has not commenced, by such last day, the Secretary shall 
withdraw approval of the substitute project.

``SEC. 1226. FISCAL, ADMINISTRATIVE, AND OTHER AMENDMENTS.

    ``(a) Advanced Construction.--Section 115 of title 23, United 
States Code, is amended--
        ``(1) in subsection (b)--
            ``(A) by moving the text of paragraph (1) (including 
        subparagraphs (A) and (B)) 2 ems to the left;
            ``(B) by striking `Projects' and all that follows through 
        `When a State' and inserting `Projects.--When a State';
            ``(C) by striking paragraphs (2) and (3);
            ``(D) by striking `(A) prior' and inserting `(1) prior'; 
        and
            ``(E) by striking `(B) the project' and inserting `(2) the 
        project';
        ``(2) by striking subsection (c); and
        ``(3) by redesignating subsection (d) as subsection (c).
    ``(b) Availability of Funds.--Section 118 of such title is 
amended--
        ``(1) in the subsection heading of subsection (b) by striking 
    `; Discretionary Projects'; and
        ``(2) by striking subsection (e) and inserting the following:
    `(e) Effect of Release of Funds.--Any Federal-aid highway funds 
released by the final payment on a project, or by the modification of 
the project agreement, shall be credited to the same program funding 
category previously apportioned to the State and shall be immediately 
available for expenditure.'.''.
    ``(c) Advances to States.--Section 124 of such title is amended--
        ``(1) by striking `(a)' the first place it appears; and
        ``(2) by striking subsection (b).
    ``(d) Diversion.--Section 126 of such title, and the item relating 
to such section in the analysis for chapter 1 of such title, are 
repealed.''.
    (b) Conforming Amendment.--The table of contents contained in 
section 1(b) of such Act is amended by inserting after the item 
relating to section 1222 the following:
``Sec. 1223. Transportation assistance for Olympic cities.
``Sec. 1224. National historic covered bridge preservation.
``Sec. 1225. Substitute project.
``Sec. 1226. Fiscal, administrative, and other amendments.''.

    (c) Metropolitan Planning Technical Adjustment.--Section 1203 of 
such Act is amended by adding at the end the following:
    ``(o) Technical Adjustment.--Section 134(h)(5)(A) of title 23, 
United States Code (as amended by subsection (h) of this section), is 
amended by striking `for implementation'.''.
    (d) Amendments to Prior Surface Transportation Laws.--Section 1211 
of such Act is amended--
        (1) in subsection (i)(3)(E) by striking ``subparagraph (D)'' 
    and inserting ``subparagraph (C)'';
        (2) in subsection (i) by adding at the end the following:
        ``(4) Technical amendments.--Section 1105(e)(5)(B)(i) of such 
    Act (as amended by paragraph (3) of this subsection) is amended--
            ``(A) by striking `subsection (c)(18)(B)(i)' and inserting 
        `subsection (c)(18)(D)(i)';
            ``(B) by striking `subsection (c)(18)(B)(ii)' and inserting 
        `subsection (c)(18)(D)(ii)'; and
            ``(C) by adding at the end the following: `The portion of 
        the route referred to in subsection (c)(36) is designated as 
        Interstate Route I-86.'.'';
        (3) by striking subsection (j);
        (4) in subsection (k)--
            (A) by striking ``along'' in paragraph (1) and inserting 
        ``from''; and
            (B) by adding at the end the following:
        ``(4) Texas state highway 99.--Texas State Highway 99 (also 
    known as `Grand Parkway') shall be considered as one option in the 
    I-69 route studies performed by the Texas Department of 
    Transportation for the designation of I-69 Bypass in Houston, 
    Texas.''; and
        (5) by redesignating subsections (g) through (i) and (k) 
    through (n) as subsections (f) through (h) and (i) through (l), 
    respectively.
    (e) Miscellaneous.--Section 1212 of such Act is amended--
        (1) in the second sentence of subsection (q)(1) by striking 
    ``advance curriculum'' and inserting ``advanced curriculum'';
        (2) in subsection (r)--
            (A) by redesignating paragraph (2) as paragraph (3); and
            (B) by inserting after paragraph (1) the following:
        ``(2) Authorization of appropriations.--There are authorized to 
    be appropriated from the Highway Trust Fund (other than the Mass 
    Transit Account) to carry out paragraph (1) $2,000,000 for fiscal 
    year 1999 and $2,500,000 for fiscal year 2000.'';
        (3) in subsection (s)--
            (A) by redesignating paragraph (2) as paragraph (3); and
            (B) by inserting after paragraph (1) the following:
        ``(2) Authorization of appropriations.--There is authorized to 
    be appropriated from the Highway Trust Fund (other than the Mass 
    Transit Account) to carry out paragraph (1) $23,000,000 for fiscal 
    year 1999.'';
        (4) in subsection (u)--
            (A) by inserting ``the Secretary shall approve, and'' 
        before ``the Commonwealth'';
            (B) by inserting a comma after ``with''; and
            (C) by inserting ``(as redefined by this Act)'' after 
        ``80''; and
        (5) by redesignating subsections (k) through (z) as subsections 
    (e) through (t), respectively.
    (f) Puerto Rico Highway Program.--Section 1214(r) of the 
Transportation Equity Act for the 21st Century is amended by adding at 
the end the following:
        ``(3) Treatment of funds.--Amounts made available to carry out 
    this subsection for a fiscal year shall be administered as follows:
            ``(A) For purposes of this subsection, such amounts shall 
        be treated as being apportioned to Puerto Rico under sections 
        104(b), 144, and 206 of title 23, United States Code, for each 
        program funded under such sections in an amount determined by 
        multiplying--
                ``(i) the aggregate of such amounts for the fiscal 
            year; by
                ``(ii) the ratio that--

                    ``(I) the amount of funds apportioned to Puerto 
                Rico for each such program for fiscal year 1997; bears 
                to
                    ``(II) the total amount of funds apportioned to 
                Puerto Rico for all such programs for fiscal year 1997.

            ``(B) The amounts treated as being apportioned to Puerto 
        Rico under each section referred to in subparagraph (A) shall 
        be deemed to be required to be apportioned to Puerto Rico under 
        such section for purposes of the imposition of any penalty 
        provisions in titles 23 and 49, United States Code.
            ``(C) Subject to subparagraph (B), nothing in this 
        subsection shall be construed as affecting any allocation under 
        section 105 of title 23, United States Code, and any 
        apportionment under sections 104 and 144 of such title.''.
    (g) Designated Transportation Enhancement Activities.--Section 1215 
of such Act--
        (1) is amended in each of subsections (d), (e), (f), and (g)--
            (A) by redesignating paragraph (2) as paragraph (3); and
            (B) by inserting after paragraph (1) the following:
        ``(2) Authorization of appropriations.--There are authorized to 
    be appropriated from the Highway Trust Fund (other than the Mass 
    Transit Account) to carry out paragraph (1) the amounts specified 
    in such paragraph for the fiscal years specified in such 
    paragraph.''; and
        (2) in subsection (d)(1) by inserting ``on Route 50'' after 
    ``measures''.
    (h) Eligibility.--Section 1217 of such Act is amended--
        (1) in subsection (d) by striking ``104(b)(4)'' and inserting 
    ``104(b)(5)(A)'';
        (2) in subsection (i) by striking ``120(l)(1)'' and inserting 
    ``120(j)(1)''; and
        (3) in subsection (j) by adding at the end the following: 
    ``$3,000,000 of the amounts made available for item 164 of the 
    table contained in section 1602 shall be made available on October 
    1, 1998, to the Pennsylvania Turnpike Commission to carry out this 
    subsection.''.
    (i) Magnetic Levitation Transportation Technology Deployment 
Program.--Section 1218 of such Act is amended by adding at the end the 
following:
    ``(c) Technical Amendments.--Section 322 of title 23, United States 
Code (as added by subsection (a) of this section), is amended--
        ``(1) in subsection (a)(3) by striking `or under 50 miles per 
    hour';
        ``(2) in subsection (d)--
            ``(A) in paragraph (1) by striking `or low-speed'; and
            ``(B) in paragraph (2)--
                ``(i) in subparagraph (A) by striking `(h)(1)(A)' and 
            inserting `(h)(1)'; and
                ``(ii) in subparagraph (B) by striking `(h)(4)' and 
            inserting `(h)(3)';
        ``(3) in subsection (h)(1)(B)(i) by inserting `(other than 
    subsection (i))' after `this section'; and
        ``(4) by adding at the end the following:
    `(i) Low-Speed Project.--
        `(1) In general.--Notwithstanding any other provision of this 
    section, of the funds made available by subsection (h)(1)(A) to 
    carry out this section, $5,000,000 shall be made available to the 
    Secretary to make grants for the research and development of low-
    speed superconductivity magnetic levitation technology for public 
    transportation purposes in urban areas to demonstrate energy 
    efficiency, congestion mitigation, and safety benefits.
        `(2) Noncontract authority authorization of appropriations.--
            `(A) In general.--There are authorized to be appropriated 
        from the Highway Trust Fund (other than the Mass Transit 
        Account) to carry out this subsection such sums as are 
        necessary for each of fiscal years 2000 through 2003.
            `(B) Availability.--Notwithstanding section 118(a), funds 
        made available under subparagraph (A)--
                `(i) shall not be available in advance of an annual 
            appropriation; and
                `(ii) shall remain available until expended.'.''.
    (j) Transportation Assistance for Olympic Cities.--Section 1223(f) 
of such Act is amended by inserting before the period at the end the 
following: ``or Special Olympics International''.

SEC. 9004. RESTORATIONS TO PROGRAM STREAMLINING AND FLEXIBILITY 
              SUBTITLE.

    (a) In General.--Subtitle C of title I of the Transportation Equity 
Act for the 21st Century is amended by adding at the end the following:

``SEC. 1311. DISCRETIONARY GRANT SELECTION CRITERIA AND PROCESS.

