110 HR 6081 IH: Heroes Earnings
U.S. House of Representatives
2008-05-16
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.
(a)This Act may be cited
as the Heroes Earnings Assistance and
Relief Tax Act of 2008
.
(b)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)The table of contents for this Act is as follows:
Sec. 1. Short title, etc.
Title I—Benefits for Military
Sec. 101. Recovery rebate provided to military
families.
Sec. 102. Election to include combat pay as earned income for
purposes of earned income tax credit.
Sec. 103. Modification of mortgage revenue bonds for
veterans.
Sec. 104. Survivor and disability payments with respect to
qualified military service.
Sec. 105. Treatment of differential military pay as
wages.
Sec. 106. Special period of limitation when uniformed services
retired pay is reduced as a result of award of disability
compensation.
Sec. 107. Distributions from retirement plans to individuals
called to active duty.
Sec. 108. Authority to disclose return information for certain
veterans programs made permanent.
Sec. 109. Contributions of military death gratuities to Roth
IRAs and Education Savings Accounts.
Sec. 110. Suspension of 5-year period during service with the
Peace Corps.
Sec. 111. Credit for employer differential wage payments to
employees who are active duty members of the uniformed services.
Sec. 112. State payments to service members treated as
qualified military benefits.
Sec. 113. Permanent exclusion of gain from sale of a principal
residence by certain employees of the intelligence community.
Sec. 114. Special disposition rules for unused benefits in
health flexible spending arrangements of individuals called to active
duty.
Sec. 115. Technical correction related to exclusion of certain
property tax rebates and other benefits provided to volunteer firefighters and
emergency medical responders.
Title II—Improvements in Supplemental Security Income
Sec. 201. Treatment of uniformed service cash remuneration as
earned income.
Sec. 202. State annuities for certain veterans to be
disregarded in determining supplemental security income benefits.
Sec. 203. Exclusion of AmeriCorps benefits for purposes of
determining supplemental security income eligibility and benefit
amounts.
Sec. 204. Effective date.
Title III—Revenue Provisions
Sec. 301. Revision of tax rules on expatriation.
Sec. 302. Certain domestically controlled foreign persons
performing services under contract with United States Government treated as
American employers.
Sec. 303. Increase in minimum penalty on failure to file a
return of tax.
Title IV—Parity in the application of certain limits to mental
health benefits
Sec. 401. Parity in the application of certain limits to mental
health benefits.
<enum>I</enum><header>Benefits for
Military</header>
<section display-inline="no-display-inline" id="HB0295E30F4E24AF69553F5CE72FC9900" section-type="subsequent-section"><enum>101.</enum><header>Recovery rebate
provided to military families</header>
<subsection id="HDA21F4EFBA8847EFB187F6CCCD6F1F00"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (h) of
<external-xref legal-doc="usc" parsable-cite="usc/26/6428">section 6428</external-xref> of the Internal Revenue Code of 1986 (relating to identification
number requirement) is amended by adding at the end the following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H0E38F71DFD1C4741A8C0FBFEECBFCD6C" style="OLC">
<paragraph id="HE46B0F832ADE42FFA64FD21268357127"><enum>(3)</enum><header>Special rule for
members of the Armed Forces</header><text display-inline="yes-display-inline">For purposes of this subsection, in the
case of a joint return where at least 1 spouse has a valid identification
number and is a member of the Armed Forces of the United States at any time
during the taxable year, the other spouse shall be deemed to have a valid
identification
number.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H287075B2AB1543F6A758F4B226054763"><enum>(b)</enum><header>Special rule for
ATINs</header><text>Paragraph (2) of section 6428(h) of such Code (defining
valid identification number) is amended by adding at the end the following new
sentence: <quote>Notwithstanding the preceding 2 sentences, a valid
identification number shall include a temporary taxpayer identification number
issued for a child by the Internal Revenue Service on account of
adoption.</quote>.</text>
</subsection><subsection id="H1022E12F09454B33A233708BA3B2173E"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall take effect as if
included in the amendments made by section 101 of the Economic Stimulus Act of
2008.</text>
</subsection></section><section id="H46E1EDB839D84B9CB3AD167C67725E6C"><enum>102.</enum><header>Election to
include combat pay as earned income for purposes of earned income tax
credit</header>
<subsection id="H23B8CA84EEBA401CA5D18C00B92B9E4B"><enum>(a)</enum><header>In
general</header><text>Clause (vi) of section 32(c)(2)(B) (defining earned
income) is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="HB86C8A9BC7494672912B1EEF96ABEC1" style="OLC">
<clause id="H5ECBAF46C9934E0B9DCEF104987CD9CE"><enum>(vi)</enum><text>a
taxpayer may elect to treat amounts excluded from gross income by reason of
section 112 as earned
income.</text>
</clause><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HA0FD64B449F04D83BD614F94AEE42000"><enum>(b)</enum><header>Conforming
amendment</header><text>Paragraph (4) of section 6428(e) is amended by striking
<quote>except that—</quote> and all that follows through <quote>(B) such term
shall</quote> and inserting <quote>except that such term shall</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HA291AE564093497CB7F6EAC6B98F4ED0"><enum>(c)</enum><header>Sunset not
applicable</header><text display-inline="yes-display-inline">Section 105 of the
Working Families Tax Relief Act of 2004 (relating to application of EGTRRA
sunset to this title) shall not apply to section 104(b) of such Act.</text>
</subsection><subsection id="H65E6A9955FF1407E8376964FA17E2055"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years ending after December 31, 2007.</text>
</subsection></section><section display-inline="no-display-inline" id="HEAEBC6788A5A4BE19E60404D80815733" section-type="subsequent-section"><enum>103.</enum><header>Modification of
mortgage revenue bonds for veterans</header>
<subsection id="HA88EABA8FDD049EF9BBB3200C2403FCE"><enum>(a)</enum><header>Qualified
mortgage bonds used To finance residences for veterans without regard to
first-time homebuyer requirement</header><text>Subparagraph (D) of section
143(d)(2) (relating to exceptions) is amended by striking <quote>and before
January 1, 2008</quote>.</text>
</subsection><subsection id="H9A0208CF537F49B39B64684853573B8E"><enum>(b)</enum><header>Increase in bond
limitation for Alaska, Oregon, and Wisconsin</header><text>Clause (ii) of
section 143(l)(3)(B) (relating to State veterans limit) is amended by striking
<quote>$25,000,000</quote> each place it appears and inserting
<quote>$100,000,000</quote>.</text>
</subsection><subsection id="H271C6ABB7BC74EDD821EEA77F20ACEE"><enum>(c)</enum><header>Definition of
qualified veteran</header><text>Paragraph (4) of section 143(l) (defining
qualified veteran) is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="H3E62249E72DA4C77B503B097F93FB092" style="OLC">
<paragraph id="H6163BB4C0A364645AAC3DB00A3575FDE"><enum>(4)</enum><header>Qualified
veteran</header><text display-inline="yes-display-inline">For purposes of this
subsection, the term <term>qualified veteran</term> means any veteran
who—</text>
<subparagraph id="HD68187D2BD804F74BCCE1E1C57F0A596"><enum>(A)</enum><text>served on active
duty, and</text>
</subparagraph><subparagraph id="H99713813E1574240A37DD540D313494B"><enum>(B)</enum><text>applied for the
financing before the date 25 years after the last date on which such veteran
left active
service.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HB972624226F443ACBEC48C9BE41289CB"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to bonds
issued after December 31, 2007.</text>
</subsection></section><section display-inline="no-display-inline" id="H22C7AF11ACB64EDDBF9987C5AA19F1EA" section-type="subsequent-section"><enum>104.</enum><header>Survivor and
disability payments with respect to qualified military service</header>
<subsection id="H90B0CF05D34749E4ACA391D466C6D6D7"><enum>(a)</enum><header>Plan
qualification requirement for death benefits under USERRA-qualified active
military service</header><text display-inline="yes-display-inline">Subsection
(a) of section 401 (relating to requirements for qualification) is amended by
inserting after paragraph (36) the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H8808515481A540DEAAB53BB237B2B547" style="OLC">
<paragraph id="H4217EDC139264CB1B6E64ABFE9D9DEA"><enum>(37)</enum><header>Death benefits
under USERRA-qualified active military service</header><text display-inline="yes-display-inline">A trust shall not constitute a qualified
trust unless the plan provides that, in the case of a participant who dies
while performing qualified military service (as defined in section 414(u)), the
survivors of the participant are entitled to any additional benefits (other
than benefit accruals relating to the period of qualified military service)
provided under the plan had the participant resumed and then terminated
employment on account of
death.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H6EE4753CA51C480D00BF0059F49E80F3"><enum>(b)</enum><header>Treatment in the
case of death or disability resulting from active military service for benefit
accrual purposes</header><text display-inline="yes-display-inline">Subsection
(u) of section 414 (relating to special rules relating to veterans’
reemployment rights under USERRA) is amended by redesignating paragraphs (9)
and (10) as paragraphs (10) and (11), respectively, and by inserting after
paragraph (8) the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H2A494ECB497642BC97E8FEF9A5A65D07" style="OLC">
<paragraph id="HDC3E40E0B4F9435EAEC6CF46C635BCDF"><enum>(9)</enum><header>Treatment in the
case of death or disability resulting from active military service</header>
<subparagraph id="H57E1E02530104C6590C521B7007E0043"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">For benefit accrual
purposes, an employer sponsoring a retirement plan may treat an individual who
dies or becomes disabled (as defined under the terms of the plan) while
performing qualified military service with respect to the employer maintaining
the plan as if the individual has resumed employment in accordance with the
individual’s reemployment rights under <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/38/43">chapter 43</external-xref> of title 38, United States
Code, on the day preceding death or disability (as the case may be) and
terminated employment on the actual date of death or disability. In the case of
any such treatment, and subject to subparagraphs (B) and (C), any full or
partial compliance by such plan with respect to the benefit accrual
requirements of paragraph (8) with respect to such individual shall be treated
for purposes of paragraph (1) as if such compliance were required under such
chapter 43.</text>
</subparagraph><subparagraph id="HBA6CD2C040AE47D780C14653078F53B7"><enum>(B)</enum><header>Nondiscrimination
requirement</header><text display-inline="yes-display-inline">Subparagraph (A)
shall apply only if all individuals performing qualified military service with
respect to the employer maintaining the plan (as determined under subsections
(b), (c), (m), and (o)) who die or became disabled as a result of performing
qualified military service prior to reemployment by the employer are credited
with service and benefits on reasonably equivalent terms.</text>
</subparagraph><subparagraph id="H61908F8EF8654E959EBDA5AD19E83BFB"><enum>(C)</enum><header>Determination of
benefits</header><text display-inline="yes-display-inline">The amount of
employee contributions and the amount of elective deferrals of an individual
treated as reemployed under subparagraph (A) for purposes of applying paragraph
(8)(C) shall be determined on the basis of the individual’s average actual
employee contributions or elective deferrals for the lesser of—</text>
<clause id="H06BB7DEDE186494E00649E88933B1051"><enum>(i)</enum><text>the 12-month
period of service with the employer immediately prior to qualified military
service, or</text>
</clause><clause id="H95F98C7356CA4AE1BEDF22B7124C2586"><enum>(ii)</enum><text>if service with
the employer is less than such 12-month period, the actual length of continuous
service with the
employer.</text>
</clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HF394644EB1B94C03A7485B34239C135B"><enum>(c)</enum><header>Conforming
amendments</header>
<paragraph id="H8C520961214245D6A87B453433E099C4"><enum>(1)</enum><text>Section 404(a)(2)
is amended by striking <quote>and (31)</quote> and inserting <quote>(31), and
(37)</quote>.</text>
</paragraph><paragraph id="H3399A46637E541BB83E5589528730700"><enum>(2)</enum><text display-inline="yes-display-inline">Section 403(b) is amended by adding at the
end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HD0EEE77CEBEA44BEA405D18B7699F533" style="OLC">
<paragraph id="H908BE9FACB854254A44E018B4B9CDDE0"><enum>(14)</enum><header>Death benefits
under USERRA-qualified active military service</header><text display-inline="yes-display-inline">This subsection shall not apply to an
annuity contract unless such contract meets the requirements of section
401(a)(37).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HBC53C37A0BF14312BAF2B59B242683AF"><enum>(3)</enum><text display-inline="yes-display-inline">Section 457(g) is amended by adding at the
end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HDC1AB0A6D6AD4B618CC9231C92F900F" style="OLC">
<paragraph id="H2C863AD65D5349D0938925B6E62FB88D"><enum>(4)</enum><header>Death benefits
under USERRA-qualified active military service</header><text display-inline="yes-display-inline">A plan described in paragraph (1) shall not
be treated as an eligible deferred compensation plan unless such plan meets the
requirements of section
401(a)(37).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HBC4E45B358C346479DA7CFC553B82593"><enum>(d)</enum><header>Effective
date</header>
<paragraph id="H956E3B7CBFA04B418CF40866BB709E1B"><enum>(1)</enum><header>In
general</header><text>The amendments made by this section shall apply with
respect to deaths and disabilities occurring on or after January 1,
2007.</text>
</paragraph><paragraph id="HC1DD59F783934D19A617FF7E934C9973"><enum>(2)</enum><header>Provisions
relating to plan amendments</header>
<subparagraph id="HAE1079C734734753AAC1D2527E04552D"><enum>(A)</enum><header>In
general</header><text>If this subparagraph applies to any plan or contract
amendment, such plan or contract shall be treated as being operated in
accordance with the terms of the plan during the period described in
subparagraph (B)(iii).</text>
</subparagraph><subparagraph id="HE69B35807E4D4E649D2F5556E2AF36C6"><enum>(B)</enum><header>Amendments to
which subparagraph <enum-in-header>(A)</enum-in-header> applies</header>
<clause id="HB85B39ED820F4C79939C7074C74BE9BD"><enum>(i)</enum><header>In
general</header><text>Subparagraph (A) shall apply to any amendment to any plan
