[Congressional Record Volume 146, Number 90 (Thursday, July 13, 2000)]
[Senate]
[Pages S6692-S6761]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          AMENDMENTS SUBMITTED

                                 ______
                                 

                       DEATH TAX ELIMINATION ACT

                                 ______
                                 

                      MOYNIHAN AMENDMENT NO. 3821

  Mr. MOYNIHAN proposed an amendment to the bill (H.R. 8) to amend the 
Internal Revenue Code of 1986 to phaseout the estate and gift taxes 
over a 10-year period; as follows:

       Strike all after the first word and insert:

              1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Estate Tax 
     Relief Act of 2000''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

     SEC. 2. INCREASE IN AMOUNT OF UNIFIED CREDIT AGAINST ESTATE 
                   AND GIFT TAXES.

       (a) In General.--The table contained in section 2010(c) 
     (relating to applicable credit amount) is amended to read as 
     follows:

``In the case of estates of decedentThe applicable exclusion amount is:
      2001, 2002, 2003, 2004, and 2005......................$1,000,000 
      2006 and 2007.........................................$1,125,000 
      2008..................................................$1,500,000 
      2009 or thereafter..................................$2,000,000.''

       (b) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

     SEC. 3. INCREASE IN QUALIFIED FAMILY-OWNED BUSINESS INTEREST 
                   DEDUCTION AMOUNT.

       (a) In General.--Paragraph (2) of section 2057(a) (relating 
     to family-owned business interests) is amended to read as 
     follows:
       ``(2) Maximum deduction.--
       ``(A) In general.--The deduction allowed by this section 
     shall not exceed the sum of--
       ``(i) the applicable deduction amount, plus
       ``(ii) in the case of a decedent described in subparagraph 
     (C), the applicable unused spousal deduction amount.
       ``(B) Applicable deduction amount.--For purposes of this 
     subparagraph (A)(i), the applicable deduction amount is 
     determined in accordance with the following table:

``In the case of estates of decedentThe applicable deduction amount is:
      2001, 2002, 2003, 2004, and 2005.......................$1,375,000
      2006 and 2007..........................................$1,625,000
      2008...................................................$2,375,000
      2009 or thereafter....................................$3,375,000.

       ``(C) Applicable unused spousal deduction amount.--With 
     respect to a decedent whose immediately predeceased spouse 
     died after December 31, 2000, and the estate of such 
     immediately predeceased spouse met the requirements of 
     subsection (b)(1), the applicable unused spousal deduction 
     amount for such decedent is equal to the excess of--
       ``(i) the applicable deduction amount allowable under this 
     section to the estate of such immediately predeceased spouse, 
     over
       ``(ii) the sum of--

       ``(I) the applicable deduction amount allowed under this 
     section to the estate of such immediately predeceased spouse, 
     plus
       ``(II) the amount of any increase in such estate's unified 
     credit under paragraph (3)(B) which was allowed to such 
     estate.''

       (b) Conforming Amendments.--Section 2057(a)(3)(B) is 
     amended--
       (1) by striking ``$675,000'' both places it appears and 
     inserting ``the applicable deduction amount'', and
       (2) by striking ``$675,000'' in the heading and inserting 
     ``applicable deduction amount''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

     SEC. 4. SENSE OF SENATE REGARDING SAVINGS.

       It is the sense of the Senate that the reduced cost to the 
     Federal Treasury resulting from the amendments made by this 
     Act as compared to the cost to the Federal Treasury of H.R. 8 
     as received by the Senate from the House of Representatives 
     on June 12, 2000, should be used exclusively to reduce the 
     Federal debt held by the public.
       Amend the title so as to read: ``An Act to amend the 
     Internal Revenue Code of 1986 to increase the unified credit 
     exemption and the qualified family-owned business interest 
     deduction, and for other purposes.''
                                 ______
                                 

                SCHUMER (AND OTHERS) AMENDMENT NO. 3822

  Mr. SCHUMER (for himself, Mr. Biden, Mr. Bayh, Ms. Landrieu, Mr. 
Durbin, and Mr. Robb) proposed an amendment to the bill, H.R. 8, supra; 
as follows:

       Strike all after the first word and insert:

              1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Estate Tax 
     Relief Act of 2000''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

                       TITLE I--ESTATE TAX RELIEF

     SEC. 101. INCREASE IN AMOUNT OF UNIFIED CREDIT AGAINST ESTATE 
                   AND GIFT TAXES.

       (a) In General.--The table contained in section 2010(c) 
     (relating to applicable credit amount) is amended to read as 
     follows:

``In the case of estates of decedents                                  
  dying, and                                             The applicable
  gifts made, during:                              exclusion amount is:
      2001, 2002, 2003, 2004, and 2005......................$1,000,000 
      2006 and 2007.........................................$1,125,000 
      2008..................................................$1,500,000 
      2009 or thereafter..................................$2,000,000.''

       (b) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

     SEC. 102. INCREASE IN QUALIFIED FAMILY-OWNED BUSINESS 
                   INTEREST DEDUCTION AMOUNT.

       (a) In General.--Paragraph (2) of section 2057(a) (relating 
     to family-owned business interests) is amended to read as 
     follows:
       ``(2) Maximum deduction.--
       ``(A) In general.--The deduction allowed by this section 
     shall not exceed the sum of--
       ``(i) the applicable deduction amount, plus
       ``(ii) in the case of a decedent described in subparagraph 
     (C), the applicable unused spousal deduction amount.
       ``(B) Applicable deduction amount.--For purposes of this 
     subparagraph (A)(i), the applicable deduction amount is 
     determined in accordance with the following table:

``In the case of estates of decedents                                  
  dying, and                                             The applicable
  gifts made, during:                              exclusion amount is:
      2001, 2002, 2003, 2004, and 2005.......................$1,375,000
      2006 and 2007..........................................$1,625,000
      2008...................................................$2,375,000
      2009 or thereafter....................................$3,375,000.

       ``(C) Applicable unused spousal deduction amount.--With 
     respect to a decedent whose immediately predeceased spouse 
     died after December 31, 2000, and the estate of such 
     immediately predeceased spouse met the requirements of 
     subsection (b)(1), the applicable unused spousal deduction 
     amount for such decedent is equal to the excess of--
       ``(i) the applicable deduction amount allowable under this 
     section to the estate of such immediately predeceased spouse, 
     over
       ``(ii) the sum of--

       ``(I) the applicable deduction amount allowed under this 
     section to the estate of such immediately predeceased spouse, 
     plus

[[Page S6693]]

       ``(II) the amount of any increase in such estate's unified 
     credit under paragraph (3)(B) which was allowed to such 
     estate.''

       (b) Conforming Amendments.--Section 2057(a)(3)(B) is 
     amended--
       (1) by striking ``$675,000'' both places it appears and 
     inserting ``the applicable deduction amount'', and
       (2) by striking ``$675,000'' in the heading and inserting 
     ``applicable deduction amount''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

                   TITLE II--MAKE COLLEGE AFFORDABLE

     SEC. 201. DEDUCTION FOR HIGHER EDUCATION EXPENSES.

       (a) Deduction Allowed.--Part VII of subchapter B of chapter 
     1 (relating to additional itemized deductions for 
     individuals) is amended by redesignating section 222 as 
     section 223 and by inserting after section 221 the following:

     ``SEC. 222. HIGHER EDUCATION EXPENSES.

       ``(a) Allowance of Deduction.--
       ``(1) In general.--In the case of an individual, there 
     shall be allowed as a deduction an amount equal to the 
     applicable dollar amount of the qualified higher education 
     expenses paid by the taxpayer during the taxable year.
       ``(2) Applicable dollar amount.--The applicable dollar 
     amount for any taxable year shall be determined as follows:

                                                             Applicable
``Taxable year:                                          dollar amount:
  2002......................................................$4,000 ....

  2003......................................................$8,000 ....

  2004 and thereafter......................................$12,000.....

       ``(b) Limitation Based on Modified Adjusted Gross Income.--
       ``(1) In general.--The amount which would (but for this 
     subsection) be taken into account under subsection (a) shall 
     be reduced (but not below zero) by the amount determined 
     under paragraph (2).
       ``(2) Amount of reduction.--The amount determined under 
     this paragraph equals the amount which bears the same ratio 
     to the amount which would be so taken into account as--
       ``(A) the excess of--
       ``(i) the taxpayer's modified adjusted gross income for 
     such taxable year, over
       ``(ii) $62,450 ($104,050 in the case of a joint return, 
     $89,150 in the case of a return filed by a head of household, 
     and $52,025 in the case of a return by a married individual 
     filing separately), bears to
       ``(B) $15,000.
       ``(3) Modified adjusted gross income.--For purposes of this 
     subsection, the term `modified adjusted gross income' means 
     the adjusted gross income of the taxpayer for the taxable 
     year determined--
       ``(A) without regard to this section and sections 911, 931, 
     and 933, and
       ``(B) after the application of sections 86, 135, 219, 220, 
     and 469.

     For purposes of the sections referred to in subparagraph (B), 
     adjusted gross income shall be determined without regard to 
     the deduction allowed under this section.
       ``(c) Qualified Higher Education Expenses.--For purposes of 
     this section--
       ``(1) Qualified higher education expenses.--
       ``(A) In general.--The term `qualified higher education 
     expenses' means tuition and fees charged by an educational 
     institution and required for the enrollment or attendance 
     of--
       ``(i) the taxpayer,
       ``(ii) the taxpayer's spouse,
       ``(iii) any dependent of the taxpayer with respect to whom 
     the taxpayer is allowed a deduction under section 151, or
       ``(iv) any grandchild of the taxpayer,
     as an eligible student at an institution of higher education.
       ``(B) Eligible courses.--Amounts paid for qualified higher 
     education expenses of any individual shall be taken into 
     account under subsection (a) only to the extent such 
     expenses--
       ``(i) are attributable to courses of instruction for which 
     credit is allowed toward a baccalaureate degree by an 
     institution of higher education or toward a certificate of 
     required course work at a vocational school, and
       ``(ii) are not attributable to any graduate program of such 
     individual.
       ``(C) Exception for nonacademic fees.--Such term does not 
     include any student activity fees, athletic fees, insurance 
     expenses, or other expenses unrelated to a student's academic 
     course of instruction.
       ``(D) Eligible student.--For purposes of subparagraph (A), 
     the term `eligible student' means a student who--
       ``(i) meets the requirements of section 484(a)(1) of the 
     Higher Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in 
     effect on the date of the enactment of this section, and
       ``(ii) is carrying at least one-half the normal full-time 
     work load for the course of study the student is pursuing, as 
     determined by the institution of higher education.
       ``(E) Identification requirement.--No deduction shall be 
     allowed under subsection (a) to a taxpayer with respect to an 
     eligible student unless the taxpayer includes the name, age, 
     and taxpayer identification number of such eligible student 
     on the return of tax for the taxable year.
       ``(2) Institution of higher education.--The term 
     `institution of higher education' means an institution 
     which--
       ``(A) is described in section 481 of the Higher Education 
     Act of 1965 (20 U.S.C. 1088), as in effect on the date of the 
     enactment of this section, and
       ``(B) is eligible to participate in programs under title IV 
     of such Act.
       ``(d) Special Rules.--
       ``(1) No double benefit.--
       ``(A) In general.--No deduction shall be allowed under 
     subsection (a) for any expense for which a deduction is 
     allowable to the taxpayer under any other provision of this 
     chapter unless the taxpayer irrevocably waives his right to 
     the deduction of such expense under such other provision.
       ``(B) Denial of deduction if credit elected.--No deduction 
     shall be allowed under subsection (a) for a taxable year with 
     respect to the qualified higher education expenses of an 
     individual if the taxpayer elects to have section 25A apply 
     with respect to such individual for such year.
       ``(C) Dependents.--No deduction shall be allowed under 
     subsection (a) to any individual with respect to whom a 
     deduction under section 151 is allowable to another taxpayer 
     for a taxable year beginning in the calendar year in which 
     such individual's taxable year begins.
       ``(D) Coordination with exclusions.--A deduction shall be 
     allowed under subsection (a) for qualified higher education 
     expenses only to the extent the amount of such expenses 
     exceeds the amount excludable under section 135 or 530(d)(2) 
     for the taxable year.
       ``(2) Limitation on taxable year of deduction.--
       ``(A) In general.--A deduction shall be allowed under 
     subsection (a) for qualified higher education expenses for 
     any taxable year only to the extent such expenses are in 
     connection with enrollment at an institution of higher 
     education during the taxable year.
       ``(B) Certain prepayments allowed.--Subparagraph (A) shall 
     not apply to qualified higher education expenses paid during 
     a taxable year if such expenses are in connection with an 
     academic term beginning during such taxable year or during 
     the first 3 months of the next taxable year.
       ``(3) Adjustment for certain scholarships and veterans 
     benefits.--The amount of qualified higher education expenses 
     otherwise taken into account under subsection (a) with 
     respect to the education of an individual shall be reduced 
     (before the application of subsection (b)) by the sum of the 
     amounts received with respect to such individual for the 
     taxable year as--
       ``(A) a qualified scholarship which under section 117 is 
     not includable in gross income,
       ``(B) an educational assistance allowance under chapter 30, 
     31, 32, 34, or 35 of title 38, United States Code, or
       ``(C) a payment (other than a gift, bequest, devise, or 
     inheritance within the meaning of section 102(a)) for 
     educational expenses, or attributable to enrollment at an 
     eligible educational institution, which is exempt from income 
     taxation by any law of the United States.
       ``(4) No deduction for married individuals filing separate 
     returns.--If the taxpayer is a married individual (within the 
     meaning of section 7703), this section shall apply only if 
     the taxpayer and the taxpayer's spouse file a joint return 
     for the taxable year.
       ``(5) Nonresident aliens.--If the taxpayer is a nonresident 
     alien individual for any portion of the taxable year, this 
     section shall apply only if such individual is treated as a 
     resident alien of the United States for purposes of this 
     chapter by reason of an election under subsection (g) or (h) 
     of section 6013.
       ``(6) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this section, including regulations requiring recordkeeping 
     and information reporting.''
       (b) Deduction Allowed in Computing Adjusted Gross Income.--
     Section 62(a) is amended by inserting after paragraph (17) 
     the following:
       ``(18) Higher education expenses.--The deduction allowed by 
     section 222.''
       (c) Conforming Amendment.--The table of sections for part 
     VII of subchapter B of chapter 1 is amended by striking the 
     item relating to section 222 and inserting the following:

``Sec. 222. Higher education expenses.
``Sec. 223. Cross reference.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to payments made in taxable years beginning after 
     December 31, 2001.

     SEC. 202. CREDIT FOR INTEREST ON HIGHER EDUCATION LOANS.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 (relating to nonrefundable personal credits) is 
     amended by inserting after section 25A the following new 
     section:

     ``SEC. 25B. INTEREST ON HIGHER EDUCATION LOANS.

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this chapter for the taxable year an amount equal to the 
     interest paid by the taxpayer during the taxable year on any 
     qualified education loan.
       ``(b) Maximum Credit.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     credit allowed by subsection (a) for the taxable year shall 
     not exceed $1,500.
       ``(2) Limitation based on modified adjusted gross income.--
       ``(A) In general.--If the modified adjusted gross income of 
     the taxpayer for the taxable year exceeds $50,000 ($80,000 in 
     the case of a joint return), the amount which would (but

[[Page S6694]]

     for this paragraph) be allowable as a credit under this 
     section shall be reduced (but not below zero) by the amount 
     which bears the same ratio to the amount which would be so 
     allowable as such excess bears to $20,000.
       ``(B) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means adjusted gross income determined 
     without regard to sections 911, 931, and 933.
       ``(C) Inflation adjustment.--In the case of any taxable 
     year beginning after 2003, the $50,000 and $80,000 amounts 
     referred to in subparagraph (A) shall be increased by an 
     amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section (1)(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `2002' for `1992'.
       ``(D) Rounding.--If any amount as adjusted under 
     subparagraph (C) is not a multiple of $50, such amount shall 
     be rounded to the nearest multiple of $50.
       ``(c) Dependents Not Eligible for Credit.--No credit shall 
     be allowed by this section to an individual for the taxable 
     year if a deduction under section 151 with respect to such 
     individual is allowed to another taxpayer for the taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins.
       ``(d) Limit on Period Credit Allowed.--A credit shall be 
     allowed under this section only with respect to interest paid 
     on any qualified education loan during the first 60 months 
     (whether or not consecutive) in which interest payments are 
     required. For purposes of this paragraph, any loan and all 
     refinancings of such loan shall be treated as 1 loan.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Qualified education loan.--The term `qualified 
     education loan' has the meaning given such term by section 
     221(e)(1).
       ``(2) Dependent.--The term `dependent' has the meaning 
     given such term by section 152.
       ``(f) Special Rules.--
       ``(1) Denial of double benefit.--No credit shall be allowed 
     under this section for any amount taken into account for any 
     deduction under any other provision of this chapter.
       ``(2) Married couples must file joint return.--If the 
     taxpayer is married at the close of the taxable year, the 
     credit shall be allowed under subsection (a) only if the 
     taxpayer and the taxpayer's spouse file a joint return for 
     the taxable year.
       ``(3) Marital status.--Marital status shall be determined 
     in accordance with section 7703.''
       (b) Conforming Amendment.--The table of sections for 
     subpart A of part IV of subchapter A of chapter 1 is amended 
     by inserting after the item relating to section 25A the 
     following new item:

``Sec. 25B. Interest on higher education loans.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to any qualified education loan (as defined in 
     section 25B(e)(1) of the Internal Revenue Code of 1986, as 
     added by this section) incurred on, before, or after the date 
     of the enactment of this Act, but only with respect to any 
     loan interest payment due after December 31, 2001.

          TITLE III--ADVANCED TEACHER CERTIFICATION INCENTIVES

     SEC. 301. CERTIFIED TEACHER CREDIT.

       (a) Findings.--Congress makes the following findings:
       (1) Studies have shown that the greatest single in-school 
     factor affecting student achievement is teacher quality.
       (2) Most accomplished teachers do not get the rewards they 
     deserve.
       (3) After adjusting amounts for inflation, the average 
     teacher salary for 1997-1998 of $39,347 is just $2 above what 
     it was in 1993. Such salary is also just $1,924 more than the 
     average salary recorded in 1972, a real increase of only $75 
     per year.
       (4) While K-12 enrollments are steadily increasing, the 
     teacher population is aging. There is a need, now more than 
     ever, to attract competent, capable, and bright college 
     graduates or mid-career professionals to the teaching 
     profession.
       (5) The Department of Education projects that 2,000,000 new 
     teachers will have to be hired in the next decade. Shortages, 
     if they occur, will most likely be felt in urban or rural 
     regions of the country where working conditions may be 
     difficult or compensation low.
       (6) If students are to receive a high quality education and 
     remain competitive in the global market the United States 
     must attract talented and motivated people to the teaching 
     profession in large numbers.
       (b) Allowance of Credit.--Subpart C of part IV of 
     subchapter A of chapter 1 (relating to refundable credits) is 
     amended by redesignating section 35 as section 36 and by 
     inserting after section 34 the following new section:

     ``SEC. 35. CERTIFIED TEACHER CREDIT.

       ``(a) Allowance of Credit.--
       ``(1) In general.--In the case of an eligible teacher, 
     there shall be allowed as a credit against the tax imposed by 
     this chapter for the taxable year $5,000.
       ``(2) Year credit allowed.--The credit under paragraph (1) 
     shall be allowed in the taxable year in which the taxpayer 
     becomes a certified individual.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Eligible teacher.--
       ``(A) In general.--The term `eligible teacher' means a 
     certified individual who is a pre-kindergarten or early 
     childhood educator, or a kindergarten through grade 12 
     classroom teacher, instructor, counselor, aide, or principal 
     in an elementary or secondary school on a full-time basis for 
     an academic year ending during a taxable year.
       ``(B) Certified individual.--The term `certified 
     individual' means an individual who has successfully 
     completed the requirements for advanced certification 
     provided by the National Board for Professional Teaching 
     Standards.
       ``(2) Elementary or secondary school.--The term `elementary 
     or secondary school' means a public elementary or secondary 
     school which--
       ``(A) is located in a school district of a local 
     educational agency which is eligible, during the taxable 
     year, for assistance under part A of title I of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6311 et seq.), and
       ``(B) during the taxable year, the Secretary of Education 
     determines to have an enrollment of children counted under 
     section 1124(c) of such Act (20 U.S.C. 6333(c)) in an amount 
     in excess of an amount equal to 40 percent of the total 
     enrollment of such school.
       ``(c) Verification.--The credit allowed under subsection 
     (a) shall be allowed with respect to any certified individual 
     only if the certification is verified in such manner as the 
     Secretary shall prescribe by regulation.
       ``(d) Election To Have Credit Not Apply.--A taxpayer may 
     elect to have this section not apply for any taxable year.''.
       (c) Exclusion From Income For Certain Amounts.--Part III of 
     subchapter B of chapter 1 (relating to items specifically 
     excluded from gross income) is amended by redesignating 
     section 139 as section 140 and inserting after section 138 
     the following new section:

     ``SEC. 139. CERTAIN AMOUNTS RECEIVED BY CERTIFIED TEACHERS.

       ``(a) In General.--In the case of a certified teacher, 
     gross income shall not include the value of anything received 
     during the taxable year solely by reason of such teacher 
     having successfully completed the requirements for advanced 
     certification provided by the National Board for Professional 
     Teaching Standards (such as an incentive payment).
       ``(b) Certified Teacher.--For purposes of this section, the 
     term `certified teacher' has the meaning given the term 
     `eligible teacher' under section 35(b)(1).
       ``(c) Verification.--The exclusion under subsection (a) 
     shall be allowed with respect to any certified teacher only 
     if the certification is verified in such manner as the 
     Secretary shall prescribe by regulation.
       ``(d) Amounts Must be Reasonable.--Amounts excluded under 
     subsection (a) shall include only amounts which are 
     reasonable.''.
       (d) Conforming Amendments.--
       (1) Section 1324(b)(2) of title 31, United States Code, is 
     amended by striking ``or'' before ``enacted'' and by 
     inserting before the period at the end ``, or from section 35 
     of such Code''.
       (2) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 is amended by striking the item 
     relating to section 35 and inserting the following:

``Sec. 35. Certified teacher credit.
``Sec. 36. Overpayments of tax.''

       (3) The table of sections for part III of subchapter B of 
     chapter 1 is amended by striking the item relating to section 
     139 and inserting the following new items:

``Sec. 139. Certain amounts received by certified teachers.
``Sec. 140. Cross references to other Acts.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

                 HATCH (AND OTHERS) AMENDMENT NO. 3823

  Mr. HATCH (for himself, Mr. Robb, and Mr. Kennedy) proposed an 
amendment to the bill, H.R. 8, supra; as follows:

       At the end, add the following:

            TITLE VI--PERMANENT EXTENSION OF RESEARCH CREDIT

     SEC. 601. PERMANENT EXTENSION OF RESEARCH CREDIT.

       (a) In General.--Section 41 (relating to credit for 
     increasing research activities) is amended by striking 
     subsection (h).
       (b) Conforming Amendment.--Paragraph (1) of section 45C(b) 
     is amended by striking subparagraph (D).
                                 ______
                                 

                 GRAHAM (AND OTHERS) AMENDMENT NO. 3824

  (Ordered to lie on the table.)
  Mr. GRAHAM (for himself, Mr. Kennedy, Mr. Robb, Mr. Bryan, Mrs. 
Lincoln, Mr. Rockefeller, Mr. Daschle, Mr. Wellstone, Mr. Kerry, and 
Mr. Dorgan) submitted an amendment intended to be proposed by them to 
the bill, H.R. 8, supra; as follows:

       Strike all after the first word and insert:

     SECTION 1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Estate Tax 
     Relief Act of 2000''.