    ``(a) Establishment of Criteria.--The Secretary shall establish 
criteria for all discretionary programs funded from the Highway Trust 
Fund (other than the Mass Transit Account). To the extent practicable, 
such criteria shall conform to the Executive Order No. 12893 (relating 
to infrastructure investment).
    ``(b) Selection Process.--
        ``(1) Limitation on acceptance of applications.--Before 
    accepting applications for grants under any discretionary program 
    for which funds are authorized to be appropriated from the Highway 
    Trust Fund (other than the Mass Transit Account) by this Act 
    (including the amendments made by this Act), the Secretary shall 
    publish the criteria established under subsection (a). Such 
    publication shall identify all statutory criteria and any criteria 
    established by regulation that will apply to the program.
        ``(2) Explanation.--Not less often than quarterly, the 
    Secretary shall submit to the Committee on Environment and Public 
    Works of the Senate and the Committee on Transportation and 
    Infrastructure of the House of Representatives a list of the 
    projects selected under discretionary programs funded from the 
    Highway Trust Fund (other than the Mass Transit Account) and an 
    explanation of how the projects were selected based on the criteria 
    established under subsection (a).
    ``(c) Minimum Covered Programs.--At a minimum, the criteria 
established under subsection (a) and the selection process established 
by subsection (b) shall apply to the following programs:
        ``(1) The intelligent transportation system deployment program 
    under title V.
        ``(2) The national corridor planning and development program.
        ``(3) The coordinated border infrastructure and safety program.
        ``(4) The construction of ferry boats and ferry terminal 
    facilities.
        ``(5) The national scenic byways program.
        ``(6) The Interstate discretionary program.
        ``(7) The discretionary bridge program.''.
    (b) Conforming Amendments.--The table of contents contained in 
section 1(b) of such Act is amended--
        (1) by striking the following:
``Sec. 1309. Major investment study integration.''.

        and inserting the following:
``Sec. 1308. Major investment study integration.'';

        and
        (2) by inserting after the item relating to section 1310 the 
    following:
``Sec. 1311. Discretionary grant selection criteria and process.''.

    (c) Review Process.--Section 1309 of the Transportation Equity Act 
for the 21st Century is amended--
        (1) in subsection (a)(1) by inserting after ``highway 
    construction'' the following: ``and mass transit'';
        (2) in subsection (d) by inserting after ``Code,'' the 
    following: ``or chapter 53 of title 49, United States Code,''; and
        (3) in subsection (e)(1)--
            (A) by inserting ``or recipient'' after ``a State'';
            (B) by inserting after ``provide funds'' the following: 
        ``for a highway project''; and
            (C) by inserting after ``Code,'' the following: ``or for a 
        mass transit project made available under chapter 53 of title 
        49, United States Code,''.

SEC. 9005. RESTORATIONS TO SAFETY SUBTITLE.

    (a) In General.--Subtitle D of title I of the Transportation Equity 
Act for the 21st Century is amended by adding at the end the following:

``SEC. 1405. OPEN CONTAINER LAWS.

    ``(a) Establishment.--Chapter 1 of title 23, United States Code, is 
amended by inserting after section 153 the following:

`Sec. 154. Open container requirements

    `(a) Definitions.--In this section, the following definitions 
apply:
        `(1) Alcoholic beverage.--The term ``alcoholic beverage'' has 
    the meaning given the term in section 158(c).
        `(2) Motor vehicle.--The term ``motor vehicle'' means a vehicle 
    driven or drawn by mechanical power and manufactured primarily for 
    use on public highways, but does not include a vehicle operated 
    exclusively on a rail or rails.
        `(3) Open alcoholic beverage container.--The term ``open 
    alcoholic beverage container'' means any bottle, can, or other 
    receptacle--
            `(A) that contains any amount of alcoholic beverage; and
            `(B)(i) that is open or has a broken seal; or
            `(ii) the contents of which are partially removed.
        `(4) Passenger area.--The term ``passenger area'' shall have 
    the meaning given the term by the Secretary by regulation.
    `(b) Open Container Laws.--
        `(1) In general.--For the purposes of this section, each State 
    shall have in effect a law that prohibits the possession of any 
    open alcoholic beverage container, or the consumption of any 
    alcoholic beverage, in the passenger area of any motor vehicle 
    (including possession or consumption by the driver of the vehicle) 
    located on a public highway, or the right-of-way of a public 
    highway, in the State.
        `(2) Motor vehicles designed to transport many passengers.--For 
    the purposes of this section, if a State has in effect a law that 
    makes unlawful the possession of any open alcoholic beverage 
    container by the driver (but not by a passenger)--
            `(A) in the passenger area of a motor vehicle designed, 
        maintained, or used primarily for the transportation of persons 
        for compensation; or
            `(B) in the living quarters of a house coach or house 
        trailer,
    the State shall be deemed to have in effect a law described in this 
    subsection with respect to such a motor vehicle for each fiscal 
    year during which the law is in effect.
    `(c) Transfer of Funds.--
        `(1) Fiscal years 2001 and 2002.--On October 1, 2000, and 
    October 1, 2001, if a State has not enacted or is not enforcing an 
    open container law described in subsection (b), the Secretary shall 
    transfer an amount equal to 1\1/2\ percent of the funds apportioned 
    to the State on that date under each of paragraphs (1), (3), and 
    (4) of section 104(b) to the apportionment of the State under 
    section 402--
            `(A) to be used for alcohol-impaired driving 
        countermeasures; or
            `(B) to be directed to State and local law enforcement 
        agencies for enforcement of laws prohibiting driving while 
        intoxicated or driving under the influence and other related 
        laws (including regulations), including the purchase of 
        equipment, the training of officers, and the use of additional 
        personnel for specific alcohol-impaired driving 
        countermeasures, dedicated to enforcement of the laws 
        (including regulations).
        `(2) Fiscal year 2003 and fiscal years thereafter.--On October 
    1, 2002, and each October 1 thereafter, if a State has not enacted 
    or is not enforcing an open container law described in subsection 
    (b), the Secretary shall transfer an amount equal to 3 percent of 
    the funds apportioned to the State on that date under each of 
    paragraphs (1), (3), and (4) of section 104(b) to the apportionment 
    of the State under section 402 to be used or directed as described 
    in subparagraph (A) or (B) of paragraph (1).
        `(3) Use for hazard elimination program.--A State may elect to 
    use all or a portion of the funds transferred under paragraph (1) 
    or (2) for activities eligible under section 152.
        `(4) Federal share.--The Federal share of the cost of a project 
    carried out with funds transferred under paragraph (1) or (2), or 
    used under paragraph (3), shall be 100 percent.
        `(5) Derivation of amount to be transferred.--The amount to be 
    transferred under paragraph (1) or (2) may be derived from one or 
    more of the following:
            `(A) The apportionment of the State under section 
        104(b)(1).
            `(B) The apportionment of the State under section 
        104(b)(3).
            `(C) The apportionment of the State under section 
        104(b)(4).
        `(6) Transfer of obligation authority.--
            `(A) In general.--If the Secretary transfers under this 
        subsection any funds to the apportionment of a State under 
        section 402 for a fiscal year, the Secretary shall transfer an 
        amount, determined under subparagraph (B), of obligation 
        authority distributed for the fiscal year to the State for 
        Federal-aid highways and highway safety construction programs 
        for carrying out projects under section 402.
            `(B) Amount.--The amount of obligation authority referred 
        to in subparagraph (A) shall be determined by multiplying--
                `(i) the amount of funds transferred under subparagraph 
            (A) to the apportionment of the State under section 402 for 
            the fiscal year, by
                `(ii) the ratio that--

                    `(I) the amount of obligation authority distributed 
                for the fiscal year to the State for Federal-aid 
                highways and highway safety construction programs, 
                bears to
                    `(II) the total of the sums apportioned to the 
                State for Federal-aid highways and highway safety 
                construction programs (excluding sums not subject to 
                any obligation limitation) for the fiscal year.

        `(7) Limitation on applicability of obligation limitation.--
    Notwithstanding any other provision of law, no limitation on the 
    total of obligations for highway safety programs under section 402 
    shall apply to funds transferred under this subsection to the 
    apportionment of a State under such section.'.
    ``(b) Conforming Amendment.--The analysis for chapter 1 of such 
title is amended by inserting after the item relating to section 153 
the following:
`154. Open container requirements.'.

``SEC. 1406. MINIMUM PENALTIES FOR REPEAT OFFENDERS FOR DRIVING WHILE 
              INTOXICATED OR DRIVING UNDER THE INFLUENCE.

    ``(a) In General.--Chapter 1 of title 23, United States Code, is 
amended by adding at the end the following:

`Sec. 164. Minimum penalties for repeat offenders for driving while 
            intoxicated or driving under the influence

    `(a) Definitions.--In this section, the following definitions 
apply:
        `(1) Alcohol concentration.--The term ``alcohol concentration'' 
    means grams of alcohol per 100 milliliters of blood or grams of 
    alcohol per 210 liters of breath.
        `(2) Driving while intoxicated; driving under the influence.--
    The terms ``driving while intoxicated'' and ``driving under the 
    influence'' mean driving or being in actual physical control of a 
    motor vehicle while having an alcohol concentration above the 
    permitted limit as established by each State.
        `(3) License suspension.--The term ``license suspension'' means 
    the suspension of all driving privileges.
        `(4) Motor vehicle.--The term ``motor vehicle'' means a vehicle 
    driven or drawn by mechanical power and manufactured primarily for 
    use on public highways, but does not include a vehicle operated 
    solely on a rail line or a commercial vehicle.
        `(5) Repeat intoxicated driver law.--The term ``repeat 
    intoxicated driver law'' means a State law that provides, as a 
    minimum penalty, that an individual convicted of a second or 
    subsequent offense for driving while intoxicated or driving under 
    the influence after a previous conviction for that offense shall--
            `(A) receive a driver's license suspension for not less 
        than 1 year;
            `(B) be subject to the impoundment or immobilization of 
        each of the individual's motor vehicles or the installation of 
        an ignition interlock system on each of the motor vehicles;
            `(C) receive an assessment of the individual's degree of 
        abuse of alcohol and treatment as appropriate; and
            `(D) receive--
                `(i) in the case of the second offense--

                    `(I) an assignment of not less than 30 days of 
                community service; or
                    `(II) not less than 5 days of imprisonment; and

                `(ii) in the case of the third or subsequent offense--

                    `(I) an assignment of not less than 60 days of 
                community service; or
                    `(II) not less than 10 days of imprisonment.

