[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3666 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 3666

 To amend the Internal Revenue Code of 1986 to provide tax incentives 
 for economic recovery and to provide assistance to displaced workers.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 29, 2002

  Mr. Thune introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committee on 
Education and the Workforce, 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 incentives 
 for economic recovery and to provide assistance to displaced workers.

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

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Job Creation and 
Economic Security Act of 2002''.
    (b) References to Internal Revenue Code of 1986.--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--INDIVIDUAL PROVISIONS

Sec. 101. Supplemental stimulus payments.
Sec. 102. Acceleration of 25 percent individual income tax rate.
                      TITLE II--BUSINESS PROVISION

Sec. 201. Special depreciation allowance for certain property acquired 
                            after September 10, 2001, and before 
                            September 11, 2004.
                   TITLE III--UNEMPLOYMENT ASSISTANCE

Sec. 301. Short title.
Sec. 302. Federal-State agreements.
Sec. 303. Temporary extended unemployment compensation account.
Sec. 304. Payments to States having agreements for the payment of 
                            temporary extended unemployment 
                            compensation.
Sec. 305. Financing provisions.
Sec. 306. Fraud and overpayments.
Sec. 307. Definitions.
Sec. 308. Applicability.
Sec. 309. Special Reed Act transfer in fiscal year 2002.
           TITLE IV--DISPLACED WORKER HEALTH INSURANCE CREDIT

Sec. 401. Displaced worker health insurance credit.
Sec. 402. Advance payment of displaced worker health insurance credit.
 TITLE V--EMPLOYMENT AND TRAINING ASSISTANCE AND TEMPORARY HEALTH CARE 
                          COVERAGE ASSISTANCE

Sec. 501. Employment and training assistance and temporary health care 
                            coverage assistance.
                   TITLE VI--VALUE-ADDED AGRICULTURE

Sec. 601. Small ethanol producer credit.
Sec. 602. Cooperative marketing includes value-added processing through 
                            animals.
Sec. 603. Declaratory judgment remedy relating to status and 
                            classification of farmers' cooperatives.

                     TITLE I--INDIVIDUAL PROVISIONS

SEC. 101. SUPPLEMENTAL STIMULUS PAYMENTS.

    (a) In General.--Section 6428 (relating to acceleration of 10 
percent income tax rate bracket benefit for 2001) is amended by adding 
at the end the following new subsection:
    ``(f) Supplemental Stimulus Payments.--
            ``(1) In general.--Each individual who was an eligible 
        individual for such individual's first taxable year beginning 
        in 2000 and who, before October 16, 2001, filed a return of tax 
        imposed by subtitle A for such taxable year shall be treated as 
        having made a payment against the tax imposed by chapter 1 for 
        such first taxable year in an amount equal to the supplemental 
        refund amount for such taxable year.
            ``(2) Supplemental refund amount.--For purposes of this 
        subsection, the supplemental refund amount is an amount equal 
        to the excess (if any) of--
                    ``(A)(i) $600 in the case of taxpayers to whom 
                section 1(a) applies,
                    ``(ii) $500 in the case of taxpayers to whom 
                section 1(b) applies, and
                    ``(iii) $300 in the case of taxpayers to whom 
                subsections (c) or (d) of section 1 applies, over
                    ``(B) the taxpayer's advance refund amount under 
                subsection (e).
            ``(3) Timing of payments.--In the case of any overpayment 
        attributable to this subsection, the Secretary shall, subject 
        to the provisions of this title, refund or credit such 
        overpayment as rapidly as possible.
            ``(4) No interest.--No interest shall be allowed on any 
        overpayment attributable to this subsection.''
    (b) Conforming Amendments.--
            (1) Subparagraph (A) of section 6428(d)(1) is amended by 
        striking ``subsection (e)'' and inserting ``subsections (e) and 
        (f)''.
            (2) Subparagraph (B) of section 6428(d)(1) is amended by 
        striking ``subsection (e)'' and inserting ``subsection (e) or 
        (f)''.
            (3) Paragraph (3) of section 6428(e) is amended by 
        inserting before the period ``(or, if earlier, the date of the 
        enactment of the Job Creation and Economic Security Act of 
        2002)''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 102. ACCELERATION OF 25 PERCENT INDIVIDUAL INCOME TAX RATE.

    (a) In General.--The table contained in paragraph (2) of section 
1(i) (relating to reductions in rates after June 30, 2001) is amended--
            (1) by striking ``27.0%'' and inserting ``25.0%'', and
            (2) by striking ``26.0%'' and inserting ``25.0%''.
    (b) Reduction Not To Increase Minimum Tax.--
            (1) Subparagraph (A) of section 55(d)(1) is amended by 
        striking ``($49,000 in the case of taxable years beginning in 
        2001, 2002, 2003, and 2004)'' and inserting ``($49,000 in the 
        case of taxable years beginning in 2001, $52,200 in the case of 
        taxable years beginning in 2002 or 2003, and $50,700 in the 
        case of taxable years beginning in 2004)''.
            (2) Subparagraph (B) of section 55(d)(1) is amended by 
        striking ``($35,750 in the case of taxable years beginning in 
        2001, 2002, 2003, and 2004)'' and inserting ``($35,750 in the 
        case of taxable years beginning in 2001, $37,350 in the case of 
        taxable years beginning in 2002 or 2003, and $36,600 in the 
        case of taxable years beginning in 2004)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.
    (d) Section 15 Not To Apply.--No amendment made by this section 
shall be treated as a change in a rate of tax for purposes of section 
15 of the Internal Revenue Code of 1986 .

                      TITLE II--BUSINESS PROVISION

SEC. 201. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED 
              AFTER SEPTEMBER 10, 2001, AND BEFORE SEPTEMBER 11, 2004.