or annuity contract which is made—</text>
<subclause id="H49AE40D79039421D8D25602159335B35"><enum>(I)</enum><text>pursuant to the
amendments made by subsection (a) or pursuant to any regulation issued by the
Secretary of the Treasury under subsection (a), and</text>
</subclause><subclause id="HEF34A1937D5246B08CD902B3CB236B72"><enum>(II)</enum><text>on or before the
last day of the first plan year beginning on or after January 1, 2010.</text>
</subclause><continuation-text continuation-text-level="clause">In the case of
a governmental plan (as defined in section 414(d) of the Internal Revenue Code
of 1986), this clause shall be applied by substituting <quote>2012</quote> for
<quote>2010</quote> in subclause (II).</continuation-text></clause><clause id="HDD9339C71475432E8D3D1D12A31D04B5"><enum>(ii)</enum><header>Conditions</header><text display-inline="yes-display-inline">This paragraph shall not apply to any
amendment unless—</text>
<subclause id="H3EE607F725254F538618A4EFF53C236"><enum>(I)</enum><text>the plan or
contract is operated as if such plan or contract amendment were in effect for
the period described in clause (iii), and</text>
</subclause><subclause id="H58B21E60EB7C46E89B1CACE8E9980097"><enum>(II)</enum><text>such plan or
contract amendment applies retroactively for such period.</text>
</subclause></clause><clause id="H3D2C0542FC7448249F21C797CF0187C7"><enum>(iii)</enum><header>Period
described</header><text>The period described in this clause is the
period—</text>
<subclause id="HFA59DFC310C7415AA590949E085B46CB"><enum>(I)</enum><text display-inline="yes-display-inline">beginning on the effective date specified
by the plan, and</text>
</subclause><subclause id="HB798332BD4694D5EBE62BC7F55F07BF1"><enum>(II)</enum><text>ending on the
date described in clause (i)(II) (or, if earlier, the date the plan or contract
amendment is adopted).</text>
</subclause></clause></subparagraph></paragraph></subsection></section><section id="H61823BD0BAA64C4FA49DE80050834879"><enum>105.</enum><header>Treatment of
differential military pay as wages</header>
<subsection id="H4681DC550FAB4E71009CD5E6BF8C94CA"><enum>(a)</enum><header>Income Tax
Withholding on Differential Wage Payments</header>
<paragraph id="HF0AE719A3CF347009EE6248FC9C3E55E"><enum>(1)</enum><header>In
general</header><text>Section 3401 (relating to definitions) is amended by
adding at the end the following new subsection:</text>
<quoted-block id="H2B5D0573BF2F4C1EB15E6001EACD56A" style="OLC">
<subsection id="H755E80FB86F24C6BAD7600FB31D785FA"><enum>(h)</enum><header>Differential
Wage Payments to Active Duty Members of the Uniformed Services</header>
<paragraph id="HE51DF5361B244F74BBC07B4F1B3846AD"><enum>(1)</enum><header>In
general</header><text>For purposes of subsection (a), any differential wage
payment shall be treated as a payment of wages by the employer to the
employee.</text>
</paragraph><paragraph id="H02CE05BD5F304B4FBE001B245B2F5552"><enum>(2)</enum><header>Differential
wage payment</header><text>For purposes of paragraph (1), the term
<term>differential wage payment</term> means any payment which—</text>
<subparagraph id="H8FF614FBB34347249303C6D654F4188C"><enum>(A)</enum><text display-inline="yes-display-inline">is made by an employer to an individual
with respect to any period during which the individual is performing service in
the uniformed services (as defined in <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/38/43">chapter 43</external-xref> of title 38, United States
Code) while on active duty for a period of more than 30 days, and</text>
</subparagraph><subparagraph id="HDBADA466C34E49588189A3E710E960D0"><enum>(B)</enum><text>represents all or
a portion of the wages the individual would have received from the employer if
the individual were performing service for the
employer.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HC7C19F3673FB461ABAB1F6F2456E8082"><enum>(2)</enum><header>Effective
date</header><text>The amendment made by this subsection shall apply to
remuneration paid after December 31, 2008.</text>
</paragraph></subsection><subsection id="HBC070071154640718ECA00FF768128DA"><enum>(b)</enum><header>Treatment of
Differential Wage Payments for Retirement Plan Purposes</header>
<paragraph id="H8E67DEA237F54004B44235F8C1894E97"><enum>(1)</enum><header>Pension
plans</header>
<subparagraph id="H42D60045DE414376ADDCFAE8E93C4FFA"><enum>(A)</enum><header>In
general</header><text>Section 414(u) (relating to special rules relating to
veterans’ reemployment rights under USERRA), as amended by section 103(b), is
amended by adding at the end the following new paragraph:</text>
<quoted-block id="H596BC45AB07A44649E3EAF3C6541947C" style="OLC">
<paragraph id="HB7D118EB1F2641409105A594E6688C34"><enum>(12)</enum><header>Treatment of
differential wage payments</header>
<subparagraph id="H393F2AEFBE7D4E5D971C89CC6C9E1090"><enum>(A)</enum><header>In
general</header><text>Except as provided in this paragraph, for purposes of
applying this title to a retirement plan to which this subsection
applies—</text>
<clause id="H3377448295014C7EAB768F5B094E432F"><enum>(i)</enum><text>an
individual receiving a differential wage payment shall be treated as an
employee of the employer making the payment,</text>
</clause><clause id="HD3946EFC6D0F47079D2B8D80D49D35D4"><enum>(ii)</enum><text>the differential
wage payment shall be treated as compensation, and</text>
</clause><clause id="HC3112388F56A4899B29E4046F45D41F7"><enum>(iii)</enum><text>the plan shall
not be treated as failing to meet the requirements of any provision described
in paragraph (1)(C) by reason of any contribution or benefit which is based on
the differential wage payment.</text>
</clause></subparagraph><subparagraph id="H3F78102494CA4A2BA38B5DEC3DB9D263"><enum>(B)</enum><header>Special rule for
distributions</header>
<clause id="H4238C1687D0A4569B51E5B99B9E64901"><enum>(i)</enum><header>In
general</header><text>Notwithstanding subparagraph (A)(i), for purposes of
section 401(k)(2)(B)(i)(I), 403(b)(7)(A)(ii), 403(b)(11)(A), or
457(d)(1)(A)(ii), an individual shall be treated as having been severed from
employment during any period the individual is performing service in the
uniformed services described in section 3401(h)(2)(A).</text>
</clause><clause id="HFF2D0CAFA4934F5AB8616F8F61F9BA8F"><enum>(ii)</enum><header>Limitation</header><text>If
an individual elects to receive a distribution by reason of clause (i), the
plan shall provide that the individual may not make an elective deferral or
employee contribution during the 6-month period beginning on the date of the
distribution.</text>
</clause></subparagraph><subparagraph id="H29AE2A3080E4451CA094B34FAECF3E24"><enum>(C)</enum><header>Nondiscrimination
requirement</header><text>Subparagraph (A)(iii) shall apply only if all
employees of an employer (as determined under subsections (b), (c), (m), and
(o)) performing service in the uniformed services described in section
3401(h)(2)(A) are entitled to receive differential wage payments on reasonably
equivalent terms and, if eligible to participate in a retirement plan
maintained by the employer, to make contributions based on the payments on
reasonably equivalent terms. For purposes of applying this subparagraph, the
provisions of paragraphs (3), (4), and (5) of section 410(b) shall
apply.</text>
</subparagraph><subparagraph id="HAA4330B0FCF5443F99A9823CC1ECD1F8"><enum>(D)</enum><header>Differential
wage payment</header><text>For purposes of this paragraph, the term
<term>differential wage payment</term> has the meaning given such term by
section
3401(h)(2).</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="H959037959BBA43CCB6236BB1BF4E5007"><enum>(B)</enum><header>Conforming
amendment</header><text>The heading for section 414(u) is amended by inserting
<quote><header-in-text level="subsection">and to Differential Wage Payments to
Members on Active Duty</header-in-text></quote> after <quote><header-in-text level="subsection">USERRA</header-in-text></quote>.</text>
</subparagraph></paragraph><paragraph id="H58E1902C77FE427D80C308C9C131FC34"><enum>(2)</enum><header>Differential
wage payments treated as compensation for individual retirement
plans</header><text>Section 219(f)(1) (defining compensation) is amended by
adding at the end the following new sentence: <quote>The term compensation
includes any differential wage payment (as defined in section
3401(h)(2)).</quote>.</text>
</paragraph><paragraph id="H3C4EEB5EC112425A870061250103E564"><enum>(3)</enum><header>Effective
date</header><text>The amendments made by this subsection shall apply to years
beginning after December 31, 2008.</text>
</paragraph></subsection><subsection id="H8A0997BDAE7D4E679118765C44734D10"><enum>(c)</enum><header>Provisions
Relating to Plan Amendments</header>
<paragraph id="HB6CDAC9D52F948A4AF2EBD008575B8F"><enum>(1)</enum><header>In
general</header><text>If this subsection applies to any plan or annuity
contract amendment, such plan or contract shall be treated as being operated in
accordance with the terms of the plan or contract during the period described
in paragraph (2)(B)(i).</text>
</paragraph><paragraph id="H2CD3EC0697B74E7A9626DC38FDDA923E"><enum>(2)</enum><header>Amendments to
which section applies</header>
<subparagraph id="HB10C36ABB4E34F3691B76D157456F9B"><enum>(A)</enum><header>In
general</header><text>This subsection shall apply to any amendment to any plan
or annuity contract which is made—</text>
<clause id="HF1B57A32C04445C3801D86EBC74544D"><enum>(i)</enum><text>pursuant to any
amendment made by subsection (b)(1), and</text>
</clause><clause id="H39694DFDF30943DF81F840BD69D1EEB"><enum>(ii)</enum><text>on
or before the last day of the first plan year beginning on or after January 1,
2010.</text>
</clause><continuation-text continuation-text-level="subparagraph">In the
case of a governmental plan (as defined in section 414(d) of the Internal
Revenue Code of 1986), this subparagraph shall be applied by substituting
<quote>2012</quote> for <quote>2010</quote> in clause (ii).</continuation-text></subparagraph><subparagraph id="HAEBF513BD5B446C38E619D41B6176B87"><enum>(B)</enum><header>Conditions</header><text>This
subsection shall not apply to any plan or annuity contract amendment
unless—</text>
<clause id="H6C5DCC4856EC42939D4BE241FE5F1F3C"><enum>(i)</enum><text>during the period
beginning on the date the amendment described in subparagraph (A)(i) takes
effect and ending on the date described in subparagraph (A)(ii) (or, if
earlier, the date the plan or contract amendment is adopted), the plan or
contract is operated as if such plan or contract amendment were in effect,
and</text>
</clause><clause id="H57368E980CAC4D65AABE76CDDE69543"><enum>(ii)</enum><text>such
plan or contract amendment applies retroactively for such period.</text>
</clause></subparagraph></paragraph></subsection></section><section commented="no" display-inline="no-display-inline" id="H82D3B3491FDC413E9DEAD8E0EB8F5228" section-type="subsequent-section"><enum>106.</enum><header display-inline="yes-display-inline">Special period of limitation when uniformed
services retired pay is reduced as a result of award of disability
compensation</header>
<subsection commented="no" display-inline="no-display-inline" id="HB7437DA211B040E5938D530700C08265"><enum>(a)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">Subsection (d) of section 6511 (relating to
special rules applicable to income taxes) is amended by adding at the end the
following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H09F24283A2E444BBAF1B5E9F5FA862AA" style="OLC">
<paragraph commented="no" display-inline="no-display-inline" id="H9ADE5C83B46449899E93FCE83DB15787"><enum>(8)</enum><header display-inline="yes-display-inline">Special rules when uniformed services
retired pay is reduced as a result of award of disability compensation</header>
<subparagraph commented="no" display-inline="no-display-inline" id="HB5E7E30548D147BBB1A5137392314631"><enum>(A)</enum><header display-inline="yes-display-inline">Period of limitation on filing
claim</header><text display-inline="yes-display-inline">If the claim for credit
or refund relates to an overpayment of tax imposed by subtitle A on account
of—</text>
<clause commented="no" display-inline="no-display-inline" id="H7BE93751E6474AA7808B1900BD843FA2"><enum>(i)</enum><text display-inline="yes-display-inline">the reduction of uniformed services retired
pay computed under section <external-xref legal-doc="usc" parsable-cite="usc/10/1406">1406</external-xref> or <external-xref legal-doc="usc" parsable-cite="usc/10/1407">1407</external-xref> of title 10, United States Code,
or</text>
</clause><clause commented="no" display-inline="no-display-inline" id="HC10C90B7494946AA98E05F6D74FEF432"><enum>(ii)</enum><text display-inline="yes-display-inline">the waiver of such pay under section 5305
of title 38 of such Code,</text>
</clause><continuation-text commented="no" continuation-text-level="subparagraph">as a result of an award of
compensation under title 38 of such Code pursuant to a determination by the
Secretary of Veterans Affairs, the 3-year period of limitation prescribed in
subsection (a) shall be extended, for purposes of permitting a credit or refund
based upon the amount of such reduction or waiver, until the end of the 1-year
period beginning on the date of such determination.</continuation-text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HA7758CC725C3407D003058834CB35F43"><enum>(B)</enum><header display-inline="yes-display-inline">Limitation to 5 taxable years</header><text display-inline="yes-display-inline">Subparagraph (A) shall not apply with
respect to any taxable year which began more than 5 years before the date of
such
determination.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HDFE53F4AD9BC430CA10000BAF1FE733E"><enum>(b)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendment made by
subsection (a) shall apply to claims for credit or refund filed after the date
of the enactment of this Act.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H6C418D3CE29A4C4CB4B0A800757F2516"><enum>(c)</enum><header display-inline="yes-display-inline">Transition rules</header><text display-inline="yes-display-inline">In the case of a determination described in
paragraph (8) of <external-xref legal-doc="usc" parsable-cite="usc/26/6511">section 6511(d)</external-xref> of the Internal Revenue Code of 1986 (as added
by this section) which is made by the Secretary of Veterans Affairs after
December 31, 2000, and before the date of the enactment of this Act, such
paragraph—</text>
<paragraph commented="no" display-inline="no-display-inline" id="HA99108C144504C8C928200B1A45CFB9D"><enum>(1)</enum><text display-inline="yes-display-inline">shall not apply with respect to any taxable
year which began before January 1, 2001, and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H6D9B955FABB941A4B93393F4375D02A5"><enum>(2)</enum><text display-inline="yes-display-inline">shall be applied by substituting for
<quote>the date of such determination</quote> in subparagraph (A)
thereof.</text>
</paragraph></subsection></section><section display-inline="no-display-inline" id="H0B6DA5CEBC1C4C16AD678838C1912316" section-type="subsequent-section"><enum>107.</enum><header>Distributions from
retirement plans to individuals called to active duty</header>