    `(b) Transfer of Funds.--
        `(1) Fiscal years 2001 and 2002.--On October 1, 2000, and 
    October 1, 2001, if a State has not enacted or is not enforcing a 
    repeat intoxicated driver law, the Secretary shall transfer an 
    amount equal to 1\1/2\ percent of the funds apportioned to the 
    State on that date under each of paragraphs (1), (3), and (4) of 
    section 104(b) to the apportionment of the State under section 
    402--
            `(A) to be used for alcohol-impaired driving 
        countermeasures; or
            `(B) to be directed to State and local law enforcement 
        agencies for enforcement of laws prohibiting driving while 
        intoxicated or driving under the influence and other related 
        laws (including regulations), including the purchase of 
        equipment, the training of officers, and the use of additional 
        personnel for specific alcohol-impaired driving 
        countermeasures, dedicated to enforcement of the laws 
        (including regulations).
        `(2) Fiscal year 2003 and fiscal years thereafter.--On October 
    1, 2002, and each October 1 thereafter, if a State has not enacted 
    or is not enforcing a repeat intoxicated driver law, the Secretary 
    shall transfer an amount equal to 3 percent of the funds 
    apportioned to the State on that date under each of paragraphs (1), 
    (3), and (4) of section 104(b) to the apportionment of the State 
    under section 402 to be used or directed as described in 
    subparagraph (A) or (B) of paragraph (1).
        `(3) Use for hazard elimination program.--A State may elect to 
    use all or a portion of the funds transferred under paragraph (1) 
    or (2) for activities eligible under section 152.
        `(4) Federal share.--The Federal share of the cost of a project 
    carried out with funds transferred under paragraph (1) or (2), or 
    used under paragraph (3), shall be 100 percent.
        `(5) Derivation of amount to be transferred.--The amount to be 
    transferred under paragraph (1) or (2) may be derived from one or 
    more of the following:
            `(A) The apportionment of the State under section 
        104(b)(1).
            `(B) The apportionment of the State under section 
        104(b)(3).
            `(C) The apportionment of the State under section 
        104(b)(4).
        `(6) Transfer of obligation authority.--
            `(A) In general.--If the Secretary transfers under this 
        subsection any funds to the apportionment of a State under 
        section 402 for a fiscal year, the Secretary shall transfer an 
        amount, determined under subparagraph (B), of obligation 
        authority distributed for the fiscal year to the State for 
        Federal-aid highways and highway safety construction programs 
        for carrying out projects under section 402.
            `(B) Amount.--The amount of obligation authority referred 
        to in subparagraph (A) shall be determined by multiplying--
                `(i) the amount of funds transferred under subparagraph 
            (A) to the apportionment of the State under section 402 for 
            the fiscal year, by
                `(ii) the ratio that--

                    `(I) the amount of obligation authority distributed 
                for the fiscal year to the State for Federal-aid 
                highways and highway safety construction programs, 
                bears to
                    `(II) the total of the sums apportioned to the 
                State for Federal-aid highways and highway safety 
                construction programs (excluding sums not subject to 
                any obligation limitation) for the fiscal year.

        `(7) Limitation on applicability of obligation limitation.--
    Notwithstanding any other provision of law, no limitation on the 
    total of obligations for highway safety programs under section 402 
    shall apply to funds transferred under this subsection to the 
    apportionment of a State under such section.'.
    ``(b) Conforming Amendment.--The analysis for chapter 1 of such 
title is amended by adding at the end the following:
`164. Minimum penalties for repeat offenders for driving while 
          intoxicated or driving under the influence.'.''.

    (b) Conforming Amendment.--The table of contents contained in 
section 1(b) of such Act is amended by inserting after the item 
relating to section 1403 the following:
``Sec. 1404. Safety incentives to prevent operation of motor vehicles by 
          intoxicated persons.
``Sec. 1405. Open container laws.
``Sec. 1406. Minimum penalties for repeat offenders for driving while 
          intoxicated or driving under the influence.''.

    (c) Roadside Safety Technologies.--Section 1402(a)(2) of such Act 
is amended by striking ``directive'' and inserting ``redirective''.

SEC. 9006. ELIMINATION OF DUPLICATE PROVISIONS.

    (a) San Mateo County, California.--Section 1113 of the 
Transportation Equity Act for the 21st Century is amended--
        (1) by striking subsection (c); and
        (2) by redesignating subsection (d) as subsection (c).
    (b) Value Pricing Pilot Program.--Section 1216(a) of such Act is 
amended by adding at the end the following:
        ``(8) Conforming amendments.--
            ``(A) Section 1012(b)(6) of such Act (as amended by 
        paragraph (5) of this subsection) is amended by striking 
        `146(c)' and inserting `102(a)'.
            ``(B) Section 1012(b)(8) of such Act (as added by paragraph 
        (7) of this subsection) is amended--
                ``(i) in subparagraph (C) by striking `under this 
            subsection' and inserting `to carry out this subsection';
                ``(ii) in subparagraph (D)--

                    ``(I) by striking `under this paragraph' and 
                inserting `to carry out this subsection'; and
                    ``(II) by striking `by this paragraph' and 
                inserting `to carry out this subsection';

                ``(iii) by striking subparagraph (A); and
                ``(iv) by redesignating subparagraphs (B), (C), and (D) 
            as subparagraphs (A), (B), and (C), respectively.''.
    (c) National Defense Highways Outside the United States.--Section 
1214(e) of such Act is amended to read as follows:
    ``(e) Minnesota Transportation History Network.--
        ``(1) In general.--The Secretary shall award a grant to the 
    Minnesota Historical Society for the establishment of the Minnesota 
    Transportation History Network to include major exhibits, 
    interpretive programs at national historic landmark sites, and 
    outreach programs with county and local historical organizations.
        ``(2) Coordination.--In carrying out subsection (a), the 
    Secretary shall coordinate with officials of the Minnesota 
    Historical Society.
        ``(3) Authorization of appropriations.--There is authorized to 
    be appropriated out of the Highway Trust Fund (other than the Mass 
    Transit Account) $1,000,000 for each of fiscal years 1998 through 
    2003 to carry out this subsection.
        ``(4) Applicability of title 23.--Funds authorized by this 
    subsection shall be available for obligation in the same manner as 
    if such funds were apportioned under chapter 1 of title 23, United 
    States Code; except that such funds shall remain available until 
    expended.''.
    (d) Entrance Paving at Ninigret National Wildlife Refuge.--Section 
1214(i) of such Act is amended by striking ``$750,000'' each place it 
appears and inserting ``$75,000''.

SEC. 9007. HIGHWAY FINANCE.

    (a) In General.--Section 1503 of the Transportation Equity Act for 
the 21st Century is amended by adding at the end the following:
    ``(c) Technical Amendments.--Section 188 of title 23, United States 
Code (as added by subsection (a) of this section), is amended--
        ``(1) in subsection (a)(2) by striking `1998' and inserting 
    `1999'; and
        ``(2) in subsection (c)--
            ``(A) by striking `1998' and inserting `1999'; and
            ``(B) by striking the table and inserting the following:

  
                                                          Maximum amount
`Fiscal year:
                                                          of credit:    
  1999..................................................
                                                         $1,600,000,000 
  2000..................................................
                                                         $1,800,000,000 
  2001..................................................
                                                         $2,200,000,000 
  2002..................................................
                                                         $2,400,000,000 
  2003..................................................
                                                    $2,600,000,000.'.''.

    (b) Conforming Amendments.--The table of contents contained in 
section 1(b) of the Transportation Equity Act for the 21st Century is 
amended--
        (1) in the item relating to section 1119 by striking ``and 
    safety''; and
        (2) by striking the items relating to subtitle E of title I and 
    inserting the following:

                          ``Subtitle E--Finance

    ``Chapter 1--Transportation Infrastructure Finance and Innovation

``Sec. 1501. Short title.
``Sec. 1502. Findings.
``Sec. 1503. Establishment of program.
``Sec. 1504. Duties of the Secretary.

          ``Chapter 2--State Infrastructure Bank Pilot Program

``Sec. 1511. State infrastructure bank pilot program.''.

SEC. 9008. HIGH PRIORITY PROJECTS TECHNICAL CORRECTIONS.

    The table contained in section 1602 of the Transportation Equity 
Act for the 21st Century is amended--
        (1) in item 1 by striking ``1.275'' and inserting ``1.7'';
        (2) in item 82 by striking ``30.675'' and inserting ``32.4'';
        (3) in item 107 by striking ``1.125'' and inserting ``1.44'';
        (4) in item 121 by striking ``10.5'' and inserting ``5.0'';
        (5) in item 140 by inserting ``-VFHS Center'' after ``Park'';
        (6) in item 151 by striking ``5.666'' and inserting ``8.666'';
        (7) in item 164--
            (A) by inserting ``, and $3,000,000 for the period of 
        fiscal years 1998 and 1999 shall be made available to carry out 
        section 1217(j)'' after ``Pennsylvania''; and
            (B) by striking ``25'' and inserting ``24.78'';
        (8) by striking item 166 and inserting the following:
---------------------------------------------------------------------------
  

``166 Michigan                    Improve Tenth Street,                 
    .                              Port Huron............       1.8'';  
------------------------------------------------------------------------

        (9) by striking item 242 and inserting the following:
---------------------------------------------------------------------------
  

  ``24Minnesota                      Construct Third                    
                                      Street North, CSAH                
                                      81, Waite Park and                
                                      St. Cloud..........       1.0'';  
------------------------------------------------------------------------

        (10) by striking item 250 and inserting the following:
---------------------------------------------------------------------------
  

   ``250Indiana                      Reconstruct Old                    
                                      Merridan Corridor                 
                                      from Pennsylvania                 
                                      Avenue to Gilford                 
                                      Road...............      1.35'';  
------------------------------------------------------------------------