    (a) In General.--Section 168 (relating to accelerated cost recovery 
system) is amended by adding at the end the following new subsection:
    ``(k) Special Allowance for Certain Property Acquired After 
September 10, 2001, and Before September 11, 2004.--
            ``(1) Additional allowance.--In the case of any qualified 
        property--
                    ``(A) the depreciation deduction provided by 
                section 167(a) for the taxable year in which such 
                property is placed in service shall include an 
                allowance equal to 30 percent of the adjusted basis of 
                the qualified property, and
                    ``(B) the adjusted basis of the qualified property 
                shall be reduced by the amount of such deduction before 
                computing the amount otherwise allowable as a 
                depreciation deduction under this chapter for such 
                taxable year and any subsequent taxable year.
            ``(2) Qualified property.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified property' 
                means property--
                            ``(i)(I) to which this section applies 
                        which has a recovery period of 20 years or less 
                        or which is water utility property, or
                            ``(II) which is computer software (as 
                        defined in section 167(f)(1)(B)) for which a 
                        deduction is allowable under section 167(a) 
                        without regard to this subsection,
                            ``(ii) the original use of which commences 
                        with the taxpayer after September 10, 2001,
                            ``(iii) which is--
                                    ``(I) acquired by the taxpayer 
                                after September 10, 2001, and before 
                                September 11, 2004, but only if no 
                                written binding contract for the 
                                acquisition was in effect before 
                                September 11, 2001, or
                                    ``(II) acquired by the taxpayer 
                                pursuant to a written binding contract 
                                which was entered into after September 
                                10, 2001, and before September 11, 
                                2004, and
                            ``(iv) which is placed in service by the 
                        taxpayer before January 1, 2005, or, in the 
                        case of property described in subparagraph (B), 
                        before January 1, 2006.
                    ``(B) Certain property having longer production 
                periods treated as qualified property.--
                            ``(i) In general.--The term `qualified 
                        property' includes property--
                                    ``(I) which meets the requirements 
                                of clauses (i), (ii), and (iii) of 
                                subparagraph (A),
                                    ``(II) which has a recovery period 
                                of at least 10 years or is 
                                transportation property, and
                                    ``(III) which is subject to section 
                                263A by reason of clause (ii) or (iii) 
                                of subsection (f)(1)(B) thereof.
                            ``(ii) Only pre-september 11, 2004, basis 
                        eligible for additional allowance.--In the case 
                        of property which is qualified property solely 
                        by reason of clause (i), paragraph (1) shall 
                        apply only to the extent of the adjusted basis 
                        thereof attributable to manufacture, 
                        construction, or production before September 
                        11, 2004.
                            ``(iii) Transportation property.--For 
                        purposes of this subparagraph, the term 
                        `transportation property' means tangible 
                        personal property used in the trade or business 
                        of transporting persons or property.
                    ``(C) Exceptions.--
                            ``(i) Alternative depreciation property.--
                        The term `qualified property' shall not include 
                        any property to which the alternative 
                        depreciation system under subsection (g) 
                        applies, determined--
                                    ``(I) without regard to paragraph 
                                (7) of subsection (g) (relating to 
                                election to have system apply), and
                                    ``(II) after application of section 
                                280F(b) (relating to listed property 
                                with limited business use).
                            ``(ii) Election out.--If a taxpayer makes 
                        an election under this clause with respect to 
                        any class of property for any taxable year, 
                        this subsection shall not apply to all property 
                        in such class placed in service during such 
                        taxable year.
                            ``(iii) Qualified leasehold improvement 
                        property.--The term `qualified property' shall 
                        not include any qualified leasehold improvement 
                        property (as defined in section 168(e)(6)).
                    ``(D) Special rules.--
                            ``(i) Self-constructed property.--In the 
                        case of a taxpayer manufacturing, constructing, 
                        or producing property for the taxpayer's own 
                        use, the requirements of clause (iii) of 
                        subparagraph (A) shall be treated as met if the 
                        taxpayer begins manufacturing, constructing, or 
                        producing the property after September 10, 
                        2001, and before September 11, 2004.
                            ``(ii) Sale-leasebacks.--For purposes of 
                        subparagraph (A)(ii), if property--
                                    ``(I) is originally placed in 
                                service after September 10, 2001, by a 
                                person, and
                                    ``(II) sold and leased back by such 
                                person within 3 months after the date 
                                such property was originally placed in 
                                service,
                        such property shall be treated as originally 
                        placed in service not earlier than the date on 
                        which such property is used under the leaseback 
                        referred to in subclause (II).
                    ``(E) Coordination with section 280f.--For purposes 
                of section 280F--
                            ``(i) Automobiles.--In the case of a 
                        passenger automobile (as defined in 
section 280F(d)(5)) which is qualified property, the Secretary shall 
increase the limitation under section 280F(a)(1)(A)(i) by $4,600.
                            ``(ii) Listed property.--The deduction 
                        allowable under paragraph (1) shall be taken 
                        into account in computing any recapture amount 
                        under section 280F(b)(2).''
    (b) Allowance Against Alternative Minimum Tax.--
            (1) In general.--Section 56(a)(1)(A) (relating to 
        depreciation adjustment for alternative minimum tax) is amended 
        by adding at the end the following new clause:
                            ``(iii) Additional allowance for certain 
                        property acquired after september 10, 2001, and 
                        before september 11, 2004.--The deduction under 
                        section 168(k) shall be allowed.''
            (2) Conforming amendment.--Clause (i) of section 
        56(a)(1)(A) is amended by striking ``clause (ii)'' both places 
        it appears and inserting ``clauses (ii) and (iii)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 10, 2001, in 
taxable years ending after such date.

                   TITLE III--UNEMPLOYMENT ASSISTANCE

SEC. 301. SHORT TITLE.

    This title may be cited as the ``Temporary Extended Unemployment 
Compensation Act of 2002''.

SEC. 302. FEDERAL-STATE AGREEMENTS.

    (a) In General.--Any State which desires to do so may enter into 
and participate in an agreement under this title with the Secretary of 
Labor (in this title referred to as the ``Secretary''). Any State which 
is a party to an agreement under this title may, upon providing 30 days 
written notice to the Secretary, terminate such agreement.
    (b) Provisions of Agreement.--Any agreement under subsection (a) 
shall provide that the State agency of the State will make payments of 
temporary extended unemployment compensation to individuals who--
            (1) have exhausted all rights to regular compensation under 
        the State law or under Federal law with respect to a benefit 
        year (excluding any benefit year that ended before March 15, 
        2001);
            (2) have no rights to regular compensation or extended 
        compensation with respect to a week under such law or any other 
        State unemployment compensation law or to compensation under 
        any other Federal law;
            (3) are not receiving compensation with respect to such 
        week under the unemployment compensation law of Canada; and
            (4) filed an initial claim for regular compensation on or 
        after March 15, 2001.
    (c) Exhaustion of Benefits.--For purposes of subsection (b)(1), an 
individual shall be deemed to have exhausted such individual's rights 
to regular compensation under a State law when--
            (1) no payments of regular compensation can be made under 
        such law because such individual has received all regular 
        compensation available to such individual based on employment 
        or wages during such individual's base period; or
            (2) such individual's rights to such compensation have been 
        terminated by reason of the expiration of the benefit year with 
        respect to which such rights existed.
    (d) Weekly Benefit Amount, etc.--For purposes of any agreement 
under this title--
            (1) the amount of temporary extended unemployment 
        compensation which shall be payable to any individual for any 
        week of total unemployment shall be equal to the amount of the 
        regular compensation (including dependents' allowances) payable 
        to such individual during such individual's benefit year under 
        the State law for a week of total unemployment;
            (2) the terms and conditions of the State law which apply 
        to claims for regular compensation and to the payment thereof 
        shall apply to claims for temporary extended unemployment 
        compensation and the payment thereof, except--
                    (A) that an individual shall not be eligible for 
                temporary extended unemployment compensation under this 
                title unless, in the base period with respect to which 
                the individual exhausted all rights to regular 
                compensation under the State law, the individual had 20 
                weeks of full-time insured employment or the equivalent 
                in insured wages, as determined under the provisions of 
                the State law implementing section 202(a)(5) of the 
                Federal-State Extended Unemployment Compensation Act of 
                1970 (26 U.S.C. 3304 note); and
                    (B) where otherwise inconsistent with the 
                provisions of this title or with the regulations or 
                operating instructions of the Secretary promulgated to 
                carry out this title; and
            (3) the maximum amount of temporary extended unemployment 
        compensation payable to any individual for whom a temporary 
        extended unemployment compensation account is established under 
        section 303 shall not exceed the amount established in such 
        account for such individual.
    (e) Election by States.--Notwithstanding any other provision of 
Federal law (and if State law permits), the Governor of a State that is 
in an extended benefit period may provide for the payment of temporary 
extended unemployment compensation in lieu of extended compensation to 
individuals who otherwise meet the requirements of this section. Such 
an election shall not require a State to trigger off an extended 
benefit period.

