[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6049 Engrossed Amendment Senate (EAS)]
In the Senate of the United States,
September 23 (legislative day, September 17), 2008.
Resolved, That the bill from the House of Representatives (H.R.
6049) entitled ``An Act to amend the Internal Revenue Code of 1986 to
provide incentives for energy production and conservation, to extend
certain expiring provisions, to provide individual income tax relief,
and for other purposes.'', do pass with the following
AMENDMENT:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE, ETC.
(a) Short Title.--This Act may be cited as the ``Energy Improvement
and Extension Act of 2008''.
(b) Reference.--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--ENERGY PRODUCTION INCENTIVES
Subtitle A--Renewable Energy Incentives
Sec. 101. Renewable energy credit.
Sec. 102. Production credit for electricity produced from marine
renewables.
Sec. 103. Energy credit.
Sec. 104. Energy credit for small wind property.
Sec. 105. Energy credit for geothermal heat pump systems.
Sec. 106. Credit for residential energy efficient property.
Sec. 107. New clean renewable energy bonds.
Sec. 108. Credit for steel industry fuel.
Sec. 109. Special rule to implement FERC and State electric
restructuring policy.
Subtitle B--Carbon Mitigation and Coal Provisions
Sec. 111. Expansion and modification of advanced coal project
investment credit.
Sec. 112. Expansion and modification of coal gasification investment
credit.
Sec. 113. Temporary increase in coal excise tax; funding of Black Lung
Disability Trust Fund.
Sec. 114. Special rules for refund of the coal excise tax to certain
coal producers and exporters.
Sec. 115. Tax credit for carbon dioxide sequestration.
Sec. 116. Certain income and gains relating to industrial source carbon
dioxide treated as qualifying income for
publicly traded partnerships.
Sec. 117. Carbon audit of the tax code.
TITLE II--TRANSPORTATION AND DOMESTIC FUEL SECURITY PROVISIONS
Sec. 201. Inclusion of cellulosic biofuel in bonus depreciation for
biomass ethanol plant property.
Sec. 202. Credits for biodiesel and renewable diesel.
Sec. 203. Clarification that credits for fuel are designed to provide
an incentive for United States production.
Sec. 204. Extension and modification of alternative fuel credit.
Sec. 205. Credit for new qualified plug-in electric drive motor
vehicles.
Sec. 206. Exclusion from heavy truck tax for idling reduction units and
advanced insulation.
Sec. 207. Alternative fuel vehicle refueling property credit.
Sec. 208. Certain income and gains relating to alcohol fuels and
mixtures, biodiesel fuels and mixtures, and
alternative fuels and mixtures treated as
qualifying income for publicly traded
partnerships.
Sec. 209. Extension and modification of election to expense certain
refineries.
Sec. 210. Extension of suspension of taxable income limit on percentage
depletion for oil and natural gas produced
from marginal properties.
Sec. 211. Transportation fringe benefit to bicycle commuters.
TITLE III--ENERGY CONSERVATION AND EFFICIENCY PROVISIONS
Sec. 301. Qualified energy conservation bonds.
Sec. 302. Credit for nonbusiness energy property.
Sec. 303. Energy efficient commercial buildings deduction.
Sec. 304. New energy efficient home credit.
Sec. 305. Modifications of energy efficient appliance credit for
appliances produced after 2007.
Sec. 306. Accelerated recovery period for depreciation of smart meters
and smart grid systems.
Sec. 307. Qualified green building and sustainable design projects.
Sec. 308. Special depreciation allowance for certain reuse and
recycling property.
TITLE IV--REVENUE PROVISIONS
Sec. 401. Limitation of deduction for income attributable to domestic
production of oil, gas, or primary products
thereof.
Sec. 402. Elimination of the different treatment of foreign oil and gas
extraction income and foreign oil related
income for purposes of the foreign tax
credit.
Sec. 403. Broker reporting of customer's basis in securities
transactions.
Sec. 404. 0.2 percent FUTA surtax.
Sec. 405. Increase and extension of Oil Spill Liability Trust Fund tax.
TITLE I--ENERGY PRODUCTION INCENTIVES
Subtitle A--Renewable Energy Incentives
SEC. 101. RENEWABLE ENERGY CREDIT.
(a) Extension of Credit.--
(1) 1-year extension for wind and refined coal
facilities.--Paragraphs (1) and (8) of section 45(d) are each
amended by striking ``January 1, 2009'' and inserting ``January
1, 2010''.
(2) 2-year extension for certain other facilities.--Each of
the following provisions of section 45(d) is amended by
striking ``January 1, 2009'' and inserting ``January 1, 2011'':
(A) Clauses (i) and (ii) of paragraph (2)(A).
(B) Clauses (i)(I) and (ii) of paragraph (3)(A).
(C) Paragraph (4).
(D) Paragraph (5).
(E) Paragraph (6).
(F) Paragraph (7).
(G) Subparagraphs (A) and (B) of paragraph (9).
(b) Modification of Refined Coal as a Qualified Energy Resource.--
(1) Elimination of increased market value test.--Section
45(c)(7)(A)(i) (defining refined coal), as amended by section
108, is amended--
(A) by striking subclause (IV),
(B) by adding ``and'' at the end of subclause (II),
and
(C) by striking ``, and'' at the end of subclause
(III) and inserting a period.
(2) Increase in required emission reduction.--Section
45(c)(7)(B) (defining qualified emission reduction) is amended
by inserting ``at least 40 percent of the emissions of'' after
``nitrogen oxide and''.
(c) Trash Facility Clarification.--Paragraph (7) of section 45(d)
is amended--
(1) by striking ``facility which burns'' and inserting
``facility (other than a facility described in paragraph (6))
which uses'', and
(2) by striking ``combustion''.
(d) Expansion of Biomass Facilities.--
(1) Open-loop biomass facilities.--Paragraph (3) of section
45(d) is amended by redesignating subparagraph (B) as
subparagraph (C) and by inserting after subparagraph (A) the
following new subparagraph:
``(B) Expansion of facility.--Such term shall
include a new unit placed in service after the date of
the enactment of this subparagraph in connection with a
facility described in subparagraph (A), but only to the
extent of the increased amount of electricity produced
at the facility by reason of such new unit.''.
(2) Closed-loop biomass facilities.--Paragraph (2) of
section 45(d) is amended by redesignating subparagraph (B) as
subparagraph (C) and inserting after subparagraph (A) the
following new subparagraph:
``(B) Expansion of facility.--Such term shall
include a new unit placed in service after the date of
the enactment of this subparagraph in connection with a
facility described in subparagraph (A)(i), but only to
the extent of the increased amount of electricity
produced at the facility by reason of such new unit.''.
(e) Modification of Rules for Hydropower Production.--Subparagraph
(C) of section 45(c)(8) is amended to read as follows:
``(C) Nonhydroelectric dam.--For purposes of
subparagraph (A), a facility is described in this
subparagraph if--
``(i) the hydroelectric project installed
on the nonhydroelectric dam is licensed by the
Federal Energy Regulatory Commission and meets
all other applicable environmental, licensing,
and regulatory requirements,
``(ii) the nonhydroelectric dam was placed
in service before the date of the enactment of
this paragraph and operated for flood control,
navigation, or water supply purposes and did
not produce hydroelectric power on the date of
the enactment of this paragraph, and
``(iii) the hydroelectric project is
operated so that the water surface elevation at
any given location and time that would have
occurred in the absence of the hydroelectric
project is maintained, subject to any license
requirements imposed under applicable law that
change the water surface elevation for the
purpose of improving environmental quality of
the affected waterway.
The Secretary, in consultation with the Federal Energy
Regulatory Commission, shall certify if a hydroelectric
project licensed at a nonhydroelectric dam meets the
criteria in clause (iii). Nothing in this section shall
affect the standards under which the Federal Energy
Regulatory Commission issues licenses for and regulates
hydropower projects under part I of the Federal Power
Act.''.
(f) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
property originally placed in service after December 31, 2008.
(2) Refined coal.--The amendments made by subsection (b)
shall apply to coal produced and sold from facilities placed in
service after December 31, 2008.
(3) Trash facility clarification.--The amendments made by
subsection (c) shall apply to electricity produced and sold
after the date of the enactment of this Act.
(4) Expansion of biomass facilities.--The amendments made
by subsection (d) shall apply to property placed in service
after the date of the enactment of this Act.
SEC. 102. PRODUCTION CREDIT FOR ELECTRICITY PRODUCED FROM MARINE
RENEWABLES.
(a) In General.--Paragraph (1) of section 45(c) is amended by
striking ``and'' at the end of subparagraph (G), by striking the period
at the end of subparagraph (H) and inserting ``, and'', and by adding
at the end the following new subparagraph:
``(I) marine and hydrokinetic renewable energy.''.
(b) Marine Renewables.--Subsection (c) of section 45 is amended by
adding at the end the following new paragraph:
``(10) Marine and hydrokinetic renewable energy.--
``(A) In general.--The term `marine and
hydrokinetic renewable energy' means energy derived
from--
``(i) waves, tides, and currents in oceans,
estuaries, and tidal areas,
``(ii) free flowing water in rivers, lakes,
and streams,
``(iii) free flowing water in an irrigation
system, canal, or other man-made channel,
including projects that utilize nonmechanical
structures to accelerate the flow of water for
electric power production purposes, or
``(iv) differentials in ocean temperature
(ocean thermal energy conversion).
``(B) Exceptions.--Such term shall not include any
energy which is derived from any source which utilizes
a dam, diversionary structure (except as provided in
subparagraph (A)(iii)), or impoundment for electric
power production purposes.''.
(c) Definition of Facility.--Subsection (d) of section 45 is
amended by adding at the end the following new paragraph:
``(11) Marine and hydrokinetic renewable energy
facilities.--In the case of a facility producing electricity
from marine and hydrokinetic renewable energy, the term
`qualified facility' means any facility owned by the taxpayer--
``(A) which has a nameplate capacity rating of at
least 150 kilowatts, and
``(B) which is originally placed in service on or
after the date of the enactment of this paragraph and
before January 1, 2012.''.
(d) Credit Rate.--Subparagraph (A) of section 45(b)(4) is amended
by striking ``or (9)'' and inserting ``(9), or (11)''.
(e) Coordination With Small Irrigation Power.--Paragraph (5) of
section 45(d), as amended by section 101, is amended by striking
``January 1, 2012'' and inserting ``the date of the enactment of
paragraph (11)''.
(f) Effective Date.--The amendments made by this section shall
apply to electricity produced and sold after the date of the enactment
of this Act, in taxable years ending after such date.
SEC. 103. ENERGY CREDIT.
(a) Extension of Credit.--
(1) Solar energy property.--Paragraphs (2)(A)(i)(II) and
(3)(A)(ii) of section 48(a) are each amended by striking
``January 1, 2009'' and inserting ``January 1, 2017''.
(2) Fuel cell property.--Subparagraph (E) of section
48(c)(1) is amended by striking ``December 31, 2008'' and
inserting ``December 31, 2016''.
(3) Microturbine property.--Subparagraph (E) of section
48(c)(2) is amended by striking ``December 31, 2008'' and
inserting ``December 31, 2016''.
(b) Allowance of Energy Credit Against Alternative Minimum Tax.--
(1) In general.--Subparagraph (B) of section 38(c)(4), as
amended by the Housing Assistance Tax Act of 2008, is amended
by redesignating clause (vi) as clause (vi) and (vii),
respectively, and by inserting after clause (iv) the following
new clause:
``(v) the credit determined under section
46 to the extent that such credit is
attributable to the energy credit determined
under section 48,''.
(2) Technical amendment.--Clause (vi) of section
38(c)(4)(B), as redesignated by paragraph (1), is amended by
striking ``section 47 to the extent attributable to'' and
inserting ``section 46 to the extent that such credit is
attributable to the rehabilitation credit under section 47, but
only with respect to''.
(c) Energy Credit for Combined Heat and Power System Property.--
(1) In general.--Section 48(a)(3)(A) is amended by striking
``or'' at the end of clause (iii), by inserting ``or'' at the
end of clause (iv), and by adding at the end the following new
clause:
``(v) combined heat and power system
property,''.
(2) Combined heat and power system property.--Subsection
(c) of section 48 is amended--
(A) by striking ``Qualified Fuel Cell Property;
Qualified Microturbine Property'' in the heading and
inserting ``Definitions'', and
(B) by adding at the end the following new
paragraph:
``(3) Combined heat and power system property.--
``(A) Combined heat and power system property.--The
term `combined heat and power system property' means
property comprising a system--
``(i) which uses the same energy source for
the simultaneous or sequential generation of
electrical power, mechanical shaft power, or
both, in combination with the generation of
steam or other forms of useful thermal energy
(including heating and cooling applications),
``(ii) which produces--
``(I) at least 20 percent of its
total useful energy in the form of
thermal energy which is not used to
produce electrical or mechanical power
(or combination thereof), and
``(II) at least 20 percent of its
total useful energy in the form of
electrical or mechanical power (or
combination thereof),
``(iii) the energy efficiency percentage of
which exceeds 60 percent, and
``(iv) which is placed in service before
January 1, 2017.
``(B) Limitation.--
``(i) In general.--In the case of combined
heat and power system property with an
electrical capacity in excess of the applicable
capacity placed in service during the taxable
year, the credit under subsection (a)(1)
(determined without regard to this paragraph)
for such year shall be equal to the amount
which bears the same ratio to such credit as
the applicable capacity bears to the capacity
of such property.
``(ii) Applicable capacity.--For purposes
of clause (i), the term `applicable capacity'
means 15 megawatts or a mechanical energy
capacity of more than 20,000 horsepower or an
equivalent combination of electrical and
mechanical energy capacities.
``(iii) Maximum capacity.--The term
`combined heat and power system property' shall
not include any property comprising a system if
such system has a capacity in excess of 50
megawatts or a mechanical energy capacity in
excess of 67,000 horsepower or an equivalent
combination of electrical and mechanical energy
capacities.
``(C) Special rules.--
``(i) Energy efficiency percentage.--For
purposes of this paragraph, the energy
efficiency percentage of a system is the
fraction--
``(I) the numerator of which is the
total useful electrical, thermal, and
mechanical power produced by the system
at normal operating rates, and expected
to be consumed in its normal
application, and
``(II) the denominator of which is
the lower heating value of the fuel
sources for the system.
``(ii) Determinations made on btu basis.--
The energy efficiency percentage and the
percentages under subparagraph (A)(ii) shall be
determined on a Btu basis.
``(iii) Input and output property not
included.--The term `combined heat and power
system property' does not include property used
to transport the energy source to the facility
or to distribute energy produced by the
facility.
``(D) Systems using biomass.--If a system is
designed to use biomass (within the meaning of
paragraphs (2) and (3) of section 45(c) without regard
to the last sentence of paragraph (3)(A)) for at least
90 percent of the energy source--
``(i) subparagraph (A)(iii) shall not
apply, but
``(ii) the amount of credit determined
under subsection (a) with respect to such
system shall not exceed the amount which bears
the same ratio to such amount of credit
(determined without regard to this
subparagraph) as the energy efficiency
percentage of such system bears to 60
percent.''.
(3) Conforming amendment.--Section 48(a)(1) is amended by
striking ``paragraphs (1)(B) and (2)(B)'' and inserting
``paragraphs (1)(B), (2)(B), and (3)(B)''.
(d) Increase of Credit Limitation for Fuel Cell Property.--
Subparagraph (B) of section 48(c)(1) is amended by striking ``$500''
and inserting ``$1,500''.
(e) Public Utility Property Taken Into Account.--
(1) In general.--Paragraph (3) of section 48(a) is amended
by striking the second sentence thereof.
(2) Conforming amendments.--
(A) Paragraph (1) of section 48(c) is amended by
striking subparagraph (D) and redesignating
subparagraph (E) as subparagraph (D).
(B) Paragraph (2) of section 48(c) is amended by
striking subparagraph (D) and redesignating
subparagraph (E) as subparagraph (D).
(f) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall take
effect on the date of the enactment of this Act.
(2) Allowance against alternative minimum tax.--The
amendments made by subsection (b) shall apply to credits
determined under section 46 of the Internal Revenue Code of
1986 in taxable years beginning after the date of the enactment
of this Act and to carrybacks of such credits.
(3) Combined heat and power and fuel cell property.--The
amendments made by subsections (c) and (d) shall apply to
periods after the date of the enactment of this Act, in taxable
years ending after such date, under rules similar to the rules
of section 48(m) of the Internal Revenue Code of 1986 (as in
effect on the day before the date of the enactment of the
Revenue Reconciliation Act of 1990).
(4) Public utility property.--The amendments made by
subsection (e) shall apply to periods after February 13, 2008,
in taxable years ending after such date, under rules similar to
the rules of section 48(m) of the Internal Revenue Code of 1986
(as in effect on the day before the date of the enactment of
the Revenue Reconciliation Act of 1990).
SEC. 104. ENERGY CREDIT FOR SMALL WIND PROPERTY.
(a) In General.--Section 48(a)(3)(A), as amended by section 103, is
amended by striking ``or'' at the end of clause (iv), by adding ``or''
at the end of clause (v), and by inserting after clause (v) the
following new clause:
``(vi) qualified small wind energy
property,''.
(b) 30 Percent Credit.--Section 48(a)(2)(A)(i) is amended by
striking ``and'' at the end of subclause (II) and by inserting after
subclause (III) the following new subclause:
``(IV) qualified small wind energy
property, and''.
(c) Qualified Small Wind Energy Property.--Section 48(c), as
amended by section 103, is amended by adding at the end the following
new paragraph:
``(4) Qualified small wind energy property.--
``(A) In general.--The term `qualified small wind
energy property' means property which uses a qualifying
small wind turbine to generate electricity.
``(B) Limitation.--In the case of qualified small
wind energy property placed in service during the
taxable year, the credit otherwise determined under
subsection (a)(1) for such year with respect to all
such property of the taxpayer shall not exceed $4,000.
``(C) Qualifying small wind turbine.--The term
`qualifying small wind turbine' means a wind turbine
which has a nameplate capacity of not more than 100
kilowatts.
``(D) Termination.--The term `qualified small wind
energy property' shall not include any property for any
period after December 31, 2016.''.
(d) Conforming Amendment.--Section 48(a)(1), as amended by section
103, is amended by striking ``paragraphs (1)(B), (2)(B), and (3)(B)''
and inserting ``paragraphs (1)(B), (2)(B), (3)(B), and (4)(B)''.
(e) Effective Date.--The amendments made by this section shall
apply to periods after the date of the enactment of this Act, in
taxable years ending after such date, under rules similar to the rules
of section 48(m) of the Internal Revenue Code of 1986 (as in effect on
the day before the date of the enactment of the Revenue Reconciliation
Act of 1990).
SEC. 105. ENERGY CREDIT FOR GEOTHERMAL HEAT PUMP SYSTEMS.
(a) In General.--Subparagraph (A) of section 48(a)(3), as amended
by this Act, is amended by striking ``or'' at the end of clause (v), by
inserting ``or'' at the end of clause (vi), and by adding at the end
the following new clause:
``(vii) equipment which uses the ground or
ground water as a thermal energy source to heat
a structure or as a thermal energy sink to cool
a structure, but only with respect to periods
ending before January 1, 2017,''.
(b) Effective Date.--The amendments made by this section shall
apply to periods after the date of the enactment of this Act, in
taxable years ending after such date, under rules similar to the rules
of section 48(m) of the Internal Revenue Code of 1986 (as in effect on
the day before the date of the enactment of the Revenue Reconciliation
Act of 1990).
SEC. 106. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.
(a) Extension.--Section 25D(g) is amended by striking ``December
31, 2008'' and inserting ``December 31, 2016''.
(b) Removal of Limitation for Solar Electric Property.--
(1) In general.--Section 25D(b)(1), as amended by
subsections (c) and (d), is amended--
(A) by striking subparagraph (A), and
(B) by redesignating subparagraphs (B) through (E)
as subparagraphs (A) through and (D), respectively.
(2) Conforming amendment.--Section 25D(e)(4)(A), as amended
by subsections (c) and (d), is amended--
(A) by striking clause (i), and
(B) by redesignating clauses (ii) through (v) as
clauses (i) and (iv), respectively.
(c) Credit for Residential Wind Property.--
(1) In general.--Section 25D(a) is amended by striking
``and'' at the end of paragraph (2), by striking the period at
the end of paragraph (3) and inserting ``, and'', and by adding
at the end the following new paragraph:
``(4) 30 percent of the qualified small wind energy
property expenditures made by the taxpayer during such year.''.
(2) Limitation.--Section 25D(b)(1) is amended by striking
``and'' at the end of subparagraph (B), by striking the period
at the end of subparagraph (C) and inserting ``, and'', and by
adding at the end the following new subparagraph:
``(D) $500 with respect to each half kilowatt of
capacity (not to exceed $4,000) of wind turbines for
which qualified small wind energy property expenditures
are made.''.
(3) Qualified small wind energy property expenditures.--
(A) In general.--Section 25D(d) is amended by
adding at the end the following new paragraph:
``(4) Qualified small wind energy property expenditure.--
The term `qualified small wind energy property expenditure'
means an expenditure for property which uses a wind turbine to
generate electricity for use in connection with a dwelling unit
located in the United States and used as a residence by the
taxpayer.''.
(B) No double benefit.--Section 45(d)(1) is amended
by adding at the end the following new sentence: ``Such
term shall not include any facility with respect to
which any qualified small wind energy property
expenditure (as defined in subsection (d)(4) of section
25D) is taken into account in determining the credit
under such section.''.
(4) Maximum expenditures in case of joint occupancy.--
Section 25D(e)(4)(A) is amended by striking ``and'' at the end
of clause (ii), by striking the period at the end of clause
(iii) and inserting ``, and'', and by adding at the end the
following new clause:
``(iv) $1,667 in the case of each half
kilowatt of capacity (not to exceed $13,333) of
wind turbines for which qualified small wind
energy property expenditures are made.''.
(d) Credit for Geothermal Heat pump Systems.--
(1) In general.--Section 25D(a), as amended by subsection
(c), is amended by striking ``and'' at the end of paragraph
(3), by striking the period at the end of paragraph (4) and
inserting ``, and'', and by adding at the end the following new
paragraph:
``(5) 30 percent of the qualified geothermal heat pump
property expenditures made by the taxpayer during such year.''.
(2) Limitation.--Section 25D(b)(1), as amended by
subsection (c), is amended by striking ``and'' at the end of
subparagraph (C), by striking the period at the end of
subparagraph (D) and inserting ``, and'', and by adding at the
end the following new subparagraph:
``(E) $2,000 with respect to any qualified
geothermal heat pump property expenditures.''.
(3) Qualified geothermal heat pump property expenditure.--
Section 25D(d), as amended by subsection (c), is amended by
adding at the end the following new paragraph:
``(5) Qualified geothermal heat pump property
expenditure.--
``(A) In general.--The term `qualified geothermal
heat pump property expenditure' means an expenditure
for qualified geothermal heat pump property installed
on or in connection with a dwelling unit located in the
United States and used as a residence by the taxpayer.
``(B) Qualified geothermal heat pump property.--The
term `qualified geothermal heat pump property' means
any equipment which--
``(i) uses the ground or ground water as a
thermal energy source to heat the dwelling unit
referred to in subparagraph (A) or as a thermal
energy sink to cool such dwelling unit, and
``(ii) meets the requirements of the Energy
Star program which are in effect at the time
that the expenditure for such equipment is
made.''.
(4) Maximum expenditures in case of joint occupancy.--
Section 25D(e)(4)(A), as amended by subsection (c), is amended
by striking ``and'' at the end of clause (iii), by striking the
period at the end of clause (iv) and inserting ``, and'', and
by adding at the end the following new clause:
``(v) $6,667 in the case of any qualified
geothermal heat pump property expenditures.''.
(e) Credit Allowed Against Alternative Minimum Tax.--
(1) In general.--Subsection (c) of section 25D is amended
to read as follows:
``(c) Limitation Based on Amount of Tax; Carryforward of Unused
Credit.--
``(1) Limitation based on amount of tax.--In the case of a
taxable year to which section 26(a)(2) does not apply, the
credit allowed under subsection (a) for the taxable year shall
not exceed the excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under this
subpart (other than this section) and section 27 for
the taxable year.
``(2) Carryforward of unused credit.--
``(A) Rule for years in which all personal credits
allowed against regular and alternative minimum tax.--
In the case of a taxable year to which section 26(a)(2)
applies, if the credit allowable under subsection (a)
exceeds the limitation imposed by section 26(a)(2) for
such taxable year reduced by the sum of the credits
allowable under this subpart (other than this section),
such excess shall be carried to the succeeding taxable
year and added to the credit allowable under subsection
(a) for such succeeding taxable year.
``(B) Rule for other years.--In the case of a
taxable year to which section 26(a)(2) does not apply,
if the credit allowable under subsection (a) exceeds
the limitation imposed by paragraph (1) for such
taxable year, such excess shall be carried to the
succeeding taxable year and added to the credit
allowable under subsection (a) for such succeeding
taxable year.''.
(2) Conforming amendments.--
(A) Section 23(b)(4)(B) is amended by inserting
``and section 25D'' after ``this section''.
(B) Section 24(b)(3)(B) is amended by striking
``and 25B'' and inserting ``, 25B, and 25D''.
(C) Section 25B(g)(2) is amended by striking
``section 23'' and inserting ``sections 23 and 25D''.
(D) Section 26(a)(1) is amended by striking ``and
25B'' and inserting ``25B, and 25D''.
(f) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2007.
(2) Solar electric property limitation.--The amendments
made by subsection (b) shall apply to taxable years beginning
after December 31, 2008.
(3) Application of egtrra sunset.--The amendments made by
subparagraphs (A) and (B) of subsection (e)(2) shall be subject
to title IX of the Economic Growth and Tax Relief
Reconciliation Act of 2001 in the same manner as the provisions
of such Act to which such amendments relate.
SEC. 107. NEW CLEAN RENEWABLE ENERGY BONDS.
(a) In General.--Subpart I of part IV of subchapter A of chapter 1
is amended by adding at the end the following new section:
``SEC. 54C. NEW CLEAN RENEWABLE ENERGY BONDS.
``(a) New Clean Renewable Energy Bond.--For purposes of this
subpart, the term `new clean renewable energy bond' means any bond
issued as part of an issue if--
``(1) 100 percent of the available project proceeds of such
issue are to be used for capital expenditures incurred by
governmental bodies, public power providers, or cooperative
electric companies for one or more qualified renewable energy
facilities,
``(2) the bond is issued by a qualified issuer, and
``(3) the issuer designates such bond for purposes of this
section.
``(b) Reduced Credit Amount.--The annual credit determined under
section 54A(b) with respect to any new clean renewable energy bond
shall be 70 percent of the amount so determined without regard to this
subsection.
``(c) Limitation on Amount of Bonds Designated.--
``(1) In general.--The maximum aggregate face amount of
bonds which may be designated under subsection (a) by any
issuer shall not exceed the limitation amount allocated under
this subsection to such issuer.
``(2) National limitation on amount of bonds designated.--
There is a national new clean renewable energy bond limitation
of $800,000,000 which shall be allocated by the Secretary as
provided in paragraph (3), except that--
``(A) not more than 33\1/3\ percent thereof may be
allocated to qualified projects of public power
providers,
``(B) not more than 33\1/3\ percent thereof may be
allocated to qualified projects of governmental bodies,
and
``(C) not more than 33\1/3\ percent thereof may be
allocated to qualified projects of cooperative electric
companies.
``(3) Method of allocation.--
``(A) Allocation among public power providers.--
After the Secretary determines the qualified projects
of public power providers which are appropriate for
receiving an allocation of the national new clean
renewable energy bond limitation, the Secretary shall,
to the maximum extent practicable, make allocations
among such projects in such manner that the amount
allocated to each such project bears the same ratio to
the cost of such project as the limitation under
paragraph (2)(A) bears to the cost of all such
projects.
``(B) Allocation among governmental bodies and
cooperative electric companies.--The Secretary shall
make allocations of the amount of the national new
clean renewable energy bond limitation described in
paragraphs (2)(B) and (2)(C) among qualified projects
of governmental bodies and cooperative electric
companies, respectively, in such manner as the
Secretary determines appropriate.
``(d) Definitions.--For purposes of this section--
``(1) Qualified renewable energy facility.--The term
`qualified renewable energy facility' means a qualified
facility (as determined under section 45(d) without regard to
paragraphs (8) and (10) thereof and to any placed in service
date) owned by a public power provider, a governmental body, or
a cooperative electric company.
``(2) Public power provider.--The term `public power
provider' means a State utility with a service obligation, as
such terms are defined in section 217 of the Federal Power Act
(as in effect on the date of the enactment of this paragraph).
``(3) Governmental body.--The term `governmental body'
means any State or Indian tribal government, or any political
subdivision thereof.
``(4) Cooperative electric company.--The term `cooperative
electric company' means a mutual or cooperative electric
company described in section 501(c)(12) or section
1381(a)(2)(C).
``(5) Clean renewable energy bond lender.--The term `clean
renewable energy bond lender' means a lender which is a
cooperative which is owned by, or has outstanding loans to, 100
or more cooperative electric companies and is in existence on
February 1, 2002, and shall include any affiliated entity which
is controlled by such lender.
``(6) Qualified issuer.--The term `qualified issuer' means
a public power provider, a cooperative electric company, a
governmental body, a clean renewable energy bond lender, or a
not-for-profit electric utility which has received a loan or
loan guarantee under the Rural Electrification Act.''.
(b) Conforming Amendments.--
(1) Paragraph (1) of section 54A(d) is amended to read as
follows:
``(1) Qualified tax credit bond.--The term `qualified tax
credit bond' means--
``(A) a qualified forestry conservation bond, or
``(B) a new clean renewable energy bond,
which is part of an issue that meets requirements of paragraphs
(2), (3), (4), (5), and (6).''.
(2) Subparagraph (C) of section 54A(d)(2) is amended to
read as follows:
``(C) Qualified purpose.--For purposes of this
paragraph, the term `qualified purpose' means--
``(i) in the case of a qualified forestry
conservation bond, a purpose specified in
section 54B(e), and
``(ii) in the case of a new clean renewable
energy bond, a purpose specified in section
54C(a)(1).''.
(3) The table of sections for subpart I of part IV of
subchapter A of chapter 1 is amended by adding at the end the
following new item:
``Sec. 54C. Qualified clean renewable energy bonds.''.
(c) Extension for Clean Renewable Energy Bonds.--Subsection (m) of
section 54 is amended by striking ``December 31, 2008'' and inserting
``December 31, 2009''.
(d) Effective Date.--The amendments made by this section shall
apply to obligations issued after the date of the enactment of this
Act.
SEC. 108. CREDIT FOR STEEL INDUSTRY FUEL.
(a) Treatment as Refined Coal.--
(1) In general.--Subparagraph (A) of section 45(c)(7) of
the Internal Revenue Code of 1986 (relating to refined coal),
as amended by this Act, is amended to read as follows:
``(A) In general.--The term `refined coal' means a
fuel--
``(i) which--
``(I) is a liquid, gaseous, or
solid fuel produced from coal
(including lignite) or high carbon fly
ash, including such fuel used as a
feedstock,
``(II) is sold by the taxpayer with
the reasonable expectation that it will
be used for purpose of producing steam,
``(III) is certified by the
taxpayer as resulting (when used in the
production of steam) in a qualified
emission reduction, and
``(IV) is produced in such a manner
as to result in an increase of at least
50 percent in the market value of the
refined coal (excluding any increase
caused by materials combined or added
during the production process), as
compared to the value of the feedstock
coal, or
``(ii) which is steel industry fuel.''.
(2) Steel industry fuel defined.--Paragraph (7) of section
45(c) of such Code is amended by adding at the end the
following new subparagraph:
``(C) Steel industry fuel.--
``(i) In general.--The term `steel industry
fuel' means a fuel which--
``(I) is produced through a process
of liquifying coal waste sludge and
distributing it on coal, and
``(II) is used as a feedstock for
the manufacture of coke.
``(ii) Coal waste sludge.--The term `coal
waste sludge' means the tar decanter sludge and
related byproducts of the coking process,
including such materials that have been stored
in ground, in tanks and in lagoons, that have
been treated as hazardous wastes under
applicable Federal environmental rules absent
liquefaction and processing with coal into a
feedstock for the manufacture of coke.''.
(b) Credit Amount.--
(1) In general.--Paragraph (8) of section 45(e) of the
Internal Revenue Code of 1986 (relating to refined coal
production facilities) is amended by adding at the end the
following new subparagraph
``(D) Special rule for steel industry fuel.--
``(i) In general.--In the case of a
taxpayer who produces steel industry fuel--
``(I) this paragraph shall be
applied separately with respect to
steel industry fuel and other refined
coal, and
``(II) in applying this paragraph
to steel industry fuel, the
modifications in clause (ii) shall
apply.
``(ii) Modifications.--
``(I) Credit amount.--Subparagraph
(A) shall be applied by substituting
`$2 per barrel-of-oil equivalent' for
`$4.375 per ton'.
``(II) Credit period.--In lieu of
the 10-year period referred to in
clauses (i) and (ii)(II) of
subparagraph (A), the credit period
shall be the period beginning on the
later of the date such facility was
originally placed in service, the date
the modifications described in clause
(iii) were placed in service, or
October 1, 2008, and ending on the
later of December 31, 2009, or the date
which is 1 year after the date such
facility or the modifications described
in clause (iii) were placed in service.
``(III) No phaseout.--Subparagraph
(B) shall not apply.
``(iii) Modifications.--The modifications
described in this clause are modifications to
an existing facility which allow such facility
to produce steel industry fuel.
``(iv) Barrel-of-oil equivalent.--For
purposes of this subparagraph, a barrel-of-oil
equivalent is the amount of steel industry fuel
that has a Btu content of 5,800,000 Btus.''.
(2) Inflation adjustment.--Paragraph (2) of section 45(b)
of such Code is amended by inserting ``the $3 amount in
subsection (e)(8)(D)(ii)(I),'' after ``subsection (e)(8)(A),''.
(c) Termination.--Paragraph (8) of section 45(d) of the Internal
Revenue Code of 1986 (relating to refined coal production facility), as
amended by this Act, is amended to read as follows:
``(8) Refined coal production facility.--In the case of a
facility that produces refined coal, the term `refined coal
production facility' means--
``(A) with respect to a facility producing steel
industry fuel, any facility (or any modification to a
facility) which is placed in service before January 1,
2010, and
``(B) with respect to any other facility producing
refined coal, any facility placed in service after the
date of the enactment of the American Jobs Creation Act
of 2004 and before January 1, 2010.''.
(d) Coordination With Credit for Producing Fuel From a
Nonconventional Source.--
(1) In general.--Subparagraph (B) of section 45(e)(9) of
the Internal Revenue Code of 1986 is amended--
(A) by striking ``The term'' and inserting the
following:
``(i) In general.--The term'', and
(B) by adding at the end the following new clause:
``(ii) Exception for steel industry coal.--
In the case of a facility producing steel
industry fuel, clause (i) shall not apply to so
much of the refined coal produced at such
facility as is steel industry fuel.''.
(2) No double benefit.--Section 45K(g)(2) of such Code is
amended by adding at the end the following new subparagraph:
``(E) Coordination with section 45.--No credit
shall be allowed with respect to any qualified fuel
which is steel industry fuel (as defined in section
45(c)(7)) if a credit is allowed to the taxpayer for
such fuel under section 45.''.
(e) Effective Date.--The amendments made by this section shall
apply to fuel produced and sold after September 30, 2008.
SEC. 109. SPECIAL RULE TO IMPLEMENT FERC AND STATE ELECTRIC
RESTRUCTURING POLICY.
(a) Extension for Qualified Electric Utilities.--
(1) In general.--Paragraph (3) of section 451(i) is amended
by inserting ``(before January 1, 2010, in the case of a
qualified electric utility)'' after ``January 1, 2008''.
(2) Qualified electric utility.--Subsection (i) of section
451 is amended by redesignating paragraphs (6) through (10) as
paragraphs (7) through (11), respectively, and by inserting
after paragraph (5) the following new paragraph:
``(6) Qualified electric utility.--For purposes of this
subsection, the term `qualified electric utility' means a
person that, as of the date of the qualifying electric
transmission transaction, is vertically integrated, in that it
is both--
``(A) a transmitting utility (as defined in section
3(23) of the Federal Power Act (16 U.S.C. 796(23)))
with respect to the transmission facilities to which
the election under this subsection applies, and
``(B) an electric utility (as defined in section
3(22) of the Federal Power Act (16 U.S.C. 796(22))).''.
(b) Extension of Period for Transfer of Operational Control
Authorized by FERC.--Clause (ii) of section 451(i)(4)(B) is amended by
striking ``December 31, 2007'' and inserting ``the date which is 4
years after the close of the taxable year in which the transaction
occurs''.
