[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1720 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                S. 1720

 To amend the Internal Revenue Code of 1986 to provide tax relief for 
 victims of the terrorist attacks against the United States involving 
                                anthrax.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 16, 2001

 Mrs. Carnahan (for herself and Ms. Mikulski) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide tax relief for 
 victims of the terrorist attacks against the United States involving 
                                anthrax.

    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 ``Victims of Anthrax 
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.
Sec. 2. Income and employment taxes of victims of terrorist attacks.
Sec. 3. Estate tax reduction.
Sec. 4. Payments by charitable organizations treated as exempt 
                            payments.
Sec. 5. Exclusion of certain cancellations of indebtedness.
Sec. 6. No impact on social security trust funds.

SEC. 2. INCOME AND EMPLOYMENT TAXES OF VICTIMS OF ANTHRAX.

    (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 Anthrax Attacks.--
            ``(1) In general.--In the case of any individual who dies 
        as a result of illness incurred as a result of a terrorist 
        attack involving anthrax occurring on or after September 11, 
        2001, and before January 1, 2002, any tax imposed by this 
        subtitle shall not apply--
                    ``(A) with respect to the taxable year in which 
                falls the date of such individual's 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 were incurred.
            ``(2) Exceptions.--
                    ``(A) 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 subtitle which would be computed by only taking 
                into account the items of income, gain, or other 
                amounts attributable to--
                            ``(i) amounts payable in the taxable year 
                        by reason of the death of an individual 
                        described in paragraph (1) which would have 
                        been payable in such taxable year if the death 
                        had occurred by reason of an event other than 
                        an event described in paragraph (1), or
                            ``(ii) amounts payable in the taxable year 
                        which would not have been payable in such 
                        taxable year but for an action taken after the 
                        date of the applicable terrorist attack.
                    ``(B) No relief for perpetrators.--Paragraph (1) 
                shall not apply with respect to any individual 
                identified by the Attorney General to have been a 
                participant or conspirator in any event described in 
                paragraph (1), or a representative of such 
                individual.''.
    (b) Refund of Other Taxes Paid.--Section 692, as amended by 
subsection (a), is amended by adding at the end the following new 
subsection:
    ``(e) Refund of Other Taxes Paid.--In determining the amount of tax 
under this section to be credited or refunded as an overpayment with 
respect to any individual for any period, such amount shall be 
increased by an amount equal to the amount of taxes imposed and 
collected under chapter 21 and sections 3201(a), 3211(a)(1), and 
3221(a) with respect to such individual for such period.''.
    (c) 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''.
    (d) Clerical Amendments.--
            (1) The heading of section 692 is amended to read as 
        follows:

``SEC. 692. INCOME AND EMPLOYMENT 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 and employment taxes 
                                        of members of Armed Forces and 
                                        victims of certain terrorist 
                                        attacks on death.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years ending on or after September 11, 2001.

SEC. 3. 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 section 2001 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, or
            ``(2) any individual who died as a result of illness 
        incurred as a result of a terrorist attack involving anthrax 
        occurring on or after September 11, 2001, and before January 1, 
        2002.
Paragraph (2) shall not apply with respect to any individual identified 
by the Attorney General to have been a participant or conspirator in 
any such terrorist attack, or a representative of such individual.
    ``(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.--The amendments made by this section shall 
apply to estates of decedents dying on or after September 11, 2001.

SEC. 4. 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 
        a terrorist 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 using an 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. 5. 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 a terrorist 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.

SEC. 6. NO IMPACT ON SOCIAL SECURITY TRUST FUND.

    (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.
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