        (11) in item 255 by striking ``2.25'' and inserting ``3.0'';
        (12) in item 263 by striking ``Upgrade Highway 99 between State 
    Highway 70 and Lincoln Road, Sutter County'' and inserting 
    ``Upgrade Highway 99, Sutter County'';
        (13) in item 288 by striking ``3.75'' and inserting ``5.0'';
        (14) in item 290 by striking ``3.5'' and inserting ``3.0'';
        (15) in item 345 by striking ``8'' and inserting ``19.4'';
        (16) in item 418 by striking ``2'' and inserting ``2.5'';
        (17) in item 421 by striking ``11'' and inserting ``6'';
        (18) in item 508 by striking ``1.8'' and inserting ``2.4'';
        (19) by striking item 525 and inserting the following:
---------------------------------------------------------------------------
  

  ``52Alaska                         Construct Bradfield                
                                      Canal Road.........         1'';  
------------------------------------------------------------------------

        (20) in item 540 by striking ``1.5'' and inserting ``2.0'';
        (21) in item 576 by striking ``0.52275'' and inserting 
    ``0.69275'';
        (22) in item 588 by striking ``2.5'' and inserting ``3.0'';
        (23) in item 591 by striking ``10'' and inserting ``5'';
        (24) in item 635 by striking ``1.875'' and inserting ``2.15'';
        (25) in item 669 by striking ``3'' and inserting ``3.5'';
        (26) in item 702 by striking ``10.5'' and inserting ``10'';
        (27) in item 746 by inserting ``, and for the purchase of the 
    Block House in Scott County, Virginia'' after ``Forest'';
        (28) in item 755 by striking ``1.125'' and inserting ``1.5'';
        (29) in item 769 by striking ``Construct new I-95 interchange 
    with Highway 99W, Tehama County'' and inserting ``Construct new I-5 
    interchange with Highway 99W, Tehama County'';
        (30) in item 770 by striking ``1.35'' and inserting ``1.0'';
        (31) in item 789 by striking ``2.0625'' and inserting ``1.0'';
        (32) in item 803 by striking ``Tomahark'' and inserting 
    ``Tomahawk'';
        (33) in item 836 by striking ``Construct'' and all that follows 
    through ``for'' and inserting ``To the National Park Service for 
    construction of the'';
        (34) in item 854 by striking ``0.75'' and inserting ``1'';
        (35) in item 863 by striking ``9'' and inserting ``4.75'';
        (36) in item 887 by striking ``0.75'' and inserting ``3.21'';
        (37) in item 891 by striking ``19.5'' and inserting ``25.0'';
        (38) in item 902 by striking ``10.5'' and inserting ``14.0'';
        (39) by striking item 1065 and inserting the following:
---------------------------------------------------------------------------
  

  ``1065Texas                        Construct a 4-lane                 
                                      divided highway on                
                                      Artcraft Road from                
                                      I-10 to Route 375                 
                                      in El Paso.........         5'';  
------------------------------------------------------------------------

        (40) in item 1192 by striking ``24.97725'' and inserting 
    ``24.55725'';
        (41) in item 1200 by striking ``Upgrade (all weather) on U.S. 
    2, U.S. 41, and M 35'' and inserting ``Upgrade (all weather) on 
    Delta County's reroute of U.S. 2, U.S. 41, and M 35'';
        (42) in item 1245 by striking ``3'' and inserting ``3.5'';
        (43) in item 1271 by striking ``Spur'' and all that follows 
    through ``U.S. 59'' and inserting ``rail-grade separations 
    (Rosenberg Bypass) at U.S. 59(S)'';
        (44) in item 1278 by striking ``28.18'' and inserting ``22.0'';
        (45) in item 1288 by inserting ``30'' after ``U.S.'';
        (46) in item 1338 by striking ``5.5'' and inserting ``3.5'';
        (47) in item 1383 by striking ``0.525'' and inserting ``0.35'';
        (48) in item 1395 by striking ``Construct'' and all that 
    follows through ``Road'' and inserting ``Upgrade Route 219 between 
    Meyersdale and Somerset'';
        (49) in item 1468 by striking ``Reconstruct'' and all that 
    follows through ``U.S. 23'' and inserting ``Conduct engineering and 
    design and improve I-94 in Calhoun and Jackson Counties'';
        (50) in item 1474--
            (A) by striking ``in Euclid'' and inserting ``and London 
        Road in Cleveland''; and
            (B) by striking ``3.75'' and inserting ``8.0'';
        (51) in item 1535 by striking ``Stanford'' and inserting 
    ``Stamford'';
        (52) in item 1538 by striking ``and Winchester'' and inserting 
    ``, Winchester, and Torrington'';
        (53) by striking item 1546 and inserting the following:
---------------------------------------------------------------------------
  

  ``1546Michigan                     Construct Bridge-to-               
                                      Bay bike path, St.                
                                      Clair County.......     0.450'';  
------------------------------------------------------------------------

        (54) by striking item 1549 and inserting the following:
---------------------------------------------------------------------------
  

  ``1549New York                     Center for Advanced                
                                      Simulation and                    
                                      Technology at                     
                                      Dowling College....       0.6'';  
------------------------------------------------------------------------

        (55) in item 1663 by striking ``26.5'' and inserting ``27.5'';
        (56) in item 1703 by striking ``I-80'' and inserting ``I-180'';
        (57) in item 1726 by striking ``I-179'' and inserting ``I-79'';
        (58) by striking item 1770 and inserting the following:
---------------------------------------------------------------------------
  

  ``1770Virginia                     Operate and conduct                
                                      research on the                   
                                      `Smart Road' in                   
                                      Blacksburg.........     6.025'';  
------------------------------------------------------------------------

        (59) in item 1810 by striking ``Construct Rio Rancho Highway'' 
    and inserting ``Northwest Albuquerque/Rio Rancho high priority 
    roads'';
        (60) in item 1815 by striking ``High'' and all that follows 
    through ``projects'' and inserting ``Highway and bridge projects 
    that Delaware provides for by law'';
        (61) in item 1844 by striking ``Prepare'' and inserting 
    ``Repair'';
        (62) by striking item 1850 and inserting the following:
---------------------------------------------------------------------------
  

  ``1850Missouri                     Resurface and                      
                                      maintain roads                    
                                      located in Missouri               
                                      State parks........         5'';  
------------------------------------------------------------------------

        (63) in item 661 by striking ``SR 800'' and inserting ``SR 
    78'';
        (64) in item 1704 by inserting ``, Pittsburgh,'' after 
    ``Road'';
        (65) in item 1710 by inserting ``, Bethlehem'' after ``site''; 
    and
        (66) in item 1626 by striking ``1'' and inserting ``2''.

SEC. 9009. FEDERAL TRANSIT ADMINISTRATION PROGRAMS.

    (a) Definitions.--Section 3003 of the Federal Transit Act of 1998 
is amended--
        (1) by inserting ``(a) In General.--'' before ``Section 5302''; 
    and
        (2) by adding at the end the following:
    ``(b) Conforming Amendments.--Section 5302 (as amended by 
subsection (a) of this section) is amended in subsection (a)(1)(G)(i) 
by striking `daycare and' and inserting `daycare or'.''.
    (b) Metropolitan Planning.--Section 3004 of the Federal Transit Act 
of 1998 is amended--
        (1) in subsection (b)--
            (A) in paragraph (1) by striking subparagraph (A) and 
        inserting the following:
            ``(A) by striking `general local government representing' 
        and inserting `general purpose local government that together 
        represent'; and'';
            (B) in paragraph (3) by striking ``and'' at the end;
            (C) in paragraph (4) by striking subparagraph (A) and 
        inserting the following:
            ``(A) by striking `general local government representing' 
        and inserting `general purpose local government that together 
        represent'; and'';
            (D) by redesignating paragraph (4) as paragraph (5); and
            (E) by inserting after paragraph (3) the following:
        ``(4) in paragraph (4)(A) by striking `(3)' and inserting 
    `(5)'; and'';
        (2) in subsection (d) by striking the closing quotation marks 
    and the final period at the end and inserting the following:
        ``(5) Coordination.--If a project is located within the 
    boundaries of more than one metropolitan planning organization, the 
    metropolitan planning organizations shall coordinate plans 
    regarding the project.
        ``(6) Lake tahoe region.--
            ``(A) Definition.--In this paragraph, the term `Lake Tahoe 
        region' has the meaning given the term `region' in subdivision 
        (a) of article II of the Tahoe Regional Planning Compact, as 
        set forth in the first section of Public Law 96-551 (94 Stat. 
        3234).
            ``(B) Transportation planning process.--The Secretary 
        shall--
                ``(i) establish with the Federal land management 
            agencies that have jurisdiction over land in the Lake Tahoe 
            region a transportation planning process for the region; 
            and
                ``(ii) coordinate the transportation planning process 
            with the planning process required of State and local 
            governments under this chapter and sections 134 and 135 of 
            title 23, United States Code.
            ``(C) Interstate compact.--
                ``(i) In general.--Subject to clause (ii) and 
            notwithstanding subsection (b), to carry out the 
            transportation planning process required by this section, 
            the consent of Congress is granted to the States of 
            California and Nevada to designate a metropolitan planning 
            organization for the Lake Tahoe region, by agreement 
            between the Governors of the States of California and 
            Nevada and units of general purpose local government that 
            together represent at least 75 percent of the affected 
            population (including the central city or cities (as 
            defined by the Bureau of the Census)), or in accordance 
            with procedures established by applicable State or local 
            law.
                ``(ii) Involvement of federal land management 
            agencies.--

                    ``(I) Representation.--The policy board of a 
                metropolitan planning organization designated under 
                clause (i) shall include a representative of each 
                Federal land management agency that has jurisdiction 
                over land in the Lake Tahoe region.
                    ``(II) Funding.--In addition to funds made 
                available to the metropolitan planning organization 
                under other provisions of this chapter and under title 
                23, not more than 1 percent of the funds allocated 
                under section 202 of title 23 may be used to carry out 
                the transportation planning process for the Lake Tahoe 
                region under this subparagraph.