(c) Property Located Outside the United States Not Treated as
Exempt Utility Property.--Paragraph (5) of section 451(i) is amended by
adding at the end the following new subparagraph:
``(C) Exception for property located outside the
united states.--The term `exempt utility property'
shall not include any property which is located outside
the United States.''.
(d) Effective Dates.--
(1) Extension.--The amendments made by subsection (a) shall
apply to transactions after December 31, 2007.
(2) Transfers of operational control.--The amendment made
by subsection (b) shall take effect as if included in section
909 of the American Jobs Creation Act of 2004.
(3) Exception for property located outside the united
states.--The amendment made by subsection (c) shall apply to
transactions after the date of the enactment of this Act.
Subtitle B--Carbon Mitigation and Coal Provisions
SEC. 111. EXPANSION AND MODIFICATION OF ADVANCED COAL PROJECT
INVESTMENT CREDIT.
(a) Modification of Credit Amount.--Section 48A(a) is amended by
striking ``and'' at the end of paragraph (1), by striking the period at
the end of paragraph (2) and inserting ``, and'', and by adding at the
end the following new paragraph:
``(3) 30 percent of the qualified investment for such
taxable year in the case of projects described in clause (iii)
of subsection (d)(3)(B).''.
(b) Expansion of Aggregate Credits.--Section 48A(d)(3)(A) is
amended by striking ``$1,300,000,000'' and inserting
``$2,550,000,000''.
(c) Authorization of Additional Projects.--
(1) In general.--Subparagraph (B) of section 48A(d)(3) is
amended to read as follows:
``(B) Particular projects.--Of the dollar amount in
subparagraph (A), the Secretary is authorized to
certify--
``(i) $800,000,000 for integrated
gasification combined cycle projects the
application for which is submitted during the
period described in paragraph (2)(A)(i),
``(ii) $500,000,000 for projects which use
other advanced coal-based generation
technologies the application for which is
submitted during the period described in
paragraph (2)(A)(i), and
``(iii) $1,250,000,000 for advanced coal-
based generation technology projects the
application for which is submitted during the
period described in paragraph (2)(A)(ii).''.
(2) Application period for additional projects.--
Subparagraph (A) of section 48A(d)(2) is amended to read as
follows:
``(A) Application period.--Each applicant for
certification under this paragraph shall submit an
application meeting the requirements of subparagraph
(B). An applicant may only submit an application--
``(i) for an allocation from the dollar
amount specified in clause (i) or (ii) of
paragraph (3)(B) during the 3-year period
beginning on the date the Secretary establishes
the program under paragraph (1), and
``(ii) for an allocation from the dollar
amount specified in paragraph (3)(B)(iii)
during the 3-year period beginning at the
earlier of the termination of the period
described in clause (i) or the date prescribed
by the Secretary.''.
(3) Capture and sequestration of carbon dioxide emissions
requirement.--
(A) In general.--Section 48A(e)(1) is amended by
striking ``and'' at the end of subparagraph (E), by
striking the period at the end of subparagraph (F) and
inserting ``; and'', and by adding at the end the
following new subparagraph:
``(G) in the case of any project the application
for which is submitted during the period described in
subsection (d)(2)(A)(ii), the project includes
equipment which separates and sequesters at least 65
percent (70 percent in the case of an application for
reallocated credits under subsection (d)(4)) of such
project's total carbon dioxide emissions.''.
(B) Highest priority for projects which sequester
carbon dioxide emissions.--Section 48A(e)(3) is amended
by striking ``and'' at the end of subparagraph
(A)(iii), by striking the period at the end of
subparagraph (B)(iii) and inserting ``, and'', and by
adding at the end the following new subparagraph:
``(C) give highest priority to projects with the
greatest separation and sequestration percentage of
total carbon dioxide emissions.''.
(C) Recapture of credit for failure to sequester.--
Section 48A is amended by adding at the end the
following new subsection:
``(i) Recapture of Credit for Failure To Sequester.--The Secretary
shall provide for recapturing the benefit of any credit allowable under
subsection (a) with respect to any project which fails to attain or
maintain the separation and sequestration requirements of subsection
(e)(1)(G).''.
(4) Additional priority for research partnerships.--Section
48A(e)(3)(B), as amended by paragraph (3)(B), is amended--
(A) by striking ``and'' at the end of clause (ii),
(B) by redesignating clause (iii) as clause (iv),
and
(C) by inserting after clause (ii) the following
new clause:
``(iii) applicant participants who have a
research partnership with an eligible
educational institution (as defined in section
529(e)(5)), and''.
(5) Clerical amendment.--Section 48A(e)(3) is amended by
striking ``integrated gasification combined cycle'' in the
heading and inserting ``certain''.
(d) Disclosure of Allocations.--Section 48A(d) is amended by adding
at the end the following new paragraph:
``(5) Disclosure of allocations.--The Secretary shall, upon
making a certification under this subsection or section 48B(d),
publicly disclose the identity of the applicant and the amount
of the credit certified with respect to such applicant.''.
(e) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
credits the application for which is submitted during the
period described in section 48A(d)(2)(A)(ii) of the Internal
Revenue Code of 1986 and which are allocated or reallocated
after the date of the enactment of this Act.
(2) Disclosure of allocations.--The amendment made by
subsection (d) shall apply to certifications made after the
date of the enactment of this Act.
(3) Clerical amendment.--The amendment made by subsection
(c)(5) shall take effect as if included in the amendment made
by section 1307(b) of the Energy Tax Incentives Act of 2005.
SEC. 112. EXPANSION AND MODIFICATION OF COAL GASIFICATION INVESTMENT
CREDIT.
(a) Modification of Credit Amount.--Section 48B(a) is amended by
inserting ``(30 percent in the case of credits allocated under
subsection (d)(1)(B))'' after ``20 percent''.
(b) Expansion of Aggregate Credits.--Section 48B(d)(1) is amended
by striking ``shall not exceed $350,000,000'' and all that follows and
inserting ``shall not exceed--
``(A) $350,000,000, plus
``(B) $250,000,000 for qualifying gasification
projects that include equipment which separates and
sequesters at least 75 percent of such project's total
carbon dioxide emissions.''.
(c) Recapture of Credit for Failure to Sequester.--Section 48B is
amended by adding at the end the following new subsection:
``(f) Recapture of Credit for Failure to Sequester.--The Secretary
shall provide for recapturing the benefit of any credit allowable under
subsection (a) with respect to any project which fails to attain or
maintain the separation and sequestration requirements for such project
under subsection (d)(1).''.
(d) Selection Priorities.--Section 48B(d) is amended by adding at
the end the following new paragraph:
``(4) Selection priorities.--In determining which
qualifying gasification projects to certify under this section,
the Secretary shall--
``(A) give highest priority to projects with the
greatest separation and sequestration percentage of
total carbon dioxide emissions, and
``(B) give high priority to applicant participants
who have a research partnership with an eligible
educational institution (as defined in section
529(e)(5)).''.
(e) Eligible Projects Include Transportation Grade Liquid Fuels.--
Section 48B(c)(7) (defining eligible entity) is amended by striking
``and'' at the end of subparagraph (F), by striking the period at the
end of subparagraph (G) and inserting ``, and'', and by adding at the
end the following new subparagraph:
``(H) transportation grade liquid fuels.''.
(f) Effective Date.--The amendments made by this section shall
apply to credits described in section 48B(d)(1)(B) of the Internal
Revenue Code of 1986 which are allocated or reallocated after the date
of the enactment of this Act.
SEC. 113. TEMPORARY INCREASE IN COAL EXCISE TAX; FUNDING OF BLACK LUNG
DISABILITY TRUST FUND.
(a) Extension of Temporary Increase.--Paragraph (2) of section
4121(e) is amended--
(1) by striking ``January 1, 2014'' in subparagraph (A) and
inserting ``December 31, 2018'', and
(2) by striking ``January 1 after 1981'' in subparagraph
(B) and inserting ``December 31 after 2007''.
(b) Restructuring of Trust Fund Debt.--
(1) Definitions.--For purposes of this subsection--
(A) Market value of the outstanding repayable
advances, plus accrued interest.--The term ``market
value of the outstanding repayable advances, plus
accrued interest'' means the present value (determined
by the Secretary of the Treasury as of the refinancing
date and using the Treasury rate as the discount rate)
of the stream of principal and interest payments
derived assuming that each repayable advance that is
outstanding on the refinancing date is due on the 30th
anniversary of the end of the fiscal year in which the
advance was made to the Trust Fund, and that all such
principal and interest payments are made on September
30 of the applicable fiscal year.
(B) Refinancing date.--The term ``refinancing
date'' means the date occurring 2 days after the
enactment of this Act.
(C) Repayable advance.--The term ``repayable
advance'' means an amount that has been appropriated to
the Trust Fund in order to make benefit payments and
other expenditures that are authorized under section
9501 of the Internal Revenue Code of 1986 and are
required to be repaid when the Secretary of the
Treasury determines that monies are available in the
Trust Fund for such purpose.
(D) Treasury rate.--The term ``Treasury rate''
means a rate determined by the Secretary of the
Treasury, taking into consideration current market
yields on outstanding marketable obligations of the
United States of comparable maturities.
(E) Treasury 1-year rate.--The term ``Treasury 1-
year rate'' means a rate determined by the Secretary of
the Treasury, taking into consideration current market
yields on outstanding marketable obligations of the
United States with remaining periods to maturity of
approximately 1 year, to have been in effect as of the
close of business 1 business day prior to the date on
which the Trust Fund issues obligations to the
Secretary of the Treasury under paragraph (2)(B).
(2) Refinancing of outstanding principal of repayable
advances and unpaid interest on such advances.--
(A) Transfer to general fund.--On the refinancing
date, the Trust Fund shall repay the market value of
the outstanding repayable advances, plus accrued
interest, by transferring into the general fund of the
Treasury the following sums:
(i) The proceeds from obligations that the
Trust Fund shall issue to the Secretary of the
Treasury in such amounts as the Secretaries of
Labor and the Treasury shall determine and
bearing interest at the Treasury rate, and that
shall be in such forms and denominations and be
subject to such other terms and conditions,
including maturity, as the Secretary of the
Treasury shall prescribe.
(ii) All, or that portion, of the
appropriation made to the Trust Fund pursuant
to paragraph (3) that is needed to cover the
difference defined in that paragraph.
(B) Repayment of obligations.--In the event that
the Trust Fund is unable to repay the obligations that
it has issued to the Secretary of the Treasury under
subparagraph (A)(i) and this subparagraph, or is unable
to make benefit payments and other authorized
expenditures, the Trust Fund shall issue obligations to
the Secretary of the Treasury in such amounts as may be
necessary to make such repayments, payments, and
expenditures, with a maturity of 1 year, and bearing
interest at the Treasury 1-year rate. These obligations
shall be in such forms and denominations and be subject
to such other terms and conditions as the Secretary of
the Treasury shall prescribe.
(C) Authority to issue obligations.--The Trust Fund
is authorized to issue obligations to the Secretary of
the Treasury under subparagraphs (A)(i) and (B). The
Secretary of the Treasury is authorized to purchase
such obligations of the Trust Fund. For the purposes of
making such purchases, the Secretary of the Treasury
may use as a public debt transaction the proceeds from
the sale of any securities issued under chapter 31 of
title 31, United States Code, and the purposes for
which securities may be issued under such chapter are
extended to include any purchase of such Trust Fund
obligations under this subparagraph.
(3) One-time appropriation.--There is hereby appropriated
to the Trust Fund an amount sufficient to pay to the general
fund of the Treasury the difference between--
(A) the market value of the outstanding repayable
advances, plus accrued interest; and
(B) the proceeds from the obligations issued by the
Trust Fund to the Secretary of the Treasury under
paragraph (2)(A)(i).
(4) Prepayment of trust fund obligations.--The Trust Fund
is authorized to repay any obligation issued to the Secretary
of the Treasury under subparagraphs (A)(i) and (B) of paragraph
(2) prior to its maturity date by paying a prepayment price
that would, if the obligation being prepaid (including all
unpaid interest accrued thereon through the date of prepayment)
were purchased by a third party and held to the maturity date
of such obligation, produce a yield to the third-party
purchaser for the period from the date of purchase to the
maturity date of such obligation substantially equal to the
Treasury yield on outstanding marketable obligations of the
United States having a comparable maturity to this period.
SEC. 114. SPECIAL RULES FOR REFUND OF THE COAL EXCISE TAX TO CERTAIN
COAL PRODUCERS AND EXPORTERS.
(a) Refund.--
(1) Coal producers.--
(A) In general.--Notwithstanding subsections (a)(1)
and (c) of section 6416 and section 6511 of the
Internal Revenue Code of 1986, if--
(i) a coal producer establishes that such
coal producer, or a party related to such coal
producer, exported coal produced by such coal
producer to a foreign country or shipped coal
produced by such coal producer to a possession
of the United States, or caused such coal to be
exported or shipped, the export or shipment of
which was other than through an exporter who
meets the requirements of paragraph (2),
(ii) such coal producer filed an excise tax
return on or after October 1, 1990, and on or
before the date of the enactment of this Act,
and
(iii) such coal producer files a claim for
refund with the Secretary not later than the
close of the 30-day period beginning on the
date of the enactment of this Act,
then the Secretary shall pay to such coal producer an
amount equal to the tax paid under section 4121 of such
Code on such coal exported or shipped by the coal
producer or a party related to such coal producer, or
caused by the coal producer or a party related to such
coal producer to be exported or shipped.
(B) Special rules for certain taxpayers.--For
purposes of this section--
(i) In general.--If a coal producer or a
party related to a coal producer has received a
judgment described in clause (iii), such coal
producer shall be deemed to have established
the export of coal to a foreign country or
shipment of coal to a possession of the United
States under subparagraph (A)(i).
(ii) Amount of payment.--If a taxpayer
described in clause (i) is entitled to a
payment under subparagraph (A), the amount of
such payment shall be reduced by any amount
paid pursuant to the judgment described in
clause (iii).
(iii) Judgment described.--A judgment is
described in this subparagraph if such
judgment--
(I) is made by a court of competent
jurisdiction within the United States,
(II) relates to the
constitutionality of any tax paid on
exported coal under section 4121 of the
Internal Revenue Code of 1986, and
(III) is in favor of the coal
producer or the party related to the
coal producer.
(2) Exporters.--Notwithstanding subsections (a)(1) and (c)
of section 6416 and section 6511 of the Internal Revenue Code
of 1986, and a judgment described in paragraph (1)(B)(iii) of
this subsection, if--
(A) an exporter establishes that such exporter
exported coal to a foreign country or shipped coal to a
possession of the United States, or caused such coal to
be so exported or shipped,
(B) such exporter filed a tax return on or after
October 1, 1990, and on or before the date of the
enactment of this Act, and
(C) such exporter files a claim for refund with the
Secretary not later than the close of the 30-day period
beginning on the date of the enactment of this Act,
then the Secretary shall pay to such exporter an amount equal
to $0.825 per ton of such coal exported by the exporter or
caused to be exported or shipped, or caused to be exported or
shipped, by the exporter.
(b) Limitations.--Subsection (a) shall not apply with respect to
exported coal if a settlement with the Federal Government has been made
with and accepted by, the coal producer, a party related to such coal
producer, or the exporter, of such coal, as of the date that the claim
is filed under this section with respect to such exported coal. For
purposes of this subsection, the term ``settlement with the Federal
Government'' shall not include any settlement or stipulation entered
into as of the date of the enactment of this Act, the terms of which
contemplate a judgment concerning which any party has reserved the
right to file an appeal, or has filed an appeal.
(c) Subsequent Refund Prohibited.--No refund shall be made under
this section to the extent that a credit or refund of such tax on such
exported or shipped coal has been paid to any person.
(d) Definitions.--For purposes of this section--
(1) Coal producer.--The term ``coal producer'' means the
person in whom is vested ownership of the coal immediately
after the coal is severed from the ground, without regard to
the existence of any contractual arrangement for the sale or
other disposition of the coal or the payment of any royalties
between the producer and third parties. The term includes any
person who extracts coal from coal waste refuse piles or from
the silt waste product which results from the wet washing (or
similar processing) of coal.
(2) Exporter.--The term ``exporter'' means a person, other
than a coal producer, who does not have a contract, fee
arrangement, or any other agreement with a producer or seller
of such coal to export or ship such coal to a third party on
behalf of the producer or seller of such coal and--
(A) is indicated in the shipper's export
declaration or other documentation as the exporter of
record, or
(B) actually exported such coal to a foreign
country or shipped such coal to a possession of the
United States, or caused such coal to be so exported or
shipped.
(3) Related party.--The term ``a party related to such coal
producer'' means a person who--
(A) is related to such coal producer through any
degree of common management, stock ownership, or voting
control,
(B) is related (within the meaning of section
144(a)(3) of the Internal Revenue Code of 1986) to such
coal producer, or
(C) has a contract, fee arrangement, or any other
agreement with such coal producer to sell such coal to
a third party on behalf of such coal producer.
(4) Secretary.--The term ``Secretary'' means the Secretary
of Treasury or the Secretary's designee.
(e) Timing of Refund.--With respect to any claim for refund filed
pursuant to this section, the Secretary shall determine whether the
requirements of this section are met not later than 180 days after such
claim is filed. If the Secretary determines that the requirements of
this section are met, the claim for refund shall be paid not later than
180 days after the Secretary makes such determination.
(f) Interest.--Any refund paid pursuant to this section shall be
paid by the Secretary with interest from the date of overpayment
determined by using the overpayment rate and method under section 6621
of the Internal Revenue Code of 1986.
(g) Denial of Double Benefit.--The payment under subsection (a)
with respect to any coal shall not exceed--
(1) in the case of a payment to a coal producer, the amount
of tax paid under section 4121 of the Internal Revenue Code of
1986 with respect to such coal by such coal producer or a party
related to such coal producer, and
(2) in the case of a payment to an exporter, an amount
equal to $0.825 per ton with respect to such coal exported by
the exporter or caused to be exported by the exporter.
(h) Application of Section.--This section applies only to claims on
coal exported or shipped on or after October 1, 1990, through the date
of the enactment of this Act.
(i) Standing Not Conferred.--
(1) Exporters.--With respect to exporters, this section
shall not confer standing upon an exporter to commence, or
intervene in, any judicial or administrative proceeding
concerning a claim for refund by a coal producer of any Federal
or State tax, fee, or royalty paid by the coal producer.
(2) Coal producers.--With respect to coal producers, this
section shall not confer standing upon a coal producer to
commence, or intervene in, any judicial or administrative
proceeding concerning a claim for refund by an exporter of any
Federal or State tax, fee, or royalty paid by the producer and
alleged to have been passed on to an exporter.
SEC. 115. TAX CREDIT FOR CARBON DIOXIDE SEQUESTRATION.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
(relating to business credits) is amended by adding at the end the
following new section:
``SEC. 45Q. CREDIT FOR CARBON DIOXIDE SEQUESTRATION.
``(a) General Rule.--For purposes of section 38, the carbon dioxide
sequestration credit for any taxable year is an amount equal to the sum
of--
``(1) $20 per metric ton of qualified carbon dioxide which
is--
``(A) captured by the taxpayer at a qualified
facility, and
``(B) disposed of by the taxpayer in secure
geological storage, and
``(2) $10 per metric ton of qualified carbon dioxide which
is--
``(A) captured by the taxpayer at a qualified
facility, and
``(B) used by the taxpayer as a tertiary injectant
in a qualified enhanced oil or natural gas recovery
project.
``(b) Qualified Carbon Dioxide.--For purposes of this section--
``(1) In general.--The term `qualified carbon dioxide'
means carbon dioxide captured from an industrial source which--
``(A) would otherwise be released into the
atmosphere as industrial emission of greenhouse gas,
and
``(B) is measured at the source of capture and
verified at the point of disposal or injection.
``(2) Recycled carbon dioxide.--The term `qualified carbon
dioxide' includes the initial deposit of captured carbon
dioxide used as a tertiary injectant. Such term does not
include carbon dioxide that is re-captured, recycled, and re-
injected as part of the enhanced oil and natural gas recovery
process.
``(c) Qualified Facility.--For purposes of this section, the term
`qualified facility' means any industrial facility--
``(1) which is owned by the taxpayer,
``(2) at which carbon capture equipment is placed in
service, and
``(3) which captures not less than 500,000 metric tons of
carbon dioxide during the taxable year.
``(d) Special Rules and Other Definitions.--For purposes of this
section--
``(1) Only carbon dioxide captured and disposed of or used
within the united states taken into account.--The credit under
this section shall apply only with respect to qualified carbon
dioxide the capture and disposal or use of which is within--
``(A) the United States (within the meaning of
section 638(1)), or
``(B) a possession of the United States (within the
meaning of section 638(2)).
``(2) Secure geological storage.--The Secretary, in
consultation with the Administrator of the Environmental
Protection Agency, shall establish regulations for determining
adequate security measures for the geological storage of carbon
dioxide under subsection (a)(1)(B) such that the carbon dioxide
does not escape into the atmosphere. Such term shall include
storage at deep saline formations and unminable coal seems
under such conditions as the Secretary may determine under such
regulations.
``(3) Tertiary injectant.--The term `tertiary injectant'
has the same meaning as when used within section 193(b)(1).
``(4) Qualified enhanced oil or natural gas recovery
project.--The term `qualified enhanced oil or natural gas
recovery project' has the meaning given the term `qualified
enhanced oil recovery project' by section 43(c)(2), by
substituting `crude oil or natural gas' for `crude oil' in
subparagraph (A)(i) thereof.
``(5) Credit attributable to taxpayer.--Any credit under
this section shall be attributable to the person that captures
and physically or contractually ensures the disposal of or the
use as a tertiary injectant of the qualified carbon dioxide,
except to the extent provided in regulations prescribed by the
Secretary.
``(6) Recapture.--The Secretary shall, by regulations,
provide for recapturing the benefit of any credit allowable
under subsection (a) with respect to any qualified carbon
dioxide which ceases to be captured, disposed of, or used as a
tertiary injectant in a manner consistent with the requirements
of this section.
``(7) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2009, there shall be
substituted for each dollar amount contained in subsection (a)
an amount equal to the product of--
``(A) such dollar amount, multiplied by
``(B) the inflation adjustment factor for such
calendar year determined under section 43(b)(3)(B) for
such calendar year, determined by substituting `2008'
for `1990'.
``(e) Application of Section.--The credit under this section shall
apply with respect to qualified carbon dioxide before the end of the
calendar year in which the Secretary, in consultation with the
Administrator of the Environmental Protection Agency, certifies that
75,000,000 metric tons of qualified carbon dioxide have been captured
and disposed of or used as a tertiary injectant.''.
(b) Conforming Amendment.--Section 38(b) (relating to general
business credit) is amended by striking ``plus'' at the end of
paragraph (32), by striking the period at the end of paragraph (33) and
inserting ``, plus'', and by adding at the end of following new
paragraph:
``(34) the carbon dioxide sequestration credit determined
under section 45Q(a).''.
(c) Clerical Amendment.--The table of sections for subpart B of
part IV of subchapter A of chapter 1 (relating to other credits) is
amended by adding at the end the following new section:
``Sec. 45Q. Credit for carbon dioxide sequestration.''.
(d) Effective Date.--The amendments made by this section shall
apply to carbon dioxide captured after the date of the enactment of
this Act.
SEC. 116. CERTAIN INCOME AND GAINS RELATING TO INDUSTRIAL SOURCE CARBON
DIOXIDE TREATED AS QUALIFYING INCOME FOR PUBLICLY TRADED
PARTNERSHIPS.
(a) In General.--Subparagraph (E) of section 7704(d)(1) (defining
qualifying income) is amended by inserting ``or industrial source
carbon dioxide'' after ``timber)''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act, in taxable years
ending after such date.
SEC. 117. CARBON AUDIT OF THE TAX CODE.
(a) Study.--The Secretary of the Treasury shall enter into an
agreement with the National Academy of Sciences to undertake a
comprehensive review of the Internal Revenue Code of 1986 to identify
the types of and specific tax provisions that have the largest effects
on carbon and other greenhouse gas emissions and to estimate the
magnitude of those effects.
(b) Report.--Not later than 2 years after the date of enactment of
this Act, the National Academy of Sciences shall submit to Congress a
report containing the results of study authorized under this section.
(c) Authorization of Appropriations.--There is authorized to be
appropriated to carry out this section $1,500,000 for the period of
fiscal years 2009 and 2010.
TITLE II--TRANSPORTATION AND DOMESTIC FUEL SECURITY PROVISIONS
SEC. 201. INCLUSION OF CELLULOSIC BIOFUEL IN BONUS DEPRECIATION FOR
BIOMASS ETHANOL PLANT PROPERTY.
(a) In General.--Paragraph (3) of section 168(l) is amended to read
as follows:
``(3) Cellulosic biofuel.--The term `cellulosic biofuel'
means any liquid fuel which is produced from any
lignocellulosic or hemicellulosic matter that is available on a
renewable or recurring basis.''.
(b) Conforming Amendments.--Subsection (l) of section 168 is
amended--
(1) by striking ``cellulosic biomass ethanol'' each place
it appears and inserting ``cellulosic biofuel'',
(2) by striking ``Cellulosic Biomass Ethanol'' in the
heading of such subsection and inserting ``Cellulosic
Biofuel'', and
(3) by striking ``cellulosic biomass ethanol'' in the
heading of paragraph (2) thereof and inserting ``cellulosic
biofuel''.
(c) Effective Date.--The amendments made by this section shall
apply to property placed in service after the date of the enactment of
this Act, in taxable years ending after such date.
SEC. 202. CREDITS FOR BIODIESEL AND RENEWABLE DIESEL.
(a) In General.--Sections 40A(g), 6426(c)(6), and 6427(e)(5)(B) are
each amended by striking ``December 31, 2008'' and inserting ``December
31, 2009''.
(b) Increase in Rate of Credit.--
(1) Income tax credit.--Paragraphs (1)(A) and (2)(A) of
section 40A(b) are each amended by striking ``50 cents'' and
inserting ``$1.00''.
(2) Excise tax credit.--Paragraph (2) of section 6426(c) is
amended to read as follows:
``(2) Applicable amount.--For purposes of this subsection,
the applicable amount is $1.00.''.
(3) Conforming amendments.--
(A) Subsection (b) of section 40A is amended by
striking paragraph (3) and by redesignating paragraphs
(4) and (5) as paragraphs (3) and (4), respectively.
(B) Paragraph (2) of section 40A(f) is amended to
read as follows:
``(2) Exception.--Subsection (b)(4) shall not apply with
respect to renewable diesel.''.
(C) Paragraphs (2) and (3) of section 40A(e) are
each amended by striking ``subsection (b)(5)(C)'' and
inserting ``subsection (b)(4)(C)''.
(D) Clause (ii) of section 40A(d)(3)(C) is amended
by striking ``subsection (b)(5)(B)'' and inserting
``subsection (b)(4)(B)''.
(c) Uniform Treatment of Diesel Produced From Biomass.--Paragraph
(3) of section 40A(f) is amended--
(1) by striking ``diesel fuel'' and inserting ``liquid
fuel'',
(2) by striking ``using a thermal depolymerization
process'', and
(3) by inserting ``, or other equivalent standard approved
by the Secretary'' after ``D396''.
(d) Coproduction of Renewable Diesel With Petroleum Feedstock.--
(1) In general.--Paragraph (3) of section 40A(f) is amended
by adding at the end the following new sentences: ``Such term
does not include any fuel derived from coprocessing biomass
with a feedstock which is not biomass. For purposes of this
paragraph, the term `biomass' has the meaning given such term
by section 45K(c)(3).''.
(2) Conforming amendment.--Paragraph (3) of section 40A(f)
is amended by striking ``(as defined in section 45K(c)(3))''.
(e) Eligibility of Certain Aviation Fuel.--Subsection (f) of
section 40A (relating to renewable diesel) is amended by adding at the
end the following new paragraph:
``(4) Certain aviation fuel.--
``(A) In general.--Except as provided in the last 3
sentences of paragraph (3), the term `renewable diesel'
shall include fuel derived from biomass which meets the
requirements of a Department of Defense specification
for military jet fuel or an American Society of Testing
and Materials specification for aviation turbine fuel.
``(B) Application of mixture credits.--In the case
of fuel which is treated as renewable diesel solely by
reason of subparagraph (A), subsection (b)(1) and
section 6426(c) shall be applied with respect to such
fuel by treating kerosene as though it were diesel
fuel.''.
(f) Modification Relating to Definition of Agri-Biodiesel.--
Paragraph (2) of section 40A(d) (relating to agri-biodiesel) is amended
by striking ``and mustard seeds'' and inserting ``mustard seeds, and
camelina''.
(g) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
fuel produced, and sold or used, after December 31, 2008.
(2) Coproduction of renewable diesel with petroleum
feedstock.--The amendment made by subsection (d) shall apply to
fuel produced, and sold or used, after the date of the
enactment of this Act.
SEC. 203. CLARIFICATION THAT CREDITS FOR FUEL ARE DESIGNED TO PROVIDE
AN INCENTIVE FOR UNITED STATES PRODUCTION.
(a) Alcohol Fuels Credit.--Subsection (d) of section 40 is amended
by adding at the end the following new paragraph:
``(7) Limitation to alcohol with connection to the united
states.--No credit shall be determined under this section with
respect to any alcohol which is produced outside the United
States for use as a fuel outside the United States. For
purposes of this paragraph, the term `United States' includes
any possession of the United States.''.
(b) Biodiesel Fuels Credit.--Subsection (d) of section 40A is
amended by adding at the end the following new paragraph:
``(5) Limitation to biodiesel with connection to the united
states.--No credit shall be determined under this section with
respect to any biodiesel which is produced outside the United
States for use as a fuel outside the United States. For
purposes of this paragraph, the term `United States' includes
any possession of the United States.''.
(c) Excise Tax Credit.--
(1) In general.--Section 6426 is amended by adding at the
end the following new subsection:
``(i) Limitation to Fuels With Connection to the United States.--
``(1) Alcohol.--No credit shall be determined under this
section with respect to any alcohol which is produced outside
the United States for use as a fuel outside the United States.
``(2) Biodiesel and alternative fuels.--No credit shall be
determined under this section with respect to any biodiesel or
alternative fuel which is produced outside the United States
for use as a fuel outside the United States.
For purposes of this subsection, the term `United States' includes any
possession of the United States.''.
(2) Conforming amendment.--Subsection (e) of section 6427
is amended by redesignating paragraph (5) as paragraph (6) and
by inserting after paragraph (4) the following new paragraph:
``(5) Limitation to fuels with connection to the united
states.--No amount shall be payable under paragraph (1) or (2)
with respect to any mixture or alternative fuel if credit is
not allowed with respect to such mixture or alternative fuel by
reason of section 6426(i).''.
(d) Effective Date.--The amendments made by this section shall
apply to claims for credit or payment made on or after May 15, 2008.
SEC. 204. EXTENSION AND MODIFICATION OF ALTERNATIVE FUEL CREDIT.
(a) Extension.--
(1) Alternative fuel credit.--Paragraph (4) of section
6426(d) (relating to alternative fuel credit) is amended by
striking ``September 30, 2009'' and inserting ``December 31,
2009''.
(2) Alternative fuel mixture credit.--Paragraph (3) of
section 6426(e) (relating to alternative fuel mixture credit)
is amended by striking ``September 30, 2009'' and inserting
``December 31, 2009''.
(3) Payments.--Subparagraph (C) of section 6427(e)(5)
(relating to termination) is amended by striking ``September
30, 2009'' and inserting ``December 31, 2009''.
(b) Modifications.--
(1) Alternative fuel to include compressed or liquified
biomass gas.--Paragraph (2) of section 6426(d) (relating to
alternative fuel credit) is amended by striking ``and'' at the
end of subparagraph (E), by redesignating subparagraph (F) as
subparagraph (G), and by inserting after subparagraph (E) the
following new subparagraph:
``(F) compressed or liquefied gas derived from
biomass (as defined in section 45K(c)(3)), and''.
(2) Credit allowed for aviation use of fuel.--Paragraph (1)
of section 6426(d) is amended by inserting ``sold by the
taxpayer for use as a fuel in aviation,'' after ``motorboat,''.
(c) Carbon Capture Requirement for Certain Fuels.--
(1) In general.--Subsection (d) of section 6426, as amended
by subsection (a), is amended by redesignating paragraph (4) as
paragraph (5) and by inserting after paragraph (3) the
following new paragraph:
``(4) Carbon capture requirement.--
``(A) In general.--The requirements of this
paragraph are met if the fuel is certified, under such
procedures as required by the Secretary, as having been
derived from coal produced at a gasification facility
which separates and sequesters not less than the
applicable percentage of such facility's total carbon
dioxide emissions.
``(B) Applicable percentage.--For purposes of
subparagraph (A), the applicable percentage is--
``(i) 50 percent in the case of fuel
produced after September 30, 2009, and on or
before December 30, 2009, and
``(ii) 75 percent in the case of fuel
produced after December 30, 2009.''.
(2) Conforming amendment.--Subparagraph (E) of section
6426(d)(2) is amended by inserting ``which meets the
requirements of paragraph (4) and which is'' after ``any liquid
fuel''.
(d) Effective Date.--The amendments made by this section shall
apply to fuel sold or used after the date of the enactment of this Act.
SEC. 205. CREDIT FOR NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR
VEHICLES.
(a) Plug-in Electric Drive Motor Vehicle Credit.--Subpart B of part
IV of subchapter A of chapter 1 (relating to other credits) is amended
by adding at the end the following new section:
``SEC. 30D. NEW QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES.
``(a) Allowance of Credit.--
``(1) In general.--There shall be allowed as a credit
against the tax imposed by this chapter for the taxable year an
amount equal to the applicable amount with respect to each new
qualified plug-in electric drive motor vehicle placed in
service by the taxpayer during the taxable year.
``(2) Applicable amount.--For purposes of paragraph (1),
the applicable amount is sum of--
``(A) $2,500, plus
``(B) $417 for each kilowatt hour of traction
battery capacity in excess of 4 kilowatt hours.
``(b) Limitations.--
``(1) Limitation based on weight.--The amount of the credit
allowed under subsection (a) by reason of subsection (a)(2)
shall not exceed--
``(A) $7,500, in the case of any new qualified
plug-in electric drive motor vehicle with a gross
vehicle weight rating of not more than 10,000 pounds,
``(B) $10,000, in the case of any new qualified
plug-in electric drive motor vehicle with a gross
vehicle weight rating of more than 10,000 pounds but
not more than 14,000 pounds,
``(C) $12,500, in the case of any new qualified
plug-in electric drive motor vehicle with a gross
vehicle weight rating of more than 14,000 pounds but
not more than 26,000 pounds, and
``(D) $15,000, in the case of any new qualified
plug-in electric drive motor vehicle with a gross
vehicle weight rating of more than 26,000 pounds.
``(2) Limitation on number of passenger vehicles and light
trucks eligible for credit.--
``(A) In general.--In the case of a new qualified
plug-in electric drive motor vehicle sold during the
phaseout period, only the applicable percentage of the
credit otherwise allowable under subsection (a) shall
be allowed.
``(B) Phaseout period.--For purposes of this
subsection, the phaseout period is the period beginning
with the second calendar quarter following the calendar
quarter which includes the first date on which the
total number of such new qualified plug-in electric
drive motor vehicles sold for use in the United States
after December 31, 2008, is at least 250,000.
``(C) Applicable percentage.--For purposes of
subparagraph (A), the applicable percentage is--
``(i) 50 percent for the first 2 calendar
quarters of the phaseout period,
``(ii) 25 percent for the 3d and 4th
calendar quarters of the phaseout period, and
``(iii) 0 percent for each calendar quarter
thereafter.
``(D) Controlled groups.--Rules similar to the
rules of section 30B(f)(4) shall apply for purposes of
this subsection.
``(c) New Qualified Plug-in Electric Drive Motor Vehicle.--For
purposes of this section, the term `new qualified plug-in electric
drive motor vehicle' means a motor vehicle--
``(1) which draws propulsion using a traction battery with
at least 4 kilowatt hours of capacity,
``(2) which uses an offboard source of energy to recharge
such battery,
``(3) which, in the case of a passenger vehicle or light
truck which has a gross vehicle weight rating of not more than
8,500 pounds, has received a certificate of conformity under
the Clean Air Act and meets or exceeds the equivalent
qualifying California low emission vehicle standard under
section 243(e)(2) of the Clean Air Act for that make and model
year, and
``(A) in the case of a vehicle having a gross
vehicle weight rating of 6,000 pounds or less, the Bin
5 Tier II emission standard established in regulations
prescribed by the Administrator of the Environmental
Protection Agency under section 202(i) of the Clean Air
Act for that make and model year vehicle, and
``(B) in the case of a vehicle having a gross
vehicle weight rating of more than 6,000 pounds but not
more than 8,500 pounds, the Bin 8 Tier II emission
standard which is so established,
``(4) the original use of which commences with the
taxpayer,
``(5) which is acquired for use or lease by the taxpayer
and not for resale, and
``(6) which is made by a manufacturer.