SEC. 303. TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION ACCOUNT.

    (a) In General.--Any agreement under this title shall provide that 
the State will establish, for each eligible individual who files an 
application for temporary extended unemployment compensation, a 
temporary extended unemployment compensation account with respect to 
such individual's benefit year.
    (b) Amount in Account.--
            (1) In general.--The amount established in an account under 
        subsection (a) shall be equal to the lesser of--
                    (A) 50 percent of the total amount of regular 
                compensation (including dependents' allowances) payable 
                to the individual during the individual's benefit year 
                under such law, or
                    (B) 13 times the individual's average weekly 
                benefit amount for the benefit year.
            (2) Reduction for extended benefits.--The amount in an 
        account under paragraph (1) shall be reduced (but not below 
        zero) by the aggregate amount of extended compensation (if any) 
        received by such individual relating to the same benefit year 
        under the Federal-State Extended Unemployment Compensation Act 
        of 1970 (26 U.S.C. 3304 note).
            (3) Weekly benefit amount.--For purposes of this 
        subsection, an individual's weekly benefit amount for any week 
        is the amount of regular compensation (including dependents' 
        allowances) under the State law payable to such individual for 
        such week for total unemployment.

SEC. 304. PAYMENTS TO STATES HAVING AGREEMENTS FOR THE PAYMENT OF 
              TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION.

    (a) General Rule.--There shall be paid to each State that has 
entered into an agreement under this title an amount equal to 100 
percent of the temporary extended unemployment compensation paid to 
individuals by the State pursuant to such agreement.
    (b) Treatment of Reimbursable Compensation.--No payment shall be 
made to any State under this section in respect of any compensation to 
the extent the State is entitled to reimbursement in respect of such 
compensation under the provisions of any Federal law other than this 
title or chapter 85 of title 5, United States Code. A State shall not 
be entitled to any reimbursement under such chapter 85 in respect of 
any compensation to the extent the State is entitled to reimbursement 
under this title in respect of such compensation.
    (c) Determination of Amount.--Sums payable to any State by reason 
of such State having an agreement under this title shall be payable, 
either in advance or by way of reimbursement (as may be determined by 
the Secretary), in such amounts as the Secretary estimates the State 
will be entitled to receive under this title for each calendar month, 
reduced or increased, as the case may be, by any amount by which the 
Secretary finds that the Secretary's estimates for any prior calendar 
month were greater or less than the amounts which should have been paid 
to the State. Such estimates may be made on the basis of such 
statistical, sampling, or other method as may be agreed upon by the 
Secretary and the State agency of the State involved.

SEC. 305. FINANCING PROVISIONS.

    (a) In General.--Funds in the extended unemployment compensation 
account (as established by section 905(a) of the Social Security Act 
(42 U.S.C. 1105(a)) of the Unemployment Trust Fund (as established by 
section 904(a) of such Act (42 U.S.C. 1104(a)) shall be used for the 
making of payments to States having agreements entered into under this 
title.
    (b) Certification.--The Secretary shall from time to time certify 
to the Secretary of the Treasury for payment to each State the sums 
payable to such State under this title. The Secretary of the Treasury, 
prior to audit or settlement by the General Accounting Office, shall 
make payments to the State in accordance with such certification, by 
transfers from the extended unemployment compensation account (as so 
established) to the account of such State in the Unemployment Trust 
Fund (as so established).
    (c) Assistance to States.--There are appropriated out of the 
employment security administration account (as established by section 
901(a) of the Social Security Act (42 U.S.C. 1101(a)) of the 
Unemployment Trust Fund, without fiscal year limitation, such funds as 
may be necessary for purposes of assisting States (as provided in title 
III of the Social Security Act (42 U.S.C. 501 et seq.)) in meeting the 
costs of administration of agreements under this title.
    (d) Appropriations for Certain Payments.--There are appropriated 
from the general fund of the Treasury, without fiscal year limitation, 
to the extended unemployment compensation account (as so established) 
of the Unemployment Trust Fund (as so established) such sums as the 
Secretary estimates to be necessary to make the payments under this 
section in respect of--
            (1) compensation payable under chapter 85 of title 5, 
        United States Code; and
            (2) compensation payable on the basis of services to which 
        section 3309(a)(1) of the Internal Revenue Code of 1986 
        applies.
Amounts appropriated pursuant to the preceding sentence shall not be 
required to be repaid.

SEC. 306. FRAUD AND OVERPAYMENTS.

    (a) In General.--If an individual knowingly has made, or caused to 
be made by another, a false statement or representation of a material 
fact, or knowingly has failed, or caused another to fail, to disclose a 
material fact, and as a result of such false statement or 
representation or of such nondisclosure such individual has received an 
amount of temporary extended unemployment compensation under this title 
to which he was not entitled, such individual--
            (1) shall be ineligible for further temporary extended 
        unemployment compensation under this title in accordance with 
        the provisions of the applicable State unemployment 
        compensation law relating to fraud in connection with a claim 
        for unemployment compensation; and
            (2) shall be subject to prosecution under section 1001 of 
        title 18, United States Code.
    (b) Repayment.--In the case of individuals who have received 
amounts of temporary extended unemployment compensation under this 
title to which they were not entitled, the State shall require such 
individuals to repay the amounts of such temporary extended 
unemployment compensation to the State agency, except that the State 
agency may waive such repayment if it determines that--
            (1) the payment of such temporary extended unemployment 
        compensation was without fault on the part of any such 
        individual; and
            (2) such repayment would be contrary to equity and good 
        conscience.
    (c) Recovery by State Agency.--
            (1) In general.--The State agency may recover the amount to 
        be repaid, or any part thereof, by deductions from any 
        temporary extended unemployment compensation payable to such 
        individual under this title or from any unemployment 
        compensation payable to such individual under any Federal 
        unemployment compensation law administered by the State agency 
        or under any other Federal law administered by the State agency 
        which provides for the payment of any assistance or allowance 
        with respect to any week of unemployment, during the 3-year 
        period after the date such individuals received the payment of 
        the temporary extended unemployment compensation to which they 
        were not entitled, except that no single deduction may exceed 
        50 percent of the weekly benefit amount from which such 
        deduction is made.
            (2) Opportunity for hearing.--No repayment shall be 
        required, and no deduction shall be made, until a determination 
        has been made, notice thereof and an opportunity for a fair 
        hearing has been given to the individual, and the determination 
        has become final.
    (d) Review.--Any determination by a State agency under this section 
shall be subject to review in the same manner and to the same extent as 
determinations under the State unemployment compensation law, and only 
in that manner and to that extent.

