[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5542 Introduced in House (IH)]







106th CONGRESS
  2d Session
                                H. R. 5542

   To amend the Internal Revenue Code of 1986 to provide tax relief.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 25, 2000

  Mr. Armey introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committees on 
 Education and the Workforce, Banking and Financial Services, and the 
 Budget, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to provide tax relief.

    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.

    (a) Short Title.--This Act may be cited as the ``Taxpayer Relief 
Act of 2000''.
    (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) Table of Contents.--

Sec. 1. Short title; amendment of 1986 Code.
       TITLE I--FSC REPEAL AND EXTRATERRITORIAL INCOME EXCLUSION

Sec. 101. Repeal of foreign sales corporation rules.
Sec. 102. Treatment of extraterritorial income.
Sec. 103. Technical and conforming amendments.
Sec. 104. Effective date.
                  TITLE II--SMALL BUSINESS TAX RELIEF

Sec. 201. Extension of work opportunity tax credit.
Sec. 202. Increase in amortizable reforestation expenditures, etc.
Sec. 203. Increase in expense treatment for small businesses.
Sec. 204. Increased deduction for meal expenses.
Sec. 205. Increased deductibility of business meal expenses for 
                            individuals subject to Federal limitations 
                            on hours of service.
Sec. 206. Repeal of modification of installment method.
Sec. 207. Income averaging not to increase alternative minimum tax 
                            liability; income averaging for fishermen.
Sec. 208. Repeal of occupational taxes relating to distilled spirits, 
                            wine, and beer.
Sec. 209. Exclusion from gross income for certain forgiven mortgage 
                            obligations.
Sec. 210. Clarification of cash accounting rules for small business.
Sec. 211. Amendments relating to demand deposit accounts at depository 
                            institutions.
  TITLE III--HEALTH INSURANCE AND LONG-TERM CARE INSURANCE PROVISIONS

Sec. 301. Deduction for 100 percent of health insurance costs of self-
                            employed individuals.
Sec. 302. Deduction for health and long-term care insurance costs of 
                            individuals not participating in employer-
                            subsidized health plans.
Sec. 303. 2-year extension of availability of medical savings accounts.
Sec. 304. Additional consumer protections for long-term care insurance.
Sec. 305. Deduction for providing long-term care in the home to 
                            household members.
   TITLE IV--PENSION AND INDIVIDUAL RETIREMENT ARRANGEMENT PROVISIONS

Sec. 400. Short title.
               Subtitle A--Individual Retirement Accounts

Sec. 401. Modification of IRA contribution limits.
Sec. 402. Deemed IRAs under employer plans.
Sec. 403. Tax-free distributions from individual retirement accounts 
                            for charitable purposes.
Sec. 404. Modification of AGI limits for Roth IRAs.
                     Subtitle B--Expanding Coverage

Sec. 411. Increase in benefit and contribution limits.
Sec. 412. Plan loans for subchapter S owners, partners, and sole 
                            proprietors.
Sec. 413. Modification of top-heavy rules.
Sec. 414. Elective deferrals not taken into account for purposes of 
                            deduction limits.
Sec. 415. Repeal of coordination requirements for deferred compensation 
                            plans of State and local governments and 
                            tax-exempt organizations.
Sec. 416. Elimination of user fee for requests to IRS regarding pension 
                            plans.
Sec. 417. Deduction limits.
Sec. 418. Option to treat elective deferrals as after-tax Roth 
                            contributions.
                Subtitle C--Enhancing Fairness for Women

Sec. 421. Catch-up contributions for individuals age 50 or over.
Sec. 422. Equitable treatment for contributions of employees to defined 
                            contribution plans.
Sec. 423. Faster vesting of certain employer matching contributions.
Sec. 424. Simplify and update the minimum distribution rules.
Sec. 425. Clarification of tax treatment of division of section 457 
                            plan benefits upon divorce.
Sec. 426. Provisions relating to hardship distributions.
Sec. 427. Waiver of tax on nondeductible contributions for domestic or 
                            similar workers.
          Subtitle D--Increasing Portability for Participants

Sec. 431. Rollovers allowed among various types of plans.
Sec. 432. Rollovers of IRAs into workplace retirement plans.
Sec. 433. Rollovers of after-tax contributions.
Sec. 434. Hardship exception to 60-day rule.
Sec. 435. Treatment of forms of distribution.
Sec. 436. Rationalization of restrictions on distributions.
Sec. 437. Purchase of service credit in governmental defined benefit 
                            plans.
Sec. 438. Employers may disregard rollovers for purposes of cash-out 
                            amounts.
Sec. 439. Minimum distribution and inclusion requirements for section 
                            457 plans.
       Subtitle E--Strengthening Pension Security and Enforcement

Sec. 441. Repeal of 155 percent of current liability funding limit.
Sec. 442. Maximum contribution deduction rules modified and applied to 
                            all defined benefit plans.
Sec. 443. Excise tax relief for sound pension funding.
Sec. 444. Excise tax on failure to provide notice by defined benefit 
                            plans significantly reducing future benefit 
                            accruals.
Sec. 445. Treatment of multiemployer plans under section 415.
Sec. 446. Protection of investment of employee contributions to 401(k) 
                            plans.
Sec. 447. Periodic pension benefits statements.
Sec. 448. Prohibited allocations of stock in S corporation ESOP.
                Subtitle F--Reducing Regulatory Burdens

Sec. 451. Modification of timing of plan valuations.
Sec. 452. ESOP dividends may be reinvested without loss of dividend 
                            deduction.
Sec. 453. Repeal of transition rule relating to certain highly 
                            compensated employees.
Sec. 454. Employees of tax-exempt entities.
Sec. 455. Clarification of treatment of employer-provided retirement 
                            advice.
Sec. 456. Reporting simplification.
Sec. 457. Improvement of employee plans compliance resolution system.
Sec. 458. Repeal of the multiple use test.
Sec. 459. Flexibility in nondiscrimination, coverage, and line of 
                            business rules.
Sec. 460. Extension to all governmental plans of moratorium on 
                            application of certain nondiscrimination 
                            rules applicable to State and local plans.
Sec. 461. Notice and consent period regarding distributions.
Sec. 462. Annual report dissemination.
Sec. 463. Technical corrections to SAVER Act.
Sec. 464. Study of pension coverage.
                   Subtitle G--Other ERISA Provisions

Sec. 471. Missing participants.
Sec. 472. Reduced PBGC premium for new plans of small employers.
Sec. 473. Reduction of additional PBGC premium for new and small plans.
Sec. 474. Authorization for PBGC to pay interest on premium overpayment 
                            refunds.
Sec. 475. Substantial owner benefits in terminated plans.
Sec. 476. Multiemployer plan benefits guarantee.
Sec. 477. Civil penalties for breach of fiduciary responsibility.
Sec. 478. Benefit suspension notice.
                      Subtitle H--Plan Amendments

Sec. 481. Provisions relating to plan amendments.
                TITLE V--SCHOOL CONSTRUCTION PROVISIONS

Sec. 501. Additional increase in arbitrage rebate exception for 
                            governmental bonds used to finance 
                            educational facilities.
Sec. 502. Modification of arbitrage rebate rules applicable to public 
                            school construction bonds.
Sec. 503. Modification of special arbitrage rule for certain funds.
Sec. 504. Treatment of qualified public educational facility bonds as 
                            exempt facility bonds.
Sec. 505. Expansion of qualified zone academy bond program.
                   TITLE VI--COMMUNITY REVITALIZATION

           Subtitle A--Tax Incentives for Renewal Communities

Sec. 601. Designation of and tax incentives for renewal communities.
Sec. 602. Work opportunity credit for hiring youth residing in renewal 
                            communities.
   Subtitle B--Extension and Expansion of Empowerment Zone Incentives

Sec. 611. Authority to designate 9 additional empowerment zones.
Sec. 612. Extension of empowerment zone treatment through 2009.
Sec. 613. 20 percent employment credit for all empowerment zones
Sec. 614. Increased expensing under section 179.
Sec. 615. Higher limits on tax-exempt empowerment zone facility bonds.
Sec. 616. Nonrecognition of gain on rollover of empowerment zone 
                            investments.
Sec. 617. Increased exclusion of gain on sale of empowerment zone 
                            stock.
                   Subtitle C--New Markets Tax Credit

Sec. 621. New markets tax credit.
         Subtitle D--Improvements in Low-Income Housing Credit

Sec. 631. Modification of State ceiling on low-income housing credit.
Sec. 632. Modification of criteria for allocating housing credits among 
                            projects.
Sec. 633. Additional responsibilities of housing credit agencies.
Sec. 634. Modifications to rules relating to basis of building which is 
                            eligible for credit.
Sec. 635. Other modifications.
Sec. 636. Carryforward rules.
Sec. 637. Effective date.

     Subtitle E--Other Community Renewal and New Markets Assistance

Sec. 641. Transfer of unoccupied and substandard HUD-held housing to 
                            local governments and community development 
                            corporations.
Sec. 642. Transfer of HUD assets in revitalization areas.
Sec. 643. Risk-sharing demonstration.
Sec. 644. Prevention and treatment of substance abuse; services 
                            provided through religious organizations.
                      Subtitle F--Other Provisions

Sec. 651. Acceleration of phase-in of increase in volume cap on private 
                            activity bonds.
Sec. 652. Modifications to expensing of environmental remediation 
                            costs.
Sec. 653. Extension of DC homebuyer tax credit.
   TITLE VII--ADMINISTRATIVE, MISCELLANEOUS, AND TECHNICAL PROVISIONS

                 Subtitle A--Administrative Provisions

Sec. 701. Exemption of certain reporting requirements.
Sec. 702. Extension of deadlines for IRS compliance with certain notice 
                            requirements.
Sec. 703. Extension of authority for undercover operations.
Sec. 704. Confidentiality of certain documents relating to closing and 
                            similar agreements and to agreements with 
                            foreign governments.
Sec. 705. Increase in threshold for Joint Committee reports on refunds 
                            and credits.
Sec. 706. Treatment of missing children with respect to certain tax 
                            benefits.
Sec. 707. Amendments to statutes referencing yield on 52-week Treasury 
                            bills.
Sec. 708. Adjustments for Consumer Price Index error.
Sec. 709. Prevention of duplication of loss through assumption of 
                            liabilities giving rise to a deduction.
                  Subtitle B--Miscellaneous Provisions

Sec. 710. Repeal of 4.3-cent motor fuel excise taxes on railroads and 
                            inland waterway transportation which remain 
                            in general fund.
Sec. 711. Repeal of reduction of deductions for mutual life insurance 
                            companies.
Sec. 712. Repeal of policyholders surplus account provisions.
Sec. 713. Credit to holders of qualified Amtrak bonds.
Sec. 714. Farm, fishing, and ranch risk management accounts.
Sec. 715. Extension of enhanced deduction for corporate donations of 
                            computer technology.
Sec. 716. Relief from Federal tax liability arising with respect to 
                            certain claims against the Department of 
                            Agriculture for discrimination in farm 
                            credit and benefit programs.
Sec. 717. Expansion of credit for adoption expenses.
Sec. 718. Study concerning United States insurance companies with 
                            certain offshore reinsurance affiliates.
Sec. 719. Treatment of Indian tribal governments under Federal 
                            Unemployment Tax Act.
                   Subtitle C--Technical Corrections

Sec. 721. Amendments related to Ticket to Work and Work Incentives 
                            Improvement Act of 1999.
Sec. 722. Amendments related to Tax and Trade Relief Extension Act of 
                            1998.
Sec. 723. Amendments related to Internal Revenue Service Restructuring 
                            and Reform Act of 1998.
Sec. 724. Amendments related to Taxpayer Relief Act of 1997.
Sec. 725. Amendments related to Balanced Budget Act of 1997.
Sec. 726. Amendments related to Small Business Job Protection Act of 
                            1996.
Sec. 727. Amendment related to Revenue Reconciliation Act of 1990.
Sec. 728. Other technical corrections.
Sec. 729. Clerical changes.
                     Subtitle D--Pay-Go Adjustments

Sec. 731. Avoidance of a Pay-Go sequestration for fiscal year 2001.

       TITLE I--FSC REPEAL AND EXTRATERRITORIAL INCOME EXCLUSION

SEC. 101. REPEAL OF FOREIGN SALES CORPORATION RULES.

    Subpart C of part III of subchapter N of chapter 1 (relating to 
taxation of foreign sales corporations) is hereby repealed.

SEC. 102. TREATMENT OF EXTRATERRITORIAL INCOME.

    (a) In General.--Part III of subchapter B of chapter 1 (relating to 
items specifically excluded from gross income) is amended by inserting 
before section 115 the following new section:

``SEC. 114. EXTRATERRITORIAL INCOME.

    ``(a) Exclusion.--Gross income does not include extraterritorial 
income.
    ``(b) Exception.--Subsection (a) shall not apply to 
extraterritorial income which is not qualifying foreign trade income as 
determined under subpart E of part III of subchapter N.
    ``(c) Disallowance of Deductions.--
            ``(1) In general.--Any deduction of a taxpayer allocated 
        under paragraph (2) to extraterritorial income of the taxpayer 
        excluded from gross income under subsection (a) shall not be 
        allowed.
            ``(2) Allocation.--Any deduction of the taxpayer properly 
        apportioned and allocated to the extraterritorial income 
        derived by the taxpayer from any transaction shall be allocated 
        on a proportionate basis between--
                    ``(A) the extraterritorial income derived from such 
                transaction which is excluded from gross income under 
                subsection (a), and
                    ``(B) the extraterritorial income derived from such 
                transaction which is not so excluded.
    ``(d) Denial of Credits for Certain Foreign Taxes.--Notwithstanding 
any other provision of this chapter, no credit shall be allowed under 
this chapter for any income, war profits, and excess profits taxes paid 
or accrued to any foreign country or possession of the United States 
with respect to extraterritorial income which is excluded from gross 
income under subsection (a).
    ``(e) Extraterritorial Income.--For purposes of this section, the 
term `extraterritorial income' means the gross income of the taxpayer 
attributable to foreign trading gross receipts (as defined in section 
942) of the taxpayer.''.
    (b) Qualifying Foreign Trade Income.--Part III of subchapter N of 
chapter 1 is amended by inserting after subpart D the following new 
subpart:

              ``Subpart E--Qualifying Foreign Trade Income

                              ``Sec. 941. Qualifying foreign trade 
                                        income.
                              ``Sec. 942. Foreign trading gross 
                                        receipts.
                              ``Sec. 943. Other definitions and special 
                                        rules.

``SEC. 941. QUALIFYING FOREIGN TRADE INCOME.

    ``(a) Qualifying Foreign Trade Income.--For purposes of this 
subpart and section 114--
            ``(1) In general.--The term `qualifying foreign trade 
        income' means, with respect to any transaction, the amount of 
        gross income which, if excluded, will result in a reduction of 
        the taxable income of the taxpayer from such transaction equal 
        to the greatest of--
                    ``(A) 30 percent of the foreign sale and leasing 
                income derived by the taxpayer from such transaction,
                    ``(B) 1.2 percent of the foreign trading gross 
                receipts derived by the taxpayer from the transaction, 
                or
                    ``(C) 15 percent of the foreign trade income 
                derived by the taxpayer from the transaction.
        In no event shall the amount determined under subparagraph (B) 
        exceed 200 percent of the amount determined under subparagraph 
        (C).
            ``(2) Alternative computation.--A taxpayer may compute its 
        qualifying foreign trade income under a subparagraph of 
        paragraph (1) other than the subparagraph which results in the 
        greatest amount of such income.
            ``(3) Limitation on use of foreign trading gross receipts 
        method.--If any person computes its qualifying foreign trade 
        income from any transaction with respect to any property under 
        paragraph (1)(B), the qualifying foreign trade income of such 
        person (or any related person) with respect to any other 
        transaction involving such property shall be zero.
            ``(4) Rules for marginal costing.--The Secretary shall 
        prescribe regulations setting forth rules for the allocation of 
        expenditures in computing foreign trade income under paragraph 
        (1)(C) in those cases where a taxpayer is seeking to establish 
        or maintain a market for qualifying foreign trade property.
            ``(5) Participation in international boycotts, etc.--Under 
        regulations prescribed by the Secretary, the qualifying foreign 
        trade income of a taxpayer for any taxable year shall be 
        reduced (but not below zero) by the sum of--
                    ``(A) an amount equal to such income multiplied by 
                the international boycott factor determined under 
                section 999, and
                    ``(B) any illegal bribe, kickback, or other payment 
                (within the meaning of section 162(c)) paid by or on 
                behalf of the taxpayer directly or indirectly to an 
                official, employee, or agent in fact of a government.
    ``(b) Foreign Trade Income.--For purposes of this subpart--
            ``(1) In general.--The term `foreign trade income' means 
        the taxable income of the taxpayer attributable to foreign 
        trading gross receipts of the taxpayer.
            ``(2) Special rule for cooperatives.--In any case in which 
        an organization to which part I of subchapter T applies which 
        is engaged in the marketing of agricultural or horticultural 
        products sells qualifying foreign trade property, in computing 
        the taxable income of such cooperative, there shall not be 
        taken into account any deduction allowable under subsection (b) 
        or (c) of section 1382 (relating to patronage dividends, per-
        unit retain allocations, and nonpatronage distributions).
    ``(c) Foreign Sale and Leasing Income.--For purposes of this 
section--
            ``(1) In general.--The term `foreign sale and leasing 
        income' means, with respect to any transaction--
                    ``(A) foreign trade income properly allocable to 
                activities which--
                            ``(i) are described in paragraph (2)(A)(i) 
                        or (3) of section 942(b), and
                            ``(ii) are performed by the taxpayer (or 
                        any person acting under a contract with such 
                        taxpayer) outside the United States, or
                    ``(B) foreign trade income derived by the taxpayer 
                in connection with the lease or rental of qualifying 
                foreign trade property for use by the lessee outside 
                the United States.
            ``(2) Special rules for leased property.--
                    ``(A) Sales income.--The term `foreign sale and 
                leasing income' includes any foreign trade income 
                derived by the taxpayer from the sale of property 
                described in paragraph (1)(B).
                    ``(B) Limitation in certain cases.--Except as 
                provided in regulations, in the case of property 
                which--
                            ``(i) was manufactured, produced, grown, or 
                        extracted by the taxpayer, or
                            ``(ii) was acquired by the taxpayer from a 
                        related person for a price which was not 
                        determined in accordance with the rules of 
                        section 482,
                the amount of foreign trade income which may be treated 
                as foreign sale and leasing income under paragraph 
                (1)(B) or subparagraph (A) of this paragraph with 
                respect to any transaction involving such property 
                shall not exceed the amount which would have been 
                determined if the taxpayer had acquired such property 
                for the price determined in accordance with the rules 
                of section 482.
            ``(3) Special rules.--
                    ``(A) Excluded property.--Foreign sale and leasing 
                income shall not include any income properly allocable 
                to excluded property described in subparagraph (B) of 
                section 943(a)(3) (relating to intangibles).
                    ``(B) Only direct expenses taken into account.--For 
                purposes of this subsection, any expense other than a 
                directly allocable expense shall not be taken into 
                account in computing foreign trade income.

``SEC. 942. FOREIGN TRADING GROSS RECEIPTS.

    ``(a) Foreign Trading Gross Receipts.--
            ``(1) In general.--Except as otherwise provided in this 
        section, for purposes of this subpart, the term `foreign 
        trading gross receipts' means the gross receipts of the 
        taxpayer which are--
                    ``(A) from the sale, exchange, or other disposition 
                of qualifying foreign trade property,
                    ``(B) from the lease or rental of qualifying 
                foreign trade property for use by the lessee outside 
                the United States,
                    ``(C) for services which are related and subsidiary 
                to--
                            ``(i) any sale, exchange, or other 
                        disposition of qualifying foreign trade 
                        property by such taxpayer, or
                            ``(ii) any lease or rental of qualifying 
                        foreign trade property described in 
                        subparagraph (B) by such taxpayer,
                    ``(D) for engineering or architectural services for 
                construction projects located (or proposed for 
                location) outside the United States, or
                    ``(E) for the performance of managerial services 
                for a person other than a related person in furtherance 
                of the production of foreign trading gross receipts 
                described in subparagraph (A), (B), or (C).
        Subparagraph (E) shall not apply to a taxpayer for any taxable 
        year unless at least 50 percent of its foreign trading gross 
        receipts (determined without regard to this sentence) for such 
        taxable year is derived from activities described in 
        subparagraph (A), (B), or (C).
            ``(2) Certain receipts excluded on basis of use; subsidized 
        receipts excluded.--The term `foreign trading gross receipts' 
        shall not include receipts of a taxpayer from a transaction 
        if--
                    ``(A) the qualifying foreign trade property or 
                services--
                            ``(i) are for ultimate use in the United 
                        States, or
                            ``(ii) are for use by the United States or 
                        any instrumentality thereof and such use of 
                        qualifying foreign trade property or services 
                        is required by law or regulation, or
                    ``(B) such transaction is accomplished by a subsidy 
                granted by the government (or any instrumentality 
                thereof) of the country or possession in which the 
                property is manufactured, produced, grown, or 
                extracted.
            ``(3) Election to exclude certain receipts.--The term 
        `foreign trading gross receipts' shall not include gross 
        receipts of a taxpayer from a transaction if the taxpayer 
        elects not to have such receipts taken into account for 
        purposes of this subpart.
    ``(b) Foreign Economic Process Requirements.--
            ``(1) In general.--Except as provided in subsection (c), a 
        taxpayer shall be treated as having foreign trading gross 
        receipts from any transaction only if economic processes with 
        respect to such transaction take place outside the United 
        States as required by paragraph (2).
            ``(2) Requirement.--
                    ``(A) In general.--The requirements of this 
                paragraph are met with respect to the gross receipts of 
                a taxpayer derived from any transaction if--
                            ``(i) such taxpayer (or any person acting 
                        under a contract with such taxpayer) has 
                        participated outside the United States in the 
                        solicitation (other than advertising), the 
                        negotiation, or the making of the contract 
                        relating to such transaction, and
                            ``(ii) the foreign direct costs incurred by 
                        the taxpayer attributable to the transaction 
                        equal or exceed 50 percent of the total direct 
                        costs attributable to the transaction.
                    ``(B) Alternative 85-percent test.--A taxpayer 
                shall be treated as satisfying the requirements of 
                subparagraph (A)(ii) with respect to any transaction 
                if, with respect to each of at least 2 subparagraphs of 
                paragraph (3), the foreign direct costs incurred by 
                such taxpayer attributable to activities described in 
                such subparagraph equal or exceed 85 percent of the 
                total direct costs attributable to activities described 
                in such subparagraph.
                    ``(C) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Total direct costs.--The term `total 
                        direct costs' means, with respect to any 
                        transaction, the total direct costs incurred by 
                        the taxpayer attributable to activities 
                        described in paragraph (3) performed at any 
                        location by the taxpayer or any person acting 
                        under a contract with such taxpayer.
                            ``(ii) Foreign direct costs.--The term 
                        `foreign direct costs' means, with respect to 
                        any transaction, the portion of the total 
                        direct costs which are attributable to 
                        activities performed outside the United States.
            ``(3) Activities relating to qualifying foreign trade 
        property.--The activities described in this paragraph are any 
        of the following with respect to qualifying foreign trade 
        property--
                    ``(A) advertising and sales promotion,
                    ``(B) the processing of customer orders and the 
                arranging for delivery,
                    ``(C) transportation outside the United States in 
                connection with delivery to the customer,
                    ``(D) the determination and transmittal of a final 
                invoice or statement of account or the receipt of 
                payment, and
                    ``(E) the assumption of credit risk.
            ``(4) Economic processes performed by related persons.--A 
        taxpayer shall be treated as meeting the requirements of this 
        subsection with respect to any sales transaction involving any 
        property if any related person has met such requirements in 
        such transaction or any other sales transaction involving such 
        property.
    ``(c) Exception From Foreign Economic Process Requirement.--
            ``(1) In general.--The requirements of subsection (b) shall 
        be treated as met for any taxable year if the foreign trading 
        gross receipts of the taxpayer for such year do not exceed 
        $5,000,000.
            ``(2) Receipts of related persons aggregated.--All related 
        persons shall be treated as one person for purposes of 
        paragraph (1), and the limitation under paragraph (1) shall be 
        allocated among such persons in a manner provided in 
        regulations prescribed by the Secretary.
            ``(3) Special rule for pass-thru entities.--In the case of 
        a partnership, S corporation, or other pass-thru entity, the 
        limitation under paragraph (1) shall apply with respect to the 
        partnership, S corporation, or entity and with respect to each 
        partner, shareholder, or other owner.

``SEC. 943. OTHER DEFINITIONS AND SPECIAL RULES.

    ``(a) Qualifying Foreign Trade Property.--For purposes of this 
subpart--
            ``(1) In general.--The term `qualifying foreign trade 
        property' means property--
                    ``(A) manufactured, produced, grown, or extracted 
                within or outside the United States,
                    ``(B) held primarily for sale, lease, or rental, in 
                the ordinary course of trade or business for direct 
                use, consumption, or disposition outside the United 
                States, and
                    ``(C) not more than 50 percent of the fair market 
                value of which is attributable to--
                            ``(i) articles manufactured, produced, 
                        grown, or extracted outside the United States, 
                        and
                            ``(ii) direct costs for labor (determined 
                        under the principles of section 263A) performed 
                        outside the United States.
        For purposes of subparagraph (C), the fair market value of any 
        article imported into the United States shall be its appraised 
        value, as determined by the Secretary under section 402 of the 
        Tariff Act of 1930 (19 U.S.C. 1401a) in connection with its 
        importation, and the direct costs for labor under clause (ii) 
        do not include costs that would be treated under the principles 
        of section 263A as direct labor costs attributable to articles 
        described in clause (i).
            ``(2) U.S. taxation to ensure consistent treatment.--
        Property which (without regard to this paragraph) is qualifying 
        foreign trade property and which is manufactured, produced, 
        grown, or extracted outside the United States shall be treated 
        as qualifying foreign trade property only if it is 
        manufactured, produced, grown, or extracted by--
                    ``(A) a domestic corporation,
                    ``(B) an individual who is a citizen or resident of 
                the United States,
                    ``(C) a foreign corporation with respect to which 
                an election under subsection (e) (relating to foreign 
                corporations electing to be subject to United States 
                taxation) is in effect, or
                    ``(D) a partnership or other pass-thru entity all 
                of the partners or owners of which are described in 
                subparagraph (A), (B), or (C).
        Except as otherwise provided by the Secretary, tiered 
        partnerships or pass-thru entities shall be treated as 
        described in subparagraph (D) if each of the partnerships or 
        entities is directly or indirectly wholly owned by persons 
        described in subparagraph (A), (B), or (C).
            ``(3) Excluded property.--The term `qualifying foreign 
        trade property' shall not include--
                    ``(A) property leased or rented by the taxpayer for 
                use by any related person,
                    ``(B) patents, inventions, models, designs, 
                formulas, or processes whether or not patented, 
                copyrights (other than films, tapes, records, or 
                similar reproductions, and other than computer software 
                (whether or not patented), for commercial or home use), 
                goodwill, trademarks, trade brands, franchises, or 
                other like property,
                    ``(C) oil or gas (or any primary product thereof),
                    ``(D) products the transfer of which is prohibited 
                or curtailed to effectuate the policy set forth in 
                paragraph (2)(C) of section 3 of Public Law 96-72, or
                    ``(E) any unprocessed timber which is a softwood.
        For purposes of subparagraph (E), the term `unprocessed timber' 
        means any log, cant, or similar form of timber.
            ``(4) Property in short supply.--If the President 
        determines that the supply of any property described in 
        paragraph (1) is insufficient to meet the requirements of the 
        domestic economy, the President may by Executive order 
        designate the property as in short supply. Any property so 
        designated shall not be treated as qualifying foreign trade 
        property during the period beginning with the date specified in 
        the Executive order and ending with the date specified in an 
        Executive order setting forth the President's determination 
        that the property is no longer in short supply.
    ``(b) Other Definitions and Rules.--For purposes of this subpart--
            ``(1) Transaction.--
                    ``(A) In general.--The term `transaction' means--
                            ``(i) any sale, exchange, or other 
                        disposition,
                            ``(ii) any lease or rental, and
                            ``(iii) any furnishing of services.
                    ``(B) Grouping of transactions.--To the extent 
                provided in regulations, any provision of this subpart 
                which, but for this subparagraph, would be applied on a 
                transaction-by-transaction basis may be applied by the 
                taxpayer on the basis of groups of transactions based 
                on product lines or recognized industry or trade usage. 
                Such regulations may permit different groupings for 
                different purposes.
            ``(2) United states defined.--The term `United States' 
        includes the Commonwealth of Puerto Rico. The preceding 
        sentence shall not apply for purposes of determining whether a 
        corporation is a domestic corporation.
            ``(3) Related person.--A person shall be related to another 
        person if such persons are treated as a single employer under 
        subsection (a) or (b) of section 52 or subsection (m) or (o) of 
        section 414, except that determinations under subsections (a) 
        and (b) of section 52 shall be made without regard to section 
        1563(b).
            ``(4) Gross and taxable income.--Section 114 shall not be 
        taken into account in determining the amount of gross income or 
        foreign trade income from any transaction.
    ``(c) Source Rule.--Under regulations, in the case of qualifying 
foreign trade property manufactured, produced, grown, or extracted 
within the United States, the amount of income of a taxpayer from any 
sales transaction with respect to such property which is treated as 
from sources without the United States shall not exceed--
            ``(1) in the case of a taxpayer computing its qualifying 
        foreign trade income under section 941(a)(1)(B), the amount of 
        the taxpayer's foreign trade income which would (but for this 
        subsection) be treated as from sources without the United 
        States if the foreign trade income were reduced by an amount 
        equal to 4 percent of the foreign trading gross receipts with 
        respect to the transaction, and
            ``(2) in the case of a taxpayer computing its qualifying 
        foreign trade income under section 941(a)(1)(C), 50 percent of 
        the amount of the taxpayer's foreign trade income which would 
        (but for this subsection) be treated as from sources without 
        the United States.
    ``(d) Treatment of Withholding Taxes.--
            ``(1) In general.--For purposes of section 114(d), any 
        withholding tax shall not be treated as paid or accrued with 
        respect to extraterritorial income which is excluded from gross 
        income under section 114(a). For purposes of this paragraph, 
        the term `withholding tax' means any tax which is imposed on a 
        basis other than residence and for which credit is allowable 
        under section 901 or 903.
            ``(2) Exception.--Paragraph (1) shall not apply to any 
        taxpayer with respect to extraterritorial income from any 
        transaction if the taxpayer computes its qualifying foreign 
        trade income with respect to the transaction under section 
        941(a)(1)(A).
    ``(e) Election To Be Treated as Domestic Corporation.--
            ``(1) In general.--An applicable foreign corporation may 
        elect to be treated as a domestic corporation for all purposes 
        of this title if such corporation waives all benefits to such 
        corporation granted by the United States under any treaty. No 
        election under section 1362(a) may be made with respect to such 
        corporation.
            ``(2) Applicable foreign corporation.--For purposes of 
        paragraph (1), the term `applicable foreign corporation' means 
        any foreign corporation if--
                    ``(A) such corporation manufactures, produces, 
                grows, or extracts property in the ordinary course of 
                such corporation's trade or business, or
                    ``(B) substantially all of the gross receipts of 
                such corporation are foreign trading gross receipts.
            ``(3) Period of election.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, an election under paragraph (1) shall 
                apply to the taxable year for which made and all 
                subsequent taxable years unless revoked by the 
                taxpayer. Any revocation of such election shall apply 
                to taxable years beginning after such revocation.
                    ``(B) Termination.--If a corporation which made an 
                election under paragraph (1) for any taxable year fails 
                to meet the requirements of subparagraph (A) or (B) of 
                paragraph (2) for any subsequent taxable year, such 
                election shall not apply to any taxable year beginning 
                after such subsequent taxable year.
                    ``(C) Effect of revocation or termination.--If a 
                corporation which made an election under paragraph (1) 
                revokes such election or such election is terminated 
                under subparagraph (B), such corporation (and any 
                successor corporation) may not make such election for 
                any of the 5 taxable years beginning with the first 
                taxable year for which such election is not in effect 
                as a result of such revocation or termination.
            ``(4) Special rules.--
                    ``(A) Requirements.--This subsection shall not 
                apply to an applicable foreign corporation if such 
                corporation fails to meet the requirements (if any) 
                which the Secretary may prescribe to ensure that the 
                taxes imposed by this chapter on such corporation are 
                paid.
                    ``(B) Effect of election, revocation, and 
                termination.--
                            ``(i) Election.--For purposes of section 
                        367, a foreign corporation making an election 
                        under this subsection shall be treated as 
                        transferring (as of the first day of the first 
                        taxable year to which the election applies) all 
                        of its assets to a domestic corporation in 
                        connection with an exchange to which section 
                        354 applies.
                            ``(ii) Revocation and termination.--For 
                        purposes of section 367, if--
                                    ``(I) an election is made by a 
                                corporation under paragraph (1) for any 
                                taxable year, and
                                    ``(II) such election ceases to 
                                apply for any subsequent taxable year,
                such corporation shall be treated as a domestic 
                corporation transferring (as of the 1st day of the 
                first such subsequent taxable year to which such 
                election ceases to apply) all of its property to a 
                foreign corporation in connection with an exchange to 
                which section 354 applies.
                    ``(C) Eligibility for election.--The Secretary may 
                by regulation designate one or more classes of 
                corporations which may not make the election under this 
                subsection.
    ``(f) Rules Relating to Allocations of Qualifying Foreign Trade 
Income From Shared Partnerships.--
            ``(1) In general.--If--
                    ``(A) a partnership maintains a separate account 
                for transactions (to which this subpart applies) with 
                each partner,
                    ``(B) distributions to each partner with respect to 
                such transactions are based on the amounts in the 
                separate account maintained with respect to such 
                partner, and
                    ``(C) such partnership meets such other 
                requirements as the Secretary may by regulations 
                prescribe,
        then such partnership shall allocate to each partner items of 
        income, gain, loss, and deduction (including qualifying foreign 
        trade income) from any transaction to which this subpart 
        applies on the basis of such separate account.
            ``(2) Special rules.--For purposes of this subpart, in the 
        case of a partnership to which paragraph (1) applies--
                    ``(A) any partner's interest in the partnership 
                shall not be taken into account in determining whether 
                such partner is a related person with respect to any 
                other partner, and
                    ``(B) the election under section 942(a)(3) shall be 
                made separately by each partner with respect to any 
                transaction for which the partnership maintains 
                separate accounts for each partner.
    ``(g) Exclusion for Patrons of Agricultural and Horticultural 
Cooperatives.--Any amount described in paragraph (1) or (3) of section 
1385(a)--
            ``(1) which is received by a person from an organization to 
        which part I of subchapter T applies which is engaged in the 
        marketing of agricultural or horticultural products, and
            ``(2) which is allocable to qualifying foreign trade income 
        and designated as such by the organization in a written notice 
        mailed to its patrons during the payment period described in 
        section 1382(d),
shall be treated as qualifying foreign trade income of such person for 
purposes of section 114. The taxable income of the organization shall 
not be reduced under section 1382 by reason of any amount to which the 
preceding sentence applies.
    ``(h) Special Rule for DISCs.--Section 114 shall not apply to any 
taxpayer for any taxable year if, at any time during the taxable year, 
the taxpayer is a member of any controlled group of corporations (as 
defined in section 927(d)(4), as in effect before the date of the 
enactment of this subsection) of which a DISC is a member.''

SEC. 103. TECHNICAL AND CONFORMING AMENDMENTS.

            (1) The second sentence of section 56(g)(4)(B)(i) is 
        amended by inserting before the period ``or under section 
        114''.
            (2) Section 275(a) is amended--
                    (A) by striking ``or'' at the end of paragraph 
                (4)(A), by striking the period at the end of paragraph 
                (4)(B) and inserting ``, or'', and by adding at the end 
                of paragraph (4) the following new subparagraph:
                    ``(C) such taxes are paid or accrued with respect 
                to qualifying foreign trade income (as defined in 
                section 941).''; and
                    (B) by adding at the end the following the 
                following new sentence: ``A rule similar to the rule of 
                section 943(d) shall apply for purposes of paragraph 
                (4)(C).''.
            (3) Paragraph (3) of section 864(e) is amended--
                    (A) by striking ``For purposes of'' and inserting:
                    ``(A) In general.--For purposes of''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(B) Assets producing exempt extraterritorial 
                income.--For purposes of allocating and apportioning 
                any interest expense, there shall not be taken into 
                account any qualifying foreign trade property (as 
                defined in section 943(a)) which is held by the 
                taxpayer for lease or rental in the ordinary course of 
                trade or business for use by the lessee outside the 
                United States (as defined in section 943(b)(2)).''.
            (4) Section 903 is amended by striking ``164(a)'' and 
        inserting ``114, 164(a),''.
            (5) Section 999(c)(1) is amended by inserting 
        ``941(a)(5),'' after ``908(a),''.
            (6) The table of sections for part III of subchapter B of 
        chapter 1 is amended by inserting before the item relating to 
        section 115 the following new item:

                              ``Sec. 114. Extraterritorial income.''.
            (7) The table of subparts for part III of subchapter N of 
        chapter 1 is amended by striking the item relating to subpart E 
        and inserting the following new item:

                              ``Subpart E. Qualifying foreign trade 
                                        income.''.
            (8) The table of subparts for part III of subchapter N of 
        chapter 1 is amended by striking the item relating to subpart 
        C.

SEC. 104. EFFECTIVE DATE.

    (a) In General.--The amendments made by this title shall apply to 
transactions after September 30, 2000.
    (b) No New FSCs; Termination of Inactive FSCs.--
            (1) No new fscs.--No corporation may elect after September 
        30, 2000, to be a FSC (as defined in section 922 of the 
        Internal Revenue Code of 1986, as in effect before the 
        amendments made by this Act).
            (2) Termination of inactive fscs.--If a FSC has no foreign 
        trade income (as defined in section 923(b) of such Code, as so 
        in effect) for any period of 5 consecutive taxable years 
        beginning after December 31, 2001, such FSC shall cease to be 
        treated as a FSC for purposes of such Code for any taxable year 
        beginning after such period.
    (c) Transition Period for Existing Foreign Sales Corporations.--
            (1) In general.--In the case of a FSC (as so defined) in 
        existence on September 30, 2000, and at all times thereafter, 
        the amendments made by this Act shall not apply to any 
        transaction in the ordinary course of trade or business 
        involving a FSC which occurs--
                    (A) before January 1, 2002; or
                    (B) after December 31, 2001, pursuant to a binding 
                contract--
                            (i) which is between the FSC (or any 
                        related person) and any person which is not a 
                        related person; and
                            (ii) which is in effect on September 30, 
                        2000, and at all times thereafter.
        For purposes of this paragraph, a binding contract shall 
        include a purchase option, renewal option, or replacement 
        option which is included in such contract and which is 
        enforceable against the seller or lessor.
            (2) Election to have amendments apply earlier.--A taxpayer 
        may elect to have the amendments made by this Act apply to any 
        transaction by a FSC or any related person to which such 
        amendments would apply but for the application of paragraph 
        (1). Such election shall be effective for the taxable year for 
        which made and all subsequent taxable years, and, once made, 
        may be revoked only with the consent of the Secretary of the 
        Treasury.
            (3) Exception for old earnings and profits of certain 
        corporations.--
                    (A) In general.--In the case of a foreign 
                corporation to which this paragraph applies--
                            (i) earnings and profits of such 
                        corporation accumulated in taxable years ending 
                        before October 1, 2000, shall not be included 
                        in the gross income of the persons holding 
                        stock in such corporation by reason of section 
                        943(e)(4)(B)(i), and
                            (ii) rules similar to the rules of clauses 
                        (ii), (iii), and (iv) of section 953(d)(4)(B) 
                        shall apply with respect to such earnings and 
                        profits.
                The preceding sentence shall not apply to earnings and 
                profits acquired in a transaction after September 30, 
                2000, to which section 381 applies unless the 
                distributor or transferor corporation was immediately 
                before the transaction a foreign corporation to which 
                this paragraph applies.
                    (B) Existing fscs.--This paragraph shall apply to 
                any controlled foreign corporation (as defined in 
                section 957) if--
                            (i) such corporation is a FSC (as so 
                        defined) in existence on September 30, 2000,
                            (ii) such corporation is eligible to make 
                        the election under section 943(e) by reason of 
                        being described in paragraph (2)(B) of such 
                        section, and
                            (iii) such corporation makes such election 
                        not later than for its first taxable year 
                        beginning after December 31, 2001.
                    (C) Other corporations.--This paragraph shall apply 
                to any controlled foreign corporation (as defined in 
                section 957), and such corporation shall 
                (notwithstanding any provision of section 943(e)) be 
                treated as an applicable foreign corporation for 
                purposes of section 943(e), if--
                            (i) such corporation is in existence on 
                        September 30, 2000,
                            (ii) as of such date, such corporation is 
                        wholly owned (directly or indirectly) by a 
                        domestic corporation (determined without regard 
                        to any election under section 943(e)),
                            (iii) for each of the 3 taxable years 
                        preceding the first taxable year to which the 
                        election under section 943(e) by such 
                        controlled foreign corporation applies--
                                    (I) all of the gross income of such 
                                corporation is subpart F income (as 
                                defined in section 952), including by 
                                reason of section 954(b)(3)(B), and
                                    (II) in the ordinary course of such 
                                corporation's trade or business, such 
                                corporation regularly sold (or paid 
                                commissions) to a FSC which on 
                                September 30, 2000, was a related 
                                person to such corporation,
                            (iv) such corporation has never made an 
                        election under section 922(a)(2) (as in effect 
                        before the date of the enactment of this 
                        paragraph) to be treated as a FSC, and
                            (v) such corporation makes the election 
                        under section 943(e) not later than for its 
                        first taxable year beginning after December 31, 
                        2001.
                The preceding sentence shall cease to apply as of the 
                date that the domestic corporation referred to in 
                clause (ii) ceases to wholly own (directly or 
                indirectly) such controlled foreign corporation.
            (4) Related person.--For purposes of this subsection, the 
        term ``related person'' has the meaning given to such term by 
        section 943(b)(3).
            (5) Section references.--Except as otherwise expressly 
        provided, any reference in this subsection to a section or 
        other provision shall be considered to be a reference to a 
        section or other provision of the Internal Revenue Code of 
        1986, as amended by this title.
    (d) Special Rules Relating to Leasing Transactions.--
            (1) Sales income.--If foreign trade income in connection 
        with the lease or rental of property described in section 
        927(a)(1)(B) of such Code (as in effect before the amendments 
        made by this Act) is treated as exempt foreign trade income for 
        purposes of section 921(a) of such Code (as so in effect), such 
        property shall be treated as property described in section 
        941(c)(1)(B) of such Code (as added by this Act) for purposes 
        of applying section 941(c)(2) of such Code (as so added) to any 
        subsequent transaction involving such property to which the 
        amendments made by this Act apply.
            (2) Limitation on use of gross receipts method.--If any 
        person computed its foreign trade income from any transaction 
        with respect to any property on the basis of a transfer price 
        determined under the method described in section 925(a)(1) of 
        such Code (as in effect before the amendments made by this 
        Act), then the qualifying foreign trade income (as defined in 
        section 941(a) of such Code, as in effect after such amendment) 
        of such person (or any related person) with respect to any 
        other transaction involving such property (and to which the 
        amendments made by this Act apply) shall be zero.

                  TITLE II--SMALL BUSINESS TAX RELIEF

SEC. 201. EXTENSION OF WORK OPPORTUNITY TAX CREDIT.

    (a) In General.--Section 51(c)(4)(B) is amended by striking 
``December 31, 2001'' and inserting ``June 30, 2004''.
    (b) Effective Date.--The amendment made by this section shall apply 
to individuals who begin work for the employer after December 31, 2001.

SEC. 202. INCREASE IN AMORTIZABLE REFORESTATION EXPENDITURES, ETC.

    (a) Increase in Dollar Limitation.--Paragraph (1) of section 194(b) 
(relating to amortization of reforestation expenditures) is amended by 
striking ``$10,000 ($5,000'' and inserting ``$25,000 ($12,500''.
    (b) Temporary Suspension of Increased Dollar Limitation.--
            (1) In general.--Subsection (b) of section 194 (relating to 
        amortization of reforestation expenditures) is amended by 
        adding at the end the following new paragraph:
            ``(5) Suspension of dollar limitation.--Paragraph (1) shall 
        not apply to taxable years beginning after December 31, 2000, 
        and before January 1, 2004.''.
            (2) Conforming amendment.--Paragraph (1) of section 48(b) 
        is amended by striking ``section 194(b)(1)'' and inserting 
        ``section 194(b)(1) and without regard to section 194(b)(5)''.
    (c) Capital Gain Treatment Under Section 631(b) To Apply to 
Outright Sales by Land Owner.--
            (1) In general.--The first sentence of section 631(b) 
        (relating to disposal of timber with a retained economic 
        interest) is amended by striking ``retains an economic interest 
        in such timber'' and inserting ``either retains an economic 
        interest in such timber or makes an outright sale of such 
        timber''.
            (2) Conforming amendment.--The third sentence of section 
        631(b) is amended by striking ``The date of disposal'' and 
        inserting ``In the case of disposal of timber with a retained 
        economic interest, the date of disposal''.
    (d) Effective Dates.--
            (1) Subsections (a) and (b).--The amendments made by 
        subsections (a) and (b) shall apply to taxable years beginning 
        after December 31, 2000.
            (2) Subsection (c).--The amendment made by subsection (c) 
        shall apply to sales after the date of the enactment of this 
        Act.

SEC. 203. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES.

    (a) In General.--Paragraph (1) of section 179(b) (relating to 
dollar limitation) is amended to read as follows:
            ``(1) Dollar limitation.--The aggregate cost which may be 
        taken into account under subsection (a) for any taxable year 
        shall not exceed $35,000.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2000.

SEC. 204. INCREASED DEDUCTION FOR MEAL EXPENSES.

    (a) In General.--Paragraph (1) of section 274(n) (relating to only 
50 percent of meal and entertainment expenses allowed as deduction) is 
amended by striking ``50 percent'' in the text and inserting ``the 
allowable percentage''.
    (b) Allowable Percentage.--Subsection (n) of section 274 is amended 
by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), 
respectively, and by inserting after paragraph (1) the following new 
paragraph:
            ``(2) Allowable percentage.--For purposes of paragraph (1), 
        the allowable percentage is--
                    ``(A) in the case of amounts for items described in 
                paragraph (1)(B), 50 percent, and
                    ``(B) in the case of expenses for food or 
                beverages, 70 percent.''.
    (c) Conforming Amendment.--The heading for subsection (n) of 
section 274 is amended by striking ``50 Percent'' and inserting 
``Limited Percentages''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 205. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES FOR 
              INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON HOURS OF 
              SERVICE.

    (a) In General.--Paragraph (4) of section 274(n) (relating to 
limited percentages of meal and entertainment expenses allowed as 
deduction), as redesignated by section 204, is amended to read as 
follows:
            ``(4) Special rule for individuals subject to federal hours 
        of service.--In the case of any expenses for food or beverages 
        consumed while away from home (within the meaning of section 
        162(a)(2)) by an individual during, or incident to, the period 
        of duty subject to the hours of service limitations of the 
        Department of Transportation, paragraph (2)(B) shall be applied 
        by substituting `80 percent' for `70 percent'.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2000.

SEC. 206. REPEAL OF MODIFICATION OF INSTALLMENT METHOD.

    (a) In General.--Subsection (a) of section 536 of the Ticket to 
Work and Work Incentives Improvement Act of 1999 (relating to 
modification of installment method and repeal of installment method for 
accrual method taxpayers) is repealed effective with respect to sales 
and other dispositions occurring on or after the date of the enactment 
of such Act.
    (b) Applicability.--The Internal Revenue Code of 1986 shall be 
applied and administered as if that subsection (and the amendments made 
by that subsection) had not been enacted.

SEC. 207. INCOME AVERAGING NOT TO INCREASE ALTERNATIVE MINIMUM TAX 
              LIABILITY; INCOME AVERAGING FOR FISHERMEN.

    (a) In General.--Section 55(c) (defining regular tax) is amended by 
redesignating paragraph (2) as paragraph (3) and by inserting after 
paragraph (1) the following:
            ``(2) Coordination with income averaging for farmers and 
        fishermen.--Solely for purposes of this section, section 1301 
        (relating to averaging of farm and fishing income) shall not 
        apply in computing the regular tax.''.
    (b) Allowing Income Averaging for Fishermen.--
            (1) In general.--Section 1301(a) is amended by striking 
        ``farming business'' and inserting ``farming business or 
        fishing business''.
            (2) Definition of elected farm income.--
                    (A) In general.--Clause (i) of section 
                1301(b)(1)(A) is amended by inserting ``or fishing 
                business'' before the semicolon.
                    (B) Conforming amendment.--Subparagraph (B) of 
                section 1301(b)(1) is amended by inserting ``or fishing 
                business'' after ``farming business'' both places it 
                occurs.
            (3) Definition of fishing business.--Section 1301(b) is 
        amended by adding at the end the following new paragraph:
            ``(4) Fishing business.--The term `fishing business' means 
        the conduct of commercial fishing as defined in section 3 of 
        the Magnuson-Stevens Fishery Conservation and Management Act 
        (16 U.S.C. 1802).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 208. REPEAL OF OCCUPATIONAL TAXES RELATING TO DISTILLED SPIRITS, 
              WINE, AND BEER.

    (a) Repeal of Occupational Taxes.--
            (1) In general.--The following provisions of part II of 
        subchapter A of chapter 51 (relating to occupational taxes) are 
        hereby repealed:
                    (A) Subpart A (relating to proprietors of distilled 
                spirits plants, bonded wine cellars, etc.).
                    (B) Subpart B (relating to brewer).
                    (C) Subpart D (relating to wholesale dealers) 
                (other than sections 5114 and 5116).
                    (D) Subpart E (relating to retail dealers) (other 
                than section 5124).
                    (E) Subpart G (relating to general provisions) 
                (other than sections 5142, 5143, 5145, and 5146).
            (2) Nonbeverage domestic drawback.--Section 5131 is amended 
        by striking ``, on payment of a special tax per annum,''.
            (3) Industrial use of distilled spirits.--Section 5276 is 
        hereby repealed.
    (b) Conforming Amendments.--
            (1)(A) The heading for part II of subchapter A of chapter 
        51 and the table of subparts for such part are amended to read 
        as follows:

                  ``PART II--MISCELLANEOUS PROVISIONS

                              ``Subpart A. Manufacturers of stills.
                              ``Subpart B. Nonbeverage domestic 
                                        drawback claimants.
                              ``Subpart C. Recordkeeping by dealers.
                              ``Subpart D. Other provisions.''.
            (B) The table of parts for such subchapter A is amended by 
        striking the item relating to part II and inserting the 
        following new item:

                              ``Part II. Miscellaneous provisions.''.
            (2) Subpart C of part II of such subchapter (relating to 
        manufacturers of stills) is redesignated as subpart A.
            (3)(A) Subpart F of such part II (relating to nonbeverage 
        domestic drawback claimants), as amended by paragraph (5), is 
        redesignated as subpart B and sections 5131 through 5134 are 
        redesignated as sections 5111 through 5114, respectively.
            (B) The table of sections for such subpart B, as so 
        redesignated, is amended--
                    (i) by redesignating the items relating to sections 
                5131 through 5134 as relating to sections 5111 through 
                5114, respectively, and
                    (ii) by striking ``and rate of tax'' in the item 
                relating to section 5111, as so redesignated.
            (C) Section 5111, as redesignated by subparagraph (A), is 
        amended--
                    (i) by striking ``and rate of tax'' in the section 
                heading,
                    (ii) by striking ``(a) Eligibility for Drawback.--
                '', and
                    (iii) by striking subsection (b).
            (4) Part II of subchapter A of chapter 51 is amended by 
        adding after subpart B, as redesignated by paragraph (3), the 
        following new subpart:

                 ``Subpart C--Recordkeeping by Dealers

                              ``Sec. 5121. Recordkeeping by wholesale 
                                        dealers.
                              ``Sec. 5122. Recordkeeping by retail 
                                        dealers.
                              ``Sec. 5123. Preservation and inspection 
                                        of records, and entry of 
                                        premises for inspection.''.
            (5)(A) Section 5114 (relating to records) is moved to 
        subpart C of such part II and inserted after the table of 
        sections for such subpart.
            (B) Section 5114 is amended--
                    (i) by striking the section heading and inserting 
                the following new heading:

``SEC. 5121. RECORDKEEPING BY WHOLESALE DEALERS.'',

                and
                    (ii) by redesignating subsection (c) as subsection 
                (d) and by inserting after subsection (b) the following 
                new subsection:
    ``(c) Wholesale Dealers.--For purposes of this part--
            ``(1) Wholesale dealer in liquors.--The term `wholesale 
        dealer in liquors' means any dealer (other than a wholesale 
        dealer in beer) who sells, or offers for sale, distilled 
        spirits, wines, or beer, to another dealer.
            ``(2) Wholesale dealer in beer.--The term `wholesale dealer 
        in beer' means any dealer who sells, or offers for sale, beer, 
        but not distilled spirits or wines, to another dealer.
            ``(3) Dealer.--The term `dealer' means any person who 
        sells, or offers for sale, any distilled spirits, wines, or 
        beer.
            ``(4) Presumption in case of sale of 20 wine gallons or 
        more.--The sale, or offer for sale, of distilled spirits, 
        wines, or beer, in quantities of 20 wine gallons or more to the 
        same person at the same time, shall be presumptive evidence 
        that the person making such sale, or offer for sale, is engaged 
        in or carrying on the business of a wholesale dealer in liquors 
        or a wholesale dealer in beer, as the case may be. Such 
        presumption may be overcome by evidence satisfactorily showing 
        that such sale, or offer for sale, was made to a person other 
        than a dealer.''.
            (C) Paragraph (3) of section 5121(d), as so redesignated, 
        is amended by striking ``section 5146'' and inserting ``section 
        5123''.
            (6)(A) Section 5124 (relating to records) is moved to 
        subpart C of part II of subchapter A of chapter 51 and inserted 
        after section 5121.
            (B) Section 5124 is amended--
                    (i) by striking the section heading and inserting 
                the following new heading:

``SEC. 5122. RECORDKEEPING BY RETAIL DEALERS.'',

                    (ii) by striking ``section 5146'' in subsection (c) 
                and inserting ``section 5123'', and
                    (iii) by redesignating subsection (c) as subsection 
                (d) and inserting after subsection (b) the following 
                new subsection:
    ``(c) Retail Dealers.--For purposes of this section--
            ``(1) Retail dealer in liquors.--The term `retail dealer in 
        liquors' means any dealer (other than a retail dealer in beer) 
        who sells, or offers for sale, distilled spirits, wines, or 
        beer, to any person other than a dealer.
            ``(2) Retail dealer in beer.--The term `retail dealer in 
        beer' means any dealer who sells, or offers for sale, beer, but 
        not distilled spirits or wines, to any person other than a 
        dealer.
            ``(3) Dealer.--The term `dealer' has the meaning given such 
        term by section 5121(c)(3).''.
            (7) Section 5146 is moved to subpart C of part II of 
        subchapter A of chapter 51, inserted after section 5122, and 
        redesignated as section 5123.
            (8) Part II of subchapter A of chapter 51 is amended by 
        inserting after subpart C the following new subpart:

                     ``Subpart D--Other Provisions

                              ``Sec. 5131. Packaging distilled spirits 
                                        for industrial uses.
                              ``Sec. 5132. Prohibited purchases by 
                                        dealers.''.
            (9) Section 5116 is moved to subpart D of part II of 
        subchapter A of chapter 51, inserted after the table of 
        sections, redesignated as section 5131, and amended by 
        inserting ``(as defined in section 5121(c))'' after ``dealer'' 
        in subsection (a).
            (10) Subpart D of part II of subchapter A of chapter 51 is 
        amended by adding at the end the following new section:

``SEC. 5132. PROHIBITED PURCHASES BY DEALERS.