``(d) Application With Other Credits.--
``(1) Business credit treated as part of general business
credit.--So much of the credit which would be allowed under
subsection (a) for any taxable year (determined without regard
to this subsection) that is attributable to property of a
character subject to an allowance for depreciation shall be
treated as a credit listed in section 38(b) for such taxable
year (and not allowed under subsection (a)).
``(2) Personal credit.--
``(A) In general.--For purposes of this title, the
credit allowed under subsection (a) for any taxable
year (determined after application of paragraph (1))
shall be treated as a credit allowable under subpart A
for such taxable year.
``(B) Limitation based on amount of tax.--In the
case of a taxable year to which section 26(a)(2) does
not apply, the credit allowed under subsection (a) for
any taxable year (determined after application of
paragraph (1)) shall not exceed the excess of--
``(i) the sum of the regular tax liability
(as defined in section 26(b)) plus the tax
imposed by section 55, over
``(ii) the sum of the credits allowable
under subpart A (other than this section and
sections 23 and 25D) and section 27 for the
taxable year.
``(e) Other Definitions and Special Rules.--For purposes of this
section--
``(1) Motor vehicle.--The term `motor vehicle' has the
meaning given such term by section 30(c)(2).
``(2) Other terms.--The terms `passenger automobile',
`light truck', and `manufacturer' have the meanings given such
terms in regulations prescribed by the Administrator of the
Environmental Protection Agency for purposes of the
administration of title II of the Clean Air Act (42 U.S.C. 7521
et seq.).
``(3) Traction battery capacity.--Traction battery capacity
shall be measured in kilowatt hours from a 100 percent state of
charge to a zero percent state of charge.
``(4) Reduction in basis.--For purposes of this subtitle,
the basis of any property for which a credit is allowable under
subsection (a) shall be reduced by the amount of such credit so
allowed.
``(5) No double benefit.--The amount of any deduction or
other credit allowable under this chapter for a new qualified
plug-in electric drive motor vehicle shall be reduced by the
amount of credit allowed under subsection (a) for such vehicle
for the taxable year.
``(6) Property used by tax-exempt entity.--In the case of a
vehicle the use of which is described in paragraph (3) or (4)
of section 50(b) and which is not subject to a lease, the
person who sold such vehicle to the person or entity using such
vehicle shall be treated as the taxpayer that placed such
vehicle in service, but only if such person clearly discloses
to such person or entity in a document the amount of any credit
allowable under subsection (a) with respect to such vehicle
(determined without regard to subsection (b)(2)).
``(7) Property used outside united states, etc., not
qualified.--No credit shall be allowable under subsection (a)
with respect to any property referred to in section 50(b)(1) or
with respect to the portion of the cost of any property taken
into account under section 179.
``(8) Recapture.--The Secretary shall, by regulations,
provide for recapturing the benefit of any credit allowable
under subsection (a) with respect to any property which ceases
to be property eligible for such credit (including recapture in
the case of a lease period of less than the economic life of a
vehicle).
``(9) Election to not take credit.--No credit shall be
allowed under subsection (a) for any vehicle if the taxpayer
elects not to have this section apply to such vehicle.
``(10) Interaction with air quality and motor vehicle
safety standards.--Unless otherwise provided in this section, a
motor vehicle shall not be considered eligible for a credit
under this section unless such vehicle is in compliance with--
``(A) the applicable provisions of the Clean Air
Act for the applicable make and model year of the
vehicle (or applicable air quality provisions of State
law in the case of a State which has adopted such
provision under a waiver under section 209(b) of the
Clean Air Act), and
``(B) the motor vehicle safety provisions of
sections 30101 through 30169 of title 49, United States
Code.
``(f) Regulations.--
``(1) In general.--Except as provided in paragraph (2), the
Secretary shall promulgate such regulations as necessary to
carry out the provisions of this section.
``(2) Coordination in prescription of certain
regulations.--The Secretary of the Treasury, in coordination
with the Secretary of Transportation and the Administrator of
the Environmental Protection Agency, shall prescribe such
regulations as necessary to determine whether a motor vehicle
meets the requirements to be eligible for a credit under this
section.
``(g) Termination.--This section shall not apply to property
purchased after December 31, 2014.''.
(b) Coordination With Alternative Motor Vehicle Credit.--Section
30B(d)(3) is amended by adding at the end the following new
subparagraph:
``(D) Exclusion of plug-in vehicles.--Any vehicle
with respect to which a credit is allowable under
section 30D (determined without regard to subsection
(d) thereof) shall not be taken into account under this
section.''.
(c) Credit Made Part of General Business Credit.--Section 38(b), as
amended by this Act, is amended by striking ``plus'' at the end of
paragraph (33), by striking the period at the end of paragraph (34) and
inserting ``plus'', and by adding at the end the following new
paragraph:
``(35) the portion of the new qualified plug-in electric
drive motor vehicle credit to which section 30D(d)(1)
applies.''.
(d) Conforming Amendments.--
(1)(A) Section 24(b)(3)(B), as amended by section 106, is
amended by striking ``and 25D'' and inserting ``25D, and 30D''.
(B) Section 25(e)(1)(C)(ii) is amended by inserting
``30D,'' after ``25D,''.
(C) Section 25B(g)(2), as amended by section 106, is
amended by striking ``and 25D'' and inserting ``, 25D, and
30D''.
(D) Section 26(a)(1), as amended by section 106, is amended
by striking ``and 25D'' and inserting ``25D, and 30D''.
(E) Section 1400C(d)(2) is amended by striking ``and 25D''
and inserting ``25D, and 30D''.
(2) Section 1016(a) is amended by striking ``and'' at the
end of paragraph (35), by striking the period at the end of
paragraph (36) and inserting ``, and'', and by adding at the
end the following new paragraph:
``(37) to the extent provided in section 30D(e)(4).''.
(3) Section 6501(m) is amended by inserting ``30D(e)(9),''
after ``30C(e)(5),''.
(4) The table of sections for subpart B of part IV of
subchapter A of chapter 1 is amended by adding at the end the
following new item:
``Sec. 30D. New qualified plug-in electric drive motor vehicles.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2008.
(f) Application of EGTRRA Sunset.--The amendment made by subsection
(d)(1)(A) shall be subject to title IX of the Economic Growth and Tax
Relief Reconciliation Act of 2001 in the same manner as the provision
of such Act to which such amendment relates.
SEC. 206. EXCLUSION FROM HEAVY TRUCK TAX FOR IDLING REDUCTION UNITS AND
ADVANCED INSULATION.
(a) In General.--Section 4053 is amended by adding at the end the
following new paragraphs:
``(9) Idling reduction device.--Any device or system of
devices which--
``(A) is designed to provide to a vehicle those
services (such as heat, air conditioning, or
electricity) that would otherwise require the operation
of the main drive engine while the vehicle is
temporarily parked or remains stationary using one or
more devices affixed to a tractor, and
``(B) is determined by the Administrator of the
Environmental Protection Agency, in consultation with
the Secretary of Energy and the Secretary of
Transportation, to reduce idling of such vehicle at a
motor vehicle rest stop or other location where such
vehicles are temporarily parked or remain stationary.
``(10) Advanced insulation.--Any insulation that has an R
value of not less than R35 per inch.''.
(b) Effective Date.--The amendment made by this section shall apply
to sales or installations after the date of the enactment of this Act.
SEC. 207. ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY CREDIT.
(a) Extension of Credit.--Paragraph (2) of section 30C(g) is
amended by striking ``December 31, 2009'' and inserting ``December 31,
2010''.
(b) Inclusion of Electricity as a Clean-Burning Fuel.--Section
30C(c)(2) is amended by adding at the end the following new
subparagraph:
``(C) Electricity.''.
(c) Effective Date.--The amendments made by this section shall
apply to property placed in service after the date of the enactment of
this Act, in taxable years ending after such date.
SEC. 208. CERTAIN INCOME AND GAINS RELATING TO ALCOHOL FUELS AND
MIXTURES, BIODIESEL FUELS AND MIXTURES, AND ALTERNATIVE
FUELS AND MIXTURES TREATED AS QUALIFYING INCOME FOR
PUBLICLY TRADED PARTNERSHIPS.
(a) In General.--Subparagraph (E) of section 7704(d)(1), as amended
by this Act, is amended by striking ``or industrial source carbon
dioxide'' and inserting ``, industrial source carbon dioxide, or the
transportation or storage of any fuel described in subsection (b), (c),
(d), or (e) of section 6426, or any alcohol fuel defined in section
6426(b)(4)(A) or any biodiesel fuel as defined in section 40A(d)(1)''
after ``timber)''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act, in taxable years
ending after such date.
SEC. 209. EXTENSION AND MODIFICATION OF ELECTION TO EXPENSE CERTAIN
REFINERIES.
(a) Extension.--Paragraph (1) of section 179C(c) (relating to
qualified refinery property) is amended--
(1) by striking ``January 1, 2012'' in subparagraph (B) and
inserting ``January 1, 2014'', and
(2) by striking ``January 1, 2008'' each place it appears
in subparagraph (F) and inserting ``January 1, 2010''.
(b) Inclusion of Fuel Derived From Shale and Tar Sands.--
(1) In general.--Subsection (d) of section 179C is amended
by inserting ``, or directly from shale or tar sands'' after
``(as defined in section 45K(c))''.
(2) Conforming amendment.--Paragraph (2) of section 179C(e)
is amended by inserting ``shale, tar sands, or'' before
``qualified fuels''.
(c) Effective Date.--The amendments made by this section shall
apply to property placed in service after the date of the enactment of
this Act.
SEC. 210. EXTENSION OF SUSPENSION OF TAXABLE INCOME LIMIT ON PERCENTAGE
DEPLETION FOR OIL AND NATURAL GAS PRODUCED FROM MARGINAL
PROPERTIES.
Subparagraph (H) of section 613A(c)(6) (relating to oil and gas
produced from marginal properties) is amended by striking ``for any
taxable year'' and all that follows and inserting ``for any taxable
year--
``(i) beginning after December 31, 1997,
and before January 1, 2008, or
``(ii) beginning after December 31, 2008,
and before January 1, 2010.''.
SEC. 211. TRANSPORTATION FRINGE BENEFIT TO BICYCLE COMMUTERS.
(a) In General.--Paragraph (1) of section 132(f) is amended by
adding at the end the following:
``(D) Any qualified bicycle commuting
reimbursement.''.
(b) Limitation on Exclusion.--Paragraph (2) of section 132(f) is
amended by striking ``and'' at the end of subparagraph (A), by striking
the period at the end of subparagraph (B) and inserting ``, and'', and
by adding at the end the following new subparagraph:
``(C) the applicable annual limitation in the case
of any qualified bicycle commuting reimbursement.''.
(c) Definitions.--Paragraph (5) of section 132(f) is amended by
adding at the end the following:
``(F) Definitions related to bicycle commuting
reimbursement.--
``(i) Qualified bicycle commuting
reimbursement.--The term `qualified bicycle
commuting reimbursement' means, with respect to
any calendar year, any employer reimbursement
during the 15-month period beginning with the
first day of such calendar year for reasonable
expenses incurred by the employee during such
calendar year for the purchase of a bicycle and
bicycle improvements, repair, and storage, if
such bicycle is regularly used for travel
between the employee's residence and place of
employment.
``(ii) Applicable annual limitation.--The
term `applicable annual limitation' means, with
respect to any employee for any calendar year,
the product of $20 multiplied by the number of
qualified bicycle commuting months during such
year.
``(iii) Qualified bicycle commuting
month.--The term `qualified bicycle commuting
month' means, with respect to any employee, any
month during which such employee--
``(I) regularly uses the bicycle
for a substantial portion of the travel
between the employee's residence and
place of employment, and
``(II) does not receive any benefit
described in subparagraph (A), (B), or
(C) of paragraph (1).''.
(d) Constructive Receipt of Benefit.--Paragraph (4) of section
132(f) is amended by inserting ``(other than a qualified bicycle
commuting reimbursement)'' after ``qualified transportation fringe''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2008.
TITLE III--ENERGY CONSERVATION AND EFFICIENCY PROVISIONS
SEC. 301. QUALIFIED ENERGY CONSERVATION BONDS.
(a) In General.--Subpart I of part IV of subchapter A of chapter 1,
as amended by section 107, is amended by adding at the end the
following new section:
``SEC. 54D. QUALIFIED ENERGY CONSERVATION BONDS.
``(a) Qualified Energy Conservation Bond.--For purposes of this
subchapter, the term `qualified energy conservation bond' means any
bond issued as part of an issue if--
``(1) 100 percent of the available project proceeds of such
issue are to be used for one or more qualified conservation
purposes,
``(2) the bond is issued by a State or local government,
and
``(3) the issuer designates such bond for purposes of this
section.
``(b) Reduced Credit Amount.--The annual credit determined under
section 54A(b) with respect to any qualified energy conservation bond
shall be 70 percent of the amount so determined without regard to this
subsection.
``(c) Limitation on Amount of Bonds Designated.--The maximum
aggregate face amount of bonds which may be designated under subsection
(a) by any issuer shall not exceed the limitation amount allocated to
such issuer under subsection (e).
``(d) National Limitation on Amount of Bonds Designated.--There is
a national qualified energy conservation bond limitation of
$800,000,000.
``(e) Allocations.--
``(1) In general.--The limitation applicable under
subsection (d) shall be allocated by the Secretary among the
States in proportion to the population of the States.
``(2) Allocations to largest local governments.--
``(A) In general.--In the case of any State in
which there is a large local government, each such
local government shall be allocated a portion of such
State's allocation which bears the same ratio to the
State's allocation (determined without regard to this
subparagraph) as the population of such large local
government bears to the population of such State.
``(B) Allocation of unused limitation to state.--
The amount allocated under this subsection to a large
local government may be reallocated by such local
government to the State in which such local government
is located.
``(C) Large local government.--For purposes of this
section, the term `large local government' means any
municipality or county if such municipality or county
has a population of 100,000 or more.
``(3) Allocation to issuers; restriction on private
activity bonds.--Any allocation under this subsection to a
State or large local government shall be allocated by such
State or large local government to issuers within the State in
a manner that results in not less than 70 percent of the
allocation to such State or large local government being used
to designate bonds which are not private activity bonds.
``(f) Qualified Conservation Purpose.--For purposes of this
section--
``(1) In general.--The term `qualified conservation
purpose' means any of the following:
``(A) Capital expenditures incurred for purposes
of--
``(i) reducing energy consumption in
publicly-owned buildings by at least 20
percent,
``(ii) implementing green community
programs,
``(iii) rural development involving the
production of electricity from renewable energy
resources, or
``(iv) any qualified facility (as
determined under section 45(d) without regard
to paragraphs (8) and (10) thereof and without
regard to any placed in service date).
``(B) Expenditures with respect to research
facilities, and research grants, to support research
in--
``(i) development of cellulosic ethanol or
other nonfossil fuels,
``(ii) technologies for the capture and
sequestration of carbon dioxide produced
through the use of fossil fuels,
``(iii) increasing the efficiency of
existing technologies for producing nonfossil
fuels,
``(iv) automobile battery technologies and
other technologies to reduce fossil fuel
consumption in transportation, or
``(v) technologies to reduce energy use in
buildings.
``(C) Mass commuting facilities and related
facilities that reduce the consumption of energy,
including expenditures to reduce pollution from
vehicles used for mass commuting.
``(D) Demonstration projects designed to promote
the commercialization of--
``(i) green building technology,
``(ii) conversion of agricultural waste for
use in the production of fuel or otherwise,
``(iii) advanced battery manufacturing
technologies,
``(iv) technologies to reduce peak use of
electricity, or
``(v) technologies for the capture and
sequestration of carbon dioxide emitted from
combusting fossil fuels in order to produce
electricity.
``(E) Public education campaigns to promote energy
efficiency.
``(2) Special rules for private activity bonds.--For
purposes of this section, in the case of any private activity
bond, the term `qualified conservation purposes' shall not
include any expenditure which is not a capital expenditure.
``(g) Population.--
``(1) In general.--The population of any State or local
government shall be determined for purposes of this section as
provided in section 146(j) for the calendar year which includes
the date of the enactment of this section.
``(2) Special rule for counties.--In determining the
population of any county for purposes of this section, any
population of such county which is taken into account in
determining the population of any municipality which is a large
local government shall not be taken into account in determining
the population of such county.
``(h) Application to Indian Tribal Governments.--An Indian tribal
government shall be treated for purposes of this section in the same
manner as a large local government, except that--
``(1) an Indian tribal government shall be treated for
purposes of subsection (e) as located within a State to the
extent of so much of the population of such government as
resides within such State, and
``(2) any bond issued by an Indian tribal government shall
be treated as a qualified energy conservation bond only if
issued as part of an issue the available project proceeds of
which are used for purposes for which such Indian tribal
government could issue bonds to which section 103(a)
applies.''.
(b) Conforming Amendments.--
(1) Paragraph (1) of section 54A(d), as amended by this
Act, is amended to read as follows:
``(1) Qualified tax credit bond.--The term `qualified tax
credit bond' means--
``(A) a qualified forestry conservation bond,
``(B) a new clean renewable energy bond, or
``(C) a qualified energy conservation bond,
which is part of an issue that meets requirements of paragraphs
(2), (3), (4), (5), and (6).''.
(2) Subparagraph (C) of section 54A(d)(2), as amended by
this Act, is amended to read as follows:
``(C) Qualified purpose.--For purposes of this
paragraph, the term `qualified purpose' means--
``(i) in the case of a qualified forestry
conservation bond, a purpose specified in
section 54B(e),
``(ii) in the case of a new clean renewable
energy bond, a purpose specified in section
54C(a)(1), and
``(iii) in the case of a qualified energy
conservation bond, a purpose specified in
section 54D(a)(1).''.
(3) The table of sections for subpart I of part IV of
subchapter A of chapter 1, as amended by this Act, is amended
by adding at the end the following new item:
``Sec. 54D. Qualified energy conservation bonds.''.
(c) Effective Date.--The amendments made by this section shall
apply to obligations issued after the date of the enactment of this
Act.
SEC. 302. CREDIT FOR NONBUSINESS ENERGY PROPERTY.
(a) Extension of Credit.--Section 25C(g) is amended by striking
``placed in service after December 31, 2007'' and inserting ``placed in
service--
``(1) after December 31, 2007, and before January 1, 2009,
or
``(2) after December 31, 2009.''.
(b) Qualified Biomass Fuel Property.--
(1) In general.--Section 25C(d)(3) is amended--
(A) by striking ``and'' at the end of subparagraph
(D),
(B) by striking the period at the end of
subparagraph (E) and inserting ``, and'', and
(C) by adding at the end the following new
subparagraph:
``(F) a stove which uses the burning of biomass
fuel to heat a dwelling unit located in the United
States and used as a residence by the taxpayer, or to
heat water for use in such a dwelling unit, and which
has a thermal efficiency rating of at least 75
percent.''.
(2) Biomass fuel.--Section 25C(d) is amended by adding at
the end the following new paragraph:
``(6) Biomass fuel.--The term `biomass fuel' means any
plant-derived fuel available on a renewable or recurring basis,
including agricultural crops and trees, wood and wood waste and
residues (including wood pellets), plants (including aquatic
plants), grasses, residues, and fibers.''.
(c) Modification of Water Heater Requirements.--Section
25C(d)(3)(E) is amended by inserting ``or a thermal efficiency of at
least 90 percent'' after ``0.80''.
(d) Coordination With Credit for Qualified Geothermal Heat pump
Property Expenditures.--
(1) In general.--Paragraph (3) of section 25C(d), as
amended by subsections (b) and (c), is amended by striking
subparagraph (C) and by redesignating subparagraphs (D), (E),
and (F) as subparagraphs (C), (D), and (E), respectively.
(2) Conforming amendment.--Subparagraph (C) of section
25C(d)(2) is amended to read as follows:
``(C) Requirements and standards for air
conditioners and heat pumps.--The standards and
requirements prescribed by the Secretary under
subparagraph (B) with respect to the energy efficiency
ratio (EER) for central air conditioners and electric
heat pumps--
``(i) shall require measurements to be
based on published data which is tested by
manufacturers at 95 degrees Fahrenheit, and
``(ii) may be based on the certified data
of the Air Conditioning and Refrigeration
Institute that are prepared in partnership with
the Consortium for Energy Efficiency.''.
(e) Modification of Qualified Energy Efficiency Improvements.--
(1) In general.--Paragraph (1) of section 25C(c) is amended
by inserting ``, or an asphalt roof with appropriate cooling
granules,'' before ``which meet the Energy Star program
requirements''.
(2) Building envelope component.--Subparagraph (D) of
section 25C(c)(2) is amended--
(A) by inserting ``or asphalt roof'' after ``metal
roof'', and
(B) by inserting ``or cooling granules'' after
``pigmented coatings''.
(f) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made this section shall apply to expenditures made
after December 31, 2008.
(2) Modification of qualified energy efficiency
improvements.--The amendments made by subsection (e) shall
apply to property placed in service after the date of the
enactment of this Act.
SEC. 303. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.
Subsection (h) of section 179D is amended by striking ``December
31, 2008'' and inserting ``December 31, 2013''.
SEC. 304. NEW ENERGY EFFICIENT HOME CREDIT.
Subsection (g) of section 45L (relating to termination) is amended
by striking ``December 31, 2008'' and inserting ``December 31, 2009''.
SEC. 305. MODIFICATIONS OF ENERGY EFFICIENT APPLIANCE CREDIT FOR
APPLIANCES PRODUCED AFTER 2007.
(a) In General.--Subsection (b) of section 45M is amended to read
as follows:
``(b) Applicable Amount.--For purposes of subsection (a)--
``(1) Dishwashers.--The applicable amount is--
``(A) $45 in the case of a dishwasher which is
manufactured in calendar year 2008 or 2009 and which
uses no more than 324 kilowatt hours per year and 5.8
gallons per cycle, and
``(B) $75 in the case of a dishwasher which is
manufactured in calendar year 2008, 2009, or 2010 and
which uses no more than 307 kilowatt hours per year and
5.0 gallons per cycle (5.5 gallons per cycle for
dishwashers designed for greater than 12 place
settings).
``(2) Clothes washers.--The applicable amount is--
``(A) $75 in the case of a residential top-loading
clothes washer manufactured in calendar year 2008 which
meets or exceeds a 1.72 modified energy factor and does
not exceed a 8.0 water consumption factor,
``(B) $125 in the case of a residential top-loading
clothes washer manufactured in calendar year 2008 or
2009 which meets or exceeds a 1.8 modified energy
factor and does not exceed a 7.5 water consumption
factor,
``(C) $150 in the case of a residential or
commercial clothes washer manufactured in calendar year
2008, 2009, or 2010 which meets or exceeds 2.0 modified
energy factor and does not exceed a 6.0 water
consumption factor, and
``(D) $250 in the case of a residential or
commercial clothes washer manufactured in calendar year
2008, 2009, or 2010 which meets or exceeds 2.2 modified
energy factor and does not exceed a 4.5 water
consumption factor.
``(3) Refrigerators.--The applicable amount is--
``(A) $50 in the case of a refrigerator which is
manufactured in calendar year 2008, and consumes at
least 20 percent but not more than 22.9 percent less
kilowatt hours per year than the 2001 energy
conservation standards,
``(B) $75 in the case of a refrigerator which is
manufactured in calendar year 2008 or 2009, and
consumes at least 23 percent but no more than 24.9
percent less kilowatt hours per year than the 2001
energy conservation standards,
``(C) $100 in the case of a refrigerator which is
manufactured in calendar year 2008, 2009, or 2010, and
consumes at least 25 percent but not more than 29.9
percent less kilowatt hours per year than the 2001
energy conservation standards, and
``(D) $200 in the case of a refrigerator
manufactured in calendar year 2008, 2009, or 2010 and
which consumes at least 30 percent less energy than the
2001 energy conservation standards.''.
(b) Eligible Production.--
(1) Similar treatment for all appliances.--Subsection (c)
of section 45M is amended--
(A) by striking paragraph (2),
(B) by striking ``(1) In general'' and all that
follows through ``the eligible'' and inserting ``The
eligible'',
(C) by moving the text of such subsection in line
with the subsection heading, and
(D) by redesignating subparagraphs (A) and (B) as
paragraphs (1) and (2), respectively, and by moving
such paragraphs 2 ems to the left.
(2) Modification of base period.--Paragraph (2) of section
45M(c), as amended by paragraph (1), is amended by striking
``3-calendar year'' and inserting ``2-calendar year''.
(c) Types of Energy Efficient Appliances.--Subsection (d) of
section 45M is amended to read as follows:
``(d) Types of Energy Efficient Appliance.--For purposes of this
section, the types of energy efficient appliances are--
``(1) dishwashers described in subsection (b)(1),
``(2) clothes washers described in subsection (b)(2), and
``(3) refrigerators described in subsection (b)(3).''.
(d) Aggregate Credit Amount Allowed.--
(1) Increase in limit.--Paragraph (1) of section 45M(e) is
amended to read as follows:
``(1) Aggregate credit amount allowed.--The aggregate
amount of credit allowed under subsection (a) with respect to a
taxpayer for any taxable year shall not exceed $75,000,000
reduced by the amount of the credit allowed under subsection
(a) to the taxpayer (or any predecessor) for all prior taxable
years beginning after December 31, 2007.''.
(2) Exception for certain refrigerator and clothes
washers.--Paragraph (2) of section 45M(e) is amended to read as
follows:
``(2) Amount allowed for certain refrigerators and clothes
washers.--Refrigerators described in subsection (b)(3)(D) and
clothes washers described in subsection (b)(2)(D) shall not be
taken into account under paragraph (1).''.
(e) Qualified Energy Efficient Appliances.--
(1) In general.--Paragraph (1) of section 45M(f) is amended
to read as follows:
``(1) Qualified energy efficient appliance.--The term
`qualified energy efficient appliance' means--
``(A) any dishwasher described in subsection
(b)(1),
``(B) any clothes washer described in subsection
(b)(2), and
``(C) any refrigerator described in subsection
(b)(3).''.
(2) Clothes washer.--Section 45M(f)(3) is amended by
inserting ``commercial'' before ``residential'' the second
place it appears.
(3) Top-loading clothes washer.--Subsection (f) of section
45M is amended by redesignating paragraphs (4), (5), (6), and
(7) as paragraphs (5), (6), (7), and (8), respectively, and by
inserting after paragraph (3) the following new paragraph:
``(4) Top-loading clothes washer.--The term `top-loading
clothes washer' means a clothes washer which has the clothes
container compartment access located on the top of the machine
and which operates on a vertical axis.''.
(4) Replacement of energy factor.--Section 45M(f)(6), as
redesignated by paragraph (3), is amended to read as follows:
``(6) Modified energy factor.--The term `modified energy
factor' means the modified energy factor established by the
Department of Energy for compliance with the Federal energy
conservation standard.''.
(5) Gallons per cycle; water consumption factor.--Section
45M(f), as amended by paragraph (3), is amended by adding at
the end the following:
``(9) Gallons per cycle.--The term `gallons per cycle'
means, with respect to a dishwasher, the amount of water,
expressed in gallons, required to complete a normal cycle of a
dishwasher.
``(10) Water consumption factor.--The term `water
consumption factor' means, with respect to a clothes washer,
the quotient of the total weighted per-cycle water consumption
divided by the cubic foot (or liter) capacity of the clothes
washer.''.
(f) Effective Date.--The amendments made by this section shall
apply to appliances produced after December 31, 2007.
SEC. 306. ACCELERATED RECOVERY PERIOD FOR DEPRECIATION OF SMART METERS
AND SMART GRID SYSTEMS.
(a) In General.--Section 168(e)(3)(D) is amended by striking
``and'' at the end of clause (i), by striking the period at the end of
clause (ii) and inserting a comma, and by inserting after clause (ii)
the following new clauses:
``(iii) any qualified smart electric meter,
and
``(iv) any qualified smart electric grid
system.''.
(b) Definitions.--Section 168(i) is amended by inserting at the end
the following new paragraph:
``(18) Qualified smart electric meters.--
``(A) In general.--The term `qualified smart
electric meter' means any smart electric meter which--
``(i) is placed in service by a taxpayer
who is a supplier of electric energy or a
provider of electric energy services, and
``(ii) does not have a class life
(determined without regard to subsection (e))
of less than 10 years.
``(B) Smart electric meter.--For purposes of
subparagraph (A), the term `smart electric meter' means
any time-based meter and related communication
equipment which is capable of being used by the
taxpayer as part of a system that--
``(i) measures and records electricity
usage data on a time-differentiated basis in at
least 24 separate time segments per day,
``(ii) provides for the exchange of
information between supplier or provider and
the customer's electric meter in support of
time-based rates or other forms of demand
response,
``(iii) provides data to such supplier or
provider so that the supplier or provider can
provide energy usage information to customers
electronically, and
``(iv) provides net metering.
``(19) Qualified smart electric grid systems.--
``(A) In general.--The term `qualified smart
electric grid system' means any smart grid property
which--
``(i) is used as part of a system for
electric distribution grid communications,
monitoring, and management placed in service by
a taxpayer who is a supplier of electric energy
or a provider of electric energy services, and
``(ii) does not have a class life
(determined without regard to subsection (e))
of less than 10 years.
``(B) Smart grid property.--For the purposes of
subparagraph (A), the term `smart grid property' means
electronics and related equipment that is capable of--
``(i) sensing, collecting, and monitoring
data of or from all portions of a utility's
electric distribution grid,
``(ii) providing real-time, two-way
communications to monitor or manage such grid,
and
``(iii) providing real time analysis of and
event prediction based upon collected data that
can be used to improve electric distribution
system reliability, quality, and
performance.''.
(c) Continued Application of 150 Percent Declining Balance
Method.--Paragraph (2) of section 168(b) is amended by striking ``or''
at the end of subparagraph (B), by redesignating subparagraph (C) as
subparagraph (D), and by inserting after subparagraph (B) the following
new subparagraph:
``(C) any property (other than property described
in paragraph (3)) which is a qualified smart electric
meter or qualified smart electric grid system, or''.
(d) Effective Date.--The amendments made by this section shall
apply to property placed in service after the date of the enactment of
this Act.
SEC. 307. QUALIFIED GREEN BUILDING AND SUSTAINABLE DESIGN PROJECTS.
(a) In General.--Paragraph (8) of section 142(l) is amended by
striking ``September 30, 2009'' and inserting ``September 30, 2012''.
(b) Treatment of Current Refunding Bonds.--Paragraph (9) of section
142(l) is amended by striking ``October 1, 2009'' and inserting
``October 1, 2012''.
(c) Accountability.--The second sentence of section 701(d) of the
American Jobs Creation Act of 2004 is amended by striking ``issuance,''
and inserting ``issuance of the last issue with respect to such
project,''.
SEC. 308. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN REUSE AND
RECYCLING PROPERTY.
(a) In General.--Section 168 is amended by adding at the end the
following new subsection:
``(m) Special Allowance for Certain Reuse and Recycling Property.--
``(1) In general.--In the case of any qualified reuse and
recycling 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 50 percent of the adjusted basis of
the qualified reuse and recycling property, and
``(B) the adjusted basis of the qualified reuse and
recycling 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 reuse and recycling property.--For purposes
of this subsection--
``(A) In general.--The term `qualified reuse and
recycling property' means any reuse and recycling
property--
``(i) to which this section applies,
``(ii) which has a useful life of at least
5 years,
``(iii) the original use of which commences
with the taxpayer after August 31, 2008, and
``(iv) which is--
``(I) acquired by purchase (as
defined in section 179(d)(2)) by the
taxpayer after August 31, 2008, but
only if no written binding contract for
the acquisition was in effect before
September 1, 2008, or
``(II) acquired by the taxpayer
pursuant to a written binding contract
which was entered into after August 31,
2008.
``(B) Exceptions.--
``(i) Bonus depreciation property under
subsection (k).--The term `qualified reuse and
recycling property' shall not include any
property to which section 168(k) applies.
``(ii) Alternative depreciation property.--
The term `qualified reuse and recycling
property' shall not include any property to
which the alternative depreciation system under
subsection (g) applies, determined without
regard to paragraph (7) of subsection (g)
(relating to election to have system apply).
``(iii) 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.
``(C) Special rule for self-constructed property.--
In the case of a taxpayer manufacturing, constructing,
or producing property for the taxpayer's own use, the
requirements of clause (iv) of subparagraph (A) shall
be treated as met if the taxpayer begins manufacturing,
constructing, or producing the property after August
31, 2008.
``(D) Deduction allowed in computing minimum tax.--
For purposes of determining alternative minimum taxable
income under section 55, the deduction under subsection
(a) for qualified reuse and recycling property shall be
determined under this section without regard to any
adjustment under section 56.
``(3) Definitions.--For purposes of this subsection--
``(A) Reuse and recycling property.--
``(i) In general.--The term `reuse and
recycling property' means any machinery and
equipment (not including buildings or real
estate), along with all appurtenances thereto,
including software necessary to operate such
equipment, which is used exclusively to
collect, distribute, or recycle qualified reuse
and recyclable materials.
``(ii) Exclusion.--Such term does not
include rolling stock or other equipment used
to transport reuse and recyclable materials.
``(B) Qualified reuse and recyclable materials.--
``(i) In general.--The term `qualified
reuse and recyclable materials' means scrap
plastic, scrap glass, scrap textiles, scrap
rubber, scrap packaging, recovered fiber, scrap
ferrous and nonferrous metals, or electronic
scrap generated by an individual or business.
``(ii) Electronic scrap.--For purposes of
clause (i), the term `electronic scrap' means--
``(I) any cathode ray tube, flat
panel screen, or similar video display
device with a screen size greater than
4 inches measured diagonally, or
``(II) any central processing unit.
``(C) Recycling or recycle.--The term `recycling'
or `recycle' means that process (including sorting) by
which worn or superfluous materials are manufactured or
processed into specification grade commodities that are
suitable for use as a replacement or substitute for
virgin materials in manufacturing tangible consumer and
commercial products, including packaging.''.
(b) Effective Date.--The amendment made by this section shall apply
to property placed in service after August 31, 2008.
TITLE IV--REVENUE PROVISIONS
SEC. 401. LIMITATION OF DEDUCTION FOR INCOME ATTRIBUTABLE TO DOMESTIC
PRODUCTION OF OIL, GAS, OR PRIMARY PRODUCTS THEREOF.
(a) In General.--Section 199(d) is amended by redesignating
paragraph (9) as paragraph (10) and by inserting after paragraph (8)
the following new paragraph:
``(9) Special rule for taxpayers with oil related qualified
production activities income.--
``(A) In general.--If a taxpayer has oil related
qualified production activities income for any taxable
year beginning after 2009, the amount otherwise
allowable as a deduction under subsection (a) shall be
reduced by 3 percent of the least of--
``(i) the oil related qualified production
activities income of the taxpayer for the
taxable year,
``(ii) the qualified production activities
income of the taxpayer for the taxable year, or
``(iii) taxable income (determined without
regard to this section).
``(B) Oil related qualified production activities
income.--For purposes of this paragraph, the term `oil
related qualified production activities income' means
for any taxable year the qualified production
activities income which is attributable to the
production, refining, processing, transportation, or
distribution of oil, gas, or any primary product
thereof during such taxable year.
``(C) Primary product.--For purposes of this
paragraph, the term `primary product' has the same
meaning as when used in section 927(a)(2)(C), as in
effect before its repeal.''.
(b) Conforming Amendment.--Section 199(d)(2) (relating to
application to individuals) is amended by striking ``subsection
(a)(1)(B)'' and inserting ``subsections (a)(1)(B) and (d)(9)(A)(iii)''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2008.
SEC. 402. ELIMINATION OF THE DIFFERENT TREATMENT OF FOREIGN OIL AND GAS
EXTRACTION INCOME AND FOREIGN OIL RELATED INCOME FOR
PURPOSES OF THE FOREIGN TAX CREDIT.
(a) In General.--Subsections (a) and (b) of section 907 (relating
to special rules in case of foreign oil and gas income) are amended to
read as follows:
``(a) Reduction in Amount Allowed as Foreign Tax Under Section
901.--In applying section 901, the amount of any foreign oil and gas
taxes paid or accrued (or deemed to have been paid) during the taxable
year which would (but for this subsection) be taken into account for
purposes of section 901 shall be reduced by the amount (if any) by
which the amount of such taxes exceeds the product of--
``(1) the amount of the combined foreign oil and gas income
for the taxable year,
``(2) multiplied by--
``(A) in the case of a corporation, the percentage
which is equal to the highest rate of tax specified
under section 11(b), or
``(B) in the case of an individual, a fraction the
numerator of which is the tax against which the credit
under section 901(a) is taken and the denominator of
which is the taxpayer's entire taxable income.