            ``(D) Activities.--Highway projects included in 
        transportation plans developed under this paragraph--
                ``(i) shall be selected for funding in a manner that 
            facilitates the participation of the Federal land 
            management agencies that have jurisdiction over land in the 
            Lake Tahoe region; and
                ``(ii) may, in accordance with chapter 2 of title 23, 
            be funded using funds allocated under section 202 of title 
            23, United States Code.''; and
        (3) by adding at the end the following:
    ``(f) Technical Adjustments.--Section 5303(f) is amended--
        ``(1) in paragraph (1) (as amended by subsection (e)(1) of this 
    subsection)--
            ``(A) in subparagraph (C) by striking `and' at the end;
            ``(B) in subparagraph (D) by striking the period at the end 
        and inserting `; and'; and
            ``(C) by adding at the end the following:
        `(E) the financial plan may include, for illustrative purposes, 
    additional projects that would be included in the adopted long-
    range plan if reasonable additional resources beyond those 
    identified in the financial plan were available, except that, for 
    the purpose of developing the long-range plan, the metropolitan 
    planning organization and the State shall cooperatively develop 
    estimates of funds that will be available to support plan 
    implementation.'; and
        ``(2) by adding at the end the following:
    `(6) Selection of projects from illustrative list.--Notwithstanding 
paragraph (1)(E), a State or metropolitan planning organization shall 
not be required to select any project from the illustrative list of 
additional projects included in the financial plan under paragraph 
(1)(B).'.''.
    (c) Metropolitan Transportation Improvement Program.--Section 3005 
of the Federal Transit Act of 1998 is amended--
        (1) in the section heading by inserting ``metropolitan'' before 
    ``transportation''; and
        (2) by adding at the end the following:
    ``(d) Technical Adjustments.--Section 5304 is amended--
        ``(1) in subsection (a) (as amended by subsection (a) of this 
    section)--
            ``(A) by striking `In cooperation with' and inserting the 
        following:
        `(1) In general.--In cooperation with'; and
            ``(B) by adding at the end the following:
        `(2) Funding estimate.--For the purpose of developing the 
    transportation improvement program, the metropolitan planning 
    organization, public transit agency, and the State shall 
    cooperatively develop estimates of funds that are reasonably 
    expected to be available to support program implementation.';
        ``(2) in subsection (b)(2)--
            ``(A) in subparagraph (B) by striking `and' at the end; and
            ``(B) in subparagraph (C) (as added by subsection (b) of 
        this section) by striking `strategies which may include' and 
        inserting the following: `strategies; and
            `(D) may include'; and
        ``(3) in subsection (c) by striking paragraph (4) (as amended 
    by subsection (c) of this section) and inserting the following:
        `(4) Selection of projects from illustrative list.--
            `(A) In general.--Notwithstanding subsection (b)(2)(D), a 
        State or metropolitan planning organization shall not be 
        required to select any project from the illustrative list of 
        additional projects included in the financial plan under 
        subsection (b)(2)(D).
            `(B) Action by secretary.--Action by the Secretary shall be 
        required for a State or metropolitan planning organization to 
        select any project from the illustrative list of additional 
        projects included in the plan under subsection (b)(2) for 
        inclusion in an approved transportation improvement plan.'.''.
    (d) Transportation Management Areas.--Section 3006(d) of the 
Federal Transit Act of 1998 is amended to read as follows:
    ``(d) Project Selection.--Section 5305(d)(1) is amended to read as 
follows: `(1)(A) All federally funded projects carried out within the 
boundaries of a transportation management area under title 23 
(excluding projects carried out on the National Highway System and 
projects carried out under the bridge and interstate maintenance 
program) or under this chapter shall be selected from the approved 
transportation improvement program by the metropolitan planning 
organization designated for the area in consultation with the State and 
any affected public transit operator.
    `(B) Projects carried out within the boundaries of a transportation 
management area on the National Highway System and projects carried out 
within such boundaries under the bridge program or the interstate 
maintenance program shall be selected from the approved transportation 
improvement program by the State in cooperation with the metropolitan 
planning organization designated for the area.'.''.
    (e) Urbanized Area Formula Grants.--Section 3007 of the Federal 
Transit Act of 1998 is amended by adding at the end the following:
    ``(h) Technical Adjustments.--
        ``(1) General authority.--Section 5307(b) (as amended by 
    subsection (c)(1)(B) of this section) is amended by adding at the 
    end the following: `The Secretary may make grants under this 
    section from funds made available for fiscal year 1998 to finance 
    the operating costs of equipment and facilities for use in mass 
    transportation in an urbanized area with a population of at least 
    200,000.'.
        ``(2) Report.--Section 5307(k)(3) (as amended by subsection (f) 
    of this section) is amended by inserting `preceding' before `fiscal 
    year'.''.
    (f) Clean Fuels Formula Grant Program.--Section 3008 of the Federal 
Transit Act of 1998 is amended by adding at the end the following:
    ``(c) Technical Adjustments.--Section 5308(e)(2) (as added by 
subsection (a) of this section) is amended by striking `$50,000,000' 
and inserting `35 percent'.''.
    (g) Capital Investment Grants and Loans.--Section 3009 of the 
Federal Transit Act of 1998 is amended by adding at the end the 
following:
    ``(k) Technical Adjustments.--
        ``(1) Criteria.--Section 5309(e) (as amended by subsection (e) 
    of this section) is amended--
            ``(A) in paragraph (3)(C) by striking `urban' and inserting 
        `suburban';
            ``(B) in the second sentence of paragraph (6) by striking 
        `or not' and all that follows through `, based' and inserting 
        `or ``not recommended'', based'; and
            ``(C) in the last sentence of paragraph (6) by inserting 
        `of the' before `criteria established'.
        ``(2) Letters of intent and full funding grant agreements.--
    Section 5309(g) (as amended by subsection (f) of this section) is 
    amended in paragraph (4) by striking `5338(a)' and all that follows 
    through `2003' and inserting `5338(b) of this title for new fixed 
    guideway systems and extensions to existing fixed guideway systems 
    and the amount appropriated under section 5338(h)(5) or an amount 
    equivalent to the last 2 fiscal years of funding authorized under 
    section 5338(b) for new fixed guideway systems and extensions to 
    existing fixed guideway systems'.
        ``(3) Allocating amounts.--Section 5309(m) (as amended by 
    subsection (g) of this section) is amended--
            ``(A) in paragraph (1) by inserting `(b)' after `5338';
            ``(B) by striking paragraph (2) and inserting the 
        following:
        `(2) New fixed guideway grants.--
            `(A) Limitation on amounts available for activities other 
        than final design and construction.--Not more than 8 percent of 
        the amounts made available in each fiscal year by paragraph 
        (1)(B) shall be available for activities other than final 
        design and construction.
            `(B) Funding for ferry boat systems.--
                `(i) Amounts under (1)(b).--Of the amounts made 
            available under paragraph (1)(B), $10,400,000 shall be 
            available in each of fiscal years 1999 through 2003 for 
            capital projects in Alaska or Hawaii, for new fixed 
            guideway systems and extensions to existing fixed guideway 
            systems that are ferry boats or ferry terminal facilities, 
            or that are approaches to ferry terminal facilities.
                `(ii) Amounts under 5338(h)(5).--Of the amounts 
            appropriated under section 5338(h)(5), $3,600,000 shall be 
            available in each of fiscal years 1999 through 2003 for 
            capital projects in Alaska or Hawaii, for new fixed 
            guideway systems and extensions to existing fixed guideway 
            systems that are ferry boats or ferry terminal facilities, 
            or that are approaches to ferry terminal facilities.';
            ``(C) by redesignating paragraph (4) as paragraph (3)(C);
            ``(D) in paragraph (3) by adding at the end the following:
            `(D) Other than urbanized areas.--Of amounts made available 
        by paragraph (1)(C), not less than 5.5 percent shall be 
        available in each fiscal year for other than urbanized areas.';
            ``(E) by striking paragraph (5); and
            ``(F) by inserting after paragraph (3) the following:
        `(4) Eligibility for assistance for multiple projects.--A 
    person applying for or receiving assistance for a project described 
    in subparagraph (A), (B), or (C) of paragraph (1) may receive 
    assistance for a project described in any other of such 
    subparagraphs.'.''.
    (h) References to Full Funding Grant Agreements.-- Section 
3009(h)(3) of the Federal Transit Act of 1998 is amended--
        (1) by striking ``and'' at the end of subparagraph (A)(ii);
        (2) by striking the period at the end of subparagraph (B) and 
    inserting a semicolon; and
        (3) by adding at the end the following:
            ``(C) in section 5328(a)(4) by striking `section 5309(m)(2) 
        of this title' and inserting `5309(o)(1)'; and
            ``(D) in section 5309(n)(2) by striking `in a way' and 
        inserting `in a manner'.''.
    (i) Dollar Value of Mobility Improvements.--Section 3010(b)(2) of 
the Federal Transit Act of 1998 is amended by striking ``Secretary'' 
and inserting ``Comptroller General''.
    (j) Intelligent Transportation System Applications.-- Section 3012 
of the Federal Transit Act of 1998 is amended by moving paragraph (3) 
of subsection (a) to the end of subsection (b) and by redesignating 
such paragraph (3) as paragraph (4).
    (k) Advanced Technology Pilot Project.--Section 3015 of the Federal 
Transit Act of 1998 is amended--
        (1) in subsection (c)(2) by adding at the end the following: 
    ``Financial assistance made available under this subsection and 
    projects assisted with the assistance shall be subject to section 
    5333(a) of title 49, United States Code.''; and
        (2) by adding at the end the following:
    ``(d) Training and Curriculum Development.--
        ``(1) In general.--Any funds made available by section 
    5338(e)(2)(C)(iii) of title 49, United States Code, shall be 
    available in equal amounts for transportation research, training, 
    and curriculum development at institutions identified in 
    subparagraphs (E) and (F) of section 5505(j)(3) of such title.
        ``(2) Special rule.--If the institutions identified in 
    paragraph (1) are selected pursuant to 5505(i)(3)(B) of such title 
    in fiscal year 2002 or 2003, the funds made available to carry out 
    this subsection shall be available to those institutions to carry 
    out the activities required pursuant to section 5505(i)(3)(B) of 
    such title for that fiscal year.''.
    (l) National Transit Institute.--Section 3017(a) of the Federal 
Transit Act of 1998 is amended to read as follows:
    ``(a) In General.--Section 5315 is amended--
        ``(1) in the section heading by striking `mass transportation' 
    and inserting `transit';
        ``(2) in subsection (a)--
            ``(A) by striking `mass transportation' in the first 
        sentence and inserting `transit';
            ``(B) in paragraph (5) by inserting `and architectural 
        design' before the semicolon at the end;
            ``(C) in paragraph (7) by striking `carrying out' and 
        inserting `delivering';
            ``(D) in paragraph (11) by inserting `, construction 
        management, insurance, and risk management' before the 
        semicolon at the end;
            ``(E) in paragraph (13) by striking `and' at the end;
            ``(F) in paragraph (14) by striking the period at the end 
        and inserting a semicolon; and
            ``(G) by adding at the end the following:
        `(15) innovative finance; and
        `(16) workplace safety.'.''.
    (m) Pilot Program.--Section 3021(a) of the Federal Transit Act of 
1998 is amended by inserting ``single-State'' before ``pilot program''.
    (n) Architectural, Engineering, and Design Contracts.--Section 3022 
of the Federal Transit Act of 1998 is amended by adding at the end the 
following:
    ``(b) Conforming Amendment.--Section 5325(b) (as redesignated by 
subsection (a)(2) of this section) is amended--
        ``(1) by inserting `or requirement' after `A contract'; and
        ``(2) by inserting before the last sentence the following: 
    `When awarding such contracts, recipients of assistance under this 
    chapter shall maximize efficiencies of administration by accepting 
    nondisputed audits conducted by other governmental agencies, as 
    provided in subparagraphs (C) through (F) of section 112(b)(2) of 
    title 23, United States Code.'.''.
    (o) Conforming Amendment.--Section 3027 of the Federal Transit Act 
of 1998 is amended--
        (1) in subsection (c) by striking ``600,000'' each place it 
    appears and inserting ``900,000''; and
        (2) by adding at the end the following:
    ``(d) Conforming Amendment.--The item relating to section 5336 in 
the table of sections for chapter 53 is amended by striking `block 
grants' and inserting `formula grants'.''.
    (p) Apportionment for Fixed Guideway Modernization.--Section 3028 
of the Federal Transit Act of 1998 is amended by adding at the end the 
following:
    ``(c) Conforming Amendments.--Section 5337(a) (as amended by 
subsection (a) of this section) is amended--
        ``(1) in paragraph (2)(B) by striking `(e)' and inserting 
    `(e)(1)';
        ``(2) in paragraph (3)(D)--
            ``(A) by striking `(ii)'; and
            ``(B) by striking `(e)' and inserting `(e)(1)';
        ``(3) in paragraph (4) by striking `(e)' and inserting 
    `(e)(1)';
        ``(4) in paragraph (5)(A) by striking `(e)' and inserting 
    `(e)(2)';
        ``(5) in paragraph (5)(B) by striking `(e)' and inserting 
    `(e)(2)';
        ``(6) in paragraph (6) by striking `(e)' each place it appears 
    and inserting `(e)(2)'; and
        ``(7) in paragraph (7) by striking `(e)' each place it appears 
    and inserting `(e)(2)'.''.
    (q) Authorizations.--Section 3029 of the Federal Transit Act of 
1998 is amended by adding at the end the following:
    ``(c) Technical Adjustments.--Section 5338 (as amended by 
subsection (a) of this section) is amended--
        ``(1) in subsection (c)(2)(A)(i) by striking `$43,200,000' and 
    inserting `$42,200,000';
        ``(2) in subsection (c)(2)(A)(ii) by striking `$46,400,000' and 
    inserting `$48,400,000';
        ``(3) in subsection (c)(2)(A)(iii) by striking `$51,200,000' 
    and inserting `$50,200,000';
        ``(4) in subsection (c)(2)(A)(iv) by striking `$52,800,000' and 
    inserting `$53,800,000';
        ``(5) in subsection (c)(2)(A)(v) by striking `$57,600,000' and 
    inserting `$58,600,000';
        ``(6) in subsection (d)(2)(C)(iii) by inserting before the 
    semicolon `, including not more than $1,000,000 shall be available 
    to carry out section 5315(a)(16)';
        ``(7) in subsection (e)--
            ``(A) by striking `5317(b)' each place it appears and 
        inserting `5505';
            ``(B) in paragraph (1) by striking `There are' and 
        inserting `Subject to paragraph (2)(C), there are';
            ``(C) in paragraph (2)--
                ``(i) in subparagraph (A) by striking `There shall' and 
            inserting `Subject to subparagraph (C), there shall';
                ``(ii) in subparagraph (B) by striking `In addition' 
            and inserting `Subject to subparagraph (C), in addition'; 
            and
                ``(iii) by adding at the end the following:
            `(C) Funding of centers.--
                `(i) Of the amounts made available under subparagraph 
            (A) and paragraph (1) for each fiscal year--