[[Page S6695]]

       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

                       TITLE I--ESTATE TAX RELIEF

     SEC. 101. INCREASE IN AMOUNT OF UNIFIED CREDIT AGAINST ESTATE 
                   AND GIFT TAXES.

       (a) In General.--The table contained in section 2010(c) 
     (relating to applicable credit amount) is amended to read as 
     follows:

``In the case of estates of decedentThe applicable exclusion amount is:
      2001, 2002, 2003, 2004, and 2005......................$1,000,000 
      2006 and 2007.........................................$1,125,000 
      2008..................................................$1,500,000 
      2009 or thereafter..................................$2,000,000.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

     SEC. 102. INCREASE IN QUALIFIED FAMILY-OWNED BUSINESS 
                   INTEREST DEDUCTION AMOUNT.

       (a) In General.--Paragraph (2) of section 2057(a) (relating 
     to family-owned business interests) is amended to read as 
     follows:
       ``(2) Maximum deduction.--
       ``(A) In general.--The deduction allowed by this section 
     shall not exceed the sum of--
       ``(i) the applicable deduction amount, plus
       ``(ii) in the case of a decedent described in subparagraph 
     (C), the applicable unused spousal deduction amount.
       ``(B) Applicable deduction amount.--For purposes of this 
     subparagraph (A)(i), the applicable deduction amount is 
     determined in accordance with the following table:

``In the case of estates of decedentThe applicable deduction amount is:
      2001, 2002, 2003, 2004, and 2005......................$1,375,000 
      2006 and 2007.........................................$1,625,000 
      2008..................................................$2,375,000 
      2009 or thereafter..................................$3,375,000.''
       ``(C) Applicable unused spousal deduction amount.--With 
     respect to a decedent whose immediately predeceased spouse 
     died after December 31, 2000, and the estate of such 
     immediately predeceased spouse met the requirements of 
     subsection (b)(1), the applicable unused spousal deduction 
     amount for such decedent is equal to the excess of--
       ``(i) the applicable deduction amount allowable under this 
     section to the estate of such immediately predeceased spouse, 
     over
       ``(ii) the sum of--

       ``(I) the applicable deduction amount allowed under this 
     section to the estate of such immediately predeceased spouse, 
     plus
       ``(II) the amount of any increase in such estate's unified 
     credit under paragraph (3)(B) which was allowed to such 
     estate.''

       (b) Conforming Amendments.--Section 2057(a)(3)(B) is 
     amended--
       (1) by striking ``$675,000'' both places it appears and 
     inserting ``the applicable deduction amount'', and
       (2) by striking ``$675,000'' in the heading and inserting 
     ``applicable deduction amount''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

 TITLE II--ADDTIONAL BUDGET RESOURCES FOR A MEDICARE PRESCRIPTION DRUG 
                            BENEFIT PROGRAM

     SEC. 201. ADDTIONAL BUDGET RESOURCES FOR A MEDICARE 
                   PRESCRIPTION DRUG BENEFIT PROGRAM.

       (a) Findings.--The Senate makes the following findings:
       (1) Beneficiaries under the medicare program under title 
     XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) are 
     the only group of insured Americans without prescription drug 
     coverage.
       (2) At any point in time, approximately 13,000,000 medicare 
     beneficiaries are without prescription drug coverage.
       (3) Over the course of a year, nearly 20,000,000 medicare 
     beneficiaries are without prescription drug coverage for all 
     or part of the year.
       (4) The options available to medicare beneficiaries for 
     obtaining prescription drug coverage are declining since--
       (A) the number of employers providing employer-sponsored 
     retiree coverage is declining at a dramatic rate;
       (B) Medicare+Choice plans that might otherwise provide 
     prescription drug coverage are pulling out of counties 
     throughout the Nation; and
       (C) medicare supplemental policies (medigap policies) that 
     offer prescription drug coverage are so prohibitively 
     expensive that only 8 percent of medicare beneficiaries have 
     the means to purchase such policies.
       (5) An elderly individual without prescription drug 
     coverage living on $12,525 a year (150 percent of the Federal 
     poverty line), who has diabetes, hypertension, and high 
     cholesterol, pays more than 18.3 percent of their total 
     income on the prescription drugs most commonly prescribed to 
     treat their medical conditions.
       (6) Medicare beneficiaries should never have to make the 
     choice between having a roof over their head, having food in 
     their mouth, or having necessary prescription drugs.
       (7) Congress must provide medicare beneficiaries with a 
     meaningful medicare prescription drug benefit that--
       (A) is universal and affordable;
       (B) guarantees stable coverage for medicare beneficiaries 
     receiving benefits through the original fee-for-service 
     program or through enrollment in a Medicare+Choice plan; and
       (C) provides real low-income and stop-loss protections.
       (8) Meaningful prescription drug coverage includes stop-
     loss protection above $4,000 of out-of-pocket expenses for 
     prescription drugs.
       (9) In March 2000, the Congressional Budget Office 
     estimated the on-budget surplus for the 5-year period of 
     fiscal year 2001 through fiscal year 2005 to be 
     $148,000,000,000, assuming that discretionary spending was 
     allowed to increase with inflation.
       (10) Relying on the March 2000 estimate of the 
     Congressional Budget Office, on April 12, 2000, Congress 
     passed the concurrent resolution on the budget for fiscal 
     year 2001 which allocated $40,000,000,000 of the estimated 
     on-budget surplus for the 5-year period described in 
     paragraph (9) to provide a prescription drug benefit for 
     medicare beneficiaries.
       (11) Forty billion dollars over 5 years cannot ensure 
     access to a meaningful medicare prescription drug benefit 
     that--
       (A) is universal and affordable;
       (B) guarantees stable coverage for medicare beneficiaries 
     receiving benefits through the original fee-for-service 
     program or through enrollment in a Medicare+Choice plan; and
       (C) provides real low-income and stop-loss protections.
       (12) Congress should not be bound to an arbitrarily low and 
     inadequate allocation for providing a medicare prescription 
     drug benefit when the estimated on-budget surplus for the 5-
     year period described in paragraph (9) has increased 
     dramatically since March 2000.
       (13) The Office of Management and Budget recently has 
     revised its estimates for the on-budget surplus for the 5-
     year period described in paragraph (9) and now estimates that 
     the on-budget surplus will be $360,000,000,000 for such 
     period.
       (14) The Congressional Budget Office will issue its revised 
     budget estimates in the next few days and those estimates are 
     widely expected to reflect a significant increase in the on-
     budget surplus for the 5-year period described in paragraph 
     (9) as compared to the on-budget surplus that was estimated 
     for such period in March 2000.
       (b) 2001 Budget Resolution Amendment.--Section 213(b) of H. 
     Con. Res. 290 (106th Congress) is amended to read as follows:
       ``(b) Adjustments.--The chairman of the Committee on the 
     Budget of the House or Senate, as applicable--
       ``(1) shall revise committee allocations and other 
     appropriate budgetary levels and limits to accommodate 
     legislation described in section 215(a) which improves access 
     to prescription drugs for Medicare beneficiaries in an 
     additional amount not to exceed $40,000,000,000 or the 
     difference between the on-budget surpluses in the reports 
     referred to in subsection (a), whichever is less; and
       ``(2) may, after the adjustment in paragraph (1), make the 
     following adjustments in an amount not to exceed the 
     difference between the on-budget surpluses in the reports 
     referred to in subsection (a) minus the adjustment made 
     pursuant to paragraph (1):
       ``(A) Reduce the on-budget revenue aggregate by that amount 
     for such fiscal year.
       ``(B) Adjust the instruction in section 103 or 104 to--
       ``(i) increase the reduction in revenues by that amount for 
     fiscal year 2001;
       ``(ii) increase the reduction in revenues by the sum of the 
     amounts for the period of fiscal years 2001 through 2005; and
       ``(iii) in the House only, increase the amount of debt 
     reduction by that amount for fiscal year 2001.
       ``(C) Adjust such other levels in this resolution, as 
     appropriate and the Senate pay-as-you-go scorecard.''.
       Strike all after the first word and insert:

              1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Estate Tax 
     Relief Act of 2000''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

                       TITLE I--ESTATE TAX RELIEF

     SEC. 101. INCREASE IN AMOUNT OF UNIFIED CREDIT AGAINST ESTATE 
                   AND GIFT TAXES.

       (a) In General.--The table contained in section 2010(c) 
     (relating to applicable credit amount) is amended to read as 
     follows:

``In the case of estates of decedentThe applicable exclusion amount is:
      2001, 2002, 2003, 2004, and 2005......................$1,000,000 
      2006 and 2007.........................................$1,125,000 
      2008..................................................$1,500,000 
      2009 or thereafter..................................$2,000,000.''

[[Page S6696]]

       (b) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

     SEC. 102. INCREASE IN QUALIFIED FAMILY-OWNED BUSINESS 
                   INTEREST DEDUCTION AMOUNT.

       (a) In General.--Paragraph (2) of section 2057(a) (relating 
     to family-owned business interests) is amended to read as 
     follows:
       ``(2) Maximum deduction.--
       ``(A) In general.--The deduction allowed by this section 
     shall not exceed the sum of--
       ``(i) the applicable deduction amount, plus
       ``(ii) in the case of a decedent described in subparagraph 
     (C), the applicable unused spousal deduction amount.
       ``(B) Applicable deduction amount.--For purposes of this 
     subparagraph (A)(i), the applicable deduction amount is 
     determined in accordance with the following table:

``In the case of estates of decedentThe applicable deduction amount is:
      2001, 2002, 2003, 2004, and 2005.......................$1,375,000
      2006 and 2007..........................................$1,625,000
      2008...................................................$2,375,000
      2009 or thereafter....................................$3,375,000.
       ``(C) Applicable unused spousal deduction amount.--With 
     respect to a decedent whose immediately predeceased spouse 
     died after December 31, 2000, and the estate of such 
     immediately predeceased spouse met the requirements of 
     subsection (b)(1), the applicable unused spousal deduction 
     amount for such decedent is equal to the excess of--
       ``(i) the applicable deduction amount allowable under this 
     section to the estate of such immediately predeceased spouse, 
     over
       ``(ii) the sum of--

       ``(I) the applicable deduction amount allowed under this 
     section to the estate of such immediately predeceased spouse, 
     plus
       ``(II) the amount of any increase in such estate's unified 
     credit under paragraph (3)(B) which was allowed to such 
     estate.''

       (b) Conforming Amendments.--Section 2057(a)(3)(B) is 
     amended--
       (1) by striking ``$675,000'' both places it appears and 
     inserting ``the applicable deduction amount'', and
       (2) by striking ``$675,000'' in the heading and inserting 
     ``applicable deduction amount''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

                      TITLE II--HEALTH PROVISIONS

     SEC. 201. LONG-TERM CARE TAX CREDIT.

       (a) Allowance of Credit.--
       (1) In general.--Section 24(a) (relating to allowance of 
     child tax credit) is amended to read as follows:
       ``(a) Allowance of Credit.--
       ``(1) In general.--There shall be allowed as a credit 
     against the tax imposed by this chapter for the taxable year 
     an amount equal to the sum of--
       ``(A) $500 multiplied by the number of qualifying children 
     of the taxpayer, plus
       ``(B) the applicable dollar amount multiplied by the number 
     of applicable individuals with respect to whom the taxpayer 
     is an eligible caregiver for the taxable year.
       ``(2) Applicable dollar amount.--For purposes of paragraph 
     (1)(B), the applicable dollar amount for taxable years 
     beginning in any calendar year shall be determined in 
     accordance with the following table:

                                                             Applicable
``Calendar year:                                         Dollar amount:
  2001......................................................$1,000 ....

  2002......................................................$1,500 ....

  2003......................................................$2,000 ....

  2004......................................................$2,500 ....

  2005 and thereafter.....................................$3,000.''....

       (2) Additional credit for taxpayer with 3 or more separate 
     credit amounts.--So much of section 24(d) as precedes 
     paragraph (1)(A) thereof is amended to read as follows:
       ``(d) Additional Credit for Taxpayers With 3 or More 
     Separate Credit Amounts.--
       ``(1) In general.--If the sum of the number of qualifying 
     children of the taxpayer and the number of applicable 
     individuals with respect to which the taxpayer is an eligible 
     caregiver is 3 or more for any taxable year, the aggregate 
     credits allowed under subpart C shall be increased by the 
     lesser of--''.
       (3) Conforming amendments.--
       (A) The heading for section 32(n) is amended by striking 
     ``Child'' and inserting ``Family Care''.
       (B) The heading for section 24 is amended to read as 
     follows:

     ``SEC. 24. FAMILY CARE CREDIT.''

       (C) The table of sections for subpart A of part IV of 
     subchapter A of chapter 1 is amended by striking the item 
     relating to section 24 and inserting the following new item:

``Sec. 24. Family care credit.''
       (b) Definitions.--Section 24(c) (defining qualifying child) 
     is amended to read as follows:
       ``(c) Definitions.--For purposes of this section--
       ``(1) Qualifying child.--
       ``(A) In general.--The term `qualifying child' means any 
     individual if--
       ``(i) the taxpayer is allowed a deduction under section 151 
     with respect to such individual for the taxable year,
       ``(ii) such individual has not attained the age of 17 as of 
     the close of the calendar year in which the taxable year of 
     the taxpayer begins, and
       ``(iii) such individual bears a relationship to the 
     taxpayer described in section 32(c)(3)(B).
       ``(B) Exception for certain noncitizens.--The term 
     `qualifying child' shall not include any individual who would 
     not be a dependent if the first sentence of section 152(b)(3) 
     were applied without regard to all that follows `resident of 
     the United States'.
       ``(2) Applicable individual.--
       ``(A) In general.--The term `applicable individual' means, 
     with respect to any taxable year, any individual who has been 
     certified, before the due date for filing the return of tax 
     for the taxable year (without extensions), by a physician (as 
     defined in section 1861(r)(1) of the Social Security Act) as 
     being an individual with long-term care needs described in 
     subparagraph (B) for a period--
       ``(i) which is at least 180 consecutive days, and
       ``(ii) a portion of which occurs within the taxable year.
     Such term shall not include any individual otherwise meeting 
     the requirements of the preceding sentence unless within the 
     39\1/2\ month period ending on such due date (or such other 
     period as the Secretary prescribes) a physician (as so 
     defined) has certified that such individual meets such 
     requirements.
       ``(B) Individuals with long-term care needs.--An individual 
     is described in this subparagraph if the individual meets any 
     of the following requirements:
       ``(i) The individual is at least 6 years of age and--

       ``(I) is unable to perform (without substantial assistance 
     from another individual) at least 3 activities of daily 
     living (as defined in section 7702B(c)(2)(B)) due to a loss 
     of functional capacity, or
       ``(II) requires substantial supervision to protect such 
     individual from threats to health and safety due to severe 
     cognitive impairment and is unable to perform at least 1 
     activity of daily living (as so defined) or to the extent 
     provided in regulations prescribed by the Secretary (in 
     consultation with the Secretary of Health and Human 
     Services), is unable to engage in age appropriate activities.

       ``(ii) The individual is at least 2 but not 6 years of age 
     and is unable due to a loss of functional capacity to perform 
     (without substantial assistance from another individual) at 
     least 2 of the following activities: eating, transferring, or 
     mobility.
       ``(iii) The individual is under 2 years of age and requires 
     specific durable medical equipment by reason of a severe 
     health condition or requires a skilled practitioner trained 
     to address the individual's condition to be available if the 
     individual's parents or guardians are absent.
       ``(3) Eligible caregiver.--
       ``(A) In general.--A taxpayer shall be treated as an 
     eligible caregiver for any taxable year with respect to the 
     following individuals:
       ``(i) The taxpayer.
       ``(ii) The taxpayer's spouse.
       ``(iii) An individual with respect to whom the taxpayer is 
     allowed a deduction under section 151 for the taxable year.
       ``(iv) An individual who would be described in clause (iii) 
     for the taxable year if section 151(c)(1)(A) were applied by 
     substituting for the exemption amount an amount equal to the 
     sum of the exemption amount, the standard deduction under 
     section 63(c)(2)(C), and any additional standard deduction 
     under section 63(c)(3) which would be applicable to the 
     individual if clause (iii) applied.
       ``(v) An individual who would be described in clause (iii) 
     for the taxable year if--

       ``(I) the requirements of clause (iv) are met with respect 
     to the individual, and
       ``(II) the requirements of subparagraph (B) are met with 
     respect to the individual in lieu of the support test of 
     section 152(a).

       ``(B) Residency test.--The requirements of this 
     subparagraph are met if an individual has as his principal 
     place of abode the home of the taxpayer and--
       ``(i) in the case of an individual who is an ancestor or 
     descendant of the taxpayer or the taxpayer's spouse, is a 
     member of the taxpayer's household for over half the taxable 
     year, or
       ``(ii) in the case of any other individual, is a member of 
     the taxpayer's household for the entire taxable year.
       ``(C) Special rules where more than 1 eligible caregiver.--
       ``(i) In general.--If more than 1 individual is an eligible 
     caregiver with respect to the same applicable individual for 
     taxable years ending with or within the same calendar year, a 
     taxpayer shall be treated as the eligible caregiver if each 
     such individual (other than the taxpayer) files a written 
     declaration (in such form and manner as the Secretary may 
     prescribe) that such individual will not claim such 
     applicable individual for the credit under this section.
       ``(ii) No agreement.--If each individual required under 
     clause (i) to file a written declaration under clause (i) 
     does not do so, the individual with the highest modified 
     adjusted gross income (as defined in section 32(c)(5)) shall 
     be treated as the eligible caregiver.
       ``(iii) Married individuals filing separately.--In the case 
     of married individuals filing separately, the determination 
     under this subparagraph as to whether the husband or wife is 
     the eligible caregiver shall be made under the rules of 
     clause (ii) (whether or not one of them has filed a written 
     declaration under clause (i)).''
       (c) Identification Requirements.--

[[Page S6697]]

       (1) In general.--Section 24(e) is amended by adding at the 
     end the following new sentence: ``No credit shall be allowed 
     under this section to a taxpayer with respect to any 
     applicable individual unless the taxpayer includes the name 
     and taxpayer identification number of such individual, and 
     the identification number of the physician certifying such 
     individual, on the return of tax for the taxable year.''
       (2) Assessment.--Section 6213(g)(2)(I) of such Code is 
     amended--
       (A) by inserting ``or physician identification'' after 
     ``correct TIN'', and
       (B) by striking ``child'' and inserting ``family care''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 202. FULL DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-
                   EMPLOYED INDIVIDUALS.

       (a) In General.--Section 162(l)(1) (relating to special 
     rules for health insurance costs of self-employed 
     individuals) is amended to read as follows:
       ``(1) Allowance of deduction.--In the case of an individual 
     who is an employee within the meaning of section 401(c)(1), 
     there shall be allowed as a deduction under this section an 
     amount equal to the amount paid during the taxable year for 
     insurance which constitutes medical care for the taxpayer, 
     the taxpayer's spouse, and dependents.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.
                                 ______
                                 

               WELLSTONE (AND OTHERS) AMENDMENT NO. 3826

  (Ordered to lie on the table.)
  Mr. WELLSTONE (for himself, Mr. Dodd, Mr. Landrieu, and Mr. Kohl), 
submitted an amendment intended to be proposed by them to the bill, 
H.R. 8, supra; as follows:

       Strike all after the first word and insert:

              1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Estate Tax 
     Relief Act of 2000''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

                       TITLE I--ESTATE TAX RELIEF

     SEC. 101. INCREASE IN AMOUNT OF UNIFIED CREDIT AGAINST ESTATE 
                   AND GIFT TAXES.

       (a) In General.--The table contained in section 2010(c) 
     (relating to applicable credit amount) is amended to read as 
     follows:

``In the case of estates of decedentThe applicable exclusion amount is:
      2001, 2002, 2003, 2004, and 2005......................$1,000,000 
      2006 and 2007.........................................$1,125,000 
      2008..................................................$1,500,000 
      2009 or thereafter..................................$2,000,000.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

     SEC. 102. INCREASE IN QUALIFIED FAMILY-OWNED BUSINESS 
                   INTEREST DEDUCTION AMOUNT.

       (a) In General.--Paragraph (2) of section 2057(a) (relating 
     to family-owned business interests) is amended to read as 
     follows:
       ``(2) Maximum deduction.--
       ``(A) In general.--The deduction allowed by this section 
     shall not exceed the sum of--
       ``(i) the applicable deduction amount, plus
       ``(ii) in the case of a decedent described in subparagraph 
     (C), the applicable unused spousal deduction amount.
       ``(B) Applicable deduction amount.--For purposes of this 
     subparagraph (A)(i), the applicable deduction amount is 
     determined in accordance with the following table:

``In the case of estates of decedentThe applicable deduction amount is:
      2001, 2002, 2003, 2004, and 2005.......................$1,375,000
      2006 and 2007..........................................$1,625,000
      2008...................................................$2,375,000
      2009 or thereafter....................................$3,375,000.
       ``(C) Applicable unused spousal deduction amount.--With 
     respect to a decedent whose immediately predeceased spouse 
     died after December 31, 2000, and the estate of such 
     immediately predeceased spouse met the requirements of 
     subsection (b)(1), the applicable unused spousal deduction 
     amount for such decedent is equal to the excess of--
       ``(i) the applicable deduction amount allowable under this 
     section to the estate of such immediately predeceased spouse, 
     over
       ``(ii) the sum of--

       ``(I) the applicable deduction amount allowed under this 
     section to the estate of such immediately predeceased spouse, 
     plus
       ``(II) the amount of any increase in such estate's unified 
     credit under paragraph (3)(B) which was allowed to such 
     estate.''

       (b) Conforming Amendments.--Section 2057(a)(3)(B) is 
     amended--
       (1) by striking ``$675,000'' both places it appears and 
     inserting ``the applicable deduction amount'', and
       (2) by striking ``$675,000'' in the heading and inserting 
     ``applicable deduction amount''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

                  TITLE II--DEPENDENT CARE TAX CREDIT

     SEC. 201. EXPANSION OF DEPENDENT CARE TAX CREDIT.