``(b) Combined Foreign Oil and Gas Income; Foreign Oil and Gas
Taxes.--For purposes of this section--
``(1) Combined foreign oil and gas income.--The term
`combined foreign oil and gas income' means, with respect to
any taxable year, the sum of--
``(A) foreign oil and gas extraction income, and
``(B) foreign oil related income.
``(2) Foreign oil and gas taxes.--The term `foreign oil and
gas taxes' means, with respect to any taxable year, the sum
of--
``(A) oil and gas extraction taxes, and
``(B) any income, war profits, and excess profits
taxes paid or accrued (or deemed to have been paid or
accrued under section 902 or 960) during the taxable
year with respect to foreign oil related income
(determined without regard to subsection (c)(4)) or
loss which would be taken into account for purposes of
section 901 without regard to this section.''.
(b) Recapture of Foreign Oil and Gas Losses.--Paragraph (4) of
section 907(c) (relating to recapture of foreign oil and gas extraction
losses by recharacterizing later extraction income) is amended to read
as follows:
``(4) Recapture of foreign oil and gas losses by
recharacterizing later combined foreign oil and gas income.--
``(A) In general.--The combined foreign oil and gas
income of a taxpayer for a taxable year (determined
without regard to this paragraph) shall be reduced--
``(i) first by the amount determined under
subparagraph (B), and
``(ii) then by the amount determined under
subparagraph (C).
The aggregate amount of such reductions shall be
treated as income (from sources without the United
States) which is not combined foreign oil and gas
income.
``(B) Reduction for pre-2009 foreign oil extraction
losses.--The reduction under this paragraph shall be
equal to the lesser of--
``(i) the foreign oil and gas extraction
income of the taxpayer for the taxable year
(determined without regard to this paragraph),
or
``(ii) the excess of--
``(I) the aggregate amount of
foreign oil extraction losses for
preceding taxable years beginning after
December 31, 1982, and before January
1, 2009, over
``(II) so much of such aggregate
amount as was recharacterized under
this paragraph (as in effect before and
after the date of the enactment of the
Energy Improvement and Extension Act of
2008) for preceding taxable years
beginning after December 31, 1982.
``(C) Reduction for post-2008 foreign oil and gas
losses.--The reduction under this paragraph shall be
equal to the lesser of--
``(i) the combined foreign oil and gas
income of the taxpayer for the taxable year
(determined without regard to this paragraph),
reduced by an amount equal to the reduction
under subparagraph (A) for the taxable year, or
``(ii) the excess of--
``(I) the aggregate amount of
foreign oil and gas losses for
preceding taxable years beginning after
December 31, 2008, over
``(II) so much of such aggregate
amount as was recharacterized under
this paragraph for preceding taxable
years beginning after December 31,
2008.
``(D) Foreign oil and gas loss defined.--
``(i) In general.--For purposes of this
paragraph, the term `foreign oil and gas loss'
means the amount by which--
``(I) the gross income for the
taxable year from sources without the
United States and its possessions
(whether or not the taxpayer chooses
the benefits of this subpart for such
taxable year) taken into account in
determining the combined foreign oil
and gas income for such year, is
exceeded by
``(II) the sum of the deductions
properly apportioned or allocated
thereto.
``(ii) Net operating loss deduction not
taken into account.--For purposes of clause
(i), the net operating loss deduction allowable
for the taxable year under section 172(a) shall
not be taken into account.
``(iii) Expropriation and casualty losses
not taken into account.--For purposes of clause
(i), there shall not be taken into account--
``(I) any foreign expropriation
loss (as defined in section 172(h) (as
in effect on the day before the date of
the enactment of the Revenue
Reconciliation Act of 1990)) for the
taxable year, or
``(II) any loss for the taxable
year which arises from fire, storm,
shipwreck, or other casualty, or from
theft,
to the extent such loss is not compensated for
by insurance or otherwise.
``(iv) Foreign oil extraction loss.--For
purposes of subparagraph (B)(ii)(I), foreign
oil extraction losses shall be determined under
this paragraph as in effect on the day before
the date of the enactment of the Energy
Improvement and Extension Act of 2008.''.
(c) Carryback and Carryover of Disallowed Credits.--Section 907(f)
(relating to carryback and carryover of disallowed credits) is
amended--
(1) by striking ``oil and gas extraction taxes'' each place
it appears and inserting ``foreign oil and gas taxes'', and
(2) by adding at the end the following new paragraph:
``(4) Transition rules for pre-2009 and 2009 disallowed
credits.--
``(A) Pre-2009 credits.--In the case of any unused
credit year beginning before January 1, 2009, this
subsection shall be applied to any unused oil and gas
extraction taxes carried from such unused credit year
to a year beginning after December 31, 2008--
``(i) by substituting `oil and gas
extraction taxes' for `foreign oil and gas
taxes' each place it appears in paragraphs (1),
(2), and (3), and
``(ii) by computing, for purposes of
paragraph (2)(A), the limitation under
subparagraph (A) for the year to which such
taxes are carried by substituting `foreign oil
and gas extraction income' for `foreign oil and
gas income' in subsection (a).
``(B) 2009 credits.--In the case of any unused
credit year beginning in 2009, the amendments made to
this subsection by the Energy Improvement and Extension
Act of 2008 shall be treated as being in effect for any
preceding year beginning before January 1, 2009, solely
for purposes of determining how much of the unused
foreign oil and gas taxes for such unused credit year
may be deemed paid or accrued in such preceding
year.''.
(d) Conforming Amendment.--Section 6501(i) is amended by striking
``oil and gas extraction taxes'' and inserting ``foreign oil and gas
taxes''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2008.
SEC. 403. BROKER REPORTING OF CUSTOMER'S BASIS IN SECURITIES
TRANSACTIONS.
(a) In General.--
(1) Broker reporting for securities transactions.--Section
6045 is amended by adding at the end the following new
subsection:
``(g) Additional Information Required in the Case of Securities
Transactions, etc.--
``(1) In general.--If a broker is otherwise required to
make a return under subsection (a) with respect to the gross
proceeds of the sale of a covered security, the broker shall
include in such return the information described in paragraph
(2).
``(2) Additional information required.--
``(A) In general.--The information required under
paragraph (1) to be shown on a return with respect to a
covered security of a customer shall include the
customer's adjusted basis in such security and whether
any gain or loss with respect to such security is long-
term or short-term (within the meaning of section
1222).
``(B) Determination of adjusted basis.--For
purposes of subparagraph (A)--
``(i) In general.--The customer's adjusted
basis shall be determined--
``(I) in the case of any security
(other than any stock for which an
average basis method is permissible
under section 1012), in accordance with
the first-in first-out method unless
the customer notifies the broker by
means of making an adequate
identification of the stock sold or
transferred, and
``(II) in the case of any stock for
which an average basis method is
permissible under section 1012, in
accordance with the broker's default
method unless the customer notifies the
broker that he elects another
acceptable method under section 1012
with respect to the account in which
such stock is held.
``(ii) Exception for wash sales.--Except as
otherwise provided by the Secretary, the
customer's adjusted basis shall be determined
without regard to section 1091 (relating to
loss from wash sales of stock or securities)
unless the transactions occur in the same
account with respect to identical securities.
``(3) Covered security.--For purposes of this subsection--
``(A) In general.--The term `covered security'
means any specified security acquired on or after the
applicable date if such security--
``(i) was acquired through a transaction in
the account in which such security is held, or
``(ii) was transferred to such account from
an account in which such security was a covered
security, but only if the broker received a
statement under section 6045A with respect to
the transfer.
``(B) Specified security.--The term `specified
security' means--
``(i) any share of stock in a corporation,
``(ii) any note, bond, debenture, or other
evidence of indebtedness,
``(iii) any commodity, or contract or
derivative with respect to such commodity, if
the Secretary determines that adjusted basis
reporting is appropriate for purposes of this
subsection, and
``(iv) any other financial instrument with
respect to which the Secretary determines that
adjusted basis reporting is appropriate for
purposes of this subsection.
``(C) Applicable date.--The term `applicable date'
means--
``(i) January 1, 2011, in the case of any
specified security which is stock in a
corporation (other than any stock described in
clause (ii)),
``(ii) January 1, 2012, in the case of any
stock for which an average basis method is
permissible under section 1012, and
``(iii) January 1, 2013, or such later date
determined by the Secretary in the case of any
other specified security.
``(4) Treatment of s corporations.--In the case of the sale
of a covered security acquired by an S corporation (other than
a financial institution) after December 31, 2011, such S
corporation shall be treated in the same manner as a
partnership for purposes of this section.
``(5) Special rules for short sales.--In the case of a
short sale, reporting under this section shall be made for the
year in which such sale is closed.''.
(2) Broker information required with respect to options.--
Section 6045, as amended by subsection (a), is amended by
adding at the end the following new subsection:
``(h) Application to Options on Securities.--
``(1) Exercise of option.--For purposes of this section, if
a covered security is acquired or disposed of pursuant to the
exercise of an option that was granted or acquired in the same
account as the covered security, the amount received with
respect to the grant or paid with respect to the acquisition of
such option shall be treated as an adjustment to gross proceeds
or as an adjustment to basis, as the case may be.
``(2) Lapse or closing transaction.--In the case of the
lapse (or closing transaction (as defined in section
1234(b)(2)(A))) of an option on a specified security or the
exercise of a cash-settled option on a specified security,
reporting under subsections (a) and (g) with respect to such
option shall be made for the calendar year which includes the
date of such lapse, closing transaction, or exercise.
``(3) Prospective application.--Paragraphs (1) and (2)
shall not apply to any option which is granted or acquired
before January 1, 2013.
``(4) Definitions.--For purposes of this subsection, the
terms `covered security' and `specified security' shall have
the meanings given such terms in subsection (g)(3).''.
(3) Extension of period for statements sent to customers.--
(A) In general.--Subsection (b) of section 6045 is
amended by striking ``January 31'' and inserting
``February 15''.
(B) Statements related to substitute payments.--
Subsection (d) of section 6045 is amended--
(i) by striking ``at such time and'', and
(ii) by inserting after ``other item.'' the
following new sentence: ``The written statement
required under the preceding sentence shall be
furnished on or before February 15 of the year
following the calendar year in which the
payment was made.''.
(C) Other statements.--Subsection (b) of section
6045 is amended by adding at the end the following:
``In the case of a consolidated reporting statement (as
defined in regulations) with respect to any customer,
any statement which would otherwise be required to be
furnished on or before January 31 of a calendar year
with respect to any item reportable to the taxpayer
shall instead be required to be furnished on or before
February 15 of such calendar year if furnished with
such consolidated reporting statement.''.
(b) Determination of Basis of Certain Securities on Account by
Account or Average Basis Method.--Section 1012 is amended--
(1) by striking ``The basis of property'' and inserting the
following:
``(a) In General.--The basis of property'',
(2) by striking ``The cost of real property'' and inserting
the following:
``(b) Special Rule for Apportioned Real Estate Taxes.--The cost of
real property'', and
(3) by adding at the end the following new subsections:
``(c) Determinations by Account.--
``(1) In general.--In the case of the sale, exchange, or
other disposition of a specified security on or after the
applicable date, the conventions prescribed by regulations
under this section shall be applied on an account by account
basis.
``(2) Application to certain funds.--
``(A) In general.--Except as provided in
subparagraph (B), any stock for which an average basis
method is permissible under section 1012 which is
acquired before January 1, 2012, shall be treated as a
separate account from any such stock acquired on or
after such date.
``(B) Election fund for treatment as single
account.--If a fund described in subparagraph (A)
elects to have this subparagraph apply with respect to
one or more of its stockholders--
``(i) subparagraph (A) shall not apply with
respect to any stock in such fund held by such
stockholders, and
``(ii) all stock in such fund which is held
by such stockholders shall be treated as
covered securities described in section
6045(g)(3) without regard to the date of the
acquisition of such stock.
A rule similar to the rule of the preceding sentence
shall apply with respect to a broker holding such stock
as a nominee.
``(3) Definitions.--For purposes of this section, the terms
`specified security' and `applicable date' shall have the
meaning given such terms in section 6045(g).
``(d) Average Basis for Stock Acquired Pursuant to a Dividend
Reinvestment Plan.--
``(1) In general.--In the case of any stock acquired after
December 31, 2010, in connection with a dividend reinvestment
plan, the basis of such stock while held as part of such plan
shall be determined using one of the methods which may be used
for determining the basis of stock in an open-end fund.
``(2) Treatment after transfer.--In the case of the
transfer to another account of stock to which paragraph (1)
applies, such stock shall have a cost basis in such other
account equal to its basis in the dividend reinvestment plan
immediately before such transfer (properly adjusted for any
fees or other charges taken into account in connection with
such transfer).
``(3) Separate accounts; election for treatment as single
account.--Rules similar to the rules of subsection (c)(2) shall
apply for purposes of this subsection.
``(4) Dividend reinvestment plan.--For purposes of this
subsection--
``(A) In general.--The term `dividend reinvestment
plan' means any arrangement under which dividends on
any stock are reinvested in stock identical to the
stock with respect to which the dividends are paid.
``(B) Initial stock acquisition treated as acquired
in connection with plan.--Stock shall be treated as
acquired in connection with a dividend reinvestment
plan if such stock is acquired pursuant to such plan or
if the dividends paid on such stock are subject to such
plan.''.
(c) Information by Transferors To Aid Brokers.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 is amended by inserting after section 6045 the
following new section:
``SEC. 6045A. INFORMATION REQUIRED IN CONNECTION WITH TRANSFERS OF
COVERED SECURITIES TO BROKERS.
``(a) Furnishing of Information.--Every applicable person which
transfers to a broker (as defined in section 6045(c)(1)) a security
which is a covered security (as defined in section 6045(g)(3)) in the
hands of such applicable person shall furnish to such broker a written
statement in such manner and setting forth such information as the
Secretary may by regulations prescribe for purposes of enabling such
broker to meet the requirements of section 6045(g).
``(b) Applicable Person.--For purposes of subsection (a), the term
`applicable person' means--
``(1) any broker (as defined in section 6045(c)(1)), and
``(2) any other person as provided by the Secretary in
regulations.
``(c) Time for Furnishing Statement.--Except as otherwise provided
by the Secretary, any statement required by subsection (a) shall be
furnished not later than 15 days after the date of the transfer
described in such subsection.''.
(2) Assessable penalties.--Paragraph (2) of section
6724(d), as amended by the Housing Assistance Tax Act of 2008,
is amended by redesignating subparagraphs (I) through (DD) as
subparagraphs (J) through (EE), respectively, and by inserting
after subparagraph (H) the following new subparagraph:
``(I) section 6045A (relating to information
required in connection with transfers of covered
securities to brokers),''.
(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 6045 the following
new item:
``Sec. 6045A. Information required in connection with transfers of
covered securities to brokers.''.
(d) Additional Issuer Information To Aid Brokers.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61, as amended by subsection (b), is amended by
inserting after section 6045A the following new section:
``SEC. 6045B. RETURNS RELATING TO ACTIONS AFFECTING BASIS OF SPECIFIED
SECURITIES.
``(a) In General.--According to the forms or regulations prescribed
by the Secretary, any issuer of a specified security shall make a
return setting forth--
``(1) a description of any organizational action which
affects the basis of such specified security of such issuer,
``(2) the quantitative effect on the basis of such
specified security resulting from such action, and
``(3) such other information as the Secretary may
prescribe.
``(b) Time for Filing Return.--Any return required by subsection
(a) shall be filed not later than the earlier of--
``(1) 45 days after the date of the action described in
subsection (a), or
``(2) January 15 of the year following the calendar year
during which such action occurred.
``(c) Statements To Be Furnished to Holders of Specified Securities
or Their Nominees.--According to the forms or regulations prescribed by
the Secretary, every person required to make a return under subsection
(a) with respect to a specified security shall furnish to the nominee
with respect to the specified security (or certificate holder if there
is no nominee) a written statement showing--
``(1) the name, address, and phone number of the
information contact of the person required to make such return,
``(2) the information required to be shown on such return
with respect to such security, and
``(3) such other information as the Secretary may
prescribe.
The written statement required under the preceding sentence shall be
furnished to the holder on or before January 15 of the year following
the calendar year during which the action described in subsection (a)
occurred.
``(d) Specified Security.--For purposes of this section, the term
`specified security' has the meaning given such term by section
6045(g)(3)(B). No return shall be required under this section with
respect to actions described in subsection (a) with respect to a
specified security which occur before the applicable date (as defined
in section 6045(g)(3)(C)) with respect to such security.
``(e) Public Reporting in Lieu of Return.--The Secretary may waive
the requirements under subsections (a) and (c) with respect to a
specified security, if the person required to make the return under
subsection (a) makes publicly available, in such form and manner as the
Secretary determines necessary to carry out the purposes of this
section--
``(1) the name, address, phone number, and email address of
the information contact of such person, and
``(2) the information described in paragraphs (1), (2), and
(3) of subsection (a).''.
(2) Assessable penalties.--
(A) Subparagraph (B) of section 6724(d)(1), as
amended by the Housing Assistance Tax Act of 2008, is
amended by redesignating clause (iv) and each of the
clauses which follow as clauses (v) through (xxiii),
respectively, and by inserting after clause (iii) the
following new clause:
``(iv) section 6045B(a) (relating to
returns relating to actions affecting basis of
specified securities),''.
(B) Paragraph (2) of section 6724(d), as amended by
the Housing Assistance Tax Act of 2008 and by
subsection (c)(2), is amended by redesignating
subparagraphs (J) through (EE) as subparagraphs (K)
through (FF), respectively, and by inserting after
subparagraph (I) the following new subparagraph:
``(J) subsections (c) and (e) of section 6045B
(relating to returns relating to actions affecting
basis of specified securities),''.
(3) Clerical amendment.--The table of sections for subpart
B of part III of subchapter A of chapter 61, as amended by
subsection (b)(3), is amended by inserting after the item
relating to section 6045A the following new item:
``Sec. 6045B. Returns relating to actions affecting basis of specified
securities.''.
(e) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall take
effect on January 1, 2011.
(2) Extension of period for statements sent to customers.--
The amendments made by subsection (a)(3) shall apply to
statements required to be furnished after December 31, 2008.
SEC. 404. 0.2 PERCENT FUTA SURTAX.
(a) In General.--Section 3301 (relating to rate of tax) is
amended--
(1) by striking ``through 2008'' in paragraph (1) and
inserting ``through 2009'', and
(2) by striking ``calendar year 2009'' in paragraph (2) and
inserting ``calendar year 2010''.
(b) Effective Date.--The amendments made by this section shall
apply to wages paid after December 31, 2008.
SEC. 405. INCREASE AND EXTENSION OF OIL SPILL LIABILITY TRUST FUND TAX.
(a) Increase in Rate.--
(1) In general.--Section 4611(c)(2)(B) (relating to rates)
is amended by striking ``is 5 cents a barrel.'' and inserting
``is--
``(i) in the case of crude oil received or
petroleum products entered before January 1,
2017, 8 cents a barrel, and
``(ii) in the case of crude oil received or
petroleum products entered after December 31,
2016, 9 cents a barrel.''.
(2) Effective date.--The amendment made by this subsection
shall apply on and after the first day of the first calendar
quarter beginning more than 60 days after the date of the
enactment of this Act.
(b) Extension.--
(1) In general.--Section 4611(f) (relating to application
of Oil Spill Liability Trust Fund financing rate) is amended by
striking paragraphs (2) and (3) and inserting the following new
paragraph:
``(2) Termination.--The Oil Spill Liability Trust Fund
financing rate shall not apply after December 31, 2017.''.
(2) Conforming amendment.--Section 4611(f)(1) is amended by
striking ``paragraphs (2) and (3)'' and inserting ``paragraph
(2)''.
(3) Effective date.--The amendments made by this subsection
shall take effect on the date of the enactment of this Act.
DIVISION B--TAX EXTENDERS AND ALTERNATIVE MINIMUM TAX RELIEF
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.
(a) Short Title.--This division may be cited as the ``Tax Extenders
and Alternative Minimum Tax Relief Act of 2008''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this division 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 of this division is
as follows:
DIVISION B--TAX EXTENDERS AND ALTERNATIVE MINIMUM TAX RELIEF
Sec. 1. Short title; amendment of 1986 Code; table of contents.
TITLE I--ALTERNATIVE MINIMUM TAX RELIEF
Sec. 101. Extension of alternative minimum tax relief for nonrefundable
personal credits.
Sec. 102. Extension of increased alternative minimum tax exemption
amount.
Sec. 103. Increase of AMT refundable credit amount for individuals with
long-term unused credits for prior year
minimum tax liability, etc.
TITLE II--EXTENSION OF INDIVIDUAL TAX PROVISIONS
Sec. 201. Deduction for State and local sales taxes.
Sec. 202. Deduction of qualified tuition and related expenses.
Sec. 203. Deduction for certain expenses of elementary and secondary
school teachers.
Sec. 204. Additional standard deduction for real property taxes for
nonitemizers.
Sec. 205. Tax-free distributions from individual retirement plans for
charitable purposes.
Sec. 206. Treatment of certain dividends of regulated investment
companies.
Sec. 207. Stock in RIC for purposes of determining estates of
nonresidents not citizens.
Sec. 208. Qualified investment entities.
TITLE III--EXTENSION OF BUSINESS TAX PROVISIONS
Sec. 301. Extension and modification of research credit.
Sec. 302. New markets tax credit.
Sec. 303. Subpart F exception for active financing income.
Sec. 304. Extension of look-thru rule for related controlled foreign
corporations.
Sec. 305. Extension of 15-year straight-line cost recovery for
qualified leasehold improvements and
qualified restaurant improvements; 15-year
straight-line cost recovery for certain
improvements to retail space.
Sec. 306. Modification of tax treatment of certain payments to
controlling exempt organizations.
Sec. 307. Basis adjustment to stock of S corporations making charitable
contributions of property.
Sec. 308. Increase in limit on cover over of rum excise tax to Puerto
Rico and the Virgin Islands.
Sec. 309. Extension of economic development credit for American Samoa.
Sec. 310. Extension of mine rescue team training credit.
Sec. 311. Extension of election to expense advanced mine safety
equipment.
Sec. 312. Deduction allowable with respect to income attributable to
domestic production activities in Puerto
Rico.
Sec. 313. Qualified zone academy bonds.
Sec. 314. Indian employment credit.
Sec. 315. Accelerated depreciation for business property on Indian
reservations.
Sec. 316. Railroad track maintenance.
Sec. 317. Seven-year cost recovery period for motorsports racing track
facility.
Sec. 318. Expensing of environmental remediation costs.
Sec. 319. Extension of work opportunity tax credit for Hurricane
Katrina employees.
Sec. 320. Extension of increased rehabilitation credit for structures
in the Gulf Opportunity Zone.
Sec. 321. Enhanced deduction for qualified computer contributions.
Sec. 322. Tax incentives for investment in the District of Columbia.
Sec. 323. Enhanced charitable deductions for contributions of food
inventory.
Sec. 324. Extension of enhanced charitable deduction for contributions
of book inventory.
Sec. 325. Extension and modification of duty suspension on wool
products; wool research fund; wool duty
refunds.
TITLE IV--EXTENSION OF TAX ADMINISTRATION PROVISIONS
Sec. 401. Permanent authority for undercover operations.
Sec. 402. Permanent authority for disclosure of information relating to
terrorist activities.
TITLE V--ADDITIONAL TAX RELIEF AND OTHER TAX PROVISIONS
Subtitle A--General Provisions
Sec. 501. $8,500 income threshold used to calculate refundable portion
of child tax credit.
Sec. 502. Provisions related to film and television productions.
Sec. 503. Exemption from excise tax for certain wooden arrows designed
for use by children.
Sec. 504. Income averaging for amounts received in connection with the
Exxon Valdez litigation.
Sec. 505. Certain farming business machinery and equipment treated as
5-year property.
Sec. 506. Modification of penalty on understatement of taxpayer's
liability by tax return preparer.
Subtitle B--Paul Wellstone and Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008
Sec. 511. Short title.
Sec. 512. Mental health parity.
TITLE VI--OTHER PROVISIONS
Sec. 601. Secure rural schools and community self-determination
program.
Sec. 602. Transfer to abandoned mine reclamation fund.
TITLE VII--DISASTER RELIEF
Subtitle A--Heartland and Hurricane Ike Disaster Relief
Sec. 701. Short title.
Sec. 702. Temporary tax relief for areas damaged by 2008 Midwestern
severe storms, tornados, and flooding.
Sec. 703. Reporting requirements relating to disaster relief
contributions.
Sec. 704. Temporary tax-exempt bond financing and low-income housing
tax relief for areas damaged by Hurricane
Ike.
Subtitle B--National Disaster Relief
Sec. 706. Losses attributable to federally declared disasters.
Sec. 707. Expensing of Qualified Disaster Expenses.
Sec. 708. Net operating losses attributable to federally declared
disasters.
Sec. 709. Waiver of certain mortgage revenue bond requirements
following federally declared disasters.
Sec. 710. Special depreciation allowance for qualified disaster
property.
Sec. 711. Increased expensing for qualified disaster assistance
property.
Sec. 712. Coordination with Heartland disaster relief.
TITLE VIII--SPENDING REDUCTIONS AND APPROPRIATE REVENUE RAISERS FOR NEW
TAX RELIEF POLICY
Sec. 801. Nonqualified deferred compensation from certain tax
indifferent parties.
TITLE I--ALTERNATIVE MINIMUM TAX RELIEF
SEC. 101. EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR NONREFUNDABLE
PERSONAL CREDITS.
(a) In General.--Paragraph (2) of section 26(a) (relating to
special rule for taxable years 2000 through 2007) is amended--
(1) by striking ``or 2007'' and inserting ``2007, or
2008'', and
(2) by striking ``2007'' in the heading thereof and
inserting ``2008''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2007.
SEC. 102. EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX EXEMPTION
AMOUNT.
(a) In General.--Paragraph (1) of section 55(d) (relating to
exemption amount) is amended--
(1) by striking ``($66,250 in the case of taxable years
beginning in 2007)'' in subparagraph (A) and inserting
``($69,950 in the case of taxable years beginning in 2008)'',
and
(2) by striking ``($44,350 in the case of taxable years
beginning in 2007)'' in subparagraph (B) and inserting
``($46,200 in the case of taxable years beginning in 2008)''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2007.
SEC. 103. INCREASE OF AMT REFUNDABLE CREDIT AMOUNT FOR INDIVIDUALS WITH
LONG-TERM UNUSED CREDITS FOR PRIOR YEAR MINIMUM TAX
LIABILITY, ETC.
(a) In General.--Paragraph (2) of section 53(e) is amended to read
as follows:
``(2) AMT refundable credit amount.--For purposes of
paragraph (1), the term `AMT refundable credit amount' means,
with respect to any taxable year, the amount (not in excess of
the long-term unused minimum tax credit for such taxable year)
equal to the greater of--
``(A) 50 percent of the long-term unused minimum
tax credit for such taxable year, or
``(B) the amount (if any) of the AMT refundable
credit amount determined under this paragraph for the
taxpayer's preceding taxable year (determined without
regard to subsection (f)(2)).''.
(b) Treatment of Certain Underpayments, Interest, and Penalties
Attributable to the Treatment of Incentive Stock Options.--Section 53
is amended by adding at the end the following new subsection:
``(f) Treatment of Certain Underpayments, Interest, and Penalties
Attributable to the Treatment of Incentive Stock Options.--
``(1) Abatement.--Any underpayment of tax outstanding on
the date of the enactment of this subsection which is
attributable to the application of section 56(b)(3) for any
taxable year ending before January 1, 2008, and any interest or
penalty with respect to such underpayment which is outstanding
on such date of enactment, is hereby abated. The amount
determined under subsection (b)(1) shall not include any tax
abated under the preceding sentence.
``(2) Increase in credit for certain interest and penalties
already paid.--The AMT refundable credit amount, and the
minimum tax credit determined under subsection (b), for the
taxpayer's first 2 taxable years beginning after December 31,
2007, shall each be increased by 50 percent of the aggregate
amount of the interest and penalties which were paid by the
taxpayer before the date of the enactment of this subsection
and which would (but for such payment) have been abated under
paragraph (1).''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2007.
(2) Abatement.--Section 53(f)(1), as added by subsection
(b), shall take effect on the date of the enactment of this
Act.
TITLE II--EXTENSION OF INDIVIDUAL TAX PROVISIONS
SEC. 201. DEDUCTION FOR STATE AND LOCAL SALES TAXES.
(a) In General.--Subparagraph (I) of section 164(b)(5) is amended
by striking ``January 1, 2008'' and inserting ``January 1, 2010''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2007.
SEC. 202. DEDUCTION OF QUALIFIED TUITION AND RELATED EXPENSES.
(a) In General.--Subsection (e) of section 222 (relating to
termination) is amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2007.
SEC. 203. DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY AND SECONDARY
SCHOOL TEACHERS.
(a) In General.--Subparagraph (D) of section 62(a)(2) (relating to
certain expenses of elementary and secondary school teachers) is
amended by striking ``or 2007'' and inserting ``2007, 2008, or 2009''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 2007.
SEC. 204. ADDITIONAL STANDARD DEDUCTION FOR REAL PROPERTY TAXES FOR
NONITEMIZERS.
(a) In General.--Subparagraph (C) of section 63(c)(1), as added by
the Housing Assistance Tax Act of 2008, is amended by inserting ``or
2009'' after ``2008''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2008.
SEC. 205. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS FOR
CHARITABLE PURPOSES.
(a) In General.--Subparagraph (F) of section 408(d)(8) (relating to
termination) is amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to distributions made in taxable years beginning after December 31,
2007.
SEC. 206. TREATMENT OF CERTAIN DIVIDENDS OF REGULATED INVESTMENT
COMPANIES.
(a) Interest-Related Dividends.--Subparagraph (C) of section
871(k)(1) (defining interest-related dividend) is amended by striking
``December 31, 2007'' and inserting ``December 31, 2009''.
(b) Short-Term Capital Gain Dividends.--Subparagraph (C) of section
871(k)(2) (defining short-term capital gain dividend) is amended by
striking ``December 31, 2007'' and inserting ``December 31, 2009''.
(c) Effective Date.--The amendments made by this section shall
apply to dividends with respect to taxable years of regulated
investment companies beginning after December 31, 2007.
SEC. 207. STOCK IN RIC FOR PURPOSES OF DETERMINING ESTATES OF
NONRESIDENTS NOT CITIZENS.
(a) In General.--Paragraph (3) of section 2105(d) (relating to
stock in a RIC) is amended by striking ``December 31, 2007'' and
inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to decedents dying after December 31, 2007.
SEC. 208. QUALIFIED INVESTMENT ENTITIES.
(a) In General.--Clause (ii) of section 897(h)(4)(A) (relating to
termination) is amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on January 1, 2008.
TITLE III--EXTENSION OF BUSINESS TAX PROVISIONS
SEC. 301. EXTENSION AND MODIFICATION OF RESEARCH CREDIT.
(a) Extension.--
(1) In general.--Section 41(h) (relating to termination) is
amended by striking ``December 31, 2007'' and inserting
``December 31, 2009'' in paragraph (1)(B).
(2) Conforming amendment.--Subparagraph (D) of section
45C(b)(1) (relating to special rule) is amended by striking
``after December 31, 2007'' and inserting ``after December 31,
2009''.
(b) Termination of Alternative Incremental Credit.--Section 41(h)
is amended by redesignating paragraph (2) as paragraph (3), and by
inserting after paragraph (1) the following new paragraph:
``(2) Termination of alternative incremental credit.--No
election under subsection (c)(4) shall apply to taxable years
beginning after December 31, 2008.''.
(c) Modification of Alternative Simplified Credit.--Paragraph
(5)(A) of section 41(c) (relating to election of alternative simplified
credit) is amended by striking ``12 percent'' and inserting ``14
percent (12 percent in the case of taxable years ending before January
1, 2009)''.
(d) Technical Correction.--Paragraph (3) of section 41(h) is
amended to read as follows:
``(2) Computation for taxable year in which credit
terminates.--In the case of any taxable year with respect to
which this section applies to a number of days which is less
than the total number of days in such taxable year--
``(A) the amount determined under subsection
(c)(1)(B) with respect to such taxable year shall be
the amount which bears the same ratio to such amount
(determined without regard to this paragraph) as the
number of days in such taxable year to which this
section applies bears to the total number of days in
such taxable year, and
``(B) for purposes of subsection (c)(5), the
average qualified research expenses for the preceding 3
taxable years shall be the amount which bears the same
ratio to such average qualified research expenses
(determined without regard to this paragraph) as the
number of days in such taxable year to which this
section applies bears to the total number of days in
such taxable year.''.
(e) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2007.
(2) Extension.--The amendments made by subsection (a) shall
apply to amounts paid or incurred after December 31, 2007.
SEC. 302. NEW MARKETS TAX CREDIT.
Subparagraph (D) of section 45D(f)(1) (relating to national
limitation on amount of investments designated) is amended by striking
``and 2008'' and inserting ``2008, and 2009''.
SEC. 303. SUBPART F EXCEPTION FOR ACTIVE FINANCING INCOME.
(a) Exempt Insurance Income.--Paragraph (10) of section 953(e)
(relating to application) is amended--
(1) by striking ``January 1, 2009'' and inserting ``January
1, 2010'', and
(2) by striking ``December 31, 2008'' and inserting
``December 31, 2009''.
(b) Exception to Treatment as Foreign Personal Holding Company
Income.--Paragraph (9) of section 954(h) (relating to application) is
amended by striking ``January 1, 2009'' and inserting ``January 1,
2010''.
SEC. 304. EXTENSION OF LOOK-THRU RULE FOR RELATED CONTROLLED FOREIGN
CORPORATIONS.
(a) In General.--Subparagraph (C) of section 954(c)(6) (relating to
application) is amended by striking ``January 1, 2009'' and inserting
``January 1, 2010''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years of foreign corporations beginning after December 31,
2007, and to taxable years of United States shareholders with or within
which such taxable years of foreign corporations end.
SEC. 305. EXTENSION OF 15-YEAR STRAIGHT-LINE COST RECOVERY FOR
QUALIFIED LEASEHOLD IMPROVEMENTS AND QUALIFIED RESTAURANT
IMPROVEMENTS; 15-YEAR STRAIGHT-LINE COST RECOVERY FOR
CERTAIN IMPROVEMENTS TO RETAIL SPACE.
(a) Extension of Leasehold and Restaurant Improvements.--
(1) In general.--Clauses (iv) and (v) of section
168(e)(3)(E) (relating to 15-year property) are each amended by
striking ``January 1, 2008'' and inserting ``January 1, 2010''.
(2) Effective date.--The amendments made by this subsection
shall apply to property placed in service after December 31,
2007.
(b) Treatment to Include New Construction.--
(1) In general.--Paragraph (7) of section 168(e) (relating
to classification of property) is amended to read as follows:
``(7) Qualified restaurant property.--
``(A) In general.--The term `qualified restaurant
property' means any section 1250 property which is--
``(i) a building, if such building is
placed in service after December 31, 2008, and
before January 1, 2010, or
``(ii) an improvement to a building,
if more than 50 percent of the building's square
footage is devoted to preparation of, and seating for
on-premises consumption of, prepared meals.
``(B) Exclusion from bonus depreciation.--Property
described in this paragraph shall not be considered
qualified property for purposes of subsection (k).''.
(2) Effective date.--The amendment made by this subsection
shall apply to property placed in service after December 31,
2008.
(c) Recovery Period for Depreciation of Certain Improvements to
Retail Space.--
(1) 15-year recovery period.--Section 168(e)(3)(E)
(relating to 15-year property) is amended by striking ``and''
at the end of clause (vii), by striking the period at the end
of clause (viii) and inserting ``, and'', and by adding at the
end the following new clause:
``(ix) any qualified retail improvement
property placed in service after December 31,
2008, and before January 1, 2010.''.
(2) Qualified retail improvement property.--Section 168(e)
is amended by adding at the end the following new paragraph:
``(8) Qualified retail improvement property.--
``(A) In general.--The term `qualified retail
improvement property' means any improvement to an
interior portion of a building which is nonresidential
real property if--
``(i) such portion is open to the general
public and is used in the retail trade or
business of selling tangible personal property
to the general public, and
``(ii) such improvement is placed in
service more than 3 years after the date the
building was first placed in service.
``(B) Improvements made by owner.--In the case of
an improvement made by the owner of such improvement,
such improvement shall be qualified retail improvement
property (if at all) only so long as such improvement
is held by such owner. Rules similar to the rules under
paragraph (6)(B) shall apply for purposes of the
preceding sentence.
``(C) Certain improvements not included.--Such term
shall not include any improvement for which the
expenditure is attributable to--
``(i) the enlargement of the building,
``(ii) any elevator or escalator,
``(iii) any structural component
benefitting a common area, or
``(iv) the internal structural framework of
the building.
``(D) Exclusion from bonus depreciation.--Property
described in this paragraph shall not be considered
qualified property for purposes of subsection (k).