SEC. 307. DEFINITIONS.

    In this title, the terms ``compensation'', ``regular 
compensation'', ``extended compensation'', ``additional compensation'', 
``benefit year'', ``base period'', ``State'', ``State agency'', ``State 
law'', and ``week'' have the respective meanings given such terms under 
section 205 of the Federal-State Extended Unemployment Compensation Act 
of 1970 (26 U.S.C. 3304 note).

SEC. 308. APPLICABILITY.

    An agreement entered into under this title shall apply to weeks of 
unemployment--
            (1) beginning after the date on which such agreement is 
        entered into; and
            (2) ending before January 1, 2003.

SEC. 309. SPECIAL REED ACT TRANSFER IN FISCAL YEAR 2002.

    (a) Repeal of Certain Provisions Added by the Balanced Budget Act 
of 1997.--
            (1) In general.--The following provisions of section 903 of 
        the Social Security Act (42 U.S.C. 1103) are repealed:
                    (A) Paragraph (3) of subsection (a).
                    (B) The last sentence of subsection (c)(2).
            (2) Savings provision.--Any amounts transferred before the 
        date of enactment of this Act under the provision repealed by 
        paragraph (1)(A) shall remain subject to section 903 of the 
        Social Security Act, as last in effect before such date of 
        enactment.
    (b) Special Transfer in Fiscal Year 2002.--Section 903 of the 
Social Security Act is amended by adding at the end the following:

                 ``Special Transfer in Fiscal Year 2002

    ``(d)(1) The Secretary of the Treasury shall transfer (as of the 
date determined under paragraph (5)) from the Federal unemployment 
account to the account of each State in the Unemployment Trust Fund the 
amount determined with respect to such State under paragraph (2).
    ``(2) The amount to be transferred under this subsection to a State 
account shall (as determined by the Secretary of Labor and certified by 
such Secretary to the Secretary of the Treasury) be equal to--
            ``(A) the amount which would have been required to have 
        been transferred under this section to such account at the 
        beginning of fiscal year 2002 if--
                    ``(i) section 309(a)(1) of the Temporary Extended 
                Unemployment Compensation Act of 2002 had been enacted 
                before the close of fiscal year 2001, and
                    ``(ii) section 5402 of Public Law 105-33 (relating 
                to increase in Federal unemployment account ceiling) 
                had not been enacted,
        minus
            ``(B) the amount which was in fact transferred under this 
        section to such account at the beginning of fiscal year 2002.
    ``(3)(A) Except as provided in paragraph (4), amounts transferred 
to a State account pursuant to this subsection may be used only in the 
payment of cash benefits--
            ``(i) to individuals with respect to their unemployment, 
        and
            ``(ii) which are allowable under subparagraph (B) or (C).
    ``(B)(i) At the option of the State, cash benefits under this 
paragraph may include amounts which shall be payable as--
            ``(I) regular compensation, or
            ``(II) additional compensation, upon the exhaustion of any 
        temporary extended unemployment compensation (if such State has 
        entered into an agreement under the Temporary Extended 
        Unemployment Compensation Act of 2002), for individuals 
        eligible for regular compensation under the unemployment 
        compensation law of such State.
    ``(ii) Any additional compensation under clause (i) may not be 
taken into account for purposes of any determination relating to the 
amount of any extended compensation for which an individual might be 
eligible.
    ``(C)(i) At the option of the State, cash benefits under this 
paragraph may include amounts which shall be payable to 1 or more 
categories of individuals not otherwise eligible for regular 
compensation under the unemployment compensation law of such State, 
including those described in clause (iii).
    ``(ii) The benefits paid under this subparagraph to any individual 
may not, for any period of unemployment, exceed the maximum amount of 
regular compensation authorized under the unemployment compensation law 
of such State for that same period, plus any additional compensation 
(described in subparagraph (B)(i)) which could have been paid with 
respect to that amount.
    ``(iii) The categories of individuals described in this clause 
include the following:
            ``(I) Individuals who are seeking, or available for, only 
        part-time (and not full-time) work.
            ``(II) Individuals who would be eligible for regular 
        compensation under the unemployment compensation law of such 
        State under an alternative base period.
    ``(D) Amounts transferred to a State account under this subsection 
may be used in the payment of cash benefits to individuals only for 
weeks of unemployment beginning after the date of enactment of this 
subsection.
    ``(4) Amounts transferred to a State account under this subsection 
may be used for the administration of its unemployment compensation law 
and public employment offices (including in connection with benefits 
described in paragraph (3) and any recipients thereof), subject to the 
same conditions as set forth in subsection (c)(2) (excluding 
subparagraph (B) thereof, and deeming the reference to `subsections (a) 
and (b)' in subparagraph (D) thereof to include this subsection).
    ``(5) Transfers under this subsection shall be made within 10 days 
after the date of enactment of this paragraph.''
    (c) Limitations on Transfers.--Section 903(b) of the Social 
Security Act shall apply to transfers under section 903(d) of such Act 
(as amended by this section). For purposes of the preceding sentence, 
such section 903(b) shall be deemed to be amended as follows:
            (1) By substituting ``the transfer date described in 
        subsection (d)(5)'' for ``October 1 of any fiscal year''.
            (2) By substituting ``remain in the Federal unemployment 
        account'' for ``be transferred to the Federal unemployment 
        account as of the beginning of such October 1''.
            (3) By substituting ``fiscal year 2002 (after the transfer 
        date described in subsection (d)(5))'' for ``the fiscal year 
        beginning on such October 1''.
            (4) By substituting ``under subsection (d)'' for ``as of 
        October 1 of such fiscal year''.
            (5) By substituting ``(as of the close of fiscal year 
        2002)'' for ``(as of the close of such fiscal year)''.
    (d) Technical Amendments.--(1) Sections 3304(a)(4)(B) and 
3306(f)(2) of the Internal Revenue Code of 1986 are amended by 
inserting ``or 903(d)(4)'' before ``of the Social Security Act''.
    (2) Section 303(a)(5) of the Social Security Act is amended in the 
second proviso by inserting ``or 903(d)(4)'' after ``903(c)(2)''.
    (e) Regulations.--The Secretary of Labor may prescribe any 
operating instructions or regulations necessary to carry out this 
section and the amendments made by this section.