<subsection id="HD6F73C7B6E624FB090134E48E6FF5F71"><enum>(a)</enum><header>In
general</header><text>Clause (iv) of section 72(t)(2)(G) is amended by striking
<quote>, and before December 31, 2007</quote>.</text>
</subsection><subsection id="H1B8BA5F75EC8491095F6A62904EB3CD8"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to
individuals ordered or called to active duty on or after December 31,
2007.</text>
</subsection></section><section display-inline="no-display-inline" id="HBA4CE503F5154019AD6841F861868505" section-type="subsequent-section"><enum>108.</enum><header>Authority to
disclose return information for certain veterans programs made
permanent</header>
<subsection id="HFBD16EA3FE3641F9A57449E9258E85AD"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Paragraph (7) of
section 6103(l) is amended by striking the last sentence thereof.</text>
</subsection><subsection id="HB7F45C38D0B24E8B9B639E9F6B36C700"><enum>(b)</enum><header>Conforming
amendment</header><text>Section 6103(l)(7)(D)(viii)(III) is amended by striking
<quote>sections 1710(a)(1)(I), 1710(a)(2), 1710(b), and 1712(a)(2)(B)</quote>
and inserting <quote>sections 1710(a)(2)(G), 1710(a)(3), and
1710(b)</quote>.</text>
</subsection><subsection id="H75EE33476CD540B9ADEC8F1BA5F873FF"><enum>(c)</enum><header>Effective
date</header><text>The amendment made by subsection (a) shall apply to requests
made after September 30, 2008.</text>
</subsection></section><section id="HC696C9579CD94EE28C61EC0069481720"><enum>109.</enum><header>Contributions
of military death gratuities to Roth IRAs and Education Savings
Accounts</header>
<subsection id="HFF6B29C95ABC41179BEDCB1C9EFF60E3"><enum>(a)</enum><header>Provision in
Effect Before Pension Protection Act</header><text>Subsection (e) of section
408A (relating to qualified rollover contribution), as in effect before the
amendments made by section 824 of the Pension Protection Act of 2006, is
amended to read as follows:</text>
<quoted-block id="HF760998162EE4593B1ADF193774ED9CF" style="OLC">
<subsection id="H593A6B348E994D96B2BC1D57251BE5DF"><enum>(e)</enum><header>Qualified
Rollover Contribution</header><text>For purposes of this section—</text>
<paragraph id="H84F64F15C0E3437DBCCC2641ED9C5E5"><enum>(1)</enum><header>In
general</header><text>The term <term>qualified rollover contribution</term>
means a rollover contribution to a Roth IRA from another such account, or from
an individual retirement plan, but only if such rollover contribution meets the
requirements of section 408(d)(3). Such term includes a rollover contribution
described in section 402A(c)(3)(A). For purposes of section 408(d)(3)(B), there
shall be disregarded any qualified rollover contribution from an individual
retirement plan (other than a Roth IRA) to a Roth IRA.</text>
</paragraph><paragraph id="H189F3A02592945D1AFE82913323BDC10"><enum>(2)</enum><header>Military death
gratuity</header>
<subparagraph display-inline="no-display-inline" id="HF3432E59237447F30006D946D96F6FE"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">The term
<term>qualified rollover contribution</term> includes a contribution to a Roth
IRA maintained for the benefit of an individual made before the end of the
1-year period beginning on the date on which such individual receives an amount
under <external-xref legal-doc="usc" parsable-cite="usc/10/1477">section 1477</external-xref> of title 10, United States Code, or <external-xref legal-doc="usc" parsable-cite="usc/38/1967">section 1967</external-xref> of title 38
of such Code, with respect to a person, to the extent that such contribution
does not exceed—</text>
<clause id="HCB5CA8B8BD224596B996459E2E3EB8C1"><enum>(i)</enum><text>the sum of the
amounts received during such period by such individual under such sections with
respect to such person, reduced by</text>
</clause><clause id="H40B0FD96025A4C1300DDCA1C31BAF3B7"><enum>(ii)</enum><text>the amounts so
received which were contributed to a Coverdell education savings account under
section 530(d)(9).</text>
</clause></subparagraph><subparagraph id="H00E1B01BE543423B800087583FBB8D04"><enum>(B)</enum><header>Annual limit on
number of rollovers not to apply</header><text>Section 408(d)(3)(B) shall not
apply with respect to amounts treated as a rollover by subparagraph (A).</text>
</subparagraph><subparagraph id="H016281A1A000498FA600BE3210E96662"><enum>(C)</enum><header>Application of
section 72</header><text>For purposes of applying section 72 in the case of a
distribution which is not a qualified distribution, the amount treated as a
rollover by reason of subparagraph (A) shall be treated as investment in the
contract.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HFBBEBA4974CB48470064D4D771E7E377"><enum>(b)</enum><header>Provision in
Effect After Pension Protection Act</header><text>Subsection (e) of section
408A, as in effect after the amendments made by section 824 of the Pension
Protection Act of 2006, is amended to read as follows:</text>
<quoted-block id="HD2844F98D7BA4BE2A0C75CFBE00DC5" style="OLC">
<subsection id="HBA1F18F984B7423B8CB0B33784708F01"><enum>(e)</enum><header>Qualified
Rollover Contribution</header><text>For purposes of this section—</text>
<paragraph id="HC3B008F5F12841F491845DB99ECCC00"><enum>(1)</enum><header>In
general</header><text>The term <term>qualified rollover contribution</term>
means a rollover contribution—</text>
<subparagraph id="H1A207E79AE0A4B65BD651897D6E3B88C"><enum>(A)</enum><text>to a Roth IRA from
another such account,</text>
</subparagraph><subparagraph id="H9413F7F059F940B6AA844F28079F3907"><enum>(B)</enum><text>from an eligible
retirement plan, but only if—</text>
<clause id="H277E4C717C014D559031B4521E4F3D2E"><enum>(i)</enum><text>in
the case of an individual retirement plan, such rollover contribution meets the
requirements of section 408(d)(3), and</text>
</clause><clause id="H1B81EC25351E4E978D7E6186E4827F06"><enum>(ii)</enum><text>in the case of
any eligible retirement plan (as defined in section 402(c)(8)(B) other than
clauses (i) and (ii) thereof), such rollover contribution meets the
requirements of section 402(c), 403(b)(8), or 457(e)(16), as applicable.</text>
</clause><continuation-text continuation-text-level="subparagraph">For
purposes of section 408(d)(3)(B), there shall be disregarded any qualified
rollover contribution from an individual retirement plan (other than a Roth
IRA) to a Roth IRA.</continuation-text></subparagraph></paragraph><paragraph id="H2447ECB631264BE49CA3FB4B836EF500"><enum>(2)</enum><header>Military death
gratuity</header>
<subparagraph id="H879971B666A0419B83243810E84DBD2"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">The term
<term>qualified rollover contribution</term> includes a contribution to a Roth
IRA maintained for the benefit of an individual made before the end of the
1-year period beginning on the date on which such individual receives an amount
under <external-xref legal-doc="usc" parsable-cite="usc/10/1477">section 1477</external-xref> of title 10, United States Code, or <external-xref legal-doc="usc" parsable-cite="usc/38/1967">section 1967</external-xref> of title 38
of such Code, with respect to a person, to the extent that such contribution
does not exceed—</text>
<clause id="HA53FE2B6D0D64F8EB23361EFC6CF8BC9"><enum>(i)</enum><text>the sum of the
amounts received during such period by such individual under such sections with
respect to such person, reduced by</text>
</clause><clause id="H22F7980C16E34D77A54EC50868456200"><enum>(ii)</enum><text>the amounts so
received which were contributed to a Coverdell education savings account under
section 530(d)(9).</text>
</clause></subparagraph><subparagraph id="HA14D0093225F4374B0B2B29FF3CAD26B"><enum>(B)</enum><header>Annual limit on
number of rollovers not to apply</header><text>Section 408(d)(3)(B) shall not
apply with respect to amounts treated as a rollover by the subparagraph
(A).</text>
</subparagraph><subparagraph id="H9AA7FEEB56564679B9AB4E3E384FBF"><enum>(C)</enum><header>Application of
section 72</header><text>For purposes of applying section 72 in the case of a
distribution which is not a qualified distribution, the amount treated as a
rollover by reason of subparagraph (A) shall be treated as investment in the
contract.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection display-inline="no-display-inline" id="H2FE8C81CC5EC4C0F91E5C8809100E9A0"><enum>(c)</enum><header>Education
savings accounts</header><text>Subsection (d) of section 530 is amended by
adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HC061D36684C44E69B3FD6405ADFFC4AB" style="OLC">
<paragraph display-inline="no-display-inline" id="HFC1DC2ADFEBE4AF9A355CA216E95C5BB"><enum>(9)</enum><header>Military death
gratuity</header>
<subparagraph id="H8427683706DF4CCC81C2984B2071D41"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">For purposes of this
section, the term <term>rollover contribution</term> includes a contribution to
a Coverdell education savings account made before the end of the 1-year period
beginning on the date on which the contributor receives an amount under section
1477 of title 10, United States Code, or <external-xref legal-doc="usc" parsable-cite="usc/38/1967">section 1967</external-xref> of title 38 of such Code,
with respect to a person, to the extent that such contribution does not
exceed—</text>
<clause id="H76B4AE0DA18E49D7B6D56561A18C1DE"><enum>(i)</enum><text>the
sum of the amounts received during such period by such contributor under such
sections with respect to such person, reduced by</text>
</clause><clause id="H5D187392349C4CCE94A609C5DF8FDE29"><enum>(ii)</enum><text display-inline="yes-display-inline">the amounts so received which were
contributed to a Roth IRA under section 408A(e)(2) or to another Coverdell
education savings account.</text>
</clause></subparagraph><subparagraph id="HE751DAEF41AF457EA57B1B544FC3C3F6"><enum>(B)</enum><header>Annual limit on
number of rollovers not to apply</header><text>The last sentence of paragraph
(5) shall not apply with respect to amounts treated as a rollover by the
subparagraph (A).</text>
</subparagraph><subparagraph id="H6BBD835D7510451C877DF7C4D72BAED"><enum>(C)</enum><header>Application of
section 72</header><text>For purposes of applying section 72 in the case of a
distribution which is includible in gross income under paragraph (1), the
amount treated as a rollover by reason of subparagraph (A) shall be treated as
investment in the
contract.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H1866E44C24C34FC991887FB200EF70D3"><enum>(d)</enum><header>Effective
Dates</header>
<paragraph id="H6348FB3388664907A85DDD7CB7CD5BF6"><enum>(1)</enum><header>In
general</header><text>Except as provided by paragraphs (2) and (3), the
amendments made by this section shall apply with respect to deaths from
injuries occurring on or after the date of the enactment of this Act.</text>
</paragraph><paragraph id="HA6EC5BF6377C495CB486711C32E13B42"><enum>(2)</enum><header>Application of
amendments to deaths from injuries occurring on or after October 7, 2001, and
before enactment</header><text display-inline="yes-display-inline">The
amendments made by this section shall apply to any contribution made pursuant
to section 408A(e)(2) or 530(d)(5) of the Internal Revenue Code of 1986, as
amended by this Act, with respect to amounts received under section 1477 of
title 10, United States Code, or under <external-xref legal-doc="usc" parsable-cite="usc/38/1967">section 1967</external-xref> of title 38 of such Code,
for deaths from injuries occurring on or after October 7, 2001, and before the
date of the enactment of this Act if such contribution is made not later than 1
year after the date of the enactment of this Act.</text>
</paragraph><paragraph id="HCBDA21D754D949FC91E53DF264936349"><enum>(3)</enum><header>Pension
Protection Act changes</header><text>Section 408A(e)(1) of the Internal Revenue
Code of 1986 (as in effect after the amendments made by subsection (b)) shall
apply to taxable years beginning after December 31, 2007.</text>
</paragraph></subsection></section><section id="HF4097A78E5D14F7485FD971EAC248F7C" section-type="subsequent-section"><enum>110.</enum><header>Suspension of 5-year
period during service with the Peace Corps</header>
<subsection id="HA555C84E4CF54724B0CCB892E1DB0388"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (d) of
section 121 (relating to special rules) is amended by adding at the end the
following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="HF1528D9681E54B44BA3EE64925E95E8B" style="OLC">
<paragraph id="HA66217AA86274CF49235EE5149CADAE7"><enum>(12)</enum><header>Peace
Corps</header>
<subparagraph id="HD2423943D13743949785218800940034"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">At the election of an
individual with respect to a property, the running of the 5-year period
described in subsections (a) and (c)(1)(B) and paragraph (7) of this subsection
with respect to such property shall be suspended during any period that such
individual or such individual’s spouse is serving outside the United
States—</text>
<clause id="HDDA16F9AAF75476FA0526F347644394F"><enum>(i)</enum><text display-inline="yes-display-inline">on qualified official extended duty (as
defined in paragraph (9)(C)) as an employee of the Peace Corps, or</text>
</clause><clause id="H6164C6B312A146CEADF762F240001EDC"><enum>(ii)</enum><text>as an enrolled
volunteer or volunteer leader under section 5 or 6 (as the case may be) of the
Peace Corps Act (<external-xref legal-doc="usc" parsable-cite="usc/22/2504">22 U.S.C. 2504</external-xref>, 2505).</text>
</clause></subparagraph><subparagraph id="H9BAD01115D324814B9AC6BAFF63E7374"><enum>(B)</enum><header>Applicable
rules</header><text>For purposes of subparagraph (A), rules similar to the
rules of subparagraphs (B) and (D) shall
apply.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H5D063D3791914E139DF39104CCE1D559"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by subsection (a) shall apply to taxable
years beginning after December 31, 2007.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="H16AC841DC2B94B6984E7B134269737B9" section-type="subsequent-section"><enum>111.</enum><header display-inline="yes-display-inline">Credit for employer differential wage
payments to employees who are active duty members of the uniformed
services</header>
<subsection id="HAD3BCBBF978D45CD9767729EC408676F"><enum>(a)</enum><header>In
general</header><text>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:</text>
<quoted-block display-inline="no-display-inline" id="H2F8734D5BC934167B34983BBBDF314AA" style="OLC">
<section commented="no" display-inline="no-display-inline" id="H4730749C954240E7B524004D3D7FDDD" section-type="subsequent-section"><enum>45O.</enum><header display-inline="yes-display-inline">Employer wage credit for employees who are
active duty members of the uniformed services</header>
<subsection commented="no" display-inline="no-display-inline" id="H2DB634A114094F30A340E4CDD66C3982"><enum>(a)</enum><header display-inline="yes-display-inline">General rule</header><text display-inline="yes-display-inline">For purposes of section 38, in the case of
an eligible small business employer, the differential wage payment credit for
any taxable year is an amount equal to 20 percent of the sum of the eligible
differential wage payments for each of the qualified employees of the taxpayer