``(E) Termination.--Such term shall not include any
improvement placed in service after December 31,
2009.''.
(3) Requirement to use straight line method.--Section
168(b)(3) is amended by adding at the end the following new
subparagraph:
``(I) Qualified retail improvement property
described in subsection (e)(8).''.
(4) Alternative system.--The table contained in section
168(g)(3)(B) is amended by inserting after the item relating to
subparagraph (E)(viii) the following new item:
``(E)(ix).................................................. 39''.
(5) Effective date.--The amendments made by this subsection
shall apply to property placed in service after December 31,
2008.
SEC. 306. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS TO
CONTROLLING EXEMPT ORGANIZATIONS.
(a) In General.--Clause (iv) of section 512(b)(13)(E) (relating to
termination) is amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to payments received or accrued after December 31, 2007.
SEC. 307. BASIS ADJUSTMENT TO STOCK OF S CORPORATIONS MAKING CHARITABLE
CONTRIBUTIONS OF PROPERTY.
(a) In General.--The last sentence of section 1367(a)(2) (relating
to decreases in basis) is amended by striking ``December 31, 2007'' and
inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to contributions made in taxable years beginning after December 31,
2007.
SEC. 308. INCREASE IN LIMIT ON COVER OVER OF RUM EXCISE TAX TO PUERTO
RICO AND THE VIRGIN ISLANDS.
(a) In General.--Paragraph (1) of section 7652(f) is amended by
striking ``January 1, 2008'' and inserting ``January 1, 2010''.
(b) Effective Date.--The amendment made by this section shall apply
to distilled spirits brought into the United States after December 31,
2007.
SEC. 309. EXTENSION OF ECONOMIC DEVELOPMENT CREDIT FOR AMERICAN SAMOA.
(a) In General.--Subsection (d) of section 119 of division A of the
Tax Relief and Health Care Act of 2006 is amended--
(1) by striking ``first two taxable years'' and inserting
``first 4 taxable years'', and
(2) by striking ``January 1, 2008'' and inserting ``January
1, 2010''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2007.
SEC. 310. EXTENSION OF MINE RESCUE TEAM TRAINING CREDIT.
Section 45N(e) (relating to termination) is amended by striking
``December 31, 2008'' and inserting ``December 31, 2009''.
SEC. 311. EXTENSION OF ELECTION TO EXPENSE ADVANCED MINE SAFETY
EQUIPMENT.
Section 179E(g) (relating to termination) is amended by striking
``December 31, 2008'' and inserting ``December 31, 2009''.
SEC. 312. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIBUTABLE TO
DOMESTIC PRODUCTION ACTIVITIES IN PUERTO RICO.
(a) In General.--Subparagraph (C) of section 199(d)(8) (relating to
termination) is amended--
(1) by striking ``first 2 taxable years'' and inserting
``first 4 taxable years'', and
(2) by striking ``January 1, 2008'' and inserting ``January
1, 2010''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2007.
SEC. 313. QUALIFIED ZONE ACADEMY BONDS.
(a) In General.--Subpart I of part IV of subchapter A of chapter 1
is amended by adding at the end the following new section:
``SEC. 54E. QUALIFIED ZONE ACADEMY BONDS.
``(a) Qualified Zone Academy Bonds.--For purposes of this
subchapter, the term `qualified zone academy bond' means any bond
issued as part of an issue if--
``(1) 100 percent of the available project proceeds of such
issue are to be used for a qualified purpose with respect to a
qualified zone academy established by an eligible local
education agency,
``(2) the bond is issued by a State or local government
within the jurisdiction of which such academy is located, and
``(3) the issuer--
``(A) designates such bond for purposes of this
section,
``(B) certifies that it has written assurances that
the private business contribution requirement of
subsection (b) will be met with respect to such
academy, and
``(C) certifies that it has the written approval of
the eligible local education agency for such bond
issuance.
``(b) Private Business Contribution Requirement.--For purposes of
subsection (a), the private business contribution requirement of this
subsection is met with respect to any issue if the eligible local
education agency that established the qualified zone academy has
written commitments from private entities to make qualified
contributions having a present value (as of the date of issuance of the
issue) of not less than 10 percent of the proceeds of the issue.
``(c) Limitation on Amount of Bonds Designated.--
``(1) National limitation.--There is a national zone
academy bond limitation for each calendar year. Such limitation
is $400,000,000 for 2008 and 2009, and, except as provided in
paragraph (4), zero thereafter.
``(2) Allocation of limitation.--The national zone academy
bond limitation for a calendar year shall be allocated by the
Secretary among the States on the basis of their respective
populations of individuals below the poverty line (as defined
by the Office of Management and Budget). The limitation amount
allocated to a State under the preceding sentence shall be
allocated by the State education agency to qualified zone
academies within such State.
``(3) Designation subject to limitation amount.--The
maximum aggregate face amount of bonds issued during any
calendar year which may be designated under subsection (a) with
respect to any qualified zone academy shall not exceed the
limitation amount allocated to such academy under paragraph (2)
for such calendar year.
``(4) Carryover of unused limitation.--
``(A) In general.--If for any calendar year--
``(i) the limitation amount for any State,
exceeds
``(ii) the amount of bonds issued during
such year which are designated under subsection
(a) with respect to qualified zone academies
within such State,
the limitation amount for such State for the following
calendar year shall be increased by the amount of such
excess.
``(B) Limitation on carryover.--Any carryforward of
a limitation amount may be carried only to the first 2
years following the unused limitation year. For
purposes of the preceding sentence, a limitation amount
shall be treated as used on a first-in first-out basis.
``(C) Coordination with section 1397e.--Any
carryover determined under section 1397E(e)(4)
(relating to carryover of unused limitation) with
respect to any State to calendar year 2008 or 2009
shall be treated for purposes of this section as a
carryover with respect to such State for such calendar
year under subparagraph (A), and the limitation of
subparagraph (B) shall apply to such carryover taking
into account the calendar years to which such carryover
relates.
``(d) Definitions.--For purposes of this section--
``(1) Qualified zone academy.--The term `qualified zone
academy' means any public school (or academic program within a
public school) which is established by and operated under the
supervision of an eligible local education agency to provide
education or training below the postsecondary level if--
``(A) such public school or program (as the case
may be) is designed in cooperation with business to
enhance the academic curriculum, increase graduation
and employment rates, and better prepare students for
the rigors of college and the increasingly complex
workforce,
``(B) students in such public school or program (as
the case may be) will be subject to the same academic
standards and assessments as other students educated by
the eligible local education agency,
``(C) the comprehensive education plan of such
public school or program is approved by the eligible
local education agency, and
``(D)(i) such public school is located in an
empowerment zone or enterprise community (including any
such zone or community designated after the date of the
enactment of this section), or
``(ii) there is a reasonable expectation (as of the
date of issuance of the bonds) that at least 35 percent
of the students attending such school or participating
in such program (as the case may be) will be eligible
for free or reduced-cost lunches under the school lunch
program established under the National School Lunch
Act.
``(2) Eligible local education agency.--For purposes of
this section, the term `eligible local education agency' means
any local educational agency as defined in section 9101 of the
Elementary and Secondary Education Act of 1965.
``(3) Qualified purpose.--The term `qualified purpose'
means, with respect to any qualified zone academy--
``(A) rehabilitating or repairing the public school
facility in which the academy is established,
``(B) providing equipment for use at such academy,
``(C) developing course materials for education to
be provided at such academy, and
``(D) training teachers and other school personnel
in such academy.
``(4) Qualified contributions.--The term `qualified
contribution' means any contribution (of a type and quality
acceptable to the eligible local education agency) of--
``(A) equipment for use in the qualified zone
academy (including state-of-the-art technology and
vocational equipment),
``(B) technical assistance in developing curriculum
or in training teachers in order to promote appropriate
market driven technology in the classroom,
``(C) services of employees as volunteer mentors,
``(D) internships, field trips, or other
educational opportunities outside the academy for
students, or
``(E) any other property or service specified by
the eligible local education agency.''.
(b) Conforming Amendments.--
(1) Paragraph (1) of section 54A(d), as amended by this
Act, is amended by striking ``or'' at the end of subparagraph
(B), by inserting ``or'' at the end of subparagraph (C), and by
inserting after subparagraph (C) the following new
subparagraph:
``(D) a qualified zone academy bond,''.
(2) Subparagraph (C) of section 54A(d)(2), as amended by
this Act, is amended by striking ``and'' at the end of clause
(ii), by striking the period at the end of clause (iii) and
inserting ``, and'', and by adding at the end the following new
clause:
``(iv) in the case of a qualified zone
academy bond, a purpose specified in section
54E(a)(1).''.
(3) Section 1397E is amended by adding at the end the
following new subsection:
``(m) Termination.--This section shall not apply to any obligation
issued after the date of the enactment of the Tax Extenders and
Alternative Minimum Tax Relief Act of 2008.''.
(4) The table of sections for subpart I of part IV of
subchapter A of chapter 1 is amended by adding at the end the
following new item:
``Sec. 54E. Qualified zone academy bonds.''.
(c) Effective Date.--The amendments made by this section shall
apply to obligations issued after the date of the enactment of this
Act.
SEC. 314. INDIAN EMPLOYMENT CREDIT.
(a) In General.--Subsection (f) of section 45A (relating to
termination) is amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2007.
SEC. 315. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON INDIAN
RESERVATIONS.
(a) In General.--Paragraph (8) of section 168(j) (relating to
termination) is amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to property placed in service after December 31, 2007.
SEC. 316. RAILROAD TRACK MAINTENANCE.
(a) In General.--Subsection (f) of section 45G (relating to
application of section) is amended by striking ``January 1, 2008'' and
inserting ``January 1, 2010''.
(b) Credit Allowed Against Alternative Minimum Tax.--Subparagraph
(B) of section 38(c)(4), as amended by this Act, is amended--
(1) by redesignating clauses (v), (vi), and (vii) as
clauses (vi), (vii), and (viii), respectively, and
(2) by inserting after clause (iv) the following new
clause:
``(v) the credit determined under section
45G,''.
(c) Effective Dates.--
(1) The amendment made by subsection (a) shall apply to
expenditures paid or incurred during taxable years beginning
after December 31, 2007.
(2) The amendments made by subsection (b) shall apply to
credits determined under section 45G of the Internal Revenue
Code of 1986 in taxable years beginning after December 31,
2007, and to carrybacks of such credits.
SEC. 317. SEVEN-YEAR COST RECOVERY PERIOD FOR MOTORSPORTS RACING TRACK
FACILITY.
(a) In General.--Subparagraph (D) of section 168(i)(15) (relating
to termination) is amended by striking ``December 31, 2007'' and
inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to property placed in service after December 31, 2007.
SEC. 318. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.
(a) In General.--Subsection (h) of section 198 (relating to
termination) is amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to expenditures paid or incurred after December 31, 2007.
SEC. 319. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR HURRICANE
KATRINA EMPLOYEES.
(a) In General.--Paragraph (1) of section 201(b) of the Katrina
Emergency Tax Relief Act of 2005 is amended by striking ``2-year'' and
inserting ``4-year''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to individuals hired after August 27, 2007.
SEC. 320. EXTENSION OF INCREASED REHABILITATION CREDIT FOR STRUCTURES
IN THE GULF OPPORTUNITY ZONE.
(a) In General.--Subsection (h) of section 1400N is amended by
striking ``December 31, 2008'' and inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to expenditures paid or incurred after the date of the enactment of
this Act.
SEC. 321. ENHANCED DEDUCTION FOR QUALIFIED COMPUTER CONTRIBUTIONS.
(a) In General.--Subparagraph (G) of section 170(e)(6) is amended
by striking ``December 31, 2007'' and inserting ``December 31, 2009''.
(b) Effective Date.--The amendment made by this section shall apply
to contributions made during taxable years beginning after December 31,
2007.
SEC. 322. TAX INCENTIVES FOR INVESTMENT IN THE DISTRICT OF COLUMBIA.
(a) Designation of Zone.--
(1) In general.--Subsection (f) of section 1400 is amended
by striking ``2007'' both places it appears and inserting
``2009''.
(2) Effective date.--The amendments made by this subsection
shall apply to periods beginning after December 31, 2007.
(b) Tax-Exempt Economic Development Bonds.--
(1) In general.--Subsection (b) of section 1400A is amended
by striking ``2007'' and inserting ``2009''.
(2) Effective date.--The amendment made by this subsection
shall apply to bonds issued after December 31, 2007.
(c) Zero Percent Capital Gains Rate.--
(1) In general.--Subsection (b) of section 1400B is amended
by striking ``2008'' each place it appears and inserting
``2010''.
(2) Conforming amendments.--
(A) Section 1400B(e)(2) is amended--
(i) by striking ``2012'' and inserting
``2014'', and
(ii) by striking ``2012'' in the heading
thereof and inserting ``2014''.
(B) Section 1400B(g)(2) is amended by striking
``2012'' and inserting ``2014''.
(C) Section 1400F(d) is amended by striking
``2012'' and inserting ``2014''.
(3) Effective dates.--
(A) Extension.--The amendments made by paragraph
(1) shall apply to acquisitions after December 31,
2007.
(B) Conforming amendments.--The amendments made by
paragraph (2) shall take effect on the date of the
enactment of this Act.
(d) First-Time Homebuyer Credit.--
(1) In general.--Subsection (i) of section 1400C is amended
by striking ``2008'' and inserting ``2010''.
(2) Effective date.--The amendment made by this subsection
shall apply to property purchased after December 31, 2007.
SEC. 323. ENHANCED CHARITABLE DEDUCTIONS FOR CONTRIBUTIONS OF FOOD
INVENTORY.
(a) Increased Amount of Deduction.--
(1) In general.--Clause (iv) of section 170(e)(3)(C)
(relating to termination) is amended by striking ``December 31,
2007'' and inserting ``December 31, 2009''.
(2) Effective date.--The amendment made by this subsection
shall apply to contributions made after December 31, 2007.
(b) Temporary Suspension of Limitations on Charitable
Contributions.--
(1) In general.--Section 170(b) is amended by adding at the
end the following new paragraph:
``(3) Temporary suspension of limitations on charitable
contributions.--In the case of a qualified farmer or rancher
(as defined in paragraph (1)(E)(v)), any charitable
contribution of food--
``(A) to which subsection (e)(3)(C) applies
(without regard to clause (ii) thereof), and
``(B) which is made during the period beginning on
the date of the enactment of this paragraph and before
January 1, 2009,
shall be treated for purposes of paragraph (1)(E) or (2)(B),
whichever is applicable, as if it were a qualified conservation
contribution which is made by a qualified farmer or rancher and
which otherwise meets the requirements of such paragraph.''.
(2) Effective date.--The amendment made by this subsection
shall apply to taxable years ending after the date of the
enactment of this Act.
SEC. 324. EXTENSION OF ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS
OF BOOK INVENTORY.
(a) Extension.--Clause (iv) of section 170(e)(3)(D) (relating to
termination) is amended by striking ``December 31, 2007'' and inserting
``December 31, 2009''.
(b) Clerical Amendment.--Clause (iii) of section 170(e)(3)(D)
(relating to certification by donee) is amended by inserting ``of
books'' after ``to any contribution''.
(c) Effective Date.--The amendments made by this section shall
apply to contributions made after December 31, 2007.
SEC. 325. EXTENSION AND MODIFICATION OF DUTY SUSPENSION ON WOOL
PRODUCTS; WOOL RESEARCH FUND; WOOL DUTY REFUNDS.
(a) Extension of Temporary Duty Reductions.--Each of the following
headings of the Harmonized Tariff Schedule of the United States is
amended by striking the date in the effective period column and
inserting ``12/31/2014'':
(1) Heading 9902.51.11 (relating to fabrics of worsted
wool).
(2) Heading 9902.51.13 (relating to yarn of combed wool).
(3) Heading 9902.51.14 (relating to wool fiber, waste,
garnetted stock, combed wool, or wool top).
(4) Heading 9902.51.15 (relating to fabrics of combed
wool).
(5) Heading 9902.51.16 (relating to fabrics of combed
wool).
(b) Extension of Duty Refunds and Wool Research Trust Fund.--
(1) In general.--Section 4002(c) of the Wool Suit and
Textile Trade Extension Act of 2004 (Public Law 108-429; 118
Stat. 2603) is amended--
(A) in paragraph (3)(C), by striking ``2010'' and
inserting ``2015''; and
(B) in paragraph (6)(A), by striking ``through
2009'' and inserting ``through 2014''.
(2) Sunset.--Section 506(f) of the Trade and Development
Act of 2000 (Public 106-200; 114 Stat. 303 (7 U.S.C. 7101
note)) is amended by striking ``2010'' and inserting ``2015''.
TITLE IV--EXTENSION OF TAX ADMINISTRATION PROVISIONS
SEC. 401. PERMANENT AUTHORITY FOR UNDERCOVER OPERATIONS.
(a) In General.--Section 7608(c) (relating to rules relating to
undercover operations) is amended by striking paragraph (6).
(b) Effective Date.--The amendment made by this section shall apply
to operations conducted after the date of the enactment of this Act.
SEC. 402. PERMANENT AUTHORITY FOR DISCLOSURE OF INFORMATION RELATING TO
TERRORIST ACTIVITIES.
(a) Disclosure of Return Information to Apprise Appropriate
Officials of Terrorist Activities.--Subparagraph (C) of section
6103(i)(3) is amended by striking clause (iv).
(b) Disclosure Upon Request of Information Relating to Terrorist
Activities.--Paragraph (7) of section 6103(i) is amended by striking
subparagraph (E).
(c) Effective Date.--The amendments made by this section shall
apply to disclosures after the date of the enactment of this Act.
TITLE V--ADDITIONAL TAX RELIEF AND OTHER TAX PROVISIONS
Subtitle A--General Provisions
SEC. 501. $8,500 INCOME THRESHOLD USED TO CALCULATE REFUNDABLE PORTION
OF CHILD TAX CREDIT.
(a) In General.--Section 24(d) is amended by adding at the end the
following new paragraph:
``(4) Special rule for 2008.--Notwithstanding paragraph
(3), in the case of any taxable year beginning in 2008, the
dollar amount in effect for such taxable year under paragraph
(1)(B)(i) shall be $8,500.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2007.
SEC. 502. PROVISIONS RELATED TO FILM AND TELEVISION PRODUCTIONS.
(a) Extension of Expensing Rules for Qualified Film and Television
Productions.--Section 181(f) (relating to termination) is amended by
striking ``December 31, 2008'' and inserting ``December 31, 2009''.
(b) Modification of Limitation on Expensing.--Subparagraph (A) of
section 181(a)(2) is amended to read as follows:
``(A) In general.--Paragraph (1) shall not apply to
so much of the aggregate cost of any qualified film or
television production as exceeds $15,000,000.''.
(c) Modifications to Deduction for Domestic Activities.--
(1) Determination of w-2 wages.--Paragraph (2) of section
199(b) is amended by adding at the end the following new
subparagraph:
``(D) Special rule for qualified film.--In the case
of a qualified film, such term shall include
compensation for services performed in the United
States by actors, production personnel, directors, and
producers.''.
(2) Definition of qualified film.--Paragraph (6) of section
199(c) is amended by adding at the end the following: ``A
qualified film shall include any copyrights, trademarks, or
other intangibles with respect to such film. The methods and
means of distributing a qualified film shall not affect the
availability of the deduction under this section.''.
(3) Partnerships.--Subparagraph (A) of section 199(d)(1) is
amended by striking ``and'' at the end of clause (ii), by
striking the period at the end of clause (iii) and inserting
``, and'', and by adding at the end the following new clause:
``(iv) in the case of each partner of a
partnership, or shareholder of an S
corporation, who owns (directly or indirectly)
at least 20 percent of the capital interests in
such partnership or of the stock of such S
corporation--
``(I) such partner or shareholder
shall be treated as having engaged
directly in any film produced by such
partnership or S corporation, and
``(II) such partnership or S
corporation shall be treated as having
engaged directly in any film produced
by such partner or shareholder.''.
(d) Conforming Amendment.--Section 181(d)(3)(A) is amended by
striking ``actors'' and all that follows and inserting ``actors,
production personnel, directors, and producers.''.
(e) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
qualified film and television productions commencing after
December 31, 2007.
(2) Deduction.--The amendments made by subsection (c) shall
apply to taxable years beginning after December 31, 2007.
SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED
FOR USE BY CHILDREN.
(a) In General.--Paragraph (2) of section 4161(b) is amended by
redesignating subparagraph (B) as subparagraph (C) and by inserting
after subparagraph (A) the following new subparagraph:
``(B) Exemption for certain wooden arrow shafts.--
Subparagraph (A) shall not apply to any shaft
consisting of all natural wood with no laminations or
artificial means of enhancing the spine of such shaft
(whether sold separately or incorporated as part of a
finished or unfinished product) of a type used in the
manufacture of any arrow which after its assembly--
``(i) measures \5/16\ of an inch or less in
diameter, and
``(ii) is not suitable for use with a bow
described in paragraph (1)(A).''.
(b) Effective Date.--The amendments made by this section shall
apply to shafts first sold after the date of enactment of this Act.
SEC. 504. INCOME AVERAGING FOR AMOUNTS RECEIVED IN CONNECTION WITH THE
EXXON VALDEZ LITIGATION.
(a) Income Averaging of Amounts Received From the Exxon Valdez
Litigation.--For purposes of section 1301 of the Internal Revenue Code
of 1986--
(1) any qualified taxpayer who receives any qualified
settlement income in any taxable year shall be treated as
engaged in a fishing business (determined without regard to the
commercial nature of the business), and
(2) such qualified settlement income shall be treated as
income attributable to such a fishing business for such taxable
year.
(b) Contributions of Amounts Received to Retirement Accounts.--
(1) In general.--Any qualified taxpayer who receives
qualified settlement income during the taxable year may, at any
time before the end of the taxable year in which such income
was received, make one or more contributions to an eligible
retirement plan of which such qualified taxpayer is a
beneficiary in an aggregate amount not to exceed the lesser
of--
(A) $100,000 (reduced by the amount of qualified
settlement income contributed to an eligible retirement
plan in prior taxable years pursuant to this
subsection), or
(B) the amount of qualified settlement income
received by the individual during the taxable year.
(2) Time when contributions deemed made.--For purposes of
paragraph (1), a qualified taxpayer shall be deemed to have
made a contribution to an eligible retirement plan on the last
day of the taxable year in which such income is received if the
contribution is made on account of such taxable year and is
made not later than the time prescribed by law for filing the
return for such taxable year (not including extensions
thereof).
(3) Treatment of contributions to eligible retirement
plans.--For purposes of the Internal Revenue Code of 1986, if a
contribution is made pursuant to paragraph (1) with respect to
qualified settlement income, then--
(A) except as provided in paragraph (4)--
(i) to the extent of such contribution, the
qualified settlement income shall not be
included in taxable income, and
(ii) for purposes of section 72 of such
Code, such contribution shall not be considered
to be investment in the contract,
(B) the qualified taxpayer shall, to the extent of
the amount of the contribution, be treated--
(i) as having received the qualified
settlement income--
(I) in the case of a contribution
to an individual retirement plan (as
defined under section 7701(a)(37) of
such Code), in a distribution described
in section 408(d)(3) of such Code, and
(II) in the case of any other
eligible retirement plan, in an
eligible rollover distribution (as
defined under section 402(f)(2) of such
Code), and
(ii) as having transferred the amount to
the eligible retirement plan in a direct
trustee to trustee transfer within 60 days of
the distribution,
(C) section 408(d)(3)(B) of the Internal Revenue
Code of 1986 shall not apply with respect to amounts
treated as a rollover under this paragraph, and
(D) section 408A(c)(3)(B) of the Internal Revenue
Code of 1986 shall not apply with respect to amounts
contributed to a Roth IRA (as defined under section
408A(b) of such Code) or a designated Roth contribution
to an applicable retirement plan (within the meaning of
section 402A of such Code) under this paragraph.
(4) Special rule for roth iras and roth 401(k)s.--For
purposes of the Internal Revenue Code of 1986, if a
contribution is made pursuant to paragraph (1) with respect to
qualified settlement income to a Roth IRA (as defined under
section 408A(b) of such Code) or as a designated Roth
contribution to an applicable retirement plan (within the
meaning of section 402A of such Code), then--
(A) the qualified settlement income shall be
includible in taxable income, and
(B) for purposes of section 72 of such Code, such
contribution shall be considered to be investment in
the contract.
(5) Eligible retirement plan.--For purpose of this
subsection, the term ``eligible retirement plan'' has the
meaning given such term under section 402(c)(8)(B) of the
Internal Revenue Code of 1986.
(c) Treatment of Qualified Settlement Income Under Employment
Taxes.--
(1) SECA.--For purposes of chapter 2 of the Internal
Revenue Code of 1986 and section 211 of the Social Security
Act, no portion of qualified settlement income received by a
qualified taxpayer shall be treated as self-employment income.
(2) FICA.--For purposes of chapter 21 of the Internal
Revenue Code of 1986 and section 209 of the Social Security
Act, no portion of qualified settlement income received by a
qualified taxpayer shall be treated as wages.
(d) Qualified Taxpayer.--For purposes of this section, the term
``qualified taxpayer'' means--
(1) any individual who is a plaintiff in the civil action
In re Exxon Valdez, No. 89-095-CV (HRH) (Consolidated) (D.
Alaska); or
(2) any individual who is a beneficiary of the estate of
such a plaintiff who--
(A) acquired the right to receive qualified
settlement income from that plaintiff; and
(B) was the spouse or an immediate relative of that
plaintiff.
(e) Qualified Settlement Income.--For purposes of this section, the
term ``qualified settlement income'' means any interest and punitive
damage awards which are--
(1) otherwise includible in taxable income, and
(2) received (whether as lump sums or periodic payments) in
connection with the civil action In re Exxon Valdez, No. 89-
095-CV (HRH) (Consolidated) (D. Alaska) (whether pre- or post-
judgment and whether related to a settlement or judgment).
SEC. 505. CERTAIN FARMING BUSINESS MACHINERY AND EQUIPMENT TREATED AS
5-YEAR PROPERTY.
(a) In General.--Section 168(e)(3)(B) (defining 5-year property) is
amended by striking ``and'' at the end of clause (v), by striking the
period at the end of clause (vi)(III) and inserting ``, and'', and by
inserting after clause (vi) the following new clause:
``(vii) any machinery or equipment (other
than any grain bin, cotton ginning asset,
fence, or other land improvement) which is used
in a farming business (as defined in section
263A(e)(4)), the original use of which
commences with the taxpayer after December 31,
2008, and which is placed in service before
January 1, 2010.''.
(b) Alternative System.--The table contained in section
168(g)(3)(B) (relating to special rule for certain property assigned to
classes) is amended by inserting after the item relating to
subparagraph (B)(iii) the following:
(B)(vii)................................ 10''.
(c) Effective Date.--The amendments made by this section shall
apply to property placed in service after December 31, 2008.
SEC. 506. MODIFICATION OF PENALTY ON UNDERSTATEMENT OF TAXPAYER'S
LIABILITY BY TAX RETURN PREPARER.
(a) In General.--Subsection (a) of section 6694 is amended to read
as follows:
``(a) Understatement Due to Unreasonable Positions.--
``(1) In general.--If a tax return preparer--
``(A) prepares any return or claim of refund with
respect to which any part of an understatement of
liability is due to a position described in paragraph
(2), and
``(B) knew (or reasonably should have known) of the
position,
such tax return preparer shall pay a penalty with respect to
each such return or claim in an amount equal to the greater of
$1,000 or 50 percent of the income derived (or to be derived)
by the tax return preparer with respect to the return or claim.
``(2) Unreasonable position.--
``(A) In general.--Except as otherwise provided in
this paragraph, a position is described in this
paragraph unless there is or was substantial authority
for the position.
``(B) Disclosed positions.--If the position was
disclosed as provided in section 6662(d)(2)(B)(ii)(I)
and is not a position to which subparagraph (C)
applies, the position is described in this paragraph
unless there is a reasonable basis for the position.
``(C) Tax shelters and reportable transactions.--If
the position is with respect to a tax shelter (as
defined in section 6662(d)(2)(C)(ii)) or a reportable
transaction to which section 6662A applies, the
position is described in this paragraph unless it is
reasonable to believe that the position would more
likely than not be sustained on its merits.
``(3) Reasonable cause exception.--No penalty shall be
imposed under this subsection if it is shown that there is
reasonable cause for the understatement and the tax return
preparer acted in good faith.''.
(b) Effective Date.--The amendment made by this section shall
apply--
(1) in the case of a position other than a position
described in subparagraph (C) of section 6694(a)(2) of the
Internal Revenue Code of 1986 (as amended by this section), to
returns prepared after May 25, 2007, and
(2) in the case of a position described in such
subparagraph (C), to returns prepared for taxable years ending
after the date of the enactment of this Act.
Subtitle B--Paul Wellstone and Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008
SEC. 511. SHORT TITLE.
This subtitle may be cited as the ``Paul Wellstone and Pete
Domenici Mental Health Parity and Addiction Equity Act of 2008''.
SEC. 512. MENTAL HEALTH PARITY.
(a) Amendments to ERISA.--Section 712 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1185a) is amended--
(1) in subsection (a), by adding at the end the following:
``(3) Financial requirements and treatment limitations.--
``(A) In general.--In the case of a group health
plan (or health insurance coverage offered in
connection with such a plan) that provides both medical
and surgical benefits and mental health or substance
use disorder benefits, such plan or coverage shall
ensure that--
``(i) the financial requirements applicable
to such mental health or substance use disorder
benefits are no more restrictive than the
predominant financial requirements applied to
substantially all medical and surgical benefits
covered by the plan (or coverage), and there
are no separate cost sharing requirements that
are applicable only with respect to mental
health or substance use disorder benefits; and
``(ii) the treatment limitations applicable
to such mental health or substance use disorder
benefits are no more restrictive than the
predominant treatment limitations applied to
substantially all medical and surgical benefits
covered by the plan (or coverage) and there are
no separate treatment limitations that are
applicable only with respect to mental health
or substance use disorder benefits.
``(B) Definitions.--In this paragraph:
``(i) Financial requirement.--The term
`financial requirement' includes deductibles,
copayments, coinsurance, and out-of-pocket
expenses, but excludes an aggregate lifetime
limit and an annual limit subject to paragraphs
(1) and (2),
``(ii) Predominant.--A financial
requirement or treatment limit is considered to
be predominant if it is the most common or
frequent of such type of limit or requirement.
``(iii) Treatment limitation.--The term
`treatment limitation' includes limits on the
frequency of treatment, number of visits, days
of coverage, or other similar limits on the
scope or duration of treatment.
``(4) Availability of plan information.--The criteria for
medical necessity determinations made under the plan with
respect to mental health or substance use disorder benefits (or
the health insurance coverage offered in connection with the
plan with respect to such benefits) shall be made available by
the plan administrator (or the health insurance issuer offering
such coverage) in accordance with regulations to any current or
potential participant, beneficiary, or contracting provider
upon request. The reason for any denial under the plan (or
coverage) of reimbursement or payment for services with respect
to mental health or substance use disorder benefits in the case
of any participant or beneficiary shall, on request or as
otherwise required, be made available by the plan administrator
(or the health insurance issuer offering such coverage) to the
participant or beneficiary in accordance with regulations.
``(5) Out-of-network providers.--In the case of a plan or
coverage that provides both medical and surgical benefits and
mental health or substance use disorder benefits, if the plan
or coverage provides coverage for medical or surgical benefits
provided by out-of-network providers, the plan or coverage
shall provide coverage for mental health or substance use
disorder benefits provided by out-of-network providers in a
manner that is consistent with the requirements of this
section.'';
(2) in subsection (b), by amending paragraph (2) to read as
follows:
``(2) in the case of a group health plan (or health
insurance coverage offered in connection with such a plan) that
provides mental health or substance use disorder benefits, as
affecting the terms and conditions of the plan or coverage
relating to such benefits under the plan or coverage, except as
provided in subsection (a).'';
(3) in subsection (c)--
(A) in paragraph (1)(B)--
(i) by inserting ``(or 1 in the case of an
employer residing in a State that permits small
groups to include a single individual)'' after
``at least 2'' the first place that such
appears; and
(ii) by striking ``and who employs at least
2 employees on the first day of the plan
year''; and
(B) by striking paragraph (2) and inserting the
following:
``(2) Cost exemption.--
``(A) In general.--With respect to a group health
plan (or health insurance coverage offered in
connection with such a plan), if the application of
this section to such plan (or coverage) results in an
increase for the plan year involved of the actual total
costs of coverage with respect to medical and surgical
benefits and mental health and substance use disorder
benefits under the plan (as determined and certified
under subparagraph (C)) by an amount that exceeds the
applicable percentage described in subparagraph (B) of
the actual total plan costs, the provisions of this
section shall not apply to such plan (or coverage)
during the following plan year, and such exemption
shall apply to the plan (or coverage) for 1 plan year.
An employer may elect to continue to apply mental
health and substance use disorder parity pursuant to
this section with respect to the group health plan (or
coverage) involved regardless of any increase in total
costs.
``(B) Applicable percentage.--With respect to a
plan (or coverage), the applicable percentage described
in this subparagraph shall be--
``(i) 2 percent in the case of the first
plan year in which this section is applied; and
``(ii) 1 percent in the case of each
subsequent plan year.
``(C) Determinations by actuaries.--Determinations
as to increases in actual costs under a plan (or
coverage) for purposes of this section shall be made
and certified by a qualified and licensed actuary who
is a member in good standing of the American Academy of
Actuaries. All such determinations shall be in a
written report prepared by the actuary. The report, and
all underlying documentation relied upon by the
actuary, shall be maintained by the group health plan
or health insurance issuer for a period of 6 years
following the notification made under subparagraph (E).
``(D) 6-month determinations.--If a group health
plan (or a health insurance issuer offering coverage in
connection with a group health plan) seeks an exemption
under this paragraph, determinations under subparagraph
(A) shall be made after such plan (or coverage) has
complied with this section for the first 6 months of
the plan year involved.
``(E) Notification.--
``(i) In general.--A group health plan (or
a health insurance issuer offering coverage in
connection with a group health plan) that,
based upon a certification described under
subparagraph (C), qualifies for an exemption
under this paragraph, and elects to implement
the exemption, shall promptly notify the
Secretary, the appropriate State agencies, and
participants and beneficiaries in the plan of
such election.
``(ii) Requirement.--A notification to the
Secretary under clause (i) shall include--
``(I) a description of the number
of covered lives under the plan (or
coverage) involved at the time of the
notification, and as applicable, at the
time of any prior election of the cost-
exemption under this paragraph by such
plan (or coverage);
``(II) for both the plan year upon
which a cost exemption is sought and
the year prior, a description of the
actual total costs of coverage with
respect to medical and surgical
benefits and mental health and
substance use disorder benefits under
the plan; and
``(III) for both the plan year upon
which a cost exemption is sought and
the year prior, the actual total costs
of coverage with respect to mental
health and substance use disorder
benefits under the plan.
``(iii) Confidentiality.--A notification to
the Secretary under clause (i) shall be
confidential. The Secretary shall make
available, upon request and on not more than an
annual basis, an anonymous itemization of such
notifications, that includes--
``(I) a breakdown of States by the
size and type of employers submitting
such notification; and
``(II) a summary of the data
received under clause (ii).
``(F) Audits by appropriate agencies.--To determine
compliance with this paragraph, the Secretary may audit
the books and records of a group health plan or health
insurance issuer relating to an exemption, including
any actuarial reports prepared pursuant to subparagraph
(C), during the 6 year period following the
notification of such exemption under subparagraph (E).
A State agency receiving a notification under
subparagraph (E) may also conduct such an audit with
respect to an exemption covered by such
notification.'';
(4) in subsection (e), by striking paragraph (4) and
inserting the following:
``(4) Mental health benefits.--The term `mental health
benefits' means benefits with respect to services for mental
health conditions, as defined under the terms of the plan and
in accordance with applicable Federal and State law.
``(5) Substance use disorder benefits.--The term `substance
use disorder benefits' means benefits with respect to services
for substance use disorders, as defined under the terms of the
plan and in accordance with applicable Federal and State
law.'';
(5) by striking subsection (f);
(6) by inserting after subsection (e) the following:
``(f) Secretary Report.--The Secretary shall, by January 1, 2012,
and every two years thereafter, submit to the appropriate committees of
Congress a report on compliance of group health plans (and health
insurance coverage offered in connection with such plans) with the
requirements of this section. Such report shall include the results of
any surveys or audits on compliance of group health plans (and health
insurance coverage offered in connection with such plans) with such
requirements and an analysis of the reasons for any failures to comply.