           TITLE IV--DISPLACED WORKER HEALTH INSURANCE CREDIT

SEC. 401. DISPLACED WORKER HEALTH INSURANCE CREDIT.

    (a) In General.--Subchapter B of chapter 65 is amended by inserting 
after section 6428 the following new section:

``SEC. 6429. DISPLACED WORKER HEALTH INSURANCE CREDIT.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by subtitle A an amount 
equal to 60 percent of the amount paid during the taxable year for 
coverage for the taxpayer, the taxpayer's spouse, and dependents of the 
taxpayer under qualified health insurance during eligible coverage 
months.
    ``(b) Only 12 Eligible Coverage Months.--The number of eligible 
coverage months taken into account under subsection (a) for all taxable 
years shall not exceed 12.
    ``(c) Eligible Coverage Month.--For purposes of this section--
            ``(1) In general.--The term `eligible coverage month' means 
        any month during 2002 or 2003 if, as of the first day of such 
        month--
                    ``(A) the taxpayer is unemployed,
                    ``(B) the taxpayer is covered by qualified health 
                insurance,
                    ``(C) the premium for coverage under such insurance 
                for such month is paid by the taxpayer, and
                    ``(D) the taxpayer does not have other specified 
                coverage.
            ``(2) Special rules.--
                    ``(A) Treatment of first month of employment.--The 
                taxpayer shall be treated as meeting the requirement of 
                paragraph (1)(A) for the first month beginning on or 
                after the date that the taxpayer ceases to be 
                unemployed by reason of beginning work for an employer.
                    ``(B) Initial claim must be after march 15, 2001.--
                The taxpayer shall not be treated as meeting the 
                requirement of paragraph (1)(A) with respect to any 
                unemployment if the initial claim for regular 
                compensation for such unemployment is filed on or 
                before March 15, 2001.
                    ``(C) Joint returns.--In the case of a joint 
                return, the requirements of paragraph (1) shall be 
                treated as met if at least 1 spouse satisfies such 
                requirements.
            ``(3) Other specified coverage.--For purposes of this 
        subsection, an individual has other specified coverage for any 
        month if, as of the first day of such month--
                    ``(A) Subsidized coverage.--
                            ``(i) In general.--Such individual is 
                        covered under any qualified health insurance 
                        under which at least 50 percent of the cost of 
                        coverage (determined under section 4980B) is 
                        paid or incurred by an employer (or former 
                        employer) of the taxpayer or the taxpayer's 
                        spouse.
                            ``(ii) Treatment of cafeteria plans and 
                        flexible spending accounts.--For purposes of 
                        clause (i), the cost of benefits--
                                    ``(I) which are chosen under a 
                                cafeteria plan (as defined in section 
                                125(d)), or provided under a flexible 
                                spending or similar arrangement, of 
                                such an employer, and
                                    ``(II) which are not includible in 
                                gross income under section 106,
                        shall be treated as borne by such employer.
                    ``(B) Coverage under medicare, medicaid, or 
                schip.--Such individual--
                            ``(i) is entitled to benefits under part A 
                        of title XVIII of the Social Security Act or is 
                        enrolled under part B of such title, or
                            ``(ii) is enrolled in the program under 
                        title XIX or XXI of such Act.
                    ``(C) Certain other coverage.--Such individual--
                            ``(i) is enrolled in a health benefits plan 
                        under chapter 89 of title 5, United States 
                        Code, or
                            ``(ii) is entitled to receive benefits 
                        under chapter 55 of title 10, United States 
                        Code.
            ``(4) Determination of unemployment.--For purposes of 
        paragraph (1), an individual shall be treated as unemployed 
        during any period--
                    ``(A) for which such individual is receiving 
                unemployment compensation (as defined in section 
                85(b)), or
                    ``(B) for which such individual is certified by a 
                State agency (or by any other entity designated by the 
                Secretary) as otherwise being entitled to receive 
                unemployment compensation (as so defined) but for--
                            ``(i) the termination of the period during 
                        which such compensation was payable, or
                            ``(ii) an exhaustion of such individual's 
                        rights to such compensation.
    ``(d) Qualified Health Insurance.--For purposes of this section, 
the term `qualified health insurance' means insurance which constitutes 
medical care; except that such term shall not include any insurance if 
substantially all of its coverage is of excepted benefits described in 
section 9832(c).
    ``(e) Coordination With Advance Payments of Credit.--
            ``(1) Recapture of excess advance payments.--If any payment 
        is made by the Secretary under section 7527 during any calendar 
        year to a provider of qualified health insurance for an 
        individual, then the tax imposed by this chapter for the 
        individual's last taxable year beginning in such calendar year 
        shall be increased by the aggregate amount of such payments.
            ``(2) Reconciliation of payments advanced and credit 
        allowed.--Any increase in tax under paragraph (1) shall not be 
        treated as tax imposed by this chapter for purposes of 
        determining the amount of any credit (other than the credit 
        allowed by subsection (a)) allowable under part IV of 
        subchapter A of chapter 1.
    ``(f) Special Rules.--
            ``(1) Coordination with other deductions.--Amounts taken 
        into account under subsection (a) shall not be taken into 
        account in determining any deduction allowed under section 
        162(l) or 213.
            ``(2) MSA distributions.--Amounts distributed from an 
        Archer MSA (as defined in section 220(d)) shall not be taken 
        into account under subsection (a).
            ``(3) Denial of credit to dependents.--No credit shall be 
        allowed under this section to any individual with respect to 
        whom a deduction under section 151 is allowable to another 
        taxpayer for a taxable year beginning in the calendar year in 
        which such individual's taxable year begins.
            ``(4) Credit treated as refundable credit.--For purposes of 
        this title, the credit allowed under this section shall be 
        treated as a credit allowable under subpart C of part IV of 
        subchapter A of chapter 1.
            ``(5) Regulations.--The Secretary may prescribe such 
        regulations and other guidance as may be necessary or 
        appropriate to carry out this section and section 7527.''.
    (b) Increased Access to Health Insurance for Individuals Eligible 
for Tax Credit.--Notwithstanding any other provision of law, in 
applying section 2741 of the Public Health Service Act (42 U.S.C. 
300gg-41)) and any alternative State mechanism under section 2744 of 
such Act (42 U.S.C.300gg-44)), in determining who is an eligible 
individual (as defined in section 2741(b) of such Act) in the case of 
an individual who may be covered by insurance for which credit is 
allowable under section 6429 of the Internal Revenue Code of 1986 for 
an eligible coverage month, if the individual seeks to obtain health 
insurance coverage under such section during an eligible coverage month 
under such section--
            (1) paragraph (1) of such section 2741(b) shall be applied 
        as if any reference to 18 months is deemed a reference to 12 
        months, and
            (2) paragraphs (4) and (5) of such section 2741(b) shall 
        not apply.
    (c) Information Reporting.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 (relating to information concerning transactions 
        with other persons) is amended by inserting after section 6050S 
        the following new section:

``SEC. 6050T. RETURNS RELATING TO DISPLACED WORKER HEALTH INSURANCE 
              CREDIT.

