[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2884 Engrossed Amendment Senate (EAS)]

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

                  In the Senate of the United States,

                      December 20 (legislative day, December 18), 2001.
      Resolved, That the Senate agree to the amendment of the House of 
Representatives to the amendments of the Senate to the bill (H.R. 2884) 
entitled ``An Act to amend the Internal Revenue Code of 1986 to provide 
tax relief for victims of the terrorist attacks against the United 
States on September 11, 2001.'', with the following

       SENATE AMENDMENT TO HOUSE AMENDMENT TO SENATE AMENDMENTS:

            In lieu of the matter proposed to be inserted by the House 
      amendment to the text of the bill, insert:

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Victims of 
Terrorism Tax Relief Act of 2001''.
    (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.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; etc.
                TITLE I--VICTIMS OF TERRORISM TAX RELIEF

     Subtitle A--Relief Provisions for Victims of Terrorist Attacks

Sec. 101. Income taxes of victims of terrorist attacks.
Sec. 102. Exclusion of certain death benefits.
Sec. 103. Estate tax reduction.
Sec. 104. Payments by charitable organizations treated as exempt 
                            payments.
Sec. 105. Exclusion of certain cancellations of indebtedness.
                  Subtitle B--Other Relief Provisions

Sec. 111. Exclusion for disaster relief payments.
Sec. 112. Authority to postpone certain deadlines and required actions.
Sec. 113. Application of certain provisions to terroristic or military 
                            actions.
Sec. 114. Clarification of due date for airline excise tax deposits.
Sec. 115. Treatment of certain structured settlement payments.
Sec. 116. Personal exemption deduction for certain disability trusts.
   TITLE II--DISCLOSURE OF TAX INFORMATION IN TERRORISM AND NATIONAL 
                        SECURITY INVESTIGATIONS

Sec. 201. Disclosure of tax information in terrorism and national 
                            security investigations.
          TITLE III--NO IMPACT ON SOCIAL SECURITY TRUST FUNDS

Sec. 301. No impact on social security trust funds.

               TITLE I----VICTIMS OF TERRORISM TAX RELIEF

     Subtitle A--Relief Provisions for Victims of Terrorist Attacks

SEC. 101. INCOME TAXES OF VICTIMS OF TERRORIST ATTACKS.

    (a) In General.--Section 692 (relating to income taxes of members 
of Armed Forces on death) is amended by adding at the end the following 
new subsection:
    ``(d) Individuals Dying as a Result of Certain Attacks.--
            ``(1) In general.--In the case of a specified terrorist 
        victim, any tax imposed by this chapter shall not apply--
                    ``(A) with respect to the taxable year in which 
                falls the date of death, and
                    ``(B) with respect to any prior taxable year in the 
                period beginning with the last taxable year ending 
                before the taxable year in which the wounds, injury, or 
                illness referred to in paragraph (3) were incurred.
            ``(2) $10,000 minimum benefit.--If, but for this paragraph, 
        the amount of tax not imposed by paragraph (1) with respect to 
        a specified terrorist victim is less than $10,000, then such 
        victim shall be treated as having made a payment against the 
        tax imposed by this chapter for such victim's last taxable year 
        in an amount equal to the excess of $10,000 over the amount of 
        tax not so imposed.
            ``(3) Taxation of certain benefits.--Subject to such rules 
        as the Secretary may prescribe, paragraph (1) shall not apply 
        to the amount of any tax imposed by this chapter which would be 
        computed by only taking into account the items of income, gain, 
        or other amounts attributable to--
                    ``(A) deferred compensation which would have been 
                payable after death if the individual had died other 
                than as a specified terrorist victim, or
                    ``(B) amounts payable in the taxable year which 
                would not have been payable in such taxable year but 
                for an action taken after September 11, 2001.
            ``(4) Specified terrorist victim.--For purposes of this 
        subsection, the term `specified terrorist victim' means any 
        decedent--
                    ``(A) who dies as a result of wounds or injury 
                incurred as a result of the terrorist attacks against 
                the United States on April 19, 1995, or September 11, 
                2001, or
                    ``(B) who dies as a result of illness incurred as a 
                result of an attack involving anthrax occurring on or 
                after September 11, 2001, and before January 1, 2002.
        Such term shall not include any individual identified by the 
        Attorney General to have been a participant or conspirator in 
        any such attack or a representative of such an individual.''.
    (b) Conforming Amendments.--
            (1) Section 5(b)(1) is amended by inserting ``and victims 
        of certain terrorist attacks'' before ``on death''.
            (2) Section 6013(f)(2)(B) is amended by inserting ``and 
        victims of certain terrorist attacks'' before ``on death''.
    (c) Clerical Amendments.--
            (1) The heading of section 692 is amended to read as 
        follows:

``SEC. 692. INCOME TAXES OF MEMBERS OF ARMED FORCES AND VICTIMS OF 
              CERTAIN TERRORIST ATTACKS ON DEATH.''.

            (2) The item relating to section 692 in the table of 
        sections for part II of subchapter J of chapter 1 is amended to 
        read as follows:

                              ``Sec. 692. Income taxes of members of 
                                        Armed Forces and victims of 
                                        certain terrorist attacks on 
                                        death.''.
    (d) Effective Date; Waiver of Limitations.--
            (1) Effective date.--The amendments made by this section 
        shall apply to taxable years ending before, on, or after 
        September 11, 2001.
            (2) Waiver of limitations.--If refund or credit of any 
        overpayment of tax resulting from the amendments made by this 
        section is prevented at any time before the close of the 1-year 
        period beginning on the date of the enactment of this Act by 
        the operation of any law or rule of law (including res 
        judicata), such refund or credit may nevertheless be made or 
        allowed if claim therefor is filed before the close of such 
        period.

SEC. 102. EXCLUSION OF CERTAIN DEATH BENEFITS.