    ``(a) In General.--Except as provided in regulations prescribed by 
the Secretary, it shall be unlawful for a dealer to purchase distilled 
spirits from any person other than a wholesale dealer in liquors who is 
required to keep the records prescribed by section 5121.
    ``(b) Penalty and Forfeiture.--

                                ``For penalty and forfeiture provisions 
applicable to violations of subsection (a), see sections 5687 and 
7302.''.
            (11) Subsection (b) of section 5002 is amended--
                    (A) by striking ``section 5112(a)'' and inserting 
                ``section 5121(c)(3)'',
                    (B) by striking ``section 5112'' and inserting 
                ``section 5121(c)'', and
                    (C) by striking ``section 5122'' and inserting 
                ``section 5122(c)''.
            (12) Subparagraph (A) of section 5010(c)(2) is amended by 
        striking ``section 5134'' and inserting ``section 5114''.
            (13) Subsection (d) of section 5052 is amended to read as 
        follows:
    ``(d) Brewer.--For purposes of this chapter, the term `brewer' 
means any person who brews beer or produces beer for sale. Such term 
shall not include any person who produces only beer exempt from tax 
under section 5053(e).''.
            (14) The text of section 5182 is amended to read as 
        follows:

                                ``For provisions requiring 
recordkeeping by wholesale liquor dealers, see section 5112, and by 
retail liquor dealers, see section 5122.''.
            (15) Subsection (b) of section 5402 is amended by striking 
        ``section 5092'' and inserting ``section 5052(d)''.
            (16) Section 5671 is amended by striking ``or 5091''.
            (17)(A) Part V of subchapter J of chapter 51 is hereby 
        repealed.
            (B) The table of parts for such subchapter J is amended by 
        striking the item relating to part V.
            (18)(A) Sections 5142, 5143, and 5145 are moved to 
        subchapter D of chapter 52, inserted after section 5731, 
        redesignated as sections 5732, 5733, and 5734, respectively, 
        and amended--
                    (i) by striking ``this part'' each place it appears 
                and inserting ``this subchapter'', and
                    (ii) by striking ``this subpart'' in section 
                5732(c)(2) (as so redesignated) and inserting ``this 
                subchapter''.
            (B) Section 5732, as redesignated by subparagraph (A), is 
        amended by striking ``(except the tax imposed by section 
        5131)'' each place it appears.
            (C) Subsection (c) of section 5733, as redesignated by 
        subparagraph (A), is amended by striking paragraph (2) and by 
        redesignating paragraph (3) as paragraph (2).
            (D) The table of sections for subchapter D of chapter 52 is 
        amended by adding at the end thereof the following:

                              ``Sec. 5732. Payment of tax.
                              ``Sec. 5733. Provisions relating to 
                                        liability for occupational 
                                        taxes.
                              ``Sec. 5734. Application of State 
                                        laws.''.
            (E) Section 5731 is amended by striking subsection (c) and 
        by redesignating subsection (d) as subsection (c).
            (19) Subsection (c) of section 6071 is amended by striking 
        ``section 5142'' and inserting ``section 5732''.
            (20) Paragraph (1) of section 7652(g) is amended--
                    (A) by striking ``subpart F'' and inserting 
                ``subpart B'', and
                    (B) by striking ``section 5131(a)'' and inserting 
                ``section 5111(a)''.
            (21) The table of sections for subchapter D of chapter 51 
        is amended by striking the item relating to section 5276.
    (c) Effective Date.--The amendments made by this section shall take 
effect on July 1, 2001, but shall not apply to taxes imposed for 
periods before such date.

SEC. 209. EXCLUSION FROM GROSS INCOME FOR CERTAIN FORGIVEN MORTGAGE 
              OBLIGATIONS.

    (a) In General.--Paragraph (1) of section 108(a) (relating to 
exclusion from gross income) is amended by striking ``or'' at the end 
of both subparagraphs (A) and (C), by striking the period at the end of 
subparagraph (D) and inserting ``, or'', and by inserting after 
subparagraph (D) the following new subparagraph:
                    ``(E) in the case of an individual, the 
                indebtedness discharged is qualified residential 
                indebtedness.''.
    (b) Qualified Residential Indebtedness.--Section 108 (relating to 
discharge of indebtedness) is amended by adding at the end the 
following new subsection:
    ``(h) Qualified Residential Indebtedness.--
            ``(1) Limitations.--The amount excluded under subparagraph 
        (E) of subsection (a)(1) with respect to any qualified 
        residential indebtedness shall not exceed the excess (if any) 
        of--
                    ``(A) the outstanding principal amount of such 
                indebtedness (immediately before the discharge), over
                    ``(B) the sum of--
                            ``(i) the amount realized from the sale of 
                        the real property securing such indebtedness 
                        reduced by the cost of such sale, and
                            ``(ii) the outstanding principal amount of 
                        any other indebtedness secured by such 
                        property.
            ``(2) Qualified residential indebtedness.--
                    ``(A) In general.--The term `qualified residential 
                indebtedness' means indebtedness which--
                            ``(i) was incurred or assumed by the 
                        taxpayer in connection with real property used 
                        as the principal residence (within the meaning 
                        of section 121) of the taxpayer and is secured 
                        by such real property,
                            ``(ii) was incurred or assumed to acquire, 
                        construct, reconstruct, or substantially 
                        improve such real property, and
                            ``(iii) with respect to which such taxpayer 
                        makes an election to have this paragraph apply.
                    ``(B) Refinanced indebtedness.--Such term shall 
                include indebtedness resulting from the refinancing of 
                indebtedness under subparagraph (A)(ii), but only to 
                the extent the amount of the indebtedness resulting 
                from such refinancing does not exceed the amount of the 
                refinanced indebtedness.
                    ``(C) Exceptions.--Such term shall not include 
                qualified farm indebtedness or qualified real property 
                business indebtedness.''.
    (c) Conforming Amendments.--
            (1) Paragraph (2) of section 108(a) is amended--
                    (A) in subparagraph (A) by striking ``and (D)'' and 
                inserting ``(D), and (E)'', and
                    (B) by amending subparagraph (B) to read as 
                follows:
                    ``(B) Insolvency exclusion takes precedence over 
                qualified farm exclusion, qualified real property 
                business exclusion, and qualified residential 
                indebtedness exclusion.--Subparagraphs (C), (D), and 
                (E) of paragraph (1) shall not apply to a discharge to 
                the extent the taxpayer is insolvent.''.
            (2) Paragraph (1) of section 108(b) is amended by striking 
        ``or (C)'' and inserting ``(C), or (E)''.
            (3) Subsection (c) of section 121 is amended by adding at 
        the end the following new paragraph:
            ``(3) Special rule relating to discharge of indebtedness.--
        The amount of gain which (but for this paragraph) would be 
        excluded from gross income under subsection (a) with respect to 
        a principal residence shall be reduced by the amount excluded 
        from gross income under section 108(a)(1)(E) with respect to 
        such residence.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to discharges after December 31, 2000.

SEC. 210. CLARIFICATION OF CASH ACCOUNTING RULES FOR SMALL BUSINESS.

    (a) Cash Accounting Permitted.--Section 446 (relating to general 
rule for methods of accounting) is amended by adding at the end the 
following new subsection:
    ``(g) Small Business Taxpayers Permitted To Use Cash Accounting 
Method Without Limitation.--
            ``(1) In general.--Notwithstanding any other provision of 
        this title, an eligible taxpayer shall not be required to use 
        an accrual method of accounting for any taxable year.
            ``(2) Eligible taxpayer.--For purposes of this subsection--
                    ``(A) In general.--A taxpayer is an eligible 
                taxpayer with respect to any taxable year if, for all 
                prior taxable years beginning after October 31, 1999, 
                the taxpayer (or any predecessor) met the gross 
                receipts test of subparagraph (B).
                    ``(B) Gross receipts test.--A taxpayer meets the 
                gross receipts test of this subparagraph for any prior 
                taxable year if the average annual gross receipts of 
                the taxpayer (or any predecessor) for the 3-taxable-
                year period ending with such prior taxable year does 
                not exceed $2,500,000. The rules of paragraphs (2) and 
                (3) of section 448(c) shall apply for purposes of the 
                preceding sentence.''
    (b) Clarification of Inventory Rules for Small Business.--Section 
471 (relating to general rule for inventories) is amended by 
redesignating subsection (c) as subsection (d) and by inserting after 
subsection (b) the following new subsection:
    ``(c) Small Business Taxpayers Not Required To Use Inventories.--
            ``(1) In general.--An eligible taxpayer shall not be 
        required to use inventories under this section for a taxable 
        year.
            ``(2) Treatment of taxpayers not using inventories.--If an 
        eligible taxpayer elects not to use inventories with respect to 
        any property for any taxable year beginning after the date of 
        the enactment of this section, such property shall be treated 
        as a material or supply which is not incidental.
            ``(3) Eligible taxpayer.--For purposes of this subsection, 
        the term `eligible taxpayer' has the meaning given such term by 
        section 446(g)(2).''.
    (c) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to taxable years beginning 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 any taxable year--
                    (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 over a period (not greater than 4 taxable 
                years) beginning with such taxable year.

SEC. 211. AMENDMENTS RELATING TO DEMAND DEPOSIT ACCOUNTS AT DEPOSITORY 
              INSTITUTIONS.

    (a) Interest-Bearing Transaction Accounts Authorized.--
            (1) Federal reserve act.--Section 19(i) of the Federal 
        Reserve Act (12 U.S.C. 371a) is amended by inserting at the end 
        the following: ``Notwithstanding any other provision of this 
        section, a member bank may permit the owner of any deposit, any 
        account which is a deposit, or any account on which interest or 
        dividends are paid to make up to 24 transfers per month (or 
        such greater number as the Board may determine by rule or 
        order), for any purpose, to a demand deposit account of the 
        owner in the same institution. With respect to an escrow 
        account maintained in connection with a loan, a lender or 
        servicer shall pay interest on such account only if such 
        payments are required by contract between the lender or 
        servicer and the borrower, or a specific statutory provision of 
        the law of the State in which the security property is located 
        requires the lender or servicer to make such payments. Nothing 
        in this subsection shall be construed to prevent an account 
        offered pursuant to this subsection from being considered a 
        transaction account for purposes of this Act.''.
            (2) Home owners' loan act.--
                    (A) In general.--Section 5(b)(1) of the Home 
                Owners' Loan Act (12 U.S.C. 1464 (b)(1)) is amended by 
                adding at the end the following new subparagraph:
                    ``(G) Transfers.--Notwithstanding any other 
                provision of this paragraph, a Federal savings 
                association may permit the owner of any deposit or 
                share, any account which is a deposit or share, or any 
                account on which interest or dividends are paid to make 
                up to 24 transfers per month (or such greater number as 
                the Board of Governors of the Federal Reserve System 
                may determine by rule or order under section 19(i) to 
                be permissible for member banks), for any purpose, to a 
                demand deposit account of the owner in the same 
                institution. With respect to an escrow account 
                maintained in connection with a loan, a lender or 
                servicer shall pay interest on such account only if 
                such payments are required by contract between the 
                lender or servicer and the borrower, or a specific 
                statutory provision of the law of the State in which 
                the security property is located requires the lender or 
                servicer to make such payments. Nothing in this 
                subsection shall be construed to prevent an account 
                offered pursuant to this subsection from being 
                considered a transaction account (as defined in section 
                19(b) of the Federal Reserve Act) for purposes of the 
                Federal Reserve Act.''.
                    (B) Repeal.--Effective on at the end of the 2-year 
                period beginning on the date of enactment of this Act, 
                section 5(b)(1) of the Home Owners' Loan Act (12 U.S.C. 
                1464 (b)(1)) is amended by striking subparagraph (G).
            (3) Federal deposit insurance act.--Section 18(g) of the 
        Federal Deposit Insurance Act (12 U.S.C. 1828(g)) is amended by 
        adding at the end the following new paragraph:
            ``(3) Transfers.--Notwithstanding any other provision of 
        this subsection, an insured nonmember bank or insured State 
        savings association may permit the owner of any deposit or 
        share, any account which is a deposit or share, or any account 
        on which interest or dividends are paid to make up to 24 
        transfers per month (or such greater number as the Board of 
        Governors of the Federal Reserve System may determine by rule 
        or order under section 19(i) to be permissible for member 
        banks), for any purpose, to a demand deposit account of the 
        owner in the same institution. With respect to an escrow 
        account maintained in connection with a loan, a lender or 
        servicer shall pay interest on such account only if such 
        payments are required by contract between the lender or 
        servicer and the borrower, or a specific statutory provision of 
        the law of the State in which the security property is located 
        requires the lender or servicer to make such payments. Nothing 
        in this subsection shall be construed to prevent an account 
        offered pursuant to this subsection from being considered a 
        transaction account (as defined in section 19(b) of the Federal 
        Reserve Act) for purposes of the Federal Reserve Act.''.
    (b) Repeal of Prohibition on Payment of Interest on Demand 
Deposits.--
            (1) Federal reserve act.--Section 19(i) of the Federal 
        Reserve Act (12 U.S.C. 371a) is amended to read as follows:
    ``(i) [Repealed]''.
            (2) Home owners' loan act.--The 1st sentence of section 
        5(b)(1)(B) of the Home Owners' Loan Act (12 U.S.C. 
        1464(b)(1)(B)) is amended by striking ``savings association may 
        not--'' and all that follows through ``(ii) permit any'' and 
        inserting ``savings association may not permit any''.
            (3) Federal deposit insurance act.--Section 18(g) of the 
        Federal Deposit Insurance Act (12 U.S.C. 1828(g)) is amended to 
        read as follows:
    ``(g) [Repealed]''.
    (c) Effective Date.--The amendments made by subsection (b) shall 
take effect at the end of the 2-year period beginning on the date of 
the enactment of this Act.

  TITLE III--HEALTH INSURANCE AND LONG-TERM CARE INSURANCE PROVISIONS

SEC. 301. DEDUCTION FOR 100 PERCENT OF HEALTH INSURANCE COSTS OF SELF-
              EMPLOYED INDIVIDUALS.

    (a) In General.--Paragraph (1) of section 162(l) is amended to read 
as follows:
            ``(1) Allowance of deduction.--In the case of an individual 
        who is an employee within the meaning of section 401(c)(1), 
        there shall be allowed as a deduction under this section an 
        amount equal to 100 percent of the amount paid during the 
        taxable year for insurance which constitutes medical care for 
        the taxpayer and the taxpayer's spouse and dependents.''.
    (b) Clarification of Limitations on Other Coverage.--The first 
sentence of section 162(l)(2)(B) is amended to read as follows: 
``Paragraph (1) shall not apply to any taxpayer for any calendar month 
for which the taxpayer participates in any subsidized health plan 
maintained by any employer (other than an employer described in section 
401(c)(4)) of the taxpayer or the spouse of the taxpayer.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 302. DEDUCTION FOR HEALTH AND LONG-TERM CARE INSURANCE COSTS OF 
              INDIVIDUALS NOT PARTICIPATING IN EMPLOYER-SUBSIDIZED 
              HEALTH PLANS.

    (a) In General.--Part VII of subchapter B of chapter 1 is amended 
by redesignating section 222 as section 223 and by inserting after 
section 221 the following new section:

``SEC. 222. HEALTH AND LONG-TERM CARE INSURANCE COSTS.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a deduction an amount equal to the applicable percentage of 
the amount paid during the taxable year for insurance which constitutes 
medical care for the taxpayer and the taxpayer's spouse and dependents.
    ``(b) Applicable Percentage.--For purposes of subsection (a), the 
applicable percentage shall be determined in accordance with the 
following table:

``For taxable years beginning                            The applicable
in calendar year--                                      percentage is--
    2001, 2002, and 2003..........................                 25  
    2004..........................................                 35  
    2005..........................................                 65  
    2006 and thereafter...........................               100.  

    ``(c) Limitation Based on Other Coverage.--
            ``(1) Coverage under certain subsidized employer plans.--
                    ``(A) In general.--Subsection (a) shall not apply 
                to any taxpayer for any calendar month for which the 
                taxpayer participates in any health plan maintained by 
                any employer of the taxpayer or of the spouse of the 
                taxpayer if for such month 50 percent or more of the 
                cost of coverage under such plan (determined under 
                section 4980B and without regard to payments made with 
                respect to any coverage described in subsection (e)) is 
                paid or incurred by the employer.
                    ``(B) Employer contributions to cafeteria plans, 
                flexible spending arrangements, and medical savings 
                accounts.--Employer contributions to a cafeteria plan, 
                a flexible spending or similar arrangement, or a 
                medical savings account which are excluded from gross 
                income under section 106 shall be treated for purposes 
                of subparagraph (A) as paid by the employer.
                    ``(C) Aggregation of plans of employer.--A health 
                plan which is not otherwise described in subparagraph 
                (A) shall be treated as described in such subparagraph 
                if such plan would be so described if all health plans 
                of persons treated as a single employer under 
                subsection (b), (c), (m), or (o) of section 414 were 
                treated as one health plan.
                    ``(D) Separate application to health insurance and 
                long-term care insurance.--Subparagraphs (A) and (C) 
                shall be applied separately with respect to--
                            ``(i) plans which include primarily 
                        coverage for qualified long-term care services 
                        or are qualified long-term care insurance 
                        contracts, and
                            ``(ii) plans which do not include such 
                        coverage and are not such contracts.
            ``(2) Coverage under certain federal programs.--
                    ``(A) In general.--Subsection (a) shall not apply 
                to any amount paid for any coverage for an individual 
                for any calendar month if, as of the first day of such 
                month, the individual is covered under any medical care 
                program described in--
                            ``(i) title XVIII, XIX, or XXI of the 
                        Social Security Act,
                            ``(ii) chapter 55 of title 10, United 
                        States Code,
                            ``(iii) chapter 17 of title 38, United 
                        States Code,
                            ``(iv) chapter 89 of title 5, United States 
                        Code, or
                            ``(v) the Indian Health Care Improvement 
                        Act.
                    ``(B) Exceptions.--
                            ``(i) Qualified long-term care.--
                        Subparagraph (A) shall not apply to amounts 
                        paid for coverage under a qualified long-term 
                        care insurance contract.
                            ``(ii) Continuation coverage of fehbp.--
                        Subparagraph (A)(iv) shall not apply to 
                        coverage which is comparable to continuation 
                        coverage under section 4980B.
    ``(d) Long-Term Care Deduction Limited to Qualified Long-Term Care 
Insurance Contracts.--In the case of a qualified long-term care 
insurance contract, only eligible long-term care premiums (as defined 
in section 213(d)(10)) may be taken into account under subsection (a).
    ``(e) Deduction Not Available for Payment of Ancillary Coverage 
Premiums.--Any amount paid as a premium for insurance which provides 
for--
            ``(1) coverage for accidents, disability, dental care, 
        vision care, or a specified illness, or
            ``(2) making payments of a fixed amount per day (or other 
        period) by reason of being hospitalized,
shall not be taken into account under subsection (a).
    ``(f) Special Rules.--
            ``(1) Coordination with deduction for health insurance 
        costs of self-employed individuals.--The amount taken into 
        account by the taxpayer in computing the deduction under 
        section 162(l) shall not be taken into account under this 
        section.
            ``(2) Coordination with medical expense deduction.--The 
        amount taken into account by the taxpayer in computing the 
        deduction under this section shall not be taken into account 
        under section 213.
    ``(g) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out this section, including regulations 
requiring employers to report to their employees and the Secretary such 
information as the Secretary determines to be appropriate.''.
    (b) Deduction Allowed Whether or Not Taxpayer Itemizes Other 
Deductions.--Subsection (a) of section 62 is amended by inserting after 
paragraph (17) the following new item:
            ``(18) Health and long-term care insurance costs.--The 
        deduction allowed by section 222.''.
    (c) Clerical Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 is amended by striking the last item and 
inserting the following new items:

                              ``Sec. 222. Health and long-term care 
                                        insurance costs.
                              ``Sec. 223. Cross reference.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 303. 2-YEAR EXTENSION OF AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.

    (a) In General.--Paragraphs (2) and (3)(B) of section 220(i) 
(defining cut-off year) are each amended by striking ``2000'' each 
place it appears and inserting ``2002''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 220(j) is amended--
                    (A) by striking ``1998 or 1999'' each place it 
                appears and inserting ``1998, 1999, 2000, or 2001'', 
                and
                    (B) by striking ``600,000 (750,000 in the case of 
                1999)'' and inserting ``750,000 (600,000 in the case of 
                1998)''.
            (2) Subparagraph (A) of section 220(j)(4) is amended by 
        striking ``, 1998, and 1999'' and inserting ``and of each 
        calendar year after 1997 and before 2002''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 304. ADDITIONAL CONSUMER PROTECTIONS FOR LONG-TERM CARE INSURANCE.

    (a) Additional Protections Applicable to Long-Term Care 
Insurance.--Subparagraph (A) of section 7702B(g)(2) (relating to 
requirements of model regulation and Act) is amended to read as 
follows:
                    ``(A) In general.--The requirements of this 
                paragraph are met with respect to any contract if such 
                contract meets--
                            ``(i) Model regulation.--The following 
                        requirements of the model regulation:
                                    ``(I) Section 6A (relating to 
                                guaranteed renewal or 
                                noncancellability), and the 
                                requirements of section 6B of the model 
                                Act relating to such section 6A.
                                    ``(II) Section 6B (relating to 
                                prohibitions on limitations and 
                                exclusions).
                                    ``(III) Section 6C (relating to 
                                extension of benefits).
                                    ``(IV) Section 6D (relating to 
                                continuation or conversion of 
                                coverage).
                                    ``(V) Section 6E (relating to 
                                discontinuance and replacement of 
                                policies).
                                    ``(VI) Section 7 (relating to 
                                unintentional lapse).
                                    ``(VII) Section 8 (relating to 
                                disclosure), other than section 8F 
                                thereof.
                                    ``(VIII) Section 11 (relating to 
                                prohibitions against post-claims 
                                underwriting).
                                    ``(IX) Section 12 (relating to 
                                minimum standards).
                                    ``(X) Section 13 (relating to 
                                requirement to offer inflation 
                                protection), except that any 
                                requirement for a signature on a 
                                rejection of inflation protection shall 
                                permit the signature to be on an 
                                application or on a separate form.
                                    ``(XI) Section 25 (relating to 
                                prohibition against preexisting 
                                conditions and probationary periods in 
                                replacement policies or certificates).
                                    ``(XII) The provisions of section 
                                26 relating to contingent nonforfeiture 
                                benefits, if the policyholder declines 
                                the offer of a nonforfeiture provision 
                                described in paragraph (4).
                            ``(ii) Model act.--The following 
                        requirements of the model Act:
                                    ``(I) Section 6C (relating to 
                                preexisting conditions).
                                    ``(II) Section 6D (relating to 
                                prior hospitalization).
                                    ``(III) The provisions of section 8 
                                relating to contingent nonforfeiture 
                                benefits, if the policyholder declines 
                                the offer of a nonforfeiture provision 
                                described in paragraph (4).
                    ``(B) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Model provisions.--The terms `model 
                        regulation' and `model Act' mean the long-term 
                        care insurance model regulation, and the long-
                        term care insurance model Act, respectively, 
                        promulgated by the National Association of 
                        Insurance Commissioners (as adopted as of 
                        September 2000).
                            ``(ii) Coordination.--Any provision of the 
                        model regulation or model Act listed under 
                        clause (i) or (ii) of subparagraph (A) shall be 
                        treated as including any other provision of 
                        such regulation or Act necessary to implement 
                        the provision.
                            ``(iii) Determination.--For purposes of 
                        this section and section 4980C, the 
                        determination of whether any requirement of a 
                        model regulation or the model Act has been met 
                        shall be made by the Secretary.''
    (b) Excise Tax.--Paragraph (1) of section 4980C(c) (relating to 
requirements of model provisions) is amended to read as follows:
            ``(1) Requirements of model provisions.--
                    ``(A) Model regulation.--The following requirements 
                of the model regulation must be met:
                            ``(i) Section 9 (relating to required 
                        disclosure of rating practices to consumer).''
                            ``(ii) Section 14 (relating to application 
                        forms and replacement coverage).
                            ``(iii) Section 15 (relating to reporting 
                        requirements), except that the issuer shall 
                        also report at least annually the number of 
                        claims denied during the reporting period for 
                        each class of business (expressed as a 
                        percentage of claims denied), other than claims 
                        denied for failure to meet the waiting period 
                        or because of any applicable preexisting 
                        condition.
                            ``(iv) Section 22 (relating to filing 
                        requirements for marketing).
                            ``(v) Section 23 (relating to standards for 
                        marketing), including inaccurate completion of 
                        medical histories, other than paragraphs (1), 
                        (6), and (9) of section 23C, except that--
                                    ``(I) in addition to such 
                                requirements, no person shall, in 
                                selling or offering to sell a qualified 
                                long-term care insurance contract, 
                                misrepresent a material fact; and
                                    ``(II) no such requirements shall 
                                include a requirement to inquire or 
                                identify whether a prospective 
                                applicant or enrollee for long-term 
                                care insurance has accident and 
                                sickness insurance.
                            ``(vi) Section 24 (relating to 
                        suitability).
                            ``(vii) Section 29 (relating to standard 
                        format outline of coverage).
                            ``(viii) Section 30 (relating to 
                        requirement to deliver shopper's guide).
                The requirements referred to in clause (vi) shall not 
                include those portions of the personal worksheet 
                described in Appendix B relating to consumer protection 
                requirements not imposed by section 4980C or 7702B.
                    ``(B) Model act.--The following requirements of the 
                model Act must be met:
                            ``(i) Section 6F (relating to right to 
                        return), except that such section shall also 
                        apply to denials of applications and any refund 
                        shall be made within 30 days of the return or 
                        denial.
                            ``(ii) Section 6G (relating to outline of 
                        coverage).
                            ``(iii) Section 6H (relating to 
                        requirements for certificates under group 
                        plans).
                            ``(iv) Section 6I (relating to policy 
                        summary).
                            ``(v) Section 6J (relating to monthly 
                        reports on accelerated death benefits).
                            ``(vi) Section 7 (relating to 
                        incontestability period).
                    ``(C) Definitions.--For purposes of this paragraph, 
                the terms `model regulation' and `model Act' have the 
                meanings given such terms by section 7702B(g)(2)(B).''
    (c) Effective Date.--The amendments made by this section shall 
apply to policies issued more than 1 year after the date of the 
enactment of this Act.

SEC. 305. DEDUCTION FOR PROVIDING LONG-TERM CARE IN THE HOME TO 
              HOUSEHOLD MEMBERS.

    (a) In General.--Part VII of subchapter B of chapter 1 is amended 
by redesignating section 223 as section 224 and by inserting after 
section 222 the following new section:

``SEC. 223. PROVISION OF LONG-TERM CARE IN THE HOME TO HOUSEHOLD 
              MEMBERS.

    ``(a) Deduction Allowed.--
            ``(1) In general.--There shall be allowed as a deduction 
        for the taxable year an amount equal to the applicable amount 
        multiplied by the number of qualified family members of the 
        taxpayer for the taxable year.
            ``(2) Applicable amount.--For purposes of paragraph (1), 
        the applicable amount for a taxable year shall be the amount 
        determined in accordance with the following table:

                ``For taxable years
                                                         The applicable
                  beginning in:
                                                           amount is:  
                    2001...................................     $3,000 
                    2002...................................     $4,000 
                    2003...................................     $5,000 
                    2004...................................     $6,000 
                    2005...................................     $7,000 
                    2006...................................     $8,000 
                    2007...................................     $9,000 
                    2008 and thereafter....................    $10,000.
    ``(b) Limitations.--
            ``(1) Reduction for amounts received under long-term care 
        insurance policy.--The amount of the deduction allowable under 
        subsection (a) with respect to a qualified family member shall 
        be reduced (but not below zero) by the amount received for the 
        taxable year under a long-term care insurance policy (whether 
        or not such policy is a qualified long-term care insurance 
        contract under section 7702B) with respect to which the insured 
        is the qualified family member.
            ``(2) Phaseout.--The amount of the deduction allowable 
        under subsection (a) (after the application of paragraph (1)) 
        shall be reduced in the same manner as the exemption amount is 
        reduced under section 151(d)(3).
    ``(c) Qualified family member.--For purposes of this section--
            ``(1) In general.--The term `qualified family member' 
        means, with respect to any taxable year, any individual--
                    ``(A) who is--
                            ``(i) the taxpayer's spouse, or
                            ``(ii) an individual who bears a 
                        relationship to the taxpayer described in any 
                        of paragraphs (1) through (8) of section 
                        152(a),
                    ``(B) who is a member for the entire taxable year 
                of the household maintained by the taxpayer,
                    ``(C) whose gross income for the calendar year in 
                which the taxable year of the taxpayer begins is less 
                than the sum of--
                            ``(i) the exemption amount (as defined in 
                        section 151(d)), and
                            ``(ii) the standard deduction, and
                    ``(D) who has been certified, before the due date 
                for filing the return of tax for the taxable year 
                (without extensions), by a physician (as defined in 
                section 1861(r)(1) of the Social Security Act) as being 
                an individual described in paragraph (3) for a period--
                            ``(i) which is at least 180 consecutive 
                        days, and
                            ``(ii) a portion of which occurs within the 
                        taxable year.
            ``(2) Special rules.--
                    ``(A) Frequency of certification.--The term 
                `qualified family member' shall not include any 
                individual otherwise meeting the requirements of 
                paragraph (1)(D) unless the certification is made 
                within the 39\1/2\ month period ending on the due date 
                (or such other period as the Secretary prescribes).
                    ``(B) Gross income test not to apply to certain 
                individuals.--Paragraph (1)(C) shall not apply to--
                            ``(i) the spouse of the taxpayer,
                            ``(ii) any child of the taxpayer described 
                        in section 151(c)(1)(B), and
                            ``(iii) any gross income which is not taken 
                        into account under paragraph (1)(B) of section 
                        151(c) by reason of paragraph (5) thereof.
            ``(3) Individuals with long-term care needs.--An individual 
        is described in this paragraph if the individual meets any of 
        the following requirements:
                    ``(A) The individual is at least 6 years of age 
                and--
                            ``(i) is unable to perform (without 
                        substantial assistance from another individual) 
                        at least 3 activities of daily living (as 
                        defined in section 7702B(c)(2)(B)) due to a 
                        loss of functional capacity, or
                            ``(ii) requires substantial supervision to 
                        protect such individual from threats to health 
                        and safety due to severe cognitive impairment, 
                        and
                                    ``(I) is unable to perform, without 
                                reminding or cuing assistance, at least 
                                1 activity of daily living (as so 
                                defined), or
                                    ``(II) to the extent provided in 
                                regulations prescribed by the Secretary 
                                (in consultation with the Secretary of 
                                Health and Human Services), is unable 
                                to engage in age appropriate 
                                activities.
                    ``(B) The individual is at least 2 but not 6 years 
                of age and is unable due to a loss of functional 
                capacity to perform (without substantial assistance 
                from another individual) at least 2 of the following 
                activities: eating, transferring, or mobility.
                    ``(C) The individual is under 2 years of age and 
                requires specific durable medical equipment by reason 
                of a severe health condition or requires a skilled 
                practitioner trained to address the individual's 
                condition to be available if the individual's parents 
                or guardians are absent.
    ``(d) Special Rules.--
            ``(1) Identification requirement.--No deduction shall be 
        allowed under this section to a taxpayer with respect to any 
        qualified family member unless the taxpayer includes the name 
        and taxpayer identification number of such member, and the 
        identification number of the physician certifying such member, 
        on the return of tax for the taxable year.
            ``(2) Taxable year must be full taxable year.--No deduction 
        shall be allowable under this section in the case of a taxable 
        year covering a period of less than 12 months, except that in 
        the case of a taxable year closed by the death of a taxpayer a 
        ratable portion of the deduction shall be allowable.
            ``(3) Special rules.--Rules similar to the rules of 
        paragraphs (1), (2), (3), (4), and (5) of section 21(e) shall 
        apply for purposes of this subsection.''.
    (b) Deduction Allowable Whether or Not Taxpayer Itemizes Other 
Deductions.--
            (1) Subsection (b) of section 63 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) the deduction allowed by section 223.''
            (2) Subsection (d) of section 63 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) the deduction allowed by section 223.''
    (c) Conforming Amendments.--
            (1) Section 6213(g)(2) is amended by striking ``and'' at 
        the end of subparagraph (K), by striking the period at the end 
        of subparagraph (L) and inserting ``, and'', and by inserting 
        after subparagraph (L) the following new subparagraph:
                    ``(M) an omission of a correct TIN or physician 
                identification number required under section 223(d)(1) 
                (relating to deduction for provision of long-term care 
                in the home to household members) to be included on a 
                return.''
            (2) The table of sections for part VII of subchapter B of 
        chapter 1 is amended by striking the last item and inserting 
        the following new items:

                              ``Sec. 223. Provision of long-term care 
                                        in the home to household 
                                        members.
                              ``Sec. 224. Cross reference.''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

   TITLE IV--PENSION AND INDIVIDUAL RETIREMENT ARRANGEMENT PROVISIONS

SEC. 400. SHORT TITLE.

    This title may be cited as the ``Retirement Savings and Pension 
Coverage Act of 2000''.

               Subtitle A--Individual Retirement Accounts

SEC. 401. MODIFICATION OF IRA CONTRIBUTION LIMITS.

    (a) Increase in Contribution Limit.--
            (1) In general.--Paragraph (1)(A) of section 219(b) 
        (relating to maximum amount of deduction) is amended by 
        striking ``$2,000'' and inserting ``the deductible amount''.
            (2) Deductible amount.--Section 219(b) is amended by adding 
        at the end the following new paragraph:
            ``(5) Deductible amount.--For purposes of paragraph 
        (1)(A)--
                    ``(A) In general.--The deductible amount shall be 
                determined in accordance with the following table:

                ``For taxable years
                                                         The deductible
                  beginning in:
                                                           amount is:  
                    2001...................................     $3,000 
                    2002...................................     $4,000 
                    2003 and thereafter....................     $5,000.
                    ``(B) Catch-up contributions for individuals 50 or 
                older.--
                            ``(i) In general.--In the case of an 
                        individual who has attained the age of 50 
                        before the close of the taxable year, the 
                        deductible amount for such taxable year 
                        (determined without regard to this 
                        subparagraph) shall be increased by the 
                        applicable catch-up amount.
                            ``(ii) Applicable catch-up amount.--For 
                        purposes of clause (i), the applicable catch-up 
                        amount shall be the amount determined in 
                        accordance with the following table:

                ``For taxable years
                                                The applicable catch-up
                  beginning in:
                                                           amount is:  
                    2001...................................       $500 
                    2002...................................     $1,000 
                    2003 and thereafter....................     $1,500.
                    ``(C) Cost-of-living adjustment.--
                            ``(i) In general.--In the case of any 
                        taxable year beginning in a calendar year after 
                        2003, the $5,000 amount under subparagraph (A) 
                        and the $1,500 amount under subparagraph (B) 
                        shall each be increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year in which 
                                the taxable year begins, determined by 
                                substituting `calendar year 2002' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                            ``(ii) Rounding rules.--If any amount after 
                        adjustment under clause (i) is not a multiple 
                        of $500, such amount shall be rounded to the 
                        next lower multiple of $500.''.
    (b) Increase in AGI Limits for Active Participants.--
            (1) Joint returns.--The table in clause (i) of section 
        219(g)(3)(B) (relating to applicable dollar amount) is amended 
        to read as follows:

                ``For taxable years
                                                         The applicable
                  beginning in
                                                         dollar amount:
                  calendar year:
                    2001...................................    $56,000 
                    2002...................................    $60,000 
                    2003...................................    $64,000 
                    2004...................................    $68,000 
                    2005...................................    $72,000 
                    2006...................................    $76,000 
                    2007 or thereafter..................... $80,000.''.
            (2) Other taxpayers.--Section 219(g)(3)(B) (relating to 
        applicable dollar amount) is amended by striking clauses (ii) 
        and (iii) and inserting the following:
                            ``(ii) In the case of any other taxpayer:

                ``For taxable years
                                                         The applicable
                  beginning in
                                                         dollar amount:
                  calendar year:
                    2001...................................    $36,000 
                    2002...................................    $40,000 
                    2003...................................    $44,000 
                    2004...................................    $48,000 
                    2005 or thereafter..................... $50,000.''.
    (c) Conforming Amendments.--
            (1) Section 408(a)(1) is amended by striking ``in excess of 
        $2,000 on behalf of any individual'' and inserting ``on behalf 
        of any individual in excess of the amount in effect for such 
        taxable year under section 219(b)(1)(A)''.
            (2) Section 408(b)(2)(B) is amended by striking ``$2,000'' 
        and inserting ``the dollar amount in effect under section 
        219(b)(1)(A)''.
            (3) Section 408(b) is amended by striking ``$2,000'' in the 
        matter following paragraph (4) and inserting ``the dollar 
        amount in effect under section 219(b)(1)(A)''.
            (4) Section 408(j) is amended by striking ``$2,000''.
            (5) Section 408(p)(8) is amended by striking ``$2,000'' and 
        inserting ``the dollar amount in effect under section 
        219(b)(1)(A)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 402. DEEMED IRAS UNDER EMPLOYER PLANS.

    (a) In General.--Section 408 (relating to individual retirement 
accounts) is amended by redesignating subsection (q) as subsection (r) 
and by inserting after subsection (p) the following new subsection:
    ``(q) Deemed IRAs Under Qualified Employer Plans.--
            ``(1) General rule.--If--
                    ``(A) a qualified employer plan elects to allow 
                employees to make voluntary employee contributions to a 
                separate account or annuity established under the plan, 
                and
                    ``(B) under the terms of the qualified employer 
                plan, such account or annuity meets the applicable 
                requirements of this section or section 408A for an 
                individual retirement account or annuity,
        then such account or annuity shall be treated for purposes of 
        this title in the same manner as an individual retirement plan 
        and not as a qualified employer plan (and contributions to such 
        account or annuity as contributions to an individual retirement 
        plan and not to the qualified employer plan). For purposes of 
        subparagraph (B), the requirements of subsection (a)(5) shall 
        not apply.
            ``(2) Special rules for qualified employer plans.--For 
        purposes of this title, a qualified employer plan shall not 
        fail to meet any requirement of this title solely by reason of 
        establishing and maintaining a program described in paragraph 
        (1).
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) Qualified employer plan.--The term `qualified 
                employer plan' has the meaning given such term by 
                section 72(p)(4); except such term shall only include 
                an eligible deferred compensation plan (as defined in 
                section 457(b)) which is maintained by an eligible 
                employer described in section 457(e)(1)(A).
                    ``(B) Voluntary employee contribution.--The term 
                `voluntary employee contribution' means any 
                contribution (other than a mandatory contribution 
                within the meaning of section 411(c)(2)(C))--
                            ``(i) which is made by an individual as an 
                        employee under a qualified employer plan which 
                        allows employees to elect to make contributions 
                        described in paragraph (1), and
                            ``(ii) with respect to which the individual 
                        has designated the contribution as a 
                        contribution to which this subsection 
                        applies.''.
    (b) Amendment of ERISA.--
            (1) In general.--Section 4 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1003) is amended by 
        adding at the end the following new subsection:
    ``(c) If a pension plan allows an employee to elect to make 
voluntary employee contributions to accounts and annuities as provided 
in section 408(q) of the Internal Revenue Code of 1986, such accounts 
and annuities (and contributions thereto) shall not be treated as part 
of such plan (or as a separate pension plan) for purposes of any 
provision of this title other than section 403(c), 404, or 405 
(relating to exclusive benefit, and fiduciary and co-fiduciary 
responsibilities).''.
            (2) Conforming amendment.--Section 4(a) of such Act (29 
        U.S.C. 1003(a)) is amended by inserting ``or (c)'' after 
        ``subsection (b)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2001.

SEC. 403. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS 
              FOR CHARITABLE PURPOSES.

    (a) In General.--Subsection (d) of section 408 (relating to 
individual retirement accounts) is amended by adding at the end the 
following new paragraph:
            ``(8) Distributions for charitable purposes.--
                    ``(A) In general.--In the case of a qualified 
                charitable distribution, no amount shall be includible 
                in the gross income of the account holder or 
                beneficiary.
                    ``(B) Qualified charitable distribution.--For 
                purposes of this paragraph, the term `qualified 
                charitable distribution' means any distribution from an 
                individual retirement account--
                            ``(i) which is made on or after the date 
                        that the individual for whose benefit the 
                        account is maintained has attained age 70\1/2\, 
                        and
                            ``(ii) which is a charitable contribution 
                        (as defined in section 170(c)) made directly 
                        from the account to an organization or entity 
                        described in section 170(c).
                    ``(C) Denial of deduction.--The amount allowable as 
                a deduction to the taxpayer for the taxable year under 
                section 170 (before the application of section 170(b)) 
                for qualified charitable distributions shall be reduced 
                (but not below zero) by the sum of the amounts of the 
                qualified charitable distributions during such year 
                which (but for this paragraph) would have been 
                includible in the gross income of the taxpayer for such 
                year.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2000.

SEC. 404. MODIFICATION OF AGI LIMITS FOR ROTH IRAS.

    (a) Increase in AGI Limit for Roth IRA Contributions.--
            (1) In general.--Section 408A(c)(3)(C)(ii) (relating to 
        limits based on modified adjusted gross income) is amended to 
        read as follows:
                            ``(ii) the applicable dollar amount is--
                                    ``(I) in the case of a taxpayer 
                                filing a joint return, $190,000, and
                                    ``(II) in the case of any other 
                                taxpayer, $95,000.''.
            (2) Phaseout amount.--Clause (ii) of section 408A(c)(3)(A) 
        is amended to read as follows:
                            ``(ii) $15,000 ($30,000 in the case of a 
                        joint return).''.
    (b) Increase in AGI Limit for Roth IRA Conversions.--Section 
408A(c)(3)(B) (relating to rollover from IRA) is amended by striking 
``relates'' and all that follows and inserting ``relates, the 
taxpayer's adjusted gross income exceeds $100,000 ($200,000 in the case 
of a joint return).''.
    (c) Conforming Amendment.--Section 408A(c)(3) is amended by 
striking subparagraph (D).
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

                     Subtitle B--Expanding Coverage

SEC. 411. INCREASE IN BENEFIT AND CONTRIBUTION LIMITS.

    (a) Defined Benefit Plans.--
            (1) Dollar limit.--
                    (A) Subparagraph (A) of section 415(b)(1) (relating 
                to limitation for defined benefit plans) is amended by 
                striking ``$90,000'' and inserting ``$160,000''.
                    (B) Subparagraphs (C) and (D) of section 415(b)(2) 
                are each amended by striking ``$90,000'' each place it 
                appears in the headings and the text and inserting 
                ``$160,000''.
                    (C) Paragraph (7) of section 415(b) (relating to 
                benefits under certain collectively bargained plans) is 
                amended by striking ``the greater of $68,212 or one-
                half the amount otherwise applicable for such year 
                under paragraph (1)(A) for `$90,000''' and inserting 
                ``one-half the amount otherwise applicable for such 
                year under paragraph (1)(A) for `$160,000'''.
            (2) Limit reduced when benefit begins before age 62.--
        Subparagraph (C) of section 415(b)(2) is amended by striking 
        ``the social security retirement age'' each place it appears in 
        the heading and text and inserting ``age 62'' and by striking 
        the second sentence.
            (3) Limit increased when benefit begins after age 65.--
        Subparagraph (D) of section 415(b)(2) is amended by striking 
        ``the social security retirement age'' each place it appears in 
        the heading and text and inserting ``age 65''.
            (4) Cost-of-living adjustments.--Subsection (d) of section 
        415 (related to cost-of-living adjustments) is amended--
                    (A) by striking ``$90,000'' in paragraph (1)(A) and 
                inserting ``$160,000''; and
                    (B) in paragraph (3)(A)--
                            (i) by striking ``$90,000'' in the heading 
                        and inserting ``$160,000''; and
                            (ii) by striking ``October 1, 1986'' and 
                        inserting ``July 1, 2000''.
            (5) Conforming amendments.--
                    (A) Section 415(b)(2) is amended by striking 
                subparagraph (F).
                    (B) Section 415(b)(9) is amended to read as 
                follows:
                    ``(9) Special rule for commercial airline pilots.--
                In the case of any participant who is a commercial 
                airline pilot, if, as of the time of the participant's 
                retirement, regulations prescribed by the Federal 
                Aviation Administration require an individual to 
                separate from service as a commercial airline pilot 
                after attaining any age occurring on or after age 60 
                and before age 62, paragraph (2)(C) shall be applied by 
                substituting such age for age 62.''.
                    (C) Section 415(b)(10)(C)(i) is amended by striking 
                ``applied without regard to paragraph (2)(F)''.
    (b) Defined Contribution Plans.--
            (1) Dollar limit.--Subparagraph (A) of section 415(c)(1) 
        (relating to limitation for defined contribution plans) is 
        amended by striking ``$30,000'' and inserting ``$40,000''.
            (2) Cost-of-living adjustments.--Subsection (d) of section 
        415 (related to cost-of-living adjustments) is amended--
                    (A) by striking ``$30,000'' in paragraph (1)(C) and 
                inserting ``$40,000''; and
                    (B) in paragraph (3)(D)--
                            (i) by striking ``$30,000'' in the heading 
                        and inserting ``$40,000''; and
                            (ii) by striking ``October 1, 1993'' and 
                        inserting ``July 1, 2000''.
            (3) Conforming amendments.--
                    (A) In general.--Section 664(g)(3)(E) (relating to 
                plan requirements) is amended by striking ``limitations 
                under section 415(c)(1)`` and inserting ``applicable 
                limitation under paragraph (7)''.
                    (B) Applicable limitation.--Section 664(g) 
                (relating to qualified gratuitous transfer of qualified 
                employer securities) is amended by adding at the end 
                the following new paragraph:
            ``(7) Applicable limitation.--
                    ``(A) In general.--For purposes of paragraph 
                (3)(E), the applicable limitation under this paragraph 
                with respect to a participant is an amount equal to the 
                lesser of--
                            ``(i) $30,000, or
                            ``(ii) 25 percent of the participant's 
                        compensation (as defined in section 415(c)(3)).
                    ``(B) Cost-of-living adjustment.--The Secretary 
                shall adjust annually the $30,000 amount under 
                subparagraph (A)(i) at the same time and in the same 
                manner as under section 415(d), except that the base 
                period shall be the calendar quarter beginning October 
                1, 1993, and any increase under this subparagraph which 
                is not a multiple of $5,000 shall be rounded to the 
                next lowest multiple of $5,000.''.
    (c) Qualified Trusts.--
            (1) Compensation limit.--Sections 401(a)(17), 404(l), 
        408(k), and 505(b)(7) are each amended by striking ``$150,000'' 
        each place it appears and inserting ``$200,000''.
            (2) Base period and rounding of cost-of-living 
        adjustment.--Subparagraph (B) of section 401(a)(17) is 
        amended--
                    (A) by striking ``October 1, 1993'' and inserting 
                ``July 1, 2000''; and
                    (B) by striking ``$10,000'' both places it appears 
                and inserting ``$5,000''.
    (d) Elective Deferrals.--
            (1) In general.--Paragraph (1) of section 402(g) (relating 
        to limitation on exclusion for elective deferrals) is amended 
        to read as follows:
            ``(1) In general.--
                    ``(A) Limitation.--Notwithstanding subsections 
                (e)(3) and (h)(1)(B), the elective deferrals of any 
                individual for any taxable year shall be included in 
                such individual's gross income to the extent the amount 
                of such deferrals for the taxable year exceeds the 
                applicable dollar amount.
                    ``(B) Applicable dollar amount.--For purposes of 
                subparagraph (A), the applicable dollar amount shall be 
                the amount determined in accordance with the following 
                table:

                ``For taxable years
                                                         The applicable
                  beginning in
                                                         dollar amount:
                  calendar year:
                    2001...................................    $11,000 
                    2002...................................    $12,000 
                    2003...................................    $13,000 
                    2004...................................    $14,000 
                    2005 or thereafter..................... $15,000.''.
            (2) Cost-of-living adjustment.--Paragraph (5) of section 
        402(g) is amended to read as follows:
            ``(5) Cost-of-living adjustment.--In the case of taxable 
        years beginning after December 31, 2005, the Secretary shall 
        adjust the $15,000 amount under paragraph (1)(B) at the same 
        time and in the same manner as under section 415(d), except 
        that the base period shall be the calendar quarter beginning 
        July 1, 2004, and any increase under this paragraph which is 
        not a multiple of $500 shall be rounded to the next lowest 
        multiple of $500.''.
            (3) Conforming amendments.--
                    (A) Section 402(g) (relating to limitation on 
                exclusion for elective deferrals), as amended by 
                paragraphs (1) and (2), is further amended by striking 
                paragraph (4) and redesignating paragraphs (5), (6), 
                (7), (8), and (9) as paragraphs (4), (5), (6), (7), and 
                (8), respectively.
                    (B) Paragraph (2) of section 457(c) is amended by 
                striking ``402(g)(8)(A)(iii)'' and inserting 
                ``402(g)(7)(A)(iii)''.
                    (C) Clause (iii) of section 501(c)(18)(D) is 
                amended by striking ``(other than paragraph (4) 
                thereof)''.
    (e) Deferred Compensation Plans of State and Local Governments and 
Tax-Exempt Organizations.--
            (1) In general.--Section 457 (relating to deferred 
        compensation plans of State and local governments and tax-
        exempt organizations) is amended--
                    (A) in subsections (b)(2)(A) and (c)(1) by striking 
                ``$7,500'' each place it appears and inserting ``the 
                applicable dollar amount''; and
                    (B) in subsection (b)(3)(A) by striking ``$15,000'' 
                and inserting ``twice the dollar amount in effect under 
                subsection (b)(2)(A)''.
            (2) Applicable dollar amount; cost-of-living adjustment.--
        Paragraph (15) of section 457(e) is amended to read as follows:
            ``(15) Applicable dollar amount.--
                    ``(A) In general.--The applicable dollar amount 
                shall be the amount determined in accordance with the 
                following table:

                ``For taxable years
                                                         The applicable
                  beginning in
                                                         dollar amount:
                  calendar year:
                    2001...................................    $11,000 
                    2002...................................    $12,000 
                    2003...................................    $13,000 
                    2004...................................    $14,000 
                    2005 or thereafter.....................    $15,000.
                    ``(B) Cost-of-living adjustments.--In the case of 
                taxable years beginning after December 31, 2005, the 
                Secretary shall adjust the $15,000 amount under 
                subparagraph (A) at the same time and in the same 
                manner as under section 415(d), except that the base 
                period shall be the calendar quarter beginning July 1, 
                2004, and any increase under this paragraph which is 
                not a multiple of $500 shall be rounded to the next 
                lowest multiple of $500.''.
    (f) Simple Retirement Accounts.--
            (1) Limitation.--Clause (ii) of section 408(p)(2)(A) 
        (relating to general rule for qualified salary reduction 
        arrangement) is amended by striking ``$6,000'' and inserting 
        ``the applicable dollar amount''.
            (2) Applicable dollar amount.--Subparagraph (E) of 
        408(p)(2) is amended to read as follows:
                    ``(E) Applicable dollar amount; cost-of-living 
                adjustment.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(ii), the applicable dollar 
                        amount shall be the amount determined in 
                        accordance with the following table:

                ``For taxable years
                                                         The applicable
                  beginning in
                                                         dollar amount:
                  calendar year:
                            2001...........................     $7,000 
                            2002...........................     $8,000 
                            2003...........................     $9,000 
                            2004 or thereafter.............    $10,000.
                            ``(ii) Cost-of-living adjustment.--In the 
                        case of a year beginning after December 31, 
                        2004, the Secretary shall adjust the $10,000 
                        amount under clause (i) at the same time and in 
                        the same manner as under section 415(d), except 
                        that the base period taken into account shall 
                        be the calendar quarter beginning July 1, 2003, 
                        and any increase under this subparagraph which 
                        is not a multiple of $500 shall be rounded to 
                        the next lower multiple of $500.''.
            (3) Conforming amendments.--
                    (A) Subclause (I) of section 401(k)(11)(B)(i) is 
                amended by striking ``$6,000'' and inserting ``the 
                amount in effect under section 408(p)(2)(A)(ii)''.
                    (B) Section 401(k)(11) is amended by striking 
                subparagraph (E).
    (g) Rounding Rule Relating to Defined Benefit Plans and Defined 
Contribution Plans.--Paragraph (4) of section 415(d) is amended to read 
as follows:
            ``(4) Rounding.--
                    ``(A) $160,000 amount.--Any increase under 
                subparagraph (A) of paragraph (1) which is not a 
                multiple of $5,000 shall be rounded to the next lowest 
                multiple of $5,000.
                    ``(B) $40,000 amount.--Any increase under 
                subparagraph (C) of paragraph (1) which is not a 
                multiple of $1,000 shall be rounded to the next lowest 
                multiple of $1,000.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 412. PLAN LOANS FOR SUBCHAPTER S OWNERS, PARTNERS, AND SOLE 
              PROPRIETORS.

    (a) In General.--Subparagraph (B) of section 4975(f)(6) (relating 
to exemptions not to apply to certain transactions) is amended by 
adding at the end the following new clause:
                            ``(iii) Loan exception.--For purposes of 
                        subparagraph (A)(i), the term `owner-employee' 
                        shall only include a person described in 
                        subclause (II) or (III) of clause (i).''.
    (b) Amendment of ERISA.--Section 408(d)(2) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1108(d)(2)) is 
amended by adding at the end the following new subparagraph:
    ``(C) For purposes of paragraph (1)(A), the term `owner-employee' 
shall only include a person described in clause (ii) or (iii) of 
subparagraph (A).''.
    (c) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 2000.

SEC. 413. MODIFICATION OF TOP-HEAVY RULES.

    (a) Simplification of Definition of Key Employee.--
            (1) In general.--Section 416(i)(1)(A) (defining key 
        employee) is amended--
                    (A) by striking ``or any of the 4 preceding plan 
                years'' in the matter preceding clause (i);
                    (B) by striking clause (i) and inserting the 
                following:
                            ``(i) an officer of the employer having an 
                        annual compensation greater than $115,000,'';
                    (C) by striking clause (ii) and redesignating 
                clauses (iii) and (iv) as clauses (ii) and (iii), 
                respectively; and
                    (D) by striking the second sentence in the matter 
                following clause (iii), as redesignated by subparagraph 
                (C).
            (2) Cost-of-living adjustment.--Section 416(i)(1) is 
        amended by adding at the end the following new subparagraph:
                    ``(E) Cost-of-living adjustment.--In the case of a 
                year beginning after December 31, 2001, the Secretary 
                shall adjust the $115,000 amount under subparagraph 
                (A)(i) at the same time and in the same manner as under 
                section 415(d), except that the base period taken into 
                account shall be the calendar quarter beginning July 1, 
                2000, and any increase under this subparagraph which is 
                not a multiple of $5,000 shall be rounded to the next 
                lower multiple of $5,000.''.
            (3) Conforming amendment.--Section 416(i)(1)(B)(iii) is 
        amended by striking ``and subparagraph (A)(ii)''.
    (b) Matching Contributions Taken Into Account for Minimum 
Contribution Requirements.--Section 416(c)(2)(A) (relating to defined 
contribution plans) is amended by adding at the end the following: 
``Employer matching contributions (as defined in section 401(m)(4)(A)) 
shall be taken into account for purposes of this subparagraph.''.
    (c) Distributions During Last Year Before Determination Date Taken 
Into Account.--
            (1) In general.--Paragraph (3) of section 416(g) is amended 
        to read as follows:
            ``(3) Distributions during last year before determination 
        date taken into account.--
                    ``(A) In general.--For purposes of determining--
                            ``(i) the present value of the cumulative 
                        accrued benefit for any employee, or
                            ``(ii) the amount of the account of any 
                        employee,
                such present value or amount shall be increased by the 
                aggregate distributions made with respect to such 
                employee under the plan during the 1-year period ending 
                on the determination date. The preceding sentence shall 
                also apply to distributions under a terminated plan 
                which if it had not been terminated would have been 
                required to be included in an aggregation group.
                    ``(B) 5-year period in case of in-service 
                distribution.--In the case of any distribution made for 
                a reason other than separation from service, death, or 
                disability, subparagraph (A) shall be applied by 
                substituting `5-year period' for `1-year period'.''.
            (2) Benefits not taken into account.--Subparagraph (E) of 
        section 416(g)(4) is amended--
                    (A) by striking ``last 5 years'' in the heading and 
                inserting ``last year before determination date''; and
                    (B) by striking ``5-year period'' and inserting 
                ``1-year period''.
    (d) Definition of Top-Heavy Plans.--Paragraph (4) of section 416(g) 
(relating to other special rules for top-heavy plans) is amended by 
adding at the end the following new subparagraph:
                    ``(H) Cash or deferred arrangements using 
                alternative methods of meeting nondiscrimination 
                requirements.--The term `top-heavy plan' shall not 
                include a plan which consists solely of--
                            ``(i) a cash or deferred arrangement which 
                        meets the requirements of section 401(k)(12), 
                        and
                            ``(ii) matching contributions with respect 
                        to which the requirements of section 401(m)(11) 
                        are met.
                If, but for this subparagraph, a plan would be treated 
                as a top-heavy plan because it is a member of an 
                aggregation group which is a top-heavy group, 
                contributions under the plan may be taken into account 
                in determining whether any other plan in the group 
                meets the requirements of subsection (c)(2).''.
    (e) Frozen Plan Exempt From Minimum Benefit Requirement.--
Subparagraph (C) of section 416(c)(1) (relating to defined benefit 
plans) is amended--
                    (A) by striking ``clause (ii)'' in clause (i) and 
                inserting ``clause (ii) or (iii)''; and
                    (B) by adding at the end the following:
                            ``(iii) Exception for frozen plan.--For 
                        purposes of determining an employee's years of 
                        service with the employer, any service with the 
                        employer shall be disregarded to the extent 
                        that such service occurs during a plan year 
                        when the plan benefits (within the meaning of 
                        section 410(b)) no key employee or former key 
                        employee.''.
    (f) Elimination of Family Attribution.--Section 416(i)(1)(B) 
(defining 5-percent owner) is amended by adding at the end the 
following new clause:
                            ``(iv) Family attribution disregarded.--
                        Solely for purposes of applying this paragraph 
                        (and not for purposes of any provision of this 
                        title which incorporates by reference the 
                        definition of a key employee or 5-percent owner 
                        under this paragraph), section 318 shall be 
                        applied without regard to subsection (a)(1) 
                        thereof in determining whether any person is a 
                        5-percent owner.''.
    (g) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 414. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR PURPOSES OF 
              DEDUCTION LIMITS.