during such taxable year.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HFD6E74599B434B92B6D234698301FAA0"><enum>(b)</enum><header>Definitions</header><text>For
purposes of this section—</text>
<paragraph commented="no" display-inline="no-display-inline" id="H8369F4DFFE664CD3A772D9891717E660"><enum>(1)</enum><header>Eligible
differential wage payments</header><text>The term <term>eligible differential
wage payments</term> means, with respect to each qualified employee, so much of
the differential wage payments (as defined in section 3401(h)(2)) paid to such
employee for the taxable year as does not exceed $20,000.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="HF1ACED67BC78452083551BF36CAF8170"><enum>(2)</enum><header display-inline="yes-display-inline">Qualified employee</header><text display-inline="yes-display-inline">The term <term>qualified employee</term>
means a person who has been an employee of the taxpayer for the 91-day period
immediately preceding the period for which any differential wage payment is
made.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H2FA9D80F1FE74E95A2008145BE64EA98"><enum>(3)</enum><header display-inline="yes-display-inline">Eligible small business employer</header>
<subparagraph commented="no" display-inline="no-display-inline" id="H37AB4F3914B84BDA9FD45F4C75688100"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The term <term>eligible small business
employer</term> means, with respect to any taxable year, any employer
which—</text>
<clause commented="no" display-inline="no-display-inline" id="H7E5437B205F748DB9B83AA0255D6BFFA"><enum>(i)</enum><text display-inline="yes-display-inline">employed an average of less than 50
employees on business days during such taxable year, and</text>
</clause><clause commented="no" display-inline="no-display-inline" id="H39E3E644D9914E0A8DCC97F096969EAE"><enum>(ii)</enum><text display-inline="yes-display-inline">under a written plan of the employer,
provides eligible differential wage payments to every qualified employee of the
employer.</text>
</clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="HF4627D9776EA44B38E6EF28BA7F6B383"><enum>(B)</enum><header display-inline="yes-display-inline">Controlled groups</header><text display-inline="yes-display-inline">For purposes of subparagraph (A), all
persons treated as a single employer under subsection (b), (c), (m), or (o) of
section 414 shall be treated as a single employer.</text>
</subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H752A6431E4CD4FC996E2E4260468C95"><enum>(c)</enum><header display-inline="yes-display-inline">Coordination with other
credits</header><text display-inline="yes-display-inline">The amount of credit
otherwise allowable under this chapter with respect to compensation paid to any
employee shall be reduced by the credit determined under this section with
respect to such employee.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H9BA9E3747F80457D851465DE097D3889"><enum>(d)</enum><header display-inline="yes-display-inline">Disallowance for failure To comply with
employment or reemployment rights of members of the reserve components of the
Armed Forces of the United States</header><text display-inline="yes-display-inline">No credit shall be allowed under subsection
(a) to a taxpayer for—</text>
<paragraph commented="no" display-inline="no-display-inline" id="HDC909052617947FFABC5884CCDF584"><enum>(1)</enum><text display-inline="yes-display-inline">any taxable year, beginning after the date
of the enactment of this section, in which the taxpayer is under a final order,
judgment, or other process issued or required by a district court of the United
States under <external-xref legal-doc="usc" parsable-cite="usc/38/4323">section 4323</external-xref> of title 38 of the United States Code with respect to
a violation of chapter 43 of such title, and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="HD104437EB91A447DB5140864D5F6DB31"><enum>(2)</enum><text display-inline="yes-display-inline">the 2 succeeding taxable years.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="H80E601CD3B1D4D4A8CA783754C858F73"><enum>(e)</enum><header display-inline="yes-display-inline">Certain rules To apply</header><text display-inline="yes-display-inline">For purposes of this section, rules similar
to the rules of subsections (c), (d), and (e) of section 52 shall apply.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HB25C4ABE60824138BA8F105C9E7E8FD2"><enum>(f)</enum><header>Termination</header><text>This
section shall not apply to any payments made after December 31,
2009.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection display-inline="no-display-inline" id="H4BDCCFEEFC12497DA1121F6092D40698"><enum>(b)</enum><header>Credit treated
as part of general business credit</header><text>Section 38(b) (relating to
general business credit) is amended by striking <quote>plus</quote> at the end
of paragraph (30), by striking the period at the end of paragraph (31) and
inserting <quote>, plus</quote>, and by adding at the end of following new
paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H8E8A9A1526384339A8E2B0D727711683" style="OLC">
<paragraph id="H05A580C12CD147BA87D698E950329596"><enum>(32)</enum><text display-inline="yes-display-inline">the differential wage payment credit
determined under section
45O(a).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H667CB002289741F1BBB110E721425D40"><enum>(c)</enum><header display-inline="yes-display-inline">No deduction for compensation taken into
account for credit</header><text display-inline="yes-display-inline">Section
280C(a) (relating to rule for employment credits) is amended by inserting
<quote>45O(a),</quote> after <quote>45A(a),</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H79877F7DC45A42AE9DEA96E8AA00D685"><enum>(d)</enum><header display-inline="yes-display-inline">Clerical amendment</header><text display-inline="yes-display-inline">The table of sections for subpart D of part
IV of subchapter A of chapter 1 is amended by adding at the end the following
new item:</text>
<quoted-block display-inline="no-display-inline" id="H7F4504E906CD4FC085131B41B443DFE" style="USC">
<toc regeneration="no-regeneration">
<toc-entry bold="off" level="section">Sec. 45O. Employer wage credit
for employees who are active duty members of the uniformed
services.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HD6E40D3710114375BDAB2900CBC74FA4"><enum>(e)</enum><header display-inline="yes-display-inline">Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to amounts paid after the date of the enactment of
this Act.</text>
</subsection></section><section commented="no" display-inline="no-display-inline" id="H247E8E9AA5BA46C886A0172894EE721B" section-type="subsequent-section"><enum>112.</enum><header>State payments to
service members treated as qualified military benefits</header>
<subsection id="HA250FD273DFC45F6A2D65D7FFDA41868"><enum>(a)</enum><header>In
general</header><text>Section 134(b) (defining qualified military benefit) is
amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H9B2B36E14AA446E798D87F9F4454F4DA" style="OLC">
<paragraph id="HFD5BE2BA1F7447899CBFFBF4C87D36E"><enum>(6)</enum><header>Certain state
payments</header><text>The term <term>qualified military benefit</term>
includes any bonus payment by a State or political subdivision thereof to any
member or former member of the uniformed services of the United States or any
dependent of such member only by reason of such member's service in an combat
zone (as defined in section 112(c)(2), determined without regard to the
parenthetical).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HEA8F53765BEA4CA782CB7DF61D5747F0"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to payments
made before, on, or after the date of the enactment of this Act.</text>
</subsection></section><section display-inline="no-display-inline" id="HFF3D324614F04EBF9BCDD2F1F4CB103F" section-type="subsequent-section"><enum>113.</enum><header>Permanent exclusion
of gain from sale of a principal residence by certain employees of the
intelligence community</header>
<subsection commented="no" display-inline="no-display-inline" id="HCC7883DD8EC74C1200E8FBE50A96E00"><enum>(a)</enum><header>In
general</header><text>Paragraph (9) of section 121(d) is amended by striking
subparagraph (E).</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H11CE9E434F0D47269500D2BFB635457F"><enum>(b)</enum><header>Duty station may
be inside United States</header><text>Section 121(d)(9)(C) (defining qualified
official extended duty) is amended by striking clause (vi).</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HE5564C6B90C14679A7ED3C2018E98753"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to sales or
exchanges after the date of the enactment of this Act.</text>
</subsection></section><section display-inline="no-display-inline" id="HAE63539F3A3C4105BA7E20E45DCD0772" section-type="subsequent-section"><enum>114.</enum><header>Special disposition
rules for unused benefits in health flexible spending arrangements of
individuals called to active duty</header>
<subsection id="H90328B2564F74298981121529E00F339"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 125 (relating
to cafeteria plans) is amended by redesignating subsections (h) and (i) as
subsection (i) and (j), respectively, and by inserting after subsection (g) the
following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H9E95B0AAC99049ECB95D20A9A9F3285" style="OLC">
<subsection id="H917FF86235EA43B2803E0903AD75A1CA"><enum>(h)</enum><header>Special rule for
unused benefits in health flexible spending arrangements of individuals called
to active duty</header>
<paragraph id="HEDF62FBA0289408687F008C800C5B64"><enum>(1)</enum><header>In
general</header><text>For purposes of this title, a plan or other arrangement
shall not fail to be treated as a cafeteria plan or health flexible spending
arrangement merely because such arrangement provides for qualified reservist
distributions.</text>
</paragraph><paragraph id="H48C46C79B6E5413C916955350100D144"><enum>(2)</enum><header>Qualified
reservist distribution</header><text>For purposes of this subsection, the term
<term>qualified reservist distribution</term> means, any distribution to an
individual of all or a portion of the balance in the employee’s account under
such arrangement if—</text>
<subparagraph id="HD56528DC6B6E43C29D1C71B7D912C1D1"><enum>(A)</enum><text display-inline="yes-display-inline">such individual was (by reason of being a
member of a reserve component (as defined in <external-xref legal-doc="usc" parsable-cite="usc/37/101">section 101</external-xref> of title 37, United
States Code)) ordered or called to active duty for a period in excess of 179
days or for an indefinite period, and</text>
</subparagraph><subparagraph id="H27A6E2B376F94B149421851DD18C8C28"><enum>(B)</enum><text display-inline="yes-display-inline">such distribution is made during the period
beginning on the date of such order or call and ending on the last date that
reimbursements could otherwise be made under such arrangement for the plan year
which includes the date of such order or
call.</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H3FFB081F243B4C8BA0D5FF2B8DCBD91"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to
distributions made after the date of the enactment of this Act.</text>
</subsection></section><section commented="no" id="H5489DA8455AC427E8108A7D64684491E"><enum>115.</enum><header>Technical
correction related to exclusion of certain property tax rebates and other
benefits provided to volunteer firefighters and emergency medical
responders</header>
<subsection commented="no" id="HD0A0572731854CEC8F4D8FCF02F6BDAB"><enum>(a)</enum><header>Social security
taxes</header>
<paragraph commented="no" id="H375ED94F95C84607B883245E30704186"><enum>(1)</enum><text>Section 3121(a)
(relating to definition of wages) is amended by striking <quote>or</quote> at
the end of paragraph (21), by striking the period at the end of paragraph (22)
and inserting <quote>; or</quote>, and by inserting after paragraph (22) the
following new paragraph:</text>
<quoted-block id="H3BBFEFEF98E94B66BE37817518417418">
<paragraph commented="no" id="H8137A6906A08472DA7B744A2E72740A3"><enum>(23)</enum><text>any benefit or
payment which is excludible from the gross income of the employee under section
139B(b).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph commented="no" id="HBE28B0AA797B47BDA32FC296C7005F51"><enum>(2)</enum><text>Section 209(a) of
the <act-name parsable-cite="SSA">Social Security Act</act-name> is amended by
striking <quote>or</quote> at the end of paragraph (18), by striking the period
at the end of paragraph (19) and inserting <quote>; or</quote>, and by
inserting after paragraph (19) the following new paragraph:</text>
<quoted-block act-name="Social Security Act" id="H24EB82E4A886433197C4AC712E182F24">
<paragraph commented="no" id="HA8CE945F635B41588100742359E4AFE8"><enum>(20)</enum><text display-inline="yes-display-inline">Any benefit or payment which is excludible
from the gross income of the employee under section 139B(b) of the Internal
Revenue Code of
1986).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" id="H37BD53539D074D0D80F887CF81BB3181"><enum>(b)</enum><header>Unemployment
taxes</header><text>Section 3306(b) (relating to definition of wages) is
amended by striking <quote>or</quote> at the end of paragraph (18), by striking
the period at the end of paragraph (19) and inserting <quote>; or</quote>, and
by inserting after paragraph (19) the following new paragraph:</text>
<quoted-block id="HD2D0066C5165409CB2ADF59C395386DB">
<paragraph commented="no" id="H8A904B7B5BDB42F6931CA51F63D395BF"><enum>(20)</enum><text display-inline="yes-display-inline">any benefit or payment which is excludible
from the gross income of the employee under section
139B(b).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" id="H9ED572F07383478897EBB53448236231"><enum>(c)</enum><header>Wage
withholding</header><text>Section 3401(a) (defining wages) is amended by
striking <quote>or</quote> at the end of paragraph (21), by striking the period
at the end of paragraph (22) and inserting <quote>; or</quote>, and by
inserting after paragraph (22) the following new paragraph:</text>
<quoted-block id="HEB394888F7BE4E598BDDED72A379DE26">
<paragraph commented="no" id="HA2230153ADDE4FA6BD5382774038D2D4"><enum>(23)</enum><text display-inline="yes-display-inline">for any benefit or payment which is
excludible from the gross income of the employee under section
139B(b).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" id="HBAA570C01337457881451BA5682D5C0"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall take effect as if
included in section 5 of the Mortgage Forgiveness Debt Relief Act of 2007.</text>
</subsection></section><enum>II</enum><header>Improvements in
Supplemental Security Income</header>
<section display-inline="no-display-inline" id="H5259077400C74F5FAB2CF62300AB5DD9" section-type="subsequent-section"><enum>201.</enum><header>Treatment of
uniformed service cash remuneration as earned income</header>
<subsection id="H41D4191455FE480191DF9954D5BEABA4"><enum>(a)</enum><header>In
general</header><text>Section 1612(a)(1)(A) of the
<act-name parsable-cite="SSA">Social Security Act</act-name> (42 U.S.C.