    (a) In General.--Section 101 (relating to certain death benefits) 
is amended by adding at the end the following new subsection:
    ``(i) Certain Employee Death Benefits Payable by Reason of Death of 
Certain Terrorist Victims.--
            ``(1) In general.--Gross income does not include amounts 
        (whether in a single sum or otherwise) paid by an employer by 
        reason of the death of an employee who is a specified terrorist 
        victim (as defined in section 692(d)(4)).
            ``(2) Limitation.--
                    ``(A) In general.--Subject to such rules as the 
                Secretary may prescribe, paragraph (1) shall not apply 
                to amounts which would have been payable after death if 
                the individual had died other than as a specified 
                terrorist victim (as so defined).
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to incidental death benefits paid from a plan described 
                in section 401(a) and exempt from tax under section 
                501(a).
            ``(3) Treatment of self-employed individuals.--For purposes 
        of paragraph (1), the term `employee' includes a self-employed 
        individual (as defined in section 401(c)(1)).''.
    (b) Effective Date; Waiver of Limitations.--
            (1) Effective date.--The amendment made by this section 
        shall apply to taxable years ending before, on, or after 
        September 11, 2001.
            (2) Waiver of limitations.--If refund or credit of any 
        overpayment of tax resulting from the amendments made by this 
        section is prevented at any time before the close of the 1-year 
        period beginning on the date of the enactment of this Act by 
        the operation of any law or rule of law (including res 
        judicata), such refund or credit may nevertheless be made or 
        allowed if claim therefor is filed before the close of such 
        period.

SEC. 103. ESTATE TAX REDUCTION.

    (a) In General.--Section 2201 is amended to read as follows:

``SEC. 2201. COMBAT ZONE-RELATED DEATHS OF MEMBERS OF THE ARMED FORCES 
              AND DEATHS OF VICTIMS OF CERTAIN TERRORIST ATTACKS.

    ``(a) In General.--Unless the executor elects not to have this 
section apply, in applying sections 2001 and 2101 to the estate of a 
qualified decedent, the rate schedule set forth in subsection (c) shall 
be deemed to be the rate schedule set forth in section 2001(c).
    ``(b) Qualified Decedent.--For purposes of this section, the term 
`qualified decedent' means--
            ``(1) any citizen or resident of the United States dying 
        while in active service of the Armed Forces of the United 
        States, if such decedent--
                    ``(A) was killed in action while serving in a 
                combat zone, as determined under section 112(c), or
                    ``(B) died as a result of wounds, disease, or 
                injury suffered while serving in a combat zone (as 
                determined under section 112(c)), and while in the line 
                of duty, by reason of a hazard to which such decedent 
                was subjected as an incident of such service, and
            ``(2) any specified terrorist victim (as defined in section 
        692(d)(4)).
    ``(c) Rate Schedule.--

``If the amount with respect to     The tentative tax is:
        which the tentative tax to 
        be computed is:
    Not over $150,000..............
                                        1 percent of the amount by 
                                                which such amount 
                                                exceeds $100,000.
    Over $150,000 but not over 
        $200,000.
                                        $500 plus 2 percent of the 
                                                excess over $150,000.
    Over $200,000 but not over 
        $300,000.
                                        $1,500 plus 3 percent of the 
                                                excess over $200,000.
    Over $300,000 but not over 
        $500,000.
                                        $4,500 plus 4 percent of the 
                                                excess over $300,000.
    Over $500,000 but not over 
        $700,000.
                                        $12,500 plus 5 percent of the 
                                                excess over $500,000.
    Over $700,000 but not over 
        $900,000.
                                        $22,500 plus 6 percent of the 
                                                excess over $700,000.
    Over $900,000 but not over 
        $1,100,000.
                                        $34,500 plus 7 percent of the 
                                                excess over $900,000.
    Over $1,100,000 but not over 
        $1,600,000.
                                        $48,500 plus 8 percent of the 
                                                excess over $1,100,000.
    Over $1,600,000 but not over 
        $2,100,000.
                                        $88,500 plus 9 percent of the 
                                                excess over $1,600,000.
    Over $2,100,000 but not over 
        $2,600,000.
                                        $133,500 plus 10 percent of the 
                                                excess over $2,100,000.
    Over $2,600,000 but not over 
        $3,100,000.
                                        $183,500 plus 11 percent of the 
                                                excess over $2,600,000.
    Over $3,100,000 but not over 
        $3,600,000.
                                        $238,500 plus 12 percent of the 
                                                excess over $3,100,000.
    Over $3,600,000 but not over 
        $4,100,000.
                                        $298,500 plus 13 percent of the 
                                                excess over $3,600,000.
    Over $4,100,000 but not over 
        $5,100,000.
                                        $363,500 plus 14 percent of the 
                                                excess over $4,100,000.
    Over $5,100,000 but not over 
        $6,100,000.
                                        $503,500 plus 15 percent of the 
                                                excess over $5,100,000.
    Over $6,100,000 but not over 
        $7,100,000.
                                        $653,500 plus 16 percent of the 
                                                excess over $6,100,000.
    Over $7,100,000 but not over 
        $8,100,000.
                                        $813,500 plus 17 percent of the 
                                                excess over $7,100,000.
    Over $8,100,000 but not over 
        $9,100,000.
                                        $983,500 plus 18 percent of the 
                                                excess over $8,100,000.
    Over $9,100,000 but not over 
        $10,100,000.
                                        $1,163,500 plus 19 percent of 
                                                the excess over 
                                                $9,100,000.
    Over $10,100,000...............
                                        $1,353,500 plus 20 percent of 
                                                the excess over 
                                                $10,100,000.
    ``(d) Determination of Unified Credit.--In the case of an estate to 
which this section applies, subsection (a) shall not apply in 
determining the credit under section 2010.''.
    (b) Conforming Amendments.--
            (1) Section 2011 is amended by striking subsection (d) and 
        by redesignating subsections (e), (f), and (g) as subsections 
        (d), (e), and (f), respectively.
            (2) Section 2053(d)(3)(B) is amended by striking ``section 
        2011(e)'' and inserting ``section 2011(d)''.
            (3) Paragraph (9) of section 532(c) of the Economic Growth 
        and Tax Relief Reconciliation Act of 2001 is repealed.
    (c) Clerical Amendment.--The item relating to section 2201 in the 
table of sections for subchapter C of chapter 11 is amended to read as 
follows:

                              ``Sec. 2201. Combat zone-related deaths 
                                        of members of the Armed Forces 
                                        and deaths of victims of 
                                        certain terrorist attacks.''.
    (d) Effective Date; Waiver of Limitations.--
            (1) Effective date.--The amendments made by this section 
        shall apply to estates of decedents--
                    (A) dying on or after September 11, 2001, and
                    (B) in the case of individuals dying as a result of 
                the April 19, 1995, terrorist attack, dying on or after 
                April 19, 1995.
            (2) Waiver of limitations.--If refund or credit of any 
        overpayment of tax resulting from the amendments made by this 
        section is prevented at any time before the close of the 1-year 
        period beginning on the date of the enactment of this Act by 
        the operation of any law or rule of law (including res 
        judicata), such refund or credit may nevertheless be made or 
        allowed if claim therefor is filed before the close of such 
        period.