    (a) In General.--Section 404 (relating to deduction for 
contributions of an employer to an employees' trust or annuity plan and 
compensation under a deferred payment plan) is amended by adding at the 
end the following new subsection:
    ``(n) Elective Deferrals Not Taken Into Account for Purposes of 
Deduction Limits.--Elective deferrals (as defined in section 402(g)(3)) 
shall not be subject to any limitation contained in paragraph (3), (7), 
or (9) of subsection (a), and such elective deferrals shall not be 
taken into account in applying any such limitation to any other 
contributions.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 2000.

SEC. 415. REPEAL OF COORDINATION REQUIREMENTS FOR DEFERRED COMPENSATION 
              PLANS OF STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT 
              ORGANIZATIONS.

    (a) In General.--Subsection (c) of section 457 (relating to 
deferred compensation plans of State and local governments and tax-
exempt organizations), as amended by section 411, is amended to read as 
follows:
    ``(c) Limitation.--The maximum amount of the compensation of any 
one individual which may be deferred under subsection (a) during any 
taxable year shall not exceed the amount in effect under subsection 
(b)(2)(A) (as modified by any adjustment provided under subsection 
(b)(3)).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to years beginning after December 31, 2000.

SEC. 416. ELIMINATION OF USER FEE FOR REQUESTS TO IRS REGARDING PENSION 
              PLANS.

    (a) Elimination of Certain User Fees.--The Secretary of the 
Treasury or the Secretary's delegate shall not require payment of user 
fees under the program established under section 10511 of the Revenue 
Act of 1987 for requests to the Internal Revenue Service for 
determination letters with respect to the qualified status of a pension 
benefit plan maintained solely by one or more eligible employers or any 
trust which is part of the plan. The preceding sentence shall not apply 
to any request--
            (1) made after the later of--
                    (A) the fifth plan year the pension benefit plan is 
                in existence; or
                    (B) the end of any remedial amendment period with 
                respect to the plan beginning within the first 5 plan 
                years; or
            (2) made by the sponsor of any prototype or similar plan 
        which the sponsor intends to market to participating employers.
    (b) Pension Benefit Plan.--For purposes of this section, the term 
``pension benefit plan'' means a pension, profit-sharing, stock bonus, 
annuity, or employee stock ownership plan.
    (c) Eligible Employer.--For purposes of this section, the term 
``eligible employer'' has the same meaning given such term in section 
408(p)(2)(C)(i)(I) of the Internal Revenue Code of 1986. The 
determination of whether an employer is an eligible employer under this 
section shall be made as of the date of the request described in 
subsection (a).
    (d) Determination of Average Fees Charged.--For purposes of any 
determination of average fees charged, any request to which subsection 
(a) applies shall not be taken into account.
    (e) Effective Date.--The provisions of this section shall apply 
with respect to requests made after December 31, 2000.

SEC. 417. DEDUCTION LIMITS.

    (a) Modification of Limits.--
            (1) Stock bonus and profit sharing trusts.--
                    (A) In general.--Subclause (I) of section 
                404(a)(3)(A)(i) (relating to stock bonus and profit 
                sharing trusts) is amended by striking ``15 percent'' 
                and inserting ``25 percent''.
                    (B) Conforming amendment.--Subparagraph (C) of 
                section 404(h)(1) is amended by striking ``15 percent'' 
                each place it appears and inserting ``25 percent''.
            (2) Defined contribution plans.--
                    (A) In general.--Clause (v) of section 404(a)(3)(A) 
                (relating to stock bonus and profit sharing trusts) is 
                amended to read as follows:
                            ``(v) Defined contribution plans subject to 
                        the funding standards.--Except as provided by 
                        the Secretary, a defined contribution plan 
                        which is subject to the funding standards of 
                        section 412 shall be treated in the same manner 
                        as a stock bonus or profit-sharing plan for 
                        purposes of this subparagraph.''.
                    (B) Conforming amendments.--
                            (i) Section 404(a)(1)(A) is amended by 
                        inserting ``(other than a trust to which 
                        paragraph (3) applies)'' after ``pension 
                        trust''.
                            (ii) Section 404(h)(2) is amended by 
                        striking ``stock bonus or profit-sharing 
                        trust'' and inserting ``trust subject to 
                        subsection (a)(3)(A)''.
                            (iii) The heading of section 404(h)(2) is 
                        amended by striking ``stock bonus and profit-
                        sharing trust'' and inserting ``certain 
                        trusts''.
    (b) Compensation.--
            (1) In general.--Section 404(a) (relating to general rule) 
        is amended by adding at the end the following:
            ``(12) Definition of compensation.--For purposes of 
        paragraphs (3), (7), (8), and (9), the term `compensation' 
        shall include amounts treated as participant's compensation 
        under subparagraph (C) or (D) of section 415(c)(3).''.
            (2) Conforming amendments.--
                    (A) Subparagraph (B) of section 404(a)(3) is 
                amended by striking the last sentence thereof.
                    (B) Clause (i) of section 4972(c)(6)(B) is amended 
                by striking ``(within the meaning of section 404(a))'' 
                and inserting ``(within the meaning of section 404(a) 
                and as adjusted under section 404(a)(12))''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 418. OPTION TO TREAT ELECTIVE DEFERRALS AS AFTER-TAX ROTH 
              CONTRIBUTIONS.

    (a) In General.--Subpart A of part I of subchapter D of chapter 1 
(relating to deferred compensation, etc.) is amended by inserting after 
section 402 the following new section:

``SEC. 402A. OPTIONAL TREATMENT OF ELECTIVE DEFERRALS AS ROTH 
              CONTRIBUTIONS.

    ``(a) General Rule.--If an applicable retirement plan includes a 
qualified Roth contribution program--
            ``(1) any designated Roth contribution made by an employee 
        pursuant to the program shall be treated as an elective 
        deferral for purposes of this chapter, except that such 
        contribution shall not be excludable from gross income, and
            ``(2) such plan (and any arrangement which is part of such 
        plan) shall not be treated as failing to meet any requirement 
        of this chapter solely by reason of including such program.
    ``(b) Qualified Roth Contribution Program.--For purposes of this 
section--
            ``(1) In general.--The term `qualified Roth contribution 
        program' means a program under which an employee may elect to 
        make designated Roth contributions in lieu of all or a portion 
        of elective deferrals the employee is otherwise eligible to 
        make under the applicable retirement plan.
            ``(2) Separate accounting required.--A program shall not be 
        treated as a qualified Roth contribution program unless the 
        applicable retirement plan--
                    ``(A) establishes separate accounts (`designated 
                Roth accounts') for the designated Roth contributions 
                of each employee and any earnings properly allocable to 
                the contributions, and
                    ``(B) maintains separate recordkeeping with respect 
                to each account.
    ``(c) Definitions and Rules Relating to Designated Roth 
Contributions.--For purposes of this section--
            ``(1) Designated Roth contribution.--The term `designated 
        Roth contribution' means any elective deferral which--
                    ``(A) is excludable from gross income of an 
                employee without regard to this section, and
                    ``(B) the employee designates (at such time and in 
                such manner as the Secretary may prescribe) as not 
                being so excludable.
            ``(2) Designation limits.--The amount of elective deferrals 
        which an employee may designate under paragraph (1) shall not 
        exceed the excess (if any) of--
                    ``(A) the maximum amount of elective deferrals 
                excludable from gross income of the employee for the 
                taxable year (without regard to this section), over
                    ``(B) the aggregate amount of elective deferrals of 
                the employee for the taxable year which the employee 
                does not designate under paragraph (1).
            ``(3) Rollover contributions.--
                    ``(A) In general.--A rollover contribution of any 
                payment or distribution from a designated Roth account 
                which is otherwise allowable under this chapter may be 
                made only if the contribution is to--
                            ``(i) another designated Roth account of 
                        the individual from whose account the payment 
                        or distribution was made, or
                            ``(ii) a Roth IRA of such individual.
                    ``(B) Coordination with limit.--Any rollover 
                contribution to a designated Roth account under 
                subparagraph (A) shall not be taken into account for 
                purposes of paragraph (1).
    ``(d) Distribution Rules.--For purposes of this title--
            ``(1) Exclusion.--Any qualified distribution from a 
        designated Roth account shall not be includible in gross 
        income.
            ``(2) Qualified distribution.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified 
                distribution' has the meaning given such term by 
                section 408A(d)(2)(A) (without regard to clause (iv) 
                thereof).
                    ``(B) Distributions within nonexclusion period.--A 
                payment or distribution from a designated Roth account 
                shall not be treated as a qualified distribution if 
                such payment or distribution is made within the 5-
                taxable-year period beginning with the earlier of--
                            ``(i) the first taxable year for which the 
                        individual made a designated Roth contribution 
                        to any designated Roth account established for 
                        such individual under the same applicable 
                        retirement plan, or
                            ``(ii) if a rollover contribution was made 
                        to such designated Roth account from a 
                        designated Roth account previously established 
                        for such individual under another applicable 
                        retirement plan, the first taxable year for 
                        which the individual made a designated Roth 
                        contribution to such previously established 
                        account.
                    ``(C) Distributions of excess deferrals and 
                contributions and earnings thereon.--The term 
                `qualified distribution' shall not include any 
                distribution of any excess deferral under section 
                402(g)(2) or any excess contribution under section 
                401(k)(8), and any income on the excess deferral or 
                contribution.
            ``(3) Treatment of distributions of certain excess 
        deferrals.--Notwithstanding section 72, if any excess deferral 
        under section 402(g)(2) attributable to a designated Roth 
        contribution is not distributed on or before the 1st April 15 
        following the close of the taxable year in which such excess 
        deferral is made, the amount of such excess deferral shall--
                    ``(A) not be treated as investment in the contract, 
                and
                    ``(B) be included in gross income for the taxable 
                year in which such excess is distributed.
            ``(4) Aggregation rules.--Section 72 shall be applied 
        separately with respect to distributions and payments from a 
        designated Roth account and other distributions and payments 
        from the plan.
    ``(e) Other Definitions.--For purposes of this section--
            ``(1) Applicable retirement plan.--The term `applicable 
        retirement plan' means--
                    ``(A) an employees' trust described in section 
                401(a) which is exempt from tax under section 501(a), 
                and
                    ``(B) a plan under which amounts are contributed by 
                an individual's employer for an annuity contract 
                described in section 403(b).
            ``(2) Elective deferral.--The term `elective deferral' 
        means any elective deferral described in subparagraph (A) or 
        (C) of section 402(g)(3).''.
    (b) Excess Deferrals.--Section 402(g) (relating to limitation on 
exclusion for elective deferrals) is amended--
            (1) by adding at the end of paragraph (1)(A) (as added by 
        section 201(d)(1)) the following new sentence: ``The preceding 
        sentence shall not apply to the portion of such excess as does 
        not exceed the designated Roth contributions of the individual 
        for the taxable year.''; and
            (2) by inserting ``(or would be included but for the last 
        sentence thereof)'' after ``paragraph (1)'' in paragraph 
        (2)(A).
    (c) Rollovers.--Subparagraph (B) of section 402(c)(8) is amended by 
adding at the end the following:
                ``If any portion of an eligible rollover distribution 
                is attributable to payments or distributions from a 
                designated Roth account (as defined in section 402A), 
                an eligible retirement plan with respect to such 
                portion shall include only another designated Roth 
                account and a Roth IRA.''.
    (d) Reporting Requirements.--
            (1) W-2 information.--Section 6051(a)(8) is amended by 
        inserting ``, including the amount of designated Roth 
        contributions (as defined in section 402A)'' before the comma 
        at the end.
            (2) Information.--Section 6047 is amended by redesignating 
        subsection (f) as subsection (g) and by inserting after 
        subsection (e) the following new subsection:
    ``(f) Designated Roth Contributions.--The Secretary shall require 
the plan administrator of each applicable retirement plan (as defined 
in section 402A) to make such returns and reports regarding designated 
Roth contributions (as defined in section 402A) to the Secretary, 
participants and beneficiaries of the plan, and such other persons as 
the Secretary may prescribe.''.
    (e) Conforming Amendments.--
            (1) Section 408A(e) is amended by adding after the first 
        sentence the following new sentence: ``Such term includes a 
        rollover contribution described in section 402A(c)(3)(A).''.
            (2) The table of sections for subpart A of part I of 
        subchapter D of chapter 1 is amended by inserting after the 
        item relating to section 402 the following new item:

                              ``Sec. 402A. Optional treatment of 
                                        elective deferrals as Roth 
                                        contributions.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

                Subtitle C--Enhancing Fairness For Women

SEC. 421. CATCH-UP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR OVER.

    (a) In General.--Section 414 (relating to definitions and special 
rules) is amended by adding at the end the following new subsection:
    ``(v) Catch-up Contributions for Individuals Age 50 or Over.--
            ``(1) In general.--An applicable employer plan shall not be 
        treated as failing to meet any requirement of this title solely 
        because the plan permits an eligible participant to make 
        additional elective deferrals in any plan year.
            ``(2) Limitation on amount of additional deferrals.--
                    ``(A) In general.--A plan shall not permit 
                additional elective deferrals under paragraph (1) for 
                any year in an amount greater than the lesser of--
                            ``(i) the applicable deferral amount, or
                            ``(ii) the excess (if any) of--
                                    ``(I) the participant's 
                                compensation for the year, over
                                    ``(II) any other elective deferrals 
                                of the participant for such year which 
                                are made without regard to this 
                                subsection.
                    ``(B) Applicable deferral amount; cost-of-living 
                adjustment.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(i), the applicable deferral 
                        amount shall be the amount determined in 
                        accordance with the following table:

                ``For taxable years
                                                         The applicable
                  beginning in
                                                       deferral amount:
                  calendar year:
                            2001...........................     $1,000 
                            2002...........................     $2,000 
                            2003...........................     $3,000 
                            2004...........................     $4,000 
                            2005 or thereafter.............     $5,000.
                            ``(ii) Cost-of-living adjustment.--In the 
                        case of a year beginning after December 31, 
                        2005, the Secretary shall adjust the $5,000 
                        amount under clause (i) at the same time and in 
                        the same manner as under section 415(d), except 
                        that the base period taken into account shall 
                        be the calendar quarter beginning July 1, 2004, 
                        and any increase under this subparagraph which 
                        is not a multiple of $500 shall be rounded to 
                        the next lower multiple of $500.
            ``(3) Treatment of contributions.--In the case of any 
        contribution to a plan under paragraph (1), such contribution 
        shall not, with respect to the year in which the contribution 
        is made--
                    ``(A) be subject to any otherwise applicable 
                limitation contained in section 402(g), 402(h)(2), 
                404(a), 404(h), 408(p)(2)(A)(ii), 415, or 457, or
                    ``(B) be taken into account in applying such 
                limitations to other contributions or benefits under 
                such plan or any other such plan.
            ``(4) Application of nondiscrimination rules.--
                    ``(A) In general.--An applicable employer plan 
                shall not be treated as failing to meet the 
                nondiscrimination requirements under section 401(a)(4) 
                with respect to benefits, rights, and features if the 
                plan allows all eligible participants to make the same 
                election with respect to the additional elective 
                deferrals under this subsection.
                    ``(B) Aggregation.--For purposes of subparagraph 
                (A), all plans maintained by employers who are treated 
                as a single employer under subsection (b), (c), (m), or 
                (o) of section 414 shall be treated as 1 plan.
            ``(5) Eligible participant.--For purposes of this 
        subsection, the term `eligible participant' means, with respect 
        to any plan year, a participant in a plan--
                    ``(A) who has attained the age of 50 before the 
                close of the plan year, and
                    ``(B) with respect to whom no other elective 
                deferrals may (without regard to this subsection) be 
                made to the plan for the plan year by reason of the 
                application of any limitation or other restriction 
                described in paragraph (3) or any comparable limitation 
                contained in the terms of the plan.
            ``(6) Other definitions and rules.--For purposes of this 
        subsection--
                    ``(A) Applicable employer plan.--The term 
                `applicable employer plan' means--
                            ``(i) an employees' trust described in 
                        section 401(a) which is exempt from tax under 
                        section 501(a),
                            ``(ii) a plan under which amounts are 
                        contributed by an individual's employer for an 
                        annuity contract described in section 403(b),
                            ``(iii) an eligible deferred compensation 
                        plan under section 457 of an eligible employer 
                        as defined in section 457(e)(1)(A), and
                            ``(iv) an arrangement meeting the 
                        requirements of section 408 (k) or (p).
                    ``(B) Elective deferral.--The term `elective 
                deferral' has the meaning given such term by subsection 
                (u)(2)(C).
                    ``(C) Exception for section 457 plans.--This 
                subsection shall not apply to an applicable employer 
                plan described in subparagraph (A)(iii) for any year to 
                which section 457(b)(3) applies.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions in taxable years beginning after December 31, 2000.

SEC. 422. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF EMPLOYEES TO DEFINED 
              CONTRIBUTION PLANS.

    (a) Equitable Treatment.--
            (1) In general.--Subparagraph (B) of section 415(c)(1) 
        (relating to limitation for defined contribution plans) is 
        amended by striking ``25 percent'' and inserting ``100 
        percent''.
            (2) Application to section 403(b).--Section 403(b) is 
        amended--
                    (A) by striking ``the exclusion allowance for such 
                taxable year'' in paragraph (1) and inserting ``the 
                applicable limit under section 415'';
                    (B) by striking paragraph (2); and
                    (C) by inserting ``or any amount received by a 
                former employee after the fifth taxable year following 
                the taxable year in which such employee was 
                terminated'' before the period at the end of the second 
                sentence of paragraph (3).
            (3) Conforming amendments.--
                    (A) Subsection (f) of section 72 is amended by 
                striking ``section 403(b)(2)(D)(iii))'' and inserting 
                ``section 403(b)(2)(D)(iii), as in effect before the 
                enactment of the Retirement Savings and Pension 
                Coverage Act of 2000)''.
                    (B) Section 404(a)(10)(B) is amended by striking 
                ``, the exclusion allowance under section 403(b)(2),''.
                    (C) Section 415(a)(2) is amended by striking ``, 
                and the amount of the contribution for such portion 
                shall reduce the exclusion allowance as provided in 
                section 403(b)(2)''.
                    (D) Section 415(c)(3) is amended by adding at the 
                end the following new subparagraph:
                    ``(E) Annuity contracts.--In the case of an annuity 
                contract described in section 403(b), the term 
                `participant's compensation' means the participant's 
                includible compensation determined under section 
                403(b)(3).''.
                    (E) Section 415(c) is amended by striking paragraph 
                (4).
                    (F) Section 415(c)(7) is amended to read as 
                follows:
            ``(7) Certain contributions by church plans not treated as 
        exceeding limit.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this subsection, at the election of a 
                participant who is an employee of a church or a 
                convention or association of churches, including an 
                organization described in section 414(e)(3)(B)(ii), 
                contributions and other additions for an annuity 
                contract or retirement income account described in 
                section 403(b) with respect to such participant, when 
                expressed as an annual addition to such participant's 
                account, shall be treated as not exceeding the 
                limitation of paragraph (1) if such annual addition is 
                not in excess of $10,000.
                    ``(B) $40,000 aggregate limitation.--The total 
                amount of additions with respect to any participant 
                which may be taken into account for purposes of this 
                subparagraph for all years may not exceed $40,000.
                    ``(C) Annual addition.--For purposes of this 
                paragraph, the term `annual addition' has the meaning 
                given such term by paragraph (2).''.
                    (G) Subparagraph (B) of section 402(g)(7) (as 
                redesignated by section 201(d)(3)(A)) is amended by 
                inserting before the period at the end the following: 
                ``(as in effect before the enactment of the Retirement 
                Savings and Pension Coverage Act of 2000)''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to years beginning after December 31, 2000.
    (b) Special Rules for Sections 403(b) and 408.--
            (1) In general.--Subsection (k) of section 415 is amended 
        by adding at the end the following new paragraph:
            ``(4) Special rules for sections 403(b) and 408.--For 
        purposes of this section, any annuity contract described in 
        section 403(b) for the benefit of a participant shall be 
        treated as a defined contribution plan maintained by each 
        employer with respect to which the participant has the control 
        required under subsection (b) or (c) of section 414 (as 
        modified by subsection (h)). For purposes of this section, any 
        contribution by an employer to a simplified employee pension 
        plan for an individual for a taxable year shall be treated as 
        an employer contribution to a defined contribution plan for 
        such individual for such year.''.
            (2) Effective date.--
                    (A) In general.--The amendment made by paragraph 
                (1) shall apply to limitation years beginning after 
                December 31, 1999.
                    (B) Exclusion allowance.--Effective for limitation 
                years beginning in 2000, in the case of any annuity 
                contract described in section 403(b) of the Internal 
                Revenue Code of 1986, the amount of the contribution 
                disqualified by reason of section 415(g) of such Code 
                shall reduce the exclusion allowance as provided in 
                section 403(b)(2) of such Code.
            (3) Modification of 403(b) exclusion allowance to conform 
        to 415 modification.--The Secretary of the Treasury shall 
        modify the regulations regarding the exclusion allowance under 
        section 403(b)(2) of the Internal Revenue Code of 1986 to 
        render void the requirement that contributions to a defined 
        benefit pension plan be treated as previously excluded amounts 
        for purposes of the exclusion allowance. For taxable years 
        beginning after December 31, 1999, such regulations shall be 
        applied as if such requirement were void.
    (c) Deferred Compensation Plans of State and Local Governments and 
Tax-Exempt Organizations.--
            (1) In general.--Subparagraph (B) of section 457(b)(2) 
        (relating to salary limitation on eligible deferred 
        compensation plans) is amended by striking ``33\1/3\ percent'' 
        and inserting ``100 percent''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to years beginning after December 31, 2000.

SEC. 423. FASTER VESTING OF CERTAIN EMPLOYER MATCHING CONTRIBUTIONS.

    (a) In General.--Section 411(a) (relating to minimum vesting 
standards) is amended--
            (1) in paragraph (2), by striking ``A plan'' and inserting 
        ``Except as provided in paragraph (12), a plan''; and
            (2) by adding at the end the following:
            ``(12) Faster vesting for matching contributions.--In the 
        case of matching contributions (as defined in section 
        401(m)(4)(A)), paragraph (2) shall be applied--
                    ``(A) by substituting `3 years' for `5 years' in 
                subparagraph (A), and
                    ``(B) by substituting the following table for the 
                table contained in subparagraph (B):

                  
                                                     The nonforfeitable
                ``Years of service:
                                                       percentage is:  
                    2......................................        20  
                    3......................................        40  
                    4......................................        60  
                    5......................................        80  
                    6......................................     100.''.
    (b) Amendment of ERISA.--Section 203(a) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1053(a)) is amended--
            (1) in paragraph (2), by striking ``A plan'' and inserting 
        ``Except as provided in paragraph (4), a plan'', and
            (2) by adding at the end the following:
            ``(4) In the case of matching contributions (as defined in 
        section 401(m)(4)(A) of the Internal Revenue Code of 1986), 
        paragraph (2) shall be applied--
                    ``(A) by substituting `3 years' for `5 years' in 
                subparagraph (A), and
                    ``(B) by substituting the following table for the 
                table contained in subparagraph (B):

                  
                                                     The nonforfeitable
                ``Years of service:
                                                       percentage is:  
                    2......................................        20  
                    3......................................        40  
                    4......................................        60  
                    5......................................        80  
                    6......................................     100.''.
    (c) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to contributions 
        for plan years beginning after December 31, 2000.
            (2) Collective bargaining agreements.--In the case of a 
        plan maintained pursuant to one or more collective bargaining 
        agreements between employee representatives and one or more 
        employers ratified by the date of the enactment of this Act, 
        the amendments made by this section shall not apply to 
        contributions on behalf of employees covered by any such 
        agreement for plan years beginning before the earlier of--
                    (A) the later of--
                            (i) the date on which the last of such 
                        collective bargaining agreements terminates 
                        (determined without regard to any extension 
                        thereof on or after such date of the 
                        enactment); or
                            (ii) January 1, 2001; or
                    (B) January 1, 2005.
            (3) Service required.--With respect to any plan, the 
        amendments made by this section shall not apply to any employee 
        before the date that such employee has 1 hour of service under 
        such plan in any plan year to which the amendments made by this 
        section apply.

SEC. 424. SIMPLIFY AND UPDATE THE MINIMUM DISTRIBUTION RULES.

    (a) Simplification and Finalization of Minimum Distribution 
Requirements.--
            (1) In general.--The Secretary of the Treasury shall--
                    (A) simplify and finalize the regulations relating 
                to minimum distribution requirements under sections 
                401(a)(9), 408(a)(6) and (b)(3), 403(b)(10), and 
                457(d)(2) of the Internal Revenue Code of 1986; and
                    (B) modify such regulations to--
                            (i) reflect current life expectancy; and
                            (ii) revise the required distribution 
                        methods so that, under reasonable assumptions, 
                        the amount of the required minimum distribution 
                        does not decrease over a participant's life 
                        expectancy.
            (2) Fresh start.--Notwithstanding subparagraph (D) of 
        section 401(a)(9) of such Code, during the first year that 
        regulations are in effect under this subsection, required 
        distributions for future years may be redetermined to reflect 
        changes under such regulations. Such redetermination shall 
        include the opportunity to choose a new designated beneficiary 
        and to elect a new method of calculating life expectancy.
            (3) Date for regulations.--Not later than December 31, 
        2001, the Secretary shall issue final regulations described in 
        paragraph (1) and such regulations shall apply without regard 
        to whether an individual had previously begun receiving minimum 
        distributions.
    (b) Repeal of Rule Where Distributions Had Begun Before Death 
Occurs.--
            (1) In general.--Subparagraph (B) of section 401(a)(9) is 
        amended by striking clause (i) and redesignating clauses (ii), 
        (iii), and (iv) as clauses (i), (ii), and (iii), respectively.
            (2) Conforming changes.--
                    (A) Clause (i) of section 401(a)(9)(B) (as so 
                redesignated) is amended--
                            (i) by striking ``for other cases'' in the 
                        heading; and
                            (ii) by striking ``the distribution of the 
                        employee's interest has begun in accordance 
                        with subparagraph (A)(ii)'' and inserting ``his 
                        entire interest has been distributed to him''.
                    (B) Clause (ii) of section 401(a)(9)(B) (as so 
                redesignated) is amended by striking ``clause (ii)'' 
                and inserting ``clause (i)''.
                    (C) Clause (iii) of section 401(a)(9)(B) (as so 
                redesignated) is amended--
                            (i) by striking ``clause (iii)(I)'' and 
                        inserting ``clause (ii)(I)'';
                            (ii) by striking ``clause (iii)(III)'' in 
                        subclause (I) and inserting ``clause 
                        (ii)(III)'';
                            (iii) by striking ``the date on which the 
                        employee would have attained age 70\1/2\,'' in 
                        subclause (I) and inserting ``April 1 of the 
                        calendar year following the calendar year in 
                        which the spouse attains 70\1/2\,''; and
                            (iv) by striking ``the distributions to 
                        such spouse begin,'' in subclause (II) and 
                        inserting ``his entire interest has been 
                        distributed to him,''.
            (3) Effective date.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the amendments made by this subsection shall apply 
                to years beginning after December 31, 2000.
                    (B) Distributions to surviving spouse.--
                            (i) In general.--In the case of an employee 
                        described in clause (ii), distributions to the 
                        surviving spouse of the employee shall not be 
                        required to commence prior to the date on which 
                        such distributions would have been required to 
                        begin under section 401(a)(9)(B) of the 
                        Internal Revenue Code of 1986 (as in effect on 
                        the day before the date of the enactment of 
                        this Act).
                            (ii) Certain employees.--An employee is 
                        described in this clause if such employee dies 
                        before--
                                    (I) the date of the enactment of 
                                this Act, and
                                    (II) the required beginning date 
                                (within the meaning of section 
                                401(a)(9)(C) of the Internal Revenue 
                                Code of 1986) of the employee.
    (c) Reduction in Excise Tax.--
            (1) In general.--Subsection (a) of section 4974 is amended 
        by striking ``50 percent'' and inserting ``10 percent''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to years beginning after December 31, 2000.

SEC. 425. CLARIFICATION OF TAX TREATMENT OF DIVISION OF SECTION 457 
              PLAN BENEFITS UPON DIVORCE.

    (a) In General.--Section 414(p)(11) (relating to application of 
rules to governmental and church plans) is amended--
            (1) by inserting ``or an eligible deferred compensation 
        plan (within the meaning of section 457(b))'' after 
        ``subsection (e))''; and
            (2) in the heading, by striking ``governmental and church 
        plans'' and inserting ``certain other plans''.
    (b) Waiver of Certain Distribution Requirements.--Paragraph (10) of 
section 414(p) is amended by striking ``and section 409(d)'' and 
inserting ``section 409(d), and section 457(d)''.
    (c) Tax Treatment of Payments From a Section 457 Plan.--Subsection 
(p) of section 414 is amended by redesignating paragraph (12) as 
paragraph (13) and inserting after paragraph (11) the following new 
paragraph:
            ``(12) Tax treatment of payments from a section 457 plan.--
        If a distribution or payment from an eligible deferred 
        compensation plan described in section 457(b) is made pursuant 
        to a qualified domestic relations order, rules similar to the 
        rules of section 402(e)(1)(A) shall apply to such distribution 
        or payment.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to transfers, distributions, and payments made after December 31, 
2000.

SEC. 426. PROVISIONS RELATING TO HARDSHIP DISTRIBUTIONS.

    (a) Safe Harbor Relief.--
            (1) In general.--The Secretary of the Treasury shall revise 
        the regulations relating to hardship distributions under 
        section 401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 
        1986 to provide that the period an employee is prohibited from 
        making elective and employee contributions in order for a 
        distribution to be deemed necessary to satisfy financial need 
        shall be equal to 6 months.
            (2) Effective date.--The revised regulations under this 
        subsection shall apply to years beginning after December 31, 
        2000.
    (b) Hardship Distributions Not Treated as Eligible Rollover 
Distributions.--
            (1) Modification of definition of eligible rollover.--
        Section 402(c)(4)(C) (relating to eligible rollover 
        distribution) is amended by striking ``described in section 
        401(k)(2)(B)(i)(IV)'' and inserting ``under the terms of the 
        plan''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to distributions made after December 31, 2001, 
        unless a plan administrator elects to apply such amendment to 
        distributions made after December 31, 2000.

SEC. 427. WAIVER OF TAX ON NONDEDUCTIBLE CONTRIBUTIONS FOR DOMESTIC OR 
              SIMILAR WORKERS.

    (a) In General.--Section 4972(c)(6) (relating to exceptions to 
nondeductible contributions), as amended by section 442(b), is amended 
by striking ``or'' at the end of subparagraph (A), by striking the 
period and inserting ``, or'' at the end of subparagraph (B), and by 
inserting after subparagraph (B) the following new subparagraph:
                    ``(C) so much of the contributions to a qualified 
                employer plan which are not deductible when contributed 
                solely because such contributions are not made in 
                connection with a trade or business of the employer.''.
    (b) Exclusion of Certain Contributions.--Section 4972(c)(6), as 
amended by subsection (a), is amended by adding at the end the 
following new sentence: ``Subparagraph (C) shall not apply to 
contributions made on behalf of the employer or a member of the 
employer's family (as defined in section 447(e)(1)).''.
    (c) No Inference.--Nothing in the amendments made by this section 
shall be construed to infer the proper treatment of nondeductible 
contributions under the laws in effect before such amendments.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

          Subtitle D--Increasing Portability For Participants

SEC. 431. ROLLOVERS ALLOWED AMONG VARIOUS TYPES OF PLANS.

    (a) Rollovers From and to Section 457 Plans.--
            (1) Rollovers from section 457 plans.--
                    (A) In general.--Section 457(e) (relating to other 
                definitions and special rules) is amended by adding at 
                the end the following:
            ``(16) Rollover amounts.--
                    ``(A) General rule.--In the case of an eligible 
                deferred compensation plan established and maintained 
                by an employer described in subsection (e)(1)(A), if--
                            ``(i) any portion of the balance to the 
                        credit of an employee in such plan is paid to 
                        such employee in an eligible rollover 
                        distribution (within the meaning of section 
                        402(c)(4) without regard to subparagraph (C) 
                        thereof),
                            ``(ii) the employee transfers any portion 
                        of the property such employee receives in such 
                        distribution to an eligible retirement plan 
                        described in section 402(c)(8)(B), and
                            ``(iii) in the case of a distribution of 
                        property other than money, the amount so 
                        transferred consists of the property 
                        distributed,
                then such distribution (to the extent so transferred) 
                shall not be includible in gross income for the taxable 
                year in which paid.
                    ``(B) Certain rules made applicable.--The rules of 
                paragraphs (2) through (7) and (9) of section 402(c) 
                and section 402(f) shall apply for purposes of 
                subparagraph (A).
                    ``(C) Reporting.--Rollovers under this paragraph 
                shall be reported to the Secretary in the same manner 
                as rollovers from qualified retirement plans (as 
                defined in section 4974(c)).''.
                    (B) Deferral limit determined without regard to 
                rollover amounts.--Section 457(b)(2) (defining eligible 
                deferred compensation plan) is amended by inserting 
                ``(other than rollover amounts)'' after ``taxable 
                year''.
                    (C) Direct rollover.--Paragraph (1) of section 
                457(d) is amended by striking ``and'' at the end of 
                subparagraph (A), by striking the period at the end of 
                subparagraph (B) and inserting ``, and'', and by 
                inserting after subparagraph (B) the following:
                    ``(C) in the case of a plan maintained by an 
                employer described in subsection (e)(1)(A), the plan 
                meets requirements similar to the requirements of 
                section 401(a)(31).
        Any amount transferred in a direct trustee-to-trustee transfer 
        in accordance with section 401(a)(31) shall not be includible 
        in gross income for the taxable year of transfer.''.
                    (D) Withholding.--
                            (i) Paragraph (12) of section 3401(a) is 
                        amended by adding at the end the following:
                    ``(E) under or to an eligible deferred compensation 
                plan which, at the time of such payment, is a plan 
                described in section 457(b) maintained by an employer 
                described in section 457(e)(1)(A), or''.
                            (ii) Paragraph (3) of section 3405(c) is 
                        amended to read as follows:
            ``(3) Eligible rollover distribution.--For purposes of this 
        subsection, the term `eligible rollover distribution' has the 
        meaning given such term by section 402(f)(2)(A).''.
                            (iii) Liability for withholding.--
                        Subparagraph (B) of section 3405(d)(2) 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:
                            ``(iv) section 457(b) and which is 
                        maintained by an eligible employer described in 
                        section 457(e)(1)(A).''.
            (2) Rollovers to section 457 plans.--
                    (A) In general.--Section 402(c)(8)(B) (defining 
                eligible retirement plan) is amended by striking 
                ``and'' at the end of clause (iii), by striking the 
                period at the end of clause (iv) and inserting ``, 
                and'', and by inserting after clause (iv) the following 
                new clause:
                            ``(v) an eligible deferred compensation 
                        plan described in section 457(b) which is 
                        maintained by an eligible employer described in 
                        section 457(e)(1)(A).''.
                    (B) Separate accounting.--Section 402(c) is amended 
                by adding at the end the following new paragraph:
            ``(11) Separate accounting.--Unless a plan described in 
        clause (v) of paragraph (8)(B) agrees to separately account for 
        amounts rolled into such plan from eligible retirement plans 
        not described in such clause, the plan described in such clause 
        may not accept transfers or rollovers from such retirement 
        plans.''.
                    (C) 10 percent additional tax.--Subsection (t) of 
                section 72 (relating to 10-percent additional tax on 
                early distributions from qualified retirement plans) is 
                amended by adding at the end the following new 
                paragraph:
            ``(9) Special rule for rollovers to section 457 plans.--For 
        purposes of this subsection, a distribution from an eligible 
        deferred compensation plan (as defined in section 457(b)) of an 
        eligible employer described in section 457(e)(1)(A) shall be 
        treated as a distribution from a qualified retirement plan 
        described in 4974(c)(1) to the extent that such distribution is 
        attributable to an amount transferred to an eligible deferred 
        compensation plan from a qualified retirement plan (as defined 
        in section 4974(c)).''.
    (b) Allowance of Rollovers From and to 403(b) Plans.--
            (1) Rollovers from section 403(b) plans.--Section 
        403(b)(8)(A)(ii) (relating to rollover amounts) is amended by 
        striking ``such distribution'' and all that follows and 
        inserting ``such distribution to an eligible retirement plan 
        described in section 402(c)(8)(B), and''.
            (2) Rollovers to section 403(b) plans.--Section 
        402(c)(8)(B) (defining eligible retirement plan), as amended by 
        subsection (a), is amended by striking ``and'' at the end of 
        clause (iv), by striking the period at the end of clause (v) 
        and inserting ``, and'', and by inserting after clause (v) the 
        following new clause:
                            ``(vi) an annuity contract described in 
                        section 403(b).''.
    (c) Expanded Explanation to Recipients of Rollover Distributions.--
Paragraph (1) of section 402(f) (relating to written explanation to 
recipients of distributions eligible for rollover treatment) is amended 
by striking ``and'' at the end of subparagraph (C), by striking the 
period at the end of subparagraph (D) and inserting ``, and'', and by 
adding at the end the following new subparagraph:
                    ``(E) of the provisions under which distributions 
                from the eligible retirement plan receiving the 
                distribution may be subject to restrictions and tax 
                consequences which are different from those applicable 
                to distributions from the plan making such 
                distribution.''.
    (d) Spousal Rollovers.--Section 402(c)(9) (relating to rollover 
where spouse receives distribution after death of employee) is amended 
by striking ``; except that'' and all that follows up to the end 
period.
    (e) Conforming Amendments.--
            (1) Section 72(o)(4) is amended by striking ``and 
        408(d)(3)'' and inserting ``403(b)(8), 408(d)(3), and 
        457(e)(16)''.
            (2) Section 219(d)(2) is amended by striking ``or 
        408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
            (3) Section 401(a)(31)(B) is amended by striking ``and 
        403(a)(4)'' and inserting ``, 403(a)(4), 403(b)(8), and 
        457(e)(16)''.
            (4) Subparagraph (A) of section 402(f)(2) is amended by 
        striking ``or paragraph (4) of section 403(a)'' and inserting 
        ``, paragraph (4) of section 403(a), subparagraph (A) of 
        section 403(b)(8), or subparagraph (A) of section 457(e)(16)''.
            (5) Paragraph (1) of section 402(f) is amended by striking 
        ``from an eligible retirement plan''.
            (6) Subparagraphs (A) and (B) of section 402(f)(1) are 
        amended by striking ``another eligible retirement plan'' and 
        inserting ``an eligible retirement plan''.
            (7) Subparagraph (B) of section 403(b)(8) is amended to 
        read as follows:
                    ``(B) Certain rules made applicable.--The rules of 
                paragraphs (2) through (7) and (9) of section 402(c) 
                and section 402(f) shall apply for purposes of 
                subparagraph (A), except that section 402(f) shall be 
                applied to the payor in lieu of the plan 
                administrator.''.
            (8) Section 408(a)(1) is amended by striking ``or 
        403(b)(8),'' and inserting ``403(b)(8), or 457(e)(16)''.
            (9) Subparagraphs (A) and (B) of section 415(b)(2) are each 
        amended by striking ``and 408(d)(3)'' and inserting 
        ``403(b)(8), 408(d)(3), and 457(e)(16)''.
            (10) Section 415(c)(2) is amended by striking ``and 
        408(d)(3)'' and inserting ``408(d)(3), and 457(e)(16)''.
            (11) Section 4973(b)(1)(A) is amended by striking ``or 
        408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
    (f) Effective Date; Special Rules.--
            (1) Effective date.--Except as provided in paragraph (2), 
        the amendments made by this section shall apply to 
        distributions after December 31, 2000.
            (2) Reasonable notice.--No penalty shall be imposed on a 
        plan for the failure to provide the information required by the 
        amendment made by subsection (c) with respect to any 
        distribution made before January 1, 2002, if the administrator 
        of such plan makes a reasonable attempt to comply with such 
        requirement.
            (3) Special rule.--Notwithstanding any other provision of 
        law, subsections (h)(3) and (h)(5) of section 1122 of the Tax 
        Reform Act of 1986 shall not apply to any distribution from an 
        eligible retirement plan (as defined in clause (iii) or (iv) of 
        section 402(c)(8)(B) of the Internal Revenue Code of 1986) on 
        behalf of an individual if there was a rollover to such plan on 
        behalf of such individual which is permitted solely by reason 
        of any amendment made by this section.

SEC. 432. ROLLOVERS OF IRAS INTO WORKPLACE RETIREMENT PLANS.

    (a) In General.--Subparagraph (A) of section 408(d)(3) (relating to 
rollover amounts) is amended by adding ``or'' at the end of clause (i), 
by striking clauses (ii) and (iii), and by adding at the end the 
following:
                            ``(ii) the entire amount received 
                        (including money and any other property) is 
                        paid into an eligible retirement plan for the 
                        benefit of such individual not later than the 
                        60th day after the date on which the payment or 
                        distribution is received, except that the 
                        maximum amount which may be paid into such plan 
                        may not exceed the portion of the amount 
                        received which is includible in gross income 
                        (determined without regard to this paragraph).
                For purposes of clause (ii), the term `eligible 
                retirement plan' means an eligible retirement plan 
                described in clause (iii), (iv), (v), or (vi) of 
                section 402(c)(8)(B).''.
    (b) Conforming Amendments.--
            (1) Paragraph (1) of section 403(b) is amended by striking 
        ``section 408(d)(3)(A)(iii)'' and inserting ``section 
        408(d)(3)(A)(ii)''.
            (2) Clause (i) of section 408(d)(3)(D) is amended by 
        striking ``(i), (ii), or (iii)'' and inserting ``(i) or (ii)''.
            (3) Subparagraph (G) of section 408(d)(3) is amended to 
        read as follows:
                    ``(G) Simple retirement accounts.--In the case of 
                any payment or distribution out of a simple retirement 
                account (as defined in subsection (p)) to which section 
                72(t)(6) applies, this paragraph shall not apply unless 
                such payment or distribution is paid into another 
                simple retirement account.''.
    (c) Effective Date; Special Rule.--
            (1) Effective date.--The amendments made by this section 
        shall apply to distributions after December 31, 2000.
            (2) Special rule.--Notwithstanding any other provision of 
        law, subsections (h)(3) and (h)(5) of section 1122 of the Tax 
        Reform Act of 1986 shall not apply to any distribution from an 
        eligible retirement plan (as defined in clause (iii) or (iv) of 
        section 402(c)(8)(B) of the Internal Revenue Code of 1986) on 
        behalf of an individual if there was a rollover to such plan on 
        behalf of such individual which is permitted solely by reason 
        of the amendments made by this section.

SEC. 433. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.

    (a) Rollovers From Exempt Trusts.--Paragraph (2) of section 402(c) 
(relating to maximum amount which may be rolled over) is amended by 
adding at the end the following: ``The preceding sentence shall not 
apply to such distribution to the extent--
                    ``(A) such portion is transferred in a direct 
                trustee-to-trustee transfer to a qualified trust which 
                is part of a plan which is a defined contribution plan 
                and which agrees to separately account for amounts so 
                transferred, including separately accounting for the 
                portion of such distribution which is includible in 
                gross income and the portion of such distribution which 
                is not so includible, or
                    ``(B) such portion is transferred to an eligible 
                retirement plan described in clause (i) or (ii) of 
                paragraph (8)(B).''.
    (b) Optional Direct Transfer of Eligible Rollover Distributions.--
Subparagraph (B) of section 401(a)(31) (relating to limitation) is 
amended by adding at the end the following: ``The preceding sentence 
shall not apply to such distribution if the plan to which such 
distribution is transferred--
                            ``(i) agrees to separately account for 
                        amounts so transferred, including separately 
                        accounting for the portion of such distribution 
                        which is includible in gross income and the 
                        portion of such distribution which is not so 
                        includible, or
                            ``(ii) is an eligible retirement plan 
                        described in clause (i) or (ii) of section 
                        402(c)(8)(B).''.
    (c) Rules for Applying Section 72 to IRAs.--Paragraph (3) of 
section 408(d) (relating to special rules for applying section 72) is 
amended by inserting at the end the following:
                    ``(H) Application of section 72.--
                            ``(i) In general.--If--
                                    ``(I) a distribution is made from 
                                an individual retirement plan, and
                                    ``(II) a rollover contribution is 
                                made to an eligible retirement plan 
                                described in section 402(c)(8)(B)(iii), 
                                (iv), (v), or (vi) with respect to all 
                                or part of such distribution,
                        then, notwithstanding paragraph (2), the rules 
                        of clause (ii) shall apply for purposes of 
                        applying section 72.
                            ``(ii) Applicable rules.--In the case of a 
                        distribution described in clause (i)--
                                    ``(I) section 72 shall be applied 
                                separately to such distribution,
                                    ``(II) notwithstanding the pro rata 
                                allocation of income on, and investment 
                                in, the contract to distributions under 
                                section 72, the portion of such 
                                distribution rolled over to an eligible 
                                retirement plan described in clause (i) 
                                shall be treated as from income on the 
                                contract (to the extent of the 
                                aggregate income on the contract from 
                                all individual retirement plans of the 
                                distributee), and
                                    ``(III) appropriate adjustments 
                                shall be made in applying section 72 to 
                                other distributions in such taxable 
                                year and subsequent taxable years.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to distributions made after December 31, 2001.

SEC. 434. HARDSHIP EXCEPTION TO 60-DAY RULE.

    (a) Exempt Trusts.--Paragraph (3) of section 402(c) (relating to 
transfer must be made within 60 days of receipt) is amended to read as 
follows:
            ``(3) Transfer must be made within 60 days of receipt.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), paragraph (1) shall not apply to any 
                transfer of a distribution made after the 60th day 
                following the day on which the distributee received the 
                property distributed.
                    ``(B) Hardship exception.--The Secretary may waive 
                the 60-day requirement under subparagraph (A) where the 
                failure to waive such requirement would be against 
                equity or good conscience, including casualty, 
                disaster, or other events beyond the reasonable control 
                of the individual subject to such requirement.''.
    (b) IRAs.--Paragraph (3) of section 408(d) (relating to rollover 
contributions), as amended by section 433, is amended by adding after 
subparagraph (H) the following new subparagraph:
                    ``(I) Waiver of 60-day requirement.--The Secretary 
                may waive the 60-day requirement under subparagraphs 
                (A) and (D) where the failure to waive such requirement 
                would be against equity or good conscience, including 
                casualty, disaster, or other events beyond the 
                reasonable control of the individual subject to such 
                requirement.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2000.

SEC. 435. TREATMENT OF FORMS OF DISTRIBUTION.

    (a) Plan Transfers.--
            (1) Amendment of internal revenue code.--Paragraph (6) of 
        section 411(d) (relating to accrued benefit not to be decreased 
        by amendment) is amended by adding at the end the following:
                    ``(D) Plan transfers.--
                            ``(i) In general.--A defined contribution 
                        plan (in this subparagraph referred to as the 
                        `transferee plan') shall not be treated as 
                        failing to meet the requirements of this 
                        subsection merely because the transferee plan 
                        does not provide some or all of the forms of 
                        distribution previously available under another 
                        defined contribution plan (in this subparagraph 
                        referred to as the `transferor plan') to the 
                        extent that--
                                    ``(I) the forms of distribution 
                                previously available under the 
                                transferor plan applied to the account 
                                of a participant or beneficiary under 
                                the transferor plan that was 
                                transferred from the transferor plan to 
                                the transferee plan pursuant to a 
                                direct transfer rather than pursuant to 
                                a distribution from the transferor 
                                plan,
                                    ``(II) the terms of both the 
                                transferor plan and the transferee plan 
                                authorize the transfer described in 
                                subclause (I),
                                    ``(III) the transfer described in 
                                subclause (I) was made pursuant to a 
                                voluntary election by the participant 
                                or beneficiary whose account was 
                                transferred to the transferee plan,
                                    ``(IV) the election described in 
                                subclause (III) was made after the 
                                participant or beneficiary received a 
                                notice describing the consequences of 
                                making the election, and
                                    ``(V) the transferee plan allows 
                                the participant or beneficiary 
                                described in subclause (III) to receive 
                                any distribution to which the 
                                participant or beneficiary is entitled 
                                under the transferee plan in the form 
                                of a single sum distribution.
                            ``(ii) Special rule for mergers; etc.--
                        Clause (i) shall apply to plan mergers and 
                        other transactions having the effect of a 
                        direct transfer, including consolidations of 
                        benefits attributable to different employers 
                        within a multiple employer plan.
                    ``(E) Elimination of form of distribution.--Except 
                to the extent provided in regulations, a defined 
                contribution plan shall not be treated as failing to 
                meet the requirements of this section merely because of 
                the elimination of a form of distribution previously 
                available thereunder. This subparagraph shall not apply 
                to the elimination of a form of distribution with 
                respect to any participant unless--
                            ``(i) a single sum payment is available to 
                        such participant at the same time or times as 
                        the form of distribution being eliminated, and
                            ``(ii) such single sum payment is based on 
                        the same or greater portion of the 
                        participant's account as the form of 
                        distribution being eliminated.''.
            (2) Amendment of erisa.--Section 204(g) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is 
        amended by adding at the end the following:
    ``(4)(A) A defined contribution plan (in this subparagraph referred 
to as the `transferee plan') shall not be treated as failing to meet 
the requirements of this subsection merely because the transferee plan 
does not provide some or all of the forms of distribution previously 
available under another defined contribution plan (in this subparagraph 
referred to as the `transferor plan') to the extent that--
            ``(i) the forms of distribution previously available under 
        the transferor plan applied to the account of a participant or 
        beneficiary under the transferor plan that was transferred from 
        the transferor plan to the transferee plan pursuant to a direct 
        transfer rather than pursuant to a distribution from the 
        transferor plan;
            ``(ii) the terms of both the transferor plan and the 
        transferee plan authorize the transfer described in clause (i);
            ``(iii) the transfer described in clause (i) was made 
        pursuant to a voluntary election by the participant or 
        beneficiary whose account was transferred to the transferee 
        plan;
            ``(iv) the election described in clause (iii) was made 
        after the participant or beneficiary received a notice 
        describing the consequences of making the election; and
            ``(v) the transferee plan allows the participant or 
        beneficiary described in clause (iii) to receive any 
        distribution to which the participant or beneficiary is 
        entitled under the transferee plan in the form of a single sum 
        distribution.
    ``(B) Subparagraph (A) shall apply to plan mergers and other 
transactions having the effect of a direct transfer, including 
consolidations of benefits attributable to different employers within a 
multiple employer plan.
    ``(5) Except to the extent provided in regulations promulgated by 
the Secretary of the Treasury, a defined contribution plan shall not be 
treated as failing to meet the requirements of this subsection merely 
because of the elimination of a form of distribution previously 
available thereunder. This paragraph shall not apply to the elimination 
of a form of distribution with respect to any participant unless--
            ``(A) a single sum payment is available to such participant 
        at the same time or times as the form of distribution being 
        eliminated; and
            ``(B) such single sum payment is based on the same or 
        greater portion of the participant's account as the form of 
        distribution being eliminated.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to years beginning after December 31, 2000.
    (b) Regulations.--
            (1) Amendment of internal revenue code.--Paragraph (6)(B) 
        of section 411(d) (relating to accrued benefit not to be 
        decreased by amendment) is amended by inserting after the 
        second sentence the following new sentence: ``The Secretary 
        shall by regulations provide that this subparagraph shall not 
        apply to any plan amendment which reduces or eliminates 
        benefits or subsidies which create significant burdens or 
        complexities for the plan and plan participants and does not 
        adversely affect the rights of any participant in a more than 
        de minimis manner.''.
            (2) Amendment of erisa.--Section 204(g)(2) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)(2)) 
        is amended by inserting before the last sentence the following 
        new sentence: ``The Secretary of the Treasury shall by 
        regulations provide that this paragraph shall not apply to any 
        plan amendment which reduces or eliminates benefits or 
        subsidies which create significant burdens or complexities for 
        the plan and plan participants and does not adversely affect 
        the rights of any participant in a more than de minimis 
        manner.''.
            (3) Secretary directed.--Not later than December 31, 2002, 
        the Secretary of the Treasury is directed to issue regulations 
        under section 411(d)(6) of the Internal Revenue Code of 1986 
        and section 204(g) of the Employee Retirement Income Security 
        Act of 1974, including the regulations required by the 
        amendment made by this subsection. Such regulations shall apply 
        to plan years beginning after December 31, 2002, or such 
        earlier date as is specified by the Secretary of the Treasury.

SEC. 436. RATIONALIZATION OF RESTRICTIONS ON DISTRIBUTIONS.

    (a) Modification of Same Desk Exception.--
            (1) Section 401(k).--
                    (A) Section 401(k)(2)(B)(i)(I) (relating to 
                qualified cash or deferred arrangements) is amended by 
                striking ``separation from service'' and inserting 
                ``severance from employment''.
                    (B) Subparagraph (A) of section 401(k)(10) 
                (relating to distributions upon termination of plan or 
                disposition of assets or subsidiary) is amended to read 
                as follows:
                    ``(A) In general.--An event described in this 
                subparagraph is the termination of the plan without 
                establishment or maintenance of another defined 
                contribution plan (other than an employee stock 
                ownership plan as defined in section 4975(e)(7)).''.
                    (C) Section 401(k)(10) is amended--
                            (i) in subparagraph (B)--
                                    (I) by striking ``An event'' in 
                                clause (i) and inserting ``A 
                                termination''; and
                                    (II) by striking ``the event'' in 
                                clause (i) and inserting ``the 
                                termination'';
                            (ii) by striking subparagraph (C); and
                            (iii) by striking ``or disposition of 
                        assets or subsidiary'' in the heading.
            (2) Section 403(b).--
                    (A) Paragraphs (7)(A)(ii) and (11)(A) of section 
                403(b) are each amended by striking ``separates from 
                service'' and inserting ``has a severance from 
                employment''.
                    (B) The heading for paragraph (11) of section 
                403(b) is amended by striking ``separation from 
                service'' and inserting ``severance from employment''.
            (3) Section 457.--Clause (ii) of section 457(d)(1)(A) is 
        amended by striking ``is separated from service'' and inserting 
        ``has a severance from employment''.
    (b) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2000.

SEC. 437. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED BENEFIT 
              PLANS.

    (a) 403(b) Plans.--Subsection (b) of section 403 is amended by 
adding at the end the following new paragraph:
            ``(13) Trustee-to-trustee transfers to purchase permissive 
        service credit.--No amount shall be includible in gross income 
        by reason of a direct trustee-to-trustee transfer to a defined 
        benefit governmental plan (as defined in section 414(d)) if 
        such transfer is--
                    ``(A) for the purchase of permissive service credit 
                (as defined in section 415(n)(3)(A)) under such plan, 
                or
                    ``(B) a repayment to which section 415 does not 
                apply by reason of subsection (k)(3) thereof.''.
    (b) 457 Plans.--Subsection (e) of section 457 is amended by adding 
after paragraph (16) the following new paragraph:
            ``(17) Trustee-to-trustee transfers to purchase permissive 
        service credit.--No amount shall be includible in gross income 
        by reason of a direct trustee-to-trustee transfer to a defined 
        benefit governmental plan (as defined in section 414(d)) if 
        such transfer is--
                    ``(A) for the purchase of permissive service credit 
                (as defined in section 415(n)(3)(A)) under such plan, 
                or
                    ``(B) a repayment to which section 415 does not 
                apply by reason of subsection (k)(3) thereof.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to trustee-to-trustee transfers after December 31, 2000.

SEC. 438. EMPLOYERS MAY DISREGARD ROLLOVERS FOR PURPOSES OF CASH-OUT 
              AMOUNTS.