    ``(a) Requirement of Reporting.--Every person--
            ``(1) who, in connection with a trade or business conducted 
        by such person, receives payments during any calendar year from 
        any individual for coverage of such individual or any other 
        individual under qualified health insurance (as defined in 
        section 6429(d)), and
            ``(2) who claims a reimbursement for an advance credit 
        amount,
shall, at such time as the Secretary may prescribe, make the return 
described in subsection (b) with respect to each individual from whom 
such payments were received or for whom such a reimbursement is 
claimed.
    ``(b) Form and Manner of Returns.--A return is described in this 
subsection if such return--
            ``(1) is in such form as the Secretary may prescribe, and
            ``(2) contains--
                    ``(A) the name, address, and TIN of each individual 
                referred to in subsection (a),
                    ``(B) the aggregate of the advance credit amounts 
                provided to such individual and for which reimbursement 
                is claimed,
                    ``(C) the number of months for which such advance 
                credit amounts are so provided, and
                    ``(D) such other information as the Secretary may 
                prescribe.
    ``(c) Statements To Be Furnished to Individuals With Respect to 
Whom Information Is Required.--Every person required to make a return 
under subsection (a) shall furnish to each individual whose name is 
required to be set forth in such return a written statement showing--
            ``(1) the name and address of the person required to make 
        such return and the phone number of the information contact for 
        such person, and
            ``(2) the information required to be shown on the return 
        with respect to such individual.
The written statement required under the preceding sentence shall be 
furnished on or before January 31 of the year following the calendar 
year for which the return under subsection (a) is required to be made.
    ``(d) Advance Credit Amount.--For purposes of this section, the 
term `advance credit amount' means an amount for which the person can 
claim a reimbursement pursuant to a program established by the 
Secretary under section 7527.''
            (2) Assessable penalties.--
                    (A) Subparagraph (B) of section 6724(d)(1) 
                (relating to definitions) is amended by redesignating 
                clauses (xi) through (xvii) as clauses (xii) through 
                (xviii), respectively, and by inserting after clause 
                (x) the following new clause:
                            ``(xi) section 6050T (relating to returns 
                        relating to displaced worker health insurance 
                        credit),''.
                    (B) Paragraph (2) of section 6724(d) is amended by 
                striking ``or'' at the end of subparagraph (Z), by 
                striking the period at the end of subparagraph (AA) and 
                inserting ``, or'', and by adding after subparagraph 
                (AA) the following new subparagraph:
                    ``(BB) section 6050T (relating to returns relating 
                to displaced worker health insurance credit).''returns 
                relating to payments for qualified health insurance).''
            (3) Clerical amendment.--The table of sections for subpart 
        B of part III of subchapter A of chapter 61 is amended by 
        inserting after the item relating to section 6050S the 
        following new item:

                              ``Sec. 6050T. Returns relating to 
                                        displaced worker health 
                                        insurance credit.''
    (d) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``, or 
        from section 6429 of such Code''.
            (2) The table of sections for subchapter B of chapter 65 is 
        amended by adding at the end the following new item:

                              ``Sec. 6429. Displaced worker health 
                                        insurance credit.''
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 402. ADVANCE PAYMENT OF DISPLACED WORKER HEALTH INSURANCE CREDIT.

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

``SEC. 7527. ADVANCE PAYMENT OF DISPLACED WORKER HEALTH INSURANCE 
              CREDIT.

    ``(a) General Rule.--The Secretary shall establish a program for 
making payments on behalf of eligible individuals to providers of 
health insurance for such individuals.
    ``(b) Eligible Individual.--For purposes of this section, the term 
`eligible individual' means any individual for whom a qualified health 
insurance credit eligibility certificate is in effect.
    ``(c) Qualified Health Insurance Credit Eligibility Certificate.--
For purposes of this section, a qualified health insurance credit 
eligibility certificate is a statement certified by a State agency (or 
by any other entity designated by the Secretary) which--
            ``(1) certifies that the individual was unemployed (within 
        the meaning of section 6429) as of the first day of any month, 
        and
            ``(2) provides such other information as the Secretary may 
        require for purposes of this section.''
    (b) Clerical Amendment.--The table of sections for chapter 77 is 
amended by adding at the end the following new item:

                              ``Sec. 7527. Advance payment of displaced 
                                        worker health insurance 
                                        credit.''
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

 TITLE V--EMPLOYMENT AND TRAINING ASSISTANCE AND TEMPORARY HEALTH CARE 
                          COVERAGE ASSISTANCE

SEC. 501. EMPLOYMENT AND TRAINING ASSISTANCE AND TEMPORARY HEALTH CARE 
              COVERAGE ASSISTANCE.