``(g) Notice and Assistance.--The Secretary, in cooperation with
the Secretaries of Health and Human Services and Treasury, as
appropriate, shall publish and widely disseminate guidance and
information for group health plans, participants and beneficiaries,
applicable State and local regulatory bodies, and the National
Association of Insurance Commissioners concerning the requirements of
this section and shall provide assistance concerning such requirements
and the continued operation of applicable State law. Such guidance and
information shall inform participants and beneficiaries of how they may
obtain assistance under this section, including, where appropriate,
assistance from State consumer and insurance agencies.'';
(7) by striking ``mental health benefits'' and inserting
``mental health and substance use disorder benefits'' each
place it appears in subsections (a)(1)(B)(i), (a)(1)(C),
(a)(2)(B)(i), and (a)(2)(C); and
(8) by striking ``mental health benefits'' and inserting
``mental health or substance use disorder benefits'' each place
it appears (other than in any provision amended by the previous
paragraph).
(b) Amendments to Public Health Service Act.--Section 2705 of the
Public Health Service Act (42 U.S.C. 300gg-5) is amended--
(1) in subsection (a), by adding at the end the following:
``(3) Financial requirements and treatment limitations.--
``(A) In general.--In the case of a group health
plan (or health insurance coverage offered in
connection with such a plan) that provides both medical
and surgical benefits and mental health or substance
use disorder benefits, such plan or coverage shall
ensure that--
``(i) the financial requirements applicable
to such mental health or substance use disorder
benefits are no more restrictive than the
predominant financial requirements applied to
substantially all medical and surgical benefits
covered by the plan (or coverage), and there
are no separate cost sharing requirements that
are applicable only with respect to mental
health or substance use disorder benefits; and
``(ii) the treatment limitations applicable
to such mental health or substance use disorder
benefits are no more restrictive than the
predominant treatment limitations applied to
substantially all medical and surgical benefits
covered by the plan (or coverage) and there are
no separate treatment limitations that are
applicable only with respect to mental health
or substance use disorder benefits.
``(B) Definitions.--In this paragraph:
``(i) Financial requirement.--The term
`financial requirement' includes deductibles,
copayments, coinsurance, and out-of-pocket
expenses, but excludes an aggregate lifetime
limit and an annual limit subject to paragraphs
(1) and (2).
``(ii) Predominant.--A financial
requirement or treatment limit is considered to
be predominant if it is the most common or
frequent of such type of limit or requirement.
``(iii) Treatment limitation.--The term
`treatment limitation' includes limits on the
frequency of treatment, number of visits, days
of coverage, or other similar limits on the
scope or duration of treatment.
``(4) Availability of plan information.--The criteria for
medical necessity determinations made under the plan with
respect to mental health or substance use disorder benefits (or
the health insurance coverage offered in connection with the
plan with respect to such benefits) shall be made available by
the plan administrator (or the health insurance issuer offering
such coverage) in accordance with regulations to any current or
potential participant, beneficiary, or contracting provider
upon request. The reason for any denial under the plan (or
coverage) of reimbursement or payment for services with respect
to mental health or substance use disorder benefits in the case
of any participant or beneficiary shall, on request or as
otherwise required, be made available by the plan administrator
(or the health insurance issuer offering such coverage) to the
participant or beneficiary in accordance with regulations.
``(5) Out-of-network providers.--In the case of a plan or
coverage that provides both medical and surgical benefits and
mental health or substance use disorder benefits, if the plan
or coverage provides coverage for medical or surgical benefits
provided by out-of-network providers, the plan or coverage
shall provide coverage for mental health or substance use
disorder benefits provided by out-of-network providers in a
manner that is consistent with the requirements of this
section.'';
(2) in subsection (b), by amending paragraph (2) to read as
follows:
``(2) in the case of a group health plan (or health
insurance coverage offered in connection with such a plan) that
provides mental health or substance use disorder benefits, as
affecting the terms and conditions of the plan or coverage
relating to such benefits under the plan or coverage, except as
provided in subsection (a).'';
(3) in subsection (c)--
(A) in paragraph (1), by inserting before the
period the following: ``(as defined in section
2791(e)(4), except that for purposes of this paragraph
such term shall include employers with 1 employee in
the case of an employer residing in a State that
permits small groups to include a single individual)'';
and
(B) by striking paragraph (2) and inserting the
following:
``(2) Cost exemption.--
``(A) In general.--With respect to a group health
plan (or health insurance coverage offered in
connection with such a plan), if the application of
this section to such plan (or coverage) results in an
increase for the plan year involved of the actual total
costs of coverage with respect to medical and surgical
benefits and mental health and substance use disorder
benefits under the plan (as determined and certified
under subparagraph (C)) by an amount that exceeds the
applicable percentage described in subparagraph (B) of
the actual total plan costs, the provisions of this
section shall not apply to such plan (or coverage)
during the following plan year, and such exemption
shall apply to the plan (or coverage) for 1 plan year.
An employer may elect to continue to apply mental
health and substance use disorder parity pursuant to
this section with respect to the group health plan (or
coverage) involved regardless of any increase in total
costs.
``(B) Applicable percentage.--With respect to a
plan (or coverage), the applicable percentage described
in this subparagraph shall be--
``(i) 2 percent in the case of the first
plan year in which this section is applied; and
``(ii) 1 percent in the case of each
subsequent plan year.
``(C) Determinations by actuaries.--Determinations
as to increases in actual costs under a plan (or
coverage) for purposes of this section shall be made
and certified by a qualified and licensed actuary who
is a member in good standing of the American Academy of
Actuaries. All such determinations shall be in a
written report prepared by the actuary. The report, and
all underlying documentation relied upon by the
actuary, shall be maintained by the group health plan
or health insurance issuer for a period of 6 years
following the notification made under subparagraph (E).
``(D) 6-month determinations.--If a group health
plan (or a health insurance issuer offering coverage in
connection with a group health plan) seeks an exemption
under this paragraph, determinations under subparagraph
(A) shall be made after such plan (or coverage) has
complied with this section for the first 6 months of
the plan year involved.
``(E) Notification.--
``(i) In general.--A group health plan (or
a health insurance issuer offering coverage in
connection with a group health plan) that,
based upon a certification described under
subparagraph (C), qualifies for an exemption
under this paragraph, and elects to implement
the exemption, shall promptly notify the
Secretary, the appropriate State agencies, and
participants and beneficiaries in the plan of
such election.
``(ii) Requirement.--A notification to the
Secretary under clause (i) shall include--
``(I) a description of the number
of covered lives under the plan (or
coverage) involved at the time of the
notification, and as applicable, at the
time of any prior election of the cost-
exemption under this paragraph by such
plan (or coverage);
``(II) for both the plan year upon
which a cost exemption is sought and
the year prior, a description of the
actual total costs of coverage with
respect to medical and surgical
benefits and mental health and
substance use disorder benefits under
the plan; and
``(III) for both the plan year upon
which a cost exemption is sought and
the year prior, the actual total costs
of coverage with respect to mental
health and substance use disorder
benefits under the plan.
``(iii) Confidentiality.--A notification to
the Secretary under clause (i) shall be
confidential. The Secretary shall make
available, upon request and on not more than an
annual basis, an anonymous itemization of such
notifications, that includes--
``(I) a breakdown of States by the
size and type of employers submitting
such notification; and
``(II) a summary of the data
received under clause (ii).
``(F) Audits by appropriate agencies.--To determine
compliance with this paragraph, the Secretary may audit
the books and records of a group health plan or health
insurance issuer relating to an exemption, including
any actuarial reports prepared pursuant to subparagraph
(C), during the 6 year period following the
notification of such exemption under subparagraph (E).
A State agency receiving a notification under
subparagraph (E) may also conduct such an audit with
respect to an exemption covered by such
notification.'';
(4) in subsection (e), by striking paragraph (4) and
inserting the following:
``(4) Mental health benefits.--The term `mental health
benefits' means benefits with respect to services for mental
health conditions, as defined under the terms of the plan and
in accordance with applicable Federal and State law.
``(5) Substance use disorder benefits.--The term `substance
use disorder benefits' means benefits with respect to services
for substance use disorders, as defined under the terms of the
plan and in accordance with applicable Federal and State
law.'';
(5) by striking subsection (f);
(6) by striking ``mental health benefits'' and inserting
``mental health and substance use disorder benefits'' each
place it appears in subsections (a)(1)(B)(i), (a)(1)(C),
(a)(2)(B)(i), and (a)(2)(C); and
(7) by striking ``mental health benefits'' and inserting
``mental health or substance use disorder benefits'' each place
it appears (other than in any provision amended by the previous
paragraph).
(c) Amendments to Internal Revenue Code.--Section 9812 of the
Internal Revenue Code of 1986 is amended--
(1) in subsection (a), by adding at the end the following:
``(3) Financial requirements and treatment limitations.--
``(A) In general.--In the case of a group health
plan that provides both medical and surgical benefits
and mental health or substance use disorder benefits,
such plan shall ensure that--
``(i) the financial requirements applicable
to such mental health or substance use disorder
benefits are no more restrictive than the
predominant financial requirements applied to
substantially all medical and surgical benefits
covered by the plan, and there are no separate
cost sharing requirements that are applicable
only with respect to mental health or substance
use disorder benefits; and
``(ii) the treatment limitations applicable
to such mental health or substance use disorder
benefits are no more restrictive than the
predominant treatment limitations applied to
substantially all medical and surgical benefits
covered by the plan and there are no separate
treatment limitations that are applicable only
with respect to mental health or substance use
disorder benefits.
``(B) Definitions.--In this paragraph:
``(i) Financial requirement.--The term
`financial requirement' includes deductibles,
copayments, coinsurance, and out-of-pocket
expenses, but excludes an aggregate lifetime
limit and an annual limit subject to paragraphs
(1) and (2),
``(ii) Predominant.--A financial
requirement or treatment limit is considered to
be predominant if it is the most common or
frequent of such type of limit or requirement.
``(iii) Treatment limitation.--The term
`treatment limitation' includes limits on the
frequency of treatment, number of visits, days
of coverage, or other similar limits on the
scope or duration of treatment.
``(4) Availability of plan information.--The criteria for
medical necessity determinations made under the plan with
respect to mental health or substance use disorder benefits
shall be made available by the plan administrator in accordance
with regulations to any current or potential participant,
beneficiary, or contracting provider upon request. The reason
for any denial under the plan of reimbursement or payment for
services with respect to mental health or substance use
disorder benefits in the case of any participant or beneficiary
shall, on request or as otherwise required, be made available
by the plan administrator to the participant or beneficiary in
accordance with regulations.
``(5) Out-of-network providers.--In the case of a plan that
provides both medical and surgical benefits and mental health
or substance use disorder benefits, if the plan provides
coverage for medical or surgical benefits provided by out-of-
network providers, the plan shall provide coverage for mental
health or substance use disorder benefits provided by out-of-
network providers in a manner that is consistent with the
requirements of this section.'';
(2) in subsection (b), by amending paragraph (2) to read as
follows:
``(2) in the case of a group health plan that provides
mental health or substance use disorder benefits, as affecting
the terms and conditions of the plan relating to such benefits
under the plan, except as provided in subsection (a).'';
(3) in subsection (c)--
(A) by amending paragraph (1) to read as follows:
``(1) Small employer exemption.--
``(A) In general.--This section shall not apply to
any group health plan for any plan year of a small
employer.
``(B) Small employer.--For purposes of subparagraph
(A), the term `small employer' means, with respect to a
calendar year and a plan year, an employer who employed
an average of at least 2 (or 1 in the case of an
employer residing in a State that permits small groups
to include a single individual) but not more than 50
employees on business days during the preceding
calendar year. For purposes of the preceding sentence,
all persons treated as a single employer under
subsection (b), (c), (m), or (o) of section 414 shall
be treated as 1 employer and rules similar to rules of
subparagraphs (B) and (C) of section 4980D(d)(2) shall
apply.''; and
(B) by striking paragraph (2) and inserting the
following:
``(2) Cost exemption.--
``(A) In general.--With respect to a group health
plan, if the application of this section to such plan
results in an increase for the plan year involved of
the actual total costs of coverage with respect to
medical and surgical benefits and mental health and
substance use disorder benefits under the plan (as
determined and certified under subparagraph (C)) by an
amount that exceeds the applicable percentage described
in subparagraph (B) of the actual total plan costs, the
provisions of this section shall not apply to such plan
during the following plan year, and such exemption
shall apply to the plan for 1 plan year. An employer
may elect to continue to apply mental health and
substance use disorder parity pursuant to this section
with respect to the group health plan involved
regardless of any increase in total costs.
``(B) Applicable percentage.--With respect to a
plan, the applicable percentage described in this
subparagraph shall be--
``(i) 2 percent in the case of the first
plan year in which this section is applied; and
``(ii) 1 percent in the case of each
subsequent plan year.
``(C) Determinations by actuaries.--Determinations
as to increases in actual costs under a plan for
purposes of this section shall be made and certified by
a qualified and licensed actuary who is a member in
good standing of the American Academy of Actuaries. All
such determinations shall be in a written report
prepared by the actuary. The report, and all underlying
documentation relied upon by the actuary, shall be
maintained by the group health plan for a period of 6
years following the notification made under
subparagraph (E).
``(D) 6-month determinations.--If a group health
plan seeks an exemption under this paragraph,
determinations under subparagraph (A) shall be made
after such plan has complied with this section for the
first 6 months of the plan year involved.
``(E) Notification.--
``(i) In general.--A group health plan
that, based upon a certification described
under subparagraph (C), qualifies for an
exemption under this paragraph, and elects to
implement the exemption, shall promptly notify
the Secretary, the appropriate State agencies,
and participants and beneficiaries in the plan
of such election.
``(ii) Requirement.--A notification to the
Secretary under clause (i) shall include--
``(I) a description of the number
of covered lives under the plan
involved at the time of the
notification, and as applicable, at the
time of any prior election of the cost-
exemption under this paragraph by such
plan;
``(II) for both the plan year upon
which a cost exemption is sought and
the year prior, a description of the
actual total costs of coverage with
respect to medical and surgical
benefits and mental health and
substance use disorder benefits under
the plan; and
``(III) for both the plan year upon
which a cost exemption is sought and
the year prior, the actual total costs
of coverage with respect to mental
health and substance use disorder
benefits under the plan.
``(iii) Confidentiality.--A notification to
the Secretary under clause (i) shall be
confidential. The Secretary shall make
available, upon request and on not more than an
annual basis, an anonymous itemization of such
notifications, that includes--
``(I) a breakdown of States by the
size and type of employers submitting
such notification; and
``(II) a summary of the data
received under clause (ii).
``(F) Audits by appropriate agencies.--To determine
compliance with this paragraph, the Secretary may audit
the books and records of a group health plan relating
to an exemption, including any actuarial reports
prepared pursuant to subparagraph (C), during the 6
year period following the notification of such
exemption under subparagraph (E). A State agency
receiving a notification under subparagraph (E) may
also conduct such an audit with respect to an exemption
covered by such notification.'';
(4) in subsection (e), by striking paragraph (4) and
inserting the following:
``(4) Mental health benefits.--The term `mental health
benefits' means benefits with respect to services for mental
health conditions, as defined under the terms of the plan and
in accordance with applicable Federal and State law.
``(5) Substance use disorder benefits.--The term `substance
use disorder benefits' means benefits with respect to services
for substance use disorders, as defined under the terms of the
plan and in accordance with applicable Federal and State
law.'';
(5) by striking subsection (f);
(6) by striking ``mental health benefits'' and inserting
``mental health and substance use disorder benefits'' each
place it appears in subsections (a)(1)(B)(i), (a)(1)(C),
(a)(2)(B)(i), and (a)(2)(C); and
(7) by striking ``mental health benefits'' and inserting
``mental health or substance use disorder benefits'' each place
it appears (other than in any provision amended by the previous
paragraph).
(d) Regulations.--Not later than 1 year after the date of enactment
of this Act, the Secretaries of Labor, Health and Human Services, and
the Treasury shall issue regulations to carry out the amendments made
by subsections (a), (b), and (c), respectively.
(e) Effective Date.--
(1) In general.--The amendments made by this section shall
apply with respect to group health plans for plan years
beginning after the date that is 1 year after the date of
enactment of this Act, regardless of whether regulations have
been issued to carry out such amendments by such effective
date, except that the amendments made by subsections (a)(5),
(b)(5), and (c)(5), relating to striking of certain sunset
provisions, shall take effect on January 1, 2009.
(2) Special rule for collective bargaining agreements.--In
the case of a group health plan maintained pursuant to one or
more collective bargaining agreements between employee
representatives and one or more employers ratified before the
date of the enactment of this Act, the amendments made by this
section shall not apply to plan years beginning before the
later of--
(A) the date on which the last of the collective
bargaining agreements relating to the plan terminates
(determined without regard to any extension thereof
agreed to after the date of the enactment of this Act),
or
(B) January 1, 2009.
For purposes of subparagraph (A), any plan amendment made
pursuant to a collective bargaining agreement relating to the
plan which amends the plan solely to conform to any requirement
added by this section shall not be treated as a termination of
such collective bargaining agreement.
(f) Assuring Coordination.--The Secretary of Health and Human
Services, the Secretary of Labor, and the Secretary of the Treasury may
ensure, through the execution or revision of an interagency memorandum
of understanding among such Secretaries, that--
(1) regulations, rulings, and interpretations issued by
such Secretaries relating to the same matter over which two or
more such Secretaries have responsibility under this section
(and the amendments made by this section) are administered so
as to have the same effect at all times; and
(2) coordination of policies relating to enforcing the same
requirements through such Secretaries in order to have a
coordinated enforcement strategy that avoids duplication of
enforcement efforts and assigns priorities in enforcement.
(g) Conforming Clerical Amendments.--
(1) ERISA heading.--
(A) In general.--The heading of section 712 of the
Employee Retirement Income Security Act of 1974 is
amended to read as follows:
``SEC. 712. PARITY IN MENTAL HEALTH AND SUBSTANCE USE DISORDER
BENEFITS.''.
(B) Clerical amendment.--The table of contents in
section 1 of such Act is amended by striking the item
relating to section 712 and inserting the following new
item:
``Sec. 712. Parity in mental health and substance use disorder
benefits.''.
(2) PHSA heading.--The heading of section 2705 of the
Public Health Service Act is amended to read as follows:
``SEC. 2705. PARITY IN MENTAL HEALTH AND SUBSTANCE USE DISORDER
BENEFITS.''.
(3) IRC heading.--
(A) In general.--The heading of section 9812 of the
Internal Revenue Code of 1986 is amended to read as
follows:
``SEC. 9812. PARITY IN MENTAL HEALTH AND SUBSTANCE USE DISORDER
BENEFITS.''.
(B) Clerical amendment.--The table of sections for
subchapter B of chapter 100 of such Code is amended by
striking the item relating to section 9812 and
inserting the following new item:
``Sec. 9812. Parity in mental health and substance use disorder
benefits.''.
(h) GAO Study on Coverage and Exclusion of Mental Health and
Substance Use Disorder Diagnoses.--
(1) In general.--The Comptroller General of the United
States shall conduct a study that analyzes the specific rates,
patterns, and trends in coverage and exclusion of specific
mental health and substance use disorder diagnoses by health
plans and health insurance. The study shall include an analysis
of--
(A) specific coverage rates for all mental health
conditions and substance use disorders;
(B) which diagnoses are most commonly covered or
excluded;
(C) whether implementation of this Act has affected
trends in coverage or exclusion of such diagnoses; and
(D) the impact of covering or excluding specific
diagnoses on participants' and enrollees' health, their
health care coverage, and the costs of delivering
health care.
(2) Reports.--Not later than 3 years after the date of the
enactment of this Act, and 2 years after the date of submission
the first report under this paragraph, the Comptroller General
shall submit to Congress a report on the results of the study
conducted under paragraph (1).
TITLE VI--OTHER PROVISIONS
SEC. 601. SECURE RURAL SCHOOLS AND COMMUNITY SELF-DETERMINATION
PROGRAM.
(a) Reauthorization of the Secure Rural Schools and Community Self-
Determination Act of 2000.--The Secure Rural Schools and Community
Self-Determination Act of 2000 (16 U.S.C. 500 note; Public Law 106-393)
is amended by striking sections 1 through 403 and inserting the
following:
``SECTION 1. SHORT TITLE.
``This Act may be cited as the `Secure Rural Schools and Community
Self-Determination Act of 2000'.
``SEC. 2. PURPOSES.
``The purposes of this Act are--
``(1) to stabilize and transition payments to counties to
provide funding for schools and roads that supplements other
available funds;
``(2) to make additional investments in, and create
additional employment opportunities through, projects that--
``(A)(i) improve the maintenance of existing
infrastructure;
``(ii) implement stewardship objectives that
enhance forest ecosystems; and
``(iii) restore and improve land health and water
quality;
``(B) enjoy broad-based support; and
``(C) have objectives that may include--
``(i) road, trail, and infrastructure
maintenance or obliteration;
``(ii) soil productivity improvement;
``(iii) improvements in forest ecosystem
health;
``(iv) watershed restoration and
maintenance;
``(v) the restoration, maintenance, and
improvement of wildlife and fish habitat;
``(vi) the control of noxious and exotic
weeds; and
``(vii) the reestablishment of native
species; and
``(3) to improve cooperative relationships among--
``(A) the people that use and care for Federal
land; and
``(B) the agencies that manage the Federal land.
``SEC. 3. DEFINITIONS.
``In this Act:
``(1) Adjusted share.--The term `adjusted share' means the
number equal to the quotient obtained by dividing--
``(A) the number equal to the quotient obtained by
dividing--
``(i) the base share for the eligible
county; by
``(ii) the income adjustment for the
eligible county; by
``(B) the number equal to the sum of the quotients
obtained under subparagraph (A) and paragraph (8)(A)
for all eligible counties.
``(2) Base share.--The term `base share' means the number
equal to the average of--
``(A) the quotient obtained by dividing--
``(i) the number of acres of Federal land
described in paragraph (7)(A) in each eligible
county; by
``(ii) the total number acres of Federal
land in all eligible counties in all eligible
States; and
``(B) the quotient obtained by dividing--
``(i) the amount equal to the average of
the 3 highest 25-percent payments and safety
net payments made to each eligible State for
each eligible county during the eligibility
period; by
``(ii) the amount equal to the sum of the
amounts calculated under clause (i) and
paragraph (9)(B)(i) for all eligible counties
in all eligible States during the eligibility
period.
``(3) County payment.--The term `county payment' means the
payment for an eligible county calculated under section 101(b).
``(4) Eligible county.--The term `eligible county' means
any county that--
``(A) contains Federal land (as defined in
paragraph (7)); and
``(B) elects to receive a share of the State
payment or the county payment under section 102(b).
``(5) Eligibility period.--The term `eligibility period'
means fiscal year 1986 through fiscal year 1999.
``(6) Eligible state.--The term `eligible State' means a
State or territory of the United States that received a 25-
percent payment for 1 or more fiscal years of the eligibility
period.
``(7) Federal land.--The term `Federal land' means--
``(A) land within the National Forest System, as
defined in section 11(a) of the Forest and Rangeland
Renewable Resources Planning Act of 1974 (16 U.S.C.
1609(a)) exclusive of the National Grasslands and land
utilization projects designated as National Grasslands
administered pursuant to the Act of July 22, 1937 (7
U.S.C. 1010-1012); and
``(B) such portions of the revested Oregon and
California Railroad and reconveyed Coos Bay Wagon Road
grant land as are or may hereafter come under the
jurisdiction of the Department of the Interior, which
have heretofore or may hereafter be classified as
timberlands, and power-site land valuable for timber,
that shall be managed, except as provided in the former
section 3 of the Act of August 28, 1937 (50 Stat. 875;
43 U.S.C. 1181c), for permanent forest production.
``(8) 50-percent adjusted share.--The term `50-percent
adjusted share' means the number equal to the quotient obtained
by dividing--
``(A) the number equal to the quotient obtained by
dividing--
``(i) the 50-percent base share for the
eligible county; by
``(ii) the income adjustment for the
eligible county; by
``(B) the number equal to the sum of the quotients
obtained under subparagraph (A) and paragraph (1)(A)
for all eligible counties.
``(9) 50-percent base share.--The term `50-percent base
share' means the number equal to the average of--
``(A) the quotient obtained by dividing--
``(i) the number of acres of Federal land
described in paragraph (7)(B) in each eligible
county; by
``(ii) the total number acres of Federal
land in all eligible counties in all eligible
States; and
``(B) the quotient obtained by dividing--
``(i) the amount equal to the average of
the 3 highest 50-percent payments made to each
eligible county during the eligibility period;
by
``(ii) the amount equal to the sum of the
amounts calculated under clause (i) and
paragraph (2)(B)(i) for all eligible counties
in all eligible States during the eligibility
period.
``(10) 50-percent payment.--The term `50-percent payment'
means the payment that is the sum of the 50-percent share
otherwise paid to a county pursuant to title II of the Act of
August 28, 1937 (chapter 876; 50 Stat. 875; 43 U.S.C. 1181f),
and the payment made to a county pursuant to the Act of May 24,
1939 (chapter 144; 53 Stat. 753; 43 U.S.C. 1181f-1 et seq.).
``(11) Full funding amount.--The term `full funding amount'
means--
``(A) $500,000,000 for fiscal year 2008; and
``(B) for fiscal year 2009 and each fiscal year
thereafter, the amount that is equal to 90 percent of
the full funding amount for the preceding fiscal year.
``(12) Income adjustment.--The term `income adjustment'
means the square of the quotient obtained by dividing--
``(A) the per capita personal income for each
eligible county; by
``(B) the median per capita personal income of all
eligible counties.
``(13) Per capita personal income.--The term `per capita
personal income' means the most recent per capita personal
income data, as determined by the Bureau of Economic Analysis.
``(14) Safety net payments.--The term `safety net payments'
means the special payment amounts paid to States and counties
required by section 13982 or 13983 of the Omnibus Budget
Reconciliation Act of 1993 (Public Law 103-66; 16 U.S.C. 500
note; 43 U.S.C. 1181f note).
``(15) Secretary concerned.--The term `Secretary concerned'
means--
``(A) the Secretary of Agriculture or the designee
of the Secretary of Agriculture with respect to the
Federal land described in paragraph (7)(A); and
``(B) the Secretary of the Interior or the designee
of the Secretary of the Interior with respect to the
Federal land described in paragraph (7)(B).
``(16) State payment.--The term `State payment' means the
payment for an eligible State calculated under section 101(a).
``(17) 25-percent payment.--The term `25-percent payment'
means the payment to States required by the sixth paragraph
under the heading of `FOREST SERVICE' in the Act of May 23,
1908 (35 Stat. 260; 16 U.S.C. 500), and section 13 of the Act
of March 1, 1911 (36 Stat. 963; 16 U.S.C. 500).
``TITLE I--SECURE PAYMENTS FOR STATES AND COUNTIES CONTAINING FEDERAL
LAND
``SEC. 101. SECURE PAYMENTS FOR STATES CONTAINING FEDERAL LAND.
``(a) State Payment.--For each of fiscal years 2008 through 2011,
the Secretary of Agriculture shall calculate for each eligible State an
amount equal to the sum of the products obtained by multiplying--
``(1) the adjusted share for each eligible county within
the eligible State; by
``(2) the full funding amount for the fiscal year.
``(b) County Payment.--For each of fiscal years 2008 through 2011,
the Secretary of the Interior shall calculate for each eligible county
that received a 50-percent payment during the eligibility period an
amount equal to the product obtained by multiplying--
``(1) the 50-percent adjusted share for the eligible
county; by
``(2) the full funding amount for the fiscal year.
``SEC. 102. PAYMENTS TO STATES AND COUNTIES.
``(a) Payment Amounts.--Except as provided in section 103, the
Secretary of the Treasury shall pay to--
``(1) a State or territory of the United States an amount
equal to the sum of the amounts elected under subsection (b) by
each county within the State or territory for--
``(A) if the county is eligible for the 25-percent
payment, the share of the 25-percent payment; or
``(B) the share of the State payment of the
eligible county; and
``(2) a county an amount equal to the amount elected under
subsection (b) by each county for--
``(A) if the county is eligible for the 50-percent
payment, the 50-percent payment; or
``(B) the county payment for the eligible county.
``(b) Election To Receive Payment Amount.--
``(1) Election; submission of results.--
``(A) In general.--The election to receive a share
of the State payment, the county payment, a share of
the State payment and the county payment, a share of
the 25-percent payment, the 50-percent payment, or a
share of the 25-percent payment and the 50-percent
payment, as applicable, shall be made at the discretion
of each affected county by August 1, 2008 (or as soon
thereafter as the Secretary concerned determines is
practicable), and August 1 of each second fiscal year
thereafter, in accordance with paragraph (2), and
transmitted to the Secretary concerned by the Governor
of each eligible State.
``(B) Failure to transmit.--If an election for an
affected county is not transmitted to the Secretary
concerned by the date specified under subparagraph (A),
the affected county shall be considered to have elected
to receive a share of the State payment, the county
payment, or a share of the State payment and the county
payment, as applicable.
``(2) Duration of election.--
``(A) In general.--A county election to receive a
share of the 25-percent payment or 50-percent payment,
as applicable, shall be effective for 2 fiscal years.
``(B) Full funding amount.--If a county elects to
receive a share of the State payment or the county
payment, the election shall be effective for all
subsequent fiscal years through fiscal year 2011.
``(3) Source of payment amounts.--The payment to an
eligible State or eligible county under this section for a
fiscal year shall be derived from--
``(A) any amounts that are appropriated to carry
out this Act;
``(B) any revenues, fees, penalties, or
miscellaneous receipts, exclusive of deposits to any
relevant trust fund, special account, or permanent
operating funds, received by the Federal Government
from activities by the Bureau of Land Management or the
Forest Service on the applicable Federal land; and
``(C) to the extent of any shortfall, out of any
amounts in the Treasury of the United States not
otherwise appropriated.
``(c) Distribution and Expenditure of Payments.--
``(1) Distribution method.--A State that receives a payment
under subsection (a) for Federal land described in section
3(7)(A) shall distribute the appropriate payment amount among
the appropriate counties in the State in accordance with--
``(A) the Act of May 23, 1908 (16 U.S.C. 500); and
``(B) section 13 of the Act of March 1, 1911 (36
Stat. 963; 16 U.S.C. 500).
``(2) Expenditure purposes.--Subject to subsection (d),
payments received by a State under subsection (a) and
distributed to counties in accordance with paragraph (1) shall
be expended as required by the laws referred to in paragraph
(1).
``(d) Expenditure Rules for Eligible Counties.--
``(1) Allocations.--
``(A) Use of portion in same manner as 25-percent
payment or 50-percent payment, as applicable.--Except
as provided in paragraph (3)(B), if an eligible county
elects to receive its share of the State payment or the
county payment, not less than 80 percent, but not more
than 85 percent, of the funds shall be expended in the
same manner in which the 25-percent payments or 50-
percent payment, as applicable, are required to be
expended.
``(B) Election as to use of balance.--Except as
provided in subparagraph (C), an eligible county shall
elect to do 1 or more of the following with the balance
of any funds not expended pursuant to subparagraph (A):
``(i) Reserve any portion of the balance
for projects in accordance with title II.
``(ii) Reserve not more than 7 percent of
the total share for the eligible county of the
State payment or the county payment for
projects in accordance with title III.
``(iii) Return the portion of the balance
not reserved under clauses (i) and (ii) to the
Treasury of the United States.
``(C) Counties with modest distributions.--In the
case of each eligible county to which more than
$100,000, but less than $350,000, is distributed for
any fiscal year pursuant to either or both of
paragraphs (1)(B) and (2)(B) of subsection (a), the
eligible county, with respect to the balance of any
funds not expended pursuant to subparagraph (A) for
that fiscal year, shall--
``(i) reserve any portion of the balance
for--
``(I) carrying out projects under
title II;
``(II) carrying out projects under
title III; or
``(III) a combination of the
purposes described in subclauses (I)
and (II); or
``(ii) return the portion of the balance
not reserved under clause (i) to the Treasury
of the United States.
``(2) Distribution of funds.--
``(A) In general.--Funds reserved by an eligible
county under subparagraph (B)(i) or (C)(i) of paragraph
(1) for carrying out projects under title II shall be
deposited in a special account in the Treasury of the
United States.
``(B) Availability.--Amounts deposited under
subparagraph (A) shall--
``(i) be available for expenditure by the
Secretary concerned, without further
appropriation; and
``(ii) remain available until expended in
accordance with title II.
``(3) Election.--
``(A) Notification.--
``(i) In general.--An eligible county shall
notify the Secretary concerned of an election
by the eligible county under this subsection
not later than September 30, 2008 (or as soon
thereafter as the Secretary concerned
determines is practicable), and each September
30 thereafter for each succeeding fiscal year.
``(ii) Failure to elect.--Except as
provided in subparagraph (B), if the eligible
county fails to make an election by the date
specified in clause (i), the eligible county
shall--
``(I) be considered to have elected
to expend 85 percent of the funds in
accordance with paragraph (1)(A); and
``(II) return the balance to the
Treasury of the United States.
``(B) Counties with minor distributions.--In the
case of each eligible county to which less than
$100,000 is distributed for any fiscal year pursuant to
either or both of paragraphs (1)(B) and (2)(B) of
subsection (a), the eligible county may elect to expend
all the funds in the same manner in which the 25-
percent payments or 50-percent payments, as applicable,
are required to be expended.
``(e) Time for Payment.--The payments required under this section
for a fiscal year shall be made as soon as practicable after the end of
that fiscal year.
``SEC. 103. TRANSITION PAYMENTS TO STATES.
``(a) Definitions.--In this section:
``(1) Adjusted amount.--The term `adjusted amount' means,
with respect to a covered State--
``(A) for fiscal year 2008, 90 percent of--
``(i) the sum of the amounts paid for
fiscal year 2006 under section 102(a)(2) (as in
effect on September 29, 2006) for the eligible
counties in the covered State that have elected
under section 102(b) to receive a share of the
State payment for fiscal year 2008; and
``(ii) the sum of the amounts paid for
fiscal year 2006 under section 103(a)(2) (as in
effect on September 29, 2006) for the eligible
counties in the State of Oregon that have
elected under section 102(b) to receive the
county payment for fiscal year 2008;
``(B) for fiscal year 2009, 81 percent of--
``(i) the sum of the amounts paid for
fiscal year 2006 under section 102(a)(2) (as in
effect on September 29, 2006) for the eligible
counties in the covered State that have elected
under section 102(b) to receive a share of the
State payment for fiscal year 2009; and
``(ii) the sum of the amounts paid for
fiscal year 2006 under section 103(a)(2) (as in
effect on September 29, 2006) for the eligible
counties in the State of Oregon that have
elected under section 102(b) to receive the
county payment for fiscal year 2009; and
``(C) for fiscal year 2010, 73 percent of--
``(i) the sum of the amounts paid for
fiscal year 2006 under section 102(a)(2) (as in
effect on September 29, 2006) for the eligible
counties in the covered State that have elected
under section 102(b) to receive a share of the
State payment for fiscal year 2010; and
``(ii) the sum of the amounts paid for
fiscal year 2006 under section 103(a)(2) (as in
effect on September 29, 2006) for the eligible
counties in the State of Oregon that have
elected under section 102(b) to receive the
county payment for fiscal year 2010.
``(2) Covered state.--The term `covered State' means each
of the States of California, Louisiana, Oregon, Pennsylvania,
South Carolina, South Dakota, Texas, and Washington.
``(b) Transition Payments.--For each of fiscal years 2008 through
2010, in lieu of the payment amounts that otherwise would have been
made under paragraphs (1)(B) and (2)(B) of section 102(a), the
Secretary of the Treasury shall pay the adjusted amount to each covered
State and the eligible counties within the covered State, as
applicable.
``(c) Distribution of Adjusted Amount.--Except as provided in
subsection (d), it is the intent of Congress that the method of
distributing the payments under subsection (b) among the counties in
the covered States for each of fiscal years 2008 through 2010 be in the
same proportion that the payments were distributed to the eligible
counties in fiscal year 2006.
``(d) Distribution of Payments in California.--The following
payments shall be distributed among the eligible counties in the State
of California in the same proportion that payments under section
102(a)(2) (as in effect on September 29, 2006) were distributed to the
eligible counties for fiscal year 2006:
``(1) Payments to the State of California under subsection
(b).
``(2) The shares of the eligible counties of the State
payment for California under section 102 for fiscal year 2011.
``(e) Treatment of Payments.--For purposes of this Act, any payment
made under subsection (b) shall be considered to be a payment made
under section 102(a).
``TITLE II--SPECIAL PROJECTS ON FEDERAL LAND
``SEC. 201. DEFINITIONS.
``In this title:
``(1) Participating county.--The term `participating
county' means an eligible county that elects under section
102(d) to expend a portion of the Federal funds received under
section 102 in accordance with this title.
``(2) Project funds.--The term `project funds' means all
funds an eligible county elects under section 102(d) to reserve
for expenditure in accordance with this title.
``(3) Resource advisory committee.--The term `resource
advisory committee' means--
``(A) an advisory committee established by the
Secretary concerned under section 205; or
``(B) an advisory committee determined by the
Secretary concerned to meet the requirements of section
205.