SEC. 104. PAYMENTS BY CHARITABLE ORGANIZATIONS TREATED AS EXEMPT 
              PAYMENTS.

    (a) In General.--For purposes of the Internal Revenue Code of 
1986--
            (1) payments made by an organization described in section 
        501(c)(3) of such Code by reason of the death, injury, 
        wounding, or illness of an individual incurred as the result of 
        the terrorist attacks against the United States on September 
        11, 2001, or an attack involving anthrax occurring on or after 
        September 11, 2001, and before January 1, 2002, shall be 
        treated as related to the purpose or function constituting the 
        basis for such organization's exemption under section 501 of 
        such Code if such payments are made in good faith using a 
        reasonable and objective formula which is consistently applied, 
        and
            (2) in the case of a private foundation (as defined in 
        section 509 of such Code), any payment described in paragraph 
        (1) shall not be treated as made to a disqualified person for 
        purposes of section 4941 of such Code.
    (b) Effective Date.--This section shall apply to payments made on 
or after September 11, 2001.

SEC. 105. EXCLUSION OF CERTAIN CANCELLATIONS OF INDEBTEDNESS.

    (a) In General.--For purposes of the Internal Revenue Code of 
1986--
            (1) gross income shall not include any amount which (but 
        for this section) would be includible in gross income by reason 
        of the discharge (in whole or in part) of indebtedness of any 
        taxpayer if the discharge is by reason of the death of an 
        individual incurred as the result of the terrorist attacks 
        against the United States on September 11, 2001, or as the 
        result of illness incurred as a result of an attack involving 
        anthrax occurring on or after September 11, 2001, and before 
        January 1, 2002, and
            (2) return requirements under section 6050P of such Code 
        shall not apply to any discharge described in paragraph (1).
    (b) Effective Date.--This section shall apply to discharges made on 
or after September 11, 2001, and before January 1, 2002.

                  Subtitle B--Other Relief Provisions

SEC. 111. EXCLUSION FOR DISASTER RELIEF PAYMENTS.

    (a) In General.--Part III of subchapter B of chapter 1 (relating to 
items specifically excluded from gross income) is amended by 
redesignating section 139 as section 140 and inserting after section 
138 the following new section:

``SEC. 139. DISASTER RELIEF PAYMENTS.

    ``(a) General Rule.--Gross income shall not include any amount 
received by an individual as a qualified disaster relief payment.
    ``(b) Qualified Disaster Relief Payment Defined.--For purposes of 
this section, the term `qualified disaster relief payment' means any 
amount paid to or for the benefit of an individual--
            ``(1) to reimburse or pay reasonable and necessary 
        personal, family, living, or funeral expenses incurred as a 
        result of a qualified disaster,
            ``(2) to reimburse or pay reasonable and necessary expenses 
        incurred for the repair or rehabilitation of a personal 
        residence or repair or replacement of its contents to the 
        extent that the need for such repair, rehabilitation, or 
        replacement is attributable to a qualified disaster,
            ``(3) by a person engaged in the furnishing or sale of 
        transportation as a common carrier by reason of the death or 
        personal physical injuries incurred as a result of a qualified 
        disaster, or
            ``(4) if such amount is paid by a Federal, State, or local 
        government, or agency or instrumentality thereof, in connection 
        with a qualified disaster in order to promote the general 
        welfare,
but only to the extent any expense compensated by such payment is not 
otherwise compensated for by insurance or otherwise.
    ``(c) Qualified Disaster Defined.--For purposes of this section, 
the term `qualified disaster' means--
            ``(1) a disaster which results from a terroristic or 
        military action (as defined in section 692(c)(2)),
            ``(2) a Presidentially declared disaster (as defined in 
        section 1033(h)(3)),
            ``(3) a disaster which results from an accident involving a 
        common carrier, or from any other event, which is determined by 
        the Secretary to be of a catastrophic nature, or
            ``(4) with respect to amounts described in subsection 
        (b)(4), a disaster which is determined by an applicable 
        Federal, State, or local authority (as determined by the 
        Secretary) to warrant assistance from the Federal, State, or 
        local government or agency or instrumentality thereof.
    ``(d) Coordination With Employment Taxes.--For purposes of chapter 
2 and subtitle C, a qualified disaster relief payment shall not be 
treated as net earnings from self-employment, wages, or compensation 
subject to tax.
    ``(e) No Relief for Certain Individuals.--Subsections (a) and (f) 
shall not apply with respect to any individual identified by the 
Attorney General to have been a participant or conspirator in a 
terroristic action (as so defined), or a representative of such 
individual.
    ``(f) Exclusion of Certain Additional Payments.--Gross income shall 
not include any amount received as payment under section 406 of the Air 
Transportation Safety and System Stabilization Act.''
    (b) Conforming Amendments.--The table of sections for part III of 
subchapter B of chapter 1 is amended by striking the item relating to 
section 139 and inserting the following new items:

                              ``Sec. 139. Disaster relief payments.
                              ``Sec. 140. Cross references to other 
                                        Acts.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending on or after September 11, 2001.

SEC. 112. AUTHORITY TO POSTPONE CERTAIN DEADLINES AND REQUIRED ACTIONS.