    (a) In General.--Section 173(a) of the Workforce Investment Act of 
1998 (29 U.S.C. 2918(a)) is amended--
            (1) in paragraph (2), by striking ``and'' at the end;
            (2) in paragraph (3), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(4) to the Governor of any State or outlying area who 
        applies for assistance under subsection (f) to provide 
        employment and training assistance and temporary health care 
        coverage assistance to workers affected by major economic 
        dislocations, such as plant closures, mass layoffs, or multiple 
        layoffs, including those dislocations caused by the terrorist 
        attacks of September 11, 2001.''.
    (b) Requirements.--Section 173 of the Workforce Investment Act of 
1998 (29 U.S.C. 2918) is amended by adding at the end the following:
    ``(f) Additional Relief for Major Economic Dislocations.--
            ``(1) Grant recipient eligibility.--
                    ``(A) In general.--To be eligible to receive a 
                grant under subsection (a)(4), a Governor shall submit 
                an application, for assistance described in 
                subparagraph (B), to the Secretary at such time, in 
                such manner, and containing such information as the 
                Secretary may require.
                    ``(B) Types of assistance.--
                            ``(i) In general.--Assistance described in 
                        this subparagraph is--
                                    ``(I) employment and training 
                                assistance, including employment and 
                                training activities described in 
                                section 134; and
                                    ``(II) temporary health care 
                                coverage assistance described in 
                                paragraph (4).
                            ``(ii) Minimum allocation to temporary 
                        health care coverage assistance.--Not less than 
                        30 percent of the cost of assistance requested 
                        in any application submitted under this 
                        subsection shall consist of the cost for 
                        temporary health care coverage assistance 
                        described in paragraph (4).
                            ``(iii) Encouragement of certain types of 
                        health care coverage.--In publishing 
                        requirements for applications under this 
                        subsection, the Secretary shall encourage the 
                        use of private health coverage alternatives.
                    ``(C) Minimum award requirement for eligible states 
                and outlying areas.--
                            ``(i) Requirements.--In any case in which 
                        the requirements of this section are met in 
                        connection with one or more applications of the 
                        Governor of any State or outlying area for 
                        assistance described in subparagraph (B), the 
                        Governor--
                                    ``(I) shall be awarded at least 1 
                                grant under subsection (a)(4) pursuant 
                                to such applications, and
                                    ``(II) except as provided in clause 
                                (ii), shall be awarded not less than 
                                $5,000,000 in total grants awarded 
                                under (a)(4).
                            ``(ii) Exception to minimum grant 
                        requirements.--The Secretary may award to a 
                        Governor a total amount less than the minimum 
                        total amount specified in clause (i)(II), as 
                        appropriate, if the Governor--
                                    ``(I) requests less than such 
                                minimum total amount, or
                                    ``(II) fails to demonstrate to the 
                                Secretary that there are a sufficient 
                                number of eligible recipients to 
                                justify the awarding of grants in such 
                                minimum total amount.
            ``(2) State administration.--The Governor may designate one 
        or more local workforce investment boards or other entities 
        with the capability to respond to the circumstances relating to 
        the particular closure, layoff, or other dislocation to 
        administer the grant under subsection (a)(4).
            ``(3) Participant eligibility.--An individual shall be 
        eligible to receive assistance described in paragraph (1)(B) 
        under a grant awarded under subsection (a)(4) if such 
        individual is a dislocated worker and the Governor has 
        certified that a major economic dislocation, such as a plant 
        closure, mass layoff, or multiple layoff, including a 
        dislocation caused by the terrorist attacks of September 11, 
        2001, contributed importantly to the dislocation.
            ``(4) Temporary health care coverage assistance.--
                    ``(A) In general.--Temporary health care coverage 
                assistance described in this paragraph consists of 
                health care coverage premium assistance provided to 
                qualified individuals under this paragraph with respect 
                to premiums for coverage for themselves, for their 
                spouses, for their dependents, or for any combination 
                thereof, other than premiums for excluded health 
                insurance coverage.
                    ``(B) Qualified individuals.--For purposes of this 
                paragraph--
                            ``(i) In general.--Subject to clause (ii), 
                        a qualified individual is an individual who--
                                    ``(I) is a dislocated worker 
                                referred to in paragraph (3) with 
                                respect to whom the Governor has made 
                                the certification regarding the 
                                dislocation as required under such 
                                paragraph, and
                                    ``(II) is receiving or has received 
                                employment and training assistance as 
                                described in paragraph (1)(B)(i)(I).
                            ``(ii) Limitation.--An individual shall not 
                        be treated as a qualified individual if--
                                    ``(I) such individual is eligible 
                                for coverage under the program under 
                                title XIX of the Social Security Act 
                                applicable in the State or outlying 
                                area, or
                                    ``(II) such individual is eligible 
                                for coverage under the program under 
                                title XXI of such Act applicable in the 
                                State or outlying area,
                        unless such eligibility is effective solely in 
                        connection with eligibility for health care 
                        coverage premium assistance under a program 
                        established by the Governor in connection with 
                        temporary health care coverage assistance 
                        received under this subsection.
                            ``(iii) Construction.--
                                    ``(I) Permitting coverage through 
                                enrollment in medicaid or schip.--
                                Nothing in this subsection shall be 
                                construed as preventing a State from 
                                using funds made available by reason of 
                                subsection (a)(4) to provide health 
                                care coverage through enrollment in the 
                                program under title XIX (relating to 
                                medicaid) or in the program under title 
                                XXI (relating to SCHIP) of the Social 
                                Security Act, but only in the case of 
                                individuals who are not otherwise 
                                eligible for coverage under either such 
                                program.
                                    ``(II) Not affecting eligibility 
                                for assistance.--An individual shall 
                                not be treated for purposes of this 
                                subsection as being eligible for 
                                coverage under either such program (and 
                                thereby not eligible for assistance 
                                under this subsection) merely on the 
                                basis that the State provides 
                                assistance under this subsection 
                                through coverage under either such 
                                program.
                    ``(C) Limitation on entitlement.--Nothing in this 
                subsection shall be construed as establishing any 
                entitlement of qualified individuals to premium 
                assistance under this subsection.
                    ``(D) Concurrence and consultation.--In connection 
                with any temporary health care coverage assistance 
                provided pursuant to this paragraph--
                            ``(i) if the Secretary determines that 
                        health care coverage premium assistance 
                        provided through title XIX or XXI of the Social 
                        Security Act is a substantial component of the 
                        assistance provided, the Secretary shall act in 
                        concurrence with the Secretary of Health and 
                        Human Services, and
                            ``(ii) in any other case, the Secretary 
                        shall consult with the Secretary of Health and 
                        Human Services to the extent that such 
                        assistance affects programs administered by or 
                        under the Secretary of Health and Human 
                        Services.
                    ``(E) Use of funds.--Temporary health care coverage 
                assistance provided pursuant to this subsection shall 
                supplement and may not supplant any other State or 
                local funds used to provide health care coverage and 
                may not be included in determining the amount of non-
                Federal contributions required under any program.
                    ``(F) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Excluded health care coverage.--The 
                        term `excluded health care coverage' means 
                        coverage under--
                                    ``(I) title XVIII 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 (other than coverage 
                                which is comparable to continuation 
                                coverage under section 4980B of the 
                                Internal Revenue Code of 1986), or
                                    ``(V) the Indian Health Care 
                                Improvement Act.
                        Such term also includes coverage under a 
                        qualified long-term care insurance contract and 
                        excepted benefits described in section 733(c) 
                        of the Employee Retirement Income Security Act 
                        of 1974.
                            ``(ii) Premium.--The term `premium' means, 
                        in connection with health care coverage, the 
                        premium which would (but for this section) be 
                        charged for the cost of coverage.
            ``(5) Appropriations.--
                    ``(A) In general.--There is hereby appropriated, 
                from any amounts in the Treasury not otherwise 
                appropriated, $4,000,000,000 for the period consisting 
                of fiscal years 2002, 2003, and 2004 for the award of 
                grants under subsection (a)(4) in accordance with this 
                section.
                    ``(B) Availability.--Amounts appropriated pursuant 
                to subparagraph (A) for each fiscal year--
                            ``(i) are in addition to amounts made 
                        available under section 132(a)(2)(A) or any 
                        other provision of law to carry out this 
                        section; and
                            ``(ii) notwithstanding section 189(g)(1), 
                        shall remain availablefor obligation by the 
                        Secretary from the date of the enactment of 
                        this subsection through each succeeding fiscal 
                        year, except that, notwithstanding section 
                        189(g)(2), no funds are hereby available for 
                        expenditure after June 30, 2004.''.

                   TITLE VI--VALUE-ADDED AGRICULTURE

SEC. 601. SMALL ETHANOL PRODUCER CREDIT.