``(4) Resource management plan.--The term `resource
management plan' means--
``(A) a land use plan prepared by the Bureau of
Land Management for units of the Federal land described
in section 3(7)(B) pursuant to section 202 of the
Federal Land Policy and Management Act of 1976 (43
U.S.C. 1712); or
``(B) a land and resource management plan prepared
by the Forest Service for units of the National Forest
System pursuant to section 6 of the Forest and
Rangeland Renewable Resources Planning Act of 1974 (16
U.S.C. 1604).
``SEC. 202. GENERAL LIMITATION ON USE OF PROJECT FUNDS.
``(a) Limitation.--Project funds shall be expended solely on
projects that meet the requirements of this title.
``(b) Authorized Uses.--Project funds may be used by the Secretary
concerned for the purpose of entering into and implementing cooperative
agreements with willing Federal agencies, State and local governments,
private and nonprofit entities, and landowners for protection,
restoration, and enhancement of fish and wildlife habitat, and other
resource objectives consistent with the purposes of this Act on Federal
land and on non-Federal land where projects would benefit the resources
on Federal land.
``SEC. 203. SUBMISSION OF PROJECT PROPOSALS.
``(a) Submission of Project Proposals to Secretary Concerned.--
``(1) Projects funded using project funds.--Not later than
September 30 for fiscal year 2008 (or as soon thereafter as the
Secretary concerned determines is practicable), and each
September 30 thereafter for each succeeding fiscal year through
fiscal year 2011, each resource advisory committee shall submit
to the Secretary concerned a description of any projects that
the resource advisory committee proposes the Secretary
undertake using any project funds reserved by eligible counties
in the area in which the resource advisory committee has
geographic jurisdiction.
``(2) Projects funded using other funds.--A resource
advisory committee may submit to the Secretary concerned a
description of any projects that the committee proposes the
Secretary undertake using funds from State or local
governments, or from the private sector, other than project
funds and funds appropriated and otherwise available to do
similar work.
``(3) Joint projects.--Participating counties or other
persons may propose to pool project funds or other funds,
described in paragraph (2), and jointly propose a project or
group of projects to a resource advisory committee established
under section 205.
``(b) Required Description of Projects.--In submitting proposed
projects to the Secretary concerned under subsection (a), a resource
advisory committee shall include in the description of each proposed
project the following information:
``(1) The purpose of the project and a description of how
the project will meet the purposes of this title.
``(2) The anticipated duration of the project.
``(3) The anticipated cost of the project.
``(4) The proposed source of funding for the project,
whether project funds or other funds.
``(5)(A) Expected outcomes, including how the project will
meet or exceed desired ecological conditions, maintenance
objectives, or stewardship objectives.
``(B) An estimate of the amount of any timber, forage, and
other commodities and other economic activity, including jobs
generated, if any, anticipated as part of the project.
``(6) A detailed monitoring plan, including funding needs
and sources, that--
``(A) tracks and identifies the positive or
negative impacts of the project, implementation, and
provides for validation monitoring; and
``(B) includes an assessment of the following:
``(i) Whether or not the project met or
exceeded desired ecological conditions; created
local employment or training opportunities,
including summer youth jobs programs such as
the Youth Conservation Corps where appropriate.
``(ii) Whether the project improved the use
of, or added value to, any products removed
from land consistent with the purposes of this
title.
``(7) An assessment that the project is to be in the public
interest.
``(c) Authorized Projects.--Projects proposed under subsection (a)
shall be consistent with section 2.
``SEC. 204. EVALUATION AND APPROVAL OF PROJECTS BY SECRETARY CONCERNED.
``(a) Conditions for Approval of Proposed Project.--The Secretary
concerned may make a decision to approve a project submitted by a
resource advisory committee under section 203 only if the proposed
project satisfies each of the following conditions:
``(1) The project complies with all applicable Federal laws
(including regulations).
``(2) The project is consistent with the applicable
resource management plan and with any watershed or subsequent
plan developed pursuant to the resource management plan and
approved by the Secretary concerned.
``(3) The project has been approved by the resource
advisory committee in accordance with section 205, including
the procedures issued under subsection (e) of that section.
``(4) A project description has been submitted by the
resource advisory committee to the Secretary concerned in
accordance with section 203.
``(5) The project will improve the maintenance of existing
infrastructure, implement stewardship objectives that enhance
forest ecosystems, and restore and improve land health and
water quality.
``(b) Environmental Reviews.--
``(1) Request for payment by county.--The Secretary
concerned may request the resource advisory committee
submitting a proposed project to agree to the use of project
funds to pay for any environmental review, consultation, or
compliance with applicable environmental laws required in
connection with the project.
``(2) Conduct of environmental review.--If a payment is
requested under paragraph (1) and the resource advisory
committee agrees to the expenditure of funds for this purpose,
the Secretary concerned shall conduct environmental review,
consultation, or other compliance responsibilities in
accordance with Federal laws (including regulations).
``(3) Effect of refusal to pay.--
``(A) In general.--If a resource advisory committee
does not agree to the expenditure of funds under
paragraph (1), the project shall be deemed withdrawn
from further consideration by the Secretary concerned
pursuant to this title.
``(B) Effect of withdrawal.--A withdrawal under
subparagraph (A) shall be deemed to be a rejection of
the project for purposes of section 207(c).
``(c) Decisions of Secretary Concerned.--
``(1) Rejection of projects.--
``(A) In general.--A decision by the Secretary
concerned to reject a proposed project shall be at the
sole discretion of the Secretary concerned.
``(B) No administrative appeal or judicial
review.--Notwithstanding any other provision of law, a
decision by the Secretary concerned to reject a
proposed project shall not be subject to administrative
appeal or judicial review.
``(C) Notice of rejection.--Not later than 30 days
after the date on which the Secretary concerned makes
the rejection decision, the Secretary concerned shall
notify in writing the resource advisory committee that
submitted the proposed project of the rejection and the
reasons for rejection.
``(2) Notice of project approval.--The Secretary concerned
shall publish in the Federal Register notice of each project
approved under subsection (a) if the notice would be required
had the project originated with the Secretary.
``(d) Source and Conduct of Project.--Once the Secretary concerned
accepts a project for review under section 203, the acceptance shall be
deemed a Federal action for all purposes.
``(e) Implementation of Approved Projects.--
``(1) Cooperation.--Notwithstanding chapter 63 of title 31,
United States Code, using project funds the Secretary concerned
may enter into contracts, grants, and cooperative agreements
with States and local governments, private and nonprofit
entities, and landowners and other persons to assist the
Secretary in carrying out an approved project.
``(2) Best value contracting.--
``(A) In general.--For any project involving a
contract authorized by paragraph (1) the Secretary
concerned may elect a source for performance of the
contract on a best value basis.
``(B) Factors.--The Secretary concerned shall
determine best value based on such factors as--
``(i) the technical demands and complexity
of the work to be done;
``(ii)(I) the ecological objectives of the
project; and
``(II) the sensitivity of the resources
being treated;
``(iii) the past experience by the
contractor with the type of work being done,
using the type of equipment proposed for the
project, and meeting or exceeding desired
ecological conditions; and
``(iv) the commitment of the contractor to
hiring highly qualified workers and local
residents.
``(3) Merchantable timber contracting pilot program.--
``(A) Establishment.--The Secretary concerned shall
establish a pilot program to implement a certain
percentage of approved projects involving the sale of
merchantable timber using separate contracts for--
``(i) the harvesting or collection of
merchantable timber; and
``(ii) the sale of the timber.
``(B) Annual percentages.--Under the pilot program,
the Secretary concerned shall ensure that, on a
nationwide basis, not less than the following
percentage of all approved projects involving the sale
of merchantable timber are implemented using separate
contracts:
``(i) For fiscal year 2008, 35 percent.
``(ii) For fiscal year 2009, 45 percent.
``(iii) For each of fiscal years 2010 and
2011, 50 percent.
``(C) Inclusion in pilot program.--The decision
whether to use separate contracts to implement a
project involving the sale of merchantable timber shall
be made by the Secretary concerned after the approval
of the project under this title.
``(D) Assistance.--
``(i) In general.--The Secretary concerned
may use funds from any appropriated account
available to the Secretary for the Federal land
to assist in the administration of projects
conducted under the pilot program.
``(ii) Maximum amount of assistance.--The
total amount obligated under this subparagraph
may not exceed $1,000,000 for any fiscal year
during which the pilot program is in effect.
``(E) Review and report.--
``(i) Initial report.--Not later than
September 30, 2010, the Comptroller General
shall submit to the Committees on Agriculture,
Nutrition, and Forestry and Energy and Natural
Resources of the Senate and the Committees on
Agriculture and Natural Resources of the House
of Representatives a report assessing the pilot
program.
``(ii) Annual report.--The Secretary
concerned shall submit to the Committees on
Agriculture, Nutrition, and Forestry and Energy
and Natural Resources of the Senate and the
Committees on Agriculture and Natural Resources
of the House of Representatives an annual
report describing the results of the pilot
program.
``(f) Requirements for Project Funds.--The Secretary shall ensure
that at least 50 percent of all project funds be used for projects that
are primarily dedicated--
``(1) to road maintenance, decommissioning, or
obliteration; or
``(2) to restoration of streams and watersheds.
``SEC. 205. RESOURCE ADVISORY COMMITTEES.
``(a) Establishment and Purpose of Resource Advisory Committees.--
``(1) Establishment.--The Secretary concerned shall
establish and maintain resource advisory committees to perform
the duties in subsection (b), except as provided in paragraph
(4).
``(2) Purpose.--The purpose of a resource advisory
committee shall be--
``(A) to improve collaborative relationships; and
``(B) to provide advice and recommendations to the
land management agencies consistent with the purposes
of this title.
``(3) Access to resource advisory committees.--To ensure
that each unit of Federal land has access to a resource
advisory committee, and that there is sufficient interest in
participation on a committee to ensure that membership can be
balanced in terms of the points of view represented and the
functions to be performed, the Secretary concerned may,
establish resource advisory committees for part of, or 1 or
more, units of Federal land.
``(4) Existing advisory committees.--
``(A) In general.--An advisory committee that meets
the requirements of this section, a resource advisory
committee established before September 29, 2006, or an
advisory committee determined by the Secretary
concerned before September 29, 2006, to meet the
requirements of this section may be deemed by the
Secretary concerned to be a resource advisory committee
for the purposes of this title.
``(B) Charter.--A charter for a committee described
in subparagraph (A) that was filed on or before
September 29, 2006, shall be considered to be filed for
purposes of this Act.
``(C) Bureau of land management advisory
committees.--The Secretary of the Interior may deem a
resource advisory committee meeting the requirements of
subpart 1784 of part 1780 of title 43, Code of Federal
Regulations, as a resource advisory committee for the
purposes of this title.
``(b) Duties.--A resource advisory committee shall--
``(1) review projects proposed under this title by
participating counties and other persons;
``(2) propose projects and funding to the Secretary
concerned under section 203;
``(3) provide early and continuous coordination with
appropriate land management agency officials in recommending
projects consistent with purposes of this Act under this title;
``(4) provide frequent opportunities for citizens,
organizations, tribes, land management agencies, and other
interested parties to participate openly and meaningfully,
beginning at the early stages of the project development
process under this title;
``(5)(A) monitor projects that have been approved under
section 204; and
``(B) advise the designated Federal official on the
progress of the monitoring efforts under subparagraph (A); and
``(6) make recommendations to the Secretary concerned for
any appropriate changes or adjustments to the projects being
monitored by the resource advisory committee.
``(c) Appointment by the Secretary.--
``(1) Appointment and term.--
``(A) In general.--The Secretary concerned, shall
appoint the members of resource advisory committees for
a term of 4 years beginning on the date of appointment.
``(B) Reappointment.--The Secretary concerned may
reappoint members to subsequent 4-year terms.
``(2) Basic requirements.--The Secretary concerned shall
ensure that each resource advisory committee established meets
the requirements of subsection (d).
``(3) Initial appointment.--Not later than 180 days after
the date of the enactment of this Act, the Secretary concerned
shall make initial appointments to the resource advisory
committees.
``(4) Vacancies.--The Secretary concerned shall make
appointments to fill vacancies on any resource advisory
committee as soon as practicable after the vacancy has
occurred.
``(5) Compensation.--Members of the resource advisory
committees shall not receive any compensation.
``(d) Composition of Advisory Committee.--
``(1) Number.--Each resource advisory committee shall be
comprised of 15 members.
``(2) Community interests represented.--Committee members
shall be representative of the interests of the following 3
categories:
``(A) 5 persons that--
``(i) represent organized labor or non-
timber forest product harvester groups;
``(ii) represent developed outdoor
recreation, off highway vehicle users, or
commercial recreation activities;
``(iii) represent--
``(I) energy and mineral
development interests; or
``(II) commercial or recreational
fishing interests;
``(iv) represent the commercial timber
industry; or
``(v) hold Federal grazing or other land
use permits, or represent nonindustrial private
forest land owners, within the area for which
the committee is organized.
``(B) 5 persons that represent--
``(i) nationally recognized environmental
organizations;
``(ii) regionally or locally recognized
environmental organizations;
``(iii) dispersed recreational activities;
``(iv) archaeological and historical
interests; or
``(v) nationally or regionally recognized
wild horse and burro interest groups, wildlife
or hunting organizations, or watershed
associations.
``(C) 5 persons that--
``(i) hold State elected office (or a
designee);
``(ii) hold county or local elected office;
``(iii) represent American Indian tribes
within or adjacent to the area for which the
committee is organized;
``(iv) are school officials or teachers; or
``(v) represent the affected public at
large.
``(3) Balanced representation.--In appointing committee
members from the 3 categories in paragraph (2), the Secretary
concerned shall provide for balanced and broad representation
from within each category.
``(4) Geographic distribution.--The members of a resource
advisory committee shall reside within the State in which the
committee has jurisdiction and, to extent practicable, the
Secretary concerned shall ensure local representation in each
category in paragraph (2).
``(5) Chairperson.--A majority on each resource advisory
committee shall select the chairperson of the committee.
``(e) Approval Procedures.--
``(1) In general.--Subject to paragraph (3), each resource
advisory committee shall establish procedures for proposing
projects to the Secretary concerned under this title.
``(2) Quorum.--A quorum must be present to constitute an
official meeting of the committee.
``(3) Approval by majority of members.--A project may be
proposed by a resource advisory committee to the Secretary
concerned under section 203(a), if the project has been
approved by a majority of members of the committee from each of
the 3 categories in subsection (d)(2).
``(f) Other Committee Authorities and Requirements.--
``(1) Staff assistance.--A resource advisory committee may
submit to the Secretary concerned a request for periodic staff
assistance from Federal employees under the jurisdiction of the
Secretary.
``(2) Meetings.--All meetings of a resource advisory
committee shall be announced at least 1 week in advance in a
local newspaper of record and shall be open to the public.
``(3) Records.--A resource advisory committee shall
maintain records of the meetings of the committee and make the
records available for public inspection.
``SEC. 206. USE OF PROJECT FUNDS.
``(a) Agreement Regarding Schedule and Cost of Project.--
``(1) Agreement between parties.--The Secretary concerned
may carry out a project submitted by a resource advisory
committee under section 203(a) using project funds or other
funds described in section 203(a)(2), if, as soon as
practicable after the issuance of a decision document for the
project and the exhaustion of all administrative appeals and
judicial review of the project decision, the Secretary
concerned and the resource advisory committee enter into an
agreement addressing, at a minimum, the following:
``(A) The schedule for completing the project.
``(B) The total cost of the project, including the
level of agency overhead to be assessed against the
project.
``(C) For a multiyear project, the estimated cost
of the project for each of the fiscal years in which it
will be carried out.
``(D) The remedies for failure of the Secretary
concerned to comply with the terms of the agreement
consistent with current Federal law.
``(2) Limited use of federal funds.--The Secretary
concerned may decide, at the sole discretion of the Secretary
concerned, to cover the costs of a portion of an approved
project using Federal funds appropriated or otherwise available
to the Secretary for the same purposes as the project.
``(b) Transfer of Project Funds.--
``(1) Initial transfer required.--As soon as practicable
after the agreement is reached under subsection (a) with regard
to a project to be funded in whole or in part using project
funds, or other funds described in section 203(a)(2), the
Secretary concerned shall transfer to the applicable unit of
National Forest System land or Bureau of Land Management
District an amount of project funds equal to--
``(A) in the case of a project to be completed in a
single fiscal year, the total amount specified in the
agreement to be paid using project funds, or other
funds described in section 203(a)(2); or
``(B) in the case of a multiyear project, the
amount specified in the agreement to be paid using
project funds, or other funds described in section
203(a)(2) for the first fiscal year.
``(2) Condition on project commencement.--The unit of
National Forest System land or Bureau of Land Management
District concerned, shall not commence a project until the
project funds, or other funds described in section 203(a)(2)
required to be transferred under paragraph (1) for the project,
have been made available by the Secretary concerned.
``(3) Subsequent transfers for multiyear projects.--
``(A) In general.--For the second and subsequent
fiscal years of a multiyear project to be funded in
whole or in part using project funds, the unit of
National Forest System land or Bureau of Land
Management District concerned shall use the amount of
project funds required to continue the project in that
fiscal year according to the agreement entered into
under subsection (a).
``(B) Suspension of work.--The Secretary concerned
shall suspend work on the project if the project funds
required by the agreement in the second and subsequent
fiscal years are not available.
``SEC. 207. AVAILABILITY OF PROJECT FUNDS.
``(a) Submission of Proposed Projects To Obligate Funds.--By
September 30, 2008 (or as soon thereafter as the Secretary concerned
determines is practicable), and each September 30 thereafter for each
succeeding fiscal year through fiscal year 2011, a resource advisory
committee shall submit to the Secretary concerned pursuant to section
203(a)(1) a sufficient number of project proposals that, if approved,
would result in the obligation of at least the full amount of the
project funds reserved by the participating county in the preceding
fiscal year.
``(b) Use or Transfer of Unobligated Funds.--Subject to section
208, if a resource advisory committee fails to comply with subsection
(a) for a fiscal year, any project funds reserved by the participating
county in the preceding fiscal year and remaining unobligated shall be
available for use as part of the project submissions in the next fiscal
year.
``(c) Effect of Rejection of Projects.--Subject to section 208, any
project funds reserved by a participating county in the preceding
fiscal year that are unobligated at the end of a fiscal year because
the Secretary concerned has rejected one or more proposed projects
shall be available for use as part of the project submissions in the
next fiscal year.
``(d) Effect of Court Orders.--
``(1) In general.--If an approved project under this Act is
enjoined or prohibited by a Federal court, the Secretary
concerned shall return the unobligated project funds related to
the project to the participating county or counties that
reserved the funds.
``(2) Expenditure of funds.--The returned funds shall be
available for the county to expend in the same manner as the
funds reserved by the county under subparagraph (B) or (C)(i)
of section 102(d)(1).
``SEC. 208. TERMINATION OF AUTHORITY.
``(a) In General.--The authority to initiate projects under this
title shall terminate on September 30, 2011.
``(b) Deposits in Treasury.--Any project funds not obligated by
September 30, 2012, shall be deposited in the Treasury of the United
States.
``TITLE III--COUNTY FUNDS
``SEC. 301. DEFINITIONS.
``In this title:
``(1) County funds.--The term `county funds' means all
funds an eligible county elects under section 102(d) to reserve
for expenditure in accordance with this title.
``(2) Participating county.--The term `participating
county' means an eligible county that elects under section
102(d) to expend a portion of the Federal funds received under
section 102 in accordance with this title.
``SEC. 302. USE.
``(a) Authorized Uses.--A participating county, including any
applicable agencies of the participating county, shall use county
funds, in accordance with this title, only--
``(1) to carry out activities under the Firewise
Communities program to provide to homeowners in fire-sensitive
ecosystems education on, and assistance with implementing,
techniques in home siting, home construction, and home
landscaping that can increase the protection of people and
property from wildfires;
``(2) to reimburse the participating county for search and
rescue and other emergency services, including firefighting,
that are--
``(A) performed on Federal land after the date on
which the use was approved under subsection (b);
``(B) paid for by the participating county; and
``(3) to develop community wildfire protection plans in
coordination with the appropriate Secretary concerned.
``(b) Proposals.--A participating county shall use county funds for
a use described in subsection (a) only after a 45-day public comment
period, at the beginning of which the participating county shall--
``(1) publish in any publications of local record a
proposal that describes the proposed use of the county funds;
and
``(2) submit the proposal to any resource advisory
committee established under section 205 for the participating
county.
``SEC. 303. CERTIFICATION.
``(a) In General.--Not later than February 1 of the year after the
year in which any county funds were expended by a participating county,
the appropriate official of the participating county shall submit to
the Secretary concerned a certification that the county funds expended
in the applicable year have been used for the uses authorized under
section 302(a), including a description of the amounts expended and the
uses for which the amounts were expended.
``(b) Review.--The Secretary concerned shall review the
certifications submitted under subsection (a) as the Secretary
concerned determines to be appropriate.
``SEC. 304. TERMINATION OF AUTHORITY.
``(a) In General.--The authority to initiate projects under this
title terminates on September 30, 2011.
``(b) Availability.--Any county funds not obligated by September
30, 2012, shall be returned to the Treasury of the United States.
``TITLE IV--MISCELLANEOUS PROVISIONS
``SEC. 401. REGULATIONS.
``The Secretary of Agriculture and the Secretary of the Interior
shall issue regulations to carry out the purposes of this Act.
``SEC. 402. AUTHORIZATION OF APPROPRIATIONS.
``There are authorized to be appropriated such sums as are
necessary to carry out this Act for each of fiscal years 2008 through
2011.
``SEC. 403. TREATMENT OF FUNDS AND REVENUES.
``(a) Relation to Other Appropriations.--Funds made available under
section 402 and funds made available to a Secretary concerned under
section 206 shall be in addition to any other annual appropriations for
the Forest Service and the Bureau of Land Management.
``(b) Deposit of Revenues and Other Funds.--All revenues generated
from projects pursuant to title II, including any interest accrued from
the revenues, shall be deposited in the Treasury of the United
States.''.
(b) Forest Receipt Payments to Eligible States and Counties.--
(1) Act of may 23, 1908.--The sixth paragraph under the
heading ``FOREST SERVICE'' in the Act of May 23, 1908 (16
U.S.C. 500) is amended in the first sentence by striking
``twenty-five percentum'' and all that follows through ``shall
be paid'' and inserting the following: ``an amount equal to the
annual average of 25 percent of all amounts received for the
applicable fiscal year and each of the preceding 6 fiscal years
from each national forest shall be paid''.
(2) Weeks law.--Section 13 of the Act of March 1, 1911
(commonly known as the ``Weeks Law'') (16 U.S.C. 500) is
amended in the first sentence by striking ``twenty-five
percentum'' and all that follows through ``shall be paid'' and
inserting the following: ``an amount equal to the annual
average of 25 percent of all amounts received for the
applicable fiscal year and each of the preceding 6 fiscal years
from each national forest shall be paid''.
(c) Payments in Lieu of Taxes.--
(1) In general.--Section 6906 of title 31, United States
Code, is amended to read as follows:
``Sec. 6906. Funding
``For each of fiscal years 2008 through 2012--
``(1) each county or other eligible unit of local
government shall be entitled to payment under this chapter; and
``(2) sums shall be made available to the Secretary of the
Interior for obligation or expenditure in accordance with this
chapter.''.
(2) Conforming amendment.--The table of sections for
chapter 69 of title 31, United States Code, is amended by
striking the item relating to section 6906 and inserting the
following:
``6906. Funding.''.
(3) Budget scorekeeping.--
(A) In general.--Notwithstanding the Budget
Scorekeeping Guidelines and the accompanying list of
programs and accounts set forth in the joint
explanatory statement of the committee of conference
accompanying Conference Report 105-217, the section in
this title regarding Payments in Lieu of Taxes shall be
treated in the baseline for purposes of section 257 of
the Balanced Budget and Emergency Deficit Control Act
of 1985 (as in effect prior to September 30, 2002), and
by the Chairmen of the House and Senate Budget
Committees, as appropriate, for purposes of budget
enforcement in the House and Senate, and under the
Congressional Budget Act of 1974 as if Payment in Lieu
of Taxes (14-1114-0-1-806) were an account designated
as Appropriated Entitlements and Mandatories for Fiscal
Year 1997 in the joint explanatory statement of the
committee of conference accompanying Conference Report
105-217.
(B) Effective date.--This paragraph shall remain in
effect for the fiscal years to which the entitlement in
section 6906 of title 31, United States Code (as
amended by paragraph (1)), applies.
SEC. 602. TRANSFER TO ABANDONED MINE RECLAMATION FUND.
Subparagraph (C) of section 402(i)(1) of the Surface Mining Control
and Reclamation Act of 1977 (30 U.S.C. 1232(i)(1)) is amended by
striking ``and $9,000,000 on October 1, 2009'' and inserting
``$9,000,000 on October 1, 2009, and $9,000,000 on October 1, 2010''.
TITLE VII--DISASTER RELIEF
Subtitle A--Heartland and Hurricane Ike Disaster Relief
SEC. 701. SHORT TITLE.
This subtitle may be cited as the ``Heartland Disaster Tax Relief
Act of 2008''.
SEC. 702. TEMPORARY TAX RELIEF FOR AREAS DAMAGED BY 2008 MIDWESTERN
SEVERE STORMS, TORNADOS, AND FLOODING.
(a) In General.--Subject to the modifications described in this
section, the following provisions of or relating to the Internal
Revenue Code of 1986 shall apply to any Midwestern disaster area in
addition to the areas to which such provisions otherwise apply:
(1) Go zone benefits.--
(A) Section 1400N (relating to tax benefits) other
than subsections (b), (d), (e), (i), (j), (m), and (o)
thereof.
(B) Section 1400O (relating to education tax
benefits).
(C) Section 1400P (relating to housing tax
benefits).
(D) Section 1400Q (relating to special rules for
use of retirement funds).
(E) Section 1400R(a) (relating to employee
retention credit for employers).
(F) Section 1400S (relating to additional tax
relief) other than subsection (d) thereof.
(G) Section 1400T (relating to special rules for
mortgage revenue bonds).
(2) Other benefits included in katrina emergency tax relief
act of 2005.--Sections 302, 303, 304, 401, and 405 of the
Katrina Emergency Tax Relief Act of 2005.
(b) Midwestern Disaster Area.--
(1) In general.--For purposes of this section and for
applying the substitutions described in subsections (d) and
(e), the term ``Midwestern disaster area'' means an area--
(A) with respect to which a major disaster has been
declared by the President on or after May 20, 2008, and
before August 1, 2008, under section 401 of the Robert
T. Stafford Disaster Relief and Emergency Assistance
Act by reason of severe storms, tornados, or flooding
occurring in any of the States of Arkansas, Illinois,
Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri,
Nebraska, and Wisconsin, and
(B) determined by the President to warrant
individual or individual and public assistance from the
Federal Government under such Act with respect to
damages attributable to such severe storms, tornados,
or flooding.
(2) Certain benefits available to areas eligible only for
public assistance.--For purposes of applying this section to
benefits under the following provisions, paragraph (1) shall be
applied without regard to subparagraph (B):
(A) Sections 1400Q, 1400S(b), and 1400S(d) of the
Internal Revenue Code of 1986.
(B) Sections 302, 401, and 405 of the Katrina
Emergency Tax Relief Act of 2005.
(c) References.--
(1) Area.--Any reference in such provisions to the
Hurricane Katrina disaster area or the Gulf Opportunity Zone
shall be treated as a reference to any Midwestern disaster area
and any reference to the Hurricane Katrina disaster area or the
Gulf Opportunity Zone within a State shall be treated as a
reference to all Midwestern disaster areas within the State.
(2) Items attributable to disaster.--Any reference in such
provisions to any loss, damage, or other item attributable to
Hurricane Katrina shall be treated as a reference to any loss,
damage, or other item attributable to the severe storms,
tornados, or flooding giving rise to any Presidential
declaration described in subsection (b)(1)(A).
(3) Applicable disaster date.--For purposes of applying the
substitutions described in subsections (d) and (e), the term
``applicable disaster date'' means, with respect to any
Midwestern disaster area, the date on which the severe storms,
tornados, or flooding giving rise to the Presidential
declaration described in subsection (b)(1)(A) occurred.
(d) Modifications to 1986 Code.--The following provisions of the
Internal Revenue Code of 1986 shall be applied with the following
modifications:
(1) Tax-exempt bond financing.--Section 1400N(a)--
(A) by substituting ``qualified Midwestern disaster
area bond'' for ``qualified Gulf Opportunity Zone
Bond'' each place it appears, except that in
determining whether a bond is a qualified Midwestern
disaster area bond--
(i) paragraph (2)(A)(i) shall be applied by
only treating costs as qualified project costs
if--
(I) in the case of a project
involving a private business use (as
defined in section 141(b)(6)), either
the person using the property suffered
a loss in a trade or business
attributable to the severe storms,
tornados, or flooding giving rise to
any Presidential declaration described
in subsection (b)(1)(A) or is a person
designated for purposes of this section
by the Governor of the State in which
the project is located as a person
carrying on a trade or business
replacing a trade or business with
respect to which another person
suffered such a loss, and
(II) in the case of a project
relating to public utility property,
the project involves repair or
reconstruction of public utility
property damaged by such severe storms,
tornados, or flooding, and
(ii) paragraph (2)(A)(ii) shall be applied
by treating an issue as a qualified mortgage
issue only if 95 percent or more of the net
proceeds (as defined in section 150(a)(3)) of
the issue are to be used to provide financing
for mortgagors who suffered damages to their
principal residences attributable to such
severe storms, tornados, or flooding.
(B) by substituting ``any State in which a
Midwestern disaster area is located'' for ``the State
of Alabama, Louisiana, or Mississippi'' in paragraph
(2)(B),
(C) by substituting ``designated for purposes of
this section (on the basis of providing assistance to
areas in the order in which such assistance is most
needed)'' for ``designated for purposes of this
section'' in paragraph (2)(C),
(D) by substituting ``January 1, 2013'' for
``January 1, 2011'' in paragraph (2)(D),
(E) in paragraph (3)(A)--
(i) by substituting ``$1,000'' for
``$2,500'', and
(ii) by substituting ``before the earliest
applicable disaster date for Midwestern
disaster areas within the State'' for ``before
August 28, 2005'',
(F) by substituting ``qualified Midwestern disaster
area repair or construction'' for ``qualified GO Zone
repair or construction'' each place it appears,
(G) by substituting ``after the date of the
enactment of the Heartland Disaster Tax Relief Act of
2008 and before January 1, 2013'' for ``after the date
of the enactment of this paragraph and before January
1, 2011'' in paragraph (7)(C), and
(H) by disregarding paragraph (8) thereof.
(2) Low-income housing credit.--Section 1400N(c)--
(A) only with respect to calendar years 2008, 2009,
and 2010,
(B) by substituting ``Disaster Recovery Assistance
housing amount'' for ``Gulf Opportunity housing
amount'' each place it appears,
(C) in paragraph (1)(B)--
(i) by substituting ``$8.00'' for
``$18.00'', and
(ii) by substituting ``before the earliest
applicable disaster date for Midwestern
disaster areas within the State'' for ``before
August 28, 2005'', and
(D) determined without regard to paragraphs (2),
(3), (4), (5), and (6) thereof.
(3) Expensing for certain demolition and clean-up costs.--
Section 1400N(f)--
(A) by substituting ``qualified Disaster Recovery
Assistance clean-up cost'' for ``qualified Gulf
Opportunity Zone clean-up cost'' each place it appears,
(B) by substituting ``beginning on the applicable
disaster date and ending on December 31, 2010'' for
``beginning on August 28, 2005, and ending on December
31, 2007'' in paragraph (2), and
(C) by treating costs as qualified Disaster
Recovery Assistance clean-up costs only if the removal
of debris or demolition of any structure was necessary
due to damage attributable to the severe storms,
tornados, or flooding giving rise to any Presidential
declaration described in subsection (b)(1)(A).
(4) Extension of expensing for environmental remediation
costs.--Section 1400N(g)--
(A) by substituting ``the applicable disaster
date'' for ``August 28, 2005'' each place it appears,
(B) by substituting ``January 1, 2011'' for
``January 1, 2008'' in paragraph (1),
(C) by substituting ``December 31, 2010'' for
``December 31, 2007'' in paragraph (1), and
(D) by treating a site as a qualified contaminated
site only if the release (or threat of release) or
disposal of a hazardous substance at the site was
attributable to the severe storms, tornados, or
flooding giving rise to any Presidential declaration
described in subsection (b)(1)(A).
(5) Increase in rehabilitation credit.--Section 1400N(h),
as amended by this Act--
(A) by substituting ``the applicable disaster
date'' for ``August 28, 2005'',
(B) by substituting ``December 31, 2011'' for
``December 31, 2009'' in paragraph (1), and
(C) by only applying such subsection to qualified
rehabilitation expenditures with respect to any
building or structure which was damaged or destroyed as
a result of the severe storms, tornados, or flooding
giving rise to any Presidential declaration described
in subsection (b)(1)(A).
(6) Treatment of net operating losses attributable to
disaster losses.--Section 1400N(k)--
(A) by substituting ``qualified Disaster Recovery
Assistance loss'' for ``qualified Gulf Opportunity Zone
loss'' each place it appears,
(B) by substituting ``after the day before the
applicable disaster date, and before January 1, 2011''
for ``after August 27, 2005, and before January 1,
2008'' each place it appears,
(C) by substituting ``the applicable disaster
date'' for ``August 28, 2005'' in paragraph
(2)(B)(ii)(I),
(D) by substituting ``qualified Disaster Recovery
Assistance property'' for ``qualified Gulf Opportunity
Zone property'' in paragraph (2)(B)(iv), and
(E) by substituting ``qualified Disaster Recovery
Assistance casualty loss'' for ``qualified Gulf
Opportunity Zone casualty loss'' each place it appears.
(7) Credit to holders of tax credit bonds.--Section
1400N(l)--
(A) by substituting ``Midwestern tax credit bond''
for ``Gulf tax credit bond'' each place it appears,
(B) by substituting ``any State in which a
Midwestern disaster area is located or any
instrumentality of the State'' for ``the State of
Alabama, Louisiana, or Mississippi'' in paragraph
(4)(A)(i),
(C) by substituting ``after December 31, 2008 and
before January 1, 2010'' for ``after December 31, 2005,
and before January 1, 2007'',
(D) by substituting ``shall not exceed $100,000,000
for any State with an aggregate population located in
all Midwestern disaster areas within the State of at
least 2,000,000, $50,000,000 for any State with an
aggregate population located in all Midwestern disaster
areas within the State of at least 1,000,000 but less
than 2,000,000, and zero for any other State. The
population of a State within any area shall be
determined on the basis of the most recent census
estimate of resident population released by the Bureau
of Census before the earliest applicable disaster date
for Midwestern disaster areas within the State.'' for
``shall not exceed'' and all that follows in paragraph
(4)(C), and
(E) by substituting ``the earliest applicable
disaster date for Midwestern disaster areas within the
State'' for ``August 28, 2005'' in paragraph (5)(A).
(8) Education tax benefits.--Section 1400O, by substituting
``2008 or 2009'' for ``2005 or 2006''.
(9) Housing tax benefits.--Section 1400P, by substituting
``the applicable disaster date'' for ``August 28, 2005'' in
subsection (c)(1).
(10) Special rules for use of retirement funds.--Section
1400Q--
(A) by substituting ``qualified Disaster Recovery
Assistance distribution'' for ``qualified hurricane
distribution'' each place it appears,
(B) by substituting ``on or after the applicable
disaster date and before January 1, 2010'' for ``on or
after August 25, 2005, and before January 1, 2007'' in
subsection (a)(4)(A)(i),
(C) by substituting ``the applicable disaster
date'' for ``August 28, 2005'' in subsections
(a)(4)(A)(i) and (c)(3)(B),
(D) by disregarding clauses (ii) and (iii) of
subsection (a)(4)(A) thereof,
(E) by substituting ``qualified storm damage
distribution'' for ``qualified Katrina distribution''
each place it appears,
(F) by substituting ``after the date which is 6
months before the applicable disaster date and before
the date which is the day after the applicable disaster
date'' for ``after February 28, 2005, and before August
29, 2005'' in subsection (b)(2)(B)(ii),
(G) by substituting ``the Midwestern disaster area,
but not so purchased or constructed on account of
severe storms, tornados, or flooding giving rise to the
designation of the area as a disaster area'' for ``the
Hurricane Katrina disaster area, but not so purchased
or constructed on account of Hurricane Katrina'' in
subsection (b)(2)(B)(iii),
(H) by substituting ``beginning on the applicable
disaster date and ending on the date which is 5 months
after the date of the enactment of the Heartland
Disaster Tax Relief Act of 2008'' for ``beginning on
August 25, 2005, and ending on February 28, 2006'' in
subsection (b)(3)(A),
(I) by substituting ``qualified storm damage
individual'' for ``qualified Hurricane Katrina
individual'' each place it appears,
(J) by substituting ``December 31, 2009'' for
``December 31, 2006'' in subsection (c)(2)(A),
(K) by disregarding subparagraphs (C) and (D) of
subsection (c)(3) thereof,
(L) by substituting ``beginning on the date of the
enactment of the Heartland Disaster Tax Relief Act of
2008 and ending on December 31, 2009'' for ``beginning
on September 24, 2005, and ending on December 31,
2006'' in subsection (c)(4)(A)(i),
(M) by substituting ``the applicable disaster
date'' for ``August 25, 2005'' in subsection
(c)(4)(A)(ii), and
(N) by substituting ``January 1, 2010'' for
``January 1, 2007'' in subsection (d)(2)(A)(ii).