                    `(I) $2,000,000 shall be available for the center 
                identified in section 5505(j)(4)(A); and
                    `(II) $2,000,000 shall be available for the center 
                identified in section 5505(j)(4)(F).

                `(ii) For each of fiscal years 1998 through 2001, of 
            the amounts made available under this paragraph and 
            paragraph (1)--

                    `(I) $400,000 shall be available from amounts made 
                available under subparagraph (A) of this paragraph and 
                under paragraph (1) for each of the centers identified 
                in subparagraphs (E) and (F) of section 5505(j)(3); and
                    `(II) $350,000 shall be available from amounts made 
                available under subparagraph (B) of this paragraph and 
                under paragraph (1) for each of the centers identified 
                in subparagraphs (E) and (F) of section 5505(j)(3).

                `(iii) Any amounts made available under this paragraph 
            or paragraph (1) for any fiscal year that remain after 
            distribution under clauses (i) and (ii), shall be available 
            for the purposes identified in section 3015(d) of the 
            Federal Transit Act of 1998.'; and
            ``(D) by adding at the end the following:
        `(3) Special rule.--Nothing in this subsection shall be 
    construed to limit the transportation research conducted by the 
    centers funded by this section.';
        ``(8) in subsection (g)(2) by striking `(c)(2)(B),' and all 
    that follows through `(f)(2)(B),' and inserting `(c)(1), (c)(2)(B), 
    (d)(1), (d)(2)(B), (e)(1), (e)(2)(B), (f)(1), (f)(2)(B),';
        ``(9) in subsection (h) by inserting `under the Transportation 
    Discretionary Spending Guarantee for the Mass Transit Category' 
    after `through (f)'; and
        ``(10) in subsection (h)(5) by striking subparagraphs (A) 
    through (E) and inserting the following:
            `(A) for fiscal year 1999 $400,000,000;
            `(B) for fiscal year 2000 $410,000,000;
            `(C) for fiscal year 2001 $420,000,000;
            `(D) for fiscal year 2002 $430,000,000; and
            `(E) for fiscal year 2003 $430,000,000;'.''.
    (r) Projects for Fixed Guideway Systems.--Section 3030 of the 
Federal Transit Act of 1998 is amended--
        (1) in subsection (a)--
            (A) in paragraph (8) by inserting ``North-'' before 
        ``South'';
            (B) in paragraph (42) by striking ``Maryland'' and 
        inserting ``Baltimore'';
            (C) in paragraph (103) by striking ``busway'' and inserting 
        ``Boulevard transitway'';
            (D) in paragraph (106) by inserting ``CTA'' before 
        ``Douglas'';
            (E) by striking paragraph (108) and inserting the 
        following:
        ``(108) Greater Albuquerque Mass Transit Project.''; and
            (F) by adding at the end the following:
        ``(109) Hartford City Light Rail Connection to Central Business 
    District.
        ``(110) Providence-Boston Commuter Rail.
        ``(111) New York-St. George's Ferry Intermodal Terminal.
        ``(112) New York-Midtown West Ferry Terminal.
        ``(113) Pinellas County-Mobility Initiative Project.
        ``(114) Atlanta-MARTA Extension (S. De Kalb-Lindbergh).'';
        (2) in subsection (b)--
            (A) by striking paragraph (2) and inserting the following:
        ``(2) Sioux City-Light Rail.'';
            (B) by striking paragraph (40) and inserting the following:
        ``(40) Santa Fe-El Dorado Rail Link.'';
            (C) by striking paragraph (44) and inserting the following:
        ``(44) Albuquerque-High Capacity Corridor.'';
            (D) by striking paragraph (53) and inserting the following:
        ``(53) San Jacinto-Branch Line (Riverside County).''; and
            (E) by adding at the end the following:
        ``(69) Chicago-Northwest Rail Transit Corridor.
        ``(70) Vermont-Burlington-Essex Commuter Rail.''; and
        (3) in subsection (c)--
            (A) in paragraph (1)(A)--
                (i) in the matter preceding clause (i) by inserting 
            ``(even if the project is not listed in subsection (a) or 
            (b))'' before the colon;
                (ii) by striking clause (ii) and inserting the 
            following:
                ``(ii) San Diego Mission Valley and Mid-Coast Corridor, 
            $325,000,000.'';
                (iii) by striking clause (v) and inserting the 
            following:
                ``(v) Hartford City Light Rail Connection to Central 
            Business District, $33,000,000.'';
                (iv) by striking clause (xxiii) and inserting the 
            following:
                ``(xxiii) Kansas City--I-35 Commuter Rail, 
            $30,000,000.'';
                (v) in clause (xxxii) by striking ``Whitehall Ferry 
            Terminal'' and inserting ``Staten Island Ferry-Whitehall 
            Intermodal Terminal'';
                (vi) by striking clause (xxxv) and inserting the 
            following:
                ``(xxxv) New York-Midtown West Ferry Terminal, 
            $16,300,000.'';
                (vii) in clause (xxxix) by striking ``Allegheny 
            County'' and inserting ``Pittsburgh'';
                (viii) by striking clause (xvi) and inserting the 
            following:
                ``(xvi) Northeast Indianapolis Corridor, 
            $10,000,000.'';
                (ix) by striking clause (xxix) and inserting the 
            following:
                ``(xxix) Greater Albuquerque Mass Transit Project, 
            $90,000,000.'';
                (x) by striking clause (xliii) and inserting the 
            following:
                ``(xliii) Providence-Boston Commuter Rail, 
            $10,000,000.''; and
                (xi) by striking clause (li) and inserting the 
            following:
                ``(li) Dallas-Ft. Worth RAILTRAN (Phase-II), 
            $12,000,000.'';
            (B) by striking the heading for subsection (c)(2) and 
        inserting ``Additional amounts''; and
            (C) in paragraph (3) by inserting after the first sentence 
        the following: ``The project shall also be exempted from all 
        requirements relating to criteria for grants and loans for 
        fixed guideway systems under section 5309(e) of such title and 
        from regulations required under that section.''.
    (s) New Jersey Urban Core Project.--Section 3030(e) of the Federal 
Transit Act of 1998 is amended by adding at the end the following:
        ``(4) Technical adjustment.--Section 3031(d) of the Intermodal 
    Surface Transportation Efficiency Act of 1991 (as amended by 
    paragraph (3)(B) of this subsection) is amended--
            ``(A) by striking `of the West Shore Line' and inserting 
        `or the West Shore Line'; and
            ``(B) by striking `directly connected to' and all that 
        follows through `Newark International Airport' the first place 
        it appears.''.
    (t) Baltimore-Washington Transportation Improvements.--Section 3030 
of the Federal Transit Act of 1998 is amended by adding at the end the 
following:
    ``(h) Technical Adjustment.--Section 3035(nn) of the Intermodal 
Surface Transportation Efficiency Act of 1991 (105 Stat. 2134) (as 
amended by subsection (g)(1)(C) of this section) is amended by 
inserting after `expenditure of' the following: `section 5309 funds to 
the aggregate expenditure of'.''.
    (u) Bus Projects.--Section 3031 of the Federal Transit Act of 1998 
is amended--
        (1) in the table contained in subsection (a)--
            (A) by striking item 64;
            (B) in item 69 by striking ``Rensslear'' each place it 
        appears and inserting ``Rensselaer'';
            (C) in item 103 by striking ``facilities and''; and
            (D) by striking item 150;
        (2) by striking the heading for subsection (b) and inserting 
    ``Additional Amounts'';
        (3) in subsection (b) by inserting after ``2000'' the first 
    place it appears ``with funds made available under section 
    5338(h)(6) of such title''; and
        (4) in item 2 of the table contained in subsection (b) by 