1382a(a)(1)(A)) is amended by inserting <quote>(and, in the case of cash
remuneration paid for service as a member of a uniformed service (other than
payments described in paragraph (2)(H) of this subsection or subsection
(b)(20)), without regard to the limitations contained in section
209(d))</quote> before the semicolon.</text>
</subsection><subsection id="HEB56899DB0C74E97BD19AE946986F532"><enum>(b)</enum><header>Certain housing
payments treated as in-kind support and maintenance</header><text>Section
1612(a)(2) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/42/1382a">42 U.S.C. 1382a(a)(2)</external-xref>) is amended—</text>
<paragraph id="HD275585EE09B44AC8C00920086F72000"><enum>(1)</enum><text>by striking
<quote>and</quote> at the end of subparagraph (F);</text>
</paragraph><paragraph id="H19F31A5DD822464788C7461400D15CAE"><enum>(2)</enum><text>by striking the
period at the end of subparagraph (G) and inserting <quote>; and</quote>;
and</text>
</paragraph><paragraph id="HE3B922749D2F45028100454CD6755C54"><enum>(3)</enum><text>by adding at the
end the following:</text>
<quoted-block id="H57D575A3C75246229D201822043439F3">
<subparagraph id="HD21E4278FE4F42C3B7D090CDE0D9B39"><enum>(H)</enum><text>payments to or on
behalf of a member of a uniformed service for housing of the member (and his or
her dependents, if any) on a facility of a uniformed service, including
payments provided under <external-xref legal-doc="usc" parsable-cite="usc/37/403">section 403</external-xref> of title 37, United States Code, for
housing that is acquired or constructed under subchapter IV of chapter 169 of
title 10 of such Code, or any related provision of law, and any such payments
shall be treated as support and maintenance in kind subject to subparagraph (A)
of this
paragraph.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection></section><section display-inline="no-display-inline" id="HE8728742EA9742369DAA88429650EDF2"><enum>202.</enum><header>State annuities
for certain veterans to be disregarded in determining supplemental security
income benefits</header>
<subsection id="HC06C19795CE74E918673C6CD9D74507E"><enum>(a)</enum><header>Income
disregard</header><text>Section 1612(b) of the <act-name parsable-cite="SSA">Social Security Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/42/1382a">42 U.S.C. 1382a(b)</external-xref>) is
amended—</text>
<paragraph id="HB8ACAF37ECD147A90069AAE599122134"><enum>(1)</enum><text>by striking
<quote>and</quote> at the end of paragraph (22);</text>
</paragraph><paragraph id="HB941F10B2D0D45C49292D2D683432B9"><enum>(2)</enum><text>by
striking the period at the end of paragraph (23) and inserting <quote>;
and</quote>; and</text>
</paragraph><paragraph id="HD7113B8560BA41A7BBA55474D004CEF"><enum>(3)</enum><text>by
adding at the end the following:</text>
<quoted-block id="H6E67065629684021B4230085A36778D2" style="OLC">
<paragraph id="HD25C2E3A82FF4DD0A43BC41EF56C7FCB"><enum>(24)</enum><text>any annuity paid
by a State to the individual (or such spouse) on the basis of the individual’s
being a veteran (as defined in <external-xref legal-doc="usc" parsable-cite="usc/38/101">section 101</external-xref> of title 38, United States Code),
and blind, disabled, or
aged.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H42A76F95847C415783D797325385B8D0"><enum>(b)</enum><header>Resource
disregard</header><text>Section 1613(a) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/42/1382b">42 U.S.C. 1382b(a)</external-xref>) is
amended—</text>
<paragraph id="H3D2EFE9B17F445ABB21E026E62F74055"><enum>(1)</enum><text>by striking
<quote>and</quote> at the end of paragraph (14);</text>
</paragraph><paragraph id="HACAF098D28A14906BE001EF5B534F78"><enum>(2)</enum><text>by
striking the period at the end of paragraph (15) and inserting <quote>;
and</quote>; and</text>
</paragraph><paragraph id="H4DBAE6FCF32A4709A6A8A3EC72E2353B"><enum>(3)</enum><text>by inserting after
paragraph (15) the following:</text>
<quoted-block id="HD38A21C143E14AA999C1C7D61FC53981" style="OLC">
<paragraph id="HF4879C99098E46D0991905576F4108F5"><enum>(16)</enum><text>for the month of
receipt and every month thereafter, any annuity paid by a State to the
individual (or such spouse) on the basis of the individual’s being a veteran
(as defined in <external-xref legal-doc="usc" parsable-cite="usc/38/101">section 101</external-xref> of title 38, United States Code), and blind,
disabled, or
aged.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection></section><section id="HD41A8E09FB8D4032BD2025F682135921"><enum>203.</enum><header>Exclusion of
AmeriCorps benefits for purposes of determining supplemental security income
eligibility and benefit amounts</header><text display-inline="no-display-inline">Section 1612(b) of the Social Security Act
(<external-xref legal-doc="usc" parsable-cite="usc/42/1382a">42 U.S.C. 1382a(b)</external-xref>), as amended by section 202(a) of this Act, is
amended—</text>
<paragraph id="H812B2C54F6BA4F6CB29DE44444925105"><enum>(1)</enum><text>in paragraph (23),
by striking <quote>and</quote> at the end;</text>
</paragraph><paragraph id="HCEFED7711EA74034A4FC37D8567DD345"><enum>(2)</enum><text>in paragraph (24),
by striking the period and inserting <quote>; and</quote>; and</text>
</paragraph><paragraph id="H4B251A8680D2486AA9740728AACEC97"><enum>(3)</enum><text>by
adding at the end the following:</text>
<quoted-block id="H28E0CC2BA2DA4A0DB4BD00169617207B" style="OLC">
<paragraph id="H6AB434486CAA4E44B828FA20A6DFA5E0"><enum>(25)</enum><text>any benefit
(whether cash or in-kind) conferred upon (or paid on behalf of) a participant
in an AmeriCorps position approved by the Corporation for National and
Community Service under section 123 of the National and Community Service Act
of 1990 (42 U.S.C.
12573).</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></section><section id="HE6283328662046C3BFAD9548217EBAFB"><enum>204.</enum><header>Effective
date</header><text display-inline="no-display-inline">The amendments made by
this title shall be effective with respect to benefits payable for months
beginning after 60 days after the date of the enactment of this Act.</text>
</section><enum>III</enum><header>Revenue
Provisions</header>
<section display-inline="no-display-inline" id="H796FAE856B29499600B1B11EA9340075" section-type="subsequent-section"><enum>301.</enum><header>Revision of tax
rules on expatriation</header>
<subsection id="H1CA9907E9BDC43D88224F7A5C9A12CBE"><enum>(a)</enum><header>In
general</header><text>Subpart A of part II of subchapter N of chapter 1 is
amended by inserting after section 877 the following new section:</text>
<quoted-block id="H0543F46E661949FBAF1E104DC6E93EE7" style="OLC">
<section id="H2AB8067EEF3C4BFA940044A55BCB9EDD"><enum>877A.</enum><header>Tax
responsibilities of expatriation</header>
<subsection id="H0209EDD632DD45250090593837C7C88E"><enum>(a)</enum><header>General
rules</header><text>For purposes of this subtitle—</text>
<paragraph id="H1B5E9D43441F4EB8B146AD1426121EE"><enum>(1)</enum><header>Mark to
market</header><text>All property of a covered expatriate shall be treated as
sold on the day before the expatriation date for its fair market value.</text>
</paragraph><paragraph id="H4032AAF49AC7454DAE3EDE0068C6B5B0"><enum>(2)</enum><header>Recognition of
gain or loss</header><text>In the case of any sale under paragraph (1)—</text>
<subparagraph id="H77C4963802A048719310996DDDA5A34B"><enum>(A)</enum><text>notwithstanding
any other provision of this title, any gain arising from such sale shall be
taken into account for the taxable year of the sale, and</text>
</subparagraph><subparagraph id="H6BEB913DA548401D94A847EE878678F2"><enum>(B)</enum><text>any loss arising
from such sale shall be taken into account for the taxable year of the sale to
the extent otherwise provided by this title, except that section 1091 shall not
apply to any such loss.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">Proper
adjustment shall be made in the amount of any gain or loss subsequently
realized for gain or loss taken into account under the preceding sentence,
determined without regard to paragraph (3).</continuation-text></paragraph><paragraph id="H8E8B312B8DFB476697D0C8B84CD520EF"><enum>(3)</enum><header>Exclusion for
certain gain</header>
<subparagraph id="HF645CF398D6446878648D747F6FCE22"><enum>(A)</enum><header>In
general</header><text>The amount which would (but for this paragraph) be
includible in the gross income of any individual by reason of paragraph (1)
shall be reduced (but not below zero) by $600,000.</text>
</subparagraph><subparagraph id="H7E7345763F344636B5B67CD951916761"><enum>(B)</enum><header>Adjustment for
inflation</header>
<clause id="H121AFA760B074C99953DCF376C36E235"><enum>(i)</enum><header>In
general</header><text>In the case of any taxable year beginning in a calendar
year after 2008, the dollar amount in subparagraph (A) shall be increased by an
amount equal to—</text>
<subclause id="H8BF5E9E1A865442AA56DA148DE54CE66"><enum>(I)</enum><text>such dollar
amount, multiplied by</text>
</subclause><subclause id="H7DAB9B3DEB7943D38E5F00B98FA9053C"><enum>(II)</enum><text>the
cost-of-living adjustment determined under section 1(f)(3) for the calendar
year in which the taxable year begins, by substituting <quote>calendar year
2007</quote> for <quote>calendar year 1992</quote> in subparagraph (B)
thereof.</text>
</subclause></clause><clause id="H466B0F7080954DE696F54D9997A3FA2C"><enum>(ii)</enum><header>Rounding</header><text>If
any amount as adjusted under clause (i) is not a multiple of $1,000, such
amount shall be rounded to the nearest multiple of $1,000.</text>
</clause></subparagraph></paragraph></subsection><subsection id="H0016C2AFC8A449B386D5DEA23DCD5B13"><enum>(b)</enum><header>Election To
defer tax</header>
<paragraph id="HADF37A36FE6345C4AF607133E3B697DB"><enum>(1)</enum><header>In
general</header><text>If the taxpayer elects the application of this subsection
with respect to any property treated as sold by reason of subsection (a), the
time for payment of the additional tax attributable to such property shall be
extended until the due date of the return for the taxable year in which such
property is disposed of (or, in the case of property disposed of in a
transaction in which gain is not recognized in whole or in part, until such
other date as the Secretary may prescribe).</text>
</paragraph><paragraph id="HD144922C1F714B9EA891460600E24382"><enum>(2)</enum><header>Determination of
tax with respect to property</header><text>For purposes of paragraph (1), the
additional tax attributable to any property is an amount which bears the same
ratio to the additional tax imposed by this chapter for the taxable year solely
by reason of subsection (a) as the gain taken into account under subsection (a)
with respect to such property bears to the total gain taken into account under
subsection (a) with respect to all property to which subsection (a)
applies.</text>
</paragraph><paragraph id="H25C620E4EF314CBE983C015D4477637E"><enum>(3)</enum><header>Termination of
extension</header><text>The due date for payment of tax may not be extended
under this subsection later than the due date for the return of tax imposed by
this chapter for the taxable year which includes the date of death of the
expatriate (or, if earlier, the time that the security provided with respect to
the property fails to meet the requirements of paragraph (4), unless the
taxpayer corrects such failure within the time specified by the
Secretary).</text>
</paragraph><paragraph id="H49A6CB0CCC174BE7B000F91C5FC1BFD"><enum>(4)</enum><header>Security</header>
<subparagraph id="H3E6967BB7C2F4F6C949F6EA4F721CE6B"><enum>(A)</enum><header>In
general</header><text>No election may be made under paragraph (1) with respect
to any property unless adequate security is provided with respect to such
property.</text>
</subparagraph><subparagraph id="H66ED3EDC2C5945C79ED5CD14F1A6F135"><enum>(B)</enum><header>Adequate
security</header><text>For purposes of subparagraph (A), security with respect
to any property shall be treated as adequate security if—</text>
<clause id="HD54B0B8ACC864E26BCF9741D4C94A68C"><enum>(i)</enum><text>it
is a bond which is furnished to, and accepted by, the Secretary, which is
conditioned on the payment of tax (and interest thereon), and which meets the
requirements of section 6325, or</text>
</clause><clause id="HCE84583017A74633A8D7FF799BBDFDBC"><enum>(ii)</enum><text>it is another
form of security for such payment (including letters of credit) that meets such
requirements as the Secretary may prescribe.</text>
</clause></subparagraph></paragraph><paragraph id="H154621CACB8042F2BA008F3ECAB700BC"><enum>(5)</enum><header>Waiver of
certain rights</header><text>No election may be made under paragraph (1) unless
the taxpayer makes an irrevocable waiver of any right under any treaty of the
United States which would preclude assessment or collection of any tax imposed
by reason of this section.</text>
</paragraph><paragraph id="H74C17C3E348E43C48F5947B20093521C"><enum>(6)</enum><header>Elections</header><text>An
election under paragraph (1) shall only apply to property described in the
election and, once made, is irrevocable.</text>
</paragraph><paragraph id="HE3E9284212F14AE3A9AEA476A6A34B24"><enum>(7)</enum><header>Interest</header><text>For
purposes of section 6601, the last date for the payment of tax shall be
determined without regard to the election under this subsection.</text>
</paragraph></subsection><subsection id="H16551BA76DF84FD1A575B7B4CEABB07"><enum>(c)</enum><header>Exception for
certain property</header><text>Subsection (a) shall not apply to—</text>
<paragraph id="HEA6860C5713A40D6896B5901E2F95D96"><enum>(1)</enum><text>any deferred
compensation item (as defined in subsection (d)(4)),</text>
</paragraph><paragraph id="H398D23CECC6D4A75BE9400F1A03CACC6"><enum>(2)</enum><text>any specified tax