       (a) In General.--Paragraph (2) of section 21(a) (relating 
     to expenses for household and dependent care services 
     necessary for gainful employment) is amended to read as 
     follows:
       ``(2) Applicable percentage defined.--For purposes of 
     paragraph (1), the term `applicable percentage' means 50 
     percent (40 percent for taxable years beginning after 
     December 31, 2002, and before January 1, 2005) reduced (but 
     not below 20 percent) by 1 percentage point for each $1,000 
     (or fraction thereof) by which the taxpayer's adjusted gross 
     income for the taxable year exceeds $30,000.''
       (b) Minimum Credit Allowed for Stay-At-Home Parents.--
     Section 21(e) (relating to special rules) is amended by 
     adding at the end the following:
       ``(11) Minimum credit allowed for stay-at-home parents.--
     Notwithstanding subsection (d), in the case of any taxpayer 
     with one or more qualifying individuals described in 
     subsection (b)(1)(A) under the age of 1 at any time during 
     the taxable year, such taxpayer shall be deemed to have 
     employment-related expenses with respect to not more than 2 
     of such qualifying individuals in an amount equal to the 
     greater of--
       ``(A) the amount of employment-related expenses incurred 
     for such qualifying individuals for the taxable year 
     (determined under this section without regard to this 
     paragraph), or
       ``(B) $41.67 for each month in such taxable year during 
     which each such qualifying individual is under the age of 
     1.''.
       (c) Inflation Adjustment of Dollar Amounts.--
       (1) Section 21 is amended by redesignating subsection (f) 
     as subsection (g) and by inserting after subsection (e) the 
     following new subsection:
       ``(f) Inflation Adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2001, the $30,000 
     amount contained in subsection (a), the $2,400 amount in 
     subsection (c), and the $41.67 amount in subsection (e)(11) 
     shall be increased by an amount equal to--
       ``(1) such dollar amount, multiplied by
       ``(2) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 2000' for `calendar year 1992' in subparagraph 
     (B) thereof.
     If the increase determined under the preceding sentence is 
     not a multiple of $50 ($5 in the case of the amount in 
     subsection (e)(11)), such amount shall be rounded to the next 
     lowest multiple thereof.''
       (2) Paragraph (2) of section 21(c) is amended by striking 
     ``$4,800'' and inserting ``twice the dollar amount applicable 
     under paragraph (1)''.
       (3) Paragraph (2) of section 21(d) is amended by striking 
     ``less than--'' and all that follows through the end of the 
     first sentence and inserting ``less than \1/12\ of the amount 
     which applies under subsection (c) to the taxpayer for the 
     taxable year.''
       (d) Credit Allowed Based on Residency in Certain Cases.--
     Subsection (e) of section 21 is amended by adding at the end 
     the following new paragraph:
       ``(12) Credit allowed based on residency in certain 
     cases.--In the case of a taxpayer--
       ``(A) who does not satisfy the household maintenance test 
     of subsection (a) for any period, but
       ``(B) whose principal place of abode for such period is 
     also the principal place of abode of any qualifying 
     individual,
     then such taxpayer shall be treated as satisfying such test 
     for such period but the amount of credit allowable under this 
     section with respect to such individual shall be determined 
     by allowing only \1/12\ of the limitation under subsection 
     (c) for each full month that the requirement of subparagraph 
     (B) is met.''
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 202. DEPENDENT CARE TAX CREDIT MADE REFUNDABLE.

       (a) In General.--Part IV of subchapter A of chapter 1 
     (relating to credits against tax) is amended--
       (1) by redesignating section 35 as section 36, and
       (2) by redesignating section 21 as section 35.
       (b) Advance Payment of Credit.--Chapter 25 (relating to 
     general provisions relating to employment taxes) is amended 
     by inserting after section 3507 the following:

     ``SEC. 3507A. ADVANCE PAYMENT OF DEPENDENT CARE CREDIT.

       ``(a) General Rule.--Except as otherwise provided in this 
     section, every employer making payment of wages with respect 
     to whom a dependent care eligibility certificate is in effect 
     shall, at the time of paying such wages, make an additional 
     payment equal to such employee's dependent care advance 
     amount.
       ``(b) Dependent Care Eligibility Certificate.--For purposes 
     of this title, a dependent care eligibility certificate is a 
     statement furnished by an employee to the employer which--
       ``(1) certifies that the employee will be eligible to 
     receive the credit provided by section 35 for the taxable 
     year,

[[Page S6698]]

       ``(2) certifies that the employee reasonably expects to be 
     an applicable taxpayer for the taxable year,
       ``(3) certifies that the employee does not have a dependent 
     care eligibility certificate in effect for the calendar year 
     with respect to the payment of wages by another employer,
       ``(4) states whether or not the employee's spouse has a 
     dependent care eligibility certificate in effect,
       ``(5) states the number of qualifying individuals in the 
     household maintained by the employee, and
       ``(6) estimates the amount of employment-related expenses 
     for the calendar year.
       ``(c) Dependent Care Advance Amount.--
       ``(1) In general.--For purposes of this title, the term 
     `dependent care advance amount' means, with respect to any 
     payroll period, the amount determined--
       ``(A) on the basis of the employee's wages from the 
     employer for such period,
       ``(B) on the basis of the employee's estimated employment-
     related expenses included in the dependent care eligibility 
     certificate, and
       ``(C) in accordance with tables provided by the Secretary.
       ``(2) Advance amount tables.--The tables referred to in 
     paragraph (1)(C) shall be similar in form to the tables 
     prescribed under section 3402 and, to the maximum extent 
     feasible, shall be coordinated with such tables and the 
     tables prescribed under section 3507(c).
       ``(d) Other Rules.--For purposes of this section, rules 
     similar to the rules of subsections (d) and (e) of section 
     3507 shall apply.
       ``(e) Definitions.--For purposes of this section, terms 
     used in this section which are defined in section 35 shall 
     have the respective meanings given such terms by section 
     35.''.
       (c) Conforming Amendments.--
       (1) Section 35(a)(1), as redesignated by paragraph (1), is 
     amended by striking ``chapter'' and inserting ``subtitle''.
       (2) Section 35(e), as so redesignated and amended by 
     subsection (c), is amended by adding at the end the 
     following:
       ``(13) Coordination with advance payments and minimum 
     tax.--Rules similar to the rules of subsections (g) and (h) 
     of section 32 shall apply for purposes of this section.''.
       (3) Sections 23(f)(1) and 129(a)(2)(C) are each amended by 
     striking ``section 21(e)'' and inserting ``section 35(e)''.
       (4) Section 129(b)(2) is amended by striking ``section 
     21(d)(2)'' and inserting ``section 35(d)(2)''.
       (5) Section 129(e)(1) is amended by striking ``section 
     21(b)(2)'' and inserting ``section 35(b)(2)''.
       (6) Section 213(e) is amended by striking ``section 21'' 
     and inserting ``section 35''.
       (7) Section 995(f)(2)(C) is amended by striking ``and 34'' 
     and inserting ``34, and 35''.
       (8) Section 6211(b)(4)(A) is amended by striking ``and 34'' 
     and inserting ``, 34, and 35''.
       (9) Section 6213(g)(2)(H) is amended by striking ``section 
     21'' and inserting ``section 35''.
       (10) Section 6213(g)(2)(L) is amended by striking ``section 
     21, 24, or 32'' and inserting ``section 24, 32, or 35''.
       (11) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 is amended by striking the item 
     relating to section 35 and inserting the following:

``Sec. 35. Dependent care services.
``Sec. 36. Overpayments of tax.''.
       (12) The table of sections for subpart A of such part IV is 
     amended by striking the item relating to section 21.
       (13) The table of sections for chapter 25 is amended by 
     adding after the item relating to section 3507 the following:

``Sec. 3507A. Advance payment of dependent care credit.''.
       (14) Section 1324(b)(2) of title 31, United States Code, is 
     amended by inserting before the period ``, or enacted by the 
     Death Tax Elimination Act of 2000''.
       (d) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 2002.

                TITLE III--EXPANSION OF ADOPTION CREDIT

     SEC. 301. EXPANSION OF ADOPTION CREDIT.

       (a) Special Needs Adoption.--
       (1) Credit amount.--Paragraph (1) of section 23(a) 
     (relating to allowance of credit) is amended to read as 
     follows:
       ``(1) In general.--In the case of an individual, there 
     shall be allowed as a credit against the tax imposed by this 
     chapter--
       ``(A) in the case of a special needs adoption, $10,000, or
       ``(B) in the case of any other adoption, the amount of the 
     qualified adoption expenses paid or incurred by the 
     taxpayer.''.
       (2) Year credit allowed.--Section 23(a)(2) (relating to 
     year credit allowed) is amended by adding at the end the 
     following new flush sentence:
     ``In the case of a special needs adoption, the credit allowed 
     under paragraph (1) shall be allowed for the taxable year in 
     which the adoption becomes final.''.
       (3) Dollar limitation.--Section 23(b)(1) is amended--
       (A) by striking ``subsection (a)'' and inserting 
     ``subsection (a)(1)(B)'', and
       (B) by striking ``($6,000, in the case of a child with 
     special needs)''.
       (4) Definition of special needs adoption.--Section 23(d) 
     (relating to definitions) is amended by adding at the end the 
     following new paragraph:
       ``(4) Special needs adoption.--The term `special needs 
     adoption' means the final adoption of an individual during 
     the taxable year who is an eligible child and who is a child 
     with special needs.''.
       (5) Definition of child with special needs.--Section 
     23(d)(3) (defining child with special needs) is amended to 
     read as follows:
       ``(3) Child with special needs.--The term `child with 
     special needs' means any child if a State has determined that 
     the child's ethnic background, age, membership in a minority 
     or sibling groups, medical condition or physical impairment, 
     or emotional handicap makes some form of adoption assistance 
     necessary.''.
       (b) Increase in Income Limitations.--Section 23(b)(2) 
     (relating to income limitation) is amended--
       (1) in subparagraph (A)--
       (A) by striking ``$75,000'' and inserting ``$63,550 
     ($105,950 in the case of a joint return)'', and
       (B) by striking ``$40,000'' and inserting ``the applicable 
     amount'', and
       (2) by adding at the end the following new subparagraph:
       ``(C) Applicable amount.--For purposes of subparagraph (A), 
     the applicable amount, with respect to any taxpayer, for the 
     taxable year shall be an amount equal to the excess of--
       ``(i) the maximum taxable income amount for the 31 percent 
     bracket under the table contained in section 1 relating to 
     such taxpayer and in effect for the taxable year, over
       ``(ii) the dollar amount in effect with respect to the 
     taxpayer for the taxable year under subparagraph (A)(i).
       ``(D) Cost-of-living adjustment.--
       ``(i) In general.--In the case of a taxable year beginning 
     after 2001, each dollar amount under subparagraph (A)(i) 
     shall be increased by an amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f )(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2000' 
     for `calendar year 1992' in subparagraph (B) thereof.

       ``(ii) Rounding rules.--If any amount after adjustment 
     under clause (i) is not a multiple of $1,000, such amount 
     shall be rounded to the next lower multiple of $1,000.''.
       (c) Adoption Credit Made Permanent.--Subclauses (A) and (B) 
     of section 23(d)(2) (defining eligible child) are amended to 
     read as follows:
       ``(A) who has not attained age 18, or
       ``(B) who is physically or mentally incapable of caring for 
     himself.''.
       (d) Conforming Amendments.--
       (1) Section 23(a)(2) is amended by striking ``(1)'' and 
     inserting ``(1)(B)''.
       (2) Section 23(b)(3) is amended by striking ``(a)'' each 
     place it appears and inserting ``(a)(1)(B)''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

         TITLE IV--INCENTIVES FOR EMPLOYER-PROVIDED CHILD CARE

     SEC. 401. ALLOWANCE OF CREDIT FOR EMPLOYER EXPENSES FOR CHILD 
                   CARE ASSISTANCE.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business related credits) is amended 
     by adding at the end the following new section:

     ``SEC. 45D. EMPLOYER-PROVIDED CHILD CARE CREDIT.

       ``(a) Allowance of Credit.--For purposes of section 38, the 
     employer-provided child care credit determined under this 
     section for the taxable year is an amount equal to the sum 
     of--
       ``(1) 25 percent of the qualified child care expenditures, 
     and
       ``(2) 10 percent of the qualified child care resource and 
     referral expenditures,
     of the taxpayer for such taxable year.
       ``(b) Dollar Limitation.--The credit allowable under 
     subsection (a) for any taxable year shall not exceed 
     $150,000.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Qualified child care expenditure.--
       ``(A) In general.--The term `qualified child care 
     expenditure' means any amount paid or incurred--
       ``(i) to acquire, construct, rehabilitate, or expand 
     property--

       ``(I) which is to be used as part of an eligible qualified 
     child care facility of the taxpayer,
       ``(II) with respect to which a deduction for depreciation 
     (or amortization in lieu of depreciation) is allowable, and
       ``(III) which does not constitute part of the principal 
     residence (within the meaning of section 121) of the taxpayer 
     or any employee of the taxpayer,

       ``(ii) for the operating costs of an eligible qualified 
     child care facility of the taxpayer, including costs related 
     to the training of employees of the child care facility, to 
     scholarship programs, to the providing of differential 
     compensation to employees based on level of child care 
     training, and to expenses associated with achieving 
     accreditation, or
       ``(iii) under a contract with a qualified child care 
     facility to provide child care services to employees of the 
     taxpayer.
       ``(B) Exclusion for amounts funded by grants, etc.--The 
     term `qualified child care expenditure' shall not include any 
     amount to the extent such amount is funded by any grant, 
     contract, or otherwise by another person (or any governmental 
     entity).

[[Page S6699]]

       ``(C) Nondiscrimination.--The term `qualified child care 
     expenditure' shall not include any amount expended in 
     relation to any child care services unless the providing of 
     such services to employees of the taxpayer does not 
     discriminate in favor of highly compensated employees (within 
     the meaning of section 404(q)).
       ``(2) Qualified child care facility.--
       ``(A) In general.--The term `qualified child care facility' 
     means a facility--
       ``(i) the principal use of which is to provide child care 
     assistance, and
       ``(ii) which meets the requirements of all applicable laws 
     and regulations of the State or local government in which it 
     is located, including, but not limited to, the licensing of 
     the facility as a child care facility.
     Clause (i) shall not apply to a facility which is the 
     principal residence (within the meaning of section 121) of 
     the operator of the facility.
       ``(B) Eligible qualified child care facility.--A qualified 
     child care facility shall be treated as an eligible qualified 
     child care facility with respect to the taxpayer if--
       ``(i) enrollment in the facility is open to employees of 
     the taxpayer during the taxable year,
       ``(ii) the facility is not the principal trade or business 
     of the taxpayer, and
       ``(iii) at least 30 percent of the enrollees of such 
     facility are dependents of employees of the taxpayer.
       ``(C) Application of subparagraph (b).--In the case of a 
     new facility, the facility shall be treated as meeting the 
     requirement of subparagraph (B)(iii) if not later than 2 
     years after placing such facility in service at least 30 
     percent of the enrollees of such facility are dependents of 
     employees of the taxpayer.
       ``(3) Qualified child care resource and referral 
     expenditure.--
       ``(A) In general.--The term `qualified child care resource 
     and referral expenditure' means any amount paid or incurred 
     under a contract to provide child care resource and referral 
     services to employees of the taxpayer.
       ``(B) Exclusion for amounts funded by grants, etc.--The 
     term `qualified child care resource and referral expenditure' 
     shall not include any amount to the extent such amount is 
     funded by any grant, contract, or otherwise by another person 
     (or any governmental entity).
       ``(C) Nondiscrimination.--The term `qualified child care 
     resource and referral expenditure' shall not include any 
     amount expended in relation to any child care resource and 
     referral services unless the providing of such services to 
     employees of the taxpayer does not discriminate in favor of 
     highly compensated employees (within the meaning of section 
     404(q)).
       ``(d) Recapture of Acquisition and Construction Credit.--
       ``(1) In general.--If, as of the close of any taxable year, 
     there is a recapture event with respect to any eligible 
     qualified child care facility of the taxpayer, then the tax 
     of the taxpayer under this chapter for such taxable year 
     shall be increased by an amount equal to the product of--
       ``(A) the applicable recapture percentage, and
       ``(B) the aggregate decrease in the credits allowed under 
     section 38 for all prior taxable years which would have 
     resulted if the qualified child care expenditures of the 
     taxpayer described in subsection (c)(1)(A) with respect to 
     such facility had been zero.
       ``(2) Applicable recapture percentage.--
       ``(A) In general.--For purposes of this subsection, the 
     applicable recapture percentage shall be determined from the 
     following table:

  ``If the recapture event occurThe applicable recapture percentage is:
    Year 1.......................................................100   
    Year 2........................................................80   
    Year 3........................................................60   
    Year 4........................................................40   
    Year 5........................................................20   
    Years 6 and thereafter.........................................0.  
       ``(B) Years.--For purposes of subparagraph (A), year 1 
     shall begin on the first day of the taxable year in which the 
     eligible qualified child care facility is placed in service 
     by the taxpayer.
       ``(3) Recapture event defined.--For purposes of this 
     subsection, the term `recapture event' means--
       ``(A) Cessation of operation.--The cessation of the 
     operation of the facility as an eligible qualified child care 
     facility.
       ``(B) Change in ownership.--
       ``(i) In general.--Except as provided in clause (ii), the 
     disposition of a taxpayer's interest in an eligible qualified 
     child care facility with respect to which the credit 
     described in subsection (a) was allowable.
       ``(ii) Agreement to assume recapture liability.--Clause (i) 
     shall not apply if the person acquiring such interest in the 
     facility agrees in writing to assume the recapture liability 
     of the person disposing of such interest in effect 
     immediately before such disposition. In the event of such an 
     assumption, the person acquiring the interest in the facility 
     shall be treated as the taxpayer for purposes of assessing 
     any recapture liability (computed as if there had been no 
     change in ownership).
       ``(4) Special rules.--
       ``(A) Tax benefit rule.--The tax for the taxable year shall 
     be increased under paragraph (1) only with respect to credits 
     allowed by reason of this section which were used to reduce 
     tax liability. In the case of credits not so used to reduce 
     tax liability, the carryforwards and carrybacks under section 
     39 shall be appropriately adjusted.
       ``(B) No credits against tax.--Any increase in tax under 
     this subsection shall not be treated as a tax imposed by this 
     chapter for purposes of determining the amount of any credit 
     under subpart A, B, or D of this part.
       ``(C) No recapture by reason of casualty loss.--The 
     increase in tax under this subsection shall not apply to a 
     cessation of operation of the facility as a qualified child 
     care facility by reason of a casualty loss to the extent such 
     loss is restored by reconstruction or replacement within a 
     reasonable period established by the Secretary.
       ``(e) Special Rules.--For purposes of this section--
       ``(1) Aggregation rules.--All persons which are treated as 
     a single employer under subsections (a) and (b) of section 52 
     shall be treated as a single taxpayer.
       ``(2) Pass-thru in the case of estates and trusts.--Under 
     regulations prescribed by the Secretary, rules similar to the 
     rules of subsection (d) of section 52 shall apply.
       ``(3) Allocation in the case of partnerships.--In the case 
     of partnerships, the credit shall be allocated among partners 
     under regulations prescribed by the Secretary.
       ``(f) No Double Benefit.--
       ``(1) Reduction in basis.--For purposes of this subtitle--
       ``(A) In general.--If a credit is determined under this 
     section with respect to any property by reason of 
     expenditures described in subsection (c)(1)(A), the basis of 
     such property shall be reduced by the amount of the credit so 
     determined.
       ``(B) Certain dispositions.--If during any taxable year 
     there is a recapture amount determined with respect to any 
     property the basis of which was reduced under subparagraph 
     (A), the basis of such property (immediately before the event 
     resulting in such recapture) shall be increased by an amount 
     equal to such recapture amount. For purposes of the preceding 
     sentence, the term `recapture amount' means any increase in 
     tax (or adjustment in carrybacks or carryovers) determined 
     under subsection (d).
       ``(2) Other deductions and credits.--No deduction or credit 
     shall be allowed under any other provision of this chapter 
     with respect to the amount of the credit determined under 
     this section.''
       (b) Conforming Amendments.--
       (1) Section 38(b) is amended--
       (A) by striking out ``plus'' at the end of paragraph (11),
       (B) by striking out the period at the end of paragraph 
     (12), and inserting a comma and ``plus'', and
       (C) by adding at the end the following new paragraph:
       ``(13) the employer-provided child care credit determined 
     under section 45D.''.
       (2) 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:

``Sec. 45D. Employer-provided child care credit.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.
                                 ______
                                 

                ABRAHAM (AND OTHERS) AMENDMENT NO. 3827

  Mr. ABRAHAM (for himself, Mr. Fitzgerald, Mrs. Hutchison, and Mr. 
Grams) proposed an amendment to the bill, H.R. 8, supra; as follows:

       At the end, add the following:

            TITLE VI--TEMPORARY FEDERAL FUELS TAX REDUCTION

     SEC. 601. SHORT TITLE.

       This title may be cited as the ``Motorists Relief Act of 
     2000''.

     SEC. 602. TEMPORARY REDUCTION IN HIGHWAY FUEL TAXES ON 
                   GASOLINE, DIESEL FUEL, KEROSENE, AND SPECIAL 
                   FUELS TO ZERO.

       (a) In General.--Section 4081 of the Internal Revenue Code 
     of 1986 (relating to imposition of tax on gasoline, diesel 
     fuel, and kerosene) is amended by adding at the end the 
     following new subsection:
       ``(f) Temporary Reduction in Taxes on Gasoline, Diesel 
     Fuel, Kerosene, and Special Fuels.--
       ``(1) Holding harmless highway trust fund and 
     apportionments.--In determining the amounts to be 
     appropriated or transferred to the Highway Trust Fund under 
     section 9503 an amount equal to the reduction in revenues to 
     the Treasury by reason of a reduction in any rate of tax 
     under paragraph (3) shall be treated for purposes of chapter 
     98 as taxes received in the Treasury at such rate. Amounts 
     appropriated or transferred by reason of the preceding 
     sentence shall be transferred from the general fund at such 
     times and in such manner as to replicate to the extent 
     possible the transfers which would have occurred to the 
     Highway Trust Fund had this subsection not been enacted. 
     Nothing in this subsection may be construed as authorizing a 
     reduction in the apportionments of such Trust Fund to the 
     States as a result of the temporary reduction in rates of tax 
     under paragraph (3), except as otherwise provided by law.
       ``(2) Protecting Social Security Trust Fund.--If the 
     Secretary, after consultation with the Director of the Office 
     of Management and Budget, and based on the most recent 
     available estimate of the Federal on-

[[Page S6700]]

     budget surplus for fiscal years 2000 and 2001, determines 
     that such reduction would result in an aggregate reduction in 
     revenues to the Treasury exceeding such surplus during the 
     remainder of the applicable period, the Secretary shall 
     modify such reduction such that each rate of tax referred to 
     in paragraph (4) is reduced in a pro rata manner and such 
     aggregate reduction does not exceed such surplus.
       ``(3) Temporary reduction in rates of certain taxes.--
     During the applicable period, each rate of tax referred to in 
     paragraph (4) shall be reduced to zero.
       ``(4) Rates of tax.--The rates of tax referred to in this 
     paragraph are the rates of tax otherwise applicable under--
       ``(A) clauses (i) and (iii) of subsection (a)(2)(A) 
     (relating to gasoline, diesel fuel, and kerosene), and
       ``(B) paragraphs (1), (2), and (3) of section 4041(a) 
     (relating to diesel fuel and special fuels) and section 
     4041(m) (relating to certain alcohol fuels) with respect to 
     fuel sold for use or used in a highway vehicle.
       ``(5) Special Reduction Rules.--In the case of a reduction 
     under paragraph (3)--
       ``(A) subsection (c) shall be applied without regard to 
     paragraph (6) thereof,
       ``(B) section 40(e)(1) shall be applied without regard to 
     subparagraph (B) thereof,
       ``(C) section 4041(d)(1) shall be applied by disregarding 
     `if tax is imposed by subsection (a)(1) or (2) on such sale 
     or use', and
       ``(D) section 6427(b) shall be applied without regard to 
     paragraph (2) thereof.
       ``(6) Applicable period.--For purposes of this subsection, 
     the term `applicable period' means the 150-day period 
     beginning after the date of the enactment of the Motorists 
     Relief Act of 2000.
       ``(7) Preemption of state law.--No State tax may be 
     increased by reason of any suspension of tax under this 
     subsection.
       ``(8) Return Requirements Continue in Effect.--Requirements 
     for filing returns relating to any tax reduced under this 
     subsection, and penalties for failing to file such returns, 
     shall continue in effect as if this subsection had not been 
     enacted. Such returns shall identify the amount of tax that 
     would have been paid but for the enactment of this 
     subsection.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 603. FLOOR STOCK REFUNDS.