    (a) Qualified Plans.--
            (1) Amendment of internal revenue code.--Section 411(a)(11) 
        (relating to restrictions on certain mandatory distributions) 
        is amended by adding at the end the following:
                    ``(D) Special rule for rollover contributions.--A 
                plan shall not fail to meet the requirements of this 
                paragraph if, under the terms of the plan, the present 
                value of the nonforfeitable accrued benefit is 
                determined without regard to that portion of such 
                benefit which is attributable to rollover contributions 
                (and earnings allocable thereto). For purposes of this 
                subparagraph, the term `rollover contributions' means 
                any rollover contribution under sections 402(c), 
                403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 
                457(e)(16).''.
            (2) Amendment of erisa.--Section 203(e) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1053(c)) is 
        amended by adding at the end the following:
    ``(4) A plan shall not fail to meet the requirements of this 
subsection if, under the terms of the plan, the present value of the 
nonforfeitable accrued benefit is determined without regard to that 
portion of such benefit which is attributable to rollover contributions 
(and earnings allocable thereto). For purposes of this subparagraph, 
the term `rollover contributions' means any rollover contribution under 
sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16) 
of the Internal Revenue Code of 1986.''.
    (b) Eligible Deferred Compensation Plans.--Clause (i) of section 
457(e)(9)(A) is amended by striking ``such amount'' and inserting ``the 
portion of such amount which is not attributable to rollover 
contributions (as defined in section 411(a)(11)(D))''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2000.

SEC. 439. MINIMUM DISTRIBUTION AND INCLUSION REQUIREMENTS FOR SECTION 
              457 PLANS.

    (a) Minimum Distribution Requirements.--Paragraph (2) of section 
457(d) (relating to distribution requirements) is amended to read as 
follows:
            ``(2) Minimum distribution requirements.--A plan meets the 
        minimum distribution requirements of this paragraph if such 
        plan meets the requirements of section 401(a)(9).''.
    (b) Inclusion in Gross Income.--
            (1) Year of inclusion.--Subsection (a) of section 457 
        (relating to year of inclusion in gross income) is amended to 
        read as follows:
    ``(a) Year of Inclusion in Gross Income.--
            ``(1) In general.--Any amount of compensation deferred 
        under an eligible deferred compensation plan, and any income 
        attributable to the amounts so deferred, shall be includible in 
        gross income only for the taxable year in which such 
        compensation or other income--
                    ``(A) is paid to the participant or other 
                beneficiary, in the case of a plan of an eligible 
                employer described in subsection (e)(1)(A), and
                    ``(B) is paid or otherwise made available to the 
                participant or other beneficiary, in the case of a plan 
                of an eligible employer described in subsection 
                (e)(1)(B).
            ``(2) Special rule for rollover amounts.--To the extent 
        provided in section 72(t)(9), section 72(t) shall apply to any 
        amount includible in gross income under this subsection.''.
            (2) Conforming amendments.--
                    (A) So much of paragraph (9) of section 457(e) as 
                precedes subparagraph (A) is amended to read as 
                follows:
            ``(9) Benefits of tax exempt organization plans not treated 
        as made available by reason of certain elections, etc.--In the 
        case of an eligible deferred compensation plan of an employer 
        described in subsection (e)(1)(B)--''.
                    (B) Section 457(d) is amended by adding at the end 
                the following new paragraph:
            ``(3) Special rule for government plan.--An eligible 
        deferred compensation plan of an employer described in 
        subsection (e)(1)(A) shall not be treated as failing to meet 
        the requirements of this subsection solely by reason of making 
        a distribution described in subsection (e)(9)(A).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2000.

       Subtitle E--Strengthening Pension Security and Enforcement

SEC. 441. REPEAL OF 155 PERCENT OF CURRENT LIABILITY FUNDING LIMIT.

    (a) Amendments of Internal Revenue Code.--Section 412(c)(7) 
(relating to full-funding limitation) is amended--
            (1) by striking ``the applicable percentage'' in 
        subparagraph (A)(i)(I) and inserting ``in the case of plan 
        years beginning before January 1, 2004, the applicable 
        percentage''; and
            (2) by amending subparagraph (F) to read as follows:
                    ``(F) Applicable percentage.--For purposes of 
                subparagraph (A)(i)(I), the applicable percentage shall 
                be determined in accordance with the following table:

                ``In the case of any plan year
                                                         The applicable
                  beginning in--
                                                        percentage is--
                    2001...................................       160  
                    2002...................................       165  
                    2003...................................     170.''.
    (b) Amendment of ERISA.--Section 302(c)(7) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)(7)) is 
amended--
            (1) by striking ``the applicable percentage'' in 
        subparagraph (A)(i)(I) and inserting ``in the case of plan 
        years beginning before January 1, 2004, the applicable 
        percentage''; and
            (2) by amending subparagraph (F) to read as follows:
                    ``(F) Applicable percentage.--For purposes of 
                subparagraph (A)(i)(I), the applicable percentage shall 
                be determined in accordance with the following table:

                ``In the case of any plan year
                                                         The applicable
                  beginning in--
                                                        percentage is--
                    2001...................................       160  
                    2002...................................       165  
                    2003...................................     170.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2000.

SEC. 442. MAXIMUM CONTRIBUTION DEDUCTION RULES MODIFIED AND APPLIED TO 
              ALL DEFINED BENEFIT PLANS.

    (a) In General.--Subparagraph (D) of section 404(a)(1) (relating to 
special rule in case of certain plans) is amended to read as follows:
                    ``(D) Special rule in case of certain plans.--
                            ``(i) In general.--In the case of any 
                        defined benefit plan, except as provided in 
                        regulations, the maximum amount deductible 
                        under the limitations of this paragraph shall 
                        not be less than the unfunded termination 
                        liability (determined as if the proposed 
                        termination date referred to in section 
                        4041(b)(2)(A)(i)(II) of the Employee Retirement 
                        Income Security Act of 1974 were the last day 
                        of the plan year).
                            ``(ii) Plans with less than 100 
                        participants.--For purposes of this 
                        subparagraph, in the case of a plan which has 
                        less than 100 participants for the plan year, 
                        termination liability shall not include the 
                        liability attributable to benefit increases for 
                        highly compensated employees (as defined in 
                        section 414(q)) resulting from a plan amendment 
                        which is made or becomes effective, whichever 
                        is later, within the last 2 years before the 
                        termination date.
                            ``(iii) Rule for determining number of 
                        participants.--For purposes of determining 
                        whether a plan has more than 100 participants, 
                        all defined benefit plans maintained by the 
                        same employer (or any member of such employer's 
                        controlled group (within the meaning of section 
                        412(l)(8)(C))) shall be treated as one plan, 
                        but only employees of such member or employer 
                        shall be taken into account.
                            ``(iv) Plans maintained by professional 
                        service employers.--Clause (i) shall not apply 
                        to a plan described in section 4021(b)(13) of 
                        the Employee Retirement Income Security Act of 
                        1974.''.
    (b) Conforming Amendment.--Paragraph (6) of section 4972(c) is 
amended to read as follows:
            ``(6) Exceptions.--In determining the amount of 
        nondeductible contributions for any taxable year, there shall 
        not be taken into account so much of the contributions to one 
        or more defined contribution plans which are not deductible 
        when contributed solely because of section 404(a)(7) as does 
        not exceed the greater of--
                    ``(A) the amount of contributions not in excess of 
                6 percent of compensation (within the meaning of 
                section 404(a)) paid or accrued (during the taxable 
                year for which the contributions were made) to 
                beneficiaries under the plans, or
                    ``(B) the sum of--
                            ``(i) the amount of contributions described 
                        in section 401(m)(4)(A), plus
                            ``(ii) the amount of contributions 
                        described in section 402(g)(3)(A).
        For purposes of this paragraph, the deductible limits under 
        section 404(a)(7) shall first be applied to amounts contributed 
        to a defined benefit plan and then to amounts described in 
        subparagraph (B).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2000.

SEC. 443. EXCISE TAX RELIEF FOR SOUND PENSION FUNDING.

    (a) In General.--Subsection (c) of section 4972 (relating to 
nondeductible contributions) is amended by adding at the end the 
following new paragraph:
            ``(7) Defined benefit plan exception.--In determining the 
        amount of nondeductible contributions for any taxable year, an 
        employer may elect for such year not to take into account any 
        contributions to a defined benefit plan except to the extent 
        that such contributions exceed the full-funding limitation (as 
        defined in section 412(c)(7), determined without regard to 
        subparagraph (A)(i)(I) thereof). For purposes of this 
        paragraph, the deductible limits under section 404(a)(7) shall 
        first be applied to amounts contributed to defined contribution 
        plans and then to amounts described in this paragraph. If an 
        employer makes an election under this paragraph for a taxable 
        year, paragraph (6) shall not apply to such employer for such 
        taxable year.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 2000.

SEC. 444. EXCISE TAX ON FAILURE TO PROVIDE NOTICE BY DEFINED BENEFIT 
              PLANS SIGNIFICANTLY REDUCING FUTURE BENEFIT ACCRUALS.

    (a) Amendment of Internal Revenue Code.--
            (1) In general.--Chapter 43 (relating to qualified pension, 
        etc., plans) is amended by adding at the end the following new 
        section:

``SEC. 4980F. FAILURE OF APPLICABLE PLANS REDUCING BENEFIT ACCRUALS TO 
              SATISFY NOTICE REQUIREMENTS.

    ``(a) Imposition of Tax.--There is hereby imposed a tax on the 
failure of any applicable pension plan to meet the requirements of 
subsection (e) with respect to any applicable individual.
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of the tax imposed by 
        subsection (a) on any failure with respect to any applicable 
        individual shall be $100 for each day in the noncompliance 
        period with respect to such failure.
            ``(2) Noncompliance period.--For purposes of this section, 
        the term `noncompliance period' means, with respect to any 
        failure, the period beginning on the date the failure first 
        occurs and ending on the date the notice to which the failure 
        relates is provided or the failure is otherwise corrected.
    ``(c) Limitations on Amount of Tax.--
            ``(1) Tax not to apply where failure not discovered and 
        reasonable diligence exercised.--No tax shall be imposed by 
        subsection (a) on any failure during any period for which it is 
        established to the satisfaction of the Secretary that any 
        person subject to liability for the tax under subsection (d) 
        did not know that the failure existed and exercised reasonable 
        diligence to meet the requirements of subsection (e).
            ``(2) Tax not to apply to failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) on any failure 
        if--
                    ``(A) any person subject to liability for the tax 
                under subsection (d) exercised reasonable diligence to 
                meet the requirements of subsection (e), and
                    ``(B) such person provides the notice described in 
                subsection (e) during the 30-day period beginning on 
                the first date such person knew, or exercising 
                reasonable diligence would have known, that such 
                failure existed.
            ``(3) Overall limitation for unintentional failures.--
                    ``(A) In general.--If the person subject to 
                liability for tax under subsection (d) exercised 
                reasonable diligence to meet the requirements of 
                subsection (e), the tax imposed by subsection (a) for 
                failures during the taxable year of the employer (or, 
                in the case of a multiemployer plan, the taxable year 
                of the trust forming part of the plan) shall not exceed 
                $500,000. For purposes of the preceding sentence, all 
                multiemployer plans of which the same trust forms a 
                part shall be treated as 1 plan.
                    ``(B) Taxable years in the case of certain 
                controlled groups.--For purposes of this paragraph, if 
                all persons who are treated as a single employer for 
                purposes of this section do not have the same taxable 
                year, the taxable years taken into account shall be 
                determined under principles similar to the principles 
                of section 1561.
            ``(4) Waiver by secretary.--In the case of a failure which 
        is due to reasonable cause and not to willful neglect, the 
        Secretary may waive part or all of the tax imposed by 
        subsection (a) to the extent that the payment of such tax would 
        be excessive or otherwise inequitable relative to the failure 
        involved.
    ``(d) Liability for Tax.--The following shall be liable for the tax 
imposed by subsection (a):
            ``(1) In the case of a plan other than a multiemployer 
        plan, the employer.
            ``(2) In the case of a multiemployer plan, the plan.
    ``(e) Notice Requirements for Plans Significantly Reducing Benefit 
Accruals.--
            ``(1) In general.--If an applicable pension plan is amended 
        to provide for a significant reduction in the rate of future 
        benefit accrual, the plan administrator shall provide written 
        notice to each applicable individual (and to each employee 
        organization representing applicable individuals).
            ``(2) Notice.--The notice required by paragraph (1) shall 
        be written in a manner calculated to be understood by the 
        average plan participant and shall provide sufficient 
        information (as determined in accordance with regulations 
        prescribed by the Secretary) to allow applicable individuals to 
        understand the effect of the plan amendment. The Secretary may 
        provide a simplified form of notice for, or exempt from any 
        notice requirement, a plan--
                    ``(A) which has fewer than 100 participants who 
                have accrued a benefit under the plan, or
                    ``(B) which offers participants the option to 
                choose between the new benefit formula and the old 
                benefit formula.
            ``(3) Timing of notice.--Except as provided in regulations, 
        the notice required by paragraph (1) shall be provided within a 
        reasonable time before the effective date of the plan 
        amendment.
            ``(4) Designees.--Any notice under paragraph (1) may be 
        provided to a person designated, in writing, by the person to 
        which it would otherwise be provided.
            ``(5) Notice before adoption of amendment.--A plan shall 
        not be treated as failing to meet the requirements of paragraph 
        (1) merely because notice is provided before the adoption of 
        the plan amendment if no material modification of the amendment 
        occurs before the amendment is adopted.
    ``(f) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Applicable individual.--The term `applicable 
        individual' means, with respect to any plan amendment--
                    ``(A) each participant in the plan, and
                    ``(B) any beneficiary who is an alternate payee 
                (within the meaning of section 414(p)(8)) under an 
                applicable qualified domestic relations order (within 
                the meaning of section 414(p)(1)(A)),
                whose rate of future benefit accrual under the plan may 
                reasonably be expected to be significantly reduced by 
                such plan amendment.
            ``(2) Applicable pension plan.--The term `applicable 
        pension plan' means--
                    ``(A) any defined benefit plan, or
                    ``(B) an individual account plan which is subject 
                to the funding standards of section 412.
        Such term shall not include a governmental plan (within the 
        meaning of section 414(d)) or a church plan (within the meaning 
        of section 414(e)) with respect to which the election provided 
        by section 410(d) has not been made.
            ``(3) Early retirement.--A plan amendment which eliminates 
        or significantly reduces any early retirement benefit or 
        retirement-type subsidy (within the meaning of section 
        411(d)(6)(B)(i)) shall be treated as having the effect of 
        significantly reducing the rate of future benefit accrual.
    ``(g) New Technologies.--The Secretary may by regulations allow any 
notice under paragraph (1) or (2) of subsection (e) to be provided by 
using new technologies.''
            (2) Clerical amendment.--The table of sections for chapter 
        43 is amended by adding at the end the following new item:

                               ``Sec. 4980F. Failure of applicable 
                                        plans reducing benefit accruals 
                                        to satisfy notice 
                                        requirements.''.
    (b) Amendment of ERISA.--Section 204(h) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1054(h)) is amended by adding at 
the end the following new paragraphs:
    ``(3)(A) An applicable pension plan to which paragraph (1) applies 
shall not be treated as meeting the requirements of such paragraph 
unless, in addition to any notice required to be provided to an 
individual or organization under such paragraph, the plan administrator 
provides the notice described in subparagraph (B) to each applicable 
individual (and to each employee organization representing applicable 
individuals).
    ``(B) The notice required by subparagraph (A) shall be written in a 
manner calculated to be understood by the average plan participant and 
shall provide sufficient information (as determined in accordance with 
regulations prescribed by the Secretary of the Treasury) to allow 
applicable individuals to understand the effect of the plan amendment. 
The Secretary of the Treasury may provide a simplified form of notice 
for, or exempt from any notice requirement, a plan--
            ``(i) which has fewer than 100 participants who have 
        accrued a benefit under the plan, or
            ``(ii) which offers participants the option to choose 
        between the new benefit formula and the old benefit formula.
    ``(C) Except as provided in regulations prescribed by the Secretary 
of the Treasury, the notice required by subparagraph (A) shall be 
provided within a reasonable time before the effective date of the plan 
amendment.
    ``(D) Any notice under subparagraph (A) may be provided to a person 
designated, in writing, by the person to which it would otherwise be 
provided.
    ``(E) A plan shall not be treated as failing to meet the 
requirements of subparagraph (A) merely because notice is provided 
before the adoption of the plan amendment if no material modification 
of the amendment occurs before the amendment is adopted.
    ``(F) The Secretary of the Treasury may by regulations allow any 
notice under subparagraph (A) or (B) to be provided by using new 
technologies.
    ``(4) For purposes of paragraph (3)--
            ``(A) The term `applicable individual' means, with respect 
        to any plan amendment--
                    ``(i) each participant in the plan; and
                    ``(ii) any beneficiary who is an alternate payee 
                (within the meaning of section 206(d)(3)(K)) under an 
                applicable qualified domestic relations order (within 
                the meaning of section 206(d)(3)(B)(i)),
        whose rate of future benefit accrual under the plan may 
        reasonably be expected to be significantly reduced by such plan 
        amendment.
            ``(B) The term `applicable pension plan' means--
                    ``(i) any defined benefit plan; or
                    ``(ii) an individual account plan which is subject 
                to the funding standards of section 412 of the Internal 
                Revenue Code of 1986.
            ``(C) A plan amendment which eliminates or significantly 
        reduces any early retirement benefit or retirement-type subsidy 
        (within the meaning of subsection (g)(2)(A)) shall be treated 
        as having the effect of significantly reducing the rate of 
        future benefit accrual.''.
    (c) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to plan amendments taking effect on or after the date of 
        the enactment of this Act.
            (2) Transition.--Until such time as the Secretary of the 
        Treasury issues regulations under sections 4980F(e)(2) and (3) 
        of the Internal Revenue Code of 1986 and section 204(h)(3) of 
        the Employee Retirement Income Security Act of 1974 (as added 
        by the amendments made by this section), a plan shall be 
        treated as meeting the requirements of such sections if it 
        makes a good faith effort to comply with such requirements.
            (3) Special notice rules.--
                    (A) In general.--The period for providing any 
                notice required by the amendments made by this section 
                shall not end before the date which is 3 months after 
                the date of the enactment of this Act.
                    (B) Reasonable notice.--The amendments made by this 
                section shall not apply to any plan amendment taking 
                effect on or after the date of the enactment of this 
                Act if, before October 25, 2000, notice was provided to 
                participants and beneficiaries adversely affected by 
                the plan amendment (or their representatives) which was 
                reasonably expected to notify them of the nature and 
                effective date of the plan amendment.
    (d) Study.--The Secretary of the Treasury shall prepare a report on 
the effects of conversions of traditional defined benefit plans to cash 
balance or hybrid formula plans. Such study shall examine the effect of 
such conversions on longer service participants, including the 
incidence and effects of ``wear away'' provisions under which 
participants earn no additional benefits for a period of time after the 
conversion. As soon as practicable, but not later than 60 days after 
the date of the enactment of this Act, the Secretary shall submit such 
report, together with recommendations thereon, to the Committee on Ways 
and Means and the Committee on Education and the Workforce of the House 
of Representatives and the Committee on Finance and the Committee on 
Health, Education, Labor, and Pensions of the Senate.

SEC. 445. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.

    (a) Compensation Limit.--
            (1) In general.--Paragraph (11) of section 415(b) (relating 
        to limitation for defined benefit plans) is amended to read as 
        follows:
            ``(11) Special limitation rule for governmental and 
        multiemployer plans.--In the case of a governmental plan (as 
        defined in section 414(d)) or a multiemployer plan (as defined 
        in section 414(f)), subparagraph (B) of paragraph (1) shall not 
        apply.''.
            (2) Conforming amendment.--Section 415(b)(7) (relating to 
        benefits under certain collectively bargained plans) is amended 
        by inserting ``(other than a multiemployer plan)'' after 
        ``defined benefit plan'' in the matter preceding subparagraph 
        (A).
    (b) Combining and Aggregation of Plans.--
            (1) Combining of plans.--Subsection (f) of section 415 
        (relating to combining of plans) is amended by adding at the 
        end the following:
            ``(3) Exception for multiemployer plans.--Notwithstanding 
        paragraph (1) and subsection (g), a multiemployer plan (as 
        defined in section 414(f)) shall not be combined or 
        aggregated--
                    ``(A) with any other plan which is not a 
                multiemployer plan for purposes of applying subsection 
                (b)(1)(B) to such other plan, or
                    ``(B) with any other multiemployer plan for 
                purposes of applying the limitations established in 
                this section.''.
            (2) Conforming amendment for aggregation of plans.--
        Subsection (g) of section 415 (relating to aggregation of 
        plans) is amended by striking ``The Secretary'' and inserting 
        ``Except as provided in subsection (f)(3), the Secretary''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 446. PROTECTION OF INVESTMENT OF EMPLOYEE CONTRIBUTIONS TO 401(K) 
              PLANS.

    (a) In General.--Section 1524(b) of the Taxpayer Relief Act of 1997 
is amended to read as follows:
    ``(b) Effective Date.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to elective 
        deferrals for plan years beginning after December 31, 1998.
            ``(2) Nonapplication to previously acquired property.--The 
        amendments made by this section shall not apply to any elective 
        deferral which is invested in assets consisting of qualifying 
        employer securities, qualifying employer real property, or 
        both, if such assets were acquired before January 1, 1999.''.
    (b) Effective Date.--The amendment made by this section shall apply 
as if included in the provision of the Taxpayer Relief Act of 1997 to 
which it relates.

SEC. 447. PERIODIC PENSION BENEFITS STATEMENTS.

    (a) In General.--Section 105(a) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1025 (a)) is amended to read as 
follows:
    ``(a)(1) Except as provided in paragraph (2)--
            ``(A) the administrator of an individual account plan shall 
        furnish a pension benefit statement--
                    ``(i) to a plan participant at least once annually, 
                and
                    ``(ii) to a plan beneficiary upon written request, 
                and
            ``(B) the administrator of a defined benefit plan shall 
        furnish a pension benefit statement--
                    ``(i) at least once every 3 years to each 
                participant with a nonforfeitable accrued benefit who 
                is employed by the employer maintaining the plan at the 
                time the statement is furnished to participants, and
                    ``(ii) to a plan participant or plan beneficiary of 
                the plan upon written request.
    ``(2) Notwithstanding paragraph (1), the administrator of a plan to 
which more than 1 unaffiliated employer is required to contribute shall 
only be required to furnish a pension benefit statement under paragraph 
(1) upon the written request of a participant or beneficiary of the 
plan.
    ``(3) A pension benefit statement under paragraph (1)--
            ``(A) shall indicate, on the basis of the latest available 
        information--
                    ``(i) the total benefits accrued, and
                    ``(ii) the nonforfeitable pension benefits, if any, 
                which have accrued, or the earliest date on which 
                benefits will become nonforfeitable,
            ``(B) shall be written in a manner calculated to be 
        understood by the average plan participant, and
            ``(C) may be provided in written, electronic, telephonic, 
        or other appropriate form.
    ``(4)(A) In the case of a defined benefit plan, the requirements of 
paragraph (1)(B)(i) shall be treated as met with respect to a 
participant if the administrator provides the participant at least once 
each year with notice of the availability of the pension benefit 
statement and the ways in which the participant may obtain such 
statement. Such notice shall be provided in written, electronic, 
telephonic, or other appropriate form, and may be included with other 
communications to the participant if done in a manner reasonably 
designed to attract the attention of the participant.
    ``(B) The Secretary may provide that years in which no employee or 
former employee benefits (within the meaning of section 410(b) of the 
Internal Revenue Code of 1986) under the plan need not be taken into 
account in determining the 3-year period under paragraph (1)(B)(i).''.
    (b) Conforming Amendments.--
            (1) Section 105 of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1025) is amended by striking subsection 
        (d).
            (2) Section 105(b) of such Act (29 U.S.C. 1025(b)) is 
        amended to read as follows:
    ``(b) In no case shall a participant or beneficiary of a plan be 
entitled to more than one statement described in subsection (a)(1)(A) 
or (a)(1)(B)(ii), whichever is applicable, in any 12-month period.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2001.

SEC. 448. PROHIBITED ALLOCATIONS OF STOCK IN S CORPORATION ESOP.

    (a) In General.--Section 409 (relating to qualifications for tax 
credit employee stock ownership plans) is amended by redesignating 
subsection (p) as subsection (q) and by inserting after subsection (o) 
the following new subsection:
    ``(p) Prohibited Allocations of Securities in an S Corporation.--
            ``(1) In general.--An employee stock ownership plan holding 
        employer securities consisting of stock in an S corporation 
        shall provide that no portion of the assets of the plan 
        attributable to (or allocable in lieu of) such employer 
        securities may, during a nonallocation year, accrue (or be 
        allocated directly or indirectly under any plan of the employer 
        meeting the requirements of section 401(a)) for the benefit of 
        any disqualified person.
            ``(2) Failure to meet requirements.--
                    ``(A) In general.--If a plan fails to meet the 
                requirements of paragraph (1), the plan shall be 
                treated as having distributed to any disqualified 
                person the amount allocated to the account of such 
                person in violation of paragraph (1) at the time of 
                such allocation.
                    ``(B) Cross reference.--

                                ``For excise tax relating to violations 
of paragraph (1) and ownership of synthetic equity, see section 4979A.
            ``(3) Nonallocation year.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `nonallocation year' 
                means any plan year of an employee stock ownership plan 
                if, at any time during such plan year--
                            ``(i) such plan holds employer securities 
                        consisting of stock in an S corporation, and
                            ``(ii) disqualified persons own at least 50 
                        percent of the number of shares of stock in the 
                        S corporation.
                    ``(B) Attribution rules.--For purposes of 
                subparagraph (A)--
                            ``(i) In general.--The rules of section 
                        318(a) shall apply for purposes of determining 
                        ownership, except that--
                                    ``(I) in applying paragraph (1) 
                                thereof, the members of an individual's 
                                family shall include members of the 
                                family described in paragraph (4)(D), 
                                and
                                    ``(II) paragraph (4) thereof shall 
                                not apply.
                            ``(ii) Deemed-owned shares.--
                        Notwithstanding the employee trust exception in 
                        section 318(a)(2)(B)(i), an individual shall be 
                        treated as owning deemed-owned shares of the 
                        individual.
                Solely for purposes of applying paragraph (5), this 
                subparagraph shall be applied after the attribution 
                rules of paragraph (5) have been applied.
            ``(4) Disqualified person.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `disqualified person' 
                means any person if--
                            ``(i) the aggregate number of deemed-owned 
                        shares of such person and the members of such 
                        person's family is at least 20 percent of the 
                        number of deemed-owned shares of stock in the S 
                        corporation, or
                            ``(ii) in the case of a person not 
                        described in clause (i), the number of deemed-
                        owned shares of such person is at least 10 
                        percent of the number of deemed-owned shares of 
                        stock in such corporation.
                    ``(B) Treatment of family members.--In the case of 
                a disqualified person described in subparagraph (A)(i), 
                any member of such person's family with deemed-owned 
                shares shall be treated as a disqualified person if not 
                otherwise treated as a disqualified person under 
                subparagraph (A).
                    ``(C) Deemed-owned shares.--
                            ``(i) In general.--The term `deemed-owned 
                        shares' means, with respect to any person--
                                    ``(I) the stock in the S 
                                corporation constituting employer 
                                securities of an employee stock 
                                ownership plan which is allocated to 
                                such person under the plan, and
                                    ``(II) such person's share of the 
                                stock in such corporation which is held 
                                by such plan but which is not allocated 
                                under the plan to participants.
                            ``(ii) Person's share of unallocated 
                        stock.--For purposes of clause (i)(II), a 
                        person's share of unallocated S corporation 
                        stock held by such plan is the amount of the 
                        unallocated stock which would be allocated to 
                        such person if the unallocated stock were 
                        allocated to all participants in the same 
                        proportions as the most recent stock allocation 
                        under the plan.
                    ``(D) Member of family.--For purposes of this 
                paragraph, the term `member of the family' means, with 
                respect to any individual--
                            ``(i) the spouse of the individual,
                            ``(ii) an ancestor or lineal descendant of 
                        the individual or the individual's spouse,
                            ``(iii) a brother or sister of the 
                        individual or the individual's spouse and any 
                        lineal descendant of the brother or sister, and
                            ``(iv) the spouse of any individual 
                        described in clause (ii) or (iii).
                A spouse of an individual who is legally separated from 
                such individual under a decree of divorce or separate 
                maintenance shall not be treated as such individual's 
                spouse for purposes of this subparagraph.
            ``(5) Treatment of synthetic equity.--For purposes of 
        paragraphs (3) and (4), in the case of a person who owns 
        synthetic equity in the S corporation, except to the extent 
        provided in regulations, the shares of stock in such 
        corporation on which such synthetic equity is based shall be 
        treated as outstanding stock in such corporation and deemed-
        owned shares of such person if such treatment of synthetic 
        equity of 1 or more such persons results in--
                    ``(A) the treatment of any person as a disqualified 
                person, or
                    ``(B) the treatment of any year as a nonallocation 
                year.
        For purposes of this paragraph, synthetic equity shall be 
        treated as owned by a person in the same manner as stock is 
        treated as owned by a person under the rules of paragraphs (2) 
        and (3) of section 318(a). If, without regard to this 
        paragraph, a person is treated as a disqualified person or a 
        year is treated as a nonallocation year, this paragraph shall 
        not be construed to result in the person or year not being so 
        treated.
            ``(6) Definitions.--For purposes of this subsection--
                    ``(A) Employee stock ownership plan.--The term 
                `employee stock ownership plan' has the meaning given 
                such term by section 4975(e)(7).
                    ``(B) Employer securities.--The term `employer 
                security' has the meaning given such term by section 
                409(l).
                    ``(C) Synthetic equity.--The term `synthetic 
                equity' means any stock option, warrant, restricted 
                stock, deferred issuance stock right, or similar 
                interest or right that gives the holder the right to 
                acquire or receive stock of the S corporation in the 
                future. Except to the extent provided in regulations, 
                synthetic equity also includes a stock appreciation 
                right, phantom stock unit, or similar right to a future 
                cash payment based on the value of such stock or 
                appreciation in such value.
            ``(7) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to carry out the purposes of 
        this subsection.''.
    (b) Coordination With Section 4975(e)(7).--The last sentence of 
section 4975(e)(7) (defining employee stock ownership plan) is amended 
by inserting ``, section 409(p),'' after ``409(n)''.
    (c) Excise Tax.--
            (1) Application of tax.--Subsection (a) of section 4979A 
        (relating to tax on certain prohibited allocations of employer 
        securities) is amended--
                    (A) by striking ``or'' at the end of paragraph (1); 
                and
                    (B) by striking all that follows paragraph (2) and 
                inserting the following:
            ``(3) there is any allocation of employer securities which 
        violates the provisions of section 409(p), or a nonallocation 
        year described in subsection (e)(2)(C) with respect to an 
        employee stock ownership plan, or
            ``(4) any synthetic equity is owned by a disqualified 
        person in any nonallocation year,
there is hereby imposed a tax on such allocation or ownership equal to 
50 percent of the amount involved.''.
            (2) Liability.--Section 4979A(c) (defining liability for 
        tax) is amended to read as follows:
    ``(c) Liability for Tax.--The tax imposed by this section shall be 
paid--
            ``(1) in the case of an allocation referred to in paragraph 
        (1) or (2) of subsection (a), by--
                    ``(A) the employer sponsoring such plan, or
                    ``(B) the eligible worker-owned cooperative,
        which made the written statement described in section 
        664(g)(1)(E) or in section 1042(b)(3)(B) (as the case may be), 
        and
            ``(2) in the case of an allocation or ownership referred to 
        in paragraph (3) or (4) of subsection (a), by the S corporation 
        the stock in which was so allocated or owned.''.
            (3) Definitions.--Section 4979A(e) (relating to 
        definitions) is amended to read as follows:
    ``(e) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Definitions.--Except as provided in paragraph (2), 
        terms used in this section have the same respective meanings as 
        when used in sections 409 and 4978.
            ``(2) Special rules relating to tax imposed by reason of 
        paragraph (3) or (4) of subsection (a).--
                    ``(A) Prohibited allocations.--The amount involved 
                with respect to any tax imposed by reason of subsection 
                (a)(3) is the amount allocated to the account of any 
                person in violation of section 409(p)(1).
                    ``(B) Synthetic equity.--The amount involved with 
                respect to any tax imposed by reason of subsection 
                (a)(4) is the value of the shares on which the 
                synthetic equity is based.
                    ``(C) Special rule during first nonallocation 
                year.--For purposes of subparagraph (A), the amount 
                involved for the first nonallocation year of any 
                employee stock ownership plan shall be determined by 
                taking into account the total value of all the deemed-
                owned shares of all disqualified persons with respect 
                to such plan.
                    ``(D) Statute of limitations.--The statutory period 
                for the assessment of any tax imposed by this section 
                by reason of paragraph (3) or (4) of subsection (a) 
                shall not expire before the date which is 3 years from 
                the later of--
                            ``(i) the allocation or ownership referred 
                        to in such paragraph giving rise to such tax, 
                        or
                            ``(ii) the date on which the Secretary is 
                        notified of such allocation or ownership.''.
    (d) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after December 31, 2001.
            (2) Exception for certain plans.--In the case of any--
                    (A) employee stock ownership plan established after 
                July 11, 2000; or
                    (B) employee stock ownership plan established on or 
                before such date if employer securities held by the 
                plan consist of stock in a corporation with respect to 
                which an election under section 1362(a) of the Internal 
                Revenue Code of 1986 is not in effect on such date,
        the amendments made by this section shall apply to plan years 
        ending after July 11, 2000.

                Subtitle F--Reducing Regulatory Burdens

SEC. 451. MODIFICATION OF TIMING OF PLAN VALUATIONS.

    (a) In General.--Paragraph (9) of section 412(c) (relating to 
annual valuation) is amended to read as follows:
            ``(9) Annual valuation.--
                    ``(A) In general.--For purposes of this section, a 
                determination of experience gains and losses and a 
                valuation of the plan's liability shall be made not 
                less frequently than once every year, except that such 
                determination shall be made more frequently to the 
                extent required in particular cases under regulations 
                prescribed by the Secretary.
                    ``(B) Valuation date.--
                            ``(i) Current year.--Except as provided in 
                        clause (ii), the valuation referred to in 
                        subparagraph (A) shall be made as of a date 
                        within the plan year to which the valuation 
                        refers or within one month prior to the 
                        beginning of such year.
                            ``(ii) Election to use prior year 
                        valuation.--The valuation referred to in 
                        subparagraph (A) may be made as of a date 
                        within the plan year prior to the year to which 
                        the valuation refers if--
                                    ``(I) an election is in effect 
                                under this clause with respect to the 
                                plan, and
                                    ``(II) as of such date, the value 
                                of the assets of the plan are not less 
                                than 125 percent of the plan's current 
                                liability (as defined in paragraph 
                                (7)(B)).
                            ``(iii) Adjustments.--Information under 
                        clause (ii) shall, in accordance with 
                        regulations, be actuarially adjusted to reflect 
                        significant differences in participants.
                            ``(iv) Election.--An election under clause 
                        (ii), once made, shall be irrevocable without 
                        the consent of the Secretary.''.
    (b) Amendment of ERISA.--Paragraph (9) of section 302(c) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1053(c)) is 
amended--
            (1) by inserting ``(A)'' after ``(9)''; and
            (2) by adding at the end the following:
    ``(B)(i) Except as provided in clause (ii), the valuation referred 
to in subparagraph (A) shall be made as of a date within the plan year 
to which the valuation refers or within one month prior to the 
beginning of such year.
    ``(ii) The valuation referred to in subparagraph (A) may be made as 
of a date within the plan year prior to the year to which the valuation 
refers if--
            ``(I) an election is in effect under this clause with 
        respect to the plan; and
            ``(II) as of such date, the value of the assets of the plan 
        are not less than 125 percent of the plan's current liability 
        (as defined in paragraph (7)(B)).
    ``(iii) Information under clause (ii) shall, in accordance with 
regulations, be actuarially adjusted to reflect significant differences 
in participants.
    ``(iv) An election under clause (ii), once made, shall be 
irrevocable without the consent of the Secretary of the Treasury.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2000.

SEC. 452. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT LOSS OF DIVIDEND 
              DEDUCTION.

    (a) In General.--Section 404(k)(2)(A) (defining applicable 
dividends) is amended by striking ``or'' at the end of clause (ii), by 
redesignating clause (iii) as clause (iv), and by inserting after 
clause (ii) the following new clause:
                            ``(iii) is, at the election of such 
                        participants or their beneficiaries--
                                    ``(I) payable as provided in clause 
                                (i) or (ii), or
                                    ``(II) paid to the plan and 
                                reinvested in qualifying employer 
                                securities, or''.
    (b) Standard for Disallowance.--Section 404(k)(5)(A) (relating to 
disallowance of deduction) is amended by inserting ``avoidance or'' 
before ``evasion''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 453. REPEAL OF TRANSITION RULE RELATING TO CERTAIN HIGHLY 
              COMPENSATED EMPLOYEES.

    (a) In General.--Paragraph (4) of section 1114(c) of the Tax Reform 
Act of 1986 is hereby repealed.
    (b) Effective Date.--The repeal made by subsection (a) shall apply 
to plan years beginning after December 31, 2000.

SEC. 454. EMPLOYEES OF TAX-EXEMPT ENTITIES.

    (a) In General.--The Secretary of the Treasury shall modify 
Treasury Regulations section 1.410(b)-6(g) to provide that employees of 
an organization described in section 403(b)(1)(A)(i) of the Internal 
Revenue Code of 1986 who are eligible to make contributions under 
section 403(b) of such Code pursuant to a salary reduction agreement 
may be treated as excludable with respect to a plan under section 
401(k) or (m) of such Code that is provided under the same general 
arrangement as a plan under such section 401(k), if--
            (1) no employee of an organization described in section 
        403(b)(1)(A)(i) of such Code is eligible to participate in such 
        section 401(k) plan or section 401(m) plan; and
            (2) 95 percent of the employees who are not employees of an 
        organization described in section 403(b)(1)(A)(i) of such Code 
        are eligible to participate in such plan under such section 
        401(k) or (m).
    (b) Effective Date.--The modification required by subsection (a) 
shall apply as of the same date set forth in section 1426(b) of the 
Small Business Job Protection Act of 1996.

SEC. 455. CLARIFICATION OF TREATMENT OF EMPLOYER-PROVIDED RETIREMENT 
              ADVICE.

    (a) In General.--Subsection (a) of section 132 (relating to 
exclusion from gross income) 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) qualified retirement planning services.''.
    (b) Qualified Retirement Planning Services Defined.--Section 132 is 
amended by redesignating subsection (m) as subsection (n) and by 
inserting after subsection (l) the following:
    ``(m) Qualified Retirement Planning Services.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified retirement planning services' means any retirement 
        planning advice or information provided to an employee and his 
        spouse by an employer maintaining a qualified employer plan.
            ``(2) Nondiscrimination rule.--Subsection (a)(7) shall 
        apply in the case of highly compensated employees only if such 
        services are available on substantially the same terms to each 
        member of the group of employees normally provided education 
        and information regarding the employer's qualified employer 
        plan.
            ``(3) Qualified employer plan.--For purposes of this 
        subsection, the term `qualified employer plan' means a plan, 
        contract, pension, or account described in section 
        219(g)(5).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 456. REPORTING SIMPLIFICATION.

    (a) Simplified Annual Filing Requirement for Owners and Their 
Spouses.--
            (1) In general.--The Secretary of the Treasury shall modify 
        the requirements for filing annual returns with respect to one-
        participant retirement plans to ensure that such plans with 
        assets of $250,000 or less as of the close of the plan year 
        need not file a return for that year.
            (2) One-participant retirement plan defined.--For purposes 
        of this subsection, the term ``one-participant retirement 
        plan'' means a retirement plan that--
                    (A) on the first day of the plan year--
                            (i) covered only the employer (and the 
                        employer's spouse) and the employer owned the 
                        entire business (whether or not incorporated); 
                        or
                            (ii) covered only one or more partners (and 
                        their spouses) in a business partnership 
                        (including partners in an S or C corporation);
                    (B) meets the minimum coverage requirements of 
                section 410(b) of the Internal Revenue Code of 1986 
                without being combined with any other plan of the 
                business that covers the employees of the business;
                    (C) does not provide benefits to anyone except the 
                employer (and the employer's spouse) or the partners 
                (and their spouses);
                    (D) does not cover a business that is a member of 
                an affiliated service group, a controlled group of 
                corporations, or a group of businesses under common 
                control; and
                    (E) does not cover a business that leases 
                employees.
            (3) Other definitions.--Terms used in paragraph (2) which 
        are also used in section 414 of the Internal Revenue Code of 
        1986 shall have the respective meanings given such terms by 
        such section.
    (b) Simplified Annual Filing Requirement for Plans With Fewer Than 
25 Employees.--In the case of plan years beginning after December 31, 
2001, the Secretary of the Treasury shall provide for the filing of a 
simplified annual return for any retirement plan which covers less than 
25 employees on the first day of a plan year and meets the requirements 
described in subparagraphs (B), (D), and (E) of subsection (a)(2).
    (c) Effective Date.--The provisions of this section shall take 
effect on January 1, 2001.

SEC. 457. IMPROVEMENT OF EMPLOYEE PLANS COMPLIANCE RESOLUTION SYSTEM.

    The Secretary of the Treasury shall continue to update and improve 
the Employee Plans Compliance Resolution System (or any successor 
program) giving special attention to--
            (1) increasing the awareness and knowledge of small 
        employers concerning the availability and use of the program;
            (2) taking into account special concerns and circumstances 
        that small employers face with respect to compliance and 
        correction of compliance failures;
            (3) extending the duration of the self-correction period 
        under the Administrative Policy Regarding Self-Correction for 
        significant compliance failures;
            (4) expanding the availability to correct insignificant 
        compliance failures under the Administrative Policy Regarding 
        Self-Correction during audit; and
            (5) assuring that any tax, penalty, or sanction that is 
        imposed by reason of a compliance failure is not excessive and 
        bears a reasonable relationship to the nature, extent, and 
        severity of the failure.

SEC. 458. REPEAL OF THE MULTIPLE USE TEST.

    (a) In General.--Paragraph (9) of section 401(m) is amended to read 
as follows:
            ``(9) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to carry out the purposes of 
        this subsection and subsection (k), including regulations 
        permitting appropriate aggregation of plans and 
        contributions.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 2000.

SEC. 459. FLEXIBILITY IN NONDISCRIMINATION, COVERAGE, AND LINE OF 
              BUSINESS RULES.

    (a) Nondiscrimination.--
            (1) In general.--The Secretary of the Treasury shall, by 
        regulation, provide that a plan shall be deemed to satisfy the 
        requirements of section 401(a)(4) of the Internal Revenue Code 
        of 1986 if such plan satisfies the facts and circumstances test 
        under section 401(a)(4) of such Code, as in effect before 
        January 1, 1994, but only if--
                    (A) the plan satisfies conditions prescribed by the 
                Secretary to appropriately limit the availability of 
                such test; and
                    (B) the plan is submitted to the Secretary for a 
                determination of whether it satisfies such test.
        Subparagraph (B) shall only apply to the extent provided by the 
        Secretary.
            (2) Effective dates.--
                    (A) Regulations.--The regulation required by 
                paragraph (1) shall apply to years beginning after 
                December 31, 2002.
                    (B) Conditions of availability.--Any condition of 
                availability prescribed by the Secretary under 
                paragraph (1)(A) shall not apply before the first year 
                beginning not less than 120 days after the date on 
                which such condition is prescribed.
    (b) Coverage Test.--
            (1) In general.--Section 410(b)(1) (relating to minimum 
        coverage requirements) is amended by adding at the end the 
        following:
                    ``(D) In the case that the plan fails to meet the 
                requirements of subparagraphs (A), (B) and (C), the 
                plan--
                            ``(i) satisfies subparagraph (B), as in 
                        effect immediately before the enactment of the 
                        Tax Reform Act of 1986,
                            ``(ii) is submitted to the Secretary for a 
                        determination of whether it satisfies the 
                        requirement described in clause (i), and
                            ``(iii) satisfies conditions prescribed by 
                        the Secretary by regulation that appropriately 
                        limit the availability of this subparagraph.
                Clause (ii) shall apply only to the extent provided by 
                the Secretary.''.
            (2) Effective dates.--
                    (A) In general.--The amendment made by paragraph 
                (1) shall apply to years beginning after December 31, 
                2002.
                    (B) Conditions of availability.--Any condition of 
                availability prescribed by the Secretary under 
                regulations prescribed by the Secretary under section 
                410(b)(1)(D) of the Internal Revenue Code of 1986 shall 
                not apply before the first year beginning not less than 
                120 days after the date on which such condition is 
                prescribed.
    (c) Line of Business Rules.--The Secretary of the Treasury shall, 
on or before December 31, 2002, modify the existing regulations issued 
under section 414(r) of the Internal Revenue Code of 1986 in order to 
expand (to the extent that the Secretary determines appropriate) the 
ability of a pension plan to demonstrate compliance with the line of 
business requirements based upon the facts and circumstances 
surrounding the design and operation of the plan, even though the plan 
is unable to satisfy the mechanical tests currently used to determine 
compliance.

SEC. 460. EXTENSION TO ALL GOVERNMENTAL PLANS OF MORATORIUM ON 
              APPLICATION OF CERTAIN NONDISCRIMINATION RULES APPLICABLE 
              TO STATE AND LOCAL PLANS.

    (a) In General.--
            (1) Subparagraph (G) of section 401(a)(5) and subparagraph 
        (H) of section 401(a)(26) are each amended by striking 
        ``section 414(d))'' and all that follows and inserting 
        ``section 414(d)).''.
            (2) Subparagraph (G) of section 401(k)(3) and paragraph (2) 
        of section 1505(d) of the Taxpayer Relief Act of 1997 are each 
        amended by striking ``maintained by a State or local government 
        or political subdivision thereof (or agency or instrumentality 
        thereof)''.
    (b) Conforming Amendments.--
            (1) The heading for subparagraph (G) of section 401(a)(5) 
        is amended to read as follows: ``Governmental plans''.
            (2) The heading for subparagraph (H) of section 401(a)(26) 
        is amended to read as follows: ``Exception for governmental 
        plans''.
            (3) Subparagraph (G) of section 401(k)(3) is amended by 
        inserting ``Governmental plans.--'' after ``(G)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 461. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

    (a) Expansion of Period.--
            (1) Amendment of internal revenue code.--
                    (A) In general.--Subparagraph (A) of section 
                417(a)(6) is amended by striking ``90-day'' and 
                inserting ``180-day''.
                    (B) Modification of regulations.--The Secretary of 
                the Treasury shall modify the regulations under 
                sections 402(f), 411(a)(11), and 417 of the Internal 
                Revenue Code of 1986 to substitute ``180 days'' for 
                ``90 days'' each place it appears in Treasury 
                Regulations sections 1.402(f)-1, 1.411(a)-11(c), and 
                1.417(e)-1(b).
            (2) Amendment of erisa.--Section 205(c)(7)(A) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1055(c)(7)(A)) is amended by striking ``90-day'' and inserting 
        ``180-day''.
            (3) Effective date.--The amendments made by paragraph 
        (1)(A) and (2) and the modifications required by paragraph 
        (1)(B) shall apply to years beginning after December 31, 2000.
    (b) Consent Regulation Inapplicable to Certain Distributions.--
            (1) In general.--The Secretary of the Treasury shall modify 
        the regulations under section 411(a)(11) of the Internal 
        Revenue Code of 1986 to provide that the description of a 
        participant's right, if any, to defer receipt of a distribution 
        shall also describe the consequences of failing to defer such 
        receipt.
            (2) Effective date.--The modifications required by 
        paragraph (1) shall apply to years beginning after December 31, 
        2000.
    (c) Disclosure of Optional Forms of Benefits.--
            (1) Regulations.--
                    (A) In general.--The Secretary of the Treasury 
                shall, not later than December 31, 2001, issue final 
                regulations under section 417(a)(3) of the Internal 
                Revenue Code of 1986 which provide that if--
                            (i) a defined benefit plan offers both a 
                        qualified joint and survivor annuity and a 
                        single sum optional form of benefit, and
                            (ii) the distributable amount under such 
                        single sum option is less than the present 
                        value (determined in accordance with section 
                        417(e) of such Code) of the qualified joint and 
                        survivor annuity commencing as of the same 
                        annuity starting date,
                the written explanation required by section 
                417(a)(3)(A) of such Code shall include sufficient 
                information to allow the participant to understand the 
                difference between the amount of the single sum and 
                such present value.
                    (B) Unmarried participants.--If the plan offers an 
                unmarried participant one or more annuity options that 
                are substantially more valuable than the qualified 
                joint and survivor annuity offered by the plan, the 
                comparison required under subparagraph (A) shall be 
                made between the single sum option and the most 
                valuable of the other annuity options offered by the 
                plan.
                    (C) Form.--Any information required under this 
                paragraph shall be provided in a manner calculated to 
                be reasonably understood by the average plan 
                participant.
            (2) Effective date.--Regulations issued under paragraph (1) 
        shall only apply to distributions made not earlier than 6 
        months after the date such regulations are issued.

SEC. 462. ANNUAL REPORT DISSEMINATION.

    (a) Report Available Through Electronic Means.--Section 104(b)(3) 
of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1024(b)(3)) is amended by adding at the end the following new sentence: 
``The requirement to furnish information under the previous sentence 
shall be satisfied if the administrator makes such information 
reasonably available through electronic means or other new 
technology.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to reports for years beginning after December 31, 1999.

SEC. 463. TECHNICAL CORRECTIONS TO SAVER ACT.

    Section 517 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1147) is amended--
            (1) in subsection (a), by striking ``2001 and 2005 on or 
        after September 1 of each year involved'' and inserting ``2001, 
        2005, and 2009 in the month of September of each year 
        involved'';
            (2) in subsection (b), by adding at the end the following 
        new sentence: ``To effectuate the purposes of this paragraph, 
        the Secretary may enter into a cooperative agreement, pursuant 
        to the Federal Grant and Cooperative Agreement Act of 1977 (31 
        U.S.C. 6301 et seq.), with the American Savings Education 
        Council.'';
            (3) in subsection (e)(2)--
                    (A) by striking ``Committee on Labor and Human 
                Resources'' in subparagraph (D) and inserting 
                ``Committee on Health, Education, Labor, and 
                Pensions'';
                    (B) by striking subparagraph (F) and inserting the 
                following:
                    ``(F) the Chairman and Ranking Member of the 
                Subcommittee on Labor, Health and Human Services, and 
                Education of the Committee on Appropriations of the 
                House of Representatives and the Chairman and Ranking 
                Member of the Subcommittee on Labor, Health and Human 
                Services, and Education of the Committee on 
                Appropriations of the Senate;'';
                    (C) by redesignating subparagraph (G) as 
                subparagraph (J); and
                    (D) by inserting after subparagraph (F) the 
                following new subparagraphs:
                    ``(G) the Chairman and Ranking Member of the 
                Committee on Finance of the Senate;
                    ``(H) the Chairman and Ranking Member of the 
                Committee on Ways and Means of the House of 
                Representatives;
                    ``(I) the Chairman and Ranking Member of the 
                Subcommittee on Employer-Employee Relations of the 
                Committee on Education and the Workforce of the House 
                of Representatives; and'';
            (4) in subsection (e)(3)(A)--
                    (A) by striking ``There shall be no more than 200 
                additional participants.'' and inserting ``The 
                participants in the National Summit shall also include 
                additional participants appointed under this 
                subparagraph.'';
                    (B) by striking ``one-half shall be appointed by 
                the President,'' in clause (i) and inserting ``not more 
                than 100 participants shall be appointed under this 
                clause by the President,'', and by striking ``and'' at 
                the end of clause (i);
                    (C) by striking ``one-half shall be appointed by 
                the elected leaders of Congress'' in clause (ii) and 
                inserting ``not more than 100 participants shall be 
                appointed under this clause by the elected leaders of 
                Congress'', and by striking the period at the end of 
                clause (ii) and inserting ``; and'';
                    (D) by adding at the end the following new clause:
                            ``(iii) The President, in consultation with 
                        the elected leaders of Congress referred to in 
                        subsection (a), may appoint under this clause 
                        additional participants to the National Summit. 
                        The number of such additional participants 
                        appointed under this clause may not exceed the 
                        lesser of 3 percent of the total number of all 
                        additional participants appointed under this 
                        paragraph, or 10. Such additional participants 
                        shall be appointed from persons nominated by 
                        the organization referred to in subsection 
                        (b)(2) which is made up of private sector 
                        businesses and associations partnered with 
                        Government entities to promote long term 
                        financial security in retirement through 
                        savings and with which the Secretary is 
                        required thereunder to consult and cooperate 
                        and shall not be Federal, State, or local 
                        government employees.'';
            (5) in subsection (e)(3)(B), by striking ``January 31, 
        1998'' in subparagraph (B) and inserting ``May 1, 2001, May 1, 
        2005, and May 1, 2009, for each of the subsequent summits, 
        respectively'';
            (6) in subsection (f)(1)(C), by inserting ``, no later than 
        90 days prior to the date of the commencement of the National 
        Summit,'' after ``comment'' in paragraph (1)(C);
            (7) in subsection (g), by inserting ``, in consultation 
        with the congressional leaders specified in subsection 
        (e)(2),'' after ``report'';
            (8) in subsection (i)--
                    (A) by striking ``beginning on or after October 1, 
                1997'' in paragraph (1) and inserting ``2001, 2005, and 
                2009''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(3) Reception and representation authority.--The 
        Secretary is hereby granted reception and representation 
        authority limited specifically to the events at the National 
        Summit. The Secretary shall use any private contributions 
        accepted in connection with the National Summit prior to using 
        funds appropriated for purposes of the National Summit pursuant 
        to this paragraph.''; and
            (9) in subsection (k)--
                    (A) by striking ``shall enter into a contract on a 
                sole-source basis'' and inserting ``may enter into a 
                contract on a sole-source basis''; and
                    (B) by striking ``fiscal year 1998'' and inserting 
                ``fiscal years 2001, 2005, and 2009''.

SEC. 464. STUDY OF PENSION COVERAGE.

    Not later than 5 years after the date of the enactment of this Act, 
the Secretary of the Treasury shall submit a report to the Committee on 
Ways and Means of the House of Representatives and the Committee on 
Finance of the Senate a report on the effect of the provisions of the 
Retirement Savings and Pension Coverage Act of 2000 on pension 
coverage, including--
            (1) any expansion of coverage for low- and middle-income 
        workers;
            (2) levels of pension benefits;
            (3) quality of pension coverage;
            (4) worker's access to and participation in plans; and
            (5) retirement security.

                   Subtitle G--Other ERISA Provisions

SEC. 471. MISSING PARTICIPANTS.

    (a) In General.--Section 4050 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1350) is amended by redesignating 
subsection (c) as subsection (e) and by inserting after subsection (b) 
the following new subsection:
    ``(c) Multiemployer Plans.--The corporation shall prescribe rules 
similar to the rules in subsection (a) for multiemployer plans covered 
by this title that terminate under section 4041A.
    ``(d) Plans Not Otherwise Subject to Title.--
            ``(1) Transfer to corporation.--The plan administrator of a 
        plan described in paragraph (4) may elect to transfer a missing 
        participant's benefits to the corporation upon termination of 
        the plan.
            ``(2) Information to the corporation.--To the extent 
        provided in regulations, the plan administrator of a plan 
        described in paragraph (4) shall, upon termination of the plan, 
        provide the corporation information with respect to benefits of 
        a missing participant if the plan transfers such benefits--
                    ``(A) to the corporation, or
                    ``(B) to an entity other than the corporation or a 
                plan described in paragraph (4)(B)(ii).
            ``(3) Payment by the corporation.--If benefits of a missing 
        participant were transferred to the corporation under paragraph 
        (1), the corporation shall, upon location of the participant or 
        beneficiary, pay to the participant or beneficiary the amount 
        transferred (or the appropriate survivor benefit) either--
                    ``(A) in a single sum (plus interest), or
                    ``(B) in such other form as is specified in 
                regulations of the corporation.
            ``(4) Plans described.--A plan is described in this 
        paragraph if--
                    ``(A) the plan is a pension plan (within the 
                meaning of section 3(2))--
                            ``(i) to which the provisions of this 
                        section do not apply (without regard to this 
                        subsection), and
                            ``(ii) which is not a plan described in 
                        paragraphs (2) through (11) of section 4021(b), 
                        and
                    ``(B) at the time the assets are to be distributed 
                upon termination, the plan--
                            ``(i) has missing participants, and
                            ``(ii) has not provided for the transfer of 
                        assets to pay the benefits of all missing 
                        participants to another pension plan (within 
                        the meaning of section 3(2)).
            ``(5) Certain provisions not to apply.--Subsections (a)(1) 
        and (a)(3) shall not apply to a plan described in paragraph 
        (4).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions made after final regulations implementing subsections 
(c) and (d) of section 4050 of the Employee Retirement Income Security 
Act of 1974 (as added by subsection (a)), respectively, are prescribed.