deferred account (as defined in subsection (e)(2)), and</text>
</paragraph><paragraph id="H4BA115271B364932A2FE7B4DC1241E9C"><enum>(3)</enum><text>any interest in a
nongrantor trust (as defined in subsection (f)(3)).</text>
</paragraph></subsection><subsection id="H093B734398604AB58C55F37913B8A3D5"><enum>(d)</enum><header>Treatment of
deferred compensation items</header>
<paragraph id="H102C969B9EB241F7B83919C6FEA77E5E"><enum>(1)</enum><header>Withholding on
eligible deferred compensation items</header>
<subparagraph id="HEF28EBD3F1A6478E8D71887C7688BC53"><enum>(A)</enum><header>In
general</header><text>In the case of any eligible deferred compensation item,
the payor shall deduct and withhold from any taxable payment to a covered
expatriate with respect to such item a tax equal to 30 percent thereof.</text>
</subparagraph><subparagraph id="HCD6EE00E2CD546B99EC23308EA5670BF"><enum>(B)</enum><header>Taxable
payment</header><text display-inline="yes-display-inline">For purposes of
subparagraph (A), the term <term>taxable payment</term> means with respect to a
covered expatriate any payment to the extent it would be includible in the
gross income of the covered expatriate if such expatriate continued to be
subject to tax as a citizen or resident of the United States. A deferred
compensation item shall be taken into account as a payment under the preceding
sentence when such item would be so includible.</text>
</subparagraph></paragraph><paragraph id="H8627F51356564AB9BB2D59CAA43CCC50"><enum>(2)</enum><header>Other deferred
compensation items</header><text>In the case of any deferred compensation item
which is not an eligible deferred compensation item—</text>
<subparagraph display-inline="no-display-inline" id="HD6EFC9B0BD7A42EAB6222F00E913B74B"><enum>(A)</enum><clause commented="no" display-inline="yes-display-inline" id="H0BCF15E3037640969333D1F8B4739CAC"><enum>(i)</enum><text display-inline="yes-display-inline">with respect to any deferred compensation
item to which clause (ii) does not apply, an amount equal to the present value
of the covered expatriate’s accrued benefit shall be treated as having been
received by such individual on the day before the expatriation date as a
distribution under the plan, and</text>
</clause><clause commented="no" id="H410B23921F16441B979F73337811D9F0" indent="up1"><enum>(ii)</enum><text display-inline="yes-display-inline">with respect to any deferred compensation
item referred to in paragraph (4)(D), the rights of the covered expatriate to
such item shall be treated as becoming transferable and not subject to a
substantial risk of forfeiture on the day before the expatriation date,</text>
</clause></subparagraph><subparagraph display-inline="no-display-inline" id="H82477F59F23C4F2E99F25459FEAC63BD"><enum>(B)</enum><text>no early
distribution tax shall apply by reason of such treatment, and</text>
</subparagraph><subparagraph id="H262EDE7A40FF44C5ACDDB5CDC94A393"><enum>(C)</enum><text display-inline="yes-display-inline">appropriate adjustments shall be made to
subsequent distributions from the plan to reflect such treatment.</text>
</subparagraph></paragraph><paragraph id="HE4467EE4C7894CCAABE586A1EF314D82"><enum>(3)</enum><header>Eligible
deferred compensation items</header><text>For purposes of this subsection, the
term <term>eligible deferred compensation item</term> means any deferred
compensation item with respect to which—</text>
<subparagraph id="H3CCEAC70220C475388649255D28B2900"><enum>(A)</enum><text display-inline="yes-display-inline">the payor of such item is—</text>
<clause id="H59E9E53201A64867924285ADB3FD37AD"><enum>(i)</enum><text>a
United States person, or</text>
</clause><clause id="HFCFD7F1BBDA14E7895737985FFA9171B"><enum>(ii)</enum><text>a
person who is not a United States person but who elects to be treated as a
United States person for purposes of paragraph (1) and meets such requirements
as the Secretary may provide to ensure that the payor will meet the
requirements of paragraph (1), and</text>
</clause></subparagraph><subparagraph id="H27B211283FE94D8E9CD533FCCA29ACAE"><enum>(B)</enum><text>the covered
expatriate—</text>
<clause id="H4DE299F870CE4E479DB0BBB629DA1616"><enum>(i)</enum><text>notifies the payor
of his status as a covered expatriate, and</text>
</clause><clause id="H7C2290958ADC49C396466036B5E6D4A6"><enum>(ii)</enum><text>makes an
irrevocable waiver of any right to claim any reduction under any treaty with
the United States in withholding on such item.</text>
</clause></subparagraph></paragraph><paragraph id="H15FB8C7CEAF84C3A8FF6CAB851E53FF"><enum>(4)</enum><header>Deferred
compensation item</header><text>For purposes of this subsection, the term
<term>deferred compensation item</term> means—</text>
<subparagraph id="HAA05106A02BF46C887BF3FA8DB007F00"><enum>(A)</enum><text>any interest in a
plan or arrangement described in section 219(g)(5),</text>
</subparagraph><subparagraph id="H3B39D19E19BE4B52A0D9472B004925AE"><enum>(B)</enum><text>any interest in a
foreign pension plan or similar retirement arrangement or program,</text>
</subparagraph><subparagraph id="HAD88F93928EC422FA122AA89B0838557"><enum>(C)</enum><text>any item of
deferred compensation, and</text>
</subparagraph><subparagraph id="HDE7D7570AC5D4390AFE351FAC61DDD3"><enum>(D)</enum><text>any property, or
right to property, which the individual is entitled to receive in connection
with the performance of services to the extent not previously taken into
account under section 83 or in accordance with section 83.</text>
</subparagraph></paragraph><paragraph id="H332321BBE90A453D87B0C047EEA564D"><enum>(5)</enum><header>Exception</header><text>Paragraphs
(1) and (2) shall not apply to any deferred compensation item to the extent
attributable to services performed outside the United States while the covered
expatriate was not a citizen or resident of the United States.</text>
</paragraph><paragraph id="H87F88943BCD041C8A1B1AD006E11ADE4"><enum>(6)</enum><header>Special
rules</header>
<subparagraph id="H924F7E0A3B8F445E8E127515E093FC4"><enum>(A)</enum><header>Application of
withholding rules</header><text>Rules similar to the rules of subchapter B of
chapter 3 shall apply for purposes of this subsection.</text>
</subparagraph><subparagraph id="H7E5C0D8AA651417383E18F04FE387B77"><enum>(B)</enum><header>Application of
tax</header><text>Any item subject to the withholding tax imposed under
paragraph (1) shall be subject to tax under section 871.</text>
</subparagraph><subparagraph id="H224C75E12E9549448797F2A00008AC95"><enum>(C)</enum><header>Coordination
with other withholding requirements</header><text>Any item subject to
withholding under paragraph (1) shall not be subject to withholding under
section 1441 or chapter 24.</text>
</subparagraph></paragraph></subsection><subsection id="H23AD859212F947E197F33500DC870091"><enum>(e)</enum><header>Treatment of
specified tax deferred accounts</header>
<paragraph id="H3ABCA62735FA46FC00236D82AA4CE03B"><enum>(1)</enum><header>Account treated
as distributed</header><text display-inline="yes-display-inline">In the case of
any interest in a specified tax deferred account held by a covered expatriate
on the day before the expatriation date—</text>
<subparagraph id="H20E23CF4F41245DA8D20B197CDD0020"><enum>(A)</enum><text>the covered
expatriate shall be treated as receiving a distribution of his entire interest
in such account on the day before the expatriation date,</text>
</subparagraph><subparagraph id="HB89CFE13A83E47C8A4131851FFDCC58"><enum>(B)</enum><text>no early
distribution tax shall apply by reason of such treatment, and</text>
</subparagraph><subparagraph id="HE24DD55D1083463DAD87338D663359B"><enum>(C)</enum><text display-inline="yes-display-inline">appropriate adjustments shall be made to
subsequent distributions from the account to reflect such treatment.</text>
</subparagraph></paragraph><paragraph id="H4B5769F9F7394B588C3CF948BC4B43AD"><enum>(2)</enum><header>Specified tax
deferred account</header><text>For purposes of paragraph (1), the term
<term>specified tax deferred account</term> means an individual retirement plan
(as defined in section 7701(a)(37)) other than any arrangement described in
subsection (k) or (p) of section 408, a qualified tuition program (as defined
in section 529), a Coverdell education savings account (as defined in section
530), a health savings account (as defined in section 223), and an Archer MSA
(as defined in section 220).</text>
</paragraph></subsection><subsection id="H74EC6DC89528479BBC42CC0AC862322"><enum>(f)</enum><header>Special rules for
nongrantor trusts</header>
<paragraph id="H30817E543C37425BAF00B5307B76E78B"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">In the case of a
distribution (directly or indirectly) of any property from a nongrantor trust
to a covered expatriate—</text>
<subparagraph id="H11766FA3B738428EACA6839D6B996D23"><enum>(A)</enum><text>the trustee shall
deduct and withhold from such distribution an amount equal to 30 percent of the
taxable portion of the distribution, and</text>
</subparagraph><subparagraph id="HBF12C40ACD8B4FB28E7B1C0959EF2B1C"><enum>(B)</enum><text>if the fair market
value of such property exceeds its adjusted basis in the hands of the trust,
gain shall be recognized to the trust as if such property were sold to the
expatriate at its fair market value.</text>
</subparagraph></paragraph><paragraph id="H85054D6610544CB594E8765069997855"><enum>(2)</enum><header>Taxable
portion</header><text display-inline="yes-display-inline">For purposes of this
subsection, the term <term>taxable portion</term> means, with respect to any
distribution, that portion of the distribution which would be includible in the
gross income of the covered expatriate if such expatriate continued to be
subject to tax as a citizen or resident of the United States.</text>
</paragraph><paragraph id="H6DAEA47985554E2BAC5EDC35E83B89DA"><enum>(3)</enum><header>Nongrantor
trust</header><text>For purposes of this subsection, the term <term>nongrantor
trust</term> means the portion of any trust that the individual is not
considered the owner of under subpart E of part I of subchapter J. The
determination under the preceding sentence shall be made immediately before the
expatriation date.</text>
</paragraph><paragraph id="HDD6384000CC447139E96E0E551B25192"><enum>(4)</enum><header>Special rules
relating to withholding</header><text display-inline="yes-display-inline">For
purposes of this subsection—</text>
<subparagraph id="H288E7B3AC8F242EAB0E7C4ACD95E5359"><enum>(A)</enum><text>rules similar to
the rules of subsection (d)(6) shall apply, and</text>
</subparagraph><subparagraph id="H4F55FA2F817740F3A33C6D3291C546C7"><enum>(B)</enum><text>the covered
expatriate shall be treated as having waived any right to claim any reduction
under any treaty with the United States in withholding on any distribution to
which paragraph (1)(A) applies unless the covered expatriate agrees to such
other treatment as the Secretary determines appropriate.</text>
</subparagraph></paragraph><paragraph id="HC5FDFC3AB8284505AB52175D380169D6"><enum>(5)</enum><header>Application</header><text display-inline="yes-display-inline">This subsection shall apply to a nongrantor
trust only if the covered expatriate was a beneficiary of the trust on the day
before the expatriation date.</text>
</paragraph></subsection><subsection id="H3FFD32403DEA42A0B7C3210650BCC75C"><enum>(g)</enum><header>Definitions and
special rules relating to expatriation</header><text>For purposes of this
section—</text>
<paragraph id="HC78F57C81E844CB493EBD4D6B271E593"><enum>(1)</enum><header>Covered
expatriate</header>
<subparagraph id="H7EDC527FE17446EDA870454B1D3BB61D"><enum>(A)</enum><header>In
general</header><text>The term <term>covered expatriate</term> means an
expatriate who meets the requirements of subparagraph (A), (B), or (C) of
section 877(a)(2).</text>
</subparagraph><subparagraph id="H5BAD469EA8F642C98D328143C67F8C27"><enum>(B)</enum><header>Exceptions</header><text display-inline="yes-display-inline">An individual shall not be treated as
meeting the requirements of subparagraph (A) or (B) of section 877(a)(2)
if—</text>
<clause id="H47A4F4CB104E44A3A47DBA00CDFF00D8"><enum>(i)</enum><text>the
individual—</text>
<subclause id="H8622B3015CC64029A8589050D0B6B4B"><enum>(I)</enum><text>became at birth a
citizen of the United States and a citizen of another country and, as of the
expatriation date, continues to be a citizen of, and is taxed as a resident of,
such other country, and</text>
</subclause><subclause id="H76D3FDF92F714526AF55ECD5A6888439"><enum>(II)</enum><text>has been a
resident of the United States (as defined in section 7701(b)(1)(A)(ii)) for not
more than 10 taxable years during the 15-taxable year period ending with the
taxable year during which the expatriation date occurs, or</text>
</subclause></clause><clause id="H30102E33C5F24F46AF42468B88D38055"><enum>(ii)</enum><subclause commented="no" display-inline="yes-display-inline" id="H92422EDE10E64E25BBE7ADD0377CB8C0"><enum>(I)</enum><text>the individual’s
relinquishment of United States citizenship occurs before such individual
attains age 18<fraction>½</fraction>, and</text>
</subclause><subclause id="HDADCD139E1CF4864A9040022324C71C2" indent="up1"><enum>(II)</enum><text>the individual has been a resident of
the United States (as so defined) for not more than 10 taxable years before the
date of relinquishment.</text>
</subclause></clause></subparagraph><subparagraph id="H3C39BBA8A58A45838879CF8EBFFFFDD9"><enum>(C)</enum><header>Covered
expatriates also subject to tax as citizens or residents</header><text display-inline="yes-display-inline">In the case of any covered expatriate who
is subject to tax as a citizen or resident of the United States for any period
beginning after the expatriation date, such individual shall not be treated as
a covered expatriate during such period for purposes of subsections (d)(1) and