(11) Employee retention credit for employers affected by
severe storms, tornados, and flooding.--Section 1400R(a)--
(A) by substituting ``the applicable disaster
date'' for ``August 28, 2005'' each place it appears,
(B) by substituting ``January 1, 2009'' for
``January 1, 2006'' both places it appears, and
(C) only with respect to eligible employers who
employed an average of not more than 200 employees on
business days during the taxable year before the
applicable disaster date.
(12) Temporary suspension of limitations on charitable
contributions.--Section 1400S(a), by substituting the following
paragraph for paragraph (4) thereof:
``(4) Qualified contributions.--
``(A) In general.--For purposes of this subsection,
the term `qualified contribution' means any charitable
contribution (as defined in section 170(c)) if--
``(i) such contribution--
``(I) is paid during the period
beginning on the earliest applicable
disaster date for all States and ending
on December 31, 2008, in cash to an
organization described in section
170(b)(1)(A), and
``(II) is made for relief efforts
in 1 or more Midwestern disaster areas,
``(ii) the taxpayer obtains from such
organization contemporaneous written
acknowledgment (within the meaning of section
170(f)(8)) that such contribution was used (or
is to be used) for relief efforts in 1 or more
Midwestern disaster areas, and
``(iii) the taxpayer has elected the
application of this subsection with respect to
such contribution.
``(B) Exception.--Such term shall not include a
contribution by a donor if the contribution is--
``(i) to an organization described in
section 509(a)(3), or
``(ii) for establishment of a new, or
maintenance of an existing, donor advised fund
(as defined in section 4966(d)(2)).
``(C) Application of election to partnerships and s
corporations.--In the case of a partnership or S
corporation, the election under subparagraph (A)(iii)
shall be made separately by each partner or
shareholder.''.
(13) Suspension of certain limitations on personal casualty
losses.--Section 1400S(b)(1), by substituting ``the applicable
disaster date'' for ``August 25, 2005''.
(14) Special rule for determining earned income.--Section
1400S(d)--
(A) by treating an individual as a qualified
individual if such individual's principal place of
abode on the applicable disaster date was located in a
Midwestern disaster area,
(B) by treating the applicable disaster date with
respect to any such individual as the applicable date
for purposes of such subsection, and
(C) by treating an area as described in paragraph
(2)(B)(ii) thereof if the area is a Midwestern disaster
area only by reason of subsection (b)(2) of this
section (relating to areas eligible only for public
assistance).
(15) Adjustments regarding taxpayer and dependency
status.--Section 1400S(e), by substituting ``2008 or 2009'' for
``2005 or 2006''.
(e) Modifications to Katrina Emergency Tax Relief Act of 2005.--The
following provisions of the Katrina Emergency Tax Relief Act of 2005
shall be applied with the following modifications:
(1) Additional exemption for housing displaced
individual.--Section 302--
(A) by substituting ``2008 or 2009'' for ``2005 or
2006'' in subsection (a) thereof,
(B) by substituting ``Midwestern displaced
individual'' for ``Hurricane Katrina displaced
individual'' each place it appears, and
(C) by treating an area as a core disaster area for
purposes of applying subsection (c) thereof if the area
is a Midwestern disaster area without regard to
subsection (b)(2) of this section (relating to areas
eligible only for public assistance).
(2) Increase in standard mileage rate.--Section 303, by
substituting ``beginning on the applicable disaster date and
ending on December 31, 2008'' for ``beginning on August 25,
2005, and ending on December 31, 2006''.
(3) Mileage reimbursements for charitable volunteers.--
Section 304--
(A) by substituting ``beginning on the applicable
disaster date and ending on December 31, 2008'' for
``beginning on August 25, 2005, and ending on December
31, 2006'' in subsection (a), and
(B) by substituting ``the applicable disaster
date'' for ``August 25, 2005'' in subsection (a).
(4) Exclusion of certain cancellation of indebtedness
income.--Section 401--
(A) by treating an individual whose principal place
of abode on the applicable disaster date was in a
Midwestern disaster area (determined without regard to
subsection (b)(2) of this section) as an individual
described in subsection (b)(1) thereof, and by treating
an individual whose principal place of abode on the
applicable disaster date was in a Midwestern disaster
area solely by reason of subsection (b)(2) of this
section as an individual described in subsection (b)(2)
thereof,
(B) by substituting ``the applicable disaster
date'' for ``August 28, 2005'' both places it appears,
and
(C) by substituting ``January 1, 2010'' for
``January 1, 2007'' in subsection (e).
(5) Extension of replacement period for nonrecognition of
gain.--Section 405, by substituting ``on or after the
applicable disaster date'' for ``on or after August 25, 2005''.
SEC. 703. REPORTING REQUIREMENTS RELATING TO DISASTER RELIEF
CONTRIBUTIONS.
(a) In General.--Section 6033(b) (relating to returns of certain
organizations described in section 501(c)(3)) is amended by striking
``and'' at the end of paragraph (13), by redesignating paragraph (14)
as paragraph (15), and by adding after paragraph (13) the following new
paragraph:
``(14) such information as the Secretary may require with
respect to disaster relief activities, including the amount and
use of qualified contributions to which section 1400S(a)
applies, and''.
(b) Effective Date.--The amendments made by this section shall
apply to returns the due date for which (determined without regard to
any extension) occurs after December 31, 2008.
SEC. 704. TEMPORARY TAX-EXEMPT BOND FINANCING AND LOW-INCOME HOUSING
TAX RELIEF FOR AREAS DAMAGED BY HURRICANE IKE.
(a) Tax-Exempt Bond Financing.--Section 1400N(a) of the Internal
Revenue Code of 1986 shall apply to any Hurricane Ike disaster area in
addition to any other area referenced in such section, but with the
following modifications:
(1) By substituting ``qualified Hurricane Ike disaster area
bond'' for ``qualified Gulf Opportunity Zone Bond'' each place
it appears, except that in determining whether a bond is a
qualified Hurricane Ike disaster area bond--
(A) paragraph (2)(A)(i) shall be applied by only
treating costs as qualified project costs if--
(i) in the case of a project involving a
private business use (as defined in section
141(b)(6)), either the person using the
property suffered a loss in a trade or business
attributable to Hurricane Ike or is a person
designated for purposes of this section by the
Governor of the State in which the project is
located as a person carrying on a trade or
business replacing a trade or business with
respect to which another person suffered such a
loss, and
(ii) in the case of a project relating to
public utility property, the project involves
repair or reconstruction of public utility
property damaged by Hurricane Ike, and
(B) paragraph (2)(A)(ii) shall be applied by
treating an issue as a qualified mortgage issue only if
95 percent or more of the net proceeds (as defined in
section 150(a)(3)) of the issue are to be used to
provide financing for mortgagors who suffered damages
to their principal residences attributable to Hurricane
Ike.
(2) By substituting ``any State in which any Hurricane Ike
disaster area is located'' for ``the State of Alabama,
Louisiana, or Mississippi'' in paragraph (2)(B).
(3) By substituting ``designated for purposes of this
section (on the basis of providing assistance to areas in the
order in which such assistance is most needed)'' for
``designated for purposes of this section'' in paragraph
(2)(C).
(4) By substituting ``January 1, 2013'' for ``January 1,
2011'' in paragraph (2)(D).
(5) By substituting the following for subparagraph (A) of
paragraph (3):
``(A) Aggregate amount designated.--The maximum
aggregate face amount of bonds which may be designated
under this subsection with respect to any State shall
not exceed the product of $2,000 multiplied by the
portion of the State population which is in--
``(i) in the case of Texas, the counties of
Brazoria, Chambers, Galveston, Jefferson, and
Orange, and
``(ii) in the case of Louisiana, the
parishes of Calcasieu and Cameron,
(as determined on the basis of the most recent census
estimate of resident population released by the Bureau
of Census before September 13, 2008).''.
(6) By substituting ``qualified Hurricane Ike disaster area
repair or construction'' for ``qualified GO Zone repair or
construction'' each place it appears.
(7) By substituting ``after the date of the enactment of
the Heartland Disaster Tax Relief Act of 2008 and before
January 1, 2013'' for ``after the date of the enactment of this
paragraph and before January 1, 2011'' in paragraph (7)(C).
(8) By disregarding paragraph (8) thereof.
(9) By substituting ``any Hurricane Ike disaster area'' for
``the Gulf Opportunity Zone'' each place it appears.
(b) Low-Income Housing Credit.--Section 1400N(c) of the Internal
Revenue Code of 1986 shall apply to any Hurricane Ike disaster area in
addition to any other area referenced in such section, but with the
following modifications:
(1) Only with respect to calendar years 2008, 2009, and
2010.
(2) By substituting ``any Hurricane Ike disaster area'' for
``the Gulf Opportunity Zone'' each place it appears.
(3) By substituting ``Hurricane Ike Recovery Assistance
housing amount'' for ``Gulf Opportunity housing amount'' each
place it appears.
(4) By substituting the following for subparagraph (B) of
paragraph (1):
``(B) Hurricane ike housing amount.--For purposes
of subparagraph (A), the term `Hurricane Ike housing
amount' means, for any calendar year, the amount equal
to the product of $16.00 multiplied by the portion of
the State population which is in--
``(i) in the case of Texas, the counties of
Brazoria, Chambers, Galveston, Jefferson, and
Orange, and
``(ii) in the case of Louisiana, the
parishes of Calcasieu and Cameron,
(as determined on the basis of the most recent census
estimate of resident population released by the Bureau
of Census before September 13, 2008).''.
(5) Determined without regard to paragraphs (2), (3), (4),
(5), and (6) thereof.
(c) Hurricane Ike Disaster Area.--For purposes of this section and
for applying the substitutions described in subsections (a) and (b),
the term ``Hurricane Ike disaster area'' means an area in the State of
Texas or Louisiana--
(1) with respect to which a major disaster has been
declared by the President on September 13, 2008, under section
401 of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act by reason of Hurricane Ike, and
(2) determined by the President to warrant individual or
individual and public assistance from the Federal Government
under such Act with respect to damages attributable to
Hurricane Ike.
Subtitle B--National Disaster Relief
SEC. 706. LOSSES ATTRIBUTABLE TO FEDERALLY DECLARED DISASTERS.
(a) Waiver of Adjusted Gross Income Limitation.--
(1) In general.--Subsection (h) of section 165 is amended
by redesignating paragraphs (3) and (4) as paragraphs (4) and
(5), respectively, and by inserting after paragraph (2) the
following new paragraph:
``(3) Special rule for losses in federally declared
disasters.--
``(A) In general.--If an individual has a net
disaster loss for any taxable year, the amount
determined under paragraph (2)(A)(ii) shall be the sum
of--
``(i) such net disaster loss, and
``(ii) so much of the excess referred to in
the matter preceding clause (i) of paragraph
(2)(A) (reduced by the amount in clause (i) of
this subparagraph) as exceeds 10 percent of the
adjusted gross income of the individual.
``(B) Net disaster loss.--For purposes of
subparagraph (A), the term `net disaster loss' means
the excess of--
``(i) the personal casualty losses--
``(I) attributable to a federally
declared disaster occurring before
January 1, 2010, and
``(II) occurring in a disaster
area, over
``(ii) personal casualty gains.
``(C) Federally declared disaster.--For purposes of
this paragraph--
``(i) Federally declared disaster.--The
term `federally declared disaster' means any
disaster subsequently determined by the
President of the United States to warrant
assistance by the Federal Government under the
Robert T. Stafford Disaster Relief and
Emergency Assistance Act.
``(ii) Disaster area.--The term `disaster
area' means the area so determined to warrant
such assistance.''.
(2) Conforming amendments.--
(A) Section 165(h)(4)(B) (as so redesignated) is
amended by striking ``paragraph (2)'' and inserting
``paragraphs (2) and (3)''.
(B) Section 165(i)(1) is amended by striking
``loss'' and all that follows through ``Act'' and
inserting ``loss occurring in a disaster area (as
defined by clause (ii) of subsection (h)(3)(C)) and
attributable to a federally declared disaster (as
defined by clause (i) of such subsection)''.
(C) Section 165(i)(4) is amended by striking
``Presidentially declared disaster (as defined by
section 1033(h)(3))'' and inserting ``federally
declared disaster (as defined by subsection
(h)(3)(C)(i)''.
(D)(i) So much of subsection (h) of section 1033 as
precedes subparagraph (A) of paragraph (1) thereof is
amended to read as follows:
``(h) Special Rules for Property Damaged by Federally Declared
Disasters.--
``(1) Principal residences.--If the taxpayer's principal
residence or any of its contents is located in a disaster area
and is compulsorily or involuntarily converted as a result of a
federally declared disaster--''.
(ii) Paragraph (2) of section 1033(h) is amended by
striking ``investment'' and all that follows through
``disaster'' and inserting ``investment located in a
disaster area and compulsorily or involuntarily
converted as a result of a federally declared
disaster''.
(iii) Paragraph (3) of section 1033(h) is amended
to read as follows:
``(3) Federally declared disaster; disaster area.--The
terms ``federally declared disaster'' and ``disaster area''
shall have the respective meaning given such terms by section
165(h)(3)(C).''.
(iv) Section 139(c)(2) is amended to read as
follows:
``(2) federally declared disaster (as defined by section
165(h)(3)(C)(i)),''.
(v) Subclause (II) of section 172(b)(1)(F)(ii) is
amended by striking ``Presidentially declared disasters
(as defined in section 1033(h)(3))'' and inserting
``federally declared disasters (as defined by
subsection (h)(3)(C)(i))''.
(vi) Subclause (III) of section 172(b)(1)(F)(ii) is
amended by striking ``Presidentially declared
disasters'' and inserting ``federally declared
disasters''.
(vii) Subsection (a) of section 7508A is amended by
striking ``Presidentially declared disaster (as defined
in section 1033(h)(3))'' and inserting ``federally
declared disaster (as defined by section
165(h)(3)(C)(i))''.
(b) Increase in Standard Deduction by Disaster Casualty Loss.--
(1) In general.--Paragraph (1) of section 63(c), as amended
by the Housing Assistance Tax Act of 2008, is amended by
striking ``and'' at the end of subparagraph (B), by striking
the period at the end of subparagraph (C) and inserting ``,
and'', and by adding at the end the following new subparagraph:
``(D) the disaster loss deduction.''.
(2) Disaster loss deduction.--Subsection (c) of section 63,
as amended by the Housing Assistance Tax Act of 2008, is
amended by adding at the end the following new paragraph:
``(8) Disaster loss deduction.--For the purposes of
paragraph (1), the term `disaster loss deduction' means the net
disaster loss (as defined in section 165(h)(3)(B)).''.
(3) Allowance in computing alternative minimum taxable
income.--Subparagraph (E) of section 56(b)(1) is amended by
adding at the end the following new sentence: ``The preceding
sentence shall not apply to so much of the standard deduction
as is determined under section 63(c)(1)(D).''.
(c) Increase in Limitation on Individual Loss Per Casualty.--
Paragraph (1) of section 165(h) is amended by striking ``$100'' and
inserting ``$500 ($100 for taxable years beginning after December 31,
2009)''.
(d) Effective Dates.--
(1) In general.--Except as provided by paragraph (2), the
amendments made by this section shall apply to disasters
declared in taxable years beginning after December 31, 2007.
(2) Increase in limitation on individual loss per
casualty.--The amendment made by subsection (c) shall apply to
taxable years beginning after December 31, 2008.
SEC. 707. EXPENSING OF QUALIFIED DISASTER EXPENSES.
(a) In General.--Part VI of subchapter B of chapter 1 is amended by
inserting after section 198 the following new section:
``SEC. 198A. EXPENSING OF QUALIFIED DISASTER EXPENSES.
``(a) In General.--A taxpayer may elect to treat any qualified
disaster expenses which are paid or incurred by the taxpayer as an
expense which is not chargeable to capital account. Any expense which
is so treated shall be allowed as a deduction for the taxable year in
which it is paid or incurred.
``(b) Qualified Disaster Expense.--For purposes of this section,
the term `qualified disaster expense' means any expenditure--
``(1) which is paid or incurred in connection with a trade
or business or with business-related property,
``(2) which is--
``(A) for the abatement or control of hazardous
substances that were released on account of a federally
declared disaster occurring before January 1, 2010,
``(B) for the removal of debris from, or the
demolition of structures on, real property which is
business-related property damaged or destroyed as a
result of a federally declared disaster occurring
before such date, or
``(C) for the repair of business-related property
damaged as a result of a federally declared disaster
occurring before such date, and
``(3) which is otherwise chargeable to capital account.
``(c) Other Definitions.--For purposes of this section--
``(1) Business-related property.--The term `business-
related property' means property--
``(A) held by the taxpayer for use in a trade or
business or for the production of income, or
``(B) described in section 1221(a)(1) in the hands
of the taxpayer.
``(2) Federally declared disaster.--The term `federally
declared disaster' has the meaning given such term by section
165(h)(3)(C)(i).
``(d) Deduction Recaptured as Ordinary Income on Sale, etc.--Solely
for purposes of section 1245, in the case of property to which a
qualified disaster expense would have been capitalized but for this
section--
``(1) the deduction allowed by this section for such
expense shall be treated as a deduction for depreciation, and
``(2) such property (if not otherwise section 1245
property) shall be treated as section 1245 property solely for
purposes of applying section 1245 to such deduction.
``(e) Coordination With Other Provisions.--Sections 198, 280B, and
468 shall not apply to amounts which are treated as expenses under this
section.
``(f) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section.''.
(b) Clerical Amendment.--The table of sections for part VI of
subchapter B of chapter 1 is amended by inserting after the item
relating to section 198 the following new item:
``Sec. 198A. Expensing of Qualified Disaster Expenses.''.
(c) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred after December 31, 2007 in connection
with disaster declared after such date.
SEC. 708. NET OPERATING LOSSES ATTRIBUTABLE TO FEDERALLY DECLARED
DISASTERS.
(a) In General.--Paragraph (1) of section 172(b) is amended by
adding at the end the following new subparagraph:
``(J) Certain losses attributable federally
declared disasters.--In the case of a taxpayer who has
a qualified disaster loss (as defined in subsection
(j)), such loss shall be a net operating loss carryback
to each of the 5 taxable years preceding the taxable
year of such loss.''.
(b) Qualified Disaster Loss.--Section 172 is amended by
redesignating subsections (j) and (k) as subsections (k) and (l),
respectively, and by inserting after subsection (i) the following new
subsection:
``(j) Rules Relating to Qualified Disaster Losses.--For purposes of
this section--
``(1) In general.--The term `qualified disaster loss' means
the lesser of--
``(A) the sum of--
``(i) the losses allowable under section
165 for the taxable year--
``(I) attributable to a federally
declared disaster (as defined in
section 165(h)(3)(C)(i)) occurring
before January 1, 2010, and
``(II) occurring in a disaster area
(as defined in section
165(h)(3)(C)(ii)), and
``(ii) the deduction for the taxable year
for qualified disaster expenses which is
allowable under section 198A(a) or which would
be so allowable if not otherwise treated as an
expense, or
``(B) the net operating loss for such taxable year.
``(2) Coordination with subsection (b)(2).--For purposes of
applying subsection (b)(2), a qualified disaster loss for any
taxable year shall be treated in a manner similar to the manner
in which a specified liability loss is treated.
``(3) Election.--Any taxpayer entitled to a 5-year
carryback under subsection (b)(1)(J) from any loss year may
elect to have the carryback period with respect to such loss
year determined without regard to subsection (b)(1)(J). Such
election shall be made in such manner as may be prescribed by
the Secretary and shall be made by the due date (including
extensions of time) for filing the taxpayer's return for the
taxable year of the net operating loss. Such election, once
made for any taxable year, shall be irrevocable for such
taxable year.
``(4) Exclusion.--The term `qualified disaster loss' shall
not include any loss with respect to any property described in
section 1400N(p)(3).''.
(c) Loss Deduction Allowed in Computing Alternative Minimum Taxable
Income.--Subsection (d) of section 56 is amended by adding at the end
the following new paragraph:
``(3) Net operating loss attributable to federally declared
disasters.--In the case of a taxpayer which has a qualified
disaster loss (as defined by section 172(b)(1)(J)) for the
taxable year, paragraph (1) shall be applied by increasing the
amount determined under subparagraph (A)(ii)(I) thereof by the
sum of the carrybacks and carryovers of such loss.''.
(d) Conforming Amendments.--
(1) Clause (ii) of section 172(b)(1)(F) is amended by
inserting ``or qualified disaster loss (as defined in
subsection (j))'' before the period at the end of the last
sentence.
(2) Paragraph (1) of section 172(i) is amended by adding at
the end the following new flush sentence:
``Such term shall not include any qualified disaster loss (as
defined in subsection (j)).''.
(e) Effective Date.--The amendments made by this section shall
apply to losses arising in taxable years beginning after December 31,
2007, in connection with disasters declared after such date.
SEC. 709. WAIVER OF CERTAIN MORTGAGE REVENUE BOND REQUIREMENTS
FOLLOWING FEDERALLY DECLARED DISASTERS.
(a) In General.--Subsection (k) of section 143 is amended by adding
at the end the following new paragraph:
``(12) Special rules for residences destroyed in federally
declared disasters.--
``(A) Principal residence destroyed.--At the
election of the taxpayer, if the principal residence
(within the meaning of section 121) of such taxpayer
is--
``(i) rendered unsafe for use as a
residence by reason of a federally declared
disaster occurring before January 1, 2010, or
``(ii) demolished or relocated by reason of
an order of the government of a State or
political subdivision thereof on account of a
federally declared disaster occurring before
such date,
then, for the 2-year period beginning on the date of
the disaster declaration, subsection (d)(1) shall not
apply with respect to such taxpayer and subsection (e)
shall be applied by substituting `110' for `90' in
paragraph (1) thereof.
``(B) Principal residence damaged.--
``(i) In general.--At the election of the
taxpayer, if the principal residence (within
the meaning of section 121) of such taxpayer
was damaged as the result of a federally
declared disaster occurring before January 1,
2010, any owner-financing provided in
connection with the repair or reconstruction of
such residence shall be treated as a qualified
rehabilitation loan.
``(ii) Limitation.--The aggregate owner-
financing to which clause (i) applies shall not
exceed the lesser of--
``(I) the cost of such repair or
reconstruction, or
``(II) $150,000.
``(C) Federally declared disaster.--For purposes of
this paragraph, the term `federally declared disaster'
has the meaning given such term by section
165(h)(3)(C)(i).
``(D) Election; denial of double benefit.--
``(i) Election.--An election under this
paragraph may not be revoked except with the
consent of the Secretary.
``(ii) Denial of double benefit.--If a
taxpayer elects the application of this
paragraph, paragraph (11) shall not apply with
respect to the purchase or financing of any
residence by such taxpayer.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to disasters occurring after December 31, 2007.
SEC. 710. SPECIAL DEPRECIATION ALLOWANCE FOR QUALIFIED DISASTER
PROPERTY.
(a) In General.--Section 168, as amended by this Act, is amended by
adding at the end the following new subsection:
``(n) Special Allowance for Qualified Disaster Assistance
Property.--
``(1) In general.--In the case of any qualified disaster
assistance 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 50 percent of the adjusted basis of
the qualified disaster assistance property, and
``(B) the adjusted basis of the qualified disaster
assistance 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 disaster assistance property.--For purposes
of this subsection--
``(A) In general.--The term `qualified disaster
assistance property' means any property--
``(i)(I) which is described in subsection
(k)(2)(A)(i), or
``(II) which is nonresidential real
property or residential rental property,
``(ii) substantially all of the use of
which is--
``(I) in a disaster area with
respect to a federally declared
disaster occurring before January 1,
2010, and
``(II) in the active conduct of a
trade or business by the taxpayer in
such disaster area,
``(iii) which--
``(I) rehabilitates property
damaged, or replaces property destroyed
or condemned, as a result of such
federally declared disaster, except
that, for purposes of this clause,
property shall be treated as replacing
property destroyed or condemned if, as
part of an integrated plan, such
property replaces property which is
included in a continuous area which
includes real property destroyed or
condemned, and
``(II) is similar in nature to, and
located in the same county as, the
property being rehabilitated or
replaced,
``(iv) the original use of which in such
disaster area commences with an eligible
taxpayer on or after the applicable disaster
date,
``(v) which is acquired by such eligible
taxpayer by purchase (as defined in section
179(d)) on or after the applicable disaster
date, but only if no written binding contract
for the acquisition was in effect before such
date, and
``(vi) which is placed in service by such
eligible taxpayer on or before the date which
is the last day of the third calendar year
following the applicable disaster date (the
fourth calendar year in the case of
nonresidential real property and residential
rental property).
``(B) Exceptions.--
``(i) Other bonus depreciation property.--
The term `qualified disaster assistance
property' shall not include--
``(I) any property to which
subsection (k) (determined without
regard to paragraph (4)), (l), or (m)
applies,
``(II) any property to which
section 1400N(d) applies, and
``(III) any property described in
section 1400N(p)(3).
``(ii) Alternative depreciation property.--
The term `qualified disaster assistance
property' shall not include any property to
which the alternative depreciation system under
subsection (g) applies, determined without
regard to paragraph (7) of subsection (g)
(relating to election to have system apply).
``(iii) Tax-exempt bond financed
property.--Such term shall not include any
property any portion of which is financed with
the proceeds of any obligation the interest on
which is exempt from tax under section 103.
``(iv) Qualified revitalization
buildings.--Such term shall not include any
qualified revitalization building with respect
to which the taxpayer has elected the
application of paragraph (1) or (2) of section
1400I(a).
``(v) 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.
``(C) Special rules.--For purposes of this
subsection, rules similar to the rules of subparagraph
(E) of subsection (k)(2) shall apply, except that such
subparagraph shall be applied--
``(i) by substituting `the applicable
disaster date' for `December 31, 2007' each
place it appears therein,
``(ii) without regard to `and before
January 1, 2009' in clause (i) thereof, and
``(iii) by substituting `qualified disaster
assistance property' for `qualified property'
in clause (iv) thereof.
``(D) Allowance against alternative minimum tax.--
For purposes of this subsection, rules similar to the
rules of subsection (k)(2)(G) shall apply.
``(3) Other definitions.--For purposes of this subsection--
``(A) Applicable disaster date.--The term
`applicable disaster date' means, with respect to any
federally declared disaster, the date on which such
federally declared disaster occurs.
``(B) Federally declared disaster.--The term
`federally declared disaster' has the meaning given
such term under section 165(h)(3)(C)(i).
``(C) Disaster area.--The term `disaster area' has
the meaning given such term under section
165(h)(3)(C)(ii).
``(D) Eligible taxpayer.--The term `eligible
taxpayer' means a taxpayer who has suffered an economic
loss attributable to a federally declared disaster.
``(4) Recapture.--For purposes of this subsection, rules
similar to the rules under section 179(d)(10) shall apply with
respect to any qualified disaster assistance property which
ceases to be qualified disaster assistance property.''.
(b) Effective Date.--The amendment made by this section shall apply
to property placed in service after December 31, 2007, with respect
disasters declared after such date.
SEC. 711. INCREASED EXPENSING FOR QUALIFIED DISASTER ASSISTANCE
PROPERTY.
(a) In General.--Section 179 is amended by adding at the end the
following new subsection:
``(e) Special Rules for Qualified Disaster Assistance Property.--
``(1) In general.--For purposes of this section--
``(A) the dollar amount in effect under subsection
(b)(1) for the taxable year shall be increased by the
lesser of--
``(i) $100,000, or
``(ii) the cost of qualified section 179
disaster assistance property placed in service
during the taxable year, and
``(B) the dollar amount in effect under subsection
(b)(2) for the taxable year shall be increased by the
lesser of--
``(i) $600,000, or
``(ii) the cost of qualified section 179
disaster assistance property placed in service
during the taxable year.
``(2) Qualified section 179 disaster assistance property.--
For purposes of this subsection, the term `qualified section
179 disaster assistance property' means section 179 property
(as defined in subsection (d)) which is qualified disaster
assistance property (as defined in section 168(n)(2)).
``(3) Coordination with empowerment zones and renewal
communities.--For purposes of sections 1397A and 1400J,
qualified section 179 disaster assistance property shall not be
treated as qualified zone property or qualified renewal
property, unless the taxpayer elects not to take such qualified
section 179 disaster assistance property into account for
purposes of this subsection.
``(4) Recapture.--For purposes of this subsection, rules
similar to the rules under subsection (d)(10) shall apply with
respect to any qualified section 179 disaster assistance
property which ceases to be qualified section 179 disaster
assistance property.''.
(b) Effective Date.--The amendment made by this section shall apply
to property placed in service after December 31, 2007, with respect
disasters declared after such date.
SEC. 712. COORDINATION WITH HEARTLAND DISASTER RELIEF.
The amendments made by this subtitle, other than the amendments
made by sections 706(a)(2), 710, and 711, shall not apply to any
disaster described in section 702(c)(1)(A), or to any expenditure or
loss resulting from such disaster.
TITLE VIII--SPENDING REDUCTIONS AND APPROPRIATE REVENUE RAISERS FOR NEW
TAX RELIEF POLICY
SEC. 801. NONQUALIFIED DEFERRED COMPENSATION FROM CERTAIN TAX
INDIFFERENT PARTIES.
(a) In General.--Subpart B of part II of subchapter E of chapter 1
is amended by inserting after section 457 the following new section:
``SEC. 457A. NONQUALIFIED DEFERRED COMPENSATION FROM CERTAIN TAX
INDIFFERENT PARTIES.
``(a) In General.--Any compensation which is deferred under a
nonqualified deferred compensation plan of a nonqualified entity shall
be includible in gross income when there is no substantial risk of
forfeiture of the rights to such compensation.
``(b) Nonqualified Entity.--For purposes of this section, the term
`nonqualified entity' means--
``(1) any foreign corporation unless substantially all of
its income is--
``(A) effectively connected with the conduct of a
trade or business in the United States, or
``(B) subject to a comprehensive foreign income
tax, and
``(2) any partnership unless substantially all of its
income is allocated to persons other than--
``(A) foreign persons with respect to whom such
income is not subject to a comprehensive foreign income
tax, and
``(B) organizations which are exempt from tax under
this title.
``(c) Determinability of Amounts of Compensation.--
``(1) In general.--If the amount of any compensation is not
determinable at the time that such compensation is otherwise
includible in gross income under subsection (a)--
``(A) such amount shall be so includible in gross
income when determinable, and
``(B) the tax imposed under this chapter for the
taxable year in which such compensation is includible
in gross income shall be increased by the sum of--
``(i) the amount of interest determined
under paragraph (2), and
``(ii) an amount equal to 20 percent of the
amount of such compensation.
``(2) Interest.--For purposes of paragraph (1)(B)(i), the
interest determined under this paragraph for any taxable year
is the amount of interest at the underpayment rate under
section 6621 plus 1 percentage point on the underpayments that
would have occurred had the deferred compensation been
includible in gross income for the taxable year in which first
deferred or, if later, the first taxable year in which such
deferred compensation is not subject to a substantial risk of
forfeiture.
``(d) Other Definitions and Special Rules.--For purposes of this
section--
``(1) Substantial risk of forfeiture.--
``(A) In general.--The rights of a person to
compensation shall be treated as subject to a
substantial risk of forfeiture only if such person's
rights to such compensation are conditioned upon the
future performance of substantial services by any
individual.
``(B) Exception for compensation based on gain
recognized on an investment asset.--
``(i) In general.--To the extent provided
in regulations prescribed by the Secretary, if
compensation is determined solely by reference
to the amount of gain recognized on the
disposition of an investment asset, such
compensation shall be treated as subject to a
substantial risk of forfeiture until the date
of such disposition.
``(ii) Investment asset.--For purposes of
clause (i), the term `investment asset' means
any single asset (other than an investment fund
or similar entity)--
``(I) acquired directly by an
investment fund or similar entity,
``(II) with respect to which such
entity does not (nor does any person
related to such entity) participate in
the active management of such asset (or
if such asset is an interest in an
entity, in the active management of the
activities of such entity), and
``(III) substantially all of any
gain on the disposition of which (other
than such deferred compensation) is
allocated to investors in such entity.
``(iii) Coordination with special rule.--
Paragraph (3)(B) shall not apply to any
compensation to which clause (i) applies.
``(2) Comprehensive foreign income tax.--The term
`comprehensive foreign income tax' means, with respect to any
foreign person, the income tax of a foreign country if--
``(A) such person is eligible for the benefits of a
comprehensive income tax treaty between such foreign
country and the United States, or
``(B) such person demonstrates to the satisfaction
of the Secretary that such foreign country has a
comprehensive income tax.
``(3) Nonqualified deferred compensation plan.--
``(A) In general.--The term `nonqualified deferred
compensation plan' has the meaning given such term
under section 409A(d), except that such term shall
include any plan that provides a right to compensation
based on the appreciation in value of a specified
number of equity units of the service recipient.
``(B) Exception.--Compensation shall not be treated
as deferred for purposes of this section if the service
provider receives payment of such compensation not
later than 12 months after the end of the taxable year
of the service recipient during which the right to the
payment of such compensation is no longer subject to a
substantial risk of forfeiture.
``(4) Exception for certain compensation with respect to
effectively connected income.--In the case a foreign
corporation with income which is taxable under section 882,
this section shall not apply to compensation which, had such
compensation had been paid in cash on the date that such
compensation ceased to be subject to a substantial risk of
forfeiture, would have been deductible by such foreign
corporation against such income.
``(5) Application of rules.--Rules similar to the rules of
paragraphs (5) and (6) of section 409A(d) shall apply.
``(e) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section, including regulations disregarding a substantial risk of
forfeiture in cases where necessary to carry out the purposes of this
section.''.
(b) Conforming Amendment.--Section 26(b)(2), as amended by the
Housing Assistance Tax Act of 2008, is amended by striking ``and'' at
the end of subparagraph (V), by striking the period at the end of
subparagraph (W) and inserting ``, and'', and by adding at the end the
following new subparagraph:
``(X) section 457A(c)(1)(B) (relating to
determinability of amounts of compensation).''.
(c) Clerical Amendment.--The table of sections of subpart B of part
II of subchapter E of chapter 1 is amended by inserting after the item
relating to section 457 the following new item:
``Sec. 457A. Nonqualified deferred compensation from certain tax
indifferent parties.''.
(d) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
amounts deferred which are attributable to services performed
after December 31, 2008.
(2) Application to existing deferrals.--In the case of any
amount deferred to which the amendments made by this section do
not apply solely by reason of the fact that the amount is
attributable to services performed before January 1, 2009, to
the extent such amount is not includible in gross income in a
taxable year beginning before 2018, such amounts shall be
includible in gross income in the later of--
(A) the last taxable year beginning before 2018, or
(B) the taxable year in which there is no
substantial risk of forfeiture of the rights to such
compensation (determined in the same manner as
determined for purposes of section 457A of the Internal
Revenue Code of 1986, as added by this section).
(3) Accelerated payments.--No later than 120 days after the
date of the enactment of this Act, the Secretary shall issue
guidance providing a limited period of time during which a
nonqualified deferred compensation arrangement attributable to
services performed on or before December 31, 2008, may, without
violating the requirements of section 409A(a) of the Internal
Revenue Code of 1986, be amended to conform the date of
distribution to the date the amounts are required to be
included in income.
(4) Certain back-to-back arrangements.--If the taxpayer is
also a service recipient and maintains one or more nonqualified
deferred compensation arrangements for its service providers
under which any amount is attributable to services performed on
or before December 31, 2008, the guidance issued under
paragraph (4) shall permit such arrangements to be amended to
conform the dates of distribution under such arrangement to the
date amounts are required to be included in the income of such
taxpayer under this subsection.
(5) Accelerated payment not treated as material
modification.--Any amendment to a nonqualified deferred
compensation arrangement made pursuant to paragraph (4) or (5)
shall not be treated as a material modification of the
arrangement for purposes of section 409A of the Internal
Revenue Code of 1986.
Attest:
Secretary.
110th CONGRESS
2d Session
H.R. 6049
_______________________________________________________________________
AMENDMENT