SEC. 472. REDUCED PBGC PREMIUM FOR NEW PLANS OF SMALL EMPLOYERS.

    (a) In General.--Subparagraph (A) of section 4006(a)(3) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1306(a)(3)(A)) is amended--
            (1) in clause (i), by inserting ``other than a new single-
        employer plan (as defined in subparagraph (F)) maintained by a 
        small employer (as so defined),'' after ``single-employer 
        plan,'',
            (2) in clause (iii), by striking the period at the end and 
        inserting ``, and'', and
            (3) by adding at the end the following new clause:
            ``(iv) in the case of a new single-employer plan (as 
        defined in subparagraph (F)) maintained by a small employer (as 
        so defined) for the plan year, $5 for each individual who is a 
        participant in such plan during the plan year.''.
    (b) Definition of New Single-Employer Plan.--Section 4006(a)(3) of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1306(a)(3)) is amended by adding at the end the following new 
subparagraph:
    ``(F)(i) For purposes of this paragraph, a single-employer plan 
maintained by a contributing sponsor shall be treated as a new single-
employer plan for each of its first 5 plan years if, during the 36-
month period ending on the date of the adoption of such plan, the 
sponsor or any member of such sponsor's controlled group (or any 
predecessor of either) did not establish or maintain a plan to which 
this title applies with respect to which benefits were accrued for 
substantially the same employees as are in the new single-employer 
plan.
    ``(ii)(I) For purposes of this paragraph, the term `small employer' 
means an employer which on the first day of any plan year has, in 
aggregation with all members of the controlled group of such employer, 
100 or fewer employees.
    ``(II) In the case of a plan maintained by two or more contributing 
sponsors that are not part of the same controlled group, the employees 
of all contributing sponsors and controlled groups of such sponsors 
shall be aggregated for purposes of determining whether any 
contributing sponsor is a small employer.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plans established after December 31, 2000.

SEC. 473. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR NEW AND SMALL PLANS.

    (a) New Plans.--Subparagraph (E) of section 4006(a)(3) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1306(a)(3)(E)) is amended by adding at the end the following new 
clause:
    ``(v) In the case of a new defined benefit plan, the amount 
determined under clause (ii) for any plan year shall be an amount equal 
to the product of the amount determined under clause (ii) and the 
applicable percentage. For purposes of this clause, the term 
`applicable percentage' means--
            ``(I) 0 percent, for the first plan year.
            ``(II) 20 percent, for the second plan year.
            ``(III) 40 percent, for the third plan year.
            ``(IV) 60 percent, for the fourth plan year.
            ``(V) 80 percent, for the fifth plan year.
For purposes of this clause, a defined benefit plan (as defined in 
section 3(35)) maintained by a contributing sponsor shall be treated as 
a new defined benefit plan for each of its first 5 plan years if, 
during the 36-month period ending on the date of the adoption of the 
plan, the sponsor and each member of any controlled group including the 
sponsor (or any predecessor of either) did not establish or maintain a 
plan to which this title applies with respect to which benefits were 
accrued for substantially the same employees as are in the new plan.''.
    (b) Small Plans.--Paragraph (3) of section 4006(a) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)), as amended 
by section 472(b), is amended--
            (1) by striking ``The'' in subparagraph (E)(i) and 
        inserting ``Except as provided in subparagraph (G), the'', and
            (2) by inserting after subparagraph (F) the following new 
        subparagraph:
    ``(G)(i) In the case of an employer who has 25 or fewer employees 
on the first day of the plan year, the additional premium determined 
under subparagraph (E) for each participant shall not exceed $5 
multiplied by the number of participants in the plan as of the close of 
the preceding plan year.
    ``(ii) For purposes of clause (i), whether an employer has 25 or 
fewer employees on the first day of the plan year is determined taking 
into consideration all of the employees of all members of the 
contributing sponsor's controlled group. In the case of a plan 
maintained by two or more contributing sponsors, the employees of all 
contributing sponsors and their controlled groups shall be aggregated 
for purposes of determining whether the 25-or-fewer-employees 
limitation has been satisfied.''.
    (c) Effective Dates.--
            (1) Subsection (a).--The amendments made by subsection (a) 
        shall apply to plans established after December 31, 2000.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to plan years beginning after December 31, 2000.

SEC. 474. AUTHORIZATION FOR PBGC TO PAY INTEREST ON PREMIUM OVERPAYMENT 
              REFUNDS.

    (a) In General.--Section 4007(b) of the Employment Retirement 
Income Security Act of 1974 (29 U.S.C. 1307(b)) is amended--
            (1) by striking ``(b)'' and inserting ``(b)(1)'', and
            (2) by inserting at the end the following new paragraph:
    ``(2) The corporation is authorized to pay, subject to regulations 
prescribed by the corporation, interest on the amount of any 
overpayment of premium refunded to a designated payor. Interest under 
this paragraph shall be calculated at the same rate and in the same 
manner as interest is calculated for underpayments under paragraph 
(1).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to interest accruing for periods beginning not earlier than the 
date of the enactment of this Act.

SEC. 475. SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.

    (a) Modification of Phase-In of Guarantee.--Section 4022(b)(5) of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1322(b)(5)) is amended to read as follows:
    ``(5)(A) For purposes of this paragraph, the term `majority owner' 
means an individual who, at any time during the 60-month period ending 
on the date the determination is being made--
            ``(i) owns the entire interest in an unincorporated trade 
        or business,
            ``(ii) in the case of a partnership, is a partner who owns, 
        directly or indirectly, 50 percent or more of either the 
        capital interest or the profits interest in such partnership, 
        or
            ``(iii) in the case of a corporation, owns, directly or 
        indirectly, 50 percent or more in value of either the voting 
        stock of that corporation or all the stock of that corporation.
For purposes of clause (iii), the constructive ownership rules of 
section 1563(e) of the Internal Revenue Code of 1986 shall apply 
(determined without regard to section 1563(e)(3)(C)).
    ``(B) In the case of a participant who is a majority owner, the 
amount of benefits guaranteed under this section shall equal the 
product of--
            ``(i) a fraction (not to exceed 1) the numerator of which 
        is the number of years from the later of the effective date or 
        the adoption date of the plan to the termination date, and the 
        denominator of which is 10, and
            ``(ii) the amount of benefits that would be guaranteed 
        under this section if the participant were not a majority 
        owner.''.
    (b) Modification of Allocation of Assets.--
            (1) Section 4044(a)(4)(B) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by 
        striking ``section 4022(b)(5)'' and inserting ``section 
        4022(b)(5)(B)''.
            (2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is 
        amended--
                    (A) by striking ``(5)'' in paragraph (2) and 
                inserting ``(4), (5),'', and
                    (B) by redesignating paragraphs (3) through (6) as 
                paragraphs (4) through (7), respectively, and by 
                inserting after paragraph (2) the following new 
                paragraph:
            ``(3) If assets available for allocation under paragraph 
        (4) of subsection (a) are insufficient to satisfy in full the 
        benefits of all individuals who are described in that 
        paragraph, the assets shall be allocated first to benefits 
        described in subparagraph (A) of that paragraph. Any remaining 
        assets shall then be allocated to benefits described in 
        subparagraph (B) of that paragraph. If assets allocated to such 
        subparagraph (B) are insufficient to satisfy in full the 
        benefits described in that subparagraph, the assets shall be 
        allocated pro rata among individuals on the basis of the 
        present value (as of the termination date) of their respective 
        benefits described in that subparagraph.''.
    (c) Conforming Amendments.--
            (1) Section 4021 of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1321) is amended--
                    (A) in subsection (b)(9), by striking ``as defined 
                in section 4022(b)(6)'', and
                    (B) by adding at the end the following new 
                subsection:
    ``(d) For purposes of subsection (b)(9), the term `substantial 
owner' means an individual who, at any time during the 60-month period 
ending on the date the determination is being made--
            ``(1) owns the entire interest in an unincorporated trade 
        or business,
            ``(2) in the case of a partnership, is a partner who owns, 
        directly or indirectly, more than 10 percent of either the 
        capital interest or the profits interest in such partnership, 
        or
            ``(3) in the case of a corporation, owns, directly or 
        indirectly, more than 10 percent in value of either the voting 
        stock of that corporation or all the stock of that corporation.
For purposes of paragraph (3), the constructive ownership rules of 
section 1563(e) of the Internal Revenue Code of 1986 shall apply 
(determined without regard to section 1563(e)(3)(C)).''.
    (2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7)) is 
amended by striking ``section 4022(b)(6)'' and inserting ``section 
4021(d)''.
    (d) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to plan 
        terminations--
                    (A) under section 4041(c) of the Employee 
                Retirement Income Security Act of 1974 (29 U.S.C. 
                1341(c)) with respect to which notices of intent to 
                terminate are provided under section 4041(a)(2) of such 
                Act (29 U.S.C. 1341(a)(2)) after December 31, 2000, and
                    (B) under section 4042 of such Act (29 U.S.C. 1342) 
                with respect to which proceedings are instituted by the 
                corporation after such date.
            (2) Conforming amendments.--The amendments made by 
        subsection (c) shall take effect on January 1, 2001.

SEC. 476. MULTIEMPLOYER PLAN BENEFITS GUARANTEE.

    (a) In General.--Section 4022A(c) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1322A(c)) is amended--
            (1) by striking ``$5'' each place it appears in paragraph 
        (1) and inserting ``$11'',
            (2) by striking ``$15'' in paragraph (1) and inserting 
        ``$33'', and
            (3) by striking paragraphs (2), (5), and (6) and by 
        redesignating paragraphs (3) and (4) as paragraphs (2) and (3), 
        respectively.
    (b) Conforming Amendment.--Section 4244(e)(4) of such Act (29 
U.S.C. 1424(e)(4)) is amended by striking ``and without regard to 
section 4022A(c)(2)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to benefits payable after the date of the enactment of this Act, 
except that such amendments shall not apply to any multiemployer plan 
that has received financial assistance (within the meaning of section 
4261 of the Employee Retirement Income Security Act of 1974) within the 
1-year period ending on the date of the enactment of this Act.

SEC. 477. CIVIL PENALTIES FOR BREACH OF FIDUCIARY RESPONSIBILITY.

    (a) Imposition and Amount of Penalty Made Discretionary.--Section 
502(l)(1) of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1132(l)(1)) is amended--
            (1) by striking ``shall'' and inserting ``may'', and
            (2) by striking ``equal to'' and inserting ``not greater 
        than''.
    (b) Applicable Recovery Amount.--Section 502(l)(2) of such Act (29 
U.S.C. 1132(l)(2)) is amended to read as follows:
    ``(2) For purposes of paragraph (1), the term `applicable recovery 
amount' means any amount which is recovered from any fiduciary or other 
person (or from any other person on behalf of any such fiduciary or 
other person) with respect to a breach or violation described in 
paragraph (1) on or after the 30th day following receipt by such 
fiduciary or other person of written notice from the Secretary of the 
violation, whether paid voluntarily or by order of a court in a 
judicial proceeding instituted by the Secretary under subsection (a)(2) 
or (a)(5). The Secretary may, in the Secretary's sole discretion, 
extend the 30-day period described in the preceding sentence.''.
    (c) Other Rules.--Section 502(l) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1132(l)) is amended by adding at the 
end the following new paragraph:
    ``(5) A person shall be jointly and severally liable for the 
penalty described in paragraph (1) to the same extent that such person 
is jointly and severally liable for the applicable recovery amount on 
which the penalty is based.
    ``(6) No penalty shall be assessed under this subsection unless the 
person against whom the penalty is assessed is given notice and 
opportunity for a hearing with respect to the violation and applicable 
recovery amount.''.
    (d) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to any breach of fiduciary responsibility or other 
        violation of part 4 of subtitle B of title I of the Employee 
        Retirement Income Security Act of 1974 occurring on or after 
        the date of enactment of this Act.
            (2) Transition rule.--In applying the amendment made by 
        subsection (b) (relating to applicable recovery amount), a 
        breach or other violation occurring before the date of 
        enactment of this Act which continues after the 180th day after 
        such date (and which may have been discontinued at any time 
        during its existence) shall be treated as having occurred after 
        such date of enactment.

SEC. 478. BENEFIT SUSPENSION NOTICE.

    (a) Modification of Regulation.--The Secretary of Labor shall 
modify the regulation under section 203(a)(3)(B) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)(3)(B)) to 
provide that the notification required by such regulation--
            (1) in the case of an employee who returns to work for a 
        former employer after commencement of payment of benefits under 
        the plan shall--
                    (A) be made during the first calendar month or 
                payroll period in which the plan withholds payments, 
                and
                    (B) if a reduced rate of future benefit accruals 
                will apply to the returning employee (as of the first 
                date of participation in the plan by the employee after 
                returning to work), include a statement that the rate 
                of future benefit accruals will be reduced, and
            (2) in the case of any employee who is not described in 
        paragraph (1)--
                    (A) may be included in the summary plan description 
                for the plan furnished in accordance with section 
                104(b) of such Act (29 U.S.C. 1024(b)), rather than in 
                a separate notice, and
                    (B) need not include a copy of the relevant plan 
                provisions.
    (b) Effective Date.--The modification made under this section shall 
apply to plan years beginning after December 31, 2000.

                      Subtitle H--Plan Amendments

SEC. 481. PROVISIONS RELATING TO PLAN AMENDMENTS.

    (a) In General.--If this section applies to any plan or contract 
amendment--
            (1) such plan or contract shall be treated as being 
        operated in accordance with the terms of the plan during the 
        period described in subsection (b)(2)(A); and
            (2) except as provided by the Secretary of the Treasury, 
        such plan shall not fail to meet the requirements of section 
        411(d)(6) of the Internal Revenue Code of 1986 or section 
        204(g) of the Employee Retirement Income Security Act of 1974 
        by reason of such amendment.
    (b) Amendments to Which Section Applies.--
            (1) In general.--This section shall apply to any amendment 
        to any plan or annuity contract which is made--
                    (A) pursuant to any amendment made by this title, 
                or pursuant to any regulation issued under this title; 
                and
                    (B) on or before the last day of the first plan 
                year beginning on or after January 1, 2003.
        In the case of a governmental plan (as defined in section 
        414(d) of the Internal Revenue Code of 1986), this paragraph 
        shall be applied by substituting ``2005'' for ``2003''.
            (2) Conditions.--This section shall not apply to any 
        amendment unless--
                    (A) during the period--
                            (i) beginning on the date the legislative 
                        or regulatory amendment described in paragraph 
                        (1)(A) takes effect (or in the case of a plan 
                        or contract amendment not required by such 
                        legislative or regulatory amendment, the 
                        effective date specified by the plan); and
                            (ii) ending on the date described in 
                        paragraph (1)(B) (or, if earlier, the date the 
                        plan or contract amendment is adopted),
                the plan or contract is operated as if such plan or 
                contract amendment were in effect; and
                    (B) such plan or contract amendment applies 
                retroactively for such period.

                TITLE V--SCHOOL CONSTRUCTION PROVISIONS

SEC. 501. ADDITIONAL INCREASE IN ARBITRAGE REBATE EXCEPTION FOR 
              GOVERNMENTAL BONDS USED TO FINANCE EDUCATIONAL 
              FACILITIES.

    (a) In General.--Section 148(f)(4)(D)(vii) (relating to increase in 
exception for bonds financing public school capital expenditures) is 
amended by striking ``$5,000,000'' the second place it appears and 
inserting ``$10,000,000''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to obligations issued after December 31, 2000.

SEC. 502. MODIFICATION OF ARBITRAGE REBATE RULES APPLICABLE TO PUBLIC 
              SCHOOL CONSTRUCTION BONDS.

    (a) In General.--Subparagraph (C) of section 148(f)(4) is amended 
by adding at the end the following new clause:
                            ``(xviii) 4-year spending requirement for 
                        public school construction issue.--
                                    ``(I) In general.--In the case of a 
                                public school construction issue, the 
                                spending requirements of clause (ii) 
                                shall be treated as met if at least 10 
                                percent of the available construction 
                                proceeds of the construction issue are 
                                spent for the governmental purposes of 
                                the issue within the 1-year period 
                                beginning on the date the bonds are 
                                issued, 30 percent of such proceeds are 
                                spent for such purposes within the 2-
                                year period beginning on such date, 60 
                                percent of such proceeds are spent for 
                                such purposes within the 3-year period 
                                beginning on such date, and 100 percent 
                                of such proceeds are spent for such 
                                purposes within the 4-year period 
                                beginning on such date.
                                    ``(II) Public school construction 
                                issue.--For purposes of this clause, 
                                the term `public school construction 
                                issue' means any construction issue if 
                                no bond which is part of such issue is 
                                a private activity bond and all of the 
                                available construction proceeds of such 
                                issue are to be used for the 
                                construction (as defined in clause 
                                (iv)) of public school facilities to 
                                provide education or training below the 
                                postsecondary level or for the 
                                acquisition of land that is 
                                functionally related and subordinate to 
                                such facilities.
                                    ``(III) Other rules to apply.--
                                Rules similar to the rules of the 
                                preceding provisions of this 
                                subparagraph which apply to clause (ii) 
                                also apply to this clause.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to obligations issued after December 31, 2000.

SEC. 503. MODIFICATION OF SPECIAL ARBITRAGE RULE FOR CERTAIN FUNDS.

    (a) In General.--Paragraph (1) of section 648 of the Tax Reform Act 
of 1984 is amended to read as follows:
            ``(1) such securities or obligations are held in a fund--
                    ``(A) which, except to the extent of the investment 
                earnings on such securities or obligations, cannot be 
                used, under State constitutional or statutory 
                restrictions continuously in effect since October 9, 
                1969, through the date of issue of the bond issue, to 
                pay debt service on the bond issue or to finance the 
                facilities that are to be financed with the proceeds of 
                the bonds, or
                    ``(B) the annual distributions from which cannot 
                exceed 7 percent of the average fair market value of 
                the assets held in such fund except to the extent 
                distributions are necessary to pay debt service on the 
                bond issue,''.
    (b) Conforming Amendment.--Paragraph (3) of such section is amended 
by striking ``the investment earnings of'' and inserting 
``distributions from''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2001.

SEC. 504. TREATMENT OF QUALIFIED PUBLIC EDUCATIONAL FACILITY BONDS AS 
              EXEMPT FACILITY BONDS.

    (a) Treatment as Exempt Facility Bond.--Subsection (a) of section 
142 (relating to exempt facility bond) is amended by striking ``or'' at 
the end of paragraph (11), by striking the period at the end of 
paragraph (12) and inserting ``, or'', and by adding at the end the 
following:
            ``(13) qualified public educational facilities.''
    (b) Qualified Public Educational Facilities.--Section 142 (relating 
to exempt facility bond) is amended by adding at the end the following 
new subsection:
    ``(k) Qualified Public Educational Facilities.--
            ``(1) In general.--For purposes of subsection (a)(13), the 
        term `qualified public educational facility' means any school 
        facility which is--
                    ``(A) part of a public elementary school or a 
                public secondary school, and
                    ``(B) owned by a private, for-profit corporation 
                pursuant to a public-private partnership agreement with 
                a State or local educational agency described in 
                paragraph (2).
            ``(2) Public-private partnership agreement described.--A 
        public-private partnership agreement is described in this 
        paragraph if it is an agreement--
                    ``(A) under which the corporation agrees--
                            ``(i) to do 1 or more of the following: 
                        construct, rehabilitate, refurbish, or equip a 
                        school facility, and
                            ``(ii) at the end of the term of the 
                        agreement, to transfer the school facility to 
                        such agency for no additional consideration, 
                        and
                    ``(B) the term of which does not exceed the term of 
                the issue to be used to provide the school facility.
            ``(3) School facility.--For purposes of this subsection, 
        the term `school facility' means--
                    ``(A) school buildings,
                    ``(B) functionally related and subordinate 
                facilities and land with respect to such buildings, 
                including any stadium or other facility primarily used 
                for school events, and
                    ``(C) any property, to which section 168 applies 
                (or would apply but for section 179), for use in the 
                facility.
            ``(4) Public schools.--For purposes of this subsection, the 
        terms `elementary school' and `secondary school' have the 
        meanings given such terms by section 14101 of the Elementary 
        and Secondary Education Act of 1965 (20 U.S.C. 8801), as in 
        effect on the date of the enactment of this subsection.
            ``(5) Annual aggregate face amount of tax-exempt 
        financing.--
                    ``(A) In general.--An issue shall not be treated as 
                an issue described in subsection (a)(13) if the 
                aggregate face amount of bonds issued by the State 
                pursuant thereto (when added to the aggregate face 
                amount of bonds previously so issued during the 
                calendar year) exceeds an amount equal to the greater 
                of--
                            ``(i) $10 multiplied by the State 
                        population, or
                            ``(ii) $5,000,000.
                    ``(B) Allocation rules.--
                            ``(i) In general.--Except as otherwise 
                        provided in this subparagraph, the State may 
                        allocate in a calendar year the amount 
                        described in subparagraph (A) for such year in 
                        such manner as the State determines 
                        appropriate.
                            ``(ii) Rules for carryforward of unused 
                        amount.--With respect to any calendar year, a 
                        State may make an election under rules similar 
                        to the rules of section 146(f), except that the 
                        sole carryforward purpose with respect to such 
                        election is the issuance of exempt facility 
                        bonds described in section 142(a)(13).''
    (c) Exemption From General State Volume Caps.--Paragraph (3) of 
section 146(g) (relating to exception for certain bonds) is amended--
            (1) by striking ``or (12)'' and inserting ``(12), or 
        (13)'', and
            (2) by striking ``and environmental enhancements of 
        hydroelectric generating facilities'' and inserting 
        ``environmental enhancements of hydroelectric generating 
        facilities, and qualified public educational facilities''.
    (d) Exemption From Limitation on Use for Land Acquisition.--Section 
147(h) (relating to certain rules not to apply to mortgage revenue 
bonds, qualified student loan bonds, and qualified 501(c)(3) bonds) is 
amended by adding at the end the following new paragraph:
            ``(3) Exempt facility bonds for qualified public-private 
        schools.--Subsection (c) shall not apply to any exempt facility 
        bond issued as part of an issue described in section 142(a)(13) 
        (relating to qualified public-private schools).''
    (e) Conforming Amendment.--The heading of section 147(h) is amended 
by striking ``Mortgage Revenue Bonds, Qualified Student Loan Bonds, and 
Qualified 501(c)(3) Bonds'' in the heading and inserting ``Certain 
Bonds''.
    (f) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2000.

SEC. 505. EXPANSION OF QUALIFIED ZONE ACADEMY BOND PROGRAM.

    (a) In General.--So much of part IV of subchapter U of chapter 1 
(relating to incentives for education zones) as precedes subsection (d) 
of section 1397E is amended to read as follows:

                  ``PART IV--EDUCATION BOND PROVISIONS

                              ``Sec. 1397E. Credit to holders of 
                                        qualified zone academy bonds.
                              ``Sec. 1397F. Qualified zone academy bond 
                                        defined.
                              ``Sec. 1397G. Authorization of additional 
                                        qualified zone academy bonds 
                                        without targeting and private 
                                        partnership requirements.

``SEC. 1397E. CREDIT TO HOLDERS OF QUALIFIED ZONE ACADEMY BONDS.

    ``(a) Allowance of Credit.--In the case of an eligible taxpayer who 
holds a qualified zone academy bond on a credit allowance date of such 
bond which occurs during the taxable year, there shall be allowed as a 
credit against the tax imposed by this chapter for such taxable year an 
amount equal to the sum of the credits determined under subsection (b) 
with respect to credit allowance dates during such year on which the 
taxpayer holds such bond.
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit allowance date 
        for a qualified zone academy bond is 25 percent of the annual 
        credit determined with respect to such bond.
            ``(2) Annual credit.--The annual credit determined with 
        respect to any qualified zone academy bond is the product of--
                    ``(A) the applicable credit rate, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Applicable credit rate.--For purposes of paragraph 
        (1), the applicable credit rate with respect to an issue is the 
        rate equal to an average market yield (as of the day before the 
        day that the issue is sold) on outstanding long-term corporate 
        debt obligations (determined under regulations prescribed by 
        the Secretary).
            ``(4) Special rule for issuance and redemption.--In the 
        case of a bond which is issued during the 3-month period ending 
        on a credit allowance date, the amount of the credit determined 
        under this subsection with respect to such credit allowance 
        date shall be a ratable portion of the credit otherwise 
        determined based on the portion of the 3-month period during 
        which the bond is outstanding. A similar rule shall apply when 
        the bond is redeemed.
    ``(c) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under part 
                IV of subchapter A (other than subpart C thereof, 
                relating to refundable credits).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Qualified zone academy bond.--The term `qualified 
        zone academy bond' has the meaning given to such term by 
        section 1397F; except that such term shall also include any 
        bond treated as a qualified zone academy bond under section 
        1397G. Such term shall not include any bond which is part of an 
        issue unless such issue meets the requirements of subsection 
        (g).
            ``(2) Credit allowance date.--The term `credit allowance 
        date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term includes the last day on which the bond is 
        outstanding.
            ``(3) Eligible taxpayer.--The term `eligible taxpayer' 
        means--
                    ``(A) a bank (within the meaning of section 581),
                    ``(B) an insurance company to which subchapter L 
                applies,
                    ``(C) a corporation actively engaged in the 
                business of lending money, and
                    ``(D) any other C corporation.
    ``(e) Other Definitions.--For purposes of this subchapter--
            ``(1) Local educational agency.--The term `local 
        educational agency' has the meaning given to such term by 
        section 14101 of the Elementary and Secondary Education Act of 
        1965. Such term includes the local educational agency that 
        serves the District of Columbia, but does not include any other 
        State agency.
            ``(2) Bond.--The term `bond' includes any obligation.
            ``(3) State.--The term `State' includes the District of 
        Columbia and any possession of the United States.
            ``(4) Public school facility.--The term `public school 
        facility' shall not include--
                    ``(A) any stadium or other facility primarily used 
                for athletic contests or exhibitions or other events 
                for which admission is charged to the general public, 
                or
                    ``(B) any facility which is not owned by a State or 
                local government or any agency or instrumentality of a 
                State or local government.
            ``(5) Permitted purpose.--The term `permitted purpose' 
        means--
                    ``(A) in the case of a bond which is a qualified 
                zone academy bond without regard to section 1397G, any 
                qualified purpose (as defined in section 1397F(a)(4)), 
                and
                    ``(B) in the case of a bond which is a qualified 
                zone academy bond solely by reason of section 1397G, 
                the purpose described in section 1397G(a)(2).
    ``(f) Special Rules.--
            ``(1) Only certain refinancings permitted.--A refinancing 
        of indebtedness (other than a qualified zone academy bond) 
        shall be treated as a qualified zone academy bond only if such 
        indebtedness was originally incurred by the issuer--
                    ``(A) after the date of the enactment of this 
                section,
                    ``(B) for a term of not more than 1 year,
                    ``(C) to finance an expenditure which is a 
                permitted purpose to be financed by a qualified zone 
                academy bond, and
                    ``(D) in anticipation of being refinanced with 
                proceeds of a qualified zone academy bond.
            ``(2) Sinking funds.--Rules similar to the rules under 
        section 148 on replacement proceeds shall apply for purposes of 
        this section. Such replacement proceeds shall be invested in 
        noninterest-bearing State and Local Government Series 
        obligations issued by the Secretary.
    ``(g) Special Rules Relating to Arbitrage.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, an issue shall be treated as meeting the 
        requirements of this subsection if the issue meets the spending 
        requirements of subclause (I) of section 148(f)(4)(C)(xviii).
            ``(2) Rules regarding compliance during 4-year period.--If 
        an issue fails to meet such spending requirements during the 4-
        year period beginning on the date of issuance, the issuer shall 
        pay to the United States amounts which would be required to be 
        paid to the United States under section 148(f)(2) were such 
        issue required to meet the requirements of such section. Rules 
        similar to the rules of clause (iii) of section 148(f)(4)(C) 
        shall apply for purposes of the preceding sentence.
            ``(3) Rules regarding continuing compliance after 4-year 
        determination.--If at least 95 percent of the proceeds of the 
        issue is not expended for 1 or more permitted purposes within 
        the 4-year period beginning on the date of issuance, an issue 
        shall be treated as continuing to meet the requirements of this 
        subsection if the issuer uses all unspent proceeds of the issue 
        to redeem bonds of the issue within 90 days after the end of 
        such 4-year period.
            ``(4) Small issuer exception.--Paragraph (1) shall not 
        apply to an issue issued by a governmental unit with general 
        taxing powers if the requirements of paragraphs (2) and (3) of 
        section 148(f) would be treated as met by reason of 
        subparagraph (D) of section 148(f)(4) if such issue were 
        treated as a tax-exempt bond and taken into account under such 
        subparagraph, and such issue shall be so treated for purposes 
        of determining whether such requirements are met with respect 
        to tax-exempt bonds.
    ``(h) Recapture of Portion of Credit Where Cessation of 
Compliance.--
            ``(1) In general.--If any bond which when issued purported 
        to be a qualified zone academy bond ceases to be a qualified 
        zone academy bond, the issuer shall pay to the United States 
        (at the time required by the Secretary) an amount equal to the 
        sum of--
                    ``(A) the aggregate of the credits allowable under 
                this section with respect to such bond (determined 
                without regard to subsection (c)) for taxable years 
                ending during the calendar year in which such cessation 
                occurs and the 2 preceding calendar years, and
                    ``(B) interest at the underpayment rate under 
                section 6621 on the amount determined under 
                subparagraph (A) for each calendar year for the period 
                beginning on the first day of such calendar year.
            ``(2) Failure to pay.--If the issuer fails to timely pay 
        the amount required by paragraph (1) with respect to such bond, 
        the tax imposed by this chapter on each holder of any such bond 
        which is part of such issue shall be increased (for the taxable 
        year of the holder in which such cessation occurs) by the 
        aggregate decrease in the credits allowed under this section to 
        such holder for taxable years beginning in such 3 calendar 
        years which would have resulted solely from denying any credit 
        under this section with respect to such issue for such taxable 
        years.
            ``(3) Special rules.--
                    ``(A) Tax benefit rule.--The tax for the taxable 
                year shall be increased under paragraph (2) only with 
                respect to credits allowed by reason of this section 
                which were used to reduce tax liability. In the case of 
                credits not so used to reduce tax liability, the 
                carryforwards and carrybacks under section 39 shall be 
                appropriately adjusted.
                    ``(B) No credits against tax.--Any increase in tax 
                under paragraph (2) shall not be treated as a tax 
                imposed by this chapter for purposes of determining --
                            ``(i) the amount of any credit allowable 
                        under this part, or
                            ``(ii) the amount of the tax imposed by 
                        section 55.
    ``(i) Credit Included in Gross Income.--Gross income includes the 
amount of the credit allowed to the taxpayer under this section 
(determined without regard to subsection (c)) and the amount so 
included shall be treated as interest income.
    ``(j) Treatment for Estimated Tax Purposes.--Solely for purposes of 
sections 6654 and 6655, the credit allowed by this section to a 
taxpayer by reason of holding a qualified zone academy bond on a credit 
allowance date shall be treated as if it were a payment of estimated 
tax made by the taxpayer on such date.
    ``(k) Reporting.--Issuers of qualified zone academy bonds shall 
submit reports similar to the reports required under section 149(e).
    ``(l) Termination.--This section shall not apply to any bond issued 
after December 31, 2005.

``SEC. 1397F. QUALIFIED ZONE ACADEMY BONDS.''

    (b) Extension of Qualified Zone Academy Bond Provisions.--
            (1) Subsections (d) and (e) of section 1397E (as in effect 
        on the day before the date of the enactment of this Act) are 
        hereby moved and inserted after the section heading for section 
        1397F (as added by subsection (a)) and redesignated as 
        subsections (a) and (b).
            (2) Subsection (b) of section 1397F (as so redesignated) is 
        amended to read as follows:
    ``(b) Limitations on Amount of Bonds Designated.--
            ``(1) In general.--There is a national zone academy bond 
        limitation for each calendar year. Such limitation is--
                    ``(A) $400,000,000 for 1998,
                    ``(B) $400,000,000 for 1999,
                    ``(C) $400,000,000 for 2000,
                    ``(D) $400,000,000 for 2001,
                    ``(E) $400,000,000 for 2002,
                    ``(F) $400,000,000 for 2003, and
                    ``(G) except as provided in paragraph (3), zero 
                after 2003.
            ``(2) Allocation of limitation.--
                    ``(A) In general.--The national zone academy bond 
                limitation for a calendar year shall be allocated by 
                the Secretary among the States on the basis of their 
                respective populations of individuals below the poverty 
                line (as defined by the Office of Management and 
                Budget). The limitation amount allocated to a State 
                under the preceding sentence shall be allocated by the 
                State to qualified zone academies within such State.
                    ``(B) Designation subject to limitation amount.--
                The maximum aggregate face amount of bonds issued 
                during any calendar year which may be designated under 
                subsection (a) with respect to any qualified zone 
                academy shall not exceed the limitation amount 
                allocated to such academy under subparagraph (A) for 
                such calendar year.
            ``(3) Carryover of unused limitation.--If for any calendar 
        year--
                    ``(A) the limitation amount under this subsection 
                for any State, exceeds
                    ``(B) the amount of bonds issued during such year 
                which are designated under subsection (a) (or the 
                corresponding provisions of prior law) with respect to 
                qualified zone academies within such State,
        the limitation amount under this subsection for such State for 
        the following calendar year shall be increased by the amount of 
        such excess. Any carryforward of a limitation amount may be 
        carried only to the first 2 years (3 years for carryforwards 
        from 1998 or 1999) following the unused limitation year. For 
        purposes of the preceding sentence, a limitation amount shall 
        be treated as used on a first-in first-out basis.''
            (3) Subsection (a) of section 1397F (as so redesignated) is 
        amended--
                    (A) by striking ``For purposes of this section--'' 
                in the material preceding paragraph (1) and inserting 
                ``For purposes of this part--'',
                    (B) by striking ``an eligible local'' in paragraphs 
                (1)(A) and (3)(A) (as redesignated by this paragraph) 
                and inserting ``a local'',
                    (C) by striking ``the maximum term permitted under 
                paragraph (3)'' in paragraph (1)(D) and inserting ``15 
                years'', and
                    (D) by striking paragraphs (3) and (6) and by 
                redesignating paragraphs (4) and (5) as paragraphs (3) 
                and (4), respectively.
            (4) Paragraph (3) of section 1397F(a) (as so redesignated) 
        is amended--
                    (A) by striking ``(4)'' and all that follows 
                through ``The term'' and inserting the following:
            ``(4) Qualified zone academy.--The term'',
                    (B) by striking subparagraph (B),
                    (C) by redesignating clauses (i) through (iv) as 
                subparagraphs (A) through (D), respectively, and
                    (D) by redesignating subclauses (I) and (II) of 
                subparagraph (D) (as so redesignated) as clauses (i) 
                and (ii), respectively.
    (c) Authorization of Additional Qualified Zone Academy Bonds 
Without Targeting and Private Partnership Requirements.--Part IV of 
subchapter U of chapter 1 is amended by adding at the end the following 
new section:

``SEC. 1397G. AUTHORIZATION OF ADDITIONAL QUALIFIED ZONE ACADEMY BONDS 
              WITHOUT TARGETING AND PRIVATE PARTNERSHIP REQUIREMENTS.

    ``(a) In General.--For purposes of this part, the term `qualified 
zone academy bond' also includes any bond issued by a State or local 
government as part of an issue if--
            ``(1) the issuer designates such bond for purpose of this 
        section, and
            ``(2) the requirements of subparagraphs (A), (B), and (D) 
        of paragraph (1) of section 1397F(a) are met with respect to 
        such issue, determined--
                    ``(A) by treating any public school facility as 
                being a qualified zone academy ,and
                    ``(B) by applying paragraph (4) thereof as if the 
                only qualified purpose were constructing, 
                rehabilitating, or repairing a public school facility 
                or acquiring the land which is functionally related and 
                subordinate to the public school facility which is to 
                be constructed with part of the proceeds of such issue.
    ``(b) Limitation on Amount of Bonds Designated.--The maximum 
aggregate face amount of bonds issued during any calendar year which 
may be designated under subsection (a) by any issuer shall not exceed 
the limitation amount allocated under subsection (d) for such calendar 
year to such issuer.
    ``(c) National Limitation on Amount of Bonds Designated.--There is 
a national additional qualified zone academy bond limitation for each 
calendar year. Such limitation is--
            ``(1) $5,000,000,000 for 2001,
            ``(2) $5,000,000,000 for 2002, and
            ``(3) $5,000,000,000 for 2003,
            ``(4) except as provided in subsection (e), zero after 
        2003.
    ``(d) Limitation Allocated Among States.--
            ``(1) In general.--
                    ``(A) Allocation on the basis of population.--50 
                percent of the limitation applicable under subsection 
                (c) for any calendar year shall be allocated before 
                such calendar year by the Secretary among the States on 
                the basis of their respective populations.
                    ``(B) Allocation on the basis of poverty.--50 
                percent of the limitation applicable under subsection 
                (c) for any calendar year shall be allocated before 
                such calendar year by the Secretary among the States on 
                the basis of their respective populations of 
                individuals below the poverty line (as defined by the 
                Office of Management and Budget).
                    ``(C) Minimum allocations to small states.--The 
                Secretary shall adjust the allocations under this 
                subsection for any calendar year for each State to the 
                extent necessary to ensure that the amount allocated to 
                such State under this subsection for such year is not 
                less than $25,000,000.
                    ``(D) Use of census data.--Determinations under 
                this subsection shall be made on the basis of the most 
                recently available census data.
            ``(2) Allocation within the state.--
                    ``(A) In general.--Except as otherwise provided in 
                subparagraph (B), the limitation allocated to any State 
                may be allocated among governmental units in such State 
                having authority to issue such bonds as provided by 
                State law (or, in absence of State law, by the Governor 
                of such State).
                    ``(B) Minimum allocations to large local 
                educational agencies.--In no event may the limitation 
                for any calendar year allocated to any large local 
                educational agency in a State be less than the sum of--
                            ``(i) an amount which bears the same ratio 
                        to 50 percent of such limitation as the 
                        population within the area under the 
                        jurisdiction of such agency bears to the 
                        population of the entire State, and
                            ``(ii) an amount which bears the same ratio 
                        to 50 percent of such limitation as the 
                        population within the area under the 
                        jurisdiction of such agency below the poverty 
                        line (as defined by the Office of Management 
                        and Budget) bears to such population of the 
                        entire State.
            ``(3) Allocations for indian schools.--In addition to the 
        amounts otherwise allocated under this subsection, $200,000,000 
        (in the aggregate for calendar years 2001, 2002, and 2003) 
        shall be allocated by the Secretary (after consultation with 
        the Secretary of the Interior) for purposes of the 
        construction, rehabilitation, and repair of schools operated by 
        or on behalf of an Indian tribal government (within the meaning 
        of section 7871). In the case of amounts allocated under the 
        preceding sentence, Indian tribal governments (as so defined) 
        shall be treated as qualified issuers for purposes of this 
        part.
            ``(4) Required state allocation plans.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this section, the limitation for any State 
                shall be zero unless the limitation is allocated within 
                such State pursuant to a qualified allocation plan.
                    ``(B) Qualified allocation plan.--For purposes of 
                subparagraph (A), the term `qualified allocation plan' 
                means any plan which--
                            ``(i) identifies the State's needs for 
                        public school facilities (including 
                        descriptions of the capacity of public schools 
                        in the State to house projected enrollments), 
                        particular financing difficulties being 
                        encountered by local school districts in the 
                        State, and health and safety problems at 
                        existing facilities, and
                            ``(ii) describes how the State will 
                        allocate to local educational agencies, or 
                        otherwise use, its allocation under this 
                        section to address the needs identified under 
                        clause (i), including a description of how it 
                        will--
                                    ``(I) ensure that the needs of 
                                rural, urban, and suburban areas will 
                                be recognized,
                                    ``(II) ensure that the needs of 
                                localities with the greatest needs, as 
                                demonstrated by inadequate school 
                                facilities coupled with low level of 
                                resources, will be met, and
                                    ``(III) give priority to the role 
                                of charter schools in achieving State 
                                educational objectives.
                    ``(C) Application of paragraph.--This paragraph 
                shall apply to allocations after more than 6 months 
                after the date of the enactment of this paragraph.
            ``(5) Large local educational agency.--For purposes of this 
        section, the term `large local educational agency' means, with 
        respect to a calendar year, any local educational agency with 
        at least 40,000 children who have attained age 5 but not age 18 
        for the most recent fiscal year ending before such calendar 
        year.
    ``(e) Carryover of Unused Limitation.--
            ``(1) In general.--If for any calendar year--
                    ``(A) the amount allocated under subsection (d) to 
                any State, exceeds
                    ``(B) the amount of bonds issued during such year 
                which are designated under subsection (a) pursuant to 
                such allocation,
        the limitation amount under such subsection for such State for 
        the following calendar year shall be increased by the amount of 
        such excess.
            ``(2) 2-year carryforward.--Any carryforward of a 
        limitation amount may be carried only to the first 2 years 
        following the unused limitation year. For purposes of the 
        preceding sentence, a limitation amount shall be treated as 
        used on a first-in first-out basis.
            ``(3) Allocations for indian schools.--Rules similar to 
        paragraphs (1) and (2) shall apply to the amounts allocated 
        under subsection (d)(3); except that 2003 shall be treated as 
        the unused limitation year.''
    (d) Reporting.--Subsection (d) of section 6049 (relating to returns 
regarding payments of interest) is amended by adding at the end the 
following new paragraph:
            ``(8) Reporting of credit on qualified zone academy 
        bonds.--
                    ``(A) In general.--For purposes of subsection (a), 
                the term `interest' includes amounts includible in 
                gross income under section 1397E(i) and such amounts 
                shall be treated as paid on the credit allowance date 
                (as defined in section 1397E(d)(2)).
                    ``(B) Reporting to corporations, etc.--Except as 
                otherwise provided in regulations, in the case of any 
                interest described in subparagraph (A) of this 
                paragraph, subsection (b)(4) of this section shall be 
                applied without regard to subparagraphs (A), (H), (I), 
                (J), (K), and (L)(i).
                    ``(C) Regulatory authority.--The Secretary may 
                prescribe such regulations as are necessary or 
                appropriate to carry out the purposes of this 
                paragraph, including regulations which require more 
                frequent or more detailed reporting.''
    (e) Conforming Amendments.--
            (1) Subsections (f), (g), and (h) of section 1397E (as in 
        effect on the day before the date of the enactment of this Act) 
        are hereby repealed.
            (2) Subchapter U of chapter 1 of such Code is amended by 
        redesignating section 1397F (as in effect on the day before the 
        date of the enactment of this Act) as section 1397H.
            (3) The table of parts of subchapter U of chapter 1 of such 
        Code is amended by striking the item relating to part IV and 
        inserting the following item:

                              ``Part IV. Education bond provisions.''
    (f) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        obligations issued after December 31, 2000.
            (2) Modification of restriction on zone academy bond 
        holders.--In the case of bonds to which section 1397E of the 
        Internal Revenue Code of 1986 (as in effect before the date of 
        the enactment of this Act) applies, the limitation of such 
        section to corporations actively engaged in the business of 
        lending money shall not apply after the date of the enactment 
        of this Act.

                   TITLE VI--COMMUNITY REVITALIZATION

           Subtitle A--Tax Incentives for Renewal Communities

SEC. 601. DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL COMMUNITIES.

    (a) In General.--Chapter 1 is amended by adding at the end the 
following new subchapter:

                  ``Subchapter X--Renewal Communities

                              ``Part   I. Designation.
                              ``Part  II. Renewal community capital 
                                        gain; renewal community 
                                        business.
                              ``Part  III. Additional incentives.

                         ``PART I--DESIGNATION

                              ``Sec. 1400E. Designation of renewal 
                                        communities.

``SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.

    ``(a) Designation.--
            ``(1) Definitions.--For purposes of this title, the term 
        `renewal community' means any area--
                    ``(A) which is nominated by 1 or more local 
                governments and the State or States in which it is 
                located for designation as a renewal community 
                (hereafter in this section referred to as a `nominated 
                area'), and
                    ``(B) which the Secretary of Housing and Urban 
                Development designates as a renewal community, after 
                consultation with--
                            ``(i) the Secretaries of Agriculture, 
                        Commerce, Labor, and the Treasury; the Director 
                        of the Office of Management and Budget, and the 
                        Administrator of the Small Business 
                        Administration, and
                            ``(ii) in the case of an area on an Indian 
                        reservation, the Secretary of the Interior.
            ``(2) Number of designations.--
                    ``(A) In general.--Not more than 40 nominated areas 
                may be designated as renewal communities.
                    ``(B) Minimum designation in rural areas.--Of the 
                areas designated under paragraph (1), at least 12 must 
                be areas--
                            ``(i) which are within a local government 
                        jurisdiction or jurisdictions with a population 
                        of less than 50,000,
                            ``(ii) which are outside of a metropolitan 
                        statistical area (within the meaning of section 
                        143(k)(2)(B)), or
                            ``(iii) which are determined by the 
                        Secretary of Housing and Urban Development, 
                        after consultation with the Secretary of 
                        Commerce, to be rural areas.
                One of such 12 areas shall be an area within 
                Mississippi, to be designated by the State of 
                Mississippi, that includes at least 1 census tract 
                within Madison County, Mississippi.
            ``(3) Areas designated based on degree of poverty, etc.--
                    ``(A) In general.--Except as otherwise provided in 
                this section, the nominated areas designated as renewal 
                communities under this subsection shall be those 
                nominated areas with the highest average ranking with 
                respect to the criteria described in subparagraphs (B), 
                (C), and (D) of subsection (c)(3). For purposes of the 
                preceding sentence, an area shall be ranked within each 
                such criterion on the basis of the amount by which the 
                area exceeds such criterion, with the area which 
                exceeds such criterion by the greatest amount given the 
                highest ranking.
                    ``(B) Exception where inadequate course of action, 
                etc.--An area shall not be designated under 
                subparagraph (A) if the Secretary of Housing and Urban 
                Development determines that the course of action 
                described in subsection (d)(2) with respect to such 
                area is inadequate.
                    ``(C) Preference for enterprise communities and 
                empowerment zones.--With respect to the first 20 
                designations made under this section, a preference 
                shall be provided to those nominated areas which are 
                enterprise communities or empowerment zones (and are 
                otherwise eligible for designation under this section).
            ``(4) Limitation on designations.--
                    ``(A) Publication of regulations.--The Secretary of 
                Housing and Urban Development shall prescribe by 
                regulation no later than 4 months after the date of the 
                enactment of this section, after consultation with the 
                officials described in paragraph (1)(B)--
                            ``(i) the procedures for nominating an area 
                        under paragraph (1)(A),
                            ``(ii) the parameters relating to the size 
                        and population characteristics of a renewal 
                        community, and
                            ``(iii) the manner in which nominated areas 
                        will be evaluated based on the criteria 
                        specified in subsection (d).
                    ``(B) Time limitations.--The Secretary of Housing 
                and Urban Development may designate nominated areas as 
                renewal communities only during the period beginning on 
                the first day of the first month following the month in 
                which the regulations described in subparagraph (A) are 
                prescribed and ending on December 31, 2001.
                    ``(C) Procedural rules.--The Secretary of Housing 
                and Urban Development shall not make any designation of 
                a nominated area as a renewal community under paragraph 
                (2) unless--
                            ``(i) the local governments and the States 
                        in which the nominated area is located have the 
                        authority--
                                    ``(I) to nominate such area for 
                                designation as a renewal community,
                                    ``(II) to make the State and local 
                                commitments described in subsection 
                                (d), and
                                    ``(III) to provide assurances 
                                satisfactory to the Secretary of 
                                Housing and Urban Development that such 
                                commitments will be fulfilled,
                            ``(ii) a nomination regarding such area is 
                        submitted in such a manner and in such form, 
                        and contains such information, as the Secretary 
                        of Housing and Urban Development shall by 
                        regulation prescribe, and
                            ``(iii) the Secretary of Housing and Urban 
                        Development determines that any information 
                        furnished is reasonably accurate.
            ``(5) Nomination process for indian reservations.--For 
        purposes of this subchapter, in the case of a nominated area on 
        an Indian reservation, the reservation governing body (as 
        determined by the Secretary of the Interior) shall be treated 
        as being both the State and local governments with respect to 
        such area.
    ``(b) Period for Which Designation Is in Effect.--
            ``(1) In general.--Any designation of an area as a renewal 
        community shall remain in effect during the period beginning on 
        January 1, 2002, and ending on the earliest of--
                    ``(A) December 31, 2009,
                    ``(B) the termination date designated by the State 
                and local governments in their nomination, or
                    ``(C) the date the Secretary of Housing and Urban 
                Development revokes such designation.
            ``(2) Revocation of designation.--The Secretary of Housing 
        and Urban Development may revoke the designation under this 
        section of an area if such Secretary determines that the local 
        government or the State in which the area is located--
                    ``(A) has modified the boundaries of the area, or
                    ``(B) is not complying substantially with, or fails 
                to make progress in achieving, the State or local 
                commitments, respectively, described in subsection (d).
            ``(3) Earlier termination of certain benefits if earlier 
        termination of designation.--If the designation of an area as a 
        renewal community terminates before December 31, 2009, the day 
        after the date of such termination shall be substituted for 
        `January 1, 2010' each place it appears in sections 1400F and 
        1400J with respect to such area.
    ``(c) Area and Eligibility Requirements.--
            ``(1) In general.--The Secretary of Housing and Urban 
        Development may designate a nominated area as a renewal 
        community under subsection (a) only if the area meets the 
        requirements of paragraphs (2) and (3) of this subsection.
            ``(2) Area requirements.--A nominated area meets the 
        requirements of this paragraph if--
                    ``(A) the area is within the jurisdiction of one or 
                more local governments,
                    ``(B) the boundary of the area is continuous, and
                    ``(C) the area--
                            ``(i) has a population of not more than 
                        200,000 and at least--
                                    ``(I) 4,000 if any portion of such 
                                area (other than a rural area described 
                                in subsection (a)(2)(B)(i)) is located 
                                within a metropolitan statistical area 
                                (within the meaning of section 
                                143(k)(2)(B)) which has a population of 
                                50,000 or greater, or
                                    ``(II) 1,000 in any other case, or
                            ``(ii) is entirely within an Indian 
                        reservation (as determined by the Secretary of 
                        the Interior).
            ``(3) Eligibility requirements.--A nominated area meets the 
        requirements of this paragraph if the State and the local 
        governments in which it is located certify in writing (and the 
        Secretary of Housing and Urban Development, after such review 
        of supporting data as he deems appropriate, accepts such 
        certification) that--
                    ``(A) the area is one of pervasive poverty, 
                unemployment, and general distress;
                    ``(B) the unemployment rate in the area, as 
                determined by the most recent available data, was at 
                least 1\1/2\ times the national unemployment rate for 
                the period to which such data relate;
                    ``(C) the poverty rate for each population census 
                tract within the nominated area is at least 20 percent; 
                and
                    ``(D) in the case of an urban area, at least 70 
                percent of the households living in the area have 
                incomes below 80 percent of the median income of 
                households within the jurisdiction of the local 
                government (determined in the same manner as under 
                section 119(b)(2) of the Housing and Community 
                Development Act of 1974).
            ``(4) Consideration of other factors.--The Secretary of 
        Housing and Urban Development, in selecting any nominated area 
        for designation as a renewal community under this section--
                    ``(A) shall take into account--
                            ``(i) the extent to which such area has a 
                        high incidence of crime, or
                            ``(ii) if such area has census tracts 
                        identified in the May 12, 1998, report of the 
                        General Accounting Office regarding the 
                        identification of economically distressed 
                        areas, and
                    ``(B) with respect to 1 of the areas to be 
                designated under subsection (a)(2)(B), may, in lieu of 
                any criteria described in paragraph (3), take into 
                account the existence of outmigration from the area.
    ``(d) Required State and Local Commitments.--
            ``(1) In general.--The Secretary of Housing and Urban 
        Development may designate any nominated area as a renewal 
        community under subsection (a) only if--
                    ``(A) the local government and the State in which 
                the area is located agree in writing that, during any 
                period during which the area is a renewal community, 
                such governments will follow a specified course of 
                action which meets the requirements of paragraph (2) 
                and is designed to reduce the various burdens borne by 
                employers or employees in such area, and
                    ``(B) the economic growth promotion requirements of 
                paragraph (3) are met.
            ``(2) Course of action.--
                    ``(A) In general.--A course of action meets the 
                requirements of this paragraph if such course of action 
                is a written document, signed by a State (or local 
                government) and neighborhood organizations, which 
                evidences a partnership between such State or 
                government and community-based organizations and which 
                commits each signatory to specific and measurable 
                goals, actions, and timetables. Such course of action 
                shall include at least 4 of the following:
                            ``(i) A reduction of tax rates or fees 
                        applying within the renewal community.
                            ``(ii) An increase in the level of 
                        efficiency of local services within the renewal 
                        community.
                            ``(iii) Crime reduction strategies, such as 
                        crime prevention (including the provision of 
                        crime prevention services by nongovernmental 
                        entities).
                            ``(iv) Actions to reduce, remove, simplify, 
                        or streamline governmental requirements 
                        applying within the renewal community.
                            ``(v) Involvement in the program by private 
                        entities, organizations, neighborhood 
                        organizations, and community groups, 
                        particularly those in the renewal community, 
                        including a commitment from such private 
                        entities to provide jobs and job training for, 
                        and technical, financial, or other assistance 
                        to, employers, employees, and residents from 
                        the renewal community.
                            ``(vi) The gift (or sale at below fair 
                        market value) of surplus real property (such as 
                        land, homes, and commercial or industrial 
                        structures) in the renewal community to 
                        neighborhood organizations, community 
                        development corporations, or private companies.
                    ``(B) Recognition of past efforts.--For purposes of 
                this section, in evaluating the course of action agreed 
                to by any State or local government, the Secretary of 
                Housing and Urban Development shall take into account 
                the past efforts of such State or local government in 
                reducing the various burdens borne by employers and 
                employees in the area involved.
            ``(3) Economic growth promotion requirements.--The economic 
        growth promotion requirements of this paragraph are met with 
        respect to a nominated area if the local government and the 
        State in which such area is located certify in writing that 
        such government and State (respectively) have repealed or 
        reduced, will not enforce, or will reduce within the nominated 
        area at least 4 of the following:
                    ``(A) Licensing requirements for occupations that 
                do not ordinarily require a professional degree.
                    ``(B) Zoning restrictions on home-based businesses 
                which do not create a public nuisance.
                    ``(C) Permit requirements for street vendors who do 
                not create a public nuisance.
                    ``(D) Zoning or other restrictions that impede the 
                formation of schools or child care centers.
                    ``(E) Franchises or other restrictions on 
                competition for businesses providing public services, 
                including taxicabs, jitneys, cable television, or trash 
                hauling.
        This paragraph shall not apply to the extent that such 
        regulation of businesses and occupations is necessary for and 
        well-tailored to the protection of health and safety.
    ``(e) Coordination With Treatment of Empowerment Zones and 
Enterprise Communities.--For purposes of this title, the designation 
under section 1391 of any area as an empowerment zone or enterprise 
community shall cease to be in effect as of the date that the 
designation of any portion of such area as a renewal community takes 
effect.
    ``(f) Definitions and Special Rules.--For purposes of this 
subchapter--
            ``(1) Governments.--If more than one government seeks to 
        nominate an area as a renewal community, any reference to, or 
        requirement of, this section shall apply to all such 
        governments.
            ``(2) Local government.--The term `local government' 
        means--
                    ``(A) any county, city, town, township, parish, 
                village, or other general purpose political subdivision 
                of a State, and
                    ``(B) any combination of political subdivisions 
                described in subparagraph (A) recognized by the 
                Secretary of Housing and Urban Development.
            ``(3) Application of rules relating to census tracts.--The 
        rules of section 1392(b)(4) shall apply.
            ``(4) Census data.--Population and poverty rate shall be 
        determined by using 1990 census data.
    ``(g) Priority for District of Columbia Nominated Area.--For 
purposes of this subchapter--
            ``(1) In general.--One nominated area within the District 
        of Columbia shall be treated for purposes of subsection (a)(3) 
        as having the highest average with respect to the criteria 
        described in subparagraphs (B), (C), and (D) of subsection 
        (c)(3).
            ``(2) Date of designation.--Notwithstanding subsection 
        (b)(1), the designation of a nominated area within the District 
        of Columbia as a renewal community shall take effect on January 
        1, 2003.
            ``(3) Nomination.--The District of Columbia shall be 
        treated as being both a State and local government with respect 
        to such area.