    (a) Expansion of Authority Relating to Disasters and Terroristic or 
Military Actions.--Section 7508A is amended to read as follows:

``SEC. 7508A. AUTHORITY TO POSTPONE CERTAIN DEADLINES BY REASON OF 
              PRESIDENTIALLY DECLARED DISASTER OR TERRORISTIC OR 
              MILITARY ACTIONS.

    ``(a) In General.--In the case of a taxpayer determined by the 
Secretary to be affected by a Presidentially declared disaster (as 
defined in section 1033(h)(3)) or a terroristic or military action (as 
defined in section 692(c)(2)), the Secretary may specify a period of up 
to one year that may be disregarded in determining, under the internal 
revenue laws, in respect of any tax liability of such taxpayer--
            ``(1) whether any of the acts described in paragraph (1) of 
        section 7508(a) were performed within the time prescribed 
        therefor (determined without regard to extension under any 
        other provision of this subtitle for periods after the date 
        (determined by the Secretary) of such disaster or action),
            ``(2) the amount of any interest, penalty, additional 
        amount, or addition to the tax for periods after such date, and
            ``(3) the amount of any credit or refund.
    ``(b) Special Rules Regarding Pensions, Etc.--In the case of a 
pension or other employee benefit plan, or any sponsor, administrator, 
participant, beneficiary, or other person with respect to such plan, 
affected by a disaster or action described in subsection (a), the 
Secretary may specify a period of up to one year which may be 
disregarded in determining the date by which any action is required or 
permitted to be completed under this title. No plan shall be treated as 
failing to be operated in accordance with the terms of the plan solely 
as the result of disregarding any period by reason of the preceding 
sentence.
    ``(c) Special Rules for Overpayments.--The rules of section 7508(b) 
shall apply for purposes of this section.''.
    (b) Clarification of Scope of Acts Secretary May Postpone.--Section 
7508(a)(1)(K) (relating to time to be disregarded) is amended by 
striking ``in regulations prescribed under this section''.
    (c) Conforming Amendments to ERISA.--
            (1) Part 5 of subtitle B of title I of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1131 et seq.) 
        is amended by adding at the end the following new section:

``SEC. 518. AUTHORITY TO POSTPONE CERTAIN DEADLINES BY REASON OF 
              PRESIDENTIALLY DECLARED DISASTER OR TERRORISTIC OR 
              MILITARY ACTIONS.

    ``In the case of a pension or other employee benefit plan, or any 
sponsor, administrator, participant, beneficiary, or other person with 
respect to such plan, affected by a Presidentially declared disaster 
(as defined in section 1033(h)(3) of the Internal Revenue Code of 1986) 
or a terroristic or military action (as defined in section 692(c)(2) of 
such Code), the Secretary may, notwithstanding any other provision of 
law, prescribe, by notice or otherwise, a period of up to one year 
which may be disregarded in determining the date by which any action is 
required or permitted to be completed under this Act. No plan shall be 
treated as failing to be operated in accordance with the terms of the 
plan solely as the result of disregarding any period by reason of the 
preceding sentence.''.
            (2) Section 4002 of Employee Retirement Income Security Act 
        of 1974 (29 U.S.C. 1302) is amended by adding at the end the 
        following new subsection:
    ``(i) Special Rules Regarding Disasters, Etc.--In the case of a 
pension or other employee benefit plan, or any sponsor, administrator, 
participant, beneficiary, or other person with respect to such plan, 
affected by a Presidentially declared disaster (as defined in section 
1033(h)(3) of the Internal Revenue Code of 1986) or a terroristic or 
military action (as defined in section 692(c)(2) of such Code), the 
corporation may, notwithstanding any other provision of law, prescribe, 
by notice or otherwise, a period of up to one year which may be 
disregarded in determining the date by which any action is required or 
permitted to be completed under this Act. No plan shall be treated as 
failing to be operated in accordance with the terms of the plan solely 
as the result of disregarding any period by reason of the preceding 
sentence.''.
    (d) Additional Conforming Amendments.--
            (1) Section 6404 is amended--
                    (A) by striking subsection (h),
                    (B) by redesignating subsection (i) as subsection 
                (h), and
                    (C) by adding at the end the following new 
                subsection:
    ``(i) Cross Reference.--

                                ``For authority to suspend running of 
interest, etc. by reason of Presidentially declared disaster or 
terroristic or military action, see section 7508A.''.
            (2) Section 6081(c) is amended to read as follows:
    ``(c) Cross References.--

                                ``For time for performing certain acts 
postponed by reason of war, see section 7508, and by reason of 
Presidentially declared disaster or terroristic or military action, see 
section 7508A.''.
            (3) Section 6161(d) is amended by adding at the end the 
        following new paragraph:
            ``(3) Postponement of certain acts.--

                                ``For time for performing certain acts 
postponed by reason of war, see section 7508, and by reason of 
Presidentially declared disaster or terroristic or military action, see 
section 7508A.''.
    (e) Clerical Amendments.--
            (1) The item relating to section 7508A in the table of 
        sections for chapter 77 is amended to read as follows:

                              ``Sec. 7508A. Authority to postpone 
                                        certain deadlines by reason of 
                                        Presidentially declared 
                                        disaster or terroristic or 
                                        military actions.''.
            (2) The table of contents for the Employee Retirement 
        Income Security Act of 1974 is amended by inserting after the 
        item relating to section 517 the following new item:

                              ``Sec. 518. Authority to postpone certain 
                                        deadlines by reason of 
                                        Presidentially declared 
                                        disaster or terroristic or 
                                        military actions.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to disasters and terroristic or military actions occurring on or 
after September 11, 2001, with respect to any action of the Secretary 
of the Treasury, the Secretary of Labor, or the Pension Benefit 
Guaranty Corporation occurring on or after the date of the enactment of 
this Act.

SEC. 113. APPLICATION OF CERTAIN PROVISIONS TO TERRORISTIC OR MILITARY 
              ACTIONS.

    (a) Disability Income.--Section 104(a)(5) (relating to compensation 
for injuries or sickness) is amended by striking ``a violent attack'' 
and all that follows through the period and inserting ``a terroristic 
or military action (as defined in section 692(c)(2)).''.
    (b) Exemption From Income Tax for Certain Military or Civilian 
Employees.--Section 692(c) is amended--
            (1) by striking ``outside the United States'' in paragraph 
        (1), and
            (2) by striking ``Sustained Overseas'' in the heading.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending on or after September 11, 2001.