       (a) In General.--If--
       (1) before the tax reduction date, tax has been imposed 
     under section 4041 or 4081 of the Internal Revenue Code of 
     1986 on any liquid, and
       (2) on such date such liquid is held by a dealer and has 
     not been used and is intended for sale,

     there shall be credited or refunded (without interest) to the 
     person who paid such tax (hereafter in this section referred 
     to as the ``taxpayer'') an amount equal to the excess of the 
     tax paid by the taxpayer over the amount of such tax which 
     would be imposed on such liquid had the taxable event 
     occurred on the tax reduction date.
       (b) Time for Filing Claims.--No credit or refund shall be 
     allowed or made under this section unless--
       (1) claim therefor is filed with the Secretary of the 
     Treasury before the date which is 6 months after the tax 
     reduction date, and
       (2) in any case where liquid is held by a dealer (other 
     than the taxpayer) on the tax reduction date--
       (A) the dealer submits a request for refund or credit to 
     the taxpayer before the date which is 3 months after the tax 
     reduction date, and
       (B) the taxpayer files with the Secretary--
       (i) a certification that the taxpayer has given, subsequent 
     to receipt of the request for refund or credit from such 
     dealer under subparagraph (A), a credit to such dealer with 
     respect to such liquid against the dealer's first purchase of 
     liquid from the taxpayer, and
       (ii) a certification by such dealer that such dealer has 
     given, subsequent to the tax suspension date, a credit to a 
     succeeding dealer (if any) with respect to such liquid 
     against the succeeding dealer's first purchase of liquid from 
     such dealer.
       (c) Reasonableness of Claims Certified.--Any certification 
     made under subsection (b)(1)(B) shall include an additional 
     certification that the claim for credit was reasonably based 
     on the taxpayer's or dealer's past business relationship with 
     the succeeding dealer.
       (d) Definitions.--For purposes of this section--
       (1) the terms ``dealer'' and ``held by a dealer'' have the 
     respective meanings given to such terms by section 6412 of 
     such Code; except that the term ``dealer'' includes a 
     producer, and
       (2) the term ``tax reduction date'' means the day after the 
     date of the enactment of this Act.
       (e) Certain Rules To Apply.--Rules similar to the rules of 
     subsections (b) and (c) of section 6412 of such Code shall 
     apply for purposes of this section.

     SEC. 604. FLOOR STOCKS TAX.

       (a) Imposition of Tax.--In the case of any liquid on which 
     tax would have been imposed under section 4041 or 4081 of the 
     Internal Revenue Code of 1986 during the applicable period 
     but for the amendments made by this Act, and which is held on 
     the floor stocks tax date by any person, there is hereby 
     imposed a floor stocks tax equal to the excess of the tax 
     which would be imposed on such liquid had the taxable event 
     occurred on such date over the tax previously paid (if any) 
     on such liquid.
       (b) Liability for Tax and Method of Payment.--
       (1) Liability for tax.--A person holding a liquid on the 
     floor stocks tax date to which the tax imposed by subsection 
     (a) applies shall be liable for such tax.
       (2) Method of payment.--The tax imposed by subsection (a) 
     shall be paid in such manner as the Secretary of the Treasury 
     shall prescribe.
       (3) Time for payment.--The tax imposed by subsection (a) 
     shall be paid on or before the date which is 45 days after 
     the floor stocks tax date.
       (c) Definitions.--For purposes of this section--
       (1) Held by a person.--A liquid shall be considered as 
     ``held by a person'' if title thereto has passed to such 
     person (whether or not delivery to the person has been made).
       (2) Floor stocks tax date.--The term ``floor stocks tax 
     date'' means the day after the date which is 150 days after 
     the date of the enactment of this Act.
       (3) Applicable period.--The term ``applicable period'' 
     means the 150-day period beginning after the date of the 
     enactment of this Act.
       (d) Exception for Exempt Uses.--The tax imposed by 
     subsection (a) shall not apply to any liquid held by any 
     person exclusively for any use to the extent a credit or 
     refund of the tax referred to in section 4081(f)(4) of the 
     Internal Revenue Code of 1986 (as added by section 602) is 
     allowable for such use.
       (e) Exception for Certain Amounts of Fuel.--
       (1) In general.--No tax shall be imposed by subsection (a) 
     on any liquid held on the floor stocks tax date by any person 
     if the aggregate amount of such liquid held by such person on 
     such date does not exceed 2,000 gallons. The preceding 
     sentence shall apply only if such person submits to the 
     Secretary (at the time and in the manner required by the 
     Secretary) such information as the Secretary shall require 
     for purposes of this paragraph.
       (2) Exempt fuel.--For purposes of paragraph (1), there 
     shall not be taken into account any liquid held by any person 
     which is exempt from the tax imposed by subsection (a) by 
     reason of subsection (d).
       (3) Controlled groups.--For purposes of this subsection--
       (A) Corporations.--
       (i) In general.--All persons treated as a controlled group 
     shall be treated as 1 person.
       (ii) Controlled group.--The term ``controlled group'' has 
     the meaning given to such term by subsection (a) of section 
     1563 of such Code; except that for such purposes the phrase 
     ``more than 50 percent'' shall be substituted for the phrase 
     ``at least 80 percent'' each place it appears in such 
     subsection.
       (B) Nonincorporated persons under common control.--Under 
     regulations prescribed by the Secretary, principles similar 
     to the principles of subparagraph (A) shall apply to a group 
     of persons under common control where 1 or more of such 
     persons is not a corporation.
       (g) Other Law Applicable.--All provisions of law, including 
     penalties, applicable with respect to the taxes imposed by 
     section 4041 or 4081 of such Code shall, insofar as 
     applicable and not inconsistent with the provisions of this 
     subsection, apply with respect to the floor stock taxes 
     imposed by subsection (a) to the same extent as if such taxes 
     were imposed by such section 4041 or 4081.

     SEC. 605. BENEFITS OF TAX REDUCTION SHOULD BE PASSED ON TO 
                   CONSUMERS.

       (a) Passthrough to Consumers.--
       (1) Sense of congress.--It is the sense of Congress that--
       (A) consumers immediately receive the benefit of the 
     reduction in taxes under this Act, and
       (B) transportation motor fuels producers and other dealers 
     take such actions as necessary to reduce transportation motor 
     fuels prices to reflect such reduction, including immediate 
     credits to customer accounts representing tax credits or 
     refunds under 604.
       (2) Study.--
       (A) In general.--The Comptroller General of the United 
     States shall conduct a study of the reduction of taxes under 
     this Act to determine whether there has been a passthrough of 
     such reduction.
       (B) Report.--Not later than 90 days after the date of the 
     enactment of this Act, the Comptroller General of the United 
     States shall report to the Committee on Finance of the Senate 
     and the Committee on Ways and Means of the House of 
     Representatives the results of the study conducted under 
     subparagraph (A).
                                 ______
                                 

                BINGAMAN (AND OTHERS) AMENDMENT NO. 3828

  Mr. BINGAMAN (for himself, Mr. Kennedy, Mrs. Murray, Mr. Dodd, Mr. 
Kerry, Mr. Schumer, and Mr. Dorgan) proposed an amendment to the bill, 
H.R. 8, supra; as follows:

       Strike all after the first word and insert:

              1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Estate Tax 
     Relief Act of 2000''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a

[[Page S6701]]

     section or other provision of the Internal Revenue Code of 
     1986.

     SEC. 2. INCREASE IN AMOUNT OF UNIFIED CREDIT AGAINST ESTATE 
                   AND GIFT TAXES.

       (a) In General.--The table contained in section 2010(c) 
     (relating to applicable credit amount) is amended to read as 
     follows:

``In the case of estates of decedentThe applicable exclusion amount is:
      2001, 2002, 2003, 2004, and 2005......................$1,000,000 
      2006 and 2007.........................................$1,125,000 
      2008..................................................$1,500,000 
      2009 or thereafter..................................$2,000,000.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

     SEC. 3. INCREASE IN QUALIFIED FAMILY-OWNED BUSINESS INTEREST 
                   DEDUCTION AMOUNT.

       (a) In General.--Paragraph (2) of section 2057(a) (relating 
     to family-owned business interests) is amended to read as 
     follows:
       ``(2) Maximum deduction.--
       ``(A) In general.--The deduction allowed by this section 
     shall not exceed the sum of--
       ``(i) the applicable deduction amount, plus
       ``(ii) in the case of a decedent described in subparagraph 
     (C), the applicable unused spousal deduction amount.
       ``(B) Applicable deduction amount.--For purposes of this 
     subparagraph (A)(i), the applicable deduction amount is 
     determined in accordance with the following table:

``In the case of estates of decedentThe applicable deduction amount is:
      2001, 2002, 2003, 2004, and 2005.......................$1,375,000
      2006 and 2007..........................................$1,625,000
      2008...................................................$2,375,000
      2009 or thereafter....................................$3,375,000.
       ``(C) Applicable unused spousal deduction amount.--With 
     respect to a decedent whose immediately predeceased spouse 
     died after December 31, 2000, and the estate of such 
     immediately predeceased spouse met the requirements of 
     subsection (b)(1), the applicable unused spousal deduction 
     amount for such decedent is equal to the excess of--
       ``(i) the applicable deduction amount allowable under this 
     section to the estate of such immediately predeceased spouse, 
     over
       ``(ii) the sum of--

       ``(I) the applicable deduction amount allowed under this 
     section to the estate of such immediately predeceased spouse, 
     plus
       ``(II) the amount of any increase in such estate's unified 
     credit under paragraph (3)(B) which was allowed to such 
     estate.''

       (b) Conforming Amendments.--Section 2057(a)(3)(B) is 
     amended--
       (1) by striking ``$675,000'' both places it appears and 
     inserting ``the applicable deduction amount'', and
       (2) by striking ``$675,000'' in the heading and inserting 
     ``applicable deduction amount''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

     SEC. 4. APPROPRIATIONS.

       There are appropriated, out of any money in the Treasury 
     not otherwise appropriated, the following amounts:
       (1) $1,750,000,000 to carry out class size reduction 
     activities in the same manner as such activities are carried 
     out under section 310 of the Department of Education 
     Appropriations Act, 2000.
       (2) $2,200,000,000 to carry out title II of the Elementary 
     and Secondary Education Act of 1965 and title II of the 
     Higher Education Act of 1965.
       (3) $250,000,000 to carry out sections 1116 and 1117 of the 
     Elementary and Secondary Education Act of 1965.
       (4) $1,000,000,000 to carry out part I of title X of the 
     Elementary and Secondary Education Act of 1965.
       (5) $325,000,000 to carry out chapter 2 of subpart 2 of 
     part A of title IV of the Higher Education Act of 1965.
       (6) $1,000,000,000 to carry out part B of the Individuals 
     with Disabilities Education Act.
       (7) $3,000,000,000 to enable the Secretary of Education to 
     carry out a College Completion Grant Program.
       (8) $150,000,000 to carry out part D of title I of the 
     Elementary and Secondary Education Act of 1965.
       (9) $1,300,000,000 to carry out title XII of the Elementary 
     and Secondary Education Act of 1965.
                                 ______
                                 

                  ROTH (AND OTHERS) AMENDMENT NO. 3829

  Mr. ROTH (for himself, Mr. Breaux, Mr. Nickles, Mr. Robb, Mr. 
Murkowski, Ms. Collins, and Mr. Baucus) proposed an amendment to the 
bill, H.R. 8, supra; as follows:

       At the end, add the following:

 TITLE VI--REPEAL OF EXCISE TAX ON TELEPHONE AND OTHER COMMUNICATIONS 
                                SERVICES

     SEC. 601. REPEAL OF EXCISE TAX ON TELEPHONE AND OTHER 
                   COMMUNICATIONS SERVICES.

       (a) In General.--Chapter 33 (relating to facilities and 
     services) is amended by striking subchapter B.
       (b) Conforming Amendments.--
       (1) Section 4293 is amended by striking ``chapter 32 (other 
     than the taxes imposed by sections 4064 and 4121) and 
     subchapter B of chapter 33,'' and inserting ``and chapter 32 
     (other than the taxes imposed by sections 4064 and 4121),''.
       (2)(A) Paragraph (1) of section 6302(e) is amended by 
     striking ``section 4251 or''.
       (B) Paragraph (2) of section 6302(e) is amended by striking 
     ``imposed by--'' and all that follows through ``with respect 
     to'' and inserting ``imposed by section 4261 or 4271 with 
     respect to''.
       (C) The subsection heading for section 6302(e) is amended 
     by striking ``Communications Services and''.
       (3) Section 6415 is amended by striking ``4251, 4261, or 
     4271'' each place it appears and inserting ``4261 or 4271''.
       (4) Paragraph (2) of section 7871(a) is amended by 
     inserting ``or'' at the end of subparagraph (B), by striking 
     subparagraph (C), and by redesignating subparagraph (D) as 
     subparagraph (C).
       (5) The table of subchapters for chapter 33 is amended by 
     striking the item relating to subchapter B.
       (c) Study Regarding Continuing Economic Benefit of 
     Repeal.--
       (1) Study.--The Comptroller General of the United States, 
     after consultation with the Chairman of the Federal 
     Communications Commission, shall study and identify--
       (A) the extent to which the benefits of the repeal of the 
     excise tax on telephone and other communication services 
     under subsection (a) are passed through to individual and 
     business consumers, and
       (B) any actions taken by communication service providers or 
     others that diminish such benefits, including increases in 
     any regulated or unregulated communication service provider 
     charges or increases in other Federal or State fees or taxes 
     related to such service occurring since the date of such 
     repeal.
       (2) Report.--By not later than September 1, 2001, the 
     Comptroller General of the United States shall submit a 
     report regarding the study described in paragraph (1) to the 
     Committee on Ways and Means of the House of Representatives 
     and the Committee on Finance of the Senate.
       (d) Effective Date.--The amendments made by this section 
     shall apply to amounts paid pursuant to bills first rendered 
     after August 31, 2000.
                                 ______
                                 

                     PROVIDING MARRIAGE TAX RELIEF

                                 ______
                                 

                     TORRICELLI AMENDMENT NO. 3830

  (Ordered to lie on the table.)
       Mr. TORRICELLI submitted an amendment intended to be 
     proposed by him to the bill (S. 2839) to amend the Internal 
     Revenue Code of 1986 to provide marriage tax relief by 
     adjusting the standard deduction, 15-percent and 28-percent 
     rate brackets, and earned income credit, and for other 
     purposes; as follows:

       At the end, add the following:

     SEC. ____. MODIFICATIONS TO DISASTER CASUALTY LOSS DEDUCTION.

       (a) Lower Adjusted Gross Income Threshold.--Paragraph (2) 
     of section 165(h) of the Internal Revenue Code of 1986 
     (relating to treatment of casualty gains and losses) is 
     amended--
       (1) by striking subparagraph (A) and inserting the 
     following:
       ``(A) In general.--If the personal casualty losses for any 
     taxable year exceed the personal casualty gains for such 
     taxable year, such losses shall be allowed for the taxable 
     year only to the extent of the sum of--
       ``(i) the amount of the personal casualty gains for the 
     taxable year, plus
       ``(ii) so much of such excess attributable to losses 
     described in subsection (i) as exceeds 5 percent of the 
     adjusted gross income of the individual (determined without 
     regard to any deduction allowable under subsection (c)(3))'', 
     plus
       ``(iii) so much of such excess attributable to losses not 
     described in subsection (i) as exceeds 10 percent of the 
     adjusted gross income of the individual.
     For purposes of this subparagraph, personal casualty losses 
     attributable to losses not described in subsection (i) shall 
     be considered before such losses attributable to losses 
     described in subsection (i).'', and
       (2) by striking ``10 percent'' in the heading and inserting 
     ``percentage''.
       (b) Above-The-Line Deduction.--Section 62(a) of the 
     Internal Revenue Code of 1986 (defining adjusted gross 
     income) is amended by inserting after paragraph (17) the 
     following:
       ``(18) Certain disaster losses.--The deduction allowed by 
     section 165(c)(3) to the extent attributable to losses 
     described in section 165(i).''
       (c) Election To Take Disaster Loss Deduction for Preceding 
     or Succeeding 2 Years.--Paragraph (1) of section 165(i) of 
     the Internal Revenue Code of 1986 (relating to disaster 
     losses) is amended--
       (1) by inserting ``or succeeding'' after ``preceding'', and
       (2) by inserting ``or succeeding'' after ``preceding'' in 
     the heading.
       (d) Elimination of Marriage Penalty for Individuals 
     Suffering Casualty Losses.--Subparagraph (B) of section 
     165(h)(4) of the Internal Revenue Code of 1986 (relating to 
     special rules) is amended to read as follows:
       ``(B) Joint returns.--For purposes of this subsection--

[[Page S6702]]

       ``(i) In general.--Except as provided in clause (ii), a 
     husband and wife making a joint return for the taxable year 
     shall be treated as 1 individual.
       ``(ii) Election.--A husband and wife may elect to have each 
     be treated as a single individual for purposes of applying 
     this section. If an election is made under this clause, the 
     adjusted gross income of each individual shall be determined 
     on the basis of the items of income and deduction properly 
     allocable to the individual, as determined under rules 
     prescribed by the Secretary.''
       (e) Effective Date.--The amendments made by this section 
     shall apply to losses sustained in taxable years beginning 
     after December 31, 2000.
                                 ______
                                 

                     TORRICELLI AMENDMENT NO. 3834

  (Ordered to lie on the table.)
  Mr. TORRICELLI submitted an amendment intended to be proposed by him 
to the bill, S. 2839, supra; as follows:

       At the end of the bill, add the following:

     SEC. 7. INCREASED LEAD POISONING SCREENINGS AND TREATMENTS 
                   UNDER THE MEDICAID PROGRAM.

       (a) Reporting Requirement.--Section 1902(a)(43)(D) of the 
     Social Security Act (42 U.S.C. 1396a(a)(43)(D)) is amended--
       (1) in clause (iii), by striking ``and'' at the end;
       (2) in clause (iv), by striking the semicolon and inserting 
     ``, and''; and
       (3) by adding at the end the following:
       ``(v) the number of children who are under the age of 3 and 
     enrolled in the State plan and the number of those children 
     who have received a blood lead screening test;''.
       (b) Mandatory Screening Requirements.--Section 1902(a) of 
     the Social Security Act (42 U.S.C. 1396a(a)) is amended--
       (1) in paragraph (64), by striking ``and'' at the end;
       (2) in paragraph (65), by striking the period and inserting 
     ``; and''; and
       (3) by inserting after paragraph (65) the following:
       ``(66) provide that each contract entered into between the 
     State and an entity (including a health insuring organization 
     and a medicaid managed care organization) that is responsible 
     for the provision (directly or through arrangements with 
     providers of services) of medical assistance under the State 
     plan shall provide for--
       ``(A) compliance with mandatory blood lead screening 
     requirements that are consistent with prevailing guidelines 
     of the Centers for Disease Control and Prevention for such 
     screening; and
       ``(B) coverage of qualified lead treatment services 
     described in section 1905(x) including diagnosis, treatment, 
     and follow-up furnished for children with elevated blood lead 
     levels in accordance with prevailing guidelines of the 
     Centers for Disease Control and Prevention.''.
       (c) Reimbursement for Treatment of Children With Elevated 
     Blood Lead Levels.--Section 1905 of the Social Security Act 
     (42 U.S.C. 1396d) is amended--
       (1) in subsection (a)--
       (A) in paragraph (26), by striking ``and'' at the end;
       (B) by redesignating paragraph (27) as paragraph (28); and
       (C) by inserting after paragraph (26) the following:
       ``(27) qualified lead treatment services (as defined in 
     subsection (x)); and''; and
       (2) by adding at the end the following:
       ``(x)(1) In this subsection:
       ``(A) The term `qualified lead treatment services' means 
     the following:
       ``(i) Lead-related medical management, as defined in 
     subparagraph (B).
       ``(ii) Lead-related case management, as defined in 
     subparagraph (C), for a child described in paragraph (2).
       ``(iii) Lead-related anticipatory guidance, as defined in 
     subparagraph (D), provided as part of--
       ``(I) prenatal services;
       ``(II) early and periodic screening, diagnostic, and 
     treatment services (EPSDT) services described in subsection 
     (r) and available under subsection (a)(4)(B) (including as 
     described and available under implementing regulations and 
     guidelines) to individuals enrolled in the State plan under 
     this title who have not attained age 21; and
       ``(III) routine pediatric preventive services.
       ``(B) The term `lead-related medical management' means the 
     provision and coordination of the diagnostic, treatment, and 
     follow-up services provided for a child diagnosed with an 
     elevated blood lead level (EBLL) that includes--
       ``(i) a clinical assessment, including a physical 
     examination and medically indicated tests (in addition to 
     diagnostic blood lead level tests) and other diagnostic 
     procedures to determine the child's developmental, 
     neurological, nutritional, and hearing status, and the 
     extent, duration, and possible source of the child's exposure 
     to lead;
       ``(ii) repeat blood lead level tests furnished when 
     medically indicated for purposes of monitoring the blood lead 
     concentrations in the child;
       ``(iii) pharmaceutical services, including chelation agents 
     and other drugs, vitamins, and minerals prescribed for 
     treatment of an EBLL;
       ``(iv) medically indicated inpatient services including 
     pediatric intensive care and emergency services;
       ``(v) medical nutrition therapy when medically indicated by 
     a nutritional assessment, that shall be furnished by a 
     dietitian or other nutrition specialist who is authorized to 
     provide such services under State law;
       ``(vi) referral--
       ``(I) when indicated by a nutritional assessment, to the 
     State agency or contractor administering the program of 
     assistance under the special supplemental food program for 
     women, infants and children (WIC) under section 17 of the 
     Child Nutrition Act of 1966 (42 U.S.C. 1786) and coordination 
     of clinical management with that program; and
       ``(II) when indicated by a clinical or developmental 
     assessment, to the State agency responsible for early 
     intervention and special education programs under the 
     Individuals with Disabilities Education Act (20 U.S.C. 1400 
     et seq.); and
       ``(vii) environmental investigation, as defined in 
     subparagraph (E).
       ``(C) The term `lead-related case management' means the 
     coordination, provision, and oversight of the nonmedical 
     services for a child with an EBLL necessary to achieve 
     reductions in the child's blood lead levels, improve the 
     child's nutrition, and secure needed resources and services 
     to protect the child by a case manager trained to develop and 
     oversee a multi-disciplinary plan for a child with an EBLL or 
     by a childhood lead poisoning prevention program, as defined 
     by the Secretary. Such services include--
       ``(i) assessing the child's environmental, nutritional, 
     housing, family, and insurance status and identifying the 
     family's immediate needs to reduce lead exposure through an 
     initial home visit;
       ``(ii) developing a multidisciplinary case management plan 
     of action that addresses the provision and coordination of 
     each of the following classes of services as appropriate--
       ``(I) whether or not such services are covered under the 
     State plan under this title;
       ``(II) lead-related medical management of an EBLL 
     (including environmental investigation);
       ``(III) nutrition services;
       ``(IV) family lead education;
       ``(V) housing;
       ``(VI) early intervention services;
       ``(VII) social services; and
       ``(VIII) other services or programs that are indicated by 
     the child's clinical status and environmental, social, 
     educational, housing, and other needs;
       ``(iii) assisting the child (and the child's family) in 
     gaining access to covered and non-covered services in the 
     case management plan developed under clause (ii);
       ``(iv) providing technical assistance to the provider that 
     is furnishing lead-related medical management for the child; 
     and
       ``(v) implementation and coordination of the case 
     management plan developed under clause (ii) through home 
     visits, family lead education, and referrals.
       ``(D) The term `lead-related anticipatory guidance' means 
     education and information for families of children and 
     pregnant women enrolled in the State plan under this title 
     about prevention of childhood lead poisoning that addresses 
     the following topics:
       ``(i) The importance of lead screening tests and where and 
     how to obtain such tests.
       ``(ii) Identifying lead hazards in the home.
       ``(iii) Specialized cleaning, home maintenance, 
     nutritional, and other measures to minimize the risk of 
     childhood lead poisoning.
       ``(iv) The rights of families under the Residential Lead-
     Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851 et 
     seq.).
       ``(E) The term `environmental investigation' means the 
     process of determining the source of a child's exposure to 
     lead by an individual that is certified or registered to 
     perform such investigations under State or local law, 
     including the collection and analysis of information and 
     environmental samples from a child's living environment. For 
     purposes of this subparagraph, a child's living environment 
     includes the child's residence or residences, residences of 
     frequently visited caretakers, relatives, and playmates, and 
     the child's day care site. Such investigations shall be 
     conducted in accordance with the standards of the Department 
     of Housing and Urban Development for the evaluation and 
     control of lead-based paint hazards in housing and in 
     compliance with State and local health agency standards for 
     environmental investigation and reporting.
       ``(2) For purposes of paragraph (1)(A)(ii), a child 
     described in this paragraph is a child who--
       ``(A) has attained 6 months but has not attained 6 years of 
     age; and
       ``(B) has been identified as having a blood lead level that 
     equals or exceeds 20 micrograms per deciliter (or after 2 
     consecutive tests, equals or exceeds 15 micrograms per 
     deciliter, or the applicable number of micrograms designated 
     for such tests under prevailing guidelines of the Centers for 
     Disease Control and Prevention).''.
       (d) Enhanced Match for Data Communications System.--Section 
     1903(a)(3) of the Social Security Act (42 U.S.C. 1396b(a)(3)) 
     is amended--
       (1) in subparagraph (D), by striking ``plus'' at the end 
     and inserting ``and''; and
       (2) by inserting after subparagraph (D), the following:
       ``(E)(i) 90 percent of so much of the sums expended during 
     such quarter as are attributable to the design, development, 
     or installation of an information retrieval system that may 
     be easily accessed and used by other federally-funded means-
     tested public benefit programs to determine whether a child 
     is enrolled in the State plan under this