 ``PART II--RENEWAL COMMUNITY CAPITAL GAIN; RENEWAL COMMUNITY BUSINESS

                              ``Sec. 1400F. Renewal community capital 
                                        gain.
                              ``Sec. 1400G. Renewal community business 
                                        defined.

``SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.

    ``(a) General Rule.--Gross income does not include any qualified 
capital gain from the sale or exchange of a qualified community asset 
held for more than 5 years.
    ``(b) Qualified Community Asset.--For purposes of this section--
            ``(1) In general.--The term `qualified community asset' 
        means--
                    ``(A) any qualified community stock,
                    ``(B) any qualified community partnership interest, 
                and
                    ``(C) any qualified community business property.
            ``(2) Qualified community stock.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `qualified community stock' 
                means any stock in a domestic corporation if--
                            ``(i) such stock is acquired by the 
                        taxpayer after December 31, 2001, and before 
                        January 1, 2010, at its original issue 
                        (directly or through an underwriter) from the 
                        corporation solely in exchange for cash,
                            ``(ii) as of the time such stock was 
                        issued, such corporation was a renewal 
                        community business (or, in the case of a new 
                        corporation, such corporation was being 
                        organized for purposes of being a renewal 
                        community business), and
                            ``(iii) during substantially all of the 
                        taxpayer's holding period for such stock, such 
                        corporation qualified as a renewal community 
                        business.
                    ``(B) Redemptions.--A rule similar to the rule of 
                section 1202(c)(3) shall apply for purposes of this 
                paragraph.
            ``(3) Qualified community partnership interest.--The term 
        `qualified community partnership interest' means any capital or 
        profits interest in a domestic partnership if--
                    ``(A) such interest is acquired by the taxpayer 
                after December 31, 2001, and before January 1, 2010, 
                from the partnership solely in exchange for cash,
                    ``(B) as of the time such interest was acquired, 
                such partnership was a renewal community business (or, 
                in the case of a new partnership, such partnership was 
                being organized for purposes of being a renewal 
                community business), and
                    ``(C) during substantially all of the taxpayer's 
                holding period for such interest, such partnership 
                qualified as a renewal community business.
        A rule similar to the rule of paragraph (2)(B) shall apply for 
        purposes of this paragraph.
            ``(4) Qualified community business property.--
                    ``(A) In general.--The term `qualified community 
                business property' means tangible property if--
                            ``(i) such property was acquired by the 
                        taxpayer by purchase (as defined in section 
                        179(d)(2)) after December 31, 2001, and before 
                        January 1, 2010,
                            ``(ii) the original use of such property in 
                        the renewal community commences with the 
                        taxpayer, and
                            ``(iii) during substantially all of the 
                        taxpayer's holding period for such property, 
                        substantially all of the use of such property 
                        was in a renewal community business of the 
                        taxpayer.
                    ``(B) Special rule for substantial improvements.--
                The requirements of clauses (i) and (ii) of 
                subparagraph (A) shall be treated as satisfied with 
                respect to--
                            ``(i) property which is substantially 
                        improved by the taxpayer before January 1, 
                        2010, and
                            ``(ii) any land on which such property is 
                        located.
                The determination of whether a property is 
                substantially improved shall be made under clause (ii) 
                of section 1400B(b)(4)(B), except that `December 31, 
                2001' shall be substituted for `December 31, 1997' in 
                such clause.
    ``(c) Qualified Capital Gain.--For purposes of this section--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the term `qualified capital gain` means any gain 
        recognized on the sale or exchange of--
                    ``(A) a capital asset, or
                    ``(B) property used in the trade or business (as 
                defined in section 1231(b)).
            ``(2) Gain before 2002 or after 2014 not qualified.--The 
        term `qualified capital gain' shall not include any gain 
        attributable to periods before January 1, 2002, or after 
        December 31, 2014.
            ``(3) Certain rules to apply.--Rules similar to the rules 
        of paragraphs (3), (4), and (5) of section 1400B(e) shall apply 
        for purposes of this subsection.
    ``(d) Certain Rules To Apply.--For purposes of this section, rules 
similar to the rules of paragraphs (5), (6), and (7) of subsection (b), 
and subsections (f) and (g), of section 1400B shall apply; except that 
for such purposes section 1400B(g)(2) shall be applied by substituting 
`January 1, 2002' for `January 1, 1998' and `December 31, 2014' for 
`December 31, 2007'.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out the purposes of this section, 
including regulations to prevent the avoidance of the purposes of this 
section.

``SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.

    ``For purposes of this subchapter, the term `renewal community 
business' means any entity or proprietorship which would be a qualified 
business entity or qualified proprietorship under section 1397C if 
references to renewal communities were substituted for references to 
empowerment zones in such section.

                   ``PART III--ADDITIONAL INCENTIVES

                              ``Sec. 1400H. Renewal community 
                                        employment credit.
                              ``Sec. 1400I. Commercial revitalization 
                                        deduction.
                              ``Sec. 1400J. Increase in expensing under 
                                        section 179.

``SEC. 1400H. RENEWAL COMMUNITY EMPLOYMENT CREDIT.

    ``(a) In General.--Subject to the modification in subsection (b), a 
renewal community shall be treated as an empowerment zone for purposes 
of section 1396 with respect to wages paid or incurred after December 
31, 2001.
    ``(b) Modification.--In applying section 1396 with respect to 
renewal communities--
            ``(1) the applicable percentage shall be 15 percent, and
            ``(2) subsection (c) thereof shall be applied by 
        substituting `$10,000' for `$15,000' each place it appears.

``SEC. 1400I. COMMERCIAL REVITALIZATION DEDUCTION.

    ``(a) General Rule.--At the election of the taxpayer, either--
            ``(1) one-half of any qualified revitalization expenditures 
        chargeable to capital account with respect to any qualified 
        revitalization building shall be allowable as a deduction for 
        the taxable year in which the building is placed in service, or
            ``(2) a deduction for all such expenditures shall be 
        allowable ratably over the 120-month period beginning with the 
        month in which the building is placed in service.
    ``(b) Qualified Revitalization Buildings and Expenditures.--For 
purposes of this section--
            ``(1) Qualified revitalization building.--The term 
        `qualified revitalization building' means any building (and its 
        structural components) if--
                    ``(A) the building is placed in service by the 
                taxpayer in a renewal community and the original use of 
                the building begins with the taxpayer, or
                    ``(B) in the case of such building not described in 
                subparagraph (A), such building--
                            ``(i) is substantially rehabilitated 
                        (within the meaning of section 47(c)(1)(C)) by 
                        the taxpayer, and
                            ``(ii) is placed in service by the taxpayer 
                        after the rehabilitation in a renewal 
                        community.
            ``(2) Qualified revitalization expenditure.--
                    ``(A) In general.--The term `qualified 
                revitalization expenditure' means any amount properly 
                chargeable to capital account for property for which 
                depreciation is allowable under section 168 (without 
                regard to this section) and which is--
                            ``(i) nonresidential real property (as 
                        defined in section 168(e)), or
                            ``(ii) section 1250 property (as defined in 
                        section 1250(c)) which is functionally related 
                        and subordinate to property described in clause 
                        (i).
                    ``(B) Certain expenditures not included.--
                            ``(i) Acquisition cost.--In the case of a 
                        building described in paragraph (1)(B), the 
                        cost of acquiring the building or interest 
                        therein shall be treated as a qualified 
                        revitalization expenditure only to the extent 
                        that such cost does not exceed 30 percent of 
                        the aggregate qualified revitalization 
                        expenditures (determined without regard to such 
                        cost) with respect to such building.
                            ``(ii) Credits.--The term `qualified 
                        revitalization expenditure' does not include 
                        any expenditure which the taxpayer may take 
                        into account in computing any credit allowable 
                        under this title unless the taxpayer elects to 
                        take the expenditure into account only for 
                        purposes of this section.
    ``(c) Dollar limitation.--The aggregate amount which may be treated 
as qualified revitalization expenditures with respect to any qualified 
revitalization building shall not exceed the lesser of--
            ``(1) $10,000,000, or
            ``(2) the commercial revitalization expenditure amount 
        allocated to such building under this section by the commercial 
        revitalization agency for the State in which the building is 
        located.
    ``(d) Commercial Revitalization Expenditure Amount.--
            ``(1) In general.--The aggregate commercial revitalization 
        expenditure amount which a commercial revitalization agency may 
        allocate for any calendar year is the amount of the State 
        commercial revitalization expenditure ceiling determined under 
        this paragraph for such calendar year for such agency.
            ``(2) State commercial revitalization expenditure 
        ceiling.--The State commercial revitalization expenditure 
        ceiling applicable to any State--
                    ``(A) for each calendar year after 2001 and before 
                2010 is $12,000,000 for each renewal community in the 
                State, and
                    ``(B) for each calendar year thereafter is zero.
            ``(3) Commercial revitalization agency.--For purposes of 
        this section, the term `commercial revitalization agency' means 
        any agency authorized by a State to carry out this section.
            ``(4) Time and manner of allocations.--Allocations under 
        this section shall be made at the same time and in the same 
        manner as under paragraphs (1) and (7) of section 42(h).
    ``(e) Responsibilities of Commercial Revitalization Agencies.--
            ``(1) Plans for allocation.--Notwithstanding any other 
        provision of this section, the commercial revitalization 
        expenditure amount with respect to any building shall be zero 
        unless--
                    ``(A) such amount was allocated pursuant to a 
                qualified allocation plan of the commercial 
                revitalization agency which is approved (in accordance 
                with rules similar to the rules of section 147(f)(2) 
                (other than subparagraph (B)(ii) thereof)) by the 
                governmental unit of which such agency is a part; and
                    ``(B) such agency notifies the chief executive 
                officer (or its equivalent) of the local jurisdiction 
                within which the building is located of such allocation 
                and provides such individual a reasonable opportunity 
                to comment on the allocation.
            ``(2) Qualified allocation plan.--For purposes of this 
        subsection, the term `qualified allocation plan' means any 
        plan--
                    ``(A) which sets forth selection criteria to be 
                used to determine priorities of the commercial 
                revitalization agency which are appropriate to local 
                conditions,
                    ``(B) which considers--
                            ``(i) the degree to which a project 
                        contributes to the implementation of a 
                        strategic plan that is devised for a renewal 
                        community through a citizen participation 
                        process,
                            ``(ii) the amount of any increase in 
                        permanent, full-time employment by reason of 
                        any project, and
                            ``(iii) the active involvement of residents 
                        and nonprofit groups within the renewal 
                        community, and
                    ``(C) which provides a procedure that the agency 
                (or its agent) will follow in monitoring compliance 
                with this section.
    ``(f) Special Rules.--
            ``(1) Deduction in lieu of depreciation.--The deduction 
        provided by this section for qualified revitalization 
        expenditures shall--
                    ``(A) with respect to the deduction determined 
                under subsection (a)(1), be in lieu of any depreciation 
                deduction otherwise allowable on account of one-half of 
                such expenditures, and
                    ``(B) with respect to the deduction determined 
                under subsection (a)(2), be in lieu of any depreciation 
                deduction otherwise allowable on account of all of such 
                expenditures.
            ``(2) Basis adjustment, etc.--For purposes of sections 1016 
        and 1250, the deduction under this section shall be treated in 
        the same manner as a depreciation deduction. For purposes of 
        section 1250(b)(5), the straight line method of adjustment 
        shall be determined without regard to this section.
            ``(3) Substantial rehabilitations treated as separate 
        buildings.--A substantial rehabilitation (within the meaning of 
        section 47(c)(1)(C)) of a building shall be treated as a 
        separate building for purposes of subsection (a).
            ``(4) Clarification of allowance of deduction under minimum 
        tax.--Notwithstanding section 56(a)(1), the deduction under 
        this section shall be allowed in determining alternative 
        minimum taxable income under section 55.
    ``(g) Termination.--This section shall not apply to any building 
placed in service after December 31, 2009.

``SEC. 1400J. INCREASE IN EXPENSING UNDER SECTION 179.

    ``(a) In General.--For purposes of section 1397A--
            ``(1) a renewal community shall be treated as an 
        empowerment zone,
            ``(2) a renewal community business shall be treated as an 
        enterprise zone business, and
            ``(3) qualified renewal property shall be treated as 
        qualified zone property.
    ``(b) Qualified Renewal Property.--For purposes of this section--
            ``(1) In general.--The term `qualified renewal property' 
        means any property to which section 168 applies (or would apply 
        but for section 179) if--
                    ``(A) such property was acquired by the taxpayer by 
                purchase (as defined in section 179(d)(2)) after 
                December 31, 2001, and before January 1, 2010, and
                    ``(B) such property would be qualified zone 
                property (as defined in section 1397D) if references to 
                renewal communities were substituted for references to 
                empowerment zones in section 1397D.
            ``(2) Certain rules to apply.--The rules of subsections 
        (a)(2) and (b) of section 1397D shall apply for purposes of 
        this section.''.
    (b) Exception for Commercial Revitalization Deduction From Passive 
Loss Rules.--
            (1) Paragraph (3) of section 469(i) is amended by 
        redesignating subparagraphs (C), (D), and (E) as subparagraphs 
        (D), (E), and (F), respectively, and by inserting after 
        subparagraph (B) the following new subparagraph:
                    ``(C) Exception for commercial revitalization 
                deduction.--Subparagraph (A) shall not apply to any 
                portion of the passive activity loss for any taxable 
                year which is attributable to the commercial 
                revitalization deduction under section 1400I.''.
            (2) Subparagraph (E) of section 469(i)(3), as redesignated 
        by subparagraph (A), is amended to read as follows:
                    ``(E) Ordering rules to reflect exceptions and 
                separate phase-outs.--If subparagraph (B), (C), or (D) 
                applies for a taxable year, paragraph (1) shall be 
                applied--
                            ``(i) first to the portion of the passive 
                        activity loss to which subparagraph (C) does 
                        not apply,
                            ``(ii) second to the portion of the passive 
                        activity credit to which subparagraph (B) or 
                        (D) does not apply,
                            ``(iii) third to the portion of such credit 
                        to which subparagraph (B) applies,
                            ``(iv) fourth to the portion of such loss 
                        to which subparagraph (C) applies, and
                            ``(v) then to the portion of such credit to 
                        which subparagraph (D) applies.''.
            (3)(A) Subparagraph (B) of section 469(i)(6) is amended by 
        striking ``or'' at the end of clause (i), by striking the 
        period at the end of clause (ii) and inserting ``, or'', and by 
        adding at the end the following new clause:
                            ``(iii) any deduction under section 1400I 
                        (relating to commercial revitalization 
                        deduction).''.
            (B) The heading for such subparagraph (B) is amended by 
        striking ``or rehabilitation credit'' and inserting ``, 
        rehabilitation credit, or commercial revitalization 
        deduction''.
    (c) Audit and Report.--Not later than January 31 of 2004, 2007, and 
2010, the Comptroller General of the United States shall, pursuant to 
an audit of the renewal community program established under section 
1400E of the Internal Revenue Code of 1986 (as added by subsection (a)) 
and the empowerment zone and enterprise community program under 
subchapter U of chapter 1 of such Code, report to Congress on such 
program and its effect on poverty, unemployment, and economic growth 
within the designated renewal communities, empowerment zones, and 
enterprise communities.
    (d) Clerical Amendment.--The table of subchapters for chapter 1 is 
amended by adding at the end the following new item:

                ``Subchapter X. Renewal Communities.''.

SEC. 602. WORK OPPORTUNITY CREDIT FOR HIRING YOUTH RESIDING IN RENEWAL 
              COMMUNITIES.

    (a) High-Risk Youth.--Subparagraphs (A)(ii) and (B) of section 
51(d)(5) are each amended by striking ``empowerment zone or enterprise 
community'' and inserting ``empowerment zone, enterprise community, or 
renewal community''.
    (b) Qualified Summer Youth Employee.--Clause (iv) of section 
51(d)(7)(A) is amended by striking ``empowerment zone or enterprise 
community'' and inserting ``empowerment zone, enterprise community, or 
renewal community''.
    (c) Headings.--Paragraphs (5)(B) and (7)(C) of section 51(d) are 
each amended by inserting ``or community'' in the heading after 
``zone''.
    (d) Effective Date.--The amendments made by this section shall 
apply to individuals who begin work for the employer after December 31, 
2001.

   Subtitle B--Extension and Expansion of Empowerment Zone Incentives

SEC. 611. AUTHORITY TO DESIGNATE 9 ADDITIONAL EMPOWERMENT ZONES.

    Section 1391 is amended by adding at the end the following new 
subsection:
    ``(h) Additional Designations Permitted.--
            ``(1) In general.--In addition to the areas designated 
        under subsections (a) and (g), the appropriate Secretaries may 
        designate in the aggregate an additional 9 nominated areas as 
        empowerment zones under this section, subject to the 
        availability of eligible nominated areas. Of that number, not 
        more than seven may be designated in urban areas and not more 
        than 2 may be designated in rural areas.
            ``(2) Period designations may be made and take effect.--A 
        designation may be made under this subsection after the date of 
        the enactment of this subsection and before January 1, 2002. 
        Subject to subparagraphs (B) and (C) of subsection (d)(1), such 
        designations shall remain in effect during the period beginning 
        on January 1, 2002, and ending on December 31, 2009.
            ``(3) Modifications to eligibility criteria, etc.--The 
        rules of subsection (g)(3) shall apply to designations under 
        this subsection.''.

SEC. 612. EXTENSION OF EMPOWERMENT ZONE TREATMENT THROUGH 2009.

    Subparagraph (A) of section 1391(d)(1) (relating to period for 
which designation is in effect) is amended to read as follows:
                    ``(A)(i) in the case of an empowerment zone, 
                December 31, 2009, or
                    ``(ii) in the case of an enterprise community, the 
                close of the 10th calendar year beginning on or after 
                such date of designation,''.

SEC. 613. 20 PERCENT EMPLOYMENT CREDIT FOR ALL EMPOWERMENT ZONES

    (a) 20 Percent Credit.--Subsection (b) of section 1396 (relating to 
empowerment zone employment credit) is amended to read as follows:
    ``(b) Applicable Percentage.--For purposes of this section, the 
applicable percentage is 20 percent.''.
    (b) All Empowerment Zones Eligible for Credit.--Section 1396 is 
amended by striking subsection (e).
    (c) Conforming Amendment.--Subsection (d) of section 1400 is 
amended to read as follows:
    ``(d) Special Rule for Application of Employment Credit.--With 
respect to the DC Zone, section 1396(d)(1)(B) (relating to empowerment 
zone employment credit) shall be applied by substituting `the District 
of Columbia' for `such empowerment zone'.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to wages paid or incurred after December 31, 2001.

SEC. 614. INCREASED EXPENSING UNDER SECTION 179.

    (a) In General.--Subparagraph (A) of section 1397A(a)(1) is amended 
by striking ``$20,000'' and inserting ``$35,000''.
    (b) Expensing for Property Used in Developable Sites.--Section 
1397A is amended by striking subsection (c).
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 615. HIGHER LIMITS ON TAX-EXEMPT EMPOWERMENT ZONE FACILITY BONDS.

    (a) In General.--Paragraph (3) of section 1394(f) (relating to 
bonds for empowerment zones designated under section 1391(g)) is 
amended to read as follows:
            ``(3) Empowerment zone facility bond.--For purposes of this 
        subsection, the term `empowerment zone facility bond' means any 
        bond which would be described in subsection (a) if--
                    ``(A) in the case of obligations issued before 
                January 1, 2002, only empowerment zones designated 
                under section 1391(g) were taken into account under 
                sections 1397C and 1397D, and
                    ``(B) in the case of obligations issued after 
                December 31, 2001, all empowerment zones (other than 
                the District of Columbia) were taken into account under 
                sections 1397C and 1397D.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2001.

SEC. 616. NONRECOGNITION OF GAIN ON ROLLOVER OF EMPOWERMENT ZONE 
              INVESTMENTS.

    (a) In General.--Part III of subchapter U of chapter 1 is amended--
            (1) by redesignating subpart C as subpart D;
            (2) by redesignating sections 1397B and 1397C as sections 
        1397C and 1397D, respectively; and
            (3) by inserting after subpart B the following new subpart:

  ``Subpart C--Nonrecognition of Gain on Rollover of Empowerment Zone 
                              Investments

                              ``Sec. 1397B. Nonrecognition of Gain on 
                                        Rollover of Empowerment Zone 
                                        Investments.

``SEC. 1397B. NONRECOGNITION OF GAIN ON ROLLOVER OF EMPOWERMENT ZONE 
              INVESTMENTS.

    ``(a) Nonrecognition of Gain.--In the case of any sale of a 
qualified empowerment zone asset held by the taxpayer for more than 1 
year and with respect to which such taxpayer elects the application of 
this section, gain from such sale shall be recognized only to the 
extent that the amount realized on such sale exceeds--
            ``(1) the cost of any qualified empowerment zone asset 
        (with respect to the same zone as the asset sold) purchased by 
        the taxpayer during the 60-day period beginning on the date of 
        such sale, reduced by
            ``(2) any portion of such cost previously taken into 
        account under this section.
    ``(b) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Qualified empowerment zone asset.--
                    ``(A) In general.--The term `qualified empowerment 
                zone asset' means any property which would be a 
                qualified community asset (as defined in section 1400F) 
                if in section 1400F--
                            ``(i) references to empowerment zones were 
                        substituted for references to renewal 
                        communities,
                            ``(ii) references to enterprise zone 
                        businesses (as defined in section 1397C) were 
                        substituted for references to renewal community 
                        businesses, and
                            ``(iii) the date of the enactment of this 
                        paragraph were substituted for `December 31, 
                        2001' each place it appears.
                    ``(B) Treatment of dc zone.--The District of 
                Columbia Enterprise Zone shall not be treated as an 
                empowerment zone for purposes of this section.
            ``(2) Certain gain not eligible for rollover.--This section 
        shall not apply to--
                    ``(A) any gain which is treated as ordinary income 
                for purposes of this subtitle, and
                    ``(B) any gain which is attributable to real 
                property, or an intangible asset, which is not an 
                integral part of an enterprise zone business.
            ``(3) Purchase.--A taxpayer shall be treated as having 
        purchased any property if, but for paragraph (4), the 
        unadjusted basis of such property in the hands of the taxpayer 
        would be its cost (within the meaning of section 1012).
            ``(4) Basis adjustments.--If gain from any sale is not 
        recognized by reason of subsection (a), such gain shall be 
        applied to reduce (in the order acquired) the basis for 
        determining gain or loss of any qualified empowerment zone 
        asset which is purchased by the taxpayer during the 60-day 
        period described in subsection (a). This paragraph shall not 
        apply for purposes of section 1202.
            ``(5) Holding period.--For purposes of determining whether 
        the nonrecognition of gain under subsection (a) applies to any 
        qualified empowerment zone asset which is sold--
                    ``(A) the taxpayer's holding period for such asset 
                and the asset referred to in subsection (a)(1) shall be 
                determined without regard to section 1223, and
                    ``(B) only the first year of the taxpayer's holding 
                period for the asset referred to in subsection (a)(1) 
                shall be taken into account for purposes of paragraphs 
                (2)(A)(iii), (3)(C), and (4)(A)(iii) of section 
                1400F(b).''.
    (b) Conforming Amendments.--
            (1) Paragraph (23) of section 1016(a) is amended--
                    (A) by striking ``or 1045'' and inserting ``1045, 
                or 1397B'', and
                    (B) by striking ``or 1045(b)(4)'' and inserting 
                ``1045(b)(4), or 1397B(b)(4)''.
            (2) Paragraph (15) of section 1223 is amended to read as 
        follows:
            ``(15) Except for purposes of sections 1202(a)(2), 
        1202(c)(2)(A), 1400B(b), and 1400F(b), in determining the 
        period for which the taxpayer has held property the acquisition 
        of which resulted under section 1045 or 1397B in the 
        nonrecognition of any part of the gain realized on the sale of 
        other property, there shall be included the period for which 
        such other property has been held as of the date of such 
        sale.''.
            (3) Paragraph (2) of section 1394(b) is amended--
                    (A) by striking ``section 1397C'' and inserting 
                ``section 1397D'', and
                    (B) by striking ``section 1397C(a)(2)'' and 
                inserting ``section 1397D(a)(2)''.
            (4) Paragraph (3) of section 1394(b) is amended--
                    (A) by striking ``section 1397B'' each place it 
                appears and inserting ``section 1397C'', and
                    (B) by striking ``section 1397B(d)'' and inserting 
                ``section 1397C(d)''.
            (5) Sections 1400(e) and 1400B(c) are each amended by 
        striking ``section 1397B'' each place it appears and inserting 
        ``section 1397C''.
            (6) The table of subparts for part III of subchapter U of 
        chapter 1 is amended by striking the last item and inserting 
        the following new items:

                              ``Subpart C. Nonrecognition of gain on 
                                        rollover of empowerment zone 
                                        investments.
                              ``Subpart D. General provisions.''.
            (7) The table of sections for subpart D of such part III is 
        amended to read as follows:

                              ``Sec. 1397C. Enterprise zone business 
                                        defined.
                              ``Sec. 1397D. Qualified zone property 
                                        defined.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to qualified empowerment zone assets acquired after the date of 
the enactment of this Act.

SEC. 617. INCREASED EXCLUSION OF GAIN ON SALE OF EMPOWERMENT ZONE 
              STOCK.

    (a) In General.--Subsection (a) of section 1202 is amended to read 
as follows:
    ``(a) Exclusion.--
            ``(1) In general.--In the case of a taxpayer other than a 
        corporation, gross income shall not include 50 percent of any 
        gain from the sale or exchange of qualified small business 
        stock held for more than 5 years.
            ``(2) Empowerment zone businesses.--
                    ``(A) In general.--In the case of qualified small 
                business stock acquired after the date of the enactment 
                of this paragraph in a corporation which is a qualified 
                business entity (as defined in section 1397C(b)) during 
                substantially all of the taxpayer's holding period for 
                such stock, paragraph (1) shall be applied by 
                substituting `60 percent' for `50 percent'.
                    ``(B) Certain rules to apply.--Rules similar to the 
                rules of paragraphs (5) and (7) of section 1400B(b) 
                shall apply for purposes of this paragraph.
                    ``(C) Gain after 2014 not qualified.--Subparagraph 
                (A) shall not apply to gain attributable to periods 
                after December 31, 2014.
                    ``(D) Treatment of dc zone.--The District of 
                Columbia Enterprise Zone shall not be treated as an 
                empowerment zone for purposes of this paragraph.''.
    (b) Conforming Amendment.--Paragraph (8) of section 1(h) is amended 
by striking ``means'' and all that follows and inserting ``means the 
excess of--
                    ``(A) the gain which would be excluded from gross 
                income under section 1202 but for the percentage 
                limitation in section 1202(a), over
                    ``(B) the gain excluded from gross income under 
                section 1202.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to stock acquired after the date of the enactment of this Act.

                   Subtitle C--New Markets Tax Credit

SEC. 621. NEW MARKETS TAX CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business-related credits) is amended by adding at the end 
the following new section:

``SEC. 45D. NEW MARKETS TAX CREDIT.

    ``(a) Allowance of Credit.--
            ``(1) In general.--For purposes of section 38, in the case 
        of a taxpayer who holds a qualified equity investment on a 
        credit allowance date of such investment which occurs during 
        the taxable year, the new markets tax credit determined under 
        this section for such taxable year is an amount equal to the 
        applicable percentage of the amount paid to the qualified 
        community development entity for such investment at its 
        original issue.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage is--
                    ``(A) 5 percent with respect to the first 3 credit 
                allowance dates, and
                    ``(B) 6 percent with respect to the remainder of 
                the credit allowance dates.
            ``(3) Credit allowance date.--For purposes of paragraph 
        (1), the term `credit allowance date' means, with respect to 
        any qualified equity investment--
                    ``(A) the date on which such investment is 
                initially made, and
                    ``(B) each of the 6 anniversary dates of such date 
                thereafter.
    ``(b) Qualified Equity Investment.--For purposes of this section--
            ``(1) In general.--The term `qualified equity investment' 
        means any equity investment in a qualified community 
        development entity if--
                    ``(A) such investment is acquired by the taxpayer 
                at its original issue (directly or through an 
                underwriter) solely in exchange for cash,
                    ``(B) substantially all of such cash is used by the 
                qualified community development entity to make 
                qualified low-income community investments, and
                    ``(C) such investment is designated for purposes of 
                this section by the qualified community development 
                entity.
        Such term shall not include any equity investment issued by a 
        qualified community development entity more than 5 years after 
        the date that such entity receives an allocation under 
        subsection (f). Any allocation not used within such 5-year 
        period may be reallocated by the Secretary under subsection 
        (f).
            ``(2) Limitation.--The maximum amount of equity investments 
        issued by a qualified community development entity which may be 
        designated under paragraph (1)(C) by such entity shall not 
        exceed the portion of the limitation amount allocated under 
        subsection (f) to such entity.
            ``(3) Safe harbor for determining use of cash.--The 
        requirement of paragraph (1)(B) shall be treated as met if at 
        least 85 percent of the aggregate gross assets of the qualified 
        community development entity are invested in qualified low-
        income community investments.
            ``(4) Treatment of subsequent purchasers.--The term 
        `qualified equity investment' includes any equity investment 
        which would (but for paragraph (1)(A)) be a qualified equity 
        investment in the hands of the taxpayer if such investment was 
        a qualified equity investment in the hands of a prior holder.
            ``(5) Redemptions.--A rule similar to the rule of section 
        1202(c)(3) shall apply for purposes of this subsection.
            ``(6) Equity investment.--The term `equity investment' 
        means--
                    ``(A) any stock (other than nonqualified preferred 
                stock as defined in section 351(g)(2)) in an entity 
                which is a corporation, and
                    ``(B) any capital interest in an entity which is a 
                partnership.
    ``(c) Qualified Community Development Entity.--For purposes of this 
section--
            ``(1) In general.--The term `qualified community 
        development entity' means any domestic corporation or 
        partnership if--
                    ``(A) the primary mission of the entity is serving, 
                or providing investment capital for, low-income 
                communities or low-income persons,
                    ``(B) the entity maintains accountability to 
                residents of low-income communities through their 
                representation on any governing board of the entity or 
                on any advisory board to the entity, and
                    ``(C) the entity is certified by the Secretary for 
                purposes of this section as being a qualified community 
                development entity.
            ``(2) Special rules for certain organizations.--The 
        requirements of paragraph (1) shall be treated as met by--
                    ``(A) any specialized small business investment 
                company (as defined in section 1044(c)(3)), and
                    ``(B) any community development financial 
                institution (as defined in section 103 of the Community 
                Development Banking and Financial Institutions Act of 
                1994 (12 U.S.C. 4702)).
    ``(d) Qualified Low-Income Community Investments.--For purposes of 
this section--
            ``(1) In general.--The term `qualified low-income community 
        investment' means--
                    ``(A) any equity investment in, or loan to, any 
                qualified active low-income community business,
                    ``(B) the purchase from another community 
                development entity of any loan made by such entity 
                which is a qualified low-income community investment,
                    ``(C) financial counseling and other services 
                specified in regulations prescribed by the Secretary to 
                businesses located in, and residents of, low-income 
                communities, and
                    ``(D) any equity investment in, or loan to, any 
                qualified community development entity.
            ``(2) Qualified active low-income community business.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the term `qualified active low-income community 
                business' means, with respect to any taxable year, any 
                corporation (including a nonprofit corporation) or 
                partnership if for such year--
                            ``(i) at least 50 percent of the total 
                        gross income of such entity is derived from the 
                        active conduct of a qualified business within 
                        any low-income community,
                            ``(ii) a substantial portion of the use of 
                        the tangible property of such entity (whether 
                        owned or leased) is within any low-income 
                        community,
                            ``(iii) a substantial portion of the 
                        services performed for such entity by its 
                        employees are performed in any low-income 
                        community,
                            ``(iv) less than 5 percent of the average 
                        of the aggregate unadjusted bases of the 
                        property of such entity is attributable to 
                        collectibles (as defined in section 408(m)(2)) 
                        other than collectibles that are held primarily 
                        for sale to customers in the ordinary course of 
                        such business, and
                            ``(v) less than 5 percent of the average of 
                        the aggregate unadjusted bases of the property 
                        of such entity is attributable to nonqualified 
                        financial property (as defined in section 
                        1397C(e)).
                    ``(B) Proprietorship.--Such term shall include any 
                business carried on by an individual as a proprietor if 
                such business would meet the requirements of 
                subparagraph (A) were it incorporated.
                    ``(C) Portions of business may be qualified active 
                low-income community business.--The term `qualified 
                active low-income community business' includes any 
                trades or businesses which would qualify as a qualified 
                active low-income community business if such trades or 
                businesses were separately incorporated.
            ``(3) Qualified business.--For purposes of this subsection, 
        the term `qualified business' has the meaning given to such 
        term by section 1397C(d); except that--
                    ``(A) in lieu of applying paragraph (2)(B) thereof, 
                the rental to others of real property located in any 
                low-income community shall be treated as a qualified 
                business if there are substantial improvements located 
                on such property, and
                    ``(B) paragraph (3) thereof shall not apply.
    ``(e) Low-Income Community.--For purposes of this section--
            ``(1) In general.--The term `low-income community' means 
        any population census tract if--
                    ``(A) the poverty rate for such tract is at least 
                20 percent, or
                    ``(B)(i) in the case of a tract not located within 
                a metropolitan area, the median family income for such 
                tract does not exceed 80 percent of statewide median 
                family income, or
                    ``(ii) in the case of a tract located within a 
                metropolitan area, the median family income for such 
                tract does not exceed 80 percent of the greater of 
                statewide median family income or the metropolitan area 
                median family income.
            ``(2) Targeted areas.--The Secretary may designate any area 
        within any census tract as a low-income community if--
                    ``(A) the boundary of such area is continuous,
                    ``(B) the area would satisfy the requirements of 
                paragraph (1) if it were a census tract, and
                    ``(C) an inadequate access to investment capital 
                exists in such area.
            ``(3) Areas not within census tracts.--In the case of an 
        area which is not tracted for population census tracts, the 
        equivalent county divisions (as defined by the Bureau of the 
        Census for purposes of defining poverty areas) shall be used 
        for purposes of determining poverty rates and median family 
        income.
    ``(f) National Limitation on Amount of Investments Designated.--
            ``(1) In general.--There is a new markets tax credit 
        limitation for each calendar year. Such limitation is--
                    ``(A) $1,000,000,000 for 2001,
                    ``(B) $1,500,000,000 for 2002 and 2003,
                    ``(C) $2,000,000,000 for 2004 and 2005, and
                    ``(D) $3,500,000,000 for 2006 and 2007.
            ``(2) Allocation of limitation.--The limitation under 
        paragraph (1) shall be allocated by the Secretary among 
        qualified community development entities selected by the 
        Secretary. In making allocations under the preceding sentence, 
        the Secretary shall give priority to any entity--
                    ``(A) with a record of having successfully provided 
                capital or technical assistance to disadvantaged 
                businesses or communities, or
                    ``(B) which intends to satisfy the requirement 
                under subsection (b)(1)(B) by making qualified low-
                income community investments in 1 or more businesses in 
                which persons unrelated to such entity (within the 
                meaning of section 267(b) or 707(b)(1)) hold the 
                majority equity interest.
            ``(3) Carryover of unused limitation.--If the new markets 
        tax credit limitation for any calendar year exceeds the 
        aggregate amount allocated under paragraph (2) for such year, 
        such limitation for the succeeding calendar year shall be 
        increased by the amount of such excess. No amount may be 
        carried under the preceding sentence to any calendar year after 
        2014.
    ``(g) Recapture of Credit In Certain Cases.--
            ``(1) In general.--If, at any time during the 7-year period 
        beginning on the date of the original issue of a qualified 
        equity investment in a qualified community development entity, 
        there is a recapture event with respect to such investment, 
        then the tax imposed by this chapter for the taxable year in 
        which such event occurs shall be increased by the credit 
        recapture amount.
            ``(2) Credit recapture amount.--For purposes of paragraph 
        (1), the credit recapture amount is an amount equal to the sum 
        of--
                    ``(A) the aggregate decrease in the credits allowed 
                to the taxpayer under section 38 for all prior taxable 
                years which would have resulted if no credit had been 
                determined under this section with respect to such 
                investment, plus
                    ``(B) interest at the underpayment rate established 
                under section 6621 on the amount determined under 
                subparagraph (A) for each prior taxable year for the 
                period beginning on the due date for filing the return 
                for the prior taxable year involved.
        No deduction shall be allowed under this chapter for interest 
        described in subparagraph (B).
            ``(3) Recapture event.--For purposes of paragraph (1), 
        there is a recapture event with respect to an equity investment 
        in a qualified community development entity if--
                    ``(A) such entity ceases to be a qualified 
                community development entity,
                    ``(B) the proceeds of the investment cease to be 
                used as required of subsection (b)(1)(B), or
                    ``(C) such investment is redeemed by such entity.
            ``(4) Special rules.--
                    ``(A) Tax benefit rule.--The tax for the taxable 
                year shall be increased under paragraph (1) only with 
                respect to credits allowed by reason of this section 
                which were used to reduce tax liability. In the case of 
                credits not so used to reduce tax liability, the 
                carryforwards and carrybacks under section 39 shall be 
                appropriately adjusted.
                    ``(B) No credits against tax.--Any increase in tax 
                under this subsection shall not be treated as a tax 
                imposed by this chapter for purposes of determining the 
                amount of any credit under this chapter or for purposes 
                of section 55.
    ``(h) Basis Reduction.--The basis of any qualified equity 
investment shall be reduced by the amount of any credit determined 
under this section with respect to such investment. This subsection 
shall not apply for purposes of sections 1202, 1400B, and 1400F.
    ``(i) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out this section, including 
regulations--
            ``(1) which limit the credit for investments which are 
        directly or indirectly subsidized by other Federal tax benefits 
        (including the credit under section 42 and the exclusion from 
        gross income under section 103),
            ``(2) which prevent the abuse of the purposes of this 
        section,
            ``(3) which provide rules for determining whether the 
        requirement of subsection (b)(1)(B) is treated as met,
            ``(4) which impose appropriate reporting requirements, and
            ``(5) which apply the provisions of this section to newly 
        formed entities.''.
    (b) Credit Made Part of General Business Credit.--
            (1) In general.--Subsection (b) of section 38 is amended by 
        striking ``plus'' at the end of paragraph (11), by striking the 
        period at the end of paragraph (12) and inserting ``, plus'', 
        and by adding at the end the following new paragraph:
            ``(13) the new markets tax credit determined under section 
        45D(a).''.
            (2) Limitation on carryback.--Subsection (d) of section 39 
        is amended by adding at the end the following new paragraph:
            ``(9) No carryback of new markets tax credit before january 
        1, 2001.--No portion of the unused business credit for any 
        taxable year which is attributable to the credit under section 
        45D may be carried back to a taxable year ending before January 
        1, 2001.''.
    (c) Deduction for Unused Credit.--Subsection (c) of section 196 is 
amended by striking ``and'' at the end of paragraph (7), by striking 
the period at the end of paragraph (8) and inserting ``, and'', and by 
adding at the end the following new paragraph:
            ``(9) the new markets tax credit determined under section 
        45D(a).''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by adding at the end 
the following new item:

                              ``Sec. 45D. New markets tax credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to investments made after December 31, 2000.
    (f) Guidance on Allocation of National Limitation.--Not later than 
120 days after the date of the enactment of this Act, the Secretary of 
the Treasury or the Secretary's delegate shall issue guidance which 
specifies--
            (1) how entities shall apply for an allocation under 
        section 45D(f)(2) of the Internal Revenue Code of 1986, as 
        added by this section;
            (2) the competitive procedure through which such 
        allocations are made; and
            (3) the actions that such Secretary or delegate shall take 
        to ensure that such allocations are properly made to 
        appropriate entities.
    (g) Audit and Report.--Not later than January 31 of 2004, 2007, and 
2010, the Comptroller General of the United States shall, pursuant to 
an audit of the new markets tax credit program established under 
section 45D of the Internal Revenue Code of 1986 (as added by 
subsection (a)), report to Congress on such program, including all 
qualified community development entities that receive an allocation 
under the new markets credit under such section.

         Subtitle D--Improvements in Low-Income Housing Credit

SEC. 631. MODIFICATION OF STATE CEILING ON LOW-INCOME HOUSING CREDIT.

    (a) In General.--Clauses (i) and (ii) of section 42(h)(3)(C) 
(relating to State housing credit ceiling) are amended to read as 
follows:
                            ``(i) the unused State housing credit 
                        ceiling (if any) of such State for the 
                        preceding calendar year,
                            ``(ii) the greater of--
                                    ``(I) $1.75 ($1.50 for 2001) 
                                multiplied by the State population, or
                                    ``(II) $2,000,000,''.
    (b) Adjustment of State Ceiling for Increases in Cost-of-Living.--
Paragraph (3) of section 42(h) (relating to housing credit dollar 
amount for agencies) is amended by adding at the end the following new 
subparagraph:
                    ``(H) Cost-of-living adjustment.--
                            ``(i) In general.--In the case of a 
                        calendar year after 2002, the $2,000,000 and 
                        $1.75 amounts in subparagraph (C) shall each be 
                        increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for such calendar year by 
                                substituting `calendar year 2001' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                            ``(ii) Rounding.--
                                    ``(I) In the case of the $2,000,000 
                                amount, any increase under clause (i) 
                                which is not a multiple of $5,000 shall 
                                be rounded to the next lowest multiple 
                                of $5,000.
                                    ``(II) In the case of the $1.75 
                                amount, any increase under clause (i) 
                                which is not a multiple of 5 cents 
                                shall be rounded to the next lowest 
                                multiple of 5 cents.''.
    (c) Conforming Amendments.--
            (1) Section 42(h)(3)(C), as amended by subsection (a), is 
        amended--
                    (A) by striking ``clause (ii)'' in the matter 
                following clause (iv) and inserting ``clause (i)''; and
                    (B) by striking ``clauses (i)'' in the matter 
                following clause (iv) and inserting ``clauses (ii)''.
            (2) Section 42(h)(3)(D)(ii) is amended--
                    (A) by striking ``subparagraph (C)(ii)'' and 
                inserting ``subparagraph (C)(i)''; and
                    (B) by striking ``clauses (i)'' in subclause (II) 
                and inserting ``clauses (ii)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to calendar years after 2000.

SEC. 632. MODIFICATION OF CRITERIA FOR ALLOCATING HOUSING CREDITS AMONG 
              PROJECTS.

    (a) Selection Criteria.--Subparagraph (C) of section 42(m)(1) 
(relating to certain selection criteria must be used) is amended--
            (1) by inserting ``, including whether the project includes 
        the use of existing housing as part of a community 
        revitalization plan'' before the comma at the end of clause 
        (iii); and
            (2) by striking clauses (v), (vi), and (vii) and inserting 
        the following new clauses:
                            ``(v) tenant populations with special 
                        housing needs,
                            ``(vi) public housing waiting lists,
                            ``(vii) tenant populations of individuals 
                        with children, and
                            ``(viii) projects intended for eventual 
                        tenant ownership.''.
    (b) Preference for Community Revitalization Projects Located in 
Qualified Census Tracts.--Clause (ii) of section 42(m)(1)(B) is amended 
by striking ``and'' at the end of subclause (I), by adding ``and'' at 
the end of subclause (II), and by inserting after subclause (II) the 
following new subclause:
                                    ``(III) projects which are located 
                                in qualified census tracts (as defined 
                                in subsection (d)(5)(C)) and the 
                                development of which contributes to a 
                                concerted community revitalization 
                                plan,''.

SEC. 633. ADDITIONAL RESPONSIBILITIES OF HOUSING CREDIT AGENCIES.

    (a) Market Study; Public Disclosure of Rationale for Not Following 
Credit Allocation Priorities.--Subparagraph (A) of section 42(m)(1) 
(relating to responsibilities of housing credit agencies) is amended by 
striking ``and'' at the end of clause (i), by striking the period at 
the end of clause (ii) and inserting a comma, and by adding at the end 
the following new clauses:
                            ``(iii) a comprehensive market study of the 
                        housing needs of low-income individuals in the 
                        area to be served by the project is conducted 
                        before the credit allocation is made and at the 
                        developer's expense by a disinterested party 
                        who is approved by such agency, and
                            ``(iv) a written explanation is available 
                        to the general public for any allocation of a 
                        housing credit dollar amount which is not made 
                        in accordance with established priorities and 
                        selection criteria of the housing credit 
                        agency.''.
    (b) Site Visits.--Clause (iii) of section 42(m)(1)(B) (relating to 
qualified allocation plan) is amended by inserting before the period 
``and in monitoring for noncompliance with habitability standards 
through regular site visits''.

SEC. 634. MODIFICATIONS TO RULES RELATING TO BASIS OF BUILDING WHICH IS 
              ELIGIBLE FOR CREDIT.

    (a) Adjusted Basis To Include Portion of Certain Buildings Used by 
Low-Income Individuals Who Are Not Tenants and by Project Employees.--
Paragraph (4) of section 42(d) (relating to special rules relating to 
determination of adjusted basis) is amended--
            (1) by striking ``subparagraph (B)'' in subparagraph (A) 
        and inserting ``subparagraphs (B) and (C)'';
            (2) by redesignating subparagraph (C) as subparagraph (D); 
        and
            (3) by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) Inclusion of basis of property used to 
                provide services for certain nontenants.--
                            ``(i) In general.--The adjusted basis of 
                        any building located in a qualified census 
                        tract (as defined in paragraph (5)(C)) shall be 
                        determined by taking into account the adjusted 
                        basis of property (of a character subject to 
                        the allowance for depreciation and not 
                        otherwise taken into account) used throughout 
                        the taxable year in providing any community 
                        service facility.
                            ``(ii) Limitation.--The increase in the 
                        adjusted basis of any building which is taken 
                        into account by reason of clause (i) shall not 
                        exceed 10 percent of the eligible basis of the 
                        qualified low-income housing project of which 
                        it is a part. For purposes of the preceding 
                        sentence, all community service facilities 
                        which are part of the same qualified low-income 
                        housing project shall be treated as one 
                        facility.
                            ``(iii) Community service facility.--For 
                        purposes of this subparagraph, the term 
                        `community service facility' means any facility 
                        designed to serve primarily individuals whose 
                        income is 60 percent or less of area median 
                        income (within the meaning of subsection 
                        (g)(1)(B)).''.
    (b) Certain Native American Housing Assistance Disregarded in 
Determining Whether Building Is Federally Subsidized for Purposes of 
the Low-Income Housing Credit.--Subparagraph (E) of section 42(i)(2) 
(relating to determination of whether building is federally subsidized) 
is amended--
            (1) in clause (i), by inserting ``or the Native American 
        Housing Assistance and Self-Determination Act of 1996 (25 
        U.S.C. 4101 et seq.) (as in effect on October 1, 1997)'' after 
        ``this subparagraph)''; and
            (2) in the subparagraph heading, by inserting ``or native 
        american housing assistance'' after ``home assistance''.

SEC. 635. OTHER MODIFICATIONS.

    (a) Allocation of Credit Limit to Certain Buildings.--
            (1) The first sentence of section 42(h)(1)(E)(ii) is 
        amended by striking ``(as of'' the first place it appears and 
        inserting ``(as of the later of the date which is 6 months 
        after the date that the allocation was made or''.
            (2) The last sentence of section 42(h)(3)(C) is amended by 
        striking ``project which'' and inserting ``project which fails 
        to meet the 10 percent test under paragraph (1)(E)(ii) on a 
        date after the close of the calendar year in which the 
        allocation was made or which''.
    (b) Determination of Whether Buildings Are Located in High Cost 
Areas.--The first sentence of section 42(d)(5)(C)(ii)(I) is amended--
            (1) by inserting ``either'' before ``in which 50 percent''; 
        and
            (2) by inserting before the period ``or which has a poverty 
        rate of at least 25 percent''.

SEC. 636. CARRYFORWARD RULES.

    (a) In General.--Clause (ii) of section 42(h)(3)(D) (relating to 
unused housing credit carryovers allocated among certain States) is 
amended by striking ``the excess'' and all that follows and inserting 
``the excess (if any) of--
                                    ``(I) the unused State housing 
                                credit ceiling for the year preceding 
                                such year, over
                                    ``(II) the aggregate housing credit 
                                dollar amount allocated for such 
                                year.''.
    (b) Conforming Amendment.--The second sentence of section 
42(h)(3)(C) (relating to State housing credit ceiling) is amended by 
striking ``clauses (i) and (iii)'' and inserting ``clauses (i) through 
(iv)''.

SEC. 637. EFFECTIVE DATE.

    Except as otherwise provided in this title, the amendments made by 
this title shall apply to--
            (1) housing credit dollar amounts allocated after December 
        31, 2000; and
            (2) buildings placed in service after such date to the 
        extent paragraph (1) of section 42(h) of the Internal Revenue 
        Code of 1986 does not apply to any building by reason of 
        paragraph (4) thereof, but only with respect to bonds issued 
        after such date.

     Subtitle E--Other Community Renewal and New Markets Assistance

SEC. 641. TRANSFER OF UNOCCUPIED AND SUBSTANDARD HUD-HELD HOUSING TO 
              LOCAL GOVERNMENTS AND COMMUNITY DEVELOPMENT CORPORATIONS.

    Section 204 of the Departments of Veterans Affairs and Housing and 
Urban Development, and Independent Agencies Appropriations Act, 1997 
(12 U.S.C. 1715z-11a) is amended--
            (1) by striking ``Flexible Authority.--'' and inserting 
        ``Disposition of HUD-Owned Properties. (a) Flexible Authority 
        for Multifamily Projects.--''; and
            (2) by adding at the end the following new subsection:
    ``(b) Transfer of Unoccupied and Substandard Housing to Local 
Governments and Community Development Corporations.--
            ``(1) Transfer authority.--Notwithstanding the authority 
        under subsection (a) and the last sentence of section 204(g) of 
        the National Housing Act (12 U.S.C. 1710(g)), the Secretary of 
        Housing and Urban Development shall transfer ownership of any 
        qualified HUD property, subject to the requirements of this 
        section, to a unit of general local government having 
        jurisdiction for the area in which the property is located or 
        to a community development corporation which operates within 
        such a unit of general local government in accordance with this 
        subsection, but only to the extent that units of general local 
        government and community development corporations consent to 
        transfer and the Secretary determines that such transfer is 
        practicable.
            ``(2) Qualified hud properties.--For purposes of this 
        subsection, the term `qualified HUD property' means any 
        property for which, as of the date that notification of the 
        property is first made under paragraph (3)(B), not less than 6 
        months have elapsed since the later of the date that the 
        property was acquired by the Secretary or the date that the 
        property was determined to be unoccupied or substandard, that 
        is owned by the Secretary and is--
                    ``(A) an unoccupied multifamily housing project;
                    ``(B) a substandard multifamily housing project; or
                    ``(C) an unoccupied single family property that--
                            ``(i) has been determined by the Secretary 
                        not to be an eligible asset under section 
                        204(h) of the National Housing Act (12 U.S.C. 
                        1710(h)); or
                            ``(ii) is an eligible asset under such 
                        section 204(h), but--
                                    ``(I) is not subject to a specific 
                                sale agreement under such section; and
                                    ``(II) has been determined by the 
                                Secretary to be inappropriate for 
                                continued inclusion in the program 
                                under such section 204(h) pursuant to 
                                paragraph (10) of such section.
            ``(3) Timing.--The Secretary shall establish procedures 
        that provide for--
                    ``(A) time deadlines for transfers under this 
                subsection;
                    ``(B) notification to units of general local 
                government and community development corporations of 
                qualified HUD properties in their jurisdictions;
                    ``(C) such units and corporations to express 
                interest in the transfer under this subsection of such 
                properties;
                    ``(D) a right of first refusal for transfer of 
                qualified HUD properties to units of general local 
                government and community development corporations, 
                under which--
                            ``(i) the Secretary shall establish a 
                        period during which the Secretary may not 
                        transfer such properties except to such units 
                        and corporations;
                            ``(ii) the Secretary shall offer qualified 
                        HUD properties that are single family 
                        properties for purchase by units of general 
                        local government at a cost of $1 for each 
                        property, but only to the extent that the costs 
                        to the Federal Government of disposal at such 
                        price do not exceed the costs to the Federal 
                        Government of disposing of property subject to 
                        the procedures for single family property 
                        established by the Secretary pursuant to the 
                        authority under the last sentence of section 
                        204(g) of the National Housing Act (12 U.S.C. 
                        1710(g));
                            ``(iii) the Secretary may accept an offer 
                        to purchase a property made by a community 
                        development corporation only if the offer 
                        provides for purchase on a cost recovery basis; 
                        and
                            ``(iv) the Secretary shall accept an offer 
                        to purchase such a property that is made during 
                        such period by such a unit or corporation and 
                        that complies with the requirements of this 
                        paragraph;
                    ``(E) a written explanation, to any unit of general 
                local government or community development corporation 
                making an offer to purchase a qualified HUD property 
                under this subsection that is not accepted, of the 
                reason that such offer was not acceptable.
            ``(4) Other disposition.--With respect to any qualified HUD 
        property, if the Secretary does not receive an acceptable offer 
        to purchase the property pursuant to the procedure established 
        under paragraph (3), the Secretary shall dispose of the 
        property to the unit of general local government in which 
        property is located or to community development corporations 
        located in such unit of general local government on a 
        negotiated, competitive bid, or other basis, on such terms as 
        the Secretary deems appropriate.
            ``(5) Satisfaction of indebtedness.--Before transferring 
        ownership of any qualified HUD property pursuant to this 
        subsection, the Secretary shall satisfy any indebtedness 
        incurred in connection with the property to be transferred, by 
        canceling the indebtedness.
            ``(6) Determination of status of properties.--To ensure 
        compliance with the requirements of this subsection, the 
        Secretary shall take the following actions:
                    ``(A) Upon enactment.--Upon the enactment of this 
                subsection, the Secretary shall promptly assess each 
                residential property owned by the Secretary to 
                determine whether such property is a qualified HUD 
                property.
                    ``(B) Upon acquisition.--Upon acquiring any 
                residential property, the Secretary shall promptly 
                determine whether the property is a qualified HUD 
                property.
                    ``(C) Updates.--The Secretary shall periodically 
                reassess the residential properties owned by the 
                Secretary to determine whether any such properties have 
                become qualified HUD properties.
            ``(7) Tenant leases.--This subsection shall not affect the 
        terms or the enforceability of any contract or lease entered 
        into with respect to any residential property before the date 
        that such property becomes a qualified HUD property.
            ``(8) Use of property.--Property transferred under this 
        subsection shall be used only for appropriate neighborhood 
        revitalization efforts, including homeownership, rental units, 
        commercial space, and parks, consistent with local zoning 
        regulations, local building codes, and subdivision regulations 
        and restrictions of record.
            ``(9) Inapplicability to properties made available for 
        homeless.--Notwithstanding any other provision of this 
        subsection, this subsection shall not apply to any properties 
        that the Secretary determines are to be made available for use 
        by the homeless pursuant to subpart E of part 291 of title 24, 
        Code of Federal Regulations, during the period that the 
        properties are so available.
            ``(10) Protection of existing contracts.--This subsection 
        may not be construed to alter, affect, or annul any legally 
        binding obligations entered into with respect to a qualified 
        HUD property before the property becomes a qualified HUD 
        property.
            ``(11) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Community development corporation.--The term 
                `community development corporation' means a nonprofit 
                organization whose primary purpose is to promote 
                community development by providing housing 
                opportunities for low-income families.
                    ``(B) Cost recovery basis.--The term `cost recovery 
                basis' means, with respect to any sale of a residential 
                property by the Secretary, that the purchase price paid 
                by the purchaser is equal to or greater than the sum 
                of: (i) the appraised value of the property, as 
                determined in accordance with such requirements as the 
                Secretary shall establish; and (ii) the costs incurred 
                by the Secretary in connection with such property 
                during the period beginning on the date on which the 
                Secretary acquires title to the property and ending on 
                the date on which the sale is consummated.
                    ``(C) Multifamily housing project.--The term 
                `multifamily housing project' has the meaning given the 
                term in section 203 of the Housing and Community 
                Development Amendments of 1978.
                    ``(D) Residential property.--The term `residential 
                property' means a property that is a multifamily 
                housing project or a single family property.
                    ``(E) Secretary.--The term `Secretary' means the 
                Secretary of Housing and Urban Development.
                    ``(F) Severe physical problems.--The term `severe 
                physical problems' means, with respect to a dwelling 
                unit, that the unit--
                            ``(i) lacks hot or cold piped water, a 
                        flush toilet, or both a bathtub and a shower in 
                        the unit, for the exclusive use of that unit;
                            ``(ii) on not less than three separate 
                        occasions during the preceding winter months, 
                        was uncomfortably cold for a period of more 
                        than 6 consecutive hours due to a malfunction 
                        of the heating system for the unit;
                            ``(iii) has no functioning electrical 
                        service, exposed wiring, any room in which 
                        there is not a functioning electrical outlet, 
                        or has experienced three or more blown fuses or 
                        tripped circuit breakers during the preceding 
                        90-day period;
                            ``(iv) is accessible through a public 
                        hallway in which there are no working light 
                        fixtures, loose or missing steps or railings, 
                        and no elevator; or
                            ``(v) has severe maintenance problems, 
                        including water leaks involving the roof, 
                        windows, doors, basement, or pipes or plumbing 
                        fixtures, holes or open cracks in walls or 
                        ceilings, severe paint peeling or broken 
                        plaster, and signs of rodent infestation.
                    ``(G) Single family property.--The term `single 
                family property' means a 1- to 4-family residence.
                    ``(H) Substandard.--The term `substandard' means, 
                with respect to a multifamily housing project, that 25 
                percent or more of the dwelling units in the project 
                have severe physical problems.
                    ``(I) Unit of general local government.--The term 
                `unit of general local government' has the meaning 
                given such term in section 102(a) of the Housing and 
                Community Development Act of 1974.
                    ``(J) Unoccupied.--The term `unoccupied' means, 
                with respect to a residential property, that the unit 
                of general local government having jurisdiction over 
                the area in which the project is located has certified 
                in writing that the property is not inhabited.
            ``(12) Regulations.--
                    ``(A) Interim.--Not later than 30 days after the 
                date of the enactment of this subsection, the Secretary 
                shall issue such interim regulations as are necessary 
                to carry out this subsection.
                    ``(B) Final.--Not later than 60 days after the date 
                of the enactment of this subsection, the Secretary 
                shall issue such final regulations as are necessary to 
                carry out this subsection.''.