SEC. 114. CLARIFICATION OF DUE DATE FOR AIRLINE EXCISE TAX DEPOSITS.

    (a) In General.--Paragraph (3) of section 301(a) of the Air 
Transportation Safety and System Stabilization Act (Public Law 107-42) 
is amended to read as follows:
            ``(3) Airline-related deposit.--For purposes of this 
        subsection, the term `airline-related deposit' means any 
        deposit of taxes imposed by subchapter C of chapter 33 of such 
        Code (relating to transportation by air).''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 301 of the Air Transportation Safety 
and System Stabilization Act (Public Law 107-42).

SEC. 115. TREATMENT OF CERTAIN STRUCTURED SETTLEMENT PAYMENTS.

    (a) In General.--Subtitle E is amended by adding at the end the 
following new chapter:

       ``CHAPTER 55--STRUCTURED SETTLEMENT FACTORING TRANSACTIONS

                              ``Sec. 5891. Structured settlement 
                                        factoring transactions.

``SEC. 5891. STRUCTURED SETTLEMENT FACTORING TRANSACTIONS.

    ``(a) Imposition of Tax.--There is hereby imposed on any person who 
acquires directly or indirectly structured settlement payment rights in 
a structured settlement factoring transaction a tax equal to 40 percent 
of the factoring discount as determined under subsection (c)(4) with 
respect to such factoring transaction.
    ``(b) Exception for Certain Approved Transactions.--
            ``(1) In general.--The tax under subsection (a) shall not 
        apply in the case of a structured settlement factoring 
        transaction in which the transfer of structured settlement 
        payment rights is approved in advance in a qualified order.
            ``(2) Qualified order.--For purposes of this section, the 
        term `qualified order' means a final order, judgment, or decree 
        which--
                    ``(A) finds that the transfer described in 
                paragraph (1)--
                            ``(i) does not contravene any Federal or 
                        State statute or the order of any court or 
                        responsible administrative authority, and
                            ``(ii) is in the best interest of the 
                        payee, taking into account the welfare and 
                        support of the payee's dependents, and
                    ``(B) is issued--
                            ``(i) under the authority of an applicable 
                        State statute by an applicable State court, or
                            ``(ii) by the responsible administrative 
                        authority (if any) which has exclusive 
                        jurisdiction over the underlying action or 
                        proceeding which was resolved by means of the 
                        structured settlement.
            ``(3) Applicable state statute.--For purposes of this 
        section, the term `applicable State statute' means a statute 
        providing for the entry of an order, judgment, or decree 
        described in paragraph (2)(A) which is enacted by--
                    ``(A) the State in which the payee of the 
                structured settlement is domiciled, or
                    ``(B) if there is no statute described in 
                subparagraph (A), the State in which either the party 
                to the structured settlement (including an assignee 
                under a qualified assignment under section 130) or the 
                person issuing the funding asset for the structured 
                settlement is domiciled or has its principal place of 
                business.
            ``(4) Applicable state court.--For purposes of this 
        section--
                    ``(A) In general.--The term `applicable State 
                court' means, with respect to any applicable State 
                statute, a court of the State which enacted such 
                statute.
                    ``(B) Special rule.--In the case of an applicable 
                State statute described in paragraph (3)(B), such term 
                also includes a court of the State in which the payee 
                of the structured settlement is domiciled.
            ``(5) Qualified order dispositive.--A qualified order shall 
        be treated as dispositive for purposes of the exception under 
        this subsection.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Structured settlement.--The term `structured 
        settlement' means an arrangement--
                    ``(A) which is established by--
                            ``(i) suit or agreement for the periodic 
                        payment of damages excludable from the gross 
                        income of the recipient under section 
                        104(a)(2), or
                            ``(ii) agreement for the periodic payment 
                        of compensation under any workers' compensation 
                        law excludable from the gross income of the 
                        recipient under section 104(a)(1), and
                    ``(B) under which the periodic payments are--
                            ``(i) of the character described in 
                        subparagraphs (A) and (B) of section 130(c)(2), 
                        and
                            ``(ii) payable by a person who is a party 
                        to the suit or agreement or to the workers' 
                        compensation claim or by a person who has 
                        assumed the liability for such periodic 
                        payments under a qualified assignment in 
                        accordance with section 130.
            ``(2) Structured settlement payment rights.--The term 
        `structured settlement payment rights' means rights to receive 
        payments under a structured settlement.
            ``(3) Structured settlement factoring transaction.--
                    ``(A) In general.--The term `structured settlement 
                factoring transaction' means a transfer of structured 
                settlement payment rights (including portions of 
                structured settlement payments) made for consideration 
                by means of sale, assignment, pledge, or other form of 
                encumbrance or alienation for consideration.
                    ``(B) Exception.--Such term shall not include--
                            ``(i) the creation or perfection of a 
                        security interest in structured settlement 
                        payment rights under a blanket security 
                        agreement entered into with an insured 
                        depository institution in the absence of any 
                        action to redirect the structured settlement 
                        payments to such institution (or agent or 
                        successor thereof) or otherwise to enforce such 
                        blanket security interest as against the 
                        structured settlement payment rights, or
                            ``(ii) a subsequent transfer of structured 
                        settlement payment rights acquired in a 
                        structured settlement factoring transaction.
            ``(4) Factoring discount.--The term `factoring discount' 
        means an amount equal to the excess of--
                    ``(A) the aggregate undiscounted amount of 
                structured settlement payments being acquired in the 
                structured settlement factoring transaction, over
                    ``(B) the total amount actually paid by the 
                acquirer to the person from whom such structured 
                settlement payments are acquired.
            ``(5) Responsible administrative authority.--The term 
        `responsible administrative authority' means the administrative 
        authority which had jurisdiction over the underlying action or 
        proceeding which was resolved by means of the structured 
        settlement.
            ``(6) State.--The term `State' includes the Commonwealth of 
        Puerto Rico and any possession of the United States.
    ``(d) Coordination With Other Provisions.--
            ``(1) In general.--If the applicable requirements of 
        sections 72, 104(a)(1), 104(a)(2), 130, and 461(h) were 
        satisfied at the time the structured settlement involving 
        structured settlement payment rights was entered into, the 
        subsequent occurrence of a structured settlement factoring 
        transaction shall not affect the application of the provisions 
        of such sections to the parties to the structured settlement 
        (including an assignee under a qualified assignment under 
        section 130) in any taxable year.
            ``(2) No withholding of tax.--The provisions of section 
        3405 regarding withholding of tax shall not apply to the person 
        making the payments in the event of a structured settlement 
        factoring transaction.''.
    (b) Clerical Amendment.--The table of chapters for subtitle E is 
amended by adding at the end the following new item:

                              ``Chapter 55. Structured settlement 
                                        factoring transactions.''.
    (c) Effective Dates.--
            (1) In general.--The amendments made by this section (other 
        than the provisions of section 5891(d) of the Internal Revenue 
        Code of 1986, as added by this section) shall apply to 
        structured settlement factoring transactions (as defined in 
        section 5891(c) of such Code (as so added)) entered into on or 
        after the 30th day following the date of the enactment of this 
        Act.
            (2) Clarification of existing law.--Section 5891(d) of such 
        Code (as so added) shall apply to structured settlement 
        factoring transactions (as defined in section 5891(c) of such 
        Code (as so added)) entered into before, on, or after such 30th 
        day.
            (3) Transition rule.--In the case of a structured 
        settlement factoring transaction entered into during the period 
        beginning on the 30th day following the date of the enactment 
        of this Act and ending on July 1, 2002, no tax shall be imposed 
        under section 5891(a) of such Code if--
                    (A) the structured settlement payee is domiciled in 
                a State (or possession of the United States) which has 
                not enacted a statute providing that the structured 
                settlement factoring transaction is ineffective unless 
                the transaction has been approved by an order, 
                judgment, or decree of a court (or where applicable, a 
                responsible administrative authority) which finds that 
                such transaction--
                            (i) does not contravene any Federal or 
                        State statute or the order of any court (or 
                        responsible administrative authority), and
                            (ii) is in the best interest of the 
                        structured settlement payee or is appropriate 
                        in light of a hardship faced by the payee, and
                    (B) the person acquiring the structured settlement 
                payment rights discloses to the structured settlement 
                payee in advance of the structured settlement factoring 
                transaction the amounts and due dates of the payments 
                to be transferred, the aggregate amount to be 
                transferred, the consideration to be received by the 
                structured settlement payee for the transferred 
                payments, the discounted present value of the 
                transferred payments (including the present value as 
                determined in the manner described in section 7520 of 
                such Code), and the expenses required under the terms 
                of the structured settlement factoring transaction to 
                be paid by the structured settlement payee or deducted 
                from the proceeds of such transaction.

SEC. 116. PERSONAL EXEMPTION DEDUCTION FOR CERTAIN DISABILITY TRUSTS.

    (a) In General.--Subsection (b) of section 642 (relating to 
deduction for personal exemption) is amended to read as follows:
    ``(b) Deduction for Personal Exemption.--
            ``(1) Estates.--An estate shall be allowed a deduction of 
        $600.
            ``(2) Trusts.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, a trust shall be allowed a deduction of 
                $100.
                    ``(B) Trusts distributing income currently.--A 
                trust which, under its governing instrument, is 
                required to distribute all of its income currently 
                shall be allowed a deduction of $300.
                    ``(C) Disability trusts.--
                            ``(i) In general.--A qualified disability 
                        trust shall be allowed a deduction equal to the 
                        exemption amount under section 151(d), 
                        determined--
                                    ``(I) by treating such trust as an 
                                individual described in section 
                                151(d)(3)(C)(iii), and
                                    ``(II) by applying section 67(e) 
                                (without the reference to section 
                                642(b)) for purposes of determining the 
                                adjusted gross income of the trust.
                            ``(ii) Qualified disability trust.--For 
                        purposes of clause (i), the term `qualified 
                        disability trust' means any trust if--
                                    ``(I) such trust is a disability 
                                trust described in subsection 
                                (c)(2)(B)(iv) of section 1917 of the 
                                Social Security Act (42 U.S.C. 1396p), 
                                and
                                    ``(II) all of the beneficiaries of 
                                the trust as of the close of the 
                                taxable year are determined by the 
                                Commissioner of Social Security to have 
                                been disabled (within the meaning of 
                                section 1614(a)(3) of the Social 
                                Security Act, 42 U.S.C. 1382c(a)(3)) 
                                for some portion of such year.
                        A trust shall not fail to meet the requirements 
                        of subclause (II) merely because the corpus of 
                        the trust may revert to a person who is not so 
                        disabled after the trust ceases to have any 
                        beneficiary who is so disabled.''
            ``(3) Deductions in lieu of personal exemption.--The 
        deductions allowed by this subsection shall be in lieu of the 
        deductions allowed under section 151 (relating to deduction for 
        personal exemption).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years ending on or after September 11, 2001.

   TITLE II--DISCLOSURE OF TAX INFORMATION IN TERRORISM AND NATIONAL 
                        SECURITY INVESTIGATIONS

SEC. 201. DISCLOSURE OF TAX INFORMATION IN TERRORISM AND NATIONAL 
              SECURITY INVESTIGATIONS.