[[Page S6703]]

     title and whether an enrolled child has received mandatory 
     early and periodic screening, diagnostic, and treatment 
     services, as described in section 1905(r); and
       ``(ii) 75 percent of so much of the sums expended during 
     such quarter as are attributable to the operation of a system 
     (whether such system is operated directly by the State or by 
     another person under a contract with the State) of the type 
     described in clause (i); plus''.
       (e) Report.--The Secretary of Health and Human Services, 
     acting through the Administrator of the Health Care Financing 
     Administration, annually shall report to Congress on the 
     number of children enrolled in the medicaid program under 
     title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) 
     who have received a blood lead screening test during the 
     prior fiscal year, noting the percentage that such children 
     represent as compared to all children enrolled in that 
     program.
       (f) Rule of Construction.--Nothing in this section or in 
     any amendment made by this section shall be construed as 
     prohibiting the Secretary of Health and Human Services or the 
     State agency administering the State plan under title XIX of 
     the Social Security Act (42 U.S.C. 1396 et seq.) from using 
     funds provided under title XIX of that Act to reimburse a 
     State or entity for expenditures for medically necessary 
     activities in the home of a lead-poisoned child to prevent 
     additional exposure to lead, including specialized cleaning 
     of lead-contaminated dust, emergency relocation, safe repair 
     of peeling paint, dust control, and other activities that 
     reduce lead exposure.
                                 ______
                                 

                  TORRICELLI AMENDMENTS NOS. 3832-3833

  (Ordered to lie on the table.)
  Mr. TORRICELLI submitted two amendments intended to be proposed by 
him to the bill, S. 2839, supra; as follows:

                           Amendment No. 3832

       At the end of the bill, add the following:

     SEC. 7. WAIVER OF 24-MONTH WAITING PERIOD FOR MEDICARE 
                   COVERAGE OF INDIVIDUALS DISABLED WITH 
                   AMYOTROPHIC LATERAL SCLEROSIS (ALS).

       (a) In General.--Section 226 of the Social Security Act (42 
     U.S.C. 426) is amended--
       (1) by redesignating subsection (h) as subsection (j) and 
     by moving such subsection to the end of the section; and
       (2) by inserting after subsection (g) the following:
       ``(h) For purposes of applying this section in the case of 
     an individual medically determined to have amyotrophic 
     lateral sclerosis (ALS), the following special rules apply:
       ``(1) Subsection (b) shall be applied as if there were no 
     requirement for any entitlement to benefits, or status, for a 
     period longer than 1 month.
       ``(2) The entitlement under such subsection shall begin 
     with the first month (rather than twenty-fifth month) of 
     entitlement or status.
       ``(3) Subsection (f) shall not be applied.''.
       (b) Conforming Amendment.--Section 1837 of such Act (42 
     U.S.C. 1395p) is amended by adding at the end the following:
       ``(j) In applying this section in the case of an individual 
     who is entitled to benefits under part A pursuant to the 
     operation of section 226(h), the following special rules 
     apply:
       ``(1) The initial enrollment period under subsection (d) 
     shall begin on the first day of the first month in which the 
     individual satisfies the requirement of section 1836(1).
       ``(2) In applying subsection (g)(1), the initial enrollment 
     period shall begin on the first day of the first month of 
     entitlement to disability insurance benefits referred to in 
     such subsection.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to benefits for months beginning after the date 
     of the enactment of this Act.
                                 ______
                                 

                       DEATH TAX ELIMINATION ACT

                                 ______
                                 

                GRASSLEY (AND OTHERS) AMENDMENT NO. 3834

  Mr. GRASSLEY (for himself, Mr. Craig, Mr. Burns, Mr. Lugar, Mr. 
Brownback, Mr. Grams, and Mr. Harkin) proposed an amendment to the 
bill, H.R. 8, supra; as follows:

                           Amendment No. 3833

       At the end, add the following:

     SEC. ____. ELIMINATION OF MARRIAGE PENALTY FOR INDIVIDUALS 
                   SUFFERING CASUALTY LOSSES.

       (a) In General.--Subparagraph (B) of section 165(h)(4) of 
     the Internal Revenue Code of 1986 (relating to special rules) 
     is amended to read as follows:
       ``(B) Joint returns.--For purposes of this subsection--
       ``(i) In general.--Except as provided in clause (ii), a 
     husband and wife making a joint return for the taxable year 
     shall be treated as 1 individual.
       ``(ii) Election.--A husband and wife may elect to have each 
     be treated as a single individual for purposes of applying 
     this section. If an election is made under this clause, the 
     adjusted gross income of each individual shall be determined 
     on the basis of the items of income and deduction properly 
     allocable to the individual, as determined under rules 
     prescribed by the Secretary.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to losses sustained in taxable years beginning 
     after December 31, 2000.
       At the end of the bill, add the following:

                    TITLE VI--TAX RELIEF FOR FARMERS

     SEC. 601. FARM, FISHING, AND RANCH RISK MANAGEMENT ACCOUNTS.

       (a) In General.--Subpart C of part II of subchapter E of 
     chapter 1 (relating to taxable year for which deductions 
     taken) is amended by inserting after section 468B the 
     following:

     ``SEC. 468C. FARM, FISHING, AND RANCH RISK MANAGEMENT 
                   ACCOUNTS.

       ``(a) Deduction Allowed.--In the case of an individual 
     engaged in an eligible farming business or commercial 
     fishing, there shall be allowed as a deduction for any 
     taxable year the amount paid in cash by the taxpayer during 
     the taxable year to a Farm, Fishing, and Ranch Risk 
     Management Account (hereinafter referred to as the `FFARRM 
     Account').
       ``(b) Limitation.--
       ``(1) Contributions.--The amount which a taxpayer may pay 
     into the FFARRM Account for any taxable year shall not exceed 
     20 percent of so much of the taxable income of the taxpayer 
     (determined without regard to this section) which is 
     attributable (determined in the manner applicable under 
     section 1301) to any eligible farming business or commercial 
     fishing.
       ``(2) Distributions.--Distributions from a FFARRM Account 
     may not be used to purchase, lease, or finance any new 
     fishing vessel, add capacity to any fishery, or otherwise 
     contribute to the overcapitalization of any fishery. The 
     Secretary of Commerce shall implement regulations to enforce 
     this paragraph.
       ``(c) Eligible Businesses.--For purposes of this section--
       ``(1) Eligible farming business.--The term `eligible 
     farming business' means any farming business (as defined in 
     section 263A(e)(4)) which is not a passive activity (within 
     the meaning of section 469(c)) of the taxpayer.
       ``(2) Commercial Fishing.--The term `commercial fishing' 
     has the meaning given such term by section (3) of the 
     Magnuson-Stevens Fishery Conservation and Management Act (16 
     U.S.C. 1802) but only if such fishing is not a passive 
     activity (within the meaning of section 469(c)) of the 
     taxpayer.
       ``(d) FFARRM Account.--For purposes of this section--
       ``(1) In general.--The term `FFARRM Account' means a trust 
     created or organized in the United States for the exclusive 
     benefit of the taxpayer, but only if the written governing 
     instrument creating the trust meets the following 
     requirements:
       ``(A) No contribution will be accepted for any taxable year 
     in excess of the amount allowed as a deduction under 
     subsection (a) for such year.
       ``(B) The trustee is a bank (as defined in section 408(n)) 
     or another person who demonstrates to the satisfaction of the 
     Secretary that the manner in which such person will 
     administer the trust will be consistent with the requirements 
     of this section.
       ``(C) The assets of the trust consist entirely of cash or 
     of obligations which have adequate stated interest (as 
     defined in section 1274(c)(2)) and which pay such interest 
     not less often than annually.
       ``(D) All income of the trust is distributed currently to 
     the grantor.
       ``(E) The assets of the trust will not be commingled with 
     other property except in a common trust fund or common 
     investment fund.
       ``(2) Account taxed as grantor trust.--The grantor of a 
     FFARRM Account shall be treated for purposes of this title as 
     the owner of such Account and shall be subject to tax thereon 
     in accordance with subpart E of part I of subchapter J of 
     this chapter (relating to grantors and others treated as 
     substantial owners).
       ``(e) Inclusion of Amounts Distributed.--
       ``(1) In general.--Except as provided in paragraph (2), 
     there shall be includible in the gross income of the taxpayer 
     for any taxable year--
       ``(A) any amount distributed from a FFARRM Account of the 
     taxpayer during such taxable year, and
       ``(B) any deemed distribution under--
       ``(i) subsection (f )(1) (relating to deposits not 
     distributed within 5 years),
       ``(ii) subsection (f )(2) (relating to cessation in 
     eligible farming business), and
       ``(iii) subparagraph (A) or (B) of subsection (f )(3) 
     (relating to prohibited transactions and pledging account as 
     security).
       ``(2) Exceptions.--Paragraph (1)(A) shall not apply to--
       ``(A) any distribution to the extent attributable to income 
     of the Account, and
       ``(B) the distribution of any contribution paid during a 
     taxable year to a FFARRM Account to the extent that such 
     contribution exceeds the limitation applicable under 
     subsection (b) if requirements similar to the requirements of 
     section 408(d)(4) are met.

     For purposes of subparagraph (A), distributions shall be 
     treated as first attributable to income and then to other 
     amounts.
       ``(f ) Special Rules.--
       ``(1) Tax on deposits in account which are not distributed 
     within 5 years.--
       ``(A) In general.--If, at the close of any taxable year, 
     there is a nonqualified balance in any FFARRM Account--

[[Page S6704]]

       ``(i) there shall be deemed distributed from such Account 
     during such taxable year an amount equal to such balance, and
       ``(ii) the taxpayer's tax imposed by this chapter for such 
     taxable year shall be increased by 10 percent of such deemed 
     distribution.

     The preceding sentence shall not apply if an amount equal to 
     such nonqualified balance is distributed from such Account to 
     the taxpayer before the due date (including extensions) for 
     filing the return of tax imposed by this chapter for such 
     year (or, if earlier, the date the taxpayer files such return 
     for such year).
       ``(B) Nonqualified balance.--For purposes of subparagraph 
     (A), the term `nonqualified balance' means any balance in the 
     Account on the last day of the taxable year which is 
     attributable to amounts deposited in such Account before the 
     4th preceding taxable year.
       ``(C) Ordering rule.--For purposes of this paragraph, 
     distributions from a FFARRM Account (other than distributions 
     of current income) shall be treated as made from deposits in 
     the order in which such deposits were made, beginning with 
     the earliest deposits.
       ``(2) Cessation in eligible business.--At the close of the 
     first disqualification period after a period for which the 
     taxpayer was engaged in an eligible farming business or 
     commercial fishing, there shall be deemed distributed from 
     the FFARRM Account of the taxpayer an amount equal to the 
     balance in such Account (if any) at the close of such 
     disqualification period. For purposes of the preceding 
     sentence, the term `disqualification period' means any period 
     of 2 consecutive taxable years for which the taxpayer is not 
     engaged in an eligible farming business or commercial 
     fishing.
       ``(3) Certain rules to apply.--Rules similar to the 
     following rules shall apply for purposes of this section:
       ``(A) Section 220(f )(8) (relating to treatment on death).
       ``(B) Section 408(e)(2) (relating to loss of exemption of 
     account where individual engages in prohibited transaction).
       ``(C) Section 408(e)(4) (relating to effect of pledging 
     account as security).
       ``(D) Section 408(g) (relating to community property laws).
       ``(E) Section 408(h) (relating to custodial accounts).
       ``(4) Time when payments deemed made.--For purposes of this 
     section, a taxpayer shall be deemed to have made a payment to 
     a FFARRM Account on the last day of a taxable year if such 
     payment is made on account of such taxable year and is made 
     on or before the due date (without regard to extensions) for 
     filing the return of tax for such taxable year.
       ``(5) Individual.--For purposes of this section, the term 
     `individual' shall not include an estate or trust.
       ``(6) Deduction not allowed for self-employment tax.--The 
     deduction allowable by reason of subsection (a) shall not be 
     taken into account in determining an individual's net 
     earnings from self-employment (within the meaning of section 
     1402(a)) for purposes of chapter 2.
       ``(g) Reports.--The trustee of a FFARRM Account shall make 
     such reports regarding such Account to the Secretary and to 
     the person for whose benefit the Account is maintained with 
     respect to contributions, distributions, and such other 
     matters as the Secretary may require under regulations. The 
     reports required by this subsection shall be filed at such 
     time and in such manner and furnished to such persons at such 
     time and in such manner as may be required by such 
     regulations.''.
       (b) Tax on Excess Contributions.--
       (1) Subsection (a) of section 4973 (relating to tax on 
     excess contributions to certain tax-favored accounts and 
     annuities) is amended by striking ``or'' at the end of 
     paragraph (3), by redesignating paragraph (4) as paragraph 
     (5), and by inserting after paragraph (3) the following:
       ``(4) a FFARRM Account (within the meaning of section 
     468C(d)), or''.
       (2) Section 4973 is amended by adding at the end the 
     following:
       ``(g) Excess Contributions to FFARRM Accounts.--For 
     purposes of this section, in the case of a FFARRM Account 
     (within the meaning of section 468C(d)), the term `excess 
     contributions' means the amount by which the amount 
     contributed for the taxable year to the Account exceeds the 
     amount which may be contributed to the Account under section 
     468C(b) for such taxable year. For purposes of this 
     subsection, any contribution which is distributed out of the 
     FFARRM Account in a distribution to which section 
     468C(e)(2)(B) applies shall be treated as an amount not 
     contributed.''.
       (3) The section heading for section 4973 is amended to read 
     as follows:

     ``SEC. 4973. EXCESS CONTRIBUTIONS TO CERTAIN ACCOUNTS, 
                   ANNUITIES, ETC.''.

       (4) The table of sections for chapter 43 is amended by 
     striking the item relating to section 4973 and inserting the 
     following:

``Sec. 4973. Excess contributions to certain accounts, annuities, 
              etc.''.

       (c) Tax on Prohibited Transactions.--
       (1) Subsection (c) of section 4975 (relating to tax on 
     prohibited transactions) is amended by adding at the end the 
     following:
       ``(6) Special rule for ffarrm accounts.--A person for whose 
     benefit a FFARRM Account (within the meaning of section 
     468C(d)) is established shall be exempt from the tax imposed 
     by this section with respect to any transaction concerning 
     such account (which would otherwise be taxable under this 
     section) if, with respect to such transaction, the account 
     ceases to be a FFARRM Account by reason of the application of 
     section 468C(f )(3)(A) to such account.''.
       (2) Paragraph (1) of section 4975(e) is amended by 
     redesignating subparagraphs (E) and (F) as subparagraphs (F) 
     and (G), respectively, and by inserting after subparagraph 
     (D) the following:
       ``(E) a FFARRM Account described in section 468C(d),''.
       (d) Failure To Provide Reports on FFARRM Accounts.--
     Paragraph (2) of section 6693(a) (relating to failure to 
     provide reports on certain tax-favored accounts or annuities) 
     is amended by redesignating subparagraphs (C) and (D) as 
     subparagraphs (D) and (E), respectively, and by inserting 
     after subparagraph (B) the following:
       ``(C) section 468C(g) (relating to FFARRM Accounts),''.
       (e) Clerical Amendment.--The table of sections for subpart 
     C of part II of subchapter E of chapter 1 is amended by 
     inserting after the item relating to section 468B the 
     following:

``Sec. 468C. Farm, Fishing and Ranch Risk Management Accounts.''.

       (f ) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 602. WRITTEN AGREEMENT RELATING TO EXCLUSION OF CERTAIN 
                   FARM RENTAL INCOME FROM NET EARNINGS FROM SELF-
                   EMPLOYMENT.

       (a) Internal Revenue Code.--Section 1402(a)(1)(A) (relating 
     to net earnings from self-employment) is amended by striking 
     ``an arrangement'' and inserting ``a lease agreement''.
       (b) Social Security Act.--Section 211(a)(1)(A) of the 
     Social Security Act is amended by striking ``an arrangement'' 
     and inserting ``a lease agreement''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 603. TREATMENT OF CONSERVATION RESERVE PROGRAM PAYMENTS 
                   AS RENTALS FROM REAL ESTATE.

       (a) In General.--Section 1402(a)(1) (defining net earnings 
     from self-employment) is amended by inserting ``and including 
     payments under section 1233(2) of the Food Security Act of 
     1985 (16 U.S.C. 3833(2))'' after ``crop shares''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to payments made before, on, or after the date of 
     the enactment of this Act.

     SEC. 604. EXEMPTION OF AGRICULTURAL BONDS FROM STATE VOLUME 
                   CAP.

       (a) In General.--Section 146(g) (relating to exception for 
     certain bonds) is amended by striking ``and'' at the end of 
     paragraph (3), by striking the period at the end of paragraph 
     (4) and inserting ``, and'', and by inserting after paragraph 
     (4) the following:
       ``(5) any qualified small issue bond described in section 
     144(a)(12)(B)(ii).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of enactment of 
     this Act.

     SEC. 605. MODIFICATIONS TO SECTION 512(B)(13).

       (a) In General.--Paragraph (13) of section 512(b) is 
     amended by redesignating subparagraph (E) as subparagraph (F) 
     and by inserting after subparagraph (D) the following new 
     paragraph:
       ``(E) Paragraph to apply only to excess payments.--
       ``(i) In general.--Subparagraph (A) shall apply only to the 
     portion of a specified payment received by the controlling 
     organization that exceeds the amount which would have been 
     paid if such payment met the requirements prescribed under 
     section 482.
       ``(ii) Addition to tax for valuation misstatements.--The 
     tax imposed by this chapter on the controlling organization 
     shall be increased by an amount equal to 20 percent of such 
     excess.''.
       (b) Effective Date.--
       (1) In general.--The amendment made by this section shall 
     apply to payments received or accrued after December 31, 
     2000.
       (2) Payments subject to binding contract transition rule.--
     If the amendments made by section 1041 of the Taxpayer Relief 
     Act of 1997 do not apply to any amount received or accrued 
     after the date of the enactment of this Act under any 
     contract described in subsection (b)(2) of such section, such 
     amendments also shall not apply to amounts received or 
     accrued under such contract before January 1, 2001.

     SEC. 606. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD 
                   INVENTORY.

       (a) In General.--Subsection (e) of section 170 (relating to 
     certain contributions of ordinary income and capital gain 
     property) is amended by adding at the end the following new 
     paragraph:
       ``(7) Special rule for contributions of food inventory.--
     For purposes of this section--
       ``(A) Contributions by non-corporate taxpayers.--In the 
     case of a charitable contribution of food, paragraph (3)(A) 
     shall be applied without regard to whether or not the 
     contribution is made by a corporation.
       ``(B) Limit on reduction.--In the case of a charitable 
     contribution of food which is a qualified contribution 
     (within the meaning of paragraph (3)(A), as modified by 
     subparagraph (A) of this paragraph)--

[[Page S6705]]

       ``(i) paragraph (3)(B) shall not apply, and
       ``(ii) the reduction under paragraph (1)(A) for such 
     contribution shall be no greater than the amount (if any) by 
     which the amount of such contribution exceeds twice the basis 
     of such food.
       ``(C) Determination of basis.--For purposes of this 
     paragraph, if a taxpayer uses the cash method of accounting, 
     the basis of any qualified contribution of such taxpayer 
     shall be deemed to be 50 percent of the fair market value of 
     such contribution.
       ``(D) Determination of fair market value.--In the case of a 
     charitable contribution of food which is a qualified 
     contribution (within the meaning of paragraph (3), as 
     modified by subparagraphs (A) and (B) of this paragraph) and 
     which, solely by reason of internal standards of the 
     taxpayer, lack of market, or similar circumstances, or which 
     is produced by the taxpayer exclusively for the purposes of 
     transferring the food to an organization described in 
     paragraph (3)(A), cannot or will not be sold, the fair market 
     value of such contribution shall be determined--
       ``(i) without regard to such internal standards, such lack 
     of market, such circumstances, or such exclusive purpose, and
       ``(ii) if applicable, by taking into account the price at 
     which the same or similar food items are sold by the taxpayer 
     at the time of the contribution (or, if not so sold at such 
     time, in the recent past).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 607. INCOME AVERAGING FOR FARMERS AND FISHERMEN NOT TO 
                   INCREASE ALTERNATIVE MINIMUM TAX LIABILITY.

       (a) In General.--Section 55(c) (defining regular tax) is 
     amended by redesignating paragraph (2) as paragraph (3) and 
     by inserting after paragraph (1) the following:
       ``(2) Coordination with income averaging for farmers and 
     fishermen.--Solely for purposes of this section, section 1301 
     (relating to averaging of farm and fishing income) shall not 
     apply in computing the regular tax.''.
       (b) Allowing Income Averaging for Fishermen.--
       (1) In general.--Section 1301(a) is amended by striking 
     ``farming business'' and inserting ``farming business or 
     fishing business,''.
       (2) Definition of elected farm income.--
       (A) In general.--Clause (i) of section 1301(b)(1)(A) is 
     amended by inserting ``or fishing business'' before the 
     semicolon.
       (B) Conforming amendment.--Subparagraph (B) of section 
     1301(b)(1) is amended by inserting ``or fishing business'' 
     after ``farming business'' both places it occurs.
       (3) Definition of fishing business.--Section 1301(b) is 
     amended by adding at the end the following new paragraph:
       ``(4) Fishing business.--The term `fishing business' means 
     the conduct of commercial fishing as defined in section 3 of 
     the Magnuson-Stevens Fishery Conservation and Management Act 
     (16 U.S.C. 1802).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 608. REPEAL OF MODIFICATION OF INSTALLMENT METHOD.