(f) and section 2801.</text>
</subparagraph></paragraph><paragraph id="H3AFF6C11D0624A3DA321E8E3CD78BF"><enum>(2)</enum><header>Expatriate</header><text>The
term <term>expatriate</term> means—</text>
<subparagraph id="H0A2B0C5649E74CCA8071007CE1ECA89"><enum>(A)</enum><text>any United States
citizen who relinquishes his citizenship, and</text>
</subparagraph><subparagraph id="H78197937F8D54F118D72019D76B5054D"><enum>(B)</enum><text>any long-term
resident of the United States who ceases to be a lawful permanent resident of
the United States (within the meaning of section 7701(b)(6)).</text>
</subparagraph></paragraph><paragraph id="HE17A36B56ED44C8BB39EE900A477C040"><enum>(3)</enum><header>Expatriation
date</header><text>The term <term>expatriation date</term> means—</text>
<subparagraph id="H144CC9F1093D4599B2E25BFC95A99977"><enum>(A)</enum><text>the date an
individual relinquishes United States citizenship, or</text>
</subparagraph><subparagraph id="H229EB30518BE4493974B1DD25A5FCF"><enum>(B)</enum><text>in the case of a
long-term resident of the United States, the date on which the individual
ceases to be a lawful permanent resident of the United States (within the
meaning of section 7701(b)(6)).</text>
</subparagraph></paragraph><paragraph id="HFBD4FEF7F39B4CBD82A6B5C2002C1BF"><enum>(4)</enum><header>Relinquishment of
citizenship</header><text>A citizen shall be treated as relinquishing his
United States citizenship on the earliest of—</text>
<subparagraph id="H83FBFA582479449CB7AF98B161D100F2"><enum>(A)</enum><text>the date the
individual renounces his United States nationality before a diplomatic or
consular officer of the United States pursuant to paragraph (5) of section
349(a) of the <act-name parsable-cite="INA">Immigration and Nationality
Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/8/1481">8 U.S.C. 1481(a)(5)</external-xref>),</text>
</subparagraph><subparagraph id="H360FC0842D0943B4AC63894EB9C8F973"><enum>(B)</enum><text>the date the
individual furnishes to the United States Department of State a signed
statement of voluntary relinquishment of United States nationality confirming
the performance of an act of expatriation specified in paragraph (1), (2), (3),
or (4) of section 349(a) of the <act-name parsable-cite="INA">Immigration and
Nationality Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/8/1481">8 U.S.C. 1481(a)(1)</external-xref>–(4)),</text>
</subparagraph><subparagraph id="H7E18B309331B46FC8E54D3CED2B44EBC"><enum>(C)</enum><text>the date the
United States Department of State issues to the individual a certificate of
loss of nationality, or</text>
</subparagraph><subparagraph id="HF4EC55746BF741B6A2C6B24CC2619229"><enum>(D)</enum><text>the date a court
of the United States cancels a naturalized citizen’s certificate of
naturalization.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">Subparagraph (A) or (B) shall not
apply to any individual unless the renunciation or voluntary relinquishment is
subsequently approved by the issuance to the individual of a certificate of
loss of nationality by the United States Department of State.</continuation-text></paragraph><paragraph id="H7B7942C577B6407F80E26343D23CB327"><enum>(5)</enum><header>Long-term
resident</header><text>The term <term>long-term resident</term> has the meaning
given to such term by section 877(e)(2).</text>
</paragraph><paragraph id="HF0A63530B86647B1ABB46FDA1BAE05"><enum>(6)</enum><header>Early distribution
tax</header><text>The term <term>early distribution tax</term> means any
increase in tax imposed under section 72(t), 220(e)(4), 223(f)(4),
409A(a)(1)(B), 529(c)(6), or 530(d)(4).</text>
</paragraph></subsection><subsection id="HD9CE5701A75946DAAA002369BC972428"><enum>(h)</enum><header>Other
rules</header>
<paragraph id="HAAE4919022FB4B838E702E9969A0DE98"><enum>(1)</enum><header>Termination of
deferrals, etc</header><text>In the case of any covered expatriate,
notwithstanding any other provision of this title—</text>
<subparagraph id="H83C2FB8D24F6455B966F00568E867DF"><enum>(A)</enum><text display-inline="yes-display-inline">any time period for acquiring property
which would result in the reduction in the amount of gain recognized with
respect to property disposed of by the taxpayer shall terminate on the day
before the expatriation date, and</text>
</subparagraph><subparagraph id="H70A370DAE4A84814B995454F677B16E1"><enum>(B)</enum><text>any extension of
time for payment of tax shall cease to apply on the day before the expatriation
date and the unpaid portion of such tax shall be due and payable at the time
and in the manner prescribed by the Secretary.</text>
</subparagraph></paragraph><paragraph id="HA5DB8FAFF4B342CCAB45BE13003E953B"><enum>(2)</enum><header>Step-up in
basis</header><text>Solely for purposes of determining any tax imposed by
reason of subsection (a), property which was held by an individual on the date
the individual first became a resident of the United States (within the meaning
of section 7701(b)) shall be treated as having a basis on such date of not less
than the fair market value of such property on such date. The preceding
sentence shall not apply if the individual elects not to have such sentence
apply. Such an election, once made, shall be irrevocable.</text>
</paragraph><paragraph id="H4C1EAB292012411E80D8AD00161DC7CE"><enum>(3)</enum><header>Coordination
with section 684</header><text>If the expatriation of any individual would
result in the recognition of gain under section 684, this section shall be
applied after the application of section 684.</text>
</paragraph></subsection><subsection id="H3B3B3931CB4C4E28A5CE00023E7B5AB"><enum>(i)</enum><header>Regulations</header><text>The
Secretary shall prescribe such regulations as may be necessary or appropriate
to carry out the purposes of this
section.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HAC894A746F4A44EB941EA396CF3EB49E"><enum>(b)</enum><header>Tax on gifts and
bequests received by United States citizens and residents from
expatriates</header>
<paragraph id="HD1B373B281384896ABA62B474B4FF368"><enum>(1)</enum><header>In
general</header><text>Subtitle B (relating to estate and gift taxes) is amended
by inserting after chapter 14 the following new chapter:</text>
<quoted-block id="H3BF5C86953F54F3883B1A5B6E6921CD1" style="OLC">
<chapter id="H0086128FAB9341D48DFE055C72358497"><enum>15</enum><header>GIFTS AND
BEQUESTS FROM EXPATRIATES</header>
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 2801. Imposition of
tax.</toc-entry>
</toc>
<section id="H8FE7677C05E34AEEB2FC254CDD7B429"><enum>2801.</enum><header>Imposition of
tax</header>
<subsection id="HCC6161F42D674A33811F9E38A75DBA54"><enum>(a)</enum><header>In
General</header><text>If, during any calendar year, any United States citizen
or resident receives any covered gift or bequest, there is hereby imposed a tax
equal to the product of—</text>
<paragraph id="H231A414759D64307B95301F3DBF71DC0"><enum>(1)</enum><text>the highest rate
of tax specified in the table contained in section 2001(c) as in effect on the
date of such receipt (or, if greater, the highest rate of tax specified in the
table applicable under section 2502(a) as in effect on the date), and</text>
</paragraph><paragraph id="H316E0AAEF6A4440D8B60C13714838787"><enum>(2)</enum><text>the value of such
covered gift or bequest.</text>
</paragraph></subsection><subsection id="H92C24DD67330456695ECCF92139C9F46"><enum>(b)</enum><header>Tax To be paid
by recipient</header><text>The tax imposed by subsection (a) on any covered
gift or bequest shall be paid by the person receiving such gift or
bequest.</text>
</subsection><subsection id="H6EBBD3795A3A473DB0B4EA57821E03CA"><enum>(c)</enum><header>Exception for
certain gifts</header><text>Subsection (a) shall apply only to the extent that
the value of covered gifts and bequests received by any person during the
calendar year exceeds the dollar amount in effect under section 2503(b) for
such calendar year.</text>
</subsection><subsection id="H89BE2B516FD14DEEACFC9B4C83C2BD7"><enum>(d)</enum><header>Tax reduced by
foreign gift or estate tax</header><text>The tax imposed by subsection (a) on
any covered gift or bequest shall be reduced by the amount of any gift or
estate tax paid to a foreign country with respect to such covered gift or
bequest.</text>
</subsection><subsection id="H372D3512945243869D5E00B25CC3C200"><enum>(e)</enum><header>Covered gift or
bequest</header>
<paragraph id="HFDD3EFA3CD26450D8F00485C35C69C77"><enum>(1)</enum><header>In
general</header><text>For purposes of this chapter, the term <term>covered gift
or bequest</term> means—</text>
<subparagraph id="H0EDF97D2C43F42F28D4ED3000051A5E2"><enum>(A)</enum><text>any property
acquired by gift directly or indirectly from an individual who, at the time of
such acquisition, is a covered expatriate, and</text>
</subparagraph><subparagraph id="H8319CE4CE4D043CDB6E591CF7F2FA2EC"><enum>(B)</enum><text>any property
acquired directly or indirectly by reason of the death of an individual who,
immediately before such death, was a covered expatriate.</text>
</subparagraph></paragraph><paragraph id="H651C9494B84348B0B47547BCCE248749"><enum>(2)</enum><header>Exceptions for
transfers otherwise subject to estate or gift tax</header><text>Such term shall
not include—</text>
<subparagraph id="H9C3EDBA1360140998475F755DD5C5391"><enum>(A)</enum><text>any property shown
on a timely filed return of tax imposed by chapter 12 which is a taxable gift
by the covered expatriate, and</text>
</subparagraph><subparagraph id="HF7FB320316C844EC94F8C3E8E89D1075"><enum>(B)</enum><text>any property
included in the gross estate of the covered expatriate for purposes of chapter
11 and shown on a timely filed return of tax imposed by chapter 11 of the
estate of the covered expatriate.</text>
</subparagraph></paragraph><paragraph id="HBC32FEC6C7D04DB9ADFADBA999DCAD8C"><enum>(3)</enum><header>Exceptions for
transfers to spouse or charity</header><text>Such term shall not include any
property with respect to which a deduction would be allowed under section 2055,
2056, 2522, or 2523, whichever is appropriate, if the decedent or donor were a
United States person.</text>
</paragraph><paragraph id="H1A96ABAB5C3544E386719FF73E707045"><enum>(4)</enum><header>Transfers in
trust</header>
<subparagraph id="H851275D7828147E6B7A300546395601C"><enum>(A)</enum><header>Domestic
trusts</header><text>In the case of a covered gift or bequest made to a
domestic trust—</text>
<clause id="HDCA9180896C6431E006043EF19001FBE"><enum>(i)</enum><text>subsection (a)
shall apply in the same manner as if such trust were a United States citizen,
and</text>
</clause><clause id="HEB075C2C94FB43EFB72849958807CF00"><enum>(ii)</enum><text>the tax imposed
by subsection (a) on such gift or bequest shall be paid by such trust.</text>
</clause></subparagraph><subparagraph id="H311C0D19E44542A8BAC1096305DE1329"><enum>(B)</enum><header>Foreign
trusts</header>
<clause id="HF15B086D646443B08B2FB90026CDD1DE"><enum>(i)</enum><header>In
general</header><text>In the case of a covered gift or bequest made to a
foreign trust, subsection (a) shall apply to any distribution attributable to
such gift or bequest from such trust (whether from income or corpus) to a
United States citizen or resident in the same manner as if such distribution
were a covered gift or bequest.</text>
</clause><clause id="H93533431E4844983B0C4484176923133"><enum>(ii)</enum><header>Deduction for
tax paid by recipient</header><text>There shall be allowed as a deduction under
section 164 the amount of tax imposed by this section which is paid or accrued
by a United States citizen or resident by reason of a distribution from a
foreign trust, but only to the extent such tax is imposed on the portion of
such distribution which is included in the gross income of such citizen or
resident.</text>
</clause><clause id="HAB772EA4E491431BB05E7FFDC008F371"><enum>(iii)</enum><header>Election to be
treated as domestic trust</header><text>Solely for purposes of this section, a
foreign trust may elect to be treated as a domestic trust. Such an election may
be revoked with the consent of the Secretary.</text>
</clause></subparagraph></paragraph></subsection><subsection id="HFFCD9A48F0F04A11B8660075C56F31C7"><enum>(f)</enum><header>Covered
expatriate</header><text>For purposes of this section, the term <term>covered
expatriate</term> has the meaning given to such term by section
877A(g)(1).</text>
</subsection></section></chapter><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HB0D0E77A8C3446C899A8ECF9F2E6364"><enum>(2)</enum><header>Clerical
amendment</header><text>The table of chapters for subtitle B is amended by
inserting after the item relating to chapter 14 the following new item:</text>
<quoted-block id="H2AA4D02EAA2045FFB5B8D732DA142E96" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="chapter">Chapter 15. Gifts and bequests from
expatriates.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HA7555C86AF42474C936854809D036DF8"><enum>(c)</enum><header>Definition of
termination of United States citizenship</header>
<paragraph id="HF77B11F2C29646A5B99EC9493EDCE597"><enum>(1)</enum><header>In
general</header><text>Section 7701(a) is amended by adding at the end the
following new paragraph:</text>
<quoted-block id="HCB5EC7E260C54F5D9D3009AA7930B92" style="OLC">
<paragraph id="HAA1E44A2D587496E9FD7E7DE3F2E9800"><enum>(50)</enum><header>Termination of
United States citizenship</header>
<subparagraph id="H2964ABEE6E9845DB9D8B20C3698DC3CF"><enum>(A)</enum><header>In
general</header><text>An individual shall not cease to be treated as a United
States citizen before the date on which the individual’s citizenship is treated
as relinquished under section 877A(g)(4).</text>
</subparagraph><subparagraph id="HA6DC8B5A895A4466BBF7C69349A2609E"><enum>(B)</enum><header>Dual
citizens</header><text>Under regulations prescribed by the Secretary,