    (a) Allocation of Alcohol Fuels Credit to Patrons of a 
Cooperative.--Section 40(g) Internal Revenue Code of 1986 (relating to 
definitions and special rules for eligible small ethanol producer 
credit) is amended by adding at the end the following:
            ``(6) Allocation of small ethanol producer credit to 
        patrons of cooperative.--
                    ``(A) Election to allocate.--
                            ``(i) In general.--Notwithstanding 
                        paragraph (4), in the case of a cooperative 
                        organization described in section 1381(a), any 
                        portion of the credit determined under 
                        subsection (a)(3) for the taxable year may, at 
                        the election of the organization, be 
                        apportioned pro rata among patrons of the 
                        organization on the basis of the quantity or 
                        value of business done with or for such patrons 
                        for the taxable year.
                            ``(ii) Form and effect of election.--An 
                        election under clause (i) for any taxable year 
                        shall be made on a timely filed return for such 
                        year. Such election, once made, shall be 
                        irrevocable for such taxable year.
                            ``(iii) Special rule for taxable years 
                        prior to enactment of paragraph.--
                        Notwithstanding clause (ii), an election for 
                        any taxable year ending prior to the date of 
                        the enactment of this paragraph may be made at 
                        any time before the expiration of the 3-year 
                        period beginning on the last date prescribed by 
                        law for filing the return of the taxpayer for 
                        such taxable year (determined without regard to 
                        extensions) by filing an amended return for 
                        such year.
                    ``(B) Treatment of organizations and patrons.--The 
                amount of the credit apportioned to patrons under 
                subparagraph (A)--
                            ``(i) shall not be included in the amount 
                        determined under subsection (a) with respect to 
                        the organization for the taxable year,
                            ``(ii) shall be included in the amount 
                        determined under subsection (a) for the taxable 
                        year of each patron for which the patronage 
                        dividends for the taxable year described in 
                        subparagraph (A) are included in gross income, 
                        and
                            ``(iii) shall be included in gross income 
                        of such patrons for the taxable year in the 
                        manner and to the extent provided in section 
                        87.
                    ``(C) Special rules for decrease in credits for 
                taxable year.--If the amount of the credit of a 
                cooperative organization (as so defined) determined 
                under subsection (a)(3) for a taxable year is less than 
                the amount of such credit shown on the return of the 
                cooperative organization for such year, an amount equal 
                to the excess of--
                            ``(i) such reduction, over
                            ``(ii) the amount not apportioned to such 
                        patrons under subparagraph (A) for the taxable 
                        year,
                shall be treated as an increase in tax imposed by this 
                chapter on the organization. Such increase shall not be 
                treated as tax imposed by this chapter for purposes of 
                determining the amount of any credit under this subpart 
                or subpart A, B, E, or G.''.
    (b) Definition of Small Ethanol Producer; Improvements to Small 
Ethanol Producer 
Credit.--
            (1) Definition of small ethanol producer.--Section 40(g)(1) 
        of the Internal Revenue Code of 1986 (relating to eligible 
        small ethanol producer) is amended by striking ``30,000,000'' 
        and inserting ``60,000,000''.
            (2) Small ethanol producer credit not a passive activity 
        credit.--Clause (i) of section 469(d)(2)(A) of such Code 
        (relating to passive activity credit) is amended by striking 
        ``subpart D'' and inserting ``subpart D, other than section 
        40(a)(3),''.
            (3) Allowing credit against minimum tax.--
                    (A) In general.--Subsection (c) of section 38 of 
                such Code (relating to limitation based on amount of 
                tax) is amended by redesignating paragraph (3) as 
                paragraph (4) and by inserting after paragraph (2) the 
                following:
            ``(3) Special rules for small ethanol producer credit.--
                    ``(A) In general.--In the case of the small ethanol 
                producer credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to the credit, 
                        and
                            ``(ii) in applying paragraph (1) to the 
                        credit--
                                    ``(I) subparagraphs (A) and (B) 
                                thereof shall not apply, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the small 
                                ethanol producer credit).
                    ``(B) Small ethanol producer credit.--For purposes 
                of this subsection, the term `small ethanol producer 
                credit' means the credit allowable under subsection (a) 
                by reason of section 40(a)(3).''.
                    (B) Conforming amendment.--Subclause (II) of 
                section 38(c)(2)(A)(ii) of such Code is amended by 
                inserting ``or the small ethanol producer credit'' 
                after ``employment credit''.
            (4) Small ethanol producer credit not added back to income 
        under section 87.--Section 87 of such Code (relating to income 
        inclusion of alcohol fuel credit is amended to read as follows:

``SEC. 87. ALCOHOL FUEL CREDIT.

    ``Gross income includes an amount equal to the sum of--
            ``(1) the amount of the alcohol mixture credit determined 
        with respect to the taxpayer for the taxable year under section 
        40(a)(1), and
            ``(2) the alcohol credit determined with respect to the 
        taxpayer for the taxable year under section 40(a)(2).''.
    (c) Conforming Amendment.--Section 1388 of the Internal Revenue 
Code of 1986 (relating to definitions and special rules for cooperative 
organizations) is amended by adding at the end the following:
    ``(k) Cross Reference.--For provisions relating to the 
apportionment of the alcohol fuels credit between cooperative 
organizations and their patrons, see section 40(d) (6).''
    (d) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 1997.
            (2) Certain provisions.--The amendments made by paragraphs 
        (1) and (4) of subsection (b) shall apply to taxable years 
        ending after the date of the enactment of this Act.

SEC. 602. COOPERATIVE MARKETING INCLUDES VALUE-ADDED PROCESSING THROUGH 
              ANIMALS.

    (a) In General.--Section 1388 of the Internal Revenue Code of 1986 
(relating to definitions and special rules) is amended by adding at the 
end the following new subsection:
    ``(k) Cooperative Marketing Includes Value-Added Processing Through 
Animals.--For purposes of section 521 and this subchapter, the term 
`marketing the products of members and other producers' includes 
feeding the products of members and other producers to cattle, hogs, 
fish, chickens, or other animals and selling the animals (or animal 
products) which were fed such feed products.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 603. DECLARATORY JUDGMENT REMEDY RELATING TO STATUS AND 
              CLASSIFICATION OF FARMERS' COOPERATIVES.

    (a) In General.--Paragraph (1) of section 7428(a) of the Internal 
Revenue Code of 1986 (relating to creation of remedy) is amended by 
striking ``or'' at the end of subparagraph (B), and by inserting after 
subparagraph (C) the following new subparagraph:
                    ``(D) with respect to the initial qualification or 
                continuing qualification of an organization as a 
                cooperative described in section 521(b) which is exempt 
                from tax under section 521(a), or''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to pleadings filed with the United States Tax Court, the 
district court of the United States for the District of Columbia, or 
the United States Court of Federal Claims after the date of enactment 
of this Act but only with respect to determinations (or requests for 
determinations) made after January 1, 2002.
                                 <all>