       (a) In General.--Subsection (a) of section 536 of the 
     Ticket to Work and Work Incentives Improvement Act of 1999 
     (relating to modification of installment method and repeal of 
     installment method for accrual method taxpayers) is repealed 
     effective with respect to sales and other dispositions 
     occurring on or after the date of the enactment of such Act.
       (b) Applicability.--The Internal Revenue Code of 1986 shall 
     be applied and administered as if such subsection (and the 
     amendments made by such subsection) had not been enacted.

     SEC. 609. COOPERATIVE MARKETING INCLUDES VALUE-ADDED 
                   PROCESSING THROUGH ANIMALS.

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

     SEC. 610. DECLARATORY JUDGMENT RELIEF FOR SECTION 521 
                   COOPERATIVES.

       (a) In General.--Section 7428(a)(1) (relating to 
     declaratory judgments of tax exempt organizations) is amended 
     by striking ``or'' at the end of subparagraph (B) and by 
     adding at the end the following:
       ``(D) with respect to the initial qualification or 
     continuing qualification of a cooperative as described in 
     section 521(b) which is exempt from tax under section 521(a), 
     or''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to pleadings filed after the date of 
     the enactment of this Act but only with respect to 
     determinations (or requests for determinations) made after 
     January 1, 2000.

     SEC. 611. SMALL ETHANOL PRODUCER CREDIT.

       (a) Allocation of Alcohol Fuels Credit to Patrons of a 
     Cooperative.--Section 40(g) (relating to alcohol used as 
     fuel) is amended by adding at the end the following:
       ``(6) Allocation of small ethanol producer credit to 
     patrons of cooperative.--
       ``(A) Election to allocate.--
       ``(i) In general.--In the case of a cooperative 
     organization described in section 1381(a), any portion of the 
     credit determined under subsection (a)(3) for the taxable 
     year may, at the election of the organization, be apportioned 
     pro rata among patrons of the organization on the basis of 
     the quantity or value of business done with or for such 
     patrons for the taxable year.
       ``(ii) Form and effect of election.--An election under 
     clause (i) for any taxable year shall be made on a timely 
     filed return for such year. Such election, once made, shall 
     be irrevocable for such taxable year.
       ``(iii) Special rule for 1998 and 1999.--Notwithstanding 
     clause (ii), an election for any taxable year ending prior to 
     the date of the enactment of the Death Tax Elimination Act of 
     2000 may be made at any time before the expiration of the 3-
     year period beginning on the last date prescribed by law for 
     filing the return of the taxpayer for such taxable year 
     (determined without regard to extensions) by filing an 
     amended return for such year.
       ``(B) Treatment of organizations and patrons.--The amount 
     of the credit apportioned to patrons under subparagraph (A)--
       ``(i) shall not be included in the amount determined under 
     subsection (a) with respect to the organization for the 
     taxable year,
       ``(ii) shall be included in the amount determined under 
     subsection (a) for the taxable year of each patron for which 
     the patronage dividends for the taxable year described in 
     subparagraph (A) are included in gross income, and
       ``(iii) shall be included in gross income of such patrons 
     for the taxable year in the manner and to the extent provided 
     in section 87.
       ``(C) Special rules for decrease in credits for taxable 
     year.--If the amount of the credit of a cooperative 
     organization determined under subsection (a)(3) for a taxable 
     year is less than the amount of such credit shown on the 
     return of the cooperative organization for such year, an 
     amount equal to the excess of--
       ``(i) such reduction, over
       ``(ii) the amount not apportioned to such patrons under 
     subparagraph (A) for the taxable year,

     shall be treated as an increase in tax imposed by this 
     chapter on the organization. Such increase shall not be 
     treated as tax imposed by this chapter for purposes of 
     determining the amount of any credit under this subpart or 
     subpart A, B, E, or G.''.
       (b) Improvements to Small Ethanol Producer Credit.--
       (1) Small ethanol producer credit not a passive activity 
     credit.--Clause (i) of section 469(d)(2)(A) is amended by 
     striking ``subpart D'' and inserting ``subpart D, other than 
     section 40(a)(3),''.
       (2) Allowing credit against minimum tax.--
       (A) In general.--Subsection (c) of section 38 (relating to 
     limitation based on amount of tax) is amended by 
     redesignating paragraph (3) as paragraph (4) and by inserting 
     after paragraph (2) the following new paragraph:
       ``(3) Special rules for small ethanol producer credit.--
       ``(A) In general.--In the case of the small ethanol 
     producer credit--
       ``(i) this section and section 39 shall be applied 
     separately with respect to the credit, and
       ``(ii) in applying paragraph (1) to the credit--

       ``(I) subparagraphs (A) and (B) thereof shall not apply, 
     and
       ``(II) the limitation under paragraph (1) (as modified by 
     subclause (I)) shall be reduced by the credit allowed under 
     subsection (a) for the taxable year (other than the small 
     ethanol producer credit).

       ``(B) Small ethanol producer credit.--For purposes of this 
     subsection, the term `small ethanol producer credit' means 
     the credit allowable under subsection (a) by reason of 
     section 40(a)(3).''.
       (B) Conforming amendment.--Subclause (II) of section 
     38(c)(2)(A)(ii) is amended by inserting ``or the small 
     ethanol producer credit'' after ``employment credit''.
       (3) Small ethanol producer credit not added back to income 
     under section 87.--Section 87 (relating to income inclusion 
     of alcohol fuel credit) is amended to read as follows:

     ``SEC. 87. ALCOHOL FUEL CREDIT.

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

[[Page S6706]]

     by subsections (a) and (c), and the amendments made by 
     paragraphs (2) and (3) of subsection (b), shall apply to 
     taxable years beginning after December 31, 1997.
                                 ______
                                 

                 BAUCUS (AND OTHERS) AMENDMENT NO. 3835

  Mr. BAUCUS (for himself, Mr. Kerrey, Mr. Dorgan, and Mr. Robb) 
proposed an amendment to the bill, H.R. 8, supra; as follows:

       Strike all after the first word and insert:

              1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Estate Tax 
     Relief Act of 2000''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

                       TITLE I--ESTATE TAX RELIEF

     SEC. 101. INCREASE IN AMOUNT OF UNIFIED CREDIT AGAINST ESTATE 
                   AND GIFT TAXES.

       (a) In General.--The table contained in section 2010(c) 
     (relating to applicable credit amount) is amended to read as 
     follows:

``In the case of estates of decedentThe applicable exclusion amount is:
      2001, 2002, 2003, 2004, and 2005......................$1,000,000 
      2006 and 2007.........................................$1,125,000 
      2008..................................................$1,500,000 
      2009 or thereafter..................................$2,000,000.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

     SEC. 102. INCREASE IN QUALIFIED FAMILY-OWNED BUSINESS 
                   INTEREST DEDUCTION AMOUNT.

       (a) In General.--Paragraph (2) of section 2057(a) (relating 
     to family-owned business interests) is amended to read as 
     follows:
       ``(2) Maximum deduction.--
       ``(A) In general.--The deduction allowed by this section 
     shall not exceed the sum of--
       ``(i) the applicable deduction amount, plus
       ``(ii) in the case of a decedent described in subparagraph 
     (C), the applicable unused spousal deduction amount.
       ``(B) Applicable deduction amount.--For purposes of this 
     subparagraph (A)(i), the applicable deduction amount is 
     determined in accordance with the following table:

``In the case of estates of decedentThe applicable deduction amount is:
      2001, 2002, 2003, 2004, and 2005.......................$1,375,000
      2006 and 2007..........................................$1,625,000
      2008...................................................$2,375,000
      2009 or thereafter....................................$3,375,000.
       ``(C) Applicable unused spousal deduction amount.--With 
     respect to a decedent whose immediately predeceased spouse 
     died after December 31, 2000, and the estate of such 
     immediately predeceased spouse met the requirements of 
     subsection (b)(1), the applicable unused spousal deduction 
     amount for such decedent is equal to the excess of--
       ``(i) the applicable deduction amount allowable under this 
     section to the estate of such immediately predeceased spouse, 
     over
       ``(ii) the sum of--

       ``(I) the applicable deduction amount allowed under this 
     section to the estate of such immediately predeceased spouse, 
     plus
       ``(II) the amount of any increase in such estate's unified 
     credit under paragraph (3)(B) which was allowed to such 
     estate.''

       (b) Conforming Amendments.--Section 2057(a)(3)(B) is 
     amended--
       (1) by striking ``$675,000'' both places it appears and 
     inserting ``the applicable deduction amount'', and
       (2) by striking ``$675,000'' in the heading and inserting 
     ``applicable deduction amount''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

                      TITLE II--PENSION INCENTIVES

     SEC. 201. REFUNDABLE CREDIT TO CERTAIN INDIVIDUALS FOR 
                   ELECTIVE DEFERRALS AND IRA CONTRIBUTIONS.

       (a) In General.--Subpart C of part IV of subchapter A of 
     chapter 1 (relating to refundable credits) is amended by 
     redesignating section 35 as section 36 and by inserting after 
     section 34 the following new section:

     ``SEC. 35. ELECTIVE DEFERRALS AND IRA CONTRIBUTIONS BY 
                   CERTAIN INDIVIDUALS.

       ``(a) Allowance of Credit.--In the case of an eligible 
     individual, there shall be allowed as a credit against the 
     tax imposed by this subtitle for the taxable year an amount 
     equal to the applicable percentage of so much of the 
     qualified retirement savings contributions of the eligible 
     individual for the taxable year as do not exceed $1,000.
       ``(b) Applicable Percentage.--For purposes of this section, 
     the applicable percentage is the percentage determined in 
     accordance with the following table:

------------------------------------------------------------------------
                   Adjusted Gross Income
------------------------------------------------------------
    Joint return          Head of a        All other cases    Applicable
--------------------      household     --------------------  percentage
                    --------------------
   Over    Not over    Over    Not over    Over    Not over
------------------------------------------------------------------------
      $0    $25,000        $0   $18,750        $0   $12,500         50
  25,000     35,000    18,750    26,250    12,500    17,500         45
  35,000     45,000    26,250    33,750    17,500    22,500         35
  45,000     55,000    33,750    41,250    22,500    27,500         25
  55,000     75,000    41,250    56,250    27,500    37,500         15
  75,000     80,000    56,250    60,000    37,500    40,000          5
  80,000   ........    60,000  ........    40,000  ........          0
------------------------------------------------------------------------


       ``(c) Eligible Individual.--For purposes of this section--
       ``(1) In general.--The term `eligible individual' means any 
     individual if--
       ``(A) such individual has attained the age of 18, but has 
     not attained the age of 61, as of the close of the taxable 
     year, and
       ``(B) the compensation (as defined in section 219(f)(1)) 
     includible in the gross income of the individual (or, in the 
     case of a joint return, of the taxpayer) for such taxable 
     year is at least $5,000.
       ``(2) Dependents and full-time students not eligible.--The 
     term `eligible individual' shall not include--
       ``(A) any individual with respect to whom a deduction under 
     section 151 is allowable to another taxpayer for a taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins, and
       ``(B) any individual who is a student (as defined in 
     section 151(c)(4)).
       ``(3) Individuals receiving certain retirement 
     distributions not eligible.--
       ``(A) In general.--The term `eligible individual' shall not 
     include, with respect to a taxable year, any individual who 
     received during the testing period--
       ``(i) any distribution from a qualified retirement plan (as 
     defined in section 4974(c)), or from an eligible deferred 
     compensation plan (as defined in section 457(b)), which is 
     includible in gross income, or
       ``(ii) any distribution from a Roth IRA which is not a 
     qualified rollover contribution (as defined in section 
     408A(e)) to a Roth IRA.
       ``(B) Testing period.--For purposes of subparagraph (A), 
     the testing period, with respect to a taxable year, is the 
     period which includes--
       ``(i) such taxable year,
       ``(ii) the 2 preceding taxable years, and
       ``(iii) the period after such taxable year and before the 
     due date (without extensions) for filing the return of tax 
     for such taxable year.
       ``(C) Excepted distributions.--There shall not be taken 
     into account under subparagraph (A)--
       ``(i) any distribution referred to in section 72(p), 
     401(k)(8), 401(m)(6), 402(g)(2), 404(k), or 408(d)(4),
       ``(ii) any distribution to which section 408A(d)(3) 
     applies, and
       ``(iii) any distribution before January 1, 2002.
       ``(D) Treatment of distributions received by spouse of 
     individual.--For purposes of determining whether an 
     individual is an eligible individual for any taxable year, 
     any distribution received by the spouse of such individual 
     shall be treated as received by such individual if such 
     individual and spouse file a joint return for such taxable 
     year and for the taxable year during which the spouse 
     receives the distribution.
       ``(d) Qualified Retirement Savings Contributions.--For 
     purposes of this section, the term `qualified retirement 
     savings contributions' means the sum of--
       ``(1) the amount of the qualified retirement contributions 
     (as defined in section 219(e)) for the benefit of the 
     eligible individual,
       ``(2) the amount of the elective deferrals (as defined in 
     section 414(u)(2)(C)) of such individual, and
       ``(3) the amount of voluntary employee contributions by 
     such individual to any qualified retirement plan (as defined 
     in section 4974(c)).
       ``(e) Investment in the Contract.--Notwithstanding any 
     other provision of law, a qualified retirement savings 
     contribution shall not fail to be included in determining the 
     investment in the contract for purposes of section 72 by 
     reason of the credit under this section.''
       (b) Conforming Amendments.--
       (1) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``, or 
     from section 35 of such Code''.
       (2) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 is amended by striking the last 
     item and inserting the following new items:

``Sec. 35. Elective deferrals and IRA contributions by certain 
              individuals.
``Sec. 36. Overpayments of tax.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 202. CREDIT FOR SMALL EMPLOYER PENSION PLAN 
                   CONTRIBUTIONS AND START-UP COSTS.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business related credits) is amended 
     by adding at the end the following new section:

     ``SEC. 45D. SMALL EMPLOYER PENSION PLAN CREDIT.

       ``(a) General Rule.--For purposes of section 38, in the 
     case of an eligible employer, the small employer pension plan 
     credit determined under this section for any taxable year is 
     an amount equal to the sum of--
       ``(1) 25 percent of the qualified employer contributions of 
     the taxpayer for the taxable year, and
       ``(2) the qualified start-up costs paid or incurred by the 
     taxpayer during the taxable year.
       ``(b) Limitations.--

[[Page S6707]]

       ``(1) Limits on contributions.--For purposes of subsection 
     (a)(1)--
       ``(A) qualified employer contributions may only be taken 
     into account for each of the first 3 taxable years ending 
     after the date the employer establishes the qualified 
     employer plan to which the contribution is made, and
       ``(B) the amount of the qualified employer contributions 
     taken into account with respect to any qualified employee for 
     any such taxable year shall not exceed 3 percent of the 
     compensation (as defined in section 414(s)) of the qualified 
     employee for such taxable year.
       ``(2) Limits on start-up costs.--The amount of the credit 
     determined under subsection (a)(2) for any taxable year shall 
     not exceed--
       ``(A) $500 for each of the first, second, and third taxable 
     years ending after the date the employer established the 
     qualified employer plan to which such costs relate, and
       ``(B) zero for each taxable year thereafter.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Eligible employer.--
       ``(A) In general.--The term `eligible employer' means, with 
     respect to any year, an employer which has no more than--
       ``(i) for purposes of subsection (a)(1), 25 employees, and
       ``(ii) for purposes of subsection (a)(2), 100 employees,
     who received at least $5,000 of compensation from the 
     employer for the preceding year.
       ``(B) 2-year grace period.--An eligible employer who 
     establishes and maintains a qualified employer plan for 1 or 
     more years and who fails to be an eligible employer for any 
     subsequent year shall be treated as an eligible employer for 
     the 2 years following the last year the employer was an 
     eligible employer.
       ``(C) Requirement for new qualified employer plans.--Such 
     term shall not include an employer if the employer (or any 
     predecessor employer) established or maintained a qualified 
     employer plan with respect to which contributions were made, 
     or benefits were accrued, for service in the 3 taxable years 
     ending prior to the first taxable year in which the credit 
     under this section is allowed.
       ``(2) Qualified employer contributions.--
       ``(A) In general.--The term `qualified employer 
     contributions' means, with respect to any taxable year, any 
     employer contributions made on behalf of a qualified employee 
     to a qualified employer plan for a plan year ending with or 
     within the taxable year.
       ``(B) Employer contributions.--The term `employer 
     contributions' shall not include any elective deferral 
     (within the meaning of section 402(g)(3)).
       ``(3) Qualified employee.--The term `qualified employee' 
     means an individual who--
       ``(A) is eligible to participate in the qualified employer 
     plan to which the employer contributions are made, and
       ``(B) is not a highly compensated employee (within the 
     meaning of section 414(q)) for the year for which the 
     contribution is made.
       ``(4) Qualified start-up costs.--The term `qualified start-
     up costs' means any ordinary and necessary expenses of an 
     eligible employer which are paid or incurred in connection 
     with--
       ``(A) the establishment or maintenance of a qualified 
     employer plan in which qualified employees are eligible to 
     participate, and
       ``(B) providing educational information to employees 
     regarding participation in such plan and the benefits of 
     establishing an investment plan.
       ``(5) Qualified employer plan.--The term `qualified 
     employer plan' has the meaning given such term in section 
     4972(d).
       ``(d) Special Rules.--
       ``(1) Aggregation rules.--All persons treated as a single 
     employer under subsection (a) or (b) of section 52, or 
     subsection (n) or (o) of section 414, shall be treated as one 
     person. All qualified employer plans of an employer shall be 
     treated as 1 qualified employer plan.
       ``(2) Disallowance of deduction.--No deduction shall be 
     allowable under this chapter for any qualified start-up costs 
     or qualified employer contributions for which a credit is 
     determined under subsection (a).
       ``(3) Election not to claim credit.--This section shall not 
     apply to a taxpayer for any taxable year if such taxpayer 
     elects to have this section not apply for such taxable 
     year.''.
       (b) Credit Allowed as Part of General Business Credit.--
     Section 38(b) (defining current year business credit) is 
     amended by striking ``plus'' at the end of paragraph (11), by 
     striking the period at the end of paragraph (12) and 
     inserting ``, plus'', and by adding at the end the following 
     new paragraph:
       ``(13) in the case of an eligible employer (as defined in 
     section 45D(c)), the small employer pension plan credit 
     determined under section 45D(a).''.
       (c) Conforming Amendment.--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:

``Sec. 45D. Small employer pension plan credit.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to costs paid or incurred or contributions made 
     in connection with qualified employer plans established after 
     December 31, 2000.

              TITLE III--SOCIAL SECURITY KIDSAVE ACCOUNTS

     SEC. 301. SHORT TITLE.

       This title may be cited as the ``Social Security KidSave 
     Accounts Act''.

     SEC. 302. SOCIAL SECURITY KIDSAVE ACCOUNTS.

       Title II of the Social Security Act (42 U.S.C. 401 et seq.) 
     is amended--
       (1) by inserting before section 201 the following:

                    ``Part A--Insurance Benefits'';

     and
       (2) by adding at the end the following:

                       ``Part B--KidSave Accounts


                           ``kidsave accounts

       ``Sec. 251. (a) Establishment.--The Commissioner of Social 
     Security shall establish in the name of each individual born 
     on or after January 1, 2006, a KidSave Account upon the later 
     of--
       ``(1) the date of enactment of this part, or
       ``(2) the date of the issuance of a Social Security account 
     number under section 205(c)(2) to such individual.
     The KidSave Account shall be identified to the account holder 
     by means of the account holder's Social Security account 
     number.
       ``(b) Contributions.--
       ``(1) In general.--There are authorized to be appropriated 
     and are appropriated such sums as are necessary in order for 
     the Secretary of the Treasury to transfer from the general 
     fund of the Treasury for crediting by the Commissioner to 
     each account holder's KidSave Account under subsection (a), 
     an amount equal to $1000.00, on the date of the establishment 
     of such individual's KidSave Account.
       ``(2) Adjustment for inflation.--For any calendar year 
     after 2010, the dollar amount under paragraph (1) shall be 
     increased by the cost-of-living adjustment determined under 
     section 215(i) for the calendar year.
       ``(c) Designations Regarding KidSave Accounts.--
       ``(1) Initial designations of investment vehicle.--A person 
     described in subsection (d) shall, on behalf of the 
     individual described in subsection (a), designate the 
     investment vehicle for the KidSave Account to which 
     contributions on behalf of such individual are to be 
     deposited. Such designation shall be made on the application 
     for such individual's Social Security account number.
       ``(2) Changes in investment vehicles or types of kidsave 
     accounts.--The Commissioner shall by regulation provide the 
     time and manner by which an individual or a person described 
     in subsection (d) on behalf of such individual may change 1 
     or more investment vehicles for a KidSave Account.
       ``(d) Treatment of Minors and Incompetent Individuals.--Any 
     designation under subsection (c) to be made by a minor, or an 
     individual mentally incompetent or under other legal 
     disability, may be made by the person who is constituted 
     guardian or other fiduciary by the law of the State of 
     residence of the individual or is otherwise legally vested 
     with the care of the individual or his estate. Payment under 
     this part due a minor, or an individual mentally incompetent 
     or under other legal disability, may be made to the person 
     who is constituted guardian or other fiduciary by the law of 
     the State of residence of the claimant or is otherwise 
     legally vested with the care of the claimant or his estate. 
     In any case in which a guardian or other fiduciary of the 
     individual under legal disability has not been appointed 
     under the law of the State of residence of the individual, if 
     any other person, in the judgment of the Commissioner, is 
     responsible for the care of such individual, any designation 
     under subsection (c) which may otherwise be made by such 
     individual may be made by such person, any payment under this 
     part which is otherwise payable to such individual may be 
     made to such person, and the payment of an annuity payment 
     under this part to such person bars recovery by any other 
     person.


                    ``definitions and special rules

       ``Sec. 252. For purposes of this part--
       ``(1) Kidsave account.--The term `KidSave Account' means an 
     account in the KidSave Investment Fund (established under 
     section 253) which is administered by the KidSave Investment 
     Fund Board.
       ``(2) Treatment of account.--
       ``(A) In general.--Except as otherwise provided in this 
     part and in section 531 of the Internal Revenue Code of 1986, 
     any KidSave Account shall be treated in the same manner as an 
     individual account in the Thrift Savings Fund under 
     subchapter III of chapter 84 of title 5, United States Code.
       ``(B) Exceptions.--
       ``(i) Contribution limit.--The aggregate amount of 
     contributions for any taxable year to all KidSave Accounts of 
     an individual shall not exceed the contribution made pursuant 
     to section 251(b) for such year on behalf of such individual.
       ``(ii) Rollover contributions.--No rollover contribution 
     may be made to a KidSave Account unless it is from another 
     KidSave Account. A rollover described in the preceding 
     sentence shall not be taken into account for purposes of 
     clause (i).
       ``(iii) Distributions.--Notwithstanding any other provision 
     of law, distributions may only be made from a KidSave Account 
     of an individual on or after the earlier of--

       ``(I) the date on which the individual begins receiving 
     benefits under this title, or
       ``(II) the date of the individual's death.