    (a) Disclosure Without a Request of Information Relating to 
Terrorist Activities, Etc.--Paragraph (3) of section 6103(i) (relating 
to disclosure of return information to apprise appropriate officials of 
criminal activities or emergency circumstances) is amended by adding at 
the end the following new subparagraph:
                    ``(C) Terrorist activities, etc.--
                            ``(i) In general.--Except as provided in 
                        paragraph (6), the Secretary may disclose in 
                        writing return information (other than taxpayer 
                        return information) that may be related to a 
                        terrorist incident, threat, or activity to the 
                        extent necessary to apprise the head of the 
                        appropriate Federal law enforcement agency 
                        responsible for investigating or responding to 
                        such terrorist incident, threat, or activity. 
                        The head of the agency may disclose such return 
                        information to officers and employees of such 
                        agency to the extent necessary to investigate 
                        or respond to such terrorist incident, threat, 
                        or activity.
                            ``(ii) Disclosure to the department of 
                        justice.--Returns and taxpayer return 
                        information may also be disclosed to the 
                        Attorney General under clause (i) to the extent 
                        necessary for, and solely for use in preparing, 
                        an application under paragraph (7)(D).
                            ``(iii) Taxpayer identity.--For purposes of 
                        this subparagraph, a taxpayer's identity shall 
                        not be treated as taxpayer return information.
                            ``(iv) Termination.--No disclosure may be 
                        made under this subparagraph after December 31, 
                        2003.''.
    (b) Disclosure Upon Request of Information Relating to Terrorist 
Activities, Etc.--Subsection (i) of section 6103 (relating to 
disclosure to Federal officers or employees for administration of 
Federal laws not relating to tax administration) is amended by 
redesignating paragraph (7) as paragraph (8) and by inserting after 
paragraph (6) the following new paragraph:
            ``(7) Disclosure upon request of information relating to 
        terrorist activities, etc.--
                    ``(A) Disclosure to law enforcement agencies.--
                            ``(i) In general.--Except as provided in 
                        paragraph (6), upon receipt by the Secretary of 
                        a written request which meets the requirements 
                        of clause (iii), the Secretary may disclose 
                        return information (other than taxpayer return 
                        information) to officers and employees of any 
                        Federal law enforcement agency who are 
                        personally and directly engaged in the response 
                        to or investigation of any terrorist incident, 
                        threat, or activity.
                            ``(ii) Disclosure to state and local law 
                        enforcement agencies.--The head of any Federal 
                        law enforcement agency may disclose return 
                        information obtained under clause (i) to 
                        officers and employees of any State or local 
                        law enforcement agency but only if such agency 
                        is part of a team with the Federal law 
                        enforcement agency in such response or 
                        investigation and such information is disclosed 
                        only to officers and employees who are 
                        personally and directly engaged in such 
                        response or investigation.
                            ``(iii) Requirements.--A request meets the 
                        requirements of this clause if--
                                    ``(I) the request is made by the 
                                head of any Federal law enforcement 
                                agency (or his delegate) involved in 
                                the response to or investigation of any 
                                terrorist incident, threat, or 
                                activity, and
                                    ``(II) the request sets forth the 
                                specific reason or reasons why such 
                                disclosure may be relevant to a 
                                terrorist incident, threat, or 
                                activity.
                            ``(iv) Limitation on use of information.--
                        Information disclosed under this subparagraph 
                        shall be solely for the use of the officers and 
                        employees to whom such information is disclosed 
                        in such response or investigation.
                    ``(B) Disclosure to intelligence agencies.--
                            ``(i) In general.--Except as provided in 
                        paragraph (6), upon receipt by the Secretary of 
                        a written request which meets the requirements 
                        of clause (ii), the Secretary may disclose 
                        return information (other than taxpayer return 
                        information) to those officers and employees of 
                        the Department of Justice, the Department of 
                        the Treasury, and other Federal intelligence 
                        agencies who are personally and directly 
                        engaged in the collection or analysis of 
                        intelligence and counterintelligence 
                        information or investigation concerning any 
                        terrorist incident, threat, or activity. For 
                        purposes of the preceding sentence, the 
                        information disclosed under the preceding 
                        sentence shall be solely for the use of such 
                        officers and employees in such investigation, 
                        collection, or analysis.
                            ``(ii) Requirements.--A request meets the 
                        requirements of this subparagraph if the 
                        request--
                                    ``(I) is made by an individual 
                                described in clause (iii), and
                                    ``(II) sets forth the specific 
                                reason or reasons why such disclosure 
                                may be relevant to a terrorist 
                                incident, threat, or activity.
                            ``(iii) Requesting individuals.--An 
                        individual described in this subparagraph is an 
                        individual--
                                    ``(I) who is an officer or employee 
                                of the Department of Justice or the 
                                Department of the Treasury who is 
                                appointed by the President with the 
                                advice and consent of the Senate or who 
                                is the Director of the United States 
                                Secret Service, and
                                    ``(II) who is responsible for the 
                                collection and analysis of intelligence 
                                and counterintelligence information 
                                concerning any terrorist incident, 
                                threat, or activity.
                            ``(iv) Taxpayer identity.--For purposes of 
                        this subparagraph, a taxpayer's identity shall 
                        not be treated as taxpayer return information.
                    ``(C) Disclosure under ex parte orders.--
                            ``(i) In general.--Except as provided in 
                        paragraph (6), any return or return information 
                        with respect to any specified taxable period or 
                        periods shall, pursuant to and upon the grant 
                        of an ex parte order by a Federal district 
                        court judge or magistrate under clause (ii), be 
                        open (but only to the extent necessary as 
                        provided in such order) to inspection by, or 
                        disclosure to, officers and employees of any 
                        Federal law enforcement agency or Federal 
                        intelligence agency who are personally and 
                        directly engaged in any investigation, response 
                        to, or analysis of intelligence and 
                        counterintelligence information concerning any 
                        terrorist incident, threat, or activity. Return 
                        or return information opened to inspection or 
                        disclosure pursuant to the preceding sentence 
                        shall be solely for the use of such officers 
                        and employees in the investigation, response, 
                        or analysis, and in any judicial, 
                        administrative, or grand jury proceedings, 
                        pertaining to such terrorist incident, threat, 
                        or activity.
                            ``(ii) Application for order.--The Attorney 
                        General, the Deputy Attorney General, the 
                        Associate Attorney General, any Assistant 
                        Attorney General, or any United States attorney 
                        may authorize an application to a Federal 
                        district court judge or magistrate for the 
                        order referred to in clause (i). Upon such 
                        application, such judge or magistrate may grant 
                        such order if he determines on the basis of the 
                        facts submitted by the applicant that--
                                    ``(I) there is reasonable cause to 
                                believe, based upon information 
                                believed to be reliable, that the 
                                return or return information may be 
                                relevant to a matter relating to such 
                                terrorist incident, threat, or 
                                activity, and
                                    ``(II) the return or return 
                                information is sought exclusively for 
                                use in a Federal investigation, 
                                analysis, or proceeding concerning any 
                                terrorist incident, threat, or 
                                activity.
                    ``(D) Special rule for ex parte disclosure by the 
                irs.--
                            ``(i) In general.--Except as provided in 
                        paragraph (6), the Secretary may authorize an 
                        application to a Federal district court judge 
                        or magistrate for the order referred to in 
                        subparagraph (C)(i). Upon such application, 
                        such judge or magistrate may grant such order 
                        if he determines on the basis of the facts 
                        submitted by the applicant that the 
                        requirements of subparagraph (C)(ii)(I) are 
                        met.
                            ``(ii) Limitation on use of information.--
                        Information disclosed under clause (i)--
                                    ``(I) may be disclosed only to the 
                                extent necessary to apprise the head of 
                                the appropriate Federal law enforcement 
                                agency responsible for investigating or 
                                responding to a terrorist incident, 
                                threat, or activity, and
                                    ``(II) shall be solely for use in a 
                                Federal investigation, analysis, or 
                                proceeding concerning any terrorist 
                                incident, threat, or activity.
                        The head of such Federal agency may disclose 
                        such information to officers and employees of 
                        such agency to the extent necessary to 
                        investigate or respond to such terrorist 
                        incident, threat, or activity.
                    ``(E) Termination.--No disclosure may be made under 
                this paragraph after December 31, 2003.''.
    (c) Conforming Amendments.--
            (1) Section 6103(a)(2) is amended by inserting ``any local 
        law enforcement agency receiving information under subsection 
        (i)(7)(A),'' after ``State,''.
            (2) Section 6103(b) is amended by adding at the end the 
        following new paragraph:
            ``(11) Terrorist incident, threat, or activity.--The term 
        `terrorist incident, threat, or activity' means an incident, 
        threat, or activity involving an act of domestic terrorism (as 
        defined in section 2331(5) of title 18, United States Code) or 
        international terrorism (as defined in section 2331(1) of such 
        title).''.
            (3) The heading of section 6103(i)(3) is amended by 
        inserting ``or terrorist'' after ``criminal''.
            (4) Paragraph (4) of section 6103(i) is amended--
                    (A) in subparagraph (A) by inserting ``or (7)(C)'' 
                after ``paragraph (1)'', and
                    (B) in subparagraph (B) by striking ``or (3)(A)'' 
                and inserting ``(3)(A) or (C), or (7)''.
            (5) Paragraph (6) of section 6103(i) is amended--
                    (A) by striking ``(3)(A)'' and inserting ``(3)(A) 
                or (C)'', and
                    (B) by striking ``or (7)'' and inserting ``(7), or 
                (8)''.
            (6) Section 6103(p)(3) is amended--
                    (A) in subparagraph (A) by striking ``(7)(A)(ii)'' 
                and inserting ``(8)(A)(ii)'', and
                    (B) in subparagraph (C) by striking 
                ``(i)(3)(B)(i)'' and inserting ``(i)(3)(B)(i) or 
                (7)(A)(ii)''.
            (7) Section 6103(p)(4) is amended--
                    (A) in the matter preceding subparagraph (A)--
                            (i) by striking ``or (5),'' the first place 
                        it appears and inserting ``(5), or (7),'', and
                            (ii) by striking ``(i)(3)(B)(i),'' and 
                        inserting ``(i)(3)(B)(i) or (7)(A)(ii),'', and
                    (B) in subparagraph (F)(ii) by striking ``or (5),'' 
                the first place it appears and inserting ``(5) or 
                (7),''.
            (8) Section 6103(p)(6)(B)(i) is amended by striking 
        ``(i)(7)(A)(ii)'' and inserting ``(i)(8)(A)(ii)''.
            (9) Section 6105(b) is amended--
                    (A) by striking ``or'' at the end of paragraph (2),
                    (B) by striking ``paragraphs (1) or (2)'' in 
                paragraph (3) and inserting ``paragraph (1), (2), or 
                (3)'',
                    (C) by redesignating paragraph (3) as paragraph 
                (4), and
                    (D) by inserting after paragraph (2) the following 
                new paragraph:
            ``(3) to the disclosure of tax convention information on 
        the same terms as return information may be disclosed under 
        paragraph (3)(C) or (7) of section 6103(i), except that in the 
        case of tax convention information provided by a foreign 
        government, no disclosure may be made under this paragraph 
        without the written consent of the foreign government, or''.
            (10) Section 7213(a)(2) is amended by striking 
        ``(i)(3)(B)(i),'' and inserting ``(i)(3)(B)(i) or 
        (7)(A)(ii),''.
    (d) Effective Date.--The amendments made by this section shall 
apply to disclosures made on or after the date of the enactment of this 
Act.