    striking ``Rensslear'' each place it appears and inserting 
    ``Rensselaer''.
    (v) Contracting Out Study.--Section 3032 of the Federal Transit Act 
of 1998 is amended--
        (1) in subsection (a) by striking ``3'' and inserting ``6'';
        (2) in subsection (d) by striking ``the Mass Transit Account of 
    the Highway Trust Fund'' and inserting ``funds made available under 
    section 5338(f)(2) of title 49, United States Code,'';
        (3) in subsection (d) by striking ``1998'' and inserting 
    ``1999''; and
        (4) in subsection (e) by striking ``subsection (c)'' and 
    inserting ``subsection (d)''.
    (w) Job Access and Reverse Commute Grants.--Section 3037 of the 
Federal Transit Act of 1998 is amended--
        (1) in subsection (b)(4)(A)--
            (A) by inserting ``designated recipients under section 
        5307(a)(2) of title 49, United States Code,'' after ``from 
        among''; and
            (B) by inserting a comma after ``and agencies'';
        (2) in subsection (b)(4)(B)--
            (A) by striking ``at least'' and inserting ``less than'';
            (B) by inserting ``designated recipients under section 
        5307(a)(2) of title 49, United States Code,'' after ``from 
        among''; and
            (C) by inserting ``and agencies,'' after ``authorities'';
        (3) in subsection (f)(2)--
            (A) by striking ``(including bicycling)''; and
            (B) by inserting ``(including bicycling)'' after 
        ``additional services'';
        (4) in subsection (h)(2)(B) by striking ``403(a)(5)(C)(ii)'' 
    and inserting ``403(a)(5)(C)(vi)'';
        (5) in the heading for subsection (l)(1)(C) by striking ``from 
    the general fund'';
        (6) in subsection (l)(1)(C) by inserting ``under the 
    Transportation Discretionary Spending Guarantee for the Mass 
    Transit Category'' after ``(B)''; and
        (7) in subsection (l)(3)(B) by striking ``at least'' and 
    inserting ``less than''.
    (x) Rural Transportation Accessibility Incentive Program.--Section 
3038 of the Federal Transit Act of 1998 is amended--
        (1) in subsection (a)(1)(A) by inserting before the semicolon 
    ``or connecting 1 or more rural communities with an urban area not 
    in close proximity'';
        (2) in subsection (g)(1)--
            (A) by inserting ``over-the-road buses used substantially 
        or exclusively in'' after ``operators of''; and
            (B) by inserting at the end the following:
    ``Such sums shall remain available until expended.''; and
        (3) in subsection (g)(2)--
            (A) by striking ``each of''; and
            (B) by adding at the end the following: ``Such sums shall 
        remain available until expended.''.
    (y) Study of Transit Needs in National Parks and Related Public 
Lands.--Section 3039(b) of the Federal Transit Act of 1998 is amended--
        (1) in paragraph (1) by striking ``in order to carry'' and 
    inserting ``assist in carrying''; and
        (2) by adding at the end the following:
        ``(3) Definition.--For purposes of this subsection, the term 
    `Federal land management agencies' means the National Park Service, 
    the United States Fish and Wildlife Service, and the Bureau of Land 
    Management.''.
    (z) Obligation Ceiling.--Section 3040 of the Federal Transit Act of 
1998 is amended--
        (1) by striking paragraph (2) and inserting the following:
        ``(2) $5,797,000,000 in fiscal year 2000;''; and
        (2) in paragraph (4) by striking ``$6,746,000,000'' and 
    inserting ``$6,747,000,000''.

SEC. 9010. MOTOR CARRIER SAFETY TECHNICAL CORRECTION.

    Section 4011 of the Transportation Equity Act for the 21st Century 
is amended by adding at the end the following:
    ``(h) Technical Amendments.--Section 31314 (as amended by 
subsection (g) of this section) is amended--
        ``(1) in subsections (a) and (b) by striking `(3), and (5)' 
    each place it appears and inserting `(3), and (4)'; and
        ``(2) by striking subsection (d).''.

SEC. 9011. RESTORATIONS TO RESEARCH TITLE.

    (a) University Transportation Research Funding.--Section 5001(a)(7) 
of the Transportation Equity Act for the 21st Century is amended--
        (1) by striking ``$31,150,000'' each place it appears and 
    inserting ``$25,650,000'';
        (2) by striking ``$32,750,000'' each place it appears and 
    inserting ``$27,250,000''; and
        (3) by striking ``$32,000,000'' each place it appears and 
    inserting ``$26,500,000''.
    (b) Obligation Ceiling.--Section 5002 of such Act is amended by 
striking ``$403,150,000'' and all that follows through ``$468,000,000'' 
and inserting ``$397,650,000 for fiscal year 1998, $403,650,000 for 
fiscal year 1999, $422,450,000 for fiscal year 2000, $437,250,000 for 
fiscal year 2001, $447,500,000 for fiscal year 2002, and 
$462,500,000''.
    (c) Use of Funds for ITS.--Section 5210 of the Transportation 
Equity Act for the 21st Century is amended by adding at the end the 
following:
    ``(d) Use of Innovative Financing.--
        ``(1) In general.--The Secretary may use up to 25 percent of 
    the funds made available to carry out this subtitle to make 
    available loans, lines of credit, and loan guarantees for projects 
    that are eligible for assistance under this subtitle and that have 
    significant intelligent transportation system elements.
        ``(2) Consistency with other law.--Credit assistance described 
    in paragraph (1) shall be made available in a manner consistent 
    with the Transportation Infrastructure Finance and Innovation Act 
    of 1998.''.
    (d) University Transportation Research.--Section 5110 of such Act 
is amended by adding at the end the following:
    ``(d) Technical Adjustments.--Section 5505 of title 49, United 
States Code (as added by subsection (a) of this section), is amended--
        ``(1) in subsection (g)(2) by striking `section 5506,' and 
    inserting `section 508 of title 23, United States Code,';
        ``(2) in subsection (i)--
            ``(A) by inserting `Subject to section 5338(e):' after `(i) 
        Number and Amount of Grants.--'; and
            ``(B) by striking `institutions' each place it appears and 
        inserting `institutions or groups of institutions'; and
        ``(3) in subsection (j)(4)(B) by striking `on behalf of' and 
    all that follows before the period and inserting `on behalf of a 
    consortium which may also include West Virginia University 
    Institute of Technology, the College of West Virginia, and 
    Bluefield State College'.''.
    (e) Technical Corrections.--Section 5115 of such Act is amended--
        (1) in subsection (a) by striking ``Director'' and inserting 
    ``Director of the Bureau of Transportation Statistics'';
        (2) in subsection (b) by striking ``Bureau'' and inserting 
    ``Bureau of Transportation Statistics,''; and
        (3) in subsection (c) by striking ``paragraph (1)'' and 
    inserting ``subsection (a)''.
    (f) Corrections to Certain Oklahoma Projects.--Section 5116 of such 
Act is amended--
        (1) in subsection (e)(2) by striking ``$1,000,000 for fiscal 
    year 1999, $1,000,000 for fiscal year 2000, and $500,000 for fiscal 
    year 2001'' and inserting ``$1,000,000 for fiscal year 1999, 
    $1,000,000 for fiscal year 2000, $1,000,000 for fiscal year 2001, 
    and $500,000 for fiscal year 2002''; and
        (2) in subsection (f)(2) by striking ``$1,000,000 for fiscal 
    year 1999, $1,000,000 for fiscal year 2000, $1,000,000 for fiscal 
    year 2001, and $500,000 for fiscal year 2002'' and inserting 
    ``$1,000,000 for fiscal year 1999, $1,000,000 for fiscal year 2000, 
    and $500,000 for fiscal year 2001''.
    (g) Intelligent Transportation Infrastructure Reference.--Section 
5117(b)(3)(B)(ii) of such Act is amended by striking ``local 
departments of transportation'' and inserting ``the Department of 
Transportation''.
    (h) Fundamental Properties of Asphalts and Modified Asphalts.--
Section 5117(b)(5)(B) of such Act is amended--
        (1) by striking ``1999'' and inserting ``1998''; and
        (2) by striking ``$3,000,000 per fiscal year'' and inserting 
    ``$1,000,000 for fiscal year 1998 and $3,000,000 for each of fiscal 
    years 1999 through 2003''.