                       ``KidSave Investment Fund

       ``Sec. 253. (a) Establishment.--There is established and 
     maintained in the Treasury of the United States a KidSave 
     Investment

[[Page S6708]]

     Fund in the same manner as the Thrift Savings Fund under 
     sections 8437, 8438, and 8439 of title 5, United States Code.
       ``(b) KidSave Investment Fund Board.--
       ``(1) In general.--There is established and operated in the 
     Social Security Administration a Kidsave Investment Fund 
     Board in the same manner as the Federal Retirement Thrift 
     Investment Board under subchapter VII of chapter 84 of title 
     5, United States Code.
       ``(2) Specific investment duties.--The Kidsave Investment 
     Fund shall be managed by the Kidsave Investment Fund Board in 
     the same manner as the Thrift Savings Fund is managed under 
     subchapter VIII of chapter 84 of title 5, United States 
     Code.''.
                                 ______
                                 

                 GRAMS (AND ABRAHAM) AMENDMENT NO. 3836

  Mr. GRAMS (for himself and Mr. Abraham) proposed an amendment to the 
bill, H.R. 8, supra; as follows:

       At the end of the bill, add the following:

                   TITLE VI--MISCELLANEOUS PROVISIONS

     SEC. 601. REPEAL OF INCREASE IN TAX ON SOCIAL SECURITY 
                   BENEFITS.

       (a) Repeal of Increase in Tax on Social Security 
     Benefits.--
       (1) In general.--Paragraph (2) of section 86(a) (relating 
     to social security and tier 1 railroad retirement benefits) 
     is amended by adding at the end the following new flush 
     sentence:
     ``This paragraph shall not apply to any taxable year 
     beginning after December 31, 2000.''
       (2) Effective date.--The amendment made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2000.
       (b) Revenue Offset.--The Secretary of the Treasury shall 
     transfer, for each fiscal year, from the general fund in the 
     Treasury to the Federal Hospital Insurance Trust Fund 
     established under section 1817 of the Social Security Act (42 
     U.S.C. 1395i) an amount equal to the decrease in revenues to 
     the Treasury for such fiscal year by reason of the amendment 
     made by this section.
                                 ______
                                 

                  DODD (AND OTHERS) AMENDMENT NO. 3837

  (Ordered to lie on the table.)
  Mr. DODD (for himself, Mr. Wellstone, Ms. Landrieu, and Mr. Kohl) 
submitted an amendment to be proposed by them to the bill, H.R. 8, 
supra; as follows:

       Strike all after the first word and insert:

              1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Estate Tax 
     Relief Act of 2000''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

                       TITLE I--ESTATE TAX RELIEF

     SEC. 101. INCREASE IN AMOUNT OF UNIFIED CREDIT AGAINST ESTATE 
                   AND GIFT TAXES.

       (a) In General.--The table contained in section 2010(c) 
     (relating to applicable credit amount) is amended to read as 
     follows:

``In the case of estates of decedentThe applicable exclusion amount is:
      2001, 2002, 2003, 2004, and 2005......................$1,000,000 
      2006 and 2007.........................................$1,125,000 
      2008..................................................$1,500,000 
      2009 or thereafter..................................$2,000,000.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

     SEC. 102. INCREASE IN QUALIFIED FAMILY-OWNED BUSINESS 
                   INTEREST DEDUCTION AMOUNT.

       (a) In General.--Paragraph (2) of section 2057(a) (relating 
     to family-owned business interests) is amended to read as 
     follows:
       ``(2) Maximum deduction.--
       ``(A) In general.--The deduction allowed by this section 
     shall not exceed the sum of--
       ``(i) the applicable deduction amount, plus
       ``(ii) in the case of a decedent described in subparagraph 
     (C), the applicable unused spousal deduction amount.
       ``(B) Applicable deduction amount.--For purposes of this 
     subparagraph (A)(i), the applicable deduction amount is 
     determined in accordance with the following table:

``In the case of estates of decedentThe applicable deduction amount is:
      2001, 2002, 2003, 2004, and 2005.......................$1,375,000
      2006 and 2007..........................................$1,625,000
      2008...................................................$2,375,000
      2009 or thereafter....................................$3,375,000.
       ``(C) Applicable unused spousal deduction amount.--With 
     respect to a decedent whose immediately predeceased spouse 
     died after December 31, 2000, and the estate of such 
     immediately predeceased spouse met the requirements of 
     subsection (b)(1), the applicable unused spousal deduction 
     amount for such decedent is equal to the excess of--
       ``(i) the applicable deduction amount allowable under this 
     section to the estate of such immediately predeceased spouse, 
     over
       ``(ii) the sum of--

       ``(I) the applicable deduction amount allowed under this 
     section to the estate of such immediately predeceased spouse, 
     plus
       ``(II) the amount of any increase in such estate's unified 
     credit under paragraph (3)(B) which was allowed to such 
     estate.''

       (b) Conforming Amendments.--Section 2057(a)(3)(B) is 
     amended--
       (1) by striking ``$675,000'' both places it appears and 
     inserting ``the applicable deduction amount'', and
       (2) by striking ``$675,000'' in the heading and inserting 
     ``applicable deduction amount''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

                  TITLE II--DEPENDENT CARE TAX CREDIT

     SEC. 201. EXPANSION OF DEPENDENT CARE TAX CREDIT.

       (a) In General.--Paragraph (2) of section 21(a) (relating 
     to expenses for household and dependent care services 
     necessary for gainful employment) is amended to read as 
     follows:
       ``(2) Applicable percentage defined.--For purposes of 
     paragraph (1), the term `applicable percentage' means 50 
     percent (40 percent for taxable years beginning after 
     December 31, 2002, and before January 1, 2005) reduced (but 
     not below 20 percent) by 1 percentage point for each $1,000 
     (or fraction thereof) by which the taxpayer's adjusted gross 
     income for the taxable year exceeds $30,000.''
       (b) Minimum Credit Allowed for Stay-At-Home Parents.--
     Section 21(e) (relating to special rules) is amended by 
     adding at the end the following:
       ``(11) Minimum credit allowed for stay-at-home parents.--
     Notwithstanding subsection (d), in the case of any taxpayer 
     with one or more qualifying individuals described in 
     subsection (b)(1)(A) under the age of 1 at any time during 
     the taxable year, such taxpayer shall be deemed to have 
     employment-related expenses with respect to not more than 2 
     of such qualifying individuals in an amount equal to the 
     greater of--
       ``(A) the amount of employment-related expenses incurred 
     for such qualifying individuals for the taxable year 
     (determined under this section without regard to this 
     paragraph), or
       ``(B) $41.67 for each month in such taxable year during 
     which each such qualifying individual is under the age of 
     1.''.
       (c) Inflation Adjustment of Dollar Amounts.--
       (1) Section 21 is amended by redesignating subsection (f) 
     as subsection (g) and by inserting after subsection (e) the 
     following new subsection:
       ``(f) Inflation Adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2001, the $30,000 
     amount contained in subsection (a), the $2,400 amount in 
     subsection (c), and the $41.67 amount in subsection (e)(11) 
     shall be increased by an amount equal to--
       ``(1) such dollar amount, multiplied by
       ``(2) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 2000' for `calendar year 1992' in subparagraph 
     (B) thereof.
     If the increase determined under the preceding sentence is 
     not a multiple of $50 ($5 in the case of the amount in 
     subsection (e)(11)), such amount shall be rounded to the next 
     lowest multiple thereof.''
       (2) Paragraph (2) of section 21(c) is amended by striking 
     ``$4,800'' and inserting ``twice the dollar amount applicable 
     under paragraph (1)''.
       (3) Paragraph (2) of section 21(d) is amended by striking 
     ``less than--'' and all that follows through the end of the 
     first sentence and inserting ``less than \1/12\ of the amount 
     which applies under subsection (c) to the taxpayer for the 
     taxable year.''
       (d) Credit Allowed Based on Residency in Certain Cases.--
     Subsection (e) of section 21 is amended by adding at the end 
     the following new paragraph:
       ``(12) Credit allowed based on residency in certain 
     cases.--In the case of a taxpayer--
       ``(A) who does not satisfy the household maintenance test 
     of subsection (a) for any period, but
       ``(B) whose principal place of abode for such period is 
     also the principal place of abode of any qualifying 
     individual,
     then such taxpayer shall be treated as satisfying such test 
     for such period but the amount of credit allowable under this 
     section with respect to such individual shall be determined 
     by allowing only \1/12\ of the limitation under subsection 
     (c) for each full month that the requirement of subparagraph 
     (B) is met.''
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 202. DEPENDENT CARE TAX CREDIT MADE REFUNDABLE.

       (a) In General.--Part IV of subchapter A of chapter 1 
     (relating to credits against tax) is amended--
       (1) by redesignating section 35 as section 36, and
       (2) by redesignating section 21 as section 35.
       (b) Advance Payment of Credit.--Chapter 25 (relating to 
     general provisions relating to employment taxes) is amended 
     by inserting after section 3507 the following:

     ``SEC. 3507A. ADVANCE PAYMENT OF DEPENDENT CARE CREDIT.

       ``(a) General Rule.--Except as otherwise provided in this 
     section, every employer

[[Page S6709]]

     making payment of wages with respect to whom a dependent care 
     eligibility certificate is in effect shall, at the time of 
     paying such wages, make an additional payment equal to such 
     employee's dependent care advance amount.
       ``(b) Dependent Care Eligibility Certificate.--For purposes 
     of this title, a dependent care eligibility certificate is a 
     statement furnished by an employee to the employer which--
       ``(1) certifies that the employee will be eligible to 
     receive the credit provided by section 35 for the taxable 
     year,
       ``(2) certifies that the employee reasonably expects to be 
     an applicable taxpayer for the taxable year,
       ``(3) certifies that the employee does not have a dependent 
     care eligibility certificate in effect for the calendar year 
     with respect to the payment of wages by another employer,
       ``(4) states whether or not the employee's spouse has a 
     dependent care eligibility certificate in effect,
       ``(5) states the number of qualifying individuals in the 
     household maintained by the employee, and
       ``(6) estimates the amount of employment-related expenses 
     for the calendar year.
       ``(c) Dependent Care Advance Amount.--
       ``(1) In general.--For purposes of this title, the term 
     `dependent care advance amount' means, with respect to any 
     payroll period, the amount determined--
       ``(A) on the basis of the employee's wages from the 
     employer for such period,
       ``(B) on the basis of the employee's estimated employment-
     related expenses included in the dependent care eligibility 
     certificate, and
       ``(C) in accordance with tables provided by the Secretary.
       ``(2) Advance amount tables.--The tables referred to in 
     paragraph (1)(C) shall be similar in form to the tables 
     prescribed under section 3402 and, to the maximum extent 
     feasible, shall be coordinated with such tables and the 
     tables prescribed under section 3507(c).
       ``(d) Other Rules.--For purposes of this section, rules 
     similar to the rules of subsections (d) and (e) of section 
     3507 shall apply.
       ``(e) Definitions.--For purposes of this section, terms 
     used in this section which are defined in section 35 shall 
     have the respective meanings given such terms by section 
     35.''.
       (c) Conforming Amendments.--
       (1) Section 35(a)(1), as redesignated by paragraph (1), is 
     amended by striking ``chapter'' and inserting ``subtitle''.
       (2) Section 35(e), as so redesignated and amended by 
     subsection (c), is amended by adding at the end the 
     following:
       ``(13) Coordination with advance payments and minimum 
     tax.--Rules similar to the rules of subsections (g) and (h) 
     of section 32 shall apply for purposes of this section.''.
       (3) Sections 23(f)(1) and 129(a)(2)(C) are each amended by 
     striking ``section 21(e)'' and inserting ``section 35(e)''.
       (4) Section 129(b)(2) is amended by striking ``section 
     21(d)(2)'' and inserting ``section 35(d)(2)''.
       (5) Section 129(e)(1) is amended by striking ``section 
     21(b)(2)'' and inserting ``section 35(b)(2)''.
       (6) Section 213(e) is amended by striking ``section 21'' 
     and inserting ``section 35''.
       (7) Section 995(f)(2)(C) is amended by striking ``and 34'' 
     and inserting ``34, and 35''.
       (8) Section 6211(b)(4)(A) is amended by striking ``and 34'' 
     and inserting ``, 34, and 35''.
       (9) Section 6213(g)(2)(H) is amended by striking ``section 
     21'' and inserting ``section 35''.
       (10) Section 6213(g)(2)(L) is amended by striking ``section 
     21, 24, or 32'' and inserting ``section 24, 32, or 35''.
       (11) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 is amended by striking the item 
     relating to section 35 and inserting the following:

``Sec. 35. Dependent care services.
``Sec. 36. Overpayments of tax.''.
       (12) The table of sections for subpart A of such part IV is 
     amended by striking the item relating to section 21.
       (13) The table of sections for chapter 25 is amended by 
     adding after the item relating to section 3507 the following:

``Sec. 3507A. Advance payment of dependent care credit.''.
       (14) Section 1324(b)(2) of title 31, United States Code, is 
     amended by inserting before the period ``, or enacted by the 
     Death Tax Elimination Act of 2000''.
       (d) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 2002.

                TITLE III--EXPANSION OF ADOPTION CREDIT

     SEC. 301. EXPANSION OF ADOPTION CREDIT.

       (a) Special Needs Adoption.--
       (1) Credit amount.--Paragraph (1) of section 23(a) 
     (relating to allowance of credit) is amended to read as 
     follows:
       ``(1) In general.--In the case of an individual, there 
     shall be allowed as a credit against the tax imposed by this 
     chapter--
       ``(A) in the case of a special needs adoption, $10,000, or
       ``(B) in the case of any other adoption, the amount of the 
     qualified adoption expenses paid or incurred by the 
     taxpayer.''.
       (2) Year credit allowed.--Section 23(a)(2) (relating to 
     year credit allowed) is amended by adding at the end the 
     following new flush sentence:
     ``In the case of a special needs adoption, the credit allowed 
     under paragraph (1) shall be allowed for the taxable year in 
     which the adoption becomes final.''.
       (3) Dollar limitation.--Section 23(b)(1) is amended--
       (A) by striking ``subsection (a)'' and inserting 
     ``subsection (a)(1)(B)'', and
       (B) by striking ``($6,000, in the case of a child with 
     special needs)''.
       (4) Definition of special needs adoption.--Section 23(d) 
     (relating to definitions) is amended by adding at the end the 
     following new paragraph:
       ``(4) Special needs adoption.--The term `special needs 
     adoption' means the final adoption of an individual during 
     the taxable year who is an eligible child and who is a child 
     with special needs.''.
       (5) Definition of child with special needs.--Section 
     23(d)(3) (defining child with special needs) is amended to 
     read as follows:
       ``(3) Child with special needs.--The term `child with 
     special needs' means any child if a State has determined that 
     the child's ethnic background, age, membership in a minority 
     or sibling groups, medical condition or physical impairment, 
     or emotional handicap makes some form of adoption assistance 
     necessary.''.
       (b) Increase in Income Limitations.--Section 23(b)(2) 
     (relating to income limitation) is amended--
       (1) in subparagraph (A)--
       (A) by striking ``$75,000'' and inserting ``$63,550 
     ($105,950 in the case of a joint return)'', and
       (B) by striking ``$40,000'' and inserting ``the applicable 
     amount'', and
       (2) by adding at the end the following new subparagraph:
       ``(C) Applicable amount.--For purposes of subparagraph (A), 
     the applicable amount, with respect to any taxpayer, for the 
     taxable year shall be an amount equal to the excess of--
       ``(i) the maximum taxable income amount for the 31 percent 
     bracket under the table contained in section 1 relating to 
     such taxpayer and in effect for the taxable year, over
       ``(ii) the dollar amount in effect with respect to the 
     taxpayer for the taxable year under subparagraph (A)(i).
       ``(D) Cost-of-living adjustment.--
       ``(i) In general.--In the case of a taxable year beginning 
     after 2001, each dollar amount under subparagraph (A)(i) 
     shall be increased by an amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f )(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2000' 
     for `calendar year 1992' in subparagraph (B) thereof.

       ``(ii) Rounding rules.--If any amount after adjustment 
     under clause (i) is not a multiple of $1,000, such amount 
     shall be rounded to the next lower multiple of $1,000.''.
       (c) Adoption Credit Made Permanent.--Subclauses (A) and (B) 
     of section 23(d)(2) (defining eligible child) are amended to 
     read as follows:
       ``(A) who has not attained age 18, or
       ``(B) who is physically or mentally incapable of caring for 
     himself.''.
       (d) Conforming Amendments.--
       (1) Section 23(a)(2) is amended by striking ``(1)'' and 
     inserting ``(1)(B)''.
       (2) Section 23(b)(3) is amended by striking ``(a)'' each 
     place it appears and inserting ``(a)(1)(B)''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

         TITLE IV--INCENTIVES FOR EMPLOYER-PROVIDED CHILD CARE

     SEC. 401. ALLOWANCE OF CREDIT FOR EMPLOYER EXPENSES FOR CHILD 
                   CARE ASSISTANCE.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business related credits) is amended 
     by adding at the end the following new section:

     ``SEC. 45D. EMPLOYER-PROVIDED CHILD CARE CREDIT.

       ``(a) Allowance of Credit.--For purposes of section 38, the 
     employer-provided child care credit determined under this 
     section for the taxable year is an amount equal to the sum 
     of--
       ``(1) 25 percent of the qualified child care expenditures, 
     and
       ``(2) 10 percent of the qualified child care resource and 
     referral expenditures,
     of the taxpayer for such taxable year.
       ``(b) Dollar Limitation.--The credit allowable under 
     subsection (a) for any taxable year shall not exceed 
     $150,000.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Qualified child care expenditure.--
       ``(A) In general.--The term `qualified child care 
     expenditure' means any amount paid or incurred--
       ``(i) to acquire, construct, rehabilitate, or expand 
     property--

       ``(I) which is to be used as part of an eligible qualified 
     child care facility of the taxpayer,
       ``(II) with respect to which a deduction for depreciation 
     (or amortization in lieu of depreciation) is allowable, and
       ``(III) which does not constitute part of the principal 
     residence (within the meaning of section 121) of the taxpayer 
     or any employee of the taxpayer,

       ``(ii) for the operating costs of an eligible qualified 
     child care facility of the taxpayer,

[[Page S6710]]

     including costs related to the training of employees of the 
     child care facility, to scholarship programs, to the 
     providing of differential compensation to employees based on 
     level of child care training, and to expenses associated with 
     achieving accreditation, or
       ``(iii) under a contract with a qualified child care 
     facility to provide child care services to employees of the 
     taxpayer.
       ``(B) Exclusion for amounts funded by grants, etc.--The 
     term `qualified child care expenditure' shall not include any 
     amount to the extent such amount is funded by any grant, 
     contract, or otherwise by another person (or any governmental 
     entity).
       ``(C) Nondiscrimination.--The term `qualified child care 
     expenditure' shall not include any amount expended in 
     relation to any child care services unless the providing of 
     such services to employees of the taxpayer does not 
     discriminate in favor of highly compensated employees (within 
     the meaning of section 404(q)).
       ``(2) Qualified child care facility.--
       ``(A) In general.--The term `qualified child care facility' 
     means a facility--
       ``(i) the principal use of which is to provide child care 
     assistance, and
       ``(ii) which meets the requirements of all applicable laws 
     and regulations of the State or local government in which it 
     is located, including, but not limited to, the licensing of 
     the facility as a child care facility.
     Clause (i) shall not apply to a facility which is the 
     principal residence (within the meaning of section 121) of 
     the operator of the facility.
       ``(B) Eligible qualified child care facility.--A qualified 
     child care facility shall be treated as an eligible qualified 
     child care facility with respect to the taxpayer if--
       ``(i) enrollment in the facility is open to employees of 
     the taxpayer during the taxable year,
       ``(ii) the facility is not the principal trade or business 
     of the taxpayer, and
       ``(iii) at least 30 percent of the enrollees of such 
     facility are dependents of employees of the taxpayer.
       ``(C) Application of subparagraph (b).--In the case of a 
     new facility, the facility shall be treated as meeting the 
     requirement of subparagraph (B)(iii) if not later than 2 
     years after placing such facility in service at least 30 
     percent of the enrollees of such facility are dependents of 
     employees of the taxpayer.
       ``(3) Qualified child care resource and referral 
     expenditure.--
       ``(A) In general.--The term `qualified child care resource 
     and referral expenditure' means any amount paid or incurred 
     under a contract to provide child care resource and referral 
     services to employees of the taxpayer.
       ``(B) Exclusion for amounts funded by grants, etc.--The 
     term `qualified child care resource and referral expenditure' 
     shall not include any amount to the extent such amount is 
     funded by any grant, contract, or otherwise by another person 
     (or any governmental entity).
       ``(C) Nondiscrimination.--The term `qualified child care 
     resource and referral expenditure' shall not include any 
     amount expended in relation to any child care resource and 
     referral services unless the providing of such services to 
     employees of the taxpayer does not discriminate in favor of 
     highly compensated employees (within the meaning of section 
     404(q)).
       ``(d) Recapture of Acquisition and Construction Credit.--
       ``(1) In general.--If, as of the close of any taxable year, 
     there is a recapture event with respect to any eligible 
     qualified child care facility of the taxpayer, then the tax 
     of the taxpayer under this chapter for such taxable year 
     shall be increased by an amount equal to the product of--
       ``(A) the applicable recapture percentage, and
       ``(B) the aggregate decrease in the credits allowed under 
     section 38 for all prior taxable years which would have 
     resulted if the qualified child care expenditures of the 
     taxpayer described in subsection (c)(1)(A) with respect to 
     such facility had been zero.
       ``(2) Applicable recapture percentage.--
       ``(A) In general.--For purposes of this subsection, the 
     applicable recapture percentage shall be determined from the 
     following table:

  ``If the recapture event occurThe applicable recapture percentage is:
    Year 1.......................................................100   
    Year 2........................................................80   
    Year 3........................................................60   
    Year 4........................................................40   
    Year 5........................................................20   
    Years 6 and thereafter.........................................0.  
       ``(B) Years.--For purposes of subparagraph (A), year 1 
     shall begin on the first day of the taxable year in which the 
     eligible qualified child care facility is placed in service 
     by the taxpayer.
       ``(3) Recapture event defined.--For purposes of this 
     subsection, the term `recapture event' means--
       ``(A) Cessation of operation.--The cessation of the 
     operation of the facility as an eligible qualified child care 
     facility.
       ``(B) Change in ownership.--
       ``(i) In general.--Except as provided in clause (ii), the 
     disposition of a taxpayer's interest in an eligible qualified 
     child care facility with respect to which the credit 
     described in subsection (a) was allowable.
       ``(ii) Agreement to assume recapture liability.--Clause (i) 
     shall not apply if the person acquiring such interest in the 
     facility agrees in writing to assume the recapture liability 
     of the person disposing of such interest in effect 
     immediately before such disposition. In the event of such an 
     assumption, the person acquiring the interest in the facility 
     shall be treated as the taxpayer for purposes of assessing 
     any recapture liability (computed as if there had been no 
     change in ownership).
       ``(4) Special rules.--
       ``(A) Tax benefit rule.--The tax for the taxable year shall 
     be increased under paragraph (1) only with respect to credits 
     allowed by reason of this section which were used to reduce 
     tax liability. In the case of credits not so used to reduce 
     tax liability, the carryforwards and carrybacks under section 
     39 shall be appropriately adjusted.
       ``(B) No credits against tax.--Any increase in tax under 
     this subsection shall not be treated as a tax imposed by this 
     chapter for purposes of determining the amount of any credit 
     under subpart A, B, or D of this part.
       ``(C) No recapture by reason of casualty loss.--The 
     increase in tax under this subsection shall not apply to a 
     cessation of operation of the facility as a qualified child 
     care facility by reason of a casualty loss to the extent such 
     loss is restored by reconstruction or replacement within a 
     reasonable period established by the Secretary.
       ``(e) Special Rules.--For purposes of this section--
       ``(1) Aggregation rules.--All persons which are treated as 
     a single employer under subsections (a) and (b) of section 52 
     shall be treated as a single taxpayer.
       ``(2) Pass-thru in the case of estates and trusts.--Under 
     regulations prescribed by the Secretary, rules similar to the 
     rules of subsection (d) of section 52 shall apply.
       ``(3) Allocation in the case of partnerships.--In the case 
     of partnerships, the credit shall be allocated among partners 
     under regulations prescribed by the Secretary.
       ``(f) No Double Benefit.--
       ``(1) Reduction in basis.--For purposes of this subtitle--
       ``(A) In general.--If a credit is determined under this 
     section with respect to any property by reason of 
     expenditures described in subsection (c)(1)(A), the basis of 
     such property shall be reduced by the amount of the credit so 
     determined.
       ``(B) Certain dispositions.--If during any taxable year 
     there is a recapture amount determined with respect to any 
     property the basis of which was reduced under subparagraph 
     (A), the basis of such property (immediately before the event 
     resulting in such recapture) shall be increased by an amount 
     equal to such recapture amount. For purposes of the preceding 
     sentence, the term `recapture amount' means any increase in 
     tax (or adjustment in carrybacks or carryovers) determined 
     under subsection (d).
       ``(2) Other deductions and credits.--No deduction or credit 
     shall be allowed under any other provision of this chapter 
     with respect to the amount of the credit determined under 
     this section.''
       (b) Conforming Amendments.--
       (1) Section 38(b) is amended--
       (A) by striking out ``plus'' at the end of paragraph (11),
       (B) by striking out the period at the end of paragraph 
     (12), and inserting a comma and ``plus'', and
       (C) by adding at the end the following new paragraph:
       ``(13) the employer-provided child care credit determined 
     under section 45D.''.
       (2) 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:

``Sec. 45D. Employer-provided child care credit.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.
                                 ______
                                 

                SANTORUM (AND OTHERS) AMENDMENT NO. 3838

  (Ordered to lie on the table.)
  Mr. SANTORUM (for himself, Mr. Lieberman, Mr. Abraham, Mr. 
Hutchinson, Mr. Torricelli, Mr. DeWine, Mr. Kohl, Ms. Landrieu, and Mr. 
Kerry) submitted an amendment intended to be proposed by them to the 
bill, H.R. 8, supra; as follows:

       At the end, add the following:

   DIVISION B--AMERICAN COMMUNITY RENEWAL AND NEW MARKETS EMPOWERMENT

     SECTION 1. SHORT TITLE; ETC.