          TITLE III--NO IMPACT ON SOCIAL SECURITY TRUST FUNDS

SEC. 301. NO IMPACT ON SOCIAL SECURITY TRUST FUNDS.

    (a) In General.--Nothing in this Act (or an amendment made by this 
Act) shall be construed to alter or amend title II of the Social 
Security Act (or any regulation promulgated under that Act).
    (b) Transfers.--
            (1) Estimate of secretary.--The Secretary of the Treasury 
        shall annually estimate the impact that the enactment of this 
        Act has on the income and balances of the trust funds 
        established under section 201 of the Social Security Act (42 
        U.S.C. 401).
            (2) Transfer of funds.--If, under paragraph (1), the 
        Secretary of the Treasury estimates that the enactment of this 
        Act has a negative impact on the income and balances of the 
        trust funds established under section 201 of the Social 
        Security Act (42 U.S.C. 401), the Secretary shall transfer, not 
        less frequently than quarterly, from the general revenues of 
        the Federal Government an amount sufficient so as to ensure 
        that the income and balances of such trust funds are not 
        reduced as a result of the enactment of this Act.

            Attest:

                                                             Secretary.
107th CONGRESS

  1st Session

                               H. R. 2884

_______________________________________________________________________

        SENATE AMENDMENT TO HOUSE AMENDMENT TO SENATE AMENDMENTS