[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2485 Introduced in Senate (IS)]








109th CONGRESS
  2d Session
                                S. 2485

  To amend the Internal Revenue Code of 1986 to provide a source for 
  payments to States and counties under the Secure Rural Schools and 
               Community Self-Determination Act of 2000.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 30, 2006

 Mr. Baucus (for himself and Mr. Wyden) 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 a source for 
  payments to States and counties under the Secure Rural Schools and 
               Community Self-Determination Act of 2000.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Secure Rural Schools and Communities 
Funding Act of 2006''.

SEC. 2. FUNDING SOURCE FOR RURAL SCHOOLS AND COMMUNITIES PAYMENTS.

    (a) Rural Schools and Communities Trust Fund.--
            (1) In general.--Subchapter A of chapter 98 of the Internal 
        Revenue Code of 1986 is amended by adding at the end the 
        following new section:

``SEC. 9511. RURAL SCHOOLS AND COMMUNITIES TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Rural Schools and 
Communities Trust Fund', consisting of such amounts as may be 
appropriated or credited to such Trust Fund as provided in this section 
or section 9602(b).
    ``(b) Transfers to Trust Fund.--There are hereby appropriated to 
the Rural Schools and Communities Trust Fund amounts equivalent to the 
amounts estimated by the Secretary by which Federal revenues are 
increased, before October 1, 2016, as a result of the provisions of 
section 3402(t).
    ``(c) Expenditures From Trust Fund.--Amounts in the Rural Schools 
and Communities Trust Fund shall be available only for--
            ``(1) payments to eligible States under section 102(a)(2) 
        of the Secure Rural Schools and Community Self-Determination 
        Act of 2000; and
            ``(2) payments to eligible counties under section 103(a)(2) 
        of the Secure Rural Schools and Community Self-Determination 
        Act of 2000.''.
            (2) Conforming amendments.--
                    (A) Payments to states.--Paragraph (3) of section 
                102(b) of the Secure Rural Schools and Community Self-
                Determination Act of 2000 (Public Law 106-393; 16 
                U.S.C. 500 note) is amended by striking ``out of any 
                funds in the Treasury not otherwise appropriated'' and 
                inserting ``out of the Rural Schools and Communities 
                Trust Fund under section 9511 of the Internal Revenue 
                Code of 1986''.
                    (B) Payments to counties.--Paragraph (2) of section 
                103(b) of the Secure Rural Schools and Community Self-
                Determination Act of 2000 (Public Law 106-393; 16 
                U.S.C. 500 note) is amended by striking ``out of any 
                funds in the Treasury not otherwise appropriated'' and 
                inserting ``out of the Rural Schools and Communities 
                Trust Fund under section 9511 of the Internal Revenue 
                Code of 1986''.
            (3) Clerical amendment.--The table of sections for 
        subchapter A of chapter 98 of the Internal Revenue Code of 1986 
        is amended by adding at the end the following new item:

        ``Sec. 9511. Rural Schools and Communities Trust Fund.''.
    (b) Imposition of Withholding on Certain Payments Made by 
Government Entities.--Section 3402 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(t) Extension of Withholding to Certain Payments Made by 
Government Entities.--
            ``(1) General rule.--The Government of the United States 
        shall deduct and withhold from any payment for goods and 
        services which is subject to withholding a tax in an amount 
        equal to 3 percent of such payment.
            ``(2) Exceptions.--Paragraph (1) shall not apply to any 
        payment--
                    ``(A) except as provided in subparagraph (B), which 
                is subject to withholding under any other provision of 
                this chapter or chapter 3,
                    ``(B) which is subject to withholding under section 
                3406 and from which amounts are being withheld under 
                such section,
                    ``(C) of interest,
                    ``(D) for real property,
                    ``(E) to any tax-exempt entity, foreign government, 
                or other entity subject to the requirements of 
                paragraph (1), and
                    ``(F) made pursuant to a classified or confidential 
                contract (as defined in section 6050M(e)(3)).
            ``(3) Coordination with other sections.--For purposes of 
        sections 3403 and 3404 and for purposes of so much of subtitle 
        F (except section 7205) as relates to this chapter, payments to 
        any person of any payment for goods and services which is 
        subject to withholding shall be treated as if such payments 
        were wages paid by an employer to an employee.''.
    (c) Effective Dates.--
            (1) Subsection (a).--The amendments made by subsection (a) 
        shall take effect on October 1, 2006.
            (2) Subsection (b).--The amendment made by subsection (b) 
        shall apply to payments made after September 30, 2006.
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