SEC. 9012. AUTOMOBILE SAFETY AND INFORMATION.

    (a) Reference.--Section 7104 of the Transportation Equity Act for 
the 21st Century is amended by adding at the end the following:
    ``(c) Conforming Amendment.--Section 30105(a) of title 49, United 
States Code (as amended by subsection (a) of this section), is amended 
by inserting after `Secretary' the following: `for the National Highway 
Traffic Safety Administration'.''.
    (b) Clean Vessel Act Funding.--Section 7403 of such Act is 
amended--
        (1) by inserting ``(a) In General.--'' before ``Section 4(b)''; 
    and
        (2) by adding at the end the following:
    ``(b) Technical Amendment.--Section 4(b)(3)(B) of the 1950 Act (as 
amended by subsection (a) of this section) is amended by striking 
`6404(d)' and inserting `7404(d)'.''.
    (c) Boating Infrastructure.--Section 7404(b) of such Act is amended 
by striking ``6402'' and inserting ``7402''.

SEC. 9013. TECHNICAL CORRECTIONS REGARDING SUBTITLE A OF TITLE VIII.

    (a) Amendment to Offsetting Adjustment for Discretionary Spending 
Limit.--Section 8101(b) of the Transportation Equity Act for the 21st 
Century is amended--
        (1) in paragraph (1) by striking ``$25,173,000,000'' and 
    inserting ``$25,144,000,000''; and
        (2) in paragraph (2) by striking ``$26,045,000,000'' and 
    inserting ``$26,009,000,000''.
    (b) Amendments for Highway Category.--Section 8101 of the 
Transportation Equity Act for the 21st Century is amended by adding at 
the end the following:
    ``(f) Technical Amendments.--Section 250(c)(4)(C) of the Balanced 
Budget and Emergency Deficit Control Act of 1985 (as amended by 
subsection (c) of this Act) is amended--
        ``(1) by striking `Century and' and inserting `Century or';
        ``(2) by striking `as amended by this section,' and inserting 
    `as amended by the Transportation Equity Act for the 21st 
    Century,'; and
        ``(3) by adding at the end the following new flush sentence:
    `Such term also refers to the Washington Metropolitan Transit 
    Authority account (69-1128-0-1-401) only for fiscal year 1999 only 
    for appropriations provided pursuant to authorizations contained in 
    section 14 of Public Law 96-184 and Public Law 101-551.'.''.
    (c) Technical Amendment.--Section 8102 of the Transportation Equity 
Act for the 21st Century is amended by inserting before the period at 
the end the following: ``or from section 1102 of this Act''.

SEC. 9014. CORRECTIONS TO VETERANS SUBTITLE.

    (a) Tobacco-Related Illnesses in Veterans.--Section 8202 of the 
Transportation Equity Act for the 21st Century is amended to read as 
follows (and the amendments made by that section as originally enacted 
shall be treated for all purposes as not having been made):

``SEC. 8202. TREATMENT OF TOBACCO-RELATED ILLNESSES OF VETERANS.

    ``(a) In General.--(1) Chapter 11 of title 38, United States Code, 
is amended by inserting after section 1102 the following new section:

`Sec. 1103. Special provisions relating to claims based upon effects of 
            tobacco products

    `(a) Notwithstanding any other provision of law, a veteran's 
disability or death shall not be considered to have resulted from 
personal injury suffered or disease contracted in the line of duty in 
the active military, naval, or air service for purposes of this title 
on the basis that it resulted from injury or disease attributable to 
the use of tobacco products by the veteran during the veteran's 
service.
    `(b) Nothing in subsection (a) shall be construed as precluding the 
establishment of service connection for disability or death from a 
disease or injury which is otherwise shown to have been incurred or 
aggravated in active military, naval, or air service or which became 
manifest to the requisite degree of disability during any applicable 
presumptive period specified in section 1112 or 1116 of this title.'.
    ``(2) The table of sections at the beginning of such chapter is 
amended by inserting after the item relating to section 1102 the 
following new item:
`1103. Special provisions relating to claims based upon effects of 
          tobacco products.'.

    ``(b) Effective Date.--Section 1103 of title 38, United States 
Code, as added by subsection (a), shall apply with respect to claims 
received by the Secretary of Veterans Affairs after the date of the 
enactment of this Act.''.
    (b) GI Bill Educational Assistance for Survivors and Dependents of 
Veterans.--Subtitle B of title VIII of the Transportation Equity Act 
for the 21st Century is amended by adding at the end the following new 
section:

``SEC. 8210. TWENTY PERCENT INCREASE IN RATES OF SURVIVORS AND 
              DEPENDENTS EDUCATIONAL ASSISTANCE.

    ``(a) Survivors and Dependents Educational Assistance.--Section 
3532 of title 38, United States Code, is amended--
        ``(1) in subsection (a)(1)--
            ``(A) by striking out `$404' and inserting in lieu thereof 
        `$485';
            ``(B) by striking out `$304' and inserting in lieu thereof 
        `$365'; and
            ``(C) by striking out `$202' and inserting in lieu thereof 
        `$242';
        ``(2) in subsection (a)(2), by striking out `$404' and 
    inserting in lieu thereof `$485';
        ``(3) in subsection (b), by striking out `$404' and inserting 
    in lieu thereof `$485'; and
        ``(4) in subsection (c)(2)--
            ``(A) by striking out `$327' and inserting in lieu thereof 
        `$392';
            ``(B) by striking out `$245' and inserting in lieu thereof 
        `$294'; and
            ``(C) by striking out `$163' and inserting in lieu thereof 
        `$196'.
    ``(b) Correspondence Course.--Section 3534(b) of such title is 
amended by striking out `$404' and inserting in lieu thereof `$485'.
    ``(c) Special Restorative Training.--Section 3542(a) of such title 
is amended--
        ``(1) by striking out `$404' and inserting in lieu thereof 
    `$485';
        ``(2) by striking out `$127' each place it appears and 
    inserting in lieu thereof `$152'; and
        ``(3) by striking out `$13.46' and inserting in lieu thereof 
    `$16.16'.
    ``(d) Apprenticeship Training.--Section 3687(b)(2) of such title is 
amended--
        ``(1) by striking out `$294' and inserting in lieu thereof 
    `$353';
        ``(2) by striking out `$220' and inserting in lieu thereof 
    `$264';
        ``(3) by striking out `$146' and inserting in lieu thereof 
    `$175'; and
        ``(4) by striking out `$73' and inserting in lieu thereof 
    `$88'.
    ``(e) Effective Date.--The amendments made by this section shall 
take effect on October 1, 1998, and shall apply with respect to 
educational assistance allowances paid for months after September 
1998.''.

SEC. 9015. TECHNICAL CORRECTIONS REGARDING TITLE IX.

    (a) Highway Trust Fund.--Subsection (f) of section 9002 of the 
Transportation Equity Act for the 21st Century is amended by adding at 
the end the following new paragraphs:
        ``(4) The last sentence of section 9503(c)(1), as amended by 
    subsection (d), is amended by striking `the date of enactment of 
    the Transportation Equity Act for the 21st Century' and inserting 
    `the date of the enactment of the TEA 21 Restoration Act'.
        ``(5) Paragraph (3) of section 9503(e), as amended by 
    subsection (d), is amended by striking `the date of enactment of 
    the Transportation Equity Act for the 21st Century' and inserting 
    `the date of the enactment of the TEA 21 Restoration Act'.''.
    (b) Boat Safety Account and Sport Fish Restoration Account.--
Section 9005 of the Transportation Equity Act for the 21st Century is 
amended by adding at the end the following new subsection:
    ``(f) Clerical Amendments.--
        ``(1) Subparagraph (A) of section 9504(b)(2), as amended by 
    subsection (b)(1), is amended by striking `the date of the 
    enactment of the Transportation Equity Act for the 21st Century' 
    and inserting `the date of the enactment of the TEA 21 Restoration 
    Act'.
        ``(2) Subparagraph (B) of section 9504(b)(2), as added by 
    subsection (b)(3), is amended by striking `such Act' and inserting 
    `the TEA 21 Restoration Act'.
        ``(3) Subparagraph (C) of section 9504(b)(2), as amended by 
    subsection (b)(2) and redesignated by subsection (b)(3), is amended 
    by striking `the date of the enactment of the Transportation Equity 
    Act for the 21st Century' and inserting `the date of the enactment 
    of the TEA 21 Restoration Act'.
        ``(4) Subsection (c) of section 9504, as amended by subsection 
    (c)(2), is amended by striking `the date of enactment of the 
    Transportation Equity Act for the 21st Century' and inserting `the 
    date of the enactment of the TEA 21 Restoration Act'.''.

SEC. 9016. EFFECTIVE DATE.

    This title and the amendments made by this title shall take effect 
simultaneously with the enactment of the Transportation Equity Act for 
the 21st Century. For purposes of all Federal laws, the amendments made 
by this title shall be treated as being included in the Transportation 
Equity Act for the 21st Century at the time of the enactment of such 
Act, and the provisions of such Act (including the amendments made by 
such Act) (as in effect on the day before the date of enactment of this 
Act) that are amended by this title shall be treated as not being 
enacted.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.