SEC. 642. TRANSFER OF HUD ASSETS IN REVITALIZATION AREAS.

    In carrying out the program under section 204(h) of the National 
Housing Act (12 U.S.C. 1710(h)), upon the request of the chief 
executive officer of a county or the government of appropriate 
jurisdiction and not later than 60 days after such request is made, the 
Secretary of Housing and Urban Development shall designate as a 
revitalization area all portions of such county that meet the criteria 
for such designation under paragraph (3) of such section.

SEC. 643. RISK-SHARING DEMONSTRATION.

    Section 249 of the National Housing Act (12 U.S.C. 1715z-14) is 
amended--
            (1) by striking the section heading and inserting the 
        following:

                    ``risk-sharing demonstration'';

            (2) by striking ``reinsurance'' each place such term 
        appears and insert ``risk-sharing'';
            (3) in subsection (a)--
                    (A) in the first sentence, by inserting ``and with 
                insured community development financial institutions'' 
                after ``private mortgage insurers'';
                    (B) in the second sentence--
                            (i) by striking ``two'' and inserting 
                        ``four''; and
                            (ii) by striking ``March 15, 1988'' and 
                        inserting ``the expiration of the 5-year period 
                        beginning on the date of the enactment of the 
                        Taxpayer Relief Act of 2000''; and
                    (C) in the third sentence--
                            (i) by striking ``insured'' and inserting 
                        ``for which risk of nonpayment is shared''; and
                            (ii) by striking ``10 percent'' and 
                        inserting ``20 percent'';
            (4) in subsection (b)--
                    (A) in the first sentence--
                            (i) by striking ``to provide'' and 
                        inserting ``, in providing'';
                            (ii) by striking ``through'' and inserting 
                        ``, to enter into''; and
                            (iii) by inserting ``and with insured 
                        community development financial institutions'' 
                        before the period at the end;
                    (B) in the second sentence, by inserting ``and 
                insured community development financial institutions'' 
                after ``private mortgage insurance companies'';
                    (C) by striking paragraph (1) and inserting the 
                following new paragraph:
            ``(1) assume a secondary percentage of loss on any mortgage 
        insured pursuant to section 203(b), 234, or 245 covering a one- 
        to four-family dwelling, which percentage of loss shall be set 
        forth in the risk-sharing contract, with the first percentage 
        of loss to be borne by the Secretary;''; and
                    (D) in paragraph (2)--
                            (i) by striking ``carry out (under 
                        appropriate delegation) such'' and inserting 
                        ``perform or delegate underwriting,'';
                            (ii) by striking ``function as the 
                        Secretary pursuant to regulations,'' and 
                        inserting ``functions as the Secretary''; and
                            (iii) by inserting before the period at the 
                        end the following: ``and shall set forth in the 
                        risk-sharing contract'';
            (5) in subsection (c)--
                    (A) in the first sentence--
                            (i) by striking ``of'' the first place it 
                        appears and inserting ``for'';
                            (ii) by inserting ``received by the 
                        Secretary with a private mortgage insurer or 
                        insured community development financial 
                        institution'' after ``sharing of premiums''
                            (iii) by striking ``insurance reserves'' 
                        and inserting ``loss reserves'';
                            (iv) by striking ``such insurance'' and 
                        inserting ``such risk-sharing contract''; and
                            (v) by striking ``right'' and inserting 
                        ``rights''; and
                    (B) in the second sentence--
                            (i) by inserting ``or insured community 
                        development financial institution'' after 
                        ``private mortgage insurance company''; and
                            (ii) by striking ``for insurance'' and 
                        inserting ``for risk-sharing'';
            (6) in subsection (d), by inserting ``or insured community 
        development financial institution'' after ``private mortgage 
        insurance company''; and
            (7) by adding at the end the following new subsection:
    ``(e) Insured Community Development Financial Institution.--For 
purposes of this section, the term `insured community development 
financial institution' means a community development financial 
institution, as such term is defined in section 103 of Reigle Community 
Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4702) 
that is an insured depository institution (as such term is defined in 
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) or an 
insured credit union (as such term is defined in section 101 of the 
Federal Credit Union Act (12 U.S.C. 1752)).''.

SEC. 644. PREVENTION AND TREATMENT OF SUBSTANCE ABUSE; SERVICES 
              PROVIDED THROUGH RELIGIOUS ORGANIZATIONS.

    Title V of the Public Health Service Act (42 U.S.C. 290aa et seq.) 
is amended by adding at the end the following part:

      ``Part G--Services Provided Through Religious Organizations

``SEC. 581. APPLICABILITY TO DESIGNATED PROGRAMS.

    ``(a) Designated Programs.--Subject to subsection (b), this part 
applies to discretionary and formula grant programs administered by the 
Substance Abuse and Mental Health Services Administration that make 
awards of financial assistance to public or private entities for the 
purpose of carrying out activities to prevent or treat substance abuse 
(in this part referred to as a `designated program'). Designated 
programs include the program under subpart II of part B of title XIX 
(relating to formula grants to the States).
    ``(b) Limitation.--This part does not apply to any award of 
financial assistance under a designated program for a purpose other 
than the purpose specified in subsection (a).
    ``(c) Definitions.--For purposes of this part (and subject to 
subsection (b)):
            ``(1) The term `designated program' has the meaning given 
        such term in subsection (a).
            ``(2) The term `financial assistance' means a grant, 
        cooperative agreement, or contract.
            ``(3) The term `program beneficiary' means an individual 
        who receives program services.
            ``(4) The term `program participant' means a public or 
        private entity that has received financial assistance under a 
        designated program.
            ``(5) The term `program services' means treatment for 
        substance abuse, or preventive services regarding such abuse, 
        provided pursuant to an award of financial assistance under a 
        designated program.
            ``(6) The term `religious organization' means a nonprofit 
        religious organization.

``SEC. 582. RELIGIOUS ORGANIZATIONS AS PROGRAM PARTICIPANTS.

    ``(a) In General.--Notwithstanding any other provision of law, a 
religious organization, on the same basis as any other nonprofit 
private provider--
            ``(1) may receive financial assistance under a designated 
        program; and
            ``(2) may be a provider of services under a designated 
        program.
    ``(b) Religious Organizations.--The purpose of this section is to 
allow religious organizations to be program participants on the same 
basis as any other nonprofit private provider without impairing the 
religious character of such organizations, and without diminishing the 
religious freedom of program beneficiaries.
    ``(c) Nondiscrimination Against Religious Organizations.--
            ``(1) Eligibility as program participants.--Religious 
        organizations are eligible to be program participants on the 
        same basis as any other nonprofit private organization as long 
        as the programs are implemented consistent with the 
        Establishment Clause and Free Exercise Clause of the First 
        Amendment to the United States Constitution. Nothing in this 
        Act shall be construed to restrict the ability of the Federal 
        Government, or a State or local government receiving funds 
        under such programs, to apply to religious organizations the 
        same eligibility conditions in designated programs as are 
        applied to any other nonprofit private organization.
            ``(2) Nondiscrimination.--Neither the Federal Government 
        nor a State or local government receiving funds under 
        designated programs shall discriminate against an organization 
        that is or applies to be a program participant on the basis 
        that the organization has a religious character.
    ``(d) Religious Character and Freedom.--
            ``(1) Religious organizations.--Except as provided in this 
        section, any religious organization that is a program 
        participant shall retain its independence from Federal, State, 
        and local government, including such organization's control 
        over the definition, development, practice, and expression of 
        its religious beliefs.
            ``(2) Additional safeguards.--Neither the Federal 
        Government nor a State shall require a religious organization 
        to--
                    ``(A) alter its form of internal governance; or
                    ``(B) remove religious art, icons, scripture, or 
                other symbols,
        in order to be a program participant.
    ``(e) Employment Practices.--Nothing in this section shall be 
construed to modify or affect the provisions of any other Federal or 
State law or regulation that relates to discrimination in employment. A 
religious organization's exemption provided under section 702 of the 
Civil Rights Act of 1964 regarding employment practices shall not be 
affected by its participation in, or receipt of funds from, a 
designated program.
    ``(f) Rights of Program Beneficiaries.--
            ``(1) In general.--If an individual who is a program 
        beneficiary or a prospective program beneficiary objects to the 
        religious character of a program participant, within a 
        reasonable period of time after the date of such objection such 
        program participant shall refer such individual to, and the 
        appropriate Federal, State, or local government that 
        administers a designated program or is a program participant 
        shall provide to such individual (if otherwise eligible for 
        such services), program services that--
                    ``(A) are from an alternative provider that is 
                accessible to, and has the capacity to provide such 
                services to, such individual; and
                    ``(B) have a value that is not less than the value 
                of the services that the individual would have received 
                from the program participant to which the individual 
                had such objection.
        Upon referring a program beneficiary to an alternative 
        provider, the program participant shall notify the appropriate 
        Federal, State, or local government agency that administers the 
        program of such referral.
            ``(2) Notices.--Program participants, public agencies that 
        refer individuals to designated programs, and the appropriate 
        Federal, State, or local governments that administer designated 
        programs or are program participants shall ensure that notice 
        is provided to program beneficiaries or prospective program 
        beneficiaries of their rights under this section.
            ``(3) Additional requirements.--A program participant 
        making a referral pursuant to paragraph (1) shall--
                    ``(A) prior to making such referral, consider any 
                list that the State or local government makes available 
                of entities in the geographic area that provide program 
                services; and
                    ``(B) ensure that the individual makes contact with 
                the alternative provider to which the individual is 
                referred.
            ``(4) Nondiscrimination.--A religious organization that is 
        a program participant shall not in providing program services 
        or engaging in outreach activities under designated programs 
        discriminate against a program beneficiary or prospective 
        program beneficiary on the basis of religion or religious 
        belief.
    ``(g) Fiscal Accountability.--
            ``(1) In general.--Except as provided in paragraph (2), any 
        religious organization that is a program participant shall be 
        subject to the same regulations as other recipients of awards 
        of Federal financial assistance to account, in accordance with 
        generally accepted auditing principles, for the use of the 
        funds provided under such awards.
            ``(2) Limited audit.--With respect to the award involved, a 
        religious organization that is a program participant shall 
        segregate Federal amounts provided under award into a separate 
        account from non-Federal funds. Only the award funds shall be 
        subject to audit by the government.
    ``(h) Compliance.--With respect to compliance with this section by 
an agency, a religious organization may obtain judicial review of 
agency action in accordance with chapter 7 of title 5, United States 
Code.

``SEC. 583. LIMITATIONS ON USE OF FUNDS FOR CERTAIN PURPOSES.

    ``No funds provided under a designated program shall be expended 
for sectarian worship, instruction, or proselytization.

``SEC. 584. EDUCATIONAL REQUIREMENTS FOR PERSONNEL IN DRUG TREATMENT 
              PROGRAMS.

    ``(a) Findings.--The Congress finds that--
            ``(1) establishing unduly rigid or uniform educational 
        qualification for counselors and other personnel in drug 
        treatment programs may undermine the effectiveness of such 
        programs; and
            ``(2) such educational requirements for counselors and 
        other personnel may hinder or prevent the provision of needed 
        drug treatment services.
    ``(b) Nondiscrimination.--In determining whether personnel of a 
program participant that has a record of successful drug treatment for 
the preceding three years have satisfied State or local requirements 
for education and training, a State or local government shall not 
discriminate against education and training provided to such personnel 
by a religious organization, so long as such education and training 
includes basic content substantially equivalent to the content provided 
by nonreligious organizations that the State or local government would 
credit for purposes of determining whether the relevant requirements 
have been satisfied.''.

                      Subtitle F--Other Provisions

SEC. 651. ACCELERATION OF PHASE-IN OF INCREASE IN VOLUME CAP ON PRIVATE 
              ACTIVITY BONDS.

    (a) In General.--Paragraphs (1) and (2) of section 146(d) (relating 
to State ceiling) are amended to read as follows:
            ``(1) In general.--The State ceiling applicable to any 
        State for any calendar year shall be the greater of--
                    ``(A) an amount equal to $75 ($62.50 in the case of 
                calendar year 2001) multiplied by the State population, 
                or
                    ``(B) $225,000,000 ($187,500,000 in the case of 
                calendar year 2001).
            ``(2) Cost-of-living adjustment.--In the case of a calendar 
        year after 2002, each of the dollar amounts contained in 
        paragraph (1) 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 such calendar year by 
                substituting `calendar year 2001' for `calendar year 
                1992' in subparagraph (B) thereof.
        If any increase determined under the preceding sentence is not 
        a multiple of $5 ($5,000 in the case of the dollar amount in 
        paragraph (1)(B)), such increase shall be rounded to the 
        nearest multiple thereof.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to calendar years after 2000.

SEC. 652. MODIFICATIONS TO EXPENSING OF ENVIRONMENTAL REMEDIATION 
              COSTS.

    (a) Expensing Not Limited to Sites in Targeted Areas.--Subsection 
(c) of section 198 is amended to read as follows:
    ``(c) Qualified Contaminated Site.--For purposes of this section--
            ``(1) In general.--The term `qualified contaminated site' 
        means any area--
                    ``(A) which is held by the taxpayer for use in a 
                trade or business or for the production of income, or 
                which is property described in section 1221(a)(1) in 
                the hands of the taxpayer, and
                    ``(B) at or on which there has been a release (or 
                threat of release) or disposal of any hazardous 
                substance.
            ``(2) National priorities listed sites not included.--Such 
        term shall not include any site which is on, or proposed for, 
        the national priorities list under section 105(a)(8)(B) of the 
        Comprehensive Environmental Response, Compensation, and 
        Liability Act of 1980 (as in effect on the date of the 
        enactment of this section).
            ``(3) Taxpayer must receive statement from state 
        environmental agency.--An area shall be treated as a qualified 
        contaminated site with respect to expenditures paid or incurred 
        during any taxable year only if the taxpayer receives a 
        statement from the appropriate agency of the State in which 
        such area is located that such area meets the requirement of 
        paragraph (1)(B).
            ``(4) Appropriate state agency.--For purposes of paragraph 
        (3), the chief executive officer of each State may, in 
        consultation with the Administrator of the Environmental 
        Protection Agency, designate the appropriate State 
        environmental agency within 60 days of the date of the 
        enactment of this section. If the chief executive officer of a 
        State has not designated an appropriate environmental agency 
        within such 60-day period, the appropriate environmental agency 
        for such State shall be designated by the Administrator of the 
        Environmental Protection Agency.''.
    (b) Extension of Termination Date.--Subsection (h) of section 198 
is amended by striking ``2001'' and inserting ``2003''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures paid or incurred after the date of the enactment 
of this Act.

SEC. 653. EXTENSION OF DC HOMEBUYER TAX CREDIT.

    Section 1400C(i) (relating to application of section) is amended by 
striking ``2002'' and inserting ``2004''.

   TITLE VII--ADMINISTRATIVE, MISCELLANEOUS, AND TECHNICAL PROVISIONS

                 Subtitle A--Administrative Provisions

SEC. 701. EXEMPTION OF CERTAIN REPORTING REQUIREMENTS.

    Section 3003(a)(1) of the Federal Reports Elimination and Sunset 
Act of 1995 (31 U.S.C. 1113 note) shall not apply to any report 
required to be submitted under any of the following provisions of law:
            (1) Section 13031(f) of the Consolidated Omnibus Budget 
        Reconciliation Act of 1985 (19 U.S.C. 58c(f)).
            (2) Section 16(c) of the Foreign Trade Zones Act (19 U.S.C. 
        81p(c)).
            (3) The following provisions of the Tariff Act of 1930:
                    (A) Section 330(c)(1) (19 U.S.C. 1330(c)(1)).
                    (B) Section 607(c) (19 U.S.C. 1607(c)).
            (4) Section 5 of the International Coffee Agreement Act of 
        1980 (19 U.S.C. 1356n).
            (5) Section 351(a)(2) of the Trade Expansion Act of 1962 
        (19 U.S.C. 1981(a)(2)).
            (6) Section 502 of the Automotive Products Trade Act of 
        1965 (19 U.S.C. 2032).
            (7) Section 3131 of the Customs Enforcement Act of 1986 (19 
        U.S.C. 2081).
            (8) The following provisions of the Trade Act of 1974 (19 
        U.S.C. 2101 et seq.):
                    (A) Section 102(b)(4)(A)(ii)(I) (19 U.S.C. 
                2112(b)(4)(A)(ii)(I)).
                    (B) Section 102(e)(1) (19 U.S.C. 2112(e)(1)).
                    (C) Section 102(e)(2) (19 U.S.C. 2112(e)(2)).
                    (D) Section 104(d) (19 U.S.C. 2114(d)).
                    (E) Section 125(e) (19 U.S.C. 2135(e)).
                    (F) Section 135(e)(1) (19 U.S.C. 2155(e)(1)).
                    (G) Section 141(c) (19 U.S.C. 2171(c)).
                    (H) Section 162 (19 U.S.C. 2212).
                    (I) Section 163(b) (19 U.S.C. 2213(b)).
                    (J) Section 163(c) (19 U.S.C. 2213(c)).
                    (K) Section 203(b) (19 U.S.C. 2253(b)).
                    (L) Section 302(b)(2)(C) (19 U.S.C. 2412(b)(2)(C)).
                    (M) Section 303 (19 U.S.C. 2413).
                    (N) Section 309 (19 U.S.C. 2419).
                    (O) Section 407(a) (19 U.S.C. 2437(a)).
                    (P) Section 502(f) (19 U.S.C. 2462(f)).
                    (Q) Section 504 (19 U.S.C. 2464).
            (9) The following provisions of the Trade Agreements Act of 
        1979 (19 U.S.C. 2501 et seq.):
                    (A) Section 2(b) (19 U.S.C. 2503(b)).
                    (B) Section 3(c) (19 U.S.C. 2504(c)).
                    (C) Section 305(c) (19 U.S.C. 2515(c)).
            (10) Section 303(g)(1) of the Convention on Cultural 
        Property Implementation Act (19 U.S.C. 2602(g)(1)).
            (11) The following provisions of the Caribbean Basin 
        Economic Recovery Act (19 U.S.C. 2701 et seq.):
                    (A) Section 212(a)(1)(A) (19 U.S.C. 2702(a)(1)(A)).
                    (B) Section 212(a)(2) (19 U.S.C. 2702(a)(2)).
            (12) The following provisions of the Omnibus Trade and 
        Competitiveness Act of 1988 (19 U.S.C. 2901 et seq.):
                    (A) Section 1102 (19 U.S.C. 2902).
                    (B) Section 1103 (19 U.S.C. 2903).
                    (C) Section 1206(b) (19 U.S.C. 3006(b)).
            (13) Section 123(a) of the Customs and Trade Act of 1990 
        (Public Law 101-382) (19 U.S.C. 2083).
            (14) Section 243(b)(2) of the Caribbean Basin Economic 
        Recovery Expansion Act of 1990 (Public Law 101-382).
            (15) The following provisions of the Internal Revenue Code 
        of 1986:
                    (A) Section 6103(p)(5).
                    (B) Section 7608.
                    (C) Section 7802(f)(3).
                    (D) Section 8022(3).
                    (E) Section 9602(a).
            (16) The following provisions relating to the revenue laws 
        of the United States:
                    (A) Section 1552(c) of the Tax Reform Act of 1986 
                (100 Stat. 2753).
                    (B) Section 231 of the Deficit Reduction Act of 
                1984 (26 U.S.C. 801 note).
                    (C) Section 208 of the Tax Treatment Extension Act 
                of 1977 (26 U.S.C. 911 note).
                    (D) Section 7105 of the Technical and Miscellaneous 
                Revenue Act of 1988 (45 U.S.C. 369).
            (17) Section 4008 of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1308).
            (18) Section 426 of the Black Lung Benefits Act (30 U.S.C. 
        936(b)).
            (19) Section 7502(g) of title 31, United States Code.
            (20) The following provisions of the Social Security Act:
                    (A) Section 215(i)(2)(C)(i) (42 U.S.C. 
                415(i)(2)(C)(i)).
                    (B) Section 221(i)(2) (42 U.S.C. 421(i)(2)).
                    (C) Section 221(i)(3) (42 U.S.C. 421(i)(3)).
                    (D) Section 233(e)(1) (42 U.S.C. 433(e)(1)).
                    (E) Section 452(a)(10) (42 U.S.C. 652(a)(10)).
                    (F) Section 452(g)(3)(B) (42 U.S.C. 652(g)(3)(B)).
                    (G) Section 506(a)(1) (42 U.S.C. 706(a)).
                    (H) Section 908 (42 U.S.C. 1108).
                    (I) Section 1114(f) (42 U.S.C. 1314(f)).
                    (J) Section 1120 (42 U.S.C. 1320).
                    (K) Section 1161 (42 U.S.C. 1320c-10).
                    (L) Section 1875(b) (42 U.S.C. 1395ll(b)).
                    (M) Section 1881 (42 U.S.C. 1395rr).
                    (N) Section 1882 (42 U.S.C. 1395ss(f)(2)).
            (21) Section 104(b) of the Social Security Independence and 
        Program Improvements Act of 1994 (42 USC 904 note).
            (22) Section 10 of the Railroad Retirement Act of 1937 (45 
        U.S.C. 231f).
            (23) The following provisions of the Railroad Retirement 
        Act of 1974:
                    (A) Section 22(a)(1) (45 U.S.C. 231u(a)(1)).
                    (B) Section 22(b)(1) (45 U.S.C. 231u(b)(1)).
            (24) Section 502 of the Railroad Retirement Solvency Act of 
        1983 (45 U.S.C. 231f-1).
            (25) Section 47121(c) of title 49, United States Code.
            (26) The following provisions of the Omnibus Budget 
        Reconciliation Act of 1987 (Public Law 100-203; 101 Stat. 1330-
        182):
                    (A) Section 4007(c)(4) (42 U.S.C. 1395ww note).
                    (B) Section 4079 (42 U.S.C. 1395mm note).
                    (C) Section 4205 (42 U.S.C. 1395i-3 note).
                    (D) Section 4215 (42 U.S.C. 1396r note).
            (27) The following provisions of the Inspector General Act 
        of 1978 (Public Law 95-452):
                    (A) Section 5(b).
                    (B) Section 5(d).
            (28) The following provisions of the Public Health Service 
        Act:
                    (A) In section 308(a) (42 U.S.C. 242m(a)), 
                subparagraphs (A), (B), (C), and (D) of paragraph (1).
                    (B) Section 403 (42 U.S.C. 283).
            (29) Section 404 of the Health Services and Centers 
        Amendments of 1978 (42 U.S.C. 242p) (Public Law 95-626).
            (30) The following provisions of the Older Americans Act of 
        1965:
                    (A) Section 206(d) (42 U.S.C. 3017(d)).
                    (B) Section 207 (42 U.S.C. 3018).
            (31) Section 308 of the Age Discrimination Act of 1975 (42 
        U.S.C. 6106a(b)).
            (32) Section 509(c)(3) of the Americans with Disabilities 
        Act 0f 1990 (42 U.S.C. 12209(c)(3)).
            (33) Section 4207(f) of the Omnibus Budget Reconciliation 
        Act of 1990 (42 U.S.C. 1395b-1 note).

SEC. 702. EXTENSION OF DEADLINES FOR IRS COMPLIANCE WITH CERTAIN NOTICE 
              REQUIREMENTS.

    (a) Annual Installment Agreement Notice.--Section 3506 of the 
Internal Revenue Service Restructuring and Reform Act of 1998 is 
amended by striking ``July 1, 2000'' and inserting ``September 1, 
2001''.
    (b) Notice Requirements Relating to Computation of Penalty.--
Subsection (c) of section 3306 of the Internal Revenue Service 
Restructuring and Reform Act of 1998 is amended--
            (1) by striking ``December 31, 2000'' and inserting ``June 
        30, 2001'', and
            (2) by adding at the end the following: ``In the case of 
        any notice of penalty issued after June 30, 2001, and before 
        July 1, 2003, the requirements of section 6751(a) of the 
        Internal Revenue Code of 1986 shall be treated as met if such 
        notice contains a telephone number at which the taxpayer can 
        request a copy of the taxpayer's assessment and payment history 
        with respect to such penalty.''.
    (c) Notice Requirements Relating to Interest Imposed.--Subsection 
(c) of section 3308 of the Internal Revenue Service Restructuring and 
Reform Act of 1998 is amended--
            (1) by striking ``December 31, 2000'' and inserting ``June 
        30, 2001'', and
            (2) by adding at the end the following: ``In the case of 
        any notice issued after June 30, 2001, and before July 1, 2003, 
        to which section 6631 of the Internal Revenue Code of 1986 
        applies, the requirements of section 6631 of such Code shall be 
        treated as met if such notice contains a telephone number at 
        which the taxpayer can request a copy of the taxpayer's payment 
        history relating to interest amounts included in such 
        notice.''.

SEC. 703. EXTENSION OF AUTHORITY FOR UNDERCOVER OPERATIONS.

    Paragraph (6), and the last sentence, of section 7608(c) are each 
amended by striking ``January 1, 2001'' and inserting ``January 1, 
2006''.

SEC. 704. CONFIDENTIALITY OF CERTAIN DOCUMENTS RELATING TO CLOSING AND 
              SIMILAR AGREEMENTS AND TO AGREEMENTS WITH FOREIGN 
              GOVERNMENTS.

    (a) Closing and Similar Agreements Treated As Return Information.--
Paragraph (2) of section 6103(b) (defining return information) is 
amended by striking ``and'' at the end of subparagraph (B), by 
inserting ``and'' at the end of subparagraph (C), and by inserting 
after subparagraph (C) the following new subparagraph:
                    ``(D) any agreement under section 7121, and any 
                similar agreement, and any background information 
                related to such an agreement or request for such an 
                agreement,''.
    (b) Agreements With Foreign Governments.--
            (1) In general.--Subchapter B of chapter 61 (relating to 
        miscellaneous provisions) is amended by inserting after section 
        6104 the following new section:

``SEC. 6105. CONFIDENTIALITY OF INFORMATION ARISING UNDER TREATY 
              OBLIGATIONS.

    ``(a) In General.--Tax convention information shall not be 
disclosed.
    ``(b) Exceptions.--Subsection (a) shall not apply--
            ``(1) to the disclosure of tax convention information to 
        persons or authorities (including courts and administrative 
        bodies) which are entitled to such disclosure pursuant to a tax 
        convention,
            ``(2) to any generally applicable procedural rules 
        regarding applications for relief under a tax convention, or
            ``(3) in any case not described in paragraphs (1) or (2), 
        to the disclosure of any tax convention information not 
        relating to a particular taxpayer if the Secretary determines, 
        after consultation with each other party to the tax convention, 
        that such disclosure would not impair tax administration.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Tax convention information.--The term `tax convention 
        information' means any--
                    ``(A) agreement entered into with the competent 
                authority of one or more foreign governments pursuant 
                to a tax convention,
                    ``(B) application for relief under a tax 
                convention,
                    ``(C) any background information related to such 
                agreement or application,
                    ``(D) document implementing such agreement, and
                    ``(E) any other information exchanged pursuant to a 
                tax convention which is treated as confidential or 
                secret under the tax convention.
            ``(2) Tax convention.--The term `tax convention' means--
                    ``(A) any income tax or gift and estate tax 
                convention, or
                    ``(B) any other convention or bilateral agreement 
                (including multilateral conventions and agreements and 
                any agreement with a possession of the United States) 
                providing for the avoidance of double taxation, the 
                prevention of fiscal evasion, nondiscrimination with 
                respect to taxes, the exchange of tax relevant 
                information with the United States, or mutual 
                assistance in tax matters.
    ``(d) Cross References.--

                                ``For penalties for the unauthorized 
disclosure of tax convention information which is return or return 
information, see sections 7213, 7213A, and 7431.''.
            (2) Clerical amendment.--The table of sections for 
        subchapter B of chapter 61 is amended by inserting after the 
        item relating to section 6104 the following new item:

                              ``Sec. 6105. Confidentiality of 
                                        information arising under 
                                        treaty obligations.''.
    (c) Exception From Public Inspection as Written Determination.--
            (1) Closing and similar agreements.--Paragraph (1) of 
        section 6110(b) is amended to read as follows:
            ``(1) Written determination.--
                    ``(A) In general.--The term `written determination' 
                means a ruling, determination letter, technical advice 
                memorandum, or Chief Counsel advice.
                    ``(B) Exceptions.--Such term shall not include any 
                matter referred to in subparagraph (C) or (D) of 
                section 6103(b)(2).''.
            (2) Agreements with foreign governments.--Paragraph (1) of 
        section 6110(l) is amended by inserting ``or 6105'' after 
        ``6104''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 705. INCREASE IN THRESHOLD FOR JOINT COMMITTEE REPORTS ON REFUNDS 
              AND CREDITS.

    (a) General Rule.--Subsections (a) and (b) of section 6405 are each 
amended by striking ``$1,000,000'' and inserting ``$2,000,000''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of the enactment of this Act, except that such 
amendment shall not apply with respect to any refund or credit with 
respect to a report that has been made before such date of the 
enactment under section 6405 of the Internal Revenue Code of 1986.

SEC. 706. TREATMENT OF MISSING CHILDREN WITH RESPECT TO CERTAIN TAX 
              BENEFITS.

    (a) In General.--Subsection (c) of section 151 (relating to 
additional exemption for dependents) is amended by adding at the end 
the following new paragraph:
            ``(6) Treatment of missing children.--
                    ``(A) In general.--Solely for the purposes referred 
                to in subparagraph (B), a child of the taxpayer--
                            ``(i) who is presumed by law enforcement 
                        authorities to have been kidnapped by someone 
                        who is not a member of the family of such child 
                        or the taxpayer, and
                            ``(ii) who was (without regard to this 
                        paragraph) the dependent of the taxpayer for 
                        the portion of the taxable year before the date 
                        of the kidnapping,
                shall be treated as a dependent of the taxpayer for all 
                taxable years ending during the period that the child 
                is kidnapped.
                    ``(B) Purposes.--Subparagraph (A) shall apply 
                solely for purposes of determining--
                            ``(i) the deduction under this section,
                            ``(ii) the credit under section 24 
                        (relating to child tax credit), and
                            ``(iii) whether an individual is a 
                        surviving spouse or a head of a household (such 
                        terms are defined in section 2).
                    ``(C) Comparable treatment for earned income 
                credit.--For purposes of section 32, an individual--
                            ``(i) who is presumed by law enforcement 
                        authorities to have been kidnapped by someone 
                        who is not a member of the family of such 
                        individual or the taxpayer, and
                            ``(ii) who had, for the taxable year in 
                        which the kidnapping occurred, the same 
                        principal place of abode as the taxpayer for 
                        more than one-half of the portion of such year 
                        before the date of the kidnapping,
                shall be treated as meeting the requirement of section 
                32(c)(3)(A)(ii) with respect to a taxpayer for all 
                taxable years ending during the period that the 
                individual is kidnapped.
                    ``(D) Termination of treatment.--Subparagraphs (A) 
                and (C) shall cease to apply as of the first taxable 
                year of the taxpayer beginning after the calendar year 
                in which there is a determination that the child is 
                dead (or, if earlier, in which the child would have 
                attained age 18).''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years ending after the date of the enactment of this Act.

SEC. 707. AMENDMENTS TO STATUTES REFERENCING YIELD ON 52-WEEK TREASURY 
              BILLS.

    (a) Amendment to the Act of February 26, 1931.--Section 6 of the 
Act of February 26, 1931 (40 U.S.C. 258e-1) (relating to the interest 
rate on compensation owed for takings of property) is amended--
            (1) in paragraph (1), by striking ``the coupon issue yield 
        equivalent (as determined by the Secretary of the Treasury) of 
        the average accepted auction price for the last auction of 52 
        week United States Treasury bills settled immediately before'' 
        and inserting ``the weekly average 1-year constant maturity 
        Treasury yield, as published by the Board of Governors of the 
        Federal Reserve System, for the calendar week preceding''; and
            (2) in paragraph (2), by striking ``the coupon issue yield 
        equivalent (as determined by the Secretary of the Treasury) of 
        the average accepted auction price for the last auction of 52 
        week United States Treasury bills settled immediately before'' 
        and inserting ``the weekly average 1-year constant maturity 
        Treasury yield, as published by the Board of Governors of the 
        Federal Reserve System, for the calendar week preceding''.
    (b) Amendment to Title 18, United States Code.--Section 
3612(f)(2)(B) of title 18, United States Code (relating to the interest 
rate on unpaid criminal fines and penalties of more than $2,500) is 
amended by striking ``the coupon issue yield equivalent (as determined 
by the Secretary of the Treasury) of the average accepted auction price 
for the last auction of fifty-two week United States Treasury bills 
settled before'' and inserting `the weekly average 1-year constant 
maturity Treasury yield, as published by the Board of Governors of the 
Federal Reserve System, for the calendar week preceding.''.
    (c) Amendment to the Internal Revenue Code.--Section 995(f)(4) 
(relating to the interest rate on tax-deferred liability of 
shareholders of domestic international sales corporations) is amended 
by striking ``the average investment yield of United States Treasury 
bills with maturities of 52 weeks which were auctioned during the 1-
year period'' and inserting ``the average of the 1-year constant 
maturity Treasury yields, as published by the Board of Governors of the 
Federal Reserve System, for the 1-year period''.
    (d) Amendments to Title 28, United States Code.--
            (1) Amendment to section 1961.--Section 1961(a) of title 
        28, United States Code (relating to the interest rate on money 
        judgments in civil cases recovered in Federal district court) 
        is amended by striking ``the coupon issue yield equivalent (as 
        determined by the Secretary of the Treasury) of the average 
        accepted auction price for the last auction of fifty-two week 
        United States Treasury bills settled immediately prior to'' and 
        inserting ``the weekly average 1-year constant maturity 
        Treasury yield, as published by the Board of Governors of the 
        Federal Reserve System, for the calendar week preceding.''.
            (2) Amendment to section 2516.--Section 2516(b) of title 
        28, United States Code (relating to the interest rate on a 
        judgment against the United States affirmed by the Supreme 
        Court after review on petition of the United States) is amended 
        by striking ``the coupon issue yield equivalent (as determined 
        by the Secretary of the Treasury) of the average accepted 
        auction price for the last auction of fifty-two week United 
        States Treasury bills settled immediately before'' and 
        inserting ``the weekly average 1-year constant maturity 
        Treasury yield, as published by the Board of Governors of the 
        Federal Reserve System, for the calendar week preceding''.

SEC. 708. ADJUSTMENTS FOR CONSUMER PRICE INDEX ERROR.

    (a) Determinations by OMB.--As soon as practicable after the date 
of the enactment of this Act, the Director of the Office of Management 
and Budget shall determine with respect to each applicable Federal 
benefit program whether the CPI computation error for 1999 has or will 
result in a shortfall in payments to beneficiaries under such program 
(as compared to payments that would have been made if the error had not 
occurred). As soon as practicable after the date of the enactment of 
this Act, but not later than 60 days after such date, the Director 
shall direct the head of the Federal agency which administers such 
program to make a payment or payments that, insofar as the Director 
finds practicable and feasible--
            (1) are targeted to the amount of the shortfall experienced 
        by individual beneficiaries, and
            (2) compensate for the shortfall.
    (b) Coordination with Federal Agencies.--As soon as practicable 
after the date of the enactment of this Act, each Federal agency that 
administers an applicable Federal benefit program shall, in accordance 
with such guidelines as are issued by the Director pursuant to this 
section, make an initial determination of whether, and the extent to 
which, the CPI computation error for 1999 has or will result in a 
shortfall in payments to beneficiaries of an applicable Federal benefit 
program administered by such agency. Not later than 30 days after such 
date, the head of such agency shall submit a report to the Director and 
to each House of the Congress of such determination, together with a 
complete description of the nature of the shortfall.
    (c) Implementation Pursuant to Agency Reports.--Upon receipt of the 
report submitted by a Federal agency pursuant to subsection (b), the 
Director shall review the initial determination of the agency, the 
agency's description of the nature of the shortfall, and the 
compensation payments proposed by the agency. Prior to directing 
payment of such payments pursuant to subsection (a), the Director shall 
make appropriate adjustments (if any) in the compensation payments 
proposed by the agency that the Director determines are necessary to 
comply with the requirements of subsection (a) and transmit to the 
agency a summary report of the review, indicating any adjustments made 
by the Director. The agency shall make the compensation payments as 
directed by the Director pursuant to subsection (a) in accordance with 
the Director's summary report.
    (d) Income Disregard Under Federal Means-Tested Benefit Programs.--
A payment made under this section to compensate for a shortfall in 
benefits shall, in accordance with guidelines issued by the Director 
pursuant to this section, be disregarded in determining income under 
title VIII of the Social Security Act or any applicable Federal benefit 
program that is means-tested.
    (e) Funding.--Funds otherwise available under each applicable 
Federal benefit program for making benefit payments under such program 
are hereby made available for making compensation payments under this 
section in connection with such program.
    (f) No Judicial Review.--No action taken pursuant to this section 
shall be subject to judicial review.
    (g) Director's Report.--Not later than April 1, 2001, the Director 
shall submit to each House of the Congress a report on the activities 
performed by the Director pursuant to this section.
    (h) Definitions.--For purposes of this section:
            (1) Applicable federal benefit program.--The term 
        ``applicable Federal benefit program'' means any program of the 
        Government of the United States providing for regular or 
        periodic payments or cash assistance paid directly to 
        individual beneficiaries, as determined by the Director of the 
        Office of Management and Budget.
            (2) Federal agency.--The term ``Federal agency'' means a 
        department, agency, or instrumentality of the Government of the 
        United States.
            (3) CPI computation error for 1999.--The term ``CPI 
        computation error for 1999'' means the error in the computation 
        of the Consumer Price Index announced by the Bureau of Labor 
        Statistics on September 28, 2000.
    (i) Tax Provisions.--If any Consumer Price Index (as defined in 
section 1(f)(5) of the Internal Revenue Code of 1986) reflects the CPI 
computation error for 1999--
            (1) the correct amount of such Index shall (in such manner 
        and to such extent as the Secretary of the Treasury determines 
        to be appropriate) be taken into account for purposes of such 
        Code, and
            (2) tables prescribed under section 1(f) of such Code to 
        reflect such correct amount shall apply in lieu of any tables 
        that were prescribed based on the erroneous amount.

SEC. 709. PREVENTION OF DUPLICATION OF LOSS THROUGH ASSUMPTION OF 
              LIABILITIES GIVING RISE TO A DEDUCTION.

    (a) In General.--Section 358 (relating to basis to distributees) is 
amended by adding at the end the following new subsection:
    ``(h) Special Rules for Assumption of Liabilities To Which 
Subsection (d) Does Not Apply.--
            ``(1) In general.--If, after application of the other 
        provisions of this section to an exchange or series of 
        exchanges, the basis of property to which subsection (a)(1) 
        applies exceeds the fair market value of such property, then 
        such basis shall be reduced (but not below such fair market 
        value) by the amount (determined as of the date of the 
        exchange) of any liability--
                    ``(A) which is assumed in exchange for such 
                property, and
                    ``(B) with respect to which subsection (d)(1) does 
                not apply to the assumption.
            ``(2) Exceptions.--Except as provided by the Secretary, 
        paragraph (1) shall not apply to any liability if--
                    ``(A) the trade or business with which the 
                liability is associated is transferred to the person 
                assuming the liability as part of the exchange, or
                    ``(B) substantially all of the assets with which 
                the liability is associated are transferred to the 
                person assuming the liability as part of the exchange.
            ``(3) Liability.--For purposes of this subsection, the term 
        `liability' shall include any fixed or contingent obligation to 
        make payment, without regard to whether the obligation is 
        otherwise taken into account for purposes of this title.''
    (b) Determination of Amount of Liability Assumed.--Section 
357(d)(1) is amended by inserting ``section 358(h),'' after ``section 
358(d),''.
    (c) Application of Comparable Rules to Partnerships and S 
Corporations.--The Secretary of the Treasury or his delegate--
            (1) shall prescribe rules which provide appropriate 
        adjustments under subchapter K of chapter 1 of the Internal 
        Revenue Code of 1986 to prevent the acceleration or duplication 
        of losses through the assumption of (or transfer of assets 
        subject to) liabilities described in section 358(h)(3) of such 
        Code (as added by subsection (a)) in transactions involving 
        partnerships, and
            (2) may prescribe rules which provide appropriate 
        adjustments under subchapter S of chapter 1 of such Code in 
        transactions described in paragraph (1) involving S 
        corporations rather than partnerships.
    (d) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to assumptions of liability after October 18, 1999.
            (2) Rules.--The rules prescribed under subsection (c) shall 
        apply to assumptions of liability after October 18, 1999, or 
        such later date as may be prescribed in such rules.

                  Subtitle B--Miscellaneous Provisions

SEC. 710. REPEAL OF 4.3-CENT MOTOR FUEL EXCISE TAXES ON RAILROADS AND 
              INLAND WATERWAY TRANSPORTATION WHICH REMAIN IN GENERAL 
              FUND.

    (a) Taxes on Trains.--
            (1) In general.--Subparagraph (A) of section 4041(a)(1) is 
        amended by striking ``or a diesel-powered train'' each place it 
        appears and by striking ``or train''.
            (2) Conforming amendments.--
                    (A) Subparagraph (C) of section 4041(a)(1) is 
                amended by striking clause (ii) and by redesignating 
                clause (iii) as clause (ii).
                    (B) Subparagraph (C) of section 4041(b)(1) is 
                amended by striking all that follows ``section 
                6421(e)(2)'' and inserting a period.
                    (C) Subsection (d) of section 4041 is amended by 
                redesignating paragraph (3) as paragraph (4) and by 
                inserting after paragraph (2) the following new 
                paragraph:
            ``(3) Diesel fuel used in trains.--There is hereby imposed 
        a tax of 0.1 cent per gallon on any liquid other than gasoline 
        (as defined in section 4083)--
                    ``(A) sold by any person to an owner, lessee, or 
                other operator of a diesel-powered train for use as a 
                fuel in such train, or
                    ``(B) used by any person as a fuel in a diesel-
                powered train unless there was a taxable sale of such 
                fuel under subparagraph (A).
        No tax shall be imposed by this paragraph on the sale or use of 
        any liquid if tax was imposed on such liquid under section 
        4081.''
                    (D) Subsection (e) of section 4082 is amended by 
                striking ``section 4041(a)(1)'' and inserting 
                ``subsections (d)(3) and (a)(1) of section 4041, 
                respectively''.
                    (E) Paragraph (3) of section 4083(a) is amended by 
                striking ``or a diesel-powered train''.
                    (F) Paragraph (3) of section 6421(f) is amended to 
                read as follows:
            ``(3) Gasoline used in trains.--In the case of gasoline 
        used as a fuel in a train, this section shall not apply with 
        respect to the Leaking Underground Storage Tank Trust Fund 
        financing rate under section 4081.''
                    (G) Paragraph (3) of section 6427(l) is amended to 
                read as follows:
            ``(3) Refund of certain taxes on fuel used in diesel-
        powered trains.--For purposes of this subsection, the term 
        `nontaxable use' includes fuel used in a diesel-powered train. 
        The preceding sentence shall not apply to the tax imposed by 
        section 4041(d) and the Leaking Underground Storage Tank Trust 
        Fund financing rate under section 4081 except with respect to 
        fuel sold for exclusive use by a State or any political 
        subdivision thereof.''
    (b) Fuel Used on Inland Waterways.--
            (1) In general.--Paragraph (1) of section 4042(b) is 
        amended by adding ``and'' at the end of subparagraph (A), by 
        striking ``, and'' at the end of subparagraph (B) and inserting 
        a period, and by striking subparagraph (C).
            (2) Conforming amendment.--Paragraph (2) of section 4042(b) 
        is amended by striking subparagraph (C).
    (c) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2001.

SEC. 711. REPEAL OF REDUCTION OF DEDUCTIONS FOR MUTUAL LIFE INSURANCE 
              COMPANIES.

    (a) In General.--Section 809 (relating to reductions in certain 
deductions of mutual life insurance companies) is hereby repealed.
    (b) Conforming Amendments Related to Repeal of Section 809.--
            (1) Subsections (a)(2)(B) and (b)(1)(B) of section 807 are 
        each amended by striking ``the sum of (i)'' and by striking 
        ``plus (ii) any excess described in section 809(a)(2) for the 
        taxable year,''.
            (2)(A) The last sentence of section 807(d)(1) is amended by 
        striking ``(as defined in section 809(b)(4)(B))''.
            (B) Subsection (d) of section 807 is amended by adding at 
        the end the following new paragraph:
            ``(6) Statutory reserves.--For purposes of this subsection, 
        the term `statutory reserves' means the aggregate amount set 
        forth in the annual statement with respect to items described 
        in subsection (c). Such term shall not include any reserve 
        attributable to a deferred and uncollected premium if the 
        establishment of such reserve is not permitted under section 
        811(c).''
            (3) Subsection (c) of section 808 is amended to read as 
        follows:
    ``(c) Amount of Deduction.--The deduction for policyholder 
dividends for any taxable year shall be an amount equal to the 
policyholder dividends paid or accrued during the taxable year.''
            (4) Subparagraph (A) of section 812(b)(3) is amended by 
        striking ``sections 808 and 809'' and inserting ``section 
        808''.
            (5) Subsection (c) of section 817 is amended by striking 
        ``(other than section 809)''.
            (6) Subsection (c) of section 842 is amended by striking 
        paragraph (3) and by redesignating paragraph (4) as paragraph 
        (3).
            (7) The table of sections for subpart C of part I of 
        subchapter L of chapter 1 is amended by striking the item 
        relating to section 809.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 712. REPEAL OF POLICYHOLDERS SURPLUS ACCOUNT PROVISIONS.

    (a) Repeal.--Section 815 (relating to distributions to shareholders 
from pre-1984 policyholders surplus accounts) is hereby repealed.
    (b) Conforming Amendments.--
            (1) Section 801 is amended by striking subsection (c).
            (2) The table of sections for subpart D of part I of 
        subchapter L of chapter 1 is amended by striking the item 
        relating to section 815.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 713. CREDIT TO HOLDERS OF QUALIFIED AMTRAK BONDS.

    (a) In General.--Part IV of subchapter A of chapter 1 (relating to 
credits against tax) is amended by adding at the end the following new 
subpart:

``Subpart H--Nonrefundable Credit for Holders of Qualified Amtrak Bonds

                              ``Sec. 54. Credit to holders of qualified 
                                        Amtrak bonds.

``SEC. 54. CREDIT TO HOLDERS OF QUALIFIED AMTRAK BONDS.

    ``(a) Allowance of Credit.--In the case of a taxpayer who holds a 
qualified Amtrak bond on a credit allowance date of such bond which 
occurs during the taxable year, there shall be allowed as a credit 
against the tax imposed by this chapter for such taxable year an amount 
equal to the sum of the credits determined under subsection (b) with 
respect to credit allowance dates during such year on which the 
taxpayer holds such bond.
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit allowance date 
        for a qualified Amtrak bond is 25 percent of the annual credit 
        determined with respect to such bond.
            ``(2) Annual credit.--The annual credit determined with 
        respect to any qualified Amtrak bond is the product of--
                    ``(A) the applicable credit rate, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Applicable credit rate.--For purposes of paragraph 
        (2), the applicable credit rate with respect to an issue is the 
        rate equal to an average market yield (as of the day before the 
        date of sale of the issue) on outstanding long-term corporate 
        debt obligations (determined under regulations prescribed by 
        the Secretary).
            ``(4) Special rule for issuance and redemption.--In the 
        case of a bond which is issued during the 3-month period ending 
        on a credit allowance date, the amount of the credit determined 
        under this subsection with respect to such credit allowance 
        date shall be a ratable portion of the credit otherwise 
        determined based on the portion of the 3-month period during 
        which the bond is outstanding. A similar rule shall apply when 
        the bond is redeemed.
    ``(c) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                part (other than this subpart and subpart C).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.
    ``(d) Qualified Amtrak Bond.--For purposes of this part--
            ``(1) In general.--The term `qualified Amtrak bond' means 
        any bond issued as part of an issue if--
                    ``(A) 95 percent or more of the proceeds of such 
                issue are to be used for any qualified project,
                    ``(B) the bond is issued by the National Railroad 
                Passenger Corporation,
                    ``(C) the issuer--
                            ``(i) designates such bond for purposes of 
                        this section,
                            ``(ii) certifies that it meets the State 
                        contribution requirement of paragraph (3) with 
                        respect to such project and that it has 
                        received the required State contribution 
                        payment before the issuance of such bond, and
                            ``(iii) certifies that it has obtained the 
                        written approval of the Secretary of 
                        Transportation for such project, including a 
                        finding by the Inspector General of the 
                        Department of Transportation that there is a 
                        reasonable likelihood that the proposed program 
                        will result in a positive incremental financial 
                        contribution to the National Railroad Passenger 
                        Corporation and that the investment evaluation 
                        process includes a return on investment, 
                        leveraging of funds (including State capital 
                        and operating contributions), cost 
                        effectiveness, safety improvement, mobility 
                        improvement, and feasibility,
                    ``(D) the term of each bond which is part of such 
                issue does not exceed 20 years,
                    ``(E) the payment of principal with respect to such 
                bond is the obligation of the National Railroad 
                Passenger Corporation (regardless of the establishment 
                of the trust account under subsection (j)), and
                    ``(F) the issue meets the requirements of 
                subsection (h).
            ``(2) Treatment of changes in use.--For purposes of 
        paragraph (1)(A), the proceeds of an issue shall not be treated 
        as used for a qualified project to the extent that the issuer 
        takes any action within its control which causes such proceeds 
        not to be used for a qualified project. The Secretary shall 
        prescribe regulations specifying remedial actions that may be 
        taken (including conditions to taking such remedial actions) to 
        prevent an action described in the preceding sentence from 
        causing a bond to fail to be a qualified Amtrak bond.
            ``(3) State contribution requirement.--
                    ``(A) In general.--For purposes of paragraph 
                (1)(C)(ii), the State contribution requirement of this 
                paragraph is met with respect to any qualified project 
                if the National Railroad Passenger Corporation has a 
                written binding commitment from 1 or more States to 
                make matching contributions not later than the date of 
                issuance of the issue of not less than 20 percent of 
                the cost of the qualified project.
                    ``(B) Use of state matching contributions.--The 
                matching contributions described in subparagraph (A) 
                with respect to each qualified project shall be used--
                            ``(i) as necessary to redeem bonds which 
                        are a part of the issue with respect to such 
                        project, and
                            ``(ii) in the case of any remaining amount, 
                        at the election of the National Railroad 
                        Passenger Corporation and the contributing 
                        State--
                                    ``(I) to fund a qualified project,
                                    ``(II) to redeem other qualified 
                                Amtrak bonds, or
                                    ``(III) for the purposes of 
                                subclauses (I) and (II).
                    ``(C) State matching contributions may not include 
                federal funds.--For purposes of this paragraph, State 
                matching contributions shall not be derived, directly 
                or indirectly, from Federal funds, including any 
                transfers from the Highway Trust Fund under section 
                9503.
                    ``(D) No state contribution requirement for certain 
                qualified projects.--With respect to any qualified 
                project described in paragraph (2)(B) or (4) of 
                subsection (e), the State contribution requirement of 
                this paragraph is zero.
            ``(4) Qualified project.--
                    ``(A) In general.--The term `qualified project' 
                means--
                            ``(i) the acquisition, financing, or 
                        refinancing of equipment, rolling stock, and 
                        other capital improvements for the northeast 
                        rail corridor between Washington, D.C. and 
                        Boston, Massachusetts (including the project 
                        described in subsection (e)(2)(B)),
                            ``(ii) the acquisition, financing, or 
                        refinancing of equipment, rolling stock, and 
                        other capital improvements for the improvement 
                        of train speeds or safety (or both) on the 
                        high-speed rail corridors designated under 
                        section 104(d)(2) of title 23, United States 
                        Code, and
                            ``(iii) the acquisition, financing, or 
                        refinancing of equipment, rolling stock, and 
                        other capital improvements for other intercity 
                        passenger rail corridors, including station 
                        rehabilitation or construction, track or signal 
                        improvements, or the elimination of grade 
                        crossings.
                    ``(B) Refinancing rules.--For purposes of 
                subparagraph (A), a refinancing shall constitute a 
                qualified project only if the indebtedness being 
                refinanced (including any obligation directly or 
                indirectly refinanced by such indebtedness) was 
                originally incurred by the National Railroad Passenger 
                Corporation--
                            ``(i) after the date of the enactment of 
                        this section,
                            ``(ii) for a term of not more than 3 years,
                            ``(iii) to finance or acquire capital 
                        improvements described in subparagraph (A), and
                            ``(iv) in anticipation of being refinanced 
                        with proceeds of a qualified Amtrak bond.
    ``(e) Limitations on Amount of Bonds Designated.--
            ``(1) In general.--There is a qualified Amtrak bond 
        limitation for each fiscal year. Such limitation is--
                    ``(A) $1,000,000,000 for each of the fiscal years 
                2001 through 2010, and
                    ``(B) except as provided in paragraph (5), zero 
                after fiscal year 2010.
            ``(2) Bonds for rail corridors.--
                    ``(A) In general.--Not more than $3,000,000,000 of 
                the limitation under paragraph (1) may be designated 
                for any 1 rail corridor described in clause (i) or (ii) 
                of subsection (d)(4)(A).
                    ``(B) Specific qualified project allocation.--Of 
                the amount described in subparagraph (A), the Secretary 
                of Transportation shall allocate $92,000,000 for the 
                acquisition and installation of platform facilities, 
                performance of railroad force account work necessary to 
                complete improvements below street grade, and any other 
                necessary improvements related to construction at the 
                railroad station at the James A. Farley Post Office 
                Building in New York City, New York.
            ``(3) Bonds for other projects.--Not more than 10 percent 
        of the limitation under paragraph (1) for any fiscal year may 
        be allocated to qualified projects described in subsection 
        (d)(4)(A)(iii).
            ``(4) Bonds for alaska railroad.--The Secretary of 
        Transportation may allocate to the Alaska Railroad a portion of 
        the qualified Amtrak limitation for any fiscal year in order to 
        allow the Alaska Railroad to issue bonds which meet the 
        requirements of this section for use in financing any project 
        described in subsection (d)(4)(A)(iii). For purposes of this 
        section, the Alaska Railroad shall be treated in the same 
        manner as the National Railroad Passenger Corporation.
            ``(5) Carryover of unused limitation.--If for any fiscal 
        year--
                    ``(A) the limitation amount under paragraph (1), 
                exceeds
                    ``(B) the amount of bonds issued during such year 
                which are designated under subsection (d)(1)(C)(i),
        the limitation amount under paragraph (1) for the following 
        fiscal year (through fiscal year 2014) shall be increased by 
        the amount of such excess.
            ``(6) Preference for greater state participation.--In 
        selecting qualified projects for allocation of the qualified 
        Amtrak bond limitation under this subsection, the Secretary of 
        Transportation shall give preference to any project with a 
        State matching contribution rate exceeding 20 percent.
    ``(f) Other Definitions.--For purposes of this subpart--
            ``(1) Bond.--The term `bond' includes any obligation.
            ``(2) Credit allowance date.--The term `credit allowance 
        date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term includes the last day on which the bond is 
        outstanding.
            ``(3) State.--The term `State' means the several States and 
        the District of Columbia, and any subdivision thereof.
            ``(4) Program.--The term `program' means 1 or more projects 
        implemented over 1 or more years to support the development of 
        intercity passenger rail corridors.
    ``(g) Credit Included in Gross Income.--Gross income includes the 
amount of the credit allowed to the taxpayer under this section 
(determined without regard to subsection (c)) and the amount so 
included shall be treated as interest income.
    ``(h) Special Rules Relating to Arbitrage.--
            ``(1) In general.--Subject to paragraph (2), an issue shall 
        be treated as meeting the requirements of this subsection if as 
        of the date of issuance, the issuer reasonably expects--
                    ``(A) to spend at least 95 percent of the proceeds 
                of the issue for 1 or more qualified projects within 
                the 3-year period beginning on such date,
                    ``(B) to incur a binding commitment with a third 
                party to spend at least 10 percent of the proceeds of 
                the issue, or to commence construction, with respect to 
                such projects within the 6-month period beginning on 
                such date, and
                    ``(C) to proceed with due diligence to complete 
                such projects and to spend the proceeds of the issue.
            ``(2) Rules regarding continuing compliance after 3-year 
        determination.--If at least 95 percent of the proceeds of the 
        issue is not expended for 1 or more qualified projects within 
        the 3-year period beginning on the date of issuance, an issue 
        shall be treated as continuing to meet the requirements of this 
        subsection if either--
                    ``(A) the issuer uses all unspent proceeds of the 
                issue to redeem bonds of the issue within 90 days after 
                the end of such 3-year period, or
                    ``(B) the following requirements are met:
                            ``(i) The issuer spends at least 75 percent 
                        of the proceeds of the issue for 1 or more 
                        qualified projects within the 3-year period 
                        beginning on the date of issuance.
                            ``(ii) The issuer has proceeded with due 
                        diligence to spend the proceeds of the issue 
                        within such 3-year period and continues to 
                        proceed with due diligence to spend such 
                        proceeds.
                            ``(iii) The issuer pays to the Federal 
                        Government any earnings on the proceeds of the 
                        issue that accrue after the end of such 3-year 
                        period.
                            ``(iv) Either--
                                    ``(I) at least 95 percent of the 
                                proceeds of the issue is expended for 1 
                                or more qualified projects within the 
                                4-year period beginning on the date of 
                                issuance, or
                                    ``(II) the issuer uses all unspent 
                                proceeds of the issue to redeem bonds 
                                of the issue within 90 days after the 
                                end of such 4-year period.
    ``(i) Recapture of Portion of Credit Where Cessation of 
Compliance.--
            ``(1) In general.--If any bond which when issued purported 
        to be a qualified Amtrak bond ceases to be a qualified Amtrak 
        bond, the issuer shall pay to the United States (at the time 
        required by the Secretary) an amount equal to the sum of--
                    ``(A) the aggregate of the credits allowable under 
                this section with respect to such bond (determined 
                without regard to subsection (c)) for taxable years 
                ending during the calendar year in which such cessation 
                occurs and the 2 preceding calendar years, and
                    ``(B) interest at the underpayment rate under 
                section 6621 on the amount determined under 
                subparagraph (A) for each calendar year for the period 
                beginning on the first day of such calendar year.
            ``(2) Failure to pay.--If the issuer fails to timely pay 
        the amount required by paragraph (1) with respect to such bond, 
        the tax imposed by this chapter on each holder of any such bond 
        which is part of such issue shall be increased (for the taxable 
        year of the holder in which such cessation occurs) by the 
        aggregate decrease in the credits allowed under this section to 
        such holder for taxable years beginning in such 3 calendar 
        years which would have resulted solely from denying any credit 
        under this section with respect to such issue for such taxable 
        years.
            ``(3) Special rules.--
                    ``(A) Tax benefit rule.--The tax for the taxable 
                year shall be increased under paragraph (2) only with 
                respect to credits allowed by reason of this section 
                which were used to reduce tax liability. In the case of 
                credits not so used to reduce tax liability, the 
                carryforwards and carrybacks under section 39 shall be 
                appropriately adjusted.
                    ``(B) No credits against tax.--Any increase in tax 
                under paragraph (2) shall not be treated as a tax 
                imposed by this chapter for purposes of determining --
                            ``(i) the amount of any credit allowable 
                        under this part, or
                            ``(ii) the amount of the tax imposed by 
                        section 55.
    ``(j) Use of Trust Account.--
            ``(1) In general.--The amount of any matching contribution 
        with respect to a qualified project described in subsection 
        (d)(3)(B)(i) or (d)(3)(B)(ii)(II) and the temporary period 
        investment earnings on proceeds of the issue with respect to 
        such project, and any earnings thereon, shall be held in a 
        trust account by a trustee independent of the National Railroad 
        Passenger Corporation to be used to the extent necessary to 
        redeem bonds which are part of such issue.
            ``(2) Use of remaining funds in trust account.--Upon the 
        repayment of the principal of all qualified Amtrak bonds issued 
        under this section, any remaining funds in the trust account 
        described in paragraph (1) shall be available--
                    ``(A) to the trustee described in paragraph (1), to 
                meet any remaining obligations under any guaranteed 
                investment contract used to secure earnings sufficient 
                to repay the principal of such bonds, and
                    ``(B) to the issuer, for any qualified project.
    ``(k) Other Special Rules.--
            ``(1) Partnership; s corporation; and other pass-thru 
        entities.--Under regulations prescribed by the Secretary, in 
        the case of a partnership, trust, S corporation, or other pass-
        thru entity, rules similar to the rules of section 41(g) shall 
        apply with respect to the credit allowable under subsection 
        (a).
            ``(2) Bonds held by regulated investment companies.--If any 
        qualified Amtrak bond is held by a regulated investment 
        company, the credit determined under subsection (a) shall be 
        allowed to shareholders of such company under procedures 
        prescribed by the Secretary.
            ``(3) Credits may be stripped.--Under regulations 
        prescribed by the Secretary--
                    ``(A) In general.--There may be a separation 
                (including at issuance) of the ownership of a qualified 
                Amtrak bond and the entitlement to the credit under 
                this section with respect to such bond. In case of any 
                such separation, the credit under this section shall be 
                allowed to the person who on the credit allowance date 
                holds the instrument evidencing the entitlement to the 
                credit and not to the holder of the bond.
                    ``(B) Certain rules to apply.--In the case of a 
                separation described in subparagraph (A), the rules of 
                section 1286 shall apply to the qualified Amtrak bond 
                as if it were a stripped bond and to the credit under 
                this section as if it were a stripped coupon.
            ``(4) Treatment for estimated tax purposes.--Solely for 
        purposes of sections 6654 and 6655, the credit allowed by this 
        section to a taxpayer by reason of holding a qualified Amtrak 
        bond on a credit allowance date shall be treated as if it were 
        a payment of estimated tax made by the taxpayer on such date.
            ``(5) Credit may be transferred.--Nothing in any law or 
        rule of law shall be construed to limit the transferability of 
        the credit allowed by this section through sale and repurchase 
        agreements.
            ``(6) Reporting.--Issuers of qualified Amtrak bonds shall 
        submit reports similar to the reports required under section 
        149(e).''.
    (b) Reporting.--Subsection (d) of section 6049 (relating to returns 
regarding payments of interest), as amended by section 505(d), is 
amended by adding at the end the following new paragraph:
            ``(9) Reporting of credit on qualified amtrak bonds.--
                    ``(A) In general.--For purposes of subsection (a), 
                the term `interest' includes amounts includible in 
                gross income under section 54(g) and such amounts shall 
                be treated as paid on the credit allowance date (as 
                defined in section 54(f)(2)).
                    ``(B) Reporting to corporations, etc.--Except as 
                otherwise provided in regulations, in the case of any 
                interest described in subparagraph (A) of this 
                paragraph, subsection (b)(4) of this section shall be 
                applied without regard to subparagraphs (A), (H), (I), 
                (J), (K), and (L)(i).
                    ``(C) Regulatory authority.--The Secretary may 
                prescribe such regulations as are necessary or 
                appropriate to carry out the purposes of this 
                paragraph, including regulations which require more 
                frequent or more detailed reporting.''.
    (c) Clerical Amendments.--
            (1) The table of subparts for part IV of subchapter A of 
        chapter 1 is amended by adding at the end the following new 
        item:

                              ``Subpart H. Nonrefundable Credit for 
                                        Holders of Qualified Amtrak 
                                        Bonds.''.
            (2) Section 6401(b)(1) is amended by striking ``and G'' and 
        inserting ``G, and H''.
    (d) Effective Date.--The amendments made by this section shall 
apply to obligations issued after September 30, 2000.
    (e) Multi-Year Capital Spending Plan and Oversight.--
            (1) Amtrak capital spending plan.--
                    (A) In general.--The National Railroad Passenger 
                Corporation shall annually submit to the President and 
                Congress a multi-year capital spending plan, as 
                approved by the Board of Directors of the Corporation.
                    (B) Contents of plan.--Such plan shall identify the 
                capital investment needs of the Corporation over a 
                period of not less than 5 years and the funding sources 
                available to finance such needs and shall prioritize 
                such needs according to corporate goals and strategies.
                    (C) Initial submission date.--The first plan shall 
                be submitted before the issuance of any qualified 
                Amtrak bonds by the National Railroad Passenger 
                Corporation pursuant to section 54 of the Internal 
                Revenue Code of 1986 (as added by this section).
            (2) Oversight of amtrak trust account and qualified 
        projects.--
                    (A) Trust account oversight.--The Secretary of the 
                Treasury shall annually report to Congress as to 
                whether the amount deposited in the trust account 
                established by the National Railroad Passenger 
                Corporation under section 54(i) of such Code (as so 
                added) is sufficient to fully repay at maturity the 
                principal of any outstanding qualified Amtrak bonds 
                issued pursuant to section 54 of such Code (as so 
                added), together with amounts expected to be deposited 
                into such account, as certified by the National 
                Railroad Passenger Corporation in accordance with 
                procedures prescribed by the Secretary of the Treasury.
                    (B) Project oversight.--The National Railroad 
                Passenger Corporation shall contract for an annual 
                independent assessment of the costs and benefits of the 
                qualified projects financed by such qualified Amtrak 
                bonds, including an assessment of the investment 
                evaluation process of the Corporation. The annual 
                assessment shall be included in the plan submitted 
                under paragraph (1).
                    (C) Oversight funding.--Not more than 0.5 percent 
                of the amounts made available through the issuance of 
                qualified Amtrak bonds by the National Railroad 
                Passenger Corporation pursuant to section 54 of such 
                Code (as so added) may be used by the National Railroad 
                Passenger Corporation for assessments described in 
                subparagraph (B).
    (f) Protection of Highway Trust Fund.--
            (1) Certification by the secretary of the treasury.--The 
        issuance of any qualified Amtrak bonds by the National Railroad 
        Passenger Corporation or the Alaska Railroad pursuant to 
        section 54 of the Internal Revenue Code of 1986 (as added by 
        this section) is conditioned on certification by the Secretary 
        of the Treasury, after consultation with the Secretary of 
        Transportation, within 30 days of a request by the issuer, that 
        with respect to funds of the Highway Trust Fund described under 
        paragraph (2), the issuer either--
                    (A) has not received such funds during fiscal years 
                commencing with fiscal year 2001 and ending before the 
                fiscal year the bonds are issued, or
                    (B) has repaid to the Highway Trust Fund any such 
                funds which were received during such fiscal years.
            (2) Applicability.--This subsection shall apply to funds 
        received directly, or indirectly from a State or local transit 
        authority, from the Highway Trust Fund established under 
        section 9503 of the Internal Revenue Code of 1986, except for 
        funds authorized to be expended under section 9503(c) of such 
        Code, as in effect on the date of the enactment of this Act.
            (3) No retroactive effect.--Nothing in this subsection 
        shall adversely affect the entitlement of the holders of 
        qualified Amtrak bonds to the tax credit allowed pursuant to 
        section 54 of the Internal Revenue Code of 1986 (as so added) 
        or to repayment of principal upon maturity.

SEC. 714. FARM, FISHING, AND RANCH RISK MANAGEMENT ACCOUNTS.

    (a) In General.--Subpart C of part II of subchapter E of chapter 1 
(relating to taxable year for which deductions taken) is amended by 
inserting after section 468B the following new section:

``SEC. 468C. FARM, FISHING, AND RANCH RISK MANAGEMENT ACCOUNTS.

    ``(a) Deduction Allowed.--In the case of an individual engaged in 
an eligible farming business or commercial fishing, there shall be 
allowed as a deduction for any taxable year the amount paid in cash by 
the taxpayer during the taxable year to a Farm, Fishing, and Ranch Risk 
Management Account (hereinafter referred to as the `FFARRM Account').
    ``(b) Limitation.--
            ``(1) Contributions.--The amount which a taxpayer may pay 
        into the FFARRM Account for any taxable year shall not exceed 
        20 percent of so much of the taxable income of the taxpayer 
        (determined without regard to this section) which is 
        attributable (determined in the manner applicable under section 
        1301) to any eligible farming business or commercial fishing.
            ``(2) Distributions.--Distributions from a FFARRM Account 
        may not be used to purchase, lease, or finance any new fishing 
        vessel, add capacity to any fishery, or otherwise contribute to 
        the overcapitalization of any fishery. The Secretary of 
        Commerce shall implement regulations to enforce this paragraph.
    ``(c) Eligible Businesses.--For purposes of this section--
            ``(1) Eligible farming business.--The term `eligible 
        farming business' means any farming business (as defined in 
        section 263A(e)(4)) which is not a passive activity (within the 
        meaning of section 469(c)) of the taxpayer.
            ``(2) Commercial fishing.--The term `commercial fishing' 
        has the meaning given such term by section (3) of the Magnuson-
        Stevens Fishery Conservation and Management Act (16 U.S.C. 
        1802) but only if such fishing is not a passive activity 
        (within the meaning of section 469(c)) of the taxpayer.
    ``(d) FFARRM Account.--For purposes of this section--
            ``(1) In general.--The term `FFARRM Account' means a trust 
        created or organized in the United States for the exclusive 
        benefit of the taxpayer, but only if the written governing 
        instrument creating the trust meets the following requirements:
                    ``(A) No contribution will be accepted for any 
                taxable year in excess of the amount allowed as a 
                deduction under subsection (a) for such year.
                    ``(B) The trustee is a bank (as defined in section 
                408(n)) or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                such person will administer the trust will be 
                consistent with the requirements of this section.
                    ``(C) The assets of the trust consist entirely of 
                cash or of obligations which have adequate stated 
                interest (as defined in section 1274(c)(2)) and which 
                pay such interest not less often than annually.
                    ``(D) All income of the trust is distributed 
                currently to the grantor.
                    ``(E) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
            ``(2) Account taxed as grantor trust.--The grantor of a 
        FFARRM Account shall be treated for purposes of this title as 
        the owner of such Account and shall be subject to tax thereon 
        in accordance with subpart E of part I of subchapter J of this 
chapter (relating to grantors and others treated as substantial 
owners).
    ``(e) Inclusion of Amounts Distributed.--
            ``(1) In general.--Except as provided in paragraph (2), 
        there shall be includible in the gross income of the taxpayer 
        for any taxable year--
                    ``(A) any amount distributed from a FFARRM Account 
                of the taxpayer during such taxable year, and
                    ``(B) any deemed distribution under--
                            ``(i) subsection (f)(1) (relating to 
                        deposits not distributed within 5 years),
                            ``(ii) subsection (f)(2) (relating to 
                        cessation in eligible farming business), and
                            ``(iii) subparagraph (B) or (C) of 
                        subsection (f)(3) (relating to prohibited 
                        transactions and pledging account as security).
            ``(2) Exceptions.--Paragraph (1)(A) shall not apply to--
                    ``(A) any distribution to the extent attributable 
                to income of the Account, and
                    ``(B) the distribution of any contribution paid 
                during a taxable year to a FFARRM Account to the extent 
                that such contribution exceeds the limitation 
                applicable under subsection (b) if requirements similar 
                to the requirements of section 408(d)(4) are met.
        For purposes of subparagraph (A), distributions shall be 
        treated as first attributable to income and then to other 
        amounts.
    ``(f) Special Rules.--
            ``(1) Tax on deposits in account which are not distributed 
        within 5 years.--
                    ``(A) In general.--If, at the close of any taxable 
                year, there is a nonqualified balance in any FFARRM 
                Account--
                            ``(i) there shall be deemed distributed 
                        from such Account during such taxable year an 
                        amount equal to such balance, and
                            ``(ii) the taxpayer's tax imposed by this 
                        chapter for such taxable year shall be 
                        increased by 10 percent of such deemed 
                        distribution.
                The preceding sentence shall not apply if an amount 
                equal to such nonqualified balance is distributed from 
                such Account to the taxpayer before the due date 
                (including extensions) for filing the return of tax 
                imposed by this chapter for such year (or, if earlier, 
                the date the taxpayer files such return for such year).
                    ``(B) Nonqualified balance.--For purposes of 
                subparagraph (A), the term `nonqualified balance' means 
                any balance in the Account on the last day of the 
                taxable year which is attributable to amounts deposited 
                in such Account before the 4th preceding taxable year.
                    ``(C) Ordering rule.--For purposes of this 
                paragraph, distributions from a FFARRM Account (other 
                than distributions of current income) shall be treated 
                as made from deposits in the order in which such 
                deposits were made, beginning with the earliest 
                deposits.
            ``(2) Cessation in eligible business.--At the close of the 
        first disqualification period after a period for which the 
        taxpayer was engaged in an eligible farming business or 
        commercial fishing, there shall be deemed distributed from the 
        FFARRM Account of the taxpayer an amount equal to the balance 
        in such Account (if any) at the close of such disqualification 
        period. For purposes of the preceding sentence, the term 
        `disqualification period' means any period of 2 consecutive 
        taxable years for which the taxpayer is not engaged in an 
        eligible farming business or commercial fishing.
            ``(3) Certain rules to apply.--Rules similar to the 
        following rules shall apply for purposes of this section:
                    ``(A) Section 220(f)(8) (relating to treatment on 
                death).
                    ``(B) Section 408(e)(2) (relating to loss of 
                exemption of account where individual engages in 
                prohibited transaction).
                    ``(C) Section 408(e)(4) (relating to effect of 
                pledging account as security).
                    ``(D) Section 408(g) (relating to community 
                property laws).
                    ``(E) Section 408(h) (relating to custodial 
                accounts).
            ``(4) Time when payments deemed made.--For purposes of this 
        section, a taxpayer shall be deemed to have made a payment to a 
        FFARRM Account on the last day of a taxable year if such 
        payment is made on account of such taxable year and is made on 
        or before the due date (without regard to extensions) for 
        filing the return of tax for such taxable year.
            ``(5) Individual.--For purposes of this section, the term 
        `individual' shall not include an estate or trust.
            ``(6) Deduction not allowed for self-employment tax.--The 
        deduction allowable by reason of subsection (a) shall not be 
        taken into account in determining an individual's net earnings 
        from self-employment (within the meaning of section 1402(a)) 
        for purposes of chapter 2.
    ``(g) Reports.--The trustee of a FFARRM Account shall make such 
reports regarding such Account to the Secretary and to the person for 
whose benefit the Account is maintained with respect to contributions, 
distributions, and such other matters as the Secretary may require 
under regulations. The reports required by this subsection shall be 
filed at such time and in such manner and furnished to such persons at 
such time and in such manner as may be required by such regulations.''.
    (b) Tax on Excess Contributions.--
            (1) Subsection (a) of section 4973 (relating to tax on 
        excess contributions to certain tax-favored accounts and 
        annuities) is amended by striking ``or'' at the end of 
        paragraph (3), by redesignating paragraph (4) as paragraph (5), 
        and by inserting after paragraph (3) the following new 
        paragraph:
            ``(4) a FFARRM Account (within the meaning of section 
        468C(d)), or''.
            (2) Section 4973 is amended by adding at the end the 
        following new subsection:
    ``(g) Excess Contributions to FFARRM Accounts.--For purposes of 
this section, in the case of a FFARRM Account (within the meaning of 
section 468C(d)), the term `excess contributions' means the amount by 
which the amount contributed for the taxable year to the Account 
exceeds the amount which may be contributed to the Account under 
section 468C(b) for such taxable year. For purposes of this subsection, 
any contribution which is distributed out of the FFARRM Account in a 
distribution to which section 468C(e)(2)(B) applies shall be treated as 
an amount not contributed.''.
            (3) The section heading for section 4973 is amended to read 
        as follows:

``SEC. 4973. EXCESS CONTRIBUTIONS TO CERTAIN ACCOUNTS, ANNUITIES, 
              ETC.''.

            (4) The table of sections for chapter 43 is amended by 
        striking the item relating to section 4973 and inserting the 
        following new item:

                              ``Sec. 4973. Excess contributions to 
                                        certain accounts, annuities, 
                                        etc.''.
    (c) Tax on Prohibited Transactions.--
            (1) Subsection (c) of section 4975 (relating to tax on 
        prohibited transactions) is amended by adding at the end the 
        following new paragraph:
            ``(6) Special rule for ffarrm accounts.--A person for whose 
        benefit a FFARRM Account (within the meaning of section 
        468C(d)) is established shall be exempt from the tax imposed by 
        this section with respect to any transaction concerning such 
        account (which would otherwise be taxable under this section) 
        if, with respect to such transaction, the account ceases to be 
        a FFARRM Account by reason of the application of section 
        468C(f)(3)(A) to such account.''.
            (2) Paragraph (1) of section 4975(e) is amended by 
        redesignating subparagraphs (E) and (F) as subparagraphs (F) 
        and (G), respectively, and by inserting after subparagraph (D) 
        the following new subparagraph:
                    ``(E) a FFARRM Account described in section 
                468C(d),''.
    (d) Failure To Provide Reports on FFARRM Accounts.--Paragraph (2) 
of section 6693(a) (relating to failure to provide reports on certain 
tax-favored accounts or annuities) is amended by redesignating 
subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively, 
and by inserting after subparagraph (B) the following new subparagraph:
                    ``(C) section 468C(g) (relating to FFARRM 
                Accounts),''.
    (e) Clerical Amendment.--The table of sections for subpart C of 
part II of subchapter E of chapter 1 is amended by inserting after the 
item relating to section 468B the following new item:

                              ``Sec. 468C. Farm, Fishing and Ranch Risk 
                                        Management Accounts.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 715. EXTENSION OF ENHANCED DEDUCTION FOR CORPORATE DONATIONS OF 
              COMPUTER TECHNOLOGY.

    (a) Expansion of Computer Technology Donations to Public 
Libraries.--
            (1) In general.--Paragraph (6) of section 170(e) (relating 
        to special rule for contributions of computer technology and 
        equipment for elementary or secondary school purposes) is 
        amended by striking ``qualified elementary or secondary 
        educational contribution'' each place it occurs in the headings 
        and text and inserting ``qualified computer contribution''.
            (2) Expansion of eligible donees.--Clause (i) of section 
        170(e)(6)(B) (relating to qualified elementary or secondary 
        educational contribution) is amended by striking ``or'' at the 
        end of subclause (I), by adding ``or'' at the end of subclause 
        (II), and by inserting after subclause (II) the following new 
        subclause:
                                    ``(III) a public library (within 
                                the meaning of section 213(2)(A) of the 
                                Library Services and Technology Act (20 
                                U.S.C. 9122(2)(A)), as in effect on the 
                                date of the enactment of the Community 
                                Renewal and New Markets Act of 2000, 
                                established and maintained by an entity 
                                described in subsection (c)(1),''.
            (3) Extension of donation period.--Clause (ii) of section 
        170(e)(6)(B) is amended by striking ``2 years'' and inserting 
        ``3 years''.
    (b) Conforming Amendments.--
            (1) Section 170(e)(6)(B)(iv) is amended by striking ``in 
        any grades of the K-12''.
            (2) The heading of paragraph (6) of section 170(e) is 
        amended by striking ``elementary or secondary school purposes'' 
        and inserting ``educational purposes''.
    (c) Extension of Deduction.--Section 170(e)(6)(F) (relating to 
termination) is amended by striking ``December 31, 2000'' and inserting 
``December 31, 2003''.
    (d) Effective Date.--The amendments made by this section shall 
apply to contributions made after December 31, 2000.

SEC. 716. RELIEF FROM FEDERAL TAX LIABILITY ARISING WITH RESPECT TO 
              CERTAIN CLAIMS AGAINST THE DEPARTMENT OF AGRICULTURE FOR 
              DISCRIMINATION IN FARM CREDIT AND BENEFIT PROGRAMS.

    Notwithstanding any provision of the Internal Revenue Code of 1986, 
in the case of a person who is certified to be a member of the 
plaintiff class in the settlement of the consolidated actions entitled 
``Pigford, et al. v. Glickman'', No. 97-1978 (D.D.C.) (PLF), and 
``Brewington et al. v. Glickman'', No. 98-1693 (D.D.C.) (PLF), gross 
income for purposes of subtitle A of such Code shall not include--
            (1) any cash payment received before, on, or after the date 
        of the enactment of this Act by, or made on behalf of, a person 
        under such settlement, and
            (2) any amount which (but for this section) would be 
        includible in gross income by reason of the discharge of 
        indebtedness pursuant to such settlement.

SEC. 717. EXPANSION OF CREDIT FOR ADOPTION EXPENSES.

    (a) Increase in Expenses Allowable for Adoption.--Paragraph (1) of 
section 23(b) (relating to dollar limitation) is amended to read as 
follows:
            ``(1) Dollar limitation.--
                    ``(A) In general.--The aggregate amount of 
                qualified adoption expenses which may be taken into 
                account under subsection (a) for all taxable years with 
                respect to the adoption of a child by the taxpayer 
                shall not exceed the applicable amount.
                    ``(B) Applicable amount.--For purposes of 
                subparagraph (A)--
                            ``(i) Child with special needs.--In the 
                        case of a child with special needs, the 
                        applicable amount for a taxable year shall be 
                        the amount determined in accordance with the 
                        following table:

                ``For taxable years
                                                         The applicable
                  beginning in:
                                                           amount is:  
                    2001...................................     $8,000 
                    2002...................................    $10,000 
                    2003 and thereafter....................    $12,000.
                            ``(ii) Other children.--In the case of a 
                        child who is not a child with special needs, 
                        the applicable amount for a taxable year shall 
                        be the amount determined in accordance with the 
                        following table:

                ``For taxable years
                                                         The applicable
                  beginning in:
                                                           amount is:  
                    2001...................................     $6,000 
                    2002...................................     $7,000 
                    2003...................................     $8,000 
                    2004...................................     $9,000 
                    2005 and thereafter.................... $10,000.''.
    (b) Increase in Income Limitation.--Clause (i) of section 
23(b)(2)(A) (relating to income limitation) is amended by striking 
``$75,000'' and inserting ``$150,000''.
    (c) Extension of Sunset.--Subparagraph (B) of section 23(d)(2) 
(relating to eligible child) is amended by striking ``2001'' and 
inserting ``2005''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 718. STUDY CONCERNING UNITED STATES INSURANCE COMPANIES WITH 
              CERTAIN OFFSHORE REINSURANCE AFFILIATES.

    (a) Study.--The Secretary of the Treasury shall conduct a study on 
the extent to which United States tax on investment income of United 
States insurance companies is being avoided through the use of 
affiliated corporations in Bermuda or other offshore locations. In 
conducting such study, the Secretary shall--
            (1) address issues concerning the application of current 
        United States tax law in preventing such avoidance,
            (2) examine changes to United States tax law which may be 
        needed to prevent such avoidance, and
            (3) make such recommendations as the Secretary considers 
        appropriate.
    (b) Submission of Study to Congress.--Not later than December 31, 
2001, the Secretary shall submit the study conducted under subsection 
(a), together with recommendations thereon, to the Committee on Ways 
and Means of the House of Representatives and the Committee on Finance 
of the Senate.

SEC. 719. TREATMENT OF INDIAN TRIBAL GOVERNMENTS UNDER FEDERAL 
              UNEMPLOYMENT TAX ACT.

    (a) In General.--Section 3306(c)(7) (defining employment) is 
amended--
            (1) by inserting ``or in the employ of an Indian tribe,'' 
        after ``service performed in the employ of a State, or any 
        political subdivision thereof,''; and
            (2) by inserting ``or Indian tribes'' after ``wholly owned 
        by one or more States or political subdivisions''.
    (b) Payments in Lieu of Contributions.--Section 3309 (relating to 
State law coverage of services performed for nonprofit organizations or 
governmental entities) is amended--
            (1) in subsection (a)(2) by inserting ``, including an 
        Indian tribe,'' after ``the State law shall provide that a 
        governmental entity'';
            (2) in subsection (b)(3)(B) by inserting ``, or of an 
        Indian tribe'' after ``of a State or political subdivision 
        thereof'';
            (3) in subsection (b)(3)(E) by inserting ``or tribal'' 
        after ``the State''; and
            (4) in subsection (b)(5) by inserting ``or of an Indian 
        tribe'' after ``an agency of a State or political subdivision 
        thereof''.
    (c) State Law Coverage.--Section 3309 (relating to State law 
coverage of services performed for nonprofit organizations or 
governmental entities) is amended by adding at the end the following 
new subsection:
    ``(d) Election by Indian Tribe.--The State law shall provide that 
an Indian tribe may make contributions for employment as if the 
employment is within the meaning of section 3306 or make payments in 
lieu of contributions under this section, and shall provide that an 
Indian tribe may make separate elections for itself and each 
subdivision, subsidiary, or business enterprise wholly owned by such 
Indian tribe. State law may require a tribe to post a payment bond or 
take other reasonable measures to assure the making of payments in lieu 
of contributions under this section. Notwithstanding the requirements 
of section 3306(a)(6), if, within 90 days of having received a notice 
of delinquency, a tribe fails to make contributions, payments in lieu 
of contributions, or payment of penalties or interest (at amounts or 
rates comparable to those applied to all other employers covered under 
the State law) assessed with respect to such failure, or if the tribe 
fails to post a required payment bond, then service for the tribe shall 
not be excepted from employment under section 3306(c)(7) until any such 
failure is corrected. This subsection shall apply to an Indian tribe 
within the meaning of section 4(e) of the Indian Self-Determination and 
Education Assistance Act (25 U.S.C. 450b(e)).''.
    (d) Definitions.--Section 3306 (relating to definitions) is amended 
by adding at the end the following new subsection:
    ``(u) Indian Tribe.--For purposes of this chapter, the term `Indian 
tribe' has the meaning given to such term by section 4(e) of the Indian 
Self-Determination and Education Assistance Act (25 U.S.C. 450b(e)), 
and includes any subdivision, subsidiary, or business enterprise wholly 
owned by such an Indian tribe.''.
    (e) Effective Date; Transition Rule.--
            (1) Effective date.--The amendments made by this section 
        shall apply to service performed on or after the date of the 
        enactment of this Act.
            (2) Transition rule.--For purposes of the Federal 
        Unemployment Tax Act, service performed in the employ of an 
        Indian tribe (as defined in section 3306(u) of the Internal 
        Revenue Code of 1986 (as added by this section)) shall not be 
        treated as employment (within the meaning of section 3306 of 
        such Code) if--
                    (A) it is service which is performed before the 
                date of the enactment of this Act and with respect to 
                which the tax imposed under the Federal Unemployment 
                Tax Act has not been paid, and
                    (B) such Indian tribe reimburses a State 
                unemployment fund for unemployment benefits paid for 
                service attributable to such tribe for such period.

                   Subtitle C--Technical Corrections

SEC. 721. AMENDMENTS RELATED TO TICKET TO WORK AND WORK INCENTIVES 
              IMPROVEMENT ACT OF 1999.

    (a) Amendments Related to Section 502 of the Act.--
            (1) Section 280C(c)(1) is amended by striking ``or credit'' 
        after ``deduction'' each place it appears.
            (2) Section 30A is amended by redesignating subsections (f) 
        and (g) as subsections (g) and (h), respectively, and by 
        inserting after subsection (e) the following new subsection:
    ``(f) Denial of Double Benefit.--Any wages or other expenses taken 
into account in determining the credit under this section may not be 
taken into account in determining the credit under section 41.''
    (b) Amendment Related to Section 545 of the Act.--Clause (ii) of 
section 857(b)(7)(B) is amended to read as follows:
                            ``(ii) Exception for certain amounts.--
                        Clause (i) shall not apply to amounts received 
                        directly or indirectly by a real estate 
                        investment trust--
                                    ``(I) for services furnished or 
                                rendered by a taxable REIT subsidiary 
                                that are described in paragraph (1)(B) 
                                of section 856(d), or
                                    ``(II) from a taxable REIT 
                                subsidiary that are described in 
                                paragraph (7)(C)(ii) of such section.''
    (c) Clarification Related to Section 538 of the Act.--The reference 
to section 332(b)(1) of the Internal Revenue Code of 1986 in Treasury 
Regulation section 1.1502-34 shall be deemed to include a reference to 
section 732(f) of such Code.
    (d) Effective Date.--Subsection (c) and the amendments made by this 
section shall take effect as if included in the provisions of the 
Ticket to Work and Work Incentives Improvement Act of 1999 to which 
they relate.

SEC. 722. AMENDMENTS RELATED TO TAX AND TRADE RELIEF EXTENSION ACT OF 
              1998.

    (a) Amendment Related to Section 1004(b) of the Act.--Subsection 
(d) of section 6104 is amended by adding at the end the following new 
paragraph:
            ``(6) Application to nonexempt charitable trusts and 
        nonexempt private foundations.--The organizations referred to 
        in paragraphs (1) and (2) of section 6033(d) shall comply with 
        the requirements of this subsection relating to annual returns 
        filed under section 6033 in the same manner as the 
        organizations referred to in paragraph (1).''.
    (b) Amendment Related to Section 4003 of the Act.--Subsection (b) 
of section 4003 of the Tax and Trade Relief Extension Act of 1998 is 
amended by inserting ``(7)(A)(i)(II),'' after ``(5)(A)(ii)(I),''.
    (c) Effective Date.--The amendments made by this section shall take 
effect as if included in the provisions of the Tax and Trade Relief 
Extension Act of 1998 to which they relate.

SEC. 723. AMENDMENTS RELATED TO INTERNAL REVENUE SERVICE RESTRUCTURING 
              AND REFORM ACT OF 1998.

    (a) Amendments Related to Innocent Spouse Relief.--
            (1) Election may be made any time after deficiency 
        asserted.--Subparagraph (B) of section 6015(c)(3) is amended by 
        striking ``shall be made'' and inserting ``may be made at any 
        time after a deficiency for such year is asserted but''.
            (2) Clarification regarding disallowance of refunds and 
        credits under section 6015(c).--
                    (A) In general.--Section 6015 is amended by 
                redesignating subsection (g) as subsection (h) and by 
                inserting after subsection (f) the following new 
                subsection:
    ``(g) Credits and Refunds.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), notwithstanding any other law or rule of law (other than 
        section 6511, 6512(b), 7121, or 7122), credit or refund shall 
        be allowed or made to the extent attributable to the 
        application of this section.
            ``(2) Res judicata.--In the case of any election under 
        subsection (b) or (c), if a decision of a 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 court determines that 
        the individual participated meaningfully in such prior 
        proceeding.
            ``(3) Credit and refund not allowed under subsection (c).--
        No credit or refund shall be allowed as a result of an election 
        under subsection (c).''.
                    (B) Conforming amendment.--Paragraph (3) of section 
                6015(e) is amended to read as follows:
            ``(3) Limitation on tax court jurisdiction.--If a suit for 
        refund is begun by either individual filing the joint return 
        pursuant to section 6532--
                    ``(A) 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
                    ``(B) the court acquiring jurisdiction shall have 
                jurisdiction over the petition filed under this 
                subsection.''.
            (3) Clarifications regarding review by tax court.--
                    (A) Paragraph (1) of section 6015(e) is amended in 
                the matter preceding subparagraph (A) by inserting 
                after ``individual'' the following: ``against whom a 
                deficiency has been asserted and''.
                    (B) Subparagraph (A) of section 6015(e)(1) is 
                amended to read as follows:
                    ``(A) In general.--In addition to any other remedy 
                provided by law, 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--
                            ``(i) at any time after the earlier of--
                                    ``(I) the date the Secretary mails, 
                                by certified or registered mail to the 
                                taxpayer's last known address, notice 
                                of the Secretary's final determination 
                                of relief available to the individual, 
                                or
                                    ``(II) the date which is 6 months 
                                after the date such election is filed 
                                with the Secretary, and
                            ``(ii) not later than the close of the 90th 
                        day after the date described in clause 
                        (i)(I).''.
                    (C) Subparagraph (B)(i) of section 6015(e)(1) is 
                amended--
                            (i) by striking ``until the expiration of 
                        the 90-day period described in subparagraph 
                        (A)'' and inserting ``until the close of the 
                        90th day referred to in subparagraph (A)(ii)'', 
                        and
                            (ii) by inserting ``under subparagraph 
                        (A)'' after ``filed with the Tax Court''.
                    (D)(i) Subsection (e) of section 6015 is amended by 
                adding at the end the following new paragraph:
            ``(5) Waiver.--An individual who elects the application of 
        subsection (b) or (c) (and who agrees with the Secretary's 
        determination of relief) may waive in writing at any time the 
        restrictions in paragraph (1)(B) with respect to collection of 
        the outstanding assessment (whether or not a notice of the 
        Secretary's final determination of relief has been mailed).''.
                    (ii) Paragraph (2) of section 6015(e) is amended to 
                read as follows:
            ``(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--
                    ``(A) 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, 
                and
                    ``(B) if a waiver under paragraph (5) is made, from 
                the date the claim for relief was filed until 60 days 
                after the waiver is filed with the Secretary.''.
    (b) Amendments Related to Procedure and Administration.--
            (1) Disputes involving $50,000 or less.--Section 7463 is 
        amended by adding at the end the following new subsection:
    ``(f) Additional Cases in Which Proceedings May Be Conducted Under 
This Section.--At the option of the taxpayer concurred in by the Tax 
Court or a division thereof before the hearing of the case, proceedings 
may be conducted under this section (in the same manner as a case 
described in subsection (a)) in the case of--
            ``(1) a petition to the Tax Court under section 6015(e) in 
        which the amount of relief sought does not exceed $50,000, and
            ``(2) an appeal under section 6330(d)(1)(A) to the Tax 
        Court of a determination in which the unpaid tax does not 
        exceed $50,000.''.
            (2) Authority to enjoin collection actions.--
                    (A) Section 6330(e)(1) is amended by adding at the 
                end the following: ``Notwithstanding the provisions of 
                section 7421(a), the beginning of a levy or proceeding 
                during the time the suspension under this paragraph 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 paragraph to enjoin any 
                action or proceeding unless a timely appeal has been 
                filed under subsection (d)(1) and then only in respect 
                of the unpaid tax or proposed levy to which the 
                determination being appealed relates.''.
                    (B) Section 7421(a) is amended by inserting 
                ``6330(e)(1),'' after ``6246(b),''.
            (3) Clarification.--Paragraph (3) of section 6331(k) is 
        amended by striking ``(3), (4), and (5)'' and inserting ``(3) 
        and (4)''.
    (c) Amendment Related to Section 1103 of the Act.--Paragraph (6) of 
section 6103(k) is amended--
            (1) by inserting ``and an officer or employee of the Office 
        of Treasury Inspector General for Tax Administration'' after 
        ``internal revenue officer or employee'', and
            (2) by striking ``internal revenue'' in the heading and 
        inserting ``certain''.
    (d) Amendment Related to Section 3401 of the Act.--Section 
6330(d)(1)(A) is amended by striking ``to hear'' and inserting ``with 
respect to''.
    (e) Amendment Related to Section 3509 of the Act.--Subparagraph (A) 
of section 6110(g)(5) is amended by inserting ``, any Chief Counsel 
advice,'' after ``technical advice memorandum''.
    (f) Effective Dates.--The amendments made by subsections (a) and 
(b) shall take effect on the date of the enactment of this Act. The 
amendments made by subsections (c), (d), and (e) shall take effect as 
if included in the provisions of the Internal Revenue Service 
Restructuring and Reform Act of 1998 to which they relate.

SEC. 724. AMENDMENTS RELATED TO TAXPAYER RELIEF ACT OF 1997.

    (a) Amendment Related to Section 101 of the Act.--Paragraph (4) of 
section 6211(b) is amended by striking ``sections 32 and 34'' and 
inserting ``sections 24(d), 32, and 34''.
    (b) Amendment Related to Section 302 of the Act.--The last sentence 
of section 3405(e)(1)(B) is amended by inserting ``(other than a Roth 
IRA)'' after ``individual retirement plan''.
    (c) Amendment to Section 311 of the Act.--Paragraph (3) of section 
311(e) of the Taxpayer Relief Act of 1997 (relating to election to 
recognize gain on assets held on January 1, 2001) is amended by adding 
at the end the following new sentence: ``Such an election shall not 
apply to any asset which is disposed of (in a transaction in which gain 
or loss is recognized in whole or in part) before the close of the 1-
year period beginning on the date that the asset would have been 
treated as sold under such election.''
    (d) Amendment Related to Section 402 of the Act.--The flush 
sentence at the end of clause (ii) of section 56(a)(1)(A) is amended by 
inserting before ``or to any other property'' the following: ``(and the 
straight line method shall be used for such 1250 property)''.
    (e) Amendments Related to Section  1072 of the Act.--
            (1) Clause (ii) of section 415(c)(3)(D) and subparagraph 
        (B) of section 403(b)(3) are each amended by striking ``section 
        125 or'' and inserting ``section 125, 132(f)(4), or''.
            (2) Paragraph (2) of section 414(s) is amended by striking 
        ``section 125, 402(e)(3)'' and inserting ``section 125, 
        132(f)(4), 402(e)(3)''.
    (f) Amendment Related to Section  1454 of the Act.--Subsection (a) 
of section 7436 is amended by inserting before the period at the end of 
the first sentence ``and the proper amount of employment tax under such 
determination''.
    (g) Effective Date.--The amendments made by this section shall take 
effect as if included in the provisions of the Taxpayer Relief of 1997 
to which they relate.

SEC. 725. AMENDMENTS RELATED TO BALANCED BUDGET ACT OF 1997.

    (a) Amendments Related to Section  9302 of the Act.--
            (1) Paragraph (1) of section 9302(j) of the Balanced Budget 
        Act of 1997 is amended by striking ``tobacco products and 
        cigarette papers and tubes'' and inserting ``cigarettes''.
            (2)(A) Subsection (h) of section 5702 is amended to read as 
        follows:
    ``(h) Manufacturer of Cigarette Papers and Tubes.--`Manufacturer of 
cigarette papers and tubes' means any person who manufactures cigarette 
paper, or makes up cigarette paper into tubes, except for his own 
personal use or consumption.''
            (B) Section 5702, as amended by subparagraph (A), is 
        amended by striking subsection (f) and by redesignating 
        subsections (g) through (p) as subsections (f) through (o), 
        respectively.
            (3) Subsection (c) of section 5761 is amended by adding at 
        the end the following: ``This subsection and section 5754 shall 
        not apply to any person who relands or receives tobacco 
        products in the quantity allowed entry free of tax and duty 
        under chapter 98 of the Harmonized Tariff Schedule of the 
        United States, and such person may voluntarily relinquish to 
        the Secretary at the time of entry any excess of such quantity 
        without incurring the penalty under this subsection. No 
        quantity of tobacco products other than the quantity referred 
        to in the preceding sentence may be relanded or received as a 
        personal use quantity.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect as if included in section 9302 of the Balanced Budget Act of 
1997.

SEC. 726. AMENDMENTS RELATED TO SMALL BUSINESS JOB PROTECTION ACT OF 
              1996.

    (a) Amendment Related to Section 1201 of the Act.--Subparagraph (B) 
of section 51(d)(2) is amended--
            (1) by striking ``plan approved'' and inserting ``program 
        funded'', and
            (2) by striking ``(relating to assistance for needy 
        families with minor children)''.
    (b) Amendment Related to Section 1302 of the Act.--Clause (i) of 
section 1361(e)(1)(A) is amended by striking ``or'' before ``(III)'' 
and by adding at the end the following: ``or (IV) an organization 
described in section 170(c)(1) which holds a contingent interest in 
such trust and is not a potential current beneficiary,''.
    (c) Amendment Related to Section 1401 of the Act.--Clause (ii) of 
section 401(k)(10)(B) is amended by adding at the end the following new 
sentence: ``Such term includes a distribution of an annuity contract 
from--
                                    ``(I) a trust which forms a part of 
                                a plan described in section 401(a) and 
                                which is exempt from tax under section 
                                501(a), or
                                    ``(II) an annuity plan described in 
                                section 403(a).''.
    (d) Amendment Related to Section 1427 of the Act.--Clause (ii) of 
section 219(c)(1)(B) is amended by striking ``and'' at the end of 
subclause (I), by redesignating subclause (II) as subclause (III), and 
by inserting after subclause (I) the following new subclause:
                                    ``(II) the amount of any designated 
                                nondeductible contribution (as defined 
                                in section 408(o)) on behalf of such 
                                spouse for such taxable year, and''.
    (e) 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. 727. AMENDMENT RELATED TO REVENUE RECONCILIATION ACT OF 1990.

    (a) Amendment Related to Section 11511 of the Act.--Subparagraph 
(C) of section 43(c)(1) is amended--
            (1) by inserting ``(as defined in section 193(b))'' after 
        ``expenses'', and
            (2) by striking ``under section 193''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 11511 of the Revenue Reconciliation 
Act of 1990.

SEC. 728. OTHER TECHNICAL CORRECTIONS.

    (a) Modified Endowment Contracts.--
            (1) Paragraph (2) of section 7702A(a) is amended by 
        inserting ``or this paragraph'' before the period.
            (2) Clause (ii) of section 7702A(c)(3)(A) is amended by 
        striking ``under the contract'' and inserting ``under the old 
        contract''.
            (3) The amendments made by this subsection shall take 
        effect as if included in the amendments made by section 5012 of 
        the Technical and Miscellaneous Revenue Act of 1988.
    (b) Affiliated Corporations in Context of Worthless Securities.--
            (1) Subparagraph (A) of section 165(g)(3) is amended to 
        read as follows:
                    ``(A) the taxpayer owns directly stock in such 
                corporation meeting the requirements of section 
                1504(a)(2), and''.
            (2) Paragraph (3) of section 165(g) is amended by striking 
        the last sentence.
            (3) The amendments made by this subsection shall apply to 
        taxable years beginning after December 31, 1984.
    (c) Certain Annuities Issued by Tax-Exempt Organizations Not 
Treated as Debt Instruments under Original Issue Discount Rules.--
            (1) Clause (ii) of section 1275(a)(1)(B) is amended by 
        striking ``subchapter L'' and inserting ``subchapter L (or by 
        an entity described in section 501(c) and exempt from tax under 
        section 501(a) which would be subject to tax under subchapter L 
        were it not so exempt)''.
            (2) The amendment made by this subsection shall take effect 
        as if included in the amendments made by section 41 of the Tax 
        Reform Act of 1984.
    (d) Tentative Carryback Adjustments of Losses From Section 1256 
Contracts.--
            (1) Subsection (a) of section 6411 is amended by striking 
        ``section 1212(a)(1)'' and inserting ``subsection (a)(1) or (c) 
        of section 1212''.
            (2) The amendment made by paragraph (1) shall take effect 
        as if included in the amendments made by section 504 of the 
        Economic Recovery Tax Act of 1981.
    (e) Correction of Calculation of Amounts to be Deposited in Highway 
Trust Fund.--
            (1) Subsection (b) of section 9503 is amended by striking 
        paragraph (5) and redesignating paragraph (6) as paragraph (5).
            (2) The amendment made by paragraph (1) shall apply with 
        respect to taxes received in the Treasury after the date of the 
        enactment of this Act.
    (f) Expenditures From Vaccine Injury Compensation Trust Fund.--
Section 9510(c)(1)(A) is amended by striking ``December 31, 1999'' and 
inserting ``October 18, 2000''.

SEC. 729. CLERICAL CHANGES.

            (1) Clause (i) of section 45(d)(7)(A) is amended by 
        striking ``paragraph (3)(A)'' and inserting ``subsection 
        (c)(3)(A)''.
            (2) Subsection (f) of section 67 is amended by striking 
        ``the last sentence'' and inserting ``the second sentence''.
            (3) The heading for paragraph (5) of section 408(d) is 
        amended to read as follows:
            ``(5) Distributions of excess contributions after due date 
        for taxable year and certain excess rollover contributions.--
        ''.
            (4) Paragraph (3) of section 475(g) is amended by striking 
        ``267(b) of'' and inserting ``267(b) or''.
            (5) The heading for subparagraph (B) of section 529(e)(3) 
        is amended by striking ``under guaranteed plans''.
            (6) Clause (iii) of section 530(d)(4)(B) is amended by 
        striking ``; or'' at the end and inserting ``, or''.
            (7) Paragraphs (1)(C) and (2)(C) of section 664(d) are each 
        amended by striking the period after ``subsection (g))''.
            (8)(A) Subsection (e) of section 678 is amended by striking 
        ``an electing small business corporation'' and inserting ``an S 
        corporation''.
            (B) Clause (v) of section 6103(e)(1)(D) is amended to read 
        as follows:
                            ``(v) if the corporation was an S 
                        corporation, any person who was a shareholder 
                        during any part of the period covered by such 
                        return during which an election under section 
                        1362(a) was in effect, or''.
            (9) Paragraph (7) of section 856(c) is amended by striking 
        ``paragraph (4)(B)(ii)(III)'' and inserting ``paragraph 
        (4)(B)(iii)(III)''
            (10) Subparagraph (A) of section 856(l)(4) is amended by 
        striking ``paragraph (9)(D)(ii)'' and inserting ``subsection 
        (d)(9)(D)(ii)''.
            (11) Subparagraph (B) of section 871(f)(2) is amended by 
        striking ``19 U.S.C.'' and inserting ``(19 U.S.C.''.
            (12) Subparagraph (B) of section 995(b)(3) is amended by 
        striking ``the Military Security Act of 1954 (22 U.S.C. 1934)'' 
        and inserting ``section 38 of the International Security 
        Assistance and Arms Export Control Act of 1976 (22 U.S.C. 
        2778)''.
            (13) Section 1391(g)(3)(C) is amended by striking 
        ``paragraph (1)(B)'' and inserting ``paragraph (1)''.
            (14)(A) Paragraph (2) of section 2035(c) is amended by 
        striking ``paragraph (1)'' and inserting ``subsection (a)''.
            (B) Subsection (d) of section 2035 is amended by inserting 
        ``and paragraph (1) of subsection (c)'' after ``Subsection 
        (a)''.
            (15) Paragraph (5) of section 3121(a) is amended by 
        striking the semicolon at the end of subparagraph (G) and 
        inserting a comma.
            (16) Subparagraph (B) of section 4946(c)(3) is amended by 
        striking ``the lowest rate of compensation prescribed for GS-16 
        of the General Schedule under section 5332'' and inserting 
        ``the lowest rate of basic pay for the Senior Executive Service 
        under section 5382''.
            (17) Subsection (p) of section 6103 is amended--
                    (A) in paragraph (4), in the matter preceding 
                subparagraph (A)--
                            (i) by striking the second comma after 
                        ``(13)'', and
                            (ii) by striking ``(7)'' and all that 
                        follows through ``shall, as a condition'' and 
                        inserting ``(7), (8), (9), (12), (15), or (16) 
                        or any other person described in subsection 
                        (l)(16) shall, as a condition'', and
                    (B) in paragraph (4)(F)(ii), by striking the second 
                comma after ``(14)''.
            (18) Paragraph (5) of section 6166(k) is amended by 
        striking ``2035(d)(4)'' and inserting ``2035(c)(2)''.
            (19) Subsection (a) of section 6512 is amended by striking 
        ``; and'' at the end of paragraphs (1), (2), and (5) and 
        inserting ``, and''.
            (20) Paragraph (1) of section 6611(g) is amended by 
        striking the comma after ``(b)(3)''.
            (21) Subparagraphs (A) and (B) of section 6655(e)(5) are 
        amended by striking ``subsections (d)(5) and (l)(3)(B)'' and 
        inserting ``subsection (d)(5)''.
            (22) The subchapter heading for subchapter D of chapter 67 
        is amended by capitalizing the first letter of the second word.
            (23)(A) Section 6724(d)(1)(B) is amended by striking 
        clauses (xiv) through (xvii) and inserting the following:
                            ``(xiv) subparagraph (A) or (C) of 
                        subsection (c)(4) of section 4093 (relating to 
                        information reporting with respect to tax on 
                        diesel and aviation fuels),
                            ``(xv) section 4101(d) (relating to 
                        information reporting with respect to fuels 
                        taxes),
                            ``(xvi) subparagraph (C) of section 
                        338(h)(10) (relating to information required to 
                        be furnished to the Secretary in case of 
                        elective recognition of gain or loss), or
                            ``(xvii) section 264(f)(5)(A)(iv) (relating 
                        to reporting with respect to certain life 
                        insurance and annuity contracts), and''.
            (B) Section 6010(o)(4)(C) of the Internal Revenue Service 
        Restructuring and Reform Act of 1998 is amended by striking 
        ``inserting `or', and by adding at the end'' and inserting 
        ``inserting `, or', and by adding after subparagraph (Z)''.
            (24) Subsection (a) of section 7421 is amended by striking 
        ``6672(b)'' and inserting ``6672(c)''.
            (25) Paragraph (3) of section 7430(c) is amended--
                    (A) in the paragraph heading, by striking 
                ``Attorneys'' and inserting ``Attorneys''', and
                    (B) in subparagraph (B), by striking ``attorneys 
                fees'' each place it appears and inserting ``attorneys' 
                fees''.
            (26) Paragraph (2) of section 7603(b) is amended by 
        striking the semicolon at the end of subparagraphs (A), (B), 
        (C), (D), (E), (F), and (G) and inserting a comma.
            (27) Clause (ii) of section 7802(b)(2)(B) is amended by 
        striking ``; and'' at the end and inserting ``, and''.
            (28) Paragraph (3) of section 7811(a) is amended by 
        striking ``taxpayer assistance order'' and inserting ``Taxpayer 
        Assistance Order''.
            (29) Paragraph (1) of section 7811(d) is amended by 
        striking ``Ombudsman's'' and inserting ``National Taxpayer 
        Advocate's''.
            (30) Paragraph (3) of section 7872(f) is amended by 
        striking ``foregoing'' and inserting ``forgoing''.

                     Subtitle D--Pay-Go Adjustment

SEC. 731. AVOIDANCE OF A PAY-GO SEQUESTRATION FOR FISCAL YEAR 2001.

    (a) Pay-Go Adjustments.--(1) In preparing the final sequestration 
report required by section 254(f)(3) of the Balanced Budget and 
Emergency Deficit Control Act of 1985 for fiscal year 2001, in addition 
to the information required by that section, the Director of the Office 
of Management and Budget shall change any balance of direct spending 
and receipts legislation for fiscal year 2001 under section 252 of that 
Act to zero.
    (2) Notwithstanding Rule 3 of the Budget Scorekeeping Guidelines 
set forth in the joint explanatory statement of the committee of 
conference accompanying the conference report on the bill H.R. 2015 of 
the 105th Congress (House Report No. 105-217, filed July 30, 1997), the 
legislation enacted in sections 504 and 505 of the Department of 
Transportation and Related Agencies Appropriations Act, 2001, section 
312 of the Legislative Branch Appropriations Act, 2001, and section 
1003 of division B of H.R. 4516 (106th Congress), as enacted, that 
would have been estimated by the Office of Management and Budget as 
changing direct spending or receipts under section 252 of the Balanced 
Budget and Emergency Deficit Control Act of 1985 were it included in an 
Act other than an appropriations Act shall be treated as direct 
spending or receipts legislation, as appropriate, under section 252 of 
the Balanced Budget and Emergency Deficit Control Act of 1985.
    (b) Exemption of Certain Budgetary Reports from Termination.--
Section 3003(a)(1) of the Federal Reports Elimination and Sunset Act of 
1995 (31 U.S.C. 1113 note) does not apply to any report required to be 
submitted under any of the following provisions of law:
            (1) Sections 1105(a), 1106(a) and (b), and 1109(a) of title 
        31, United States Code, and any other law relating to the 
        budget of the United States Government.
            (2) The Balanced Budget and Emergency Deficit Control Act 
        of 1985 (2 U.S.C. 900 et seq.).
            (3) Sections 202(e)(1) and (3) of the Congressional Budget 
        Act of 1974 (2 U.S.C. 602(e)(1) and (3)).
            (4) Section 1014(e) of the Congressional Budget and 
        Impoundment Control Act of 1974 (2 U.S.C. 685(e)).
                                 <all>