subparagraph (A) shall not apply to an individual who became at birth a citizen
of the United States and a citizen of another
country.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph><paragraph id="HDAF51FB9ADBC451EAFA1E00014EC9200"><enum>(2)</enum><header>Conforming
amendments</header>
<subparagraph id="H5A9022B409DF4B009F2B61C01BE44F04"><enum>(A)</enum><text>Paragraph (1) of
section 877(e) is amended to read as follows:</text>
<quoted-block display-inline="no-display-inline" id="H692BE0D8AD1E4060BC26AB553991FB93" style="OLC">
<paragraph id="HCB9B98DC1BE347B2B904CC3D48007886"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Any long-term
resident of the United States who ceases to be a lawful permanent resident of
the United States (within the meaning of section 7701(b)(6)) shall be treated
for purposes of this section and sections 2107, 2501, and 6039G in the same
manner as if such resident were a citizen of the United States who lost United
States citizenship on the date of such cessation or
commencement.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="HB00D0394801147C78E00872F48842600"><enum>(B)</enum><text>Paragraph (6) of
section 7701(b) is amended by adding at the end the following flush
sentence:</text>
<quoted-block display-inline="no-display-inline" id="HF1664CDC0C2343908E4B8D6B2C8E22BB" style="OLC">
<quoted-block-continuation-text quoted-block-continuation-text-level="paragraph">An
individual shall cease to be treated as a lawful permanent resident of the
United States if such individual commences to be treated as a resident of a
foreign country under the provisions of a tax treaty between the United States
and the foreign country, does not waive the benefits of such treaty applicable
to residents of the foreign country, and notifies the Secretary of the
commencement of such
treatment.</quoted-block-continuation-text><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph><subparagraph id="HB51219BF22DE46B2A6B41DBE8C1B2CC8"><enum>(C)</enum><text>Section 7701 is
amended by striking subsection (n) and by redesignating subsections (o) and (p)
as subsections (n) and (o), respectively.</text>
</subparagraph></paragraph></subsection><subsection id="H3422EF33E01A42F7AAB2569EC9D6ABE6"><enum>(d)</enum><header>Termination of
section 877</header><text>Section 877 is amended by adding at the end the
following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H37D980DC356F463F90C206A393247B91" style="OLC">
<subsection id="H9267F5F4D1404AB0B59678A3ED546B00"><enum>(h)</enum><header>Termination</header><text display-inline="yes-display-inline">This section shall not apply to any
individual whose expatriation date (as defined in section 877A(g)(3)) is on or
after the date of the enactment of this
subsection.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HC4EF24D6014340E6BEC1771E03AE8CBD"><enum>(e)</enum><header>Information
returns</header><text>Section 6039G is amended—</text>
<paragraph id="HAA9A330C1D724BF892C442833C40622D"><enum>(1)</enum><text>by inserting
<quote>or 877A</quote> after <quote>section 877(b)</quote> in subsection (a),
and</text>
</paragraph><paragraph id="HF29A980A74B6437A8C007BDCC16C8E1"><enum>(2)</enum><text>by
inserting <quote>or 877A</quote> after <quote>section 877(a)</quote> in
subsection (d).</text>
</paragraph></subsection><subsection id="HDBF4864B5AD846B39981CA008BE733F6"><enum>(f)</enum><header>Clerical
amendment</header><text>The table of sections for subpart A of part II of
subchapter N of chapter 1 is amended by inserting after the item relating to
section 877 the following new item:</text>
<quoted-block id="H58AA92ADEB9544429C45B9CEF82AEF4" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="section">Sec. 877A. Tax responsibilities of
expatriation.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H299AE3E66F834CAB88F3BE26C6810A3"><enum>(g)</enum><header>Effective
date</header>
<paragraph id="HF344D45B91AC4746A181C91B36F9E069"><enum>(1)</enum><header>In
general</header><text>Except as provided in this subsection, the amendments
made by this section shall apply to any individual whose expatriation date (as
so defined) is on or after the date of the enactment of this Act.</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H091A5E364EE047BC8552DBB724E4BC91"><enum>(2)</enum><header>Gifts and
bequests</header><text><external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/15">Chapter 15</external-xref> of the Internal Revenue Code of 1986 (as
added by subsection (b)) shall apply to covered gifts and bequests (as defined
in section 2801 of such Code, as so added) received on or after the date of the
enactment of this Act from transferors (or from the estates of transferors)
whose expatriation date is on or after such date of enactment.</text>
</paragraph></subsection></section><section display-inline="no-display-inline" id="H0E4676CE83894BBA9D62F24DCDEFB2A0" section-type="subsequent-section"><enum>302.</enum><header>Certain domestically
controlled foreign persons performing services under contract with United
States Government treated as American employers</header>
<subsection id="HF59A5FAFC2C94A43AA023203D77010C2"><enum>(a)</enum><header>FICA
taxes</header><text display-inline="yes-display-inline">Section 3121 (relating
to definitions) is amended by adding at the end the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="H0A1CB8EFE3714D8AA2DA5383E71BE9DF" style="OLC">
<subsection id="H1148913BA09B450EB9CFF520F6178B68"><enum>(z)</enum><header>Treatment of
certain foreign persons as American employers</header>
<paragraph id="HA5FB524E7ADA432F8DAD4E86ECD11E4E"><enum>(1)</enum><header>In
general</header><text>If any employee of a foreign person is performing
services in connection with a contract between the United States Government (or
any instrumentality thereof) and any member of any domestically controlled
group of entities which includes such foreign person, such foreign person shall
be treated for purposes of this chapter as an American employer with respect to
such services performed by such employee.</text>
</paragraph><paragraph id="H032A4569208A4CE2ACAA29DB488B71E1"><enum>(2)</enum><header>Domestically
controlled group of entities</header><text>For purposes of this
subsection—</text>
<subparagraph id="H17BDB4AF6E2D45D4BA8B70B915FB8381"><enum>(A)</enum><header>In
general</header><text display-inline="yes-display-inline">The term
<term>domestically controlled group of entities</term> means a controlled group
of entities the common parent of which is a domestic corporation.</text>
</subparagraph><subparagraph id="H216B129D90124E708913E4821C4DA4DD"><enum>(B)</enum><header>Controlled group
of entities</header><text display-inline="yes-display-inline">The term
<term>controlled group of entities</term> means a controlled group of
corporations as defined in section 1563(a)(1), except that—</text>
<clause id="H8F18C075159347F9B29B0633DD377FDA"><enum>(i)</enum><text><quote>more than
50 percent</quote> shall be substituted for <quote>at least 80 percent</quote>
each place it appears therein, and</text>
</clause><clause id="H1A631B5414644EB195891FD169009D72"><enum>(ii)</enum><text>the determination
shall be made without regard to subsections (a)(4) and (b)(2) of section
1563.</text>
</clause><continuation-text continuation-text-level="subparagraph">A
partnership or any other entity (other than a corporation) shall be treated as
a member of a controlled group of entities if such entity is controlled (within
the meaning of section 954(d)(3)) by members of such group (including any
entity treated as a member of such group by reason of this sentence).</continuation-text></subparagraph></paragraph><paragraph id="HF1056017E1D744FCB304E94E982BC75E"><enum>(3)</enum><header>Liability of
common parent</header><text display-inline="yes-display-inline">In the case of
a foreign person who is a member of any domestically controlled group of
entities, the common parent of such group shall be jointly and severally liable
for any tax under this chapter for which such foreign person is liable by
reason of this subsection, and for any penalty imposed on such person by this
title with respect to any failure to pay such tax or to file any return or
statement with respect to such tax or wages subject to such tax. No deduction
shall be allowed under this title for any liability imposed by the preceding
sentence.</text>
</paragraph><paragraph id="H2F3AB115FF144384B439E7F322E79D00"><enum>(4)</enum><header>Coordination</header><text>Paragraph
(1) shall not apply to any services which are covered by an agreement under
subsection (l).</text>
</paragraph><paragraph id="H3A01060C8F1E4980ABA4759BBF159350"><enum>(5)</enum><header>Cross
reference</header><text>For relief from taxes in cases covered by certain
international agreements, see sections 3101(c) and
3111(c).</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H8C623FF2BECF4A88AEE28EA6A6DAA3A0"><enum>(b)</enum><header>Social Security
benefits</header><text>Subsection (e) of section 210 of the Social Security Act
(<external-xref legal-doc="usc" parsable-cite="usc/42/410">42 U.S.C. 410(e)</external-xref>) is amended—</text>
<paragraph id="H24B7EEDD72D14856B6043654A9D9D4EA"><enum>(1)</enum><text>by striking
<quote>(e) The term</quote> and inserting <quote>(e)(1) The
term</quote>,</text>
</paragraph><paragraph id="H3ED6A21DCC2F4FEE80874CC000891773"><enum>(2)</enum><text>by redesignating
clauses (1) through (6) as clauses (A) through (F), respectively, and</text>
</paragraph><paragraph id="H3E83EA15A57F4BFB8EC1E490A70032DA"><enum>(3)</enum><text>by adding at the
end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline" id="H340537ECB5E244B789836EF2EFEBE4CF" style="traditional">
<paragraph id="HC4EEF0CB438D4DC789E7055C37D53528" indent="up1"><enum>(2)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="HF034EDD5E86A4CF18C33EC38DC216BF2"><enum>(A)</enum><text>If any employee of a
foreign person is performing services in connection with a contract between the
United States Government (or any instrumentality thereof) and any member of any
domestically controlled group of entities which includes such foreign person,
such foreign person shall be treated as an American employer with respect to
such services performed by such employee.</text>
</subparagraph><subparagraph id="HDD0A74E308F04DA3A2F673B614D19B6" indent="up1"><enum>(B)</enum><text display-inline="yes-display-inline">For purposes of this paragraph—</text>
<clause display-inline="no-display-inline" id="H93202B74F7A047BDBEA5A6A1904B3CD2"><enum>(i)</enum><text>The term <term>domestically controlled
group of entities</term> means a controlled group of entities the common parent
of which is a domestic corporation.</text>
</clause><clause id="HE377D3EE852543D69BF608F308EF4000"><enum>(ii)</enum><text>The term <term>controlled group of
entities</term> means a controlled group of corporations as defined in section
1563(a)(1) of the Internal Revenue Code of 1986, except that—</text>
<subclause id="H2F55829650EE47D09B25B135FAF69200"><enum>(I)</enum><text display-inline="yes-display-inline"><quote>more than 50 percent</quote> shall
be substituted for <quote>at least 80 percent</quote> each place it appears
therein, and</text>
</subclause><subclause id="HDE0D5B0E9EAD4D8CAD8E36AACFFBD2D9"><enum>(II)</enum><text>the determination shall be made
without regard to subsections (a)(4) and (b)(2) of section 1563 of such
Code.</text>
</subclause><continuation-text continuation-text-level="clause">A partnership
or any other entity (other than a corporation) shall be treated as a member of
a controlled group of entities if such entity is controlled (within the meaning
of section 954(d)(3) of such Code) by members of such group (including any
entity treated as a member of such group by reason of this
sentence).</continuation-text></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H50597FAF420C4C9D00C2F3DA4199CA5"><enum>(c)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to services
performed after the date of the enactment of this Act.</text>
</subsection></section><section id="H5775639CB5A14FD793F4C53150CC5D2B"><enum>303.</enum><header>Increase in
minimum penalty on failure to file a return of tax</header>
<subsection id="H12E5A8AD906E42A89EA8B4A2005D0493"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (a) of
section 6651 is amended by striking <quote>$100</quote> in the last sentence
and inserting <quote>$125</quote>.</text>
</subsection><subsection id="H2D96FB942B3641648041B57355398423"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to returns
required to be filed after December 31, 2008.</text>
</subsection></section><enum>IV</enum><header>Parity in the
application of certain limits to mental health benefits</header>
<section display-inline="no-display-inline" id="H2D84DA4CEC71464499A2587C9DC9FA9" section-type="subsequent-section"><enum>401.</enum><header>Parity in the
application of certain limits to mental health benefits</header><text display-inline="no-display-inline">Subsection (f) of section 9812 is
amended—</text>
<paragraph id="HE4A03826A5AE4A06BCD34B2283F5B39"><enum>(1)</enum><text>by
striking <quote>and</quote> at the end of paragraph (2), and</text>
</paragraph><paragraph id="H48854A2A460344A688004BF222CB39F5"><enum>(2)</enum><text>by striking
paragraph (3) and inserting the following new paragraphs:</text>
<quoted-block display-inline="no-display-inline" id="H7259C730501D438E81D96247CF57BD60" style="OLC">
<paragraph id="HD2E9933BCD4C47F49EF7A9C09220335"><enum>(3)</enum><text display-inline="yes-display-inline">on or after January 1, 2008, and before the
date of the enactment of the <short-title>Heroes Earnings
Assistance and Relief Tax Act of 2008</short-title>, and</text>
</paragraph><paragraph id="HF64F6AA564584942BE5956A3A223F3AC"><enum>(4)</enum><text>after December 31,
2008.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></section>