       (a) Short Title.--This division may be cited as the 
     ``American Community Renewal and New Markets Empowerment 
     Act''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this division an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--

Sec. 1. Short title; etc.

                  TITLE I--AMERICAN COMMUNITY RENEWAL

Sec. 101. Designation of and tax incentives for renewal communities.

[[Page S6711]]

Sec. 102. Extension of expensing of environmental remediation costs to 
              renewal communities; extension of termination date for 
              renewal communities and empowerment zones.
Sec. 103. Work opportunity credit for hiring youth residing in renewal 
              communities.
Sec. 104. Evaluation and reporting requirements.
Sec. 105. Exclusion of effects of this title from paygo scorecard.

                  TITLE II--NEW MILLENNIUM CLASSROOMS

Sec. 201. Credit for computer donations to schools, senior centers, 
              public libraries, and other training centers.

 TITLE III--EXPANSION AND EXTENSION OF EMPOWERMENT ZONE TAX INCENTIVES

Sec. 301. Authority to designate 9 additional empowerment zones.
Sec. 302. Extension of enterprise zone treatment through 2009.
Sec. 303. 20 percent employment credit for all empowerment zones.
Sec. 304. Increased expensing under section 179.
Sec. 305. Higher limits on tax-exempt empowerment zone facility bonds.
Sec. 306. Nonrecognition of gain on rollover of empowerment zone 
              investments.
Sec. 307. Increased exclusion of gain on sale of empowerment zone 
              investments.
Sec. 308. Funding entitlement for Round II empowerment zones.
Sec. 309. Rules regarding qualified issues.
Sec. 310. Custom user fees.

            TITLE IV--FAITH BASED SUBSTANCE ABUSE TREATMENT

Sec. 401. Prevention and treatment of substance abuse; services 
              provided through religious organizations.

                         TITLE V--HOMEOWNERSHIP

Sec. 501. Transfer of unoccupied and substandard HUD-held housing to 
              local governments and community development corporations.
Sec. 502. Transfer of HUD assets in revitalization areas.
Sec. 503. Risk-sharing demonstration.

            TITLE VI--AMERICA'S PRIVATE INVESTMENT COMPANIES

Sec. 601. Short title.
Sec. 602. Findings and purposes.
Sec. 603. Definitions.
Sec. 604. Authorization.
Sec. 605. Selection of APICs.
Sec. 606. Operations of APICs.
Sec. 607. Credit enhancement by the Federal Government.
Sec. 608. APIC requests for guarantee actions.
Sec. 609. Examination and monitoring of APICs.
Sec. 610. Penalties.
Sec. 611. Effective date.
Sec. 612. Sunset.

                   TITLE VII--NEW MARKETS TAX CREDIT

Sec. 701. New markets tax credit.

         TITLE VIII--COMMUNITY DEVELOPMENT AND VENTURE CAPITAL

Sec. 800. Short title.

            Subtitle A--New Markets Venture Capital Program

Sec. 801. New Markets Venture Capital Program.
Sec. 802. Bankruptcy exemption for NMVC companies.
Sec. 803. Federal savings associations.

      Subtitle B--Community Development Venture Capital Assistance

Sec. 811. Findings and purposes.
Sec. 812. Community development venture capital activities.

                       Subtitle C--Business LINC

Sec. 821. Grants authorized.
Sec. 822. Regulations.

   TITLE IX--BOND VOLUME CAP AND LOW-INCOME HOUSING CREDIT INCREASES

Sec. 901. Increase in State ceiling on private activity bonds.
Sec. 902. Increase in State ceiling on low-income housing credit.

                TITLE X--INDIVIDUAL DEVELOPMENT ACCOUNTS

Sec. 1001. Findings.
Sec. 1002. Purposes.
Sec. 1003. Definitions.

   Subtitle A--Individual Development Accounts for Low-Income Workers

Sec. 1011. Structure and administration of qualified individual 
              development account programs.
Sec. 1012. Procedures for opening an Individual Development Account and 
              qualifying for matching funds.
Sec. 1013. Contributions to Individual Development Accounts.
Sec. 1014. Deposits by qualified individual development account 
              programs.
Sec. 1015. Withdrawal procedures.
Sec. 1016. Certification and termination of qualified individual 
              development account programs.
Sec. 1017. Reporting, monitoring, and evaluation.
Sec. 1018. Certain account funds of program participants disregarded 
              for purposes of certain means-tested Federal programs.

Subtitle B--Qualified Individual Development Account Program Investment 
                                Credits

Sec. 1021. Qualified individual development account program investment 
              credits.
Sec. 1022. CRA credit treatment for qualified individual development 
              account program investments.
Sec. 1023. Designation of earned income tax credit payments for deposit 
              to Individual Development Accounts.

                 TITLE XI--CHARITABLE CHOICE EXPANSION

Sec. 1101. Provision of assistance under government programs by 
              religious organizations.

               TITLE XII--ANTHRACITE REGION REDEVELOPMENT

Sec. 1201. Credit to holders of qualified anthracite region 
              redevelopment bonds.

                  TITLE I--AMERICAN COMMUNITY RENEWAL

     SEC. 101. DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL 
                   COMMUNITIES.

       (a) In General.--Chapter 1 is amended by adding at the end 
     the following new subchapter:

                  ``Subchapter X--Renewal Communities

``Part I.   Designation.
``Part II.  Renewal community capital gain; renewal community business.
``Part III.  Additional incentives.

                         ``PART I--DESIGNATION

``Sec. 1400E. Designation of renewal communities.

     ``SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.

       ``(a) Designation.--
       ``(1) Definitions.--For purposes of this title, the term 
     `renewal community' means any area--
       ``(A) which is nominated by one or more local governments 
     and the State or States in which it is located for 
     designation as a renewal community (hereinafter in this 
     section referred to as a `nominated area'), and
       ``(B) which the Secretary of Housing and Urban Development 
     designates as a renewal community, after consultation with--
       ``(i) the Secretaries of Agriculture, Commerce, Labor, and 
     the Treasury; the Director of the Office of Management and 
     Budget, and the Administrator of the Small Business 
     Administration, and
       ``(ii) in the case of an area on an Indian reservation, the 
     Secretary of the Interior.
       ``(2) Number of designations.--
       ``(A) In general.--The Secretary of Housing and Urban 
     Development may designate not more than 1 nominated area as a 
     renewal community in each State.
       ``(B) Minimum designation in rural areas.--Of the areas 
     designated under paragraph (1), at least 20 percent must be 
     areas--
       ``(i) which are within a local government jurisdiction or 
     jurisdictions with a population of less than 50,000,
       ``(ii) which are outside of a metropolitan statistical area 
     (within the meaning of section 143(k)(2)(B)), or
       ``(iii) which are determined by the Secretary of Housing 
     and Urban Development, after consultation with the Secretary 
     of Commerce, to be rural areas.
       ``(3) Areas designated based on degree of poverty, etc.--
       ``(A) In general.--Except as otherwise provided in this 
     section, the nominated areas designated as renewal 
     communities under this subsection shall be those nominated 
     areas with the highest average ranking with respect to the 
     criteria described in subparagraphs (B), (C), and (D) of 
     subsection (c)(3). For purposes of the preceding sentence, an 
     area shall be ranked within each such criterion on the basis 
     of the amount by which the area exceeds such criterion, with 
     the area which exceeds such criterion by the greatest amount 
     given the highest ranking.
       ``(B) Exception where inadequate course of action, etc.--An 
     area shall not be designated under subparagraph (A) if the 
     Secretary of Housing and Urban Development determines that 
     the course of action described in subsection (d)(2) with 
     respect to such area is inadequate.
       ``(4) Limitation on designations.--
       ``(A) Publication of regulations.--The Secretary of Housing 
     and Urban Development shall prescribe by regulation no later 
     than 4 months after the date of the enactment of this 
     section, after consultation with the officials described in 
     paragraph (1)(B)--
       ``(i) the procedures for nominating an area under paragraph 
     (1)(A),
       ``(ii) the parameters relating to the size and population 
     characteristics of a renewal community, and
       ``(iii) the manner in which nominated areas will be 
     evaluated based on the criteria specified in subsection (d).
       ``(B) Time limitations.--The Secretary of Housing and Urban 
     Development may designate nominated areas as renewal 
     communities only during the 24-month period beginning on the 
     first day of the first month following the month in which the 
     regulations described in subparagraph (A) are prescribed.
       ``(C) Procedural rules.--The Secretary of Housing and Urban 
     Development shall not make any designation of a nominated 
     area as a renewal community under paragraph (2) unless--
       ``(i) the local governments and the States in which the 
     nominated area is located have the authority--

[[Page S6712]]

       ``(I) to nominate such area for designation as a renewal 
     community,
       ``(II) to make the State and local commitments described in 
     subsection (d), and
       ``(III) to provide assurances satisfactory to the Secretary 
     of Housing and Urban Development that such commitments will 
     be fulfilled,

       ``(ii) a nomination regarding such area is submitted in 
     such a manner and in such form, and contains such 
     information, as the Secretary of Housing and Urban 
     Development shall by regulation prescribe, and
       ``(iii) the Secretary of Housing and Urban Development 
     determines that any information furnished is reasonably 
     accurate.
       ``(5) Nomination process for indian reservations.--For 
     purposes of this subchapter, in the case of a nominated area 
     on an Indian reservation, the reservation governing body (as 
     determined by the Secretary of the Interior) shall be treated 
     as being both the State and local governments with respect to 
     such area.
       ``(b) Period for Which Designation Is in Effect.--
       ``(1) In general.--Any designation of an area as a renewal 
     community shall remain in effect during the period beginning 
     on January 1, 2001, and ending on the earliest of--
       ``(A) December 31, 2009,
       ``(B) the termination date designated by the State and 
     local governments in their nomination, or
       ``(C) the date the Secretary of Housing and Urban 
     Development revokes such designation.
       ``(2) Revocation of designation.--The Secretary of Housing 
     and Urban Development may revoke the designation under this 
     section of an area if such Secretary determines that the 
     local government or the State in which the area is located--
       ``(A) has modified the boundaries of the area, or
       ``(B) is not complying substantially with, or fails to make 
     progress in achieving, the State or local commitments, 
     respectively, described in subsection (d).
       ``(c) Area and Eligibility Requirements.--
       ``(1) In general.--The Secretary of Housing and Urban 
     Development may designate a nominated area as a renewal 
     community under subsection (a) only if the area meets the 
     requirements of paragraphs (2) and (3) of this subsection.
       ``(2) Area requirements.--A nominated area meets the 
     requirements of this paragraph if--
       ``(A) the area is within the jurisdiction of one or more 
     local governments,
       ``(B) the boundary of the area is continuous, and
       ``(C) the area--
       ``(i) has a population, of at least--

       ``(I) 4,000 if any portion of such area (other than a rural 
     area described in subsection (a)(2)(B)(i)) is located within 
     a metropolitan statistical area (within the meaning of 
     section 143(k)(2)(B)) which has a population of 50,000 or 
     greater, or
       ``(II) 1,000 in any other case, or

       ``(ii) is entirely within an Indian reservation (as 
     determined by the Secretary of the Interior).
       ``(3) Eligibility requirements.--A nominated area meets the 
     requirements of this paragraph if the State and the local 
     governments in which it is located certify (and the Secretary 
     of Housing and Urban Development, after such review of 
     supporting data as he deems appropriate, accepts such 
     certification) that--
       ``(A) the area is one of pervasive poverty, unemployment, 
     and general distress,
       ``(B) the unemployment rate in the area, as determined by 
     the most recent available data, was at least 1\1/2\ times the 
     national unemployment rate for the period to which such data 
     relate,
       ``(C) the poverty rate for each population census tract 
     within the nominated area is at least 20 percent, and
       ``(D) in the case of an urban area, at least 70 percent of 
     the households living in the area have incomes below 80 
     percent of the median income of households within the 
     jurisdiction of the local government (determined in the same 
     manner as under section 119(b)(2) of the Housing and 
     Community Development Act of 1974).
       ``(4) Consideration of high incidence of crime.--The 
     Secretary of Housing and Urban Development shall take into 
     account, in selecting nominated areas for designation as 
     renewal communities under this section, the extent to which 
     such areas have a high incidence of crime.
       ``(5) Consideration of communities identified in gao 
     study.--The Secretary of Housing and Urban Development shall 
     take into account, in selecting nominated areas for 
     designation as renewal communities under this section, if the 
     area has census tracts identified in the May 12, 1998, report 
     of the Government Accounting Office regarding the 
     identification of economically distressed areas.
       ``(d) Required State and Local Commitments.--
       ``(1) In general.--The Secretary of Housing and Urban 
     Development may designate any nominated area as a renewal 
     community under subsection (a) only if--
       ``(A) the local government and the State in which the area 
     is located agree in writing that, during any period during 
     which the area is a renewal community, such governments will 
     follow a specified course of action which meets the 
     requirements of paragraph (2) and is designed to reduce the 
     various burdens borne by employers or employees in such area, 
     and
       ``(B) the economic growth promotion requirements of 
     paragraph (3) are met.
       ``(2) Course of action.--
       ``(A) In general.--A course of action meets the 
     requirements of this paragraph if such course of action is a 
     written document, signed by a State (or local government) and 
     neighborhood organizations, which evidences a partnership 
     between such State or government and community-based 
     organizations and which commits each signatory to specific 
     and measurable goals, actions, and timetables. Such course of 
     action shall include at least 4 of the following:
       ``(i) A reduction of tax rates or fees applying within the 
     renewal community.
       ``(ii) An increase in the level of efficiency of local 
     services within the renewal community.
       ``(iii) Crime reduction strategies, such as crime 
     prevention (including the provision of such services by 
     nongovernmental entities).
       ``(iv) Actions to reduce, remove, simplify, or streamline 
     governmental requirements applying within the renewal 
     community.
       ``(v) Involvement in the program by private entities, 
     organizations, neighborhood organizations, and community 
     groups, particularly those in the renewal community, 
     including a commitment from such private entities to provide 
     jobs and job training for, and technical, financial, or other 
     assistance to, employers, employees, and residents from the 
     renewal community.
       ``(vi) The gift (or sale at below fair market value) of 
     surplus real property (such as land, homes, and commercial or 
     industrial structures) in the renewal community to 
     neighborhood organizations, community development 
     corporations, or private companies.
       ``(B) Recognition of past efforts.--For purposes of this 
     section, in evaluating the course of action agreed to by any 
     State or local government, the Secretary of Housing and Urban 
     Development shall take into account the past efforts of such 
     State or local government in reducing the various burdens 
     borne by employers and employees in the area involved.
       ``(3) Economic growth promotion requirements.--The economic 
     growth promotion requirements of this paragraph are met with 
     respect to a nominated area if the local government and the 
     State in which such area is located certify in writing that 
     such government and State (respectively) have repealed, 
     will not enforce, or will reduce within the area at least 
     4 of the following if such area is designated as a renewal 
     community:
       ``(A) Licensing requirements for occupations that do not 
     ordinarily require a professional degree.
       ``(B) Zoning restrictions on home-based businesses which do 
     not create a public nuisance.
       ``(C) Permit requirements for street vendors who do not 
     create a public nuisance.
       ``(D) Zoning or other restrictions that impede the 
     formation of schools or child care centers.
       ``(E) Franchises or other restrictions on competition for 
     businesses providing public services, including taxicabs, 
     jitneys, cable television, or trash hauling.
     This paragraph shall not apply to the extent that such 
     regulation of businesses and occupations is necessary for and 
     well-tailored to the protection of health and safety.
       ``(e) Coordination With Treatment of Empowerment Zones and 
     Enterprise Communities.--
       ``(1) In general.--For purposes of this title, the 
     designation under section 1391 of any area as an empowerment 
     zone or enterprise community shall cease to be in effect as 
     of the date that any portion of such area is designated as a 
     renewal community.
       ``(2) Special rule for wage credit.--For purposes of 
     section 1400H (relating to renewal community employment 
     credit)--
       ``(A) there shall not be taken into account wages taken 
     into account under section 1396 (without regard to section 
     1400H), and
       ``(B) the $15,000 amount in section 1396(c) shall (in 
     applying section 1400H) be reduced for any calendar year by 
     the amount of wages paid or incurred during such year which 
     are taken into account in determining the credit under 
     section 1396 (without regard to section 1400H).
       ``(f) Definitions and Special Rules.--For purposes of this 
     subchapter--
       ``(1) Governments.--If more than one government seeks to 
     nominate an area as a renewal community, any reference to, or 
     requirement of, this section shall apply to all such 
     governments.
       ``(2) Local government.--The term `local government' 
     means--
       ``(A) any county, city, town, township, parish, village, or 
     other general purpose political subdivision of a State, and
       ``(B) any combination of political subdivisions described 
     in subparagraph (A) recognized by the Secretary of Housing 
     and Urban Development.
       ``(3) State.--The term `State' means the several States.
       ``(4) Application of rules relating to census tracts.--The 
     rules of sections 1392(b)(4) shall apply.
       ``(5) Census data.--Population and poverty rate shall be 
     determined by using 1990 census data.

 ``PART II--RENEWAL COMMUNITY CAPITAL GAIN; RENEWAL COMMUNITY BUSINESS

``Sec. 1400F. Renewal community capital gain.

[[Page S6713]]

``Sec. 1400G. Renewal community business defined.

     ``SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.

       ``(a) General Rule.--Gross income does not include any 
     qualified capital gain recognized on the sale or exchange of 
     a qualified community asset held for more than 5 years.
       ``(b) Qualified Community Asset.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified community asset' 
     means--
       ``(A) any qualified community stock,
       ``(B) any qualified community partnership interest, and
       ``(C) any qualified community business property.
       ``(2) Qualified community stock.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `qualified community stock' means any stock in a 
     domestic corporation if--
       ``(i) such stock is acquired by the taxpayer after December 
     31, 2000, and before January 1, 2010, at its original issue 
     (directly or through an underwriter) from the corporation 
     solely in exchange for cash,
       ``(ii) as of the time such stock was issued, such 
     corporation was a renewal community business (or, in the case 
     of a new corporation, such corporation was being organized 
     for purposes of being a renewal community business), and
       ``(iii) during substantially all of the taxpayer's holding 
     period for such stock, such corporation qualified as a 
     renewal community business.
       ``(B) Redemptions.--A rule similar to the rule of section 
     1202(c)(3) shall apply for purposes of this paragraph.
       ``(3) Qualified community partnership interest.--The term 
     `qualified community partnership interest' means any capital 
     or profits interest in a domestic partnership if--
       ``(A) such interest is acquired by the taxpayer after 
     December 31, 2000, and before January 1, 2010, from the 
     partnership solely in exchange for cash,
       ``(B) as of the time such interest was acquired, such 
     partnership was a renewal community business (or, in the case 
     of a new partnership, such partnership was being organized 
     for purposes of being a renewal community business), and
       ``(C) during substantially all of the taxpayer's holding 
     period for such interest, such partnership qualified as a 
     renewal community business.
     A rule similar to the rule of paragraph (2)(B) shall apply 
     for purposes of this paragraph.
       ``(4) Qualified community business property.--
       ``(A) In general.--The term `qualified community business 
     property' means tangible property if--
       ``(i) such property was acquired by the taxpayer by 
     purchase (as defined in section 179(d)(2)) after December 31, 
     2000, and before January 1, 2010,
       ``(ii) the original use of such property in the renewal 
     community commences with the taxpayer, and
       ``(iii) during substantially all of the taxpayer's holding 
     period for such property, substantially all of the use of 
     such property was in a renewal community business of the 
     taxpayer.
       ``(B) Special rule for substantial improvements.--The 
     requirements of clauses (i) and (ii) of subparagraph (A) 
     shall be treated as satisfied with respect to--
       ``(i) property which is substantially improved by the 
     taxpayer before January 1, 2010, and
       ``(ii) any land on which such property is located.
     The determination of whether a property is substantially 
     improved shall be made under clause (ii) of section 
     1400B(b)(4)(B), except that `December 31, 2000' shall be 
     substituted for `December 31, 1997' in such clause.
       ``(c) Qualified Capital Gain.--For purposes of this 
     section--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the term `qualified capital gain` means any gain 
     recognized on the sale or exchange of--
       ``(A) a capital asset, or
       ``(B) property used in the trade or business (as defined in 
     section 1231(b).
       ``(2) Gain before 2001 or after 2014 not qualified.--The 
     term `qualified capital gain' shall not include any gain 
     attributable to periods before January 1, 2001, or after 
     December 31, 2014.
       ``(3) Certain rules to apply.--Rules similar to the rules 
     of paragraphs (3), (4), and (5) of section 1400B(e) shall 
     apply for purposes of this subsection.
       ``(d) Certain Rules To Apply.--For purposes of this 
     section, rules similar to the rules of paragraphs (5), (6), 
     and (7) of subsection (b), and subsections (f ) and (g), of 
     section 1400B shall apply; except that for such purposes 
     section 1400B(g)(2) shall be applied by substituting `January 
     1, 2001' for `January 1, 1998' and `December 31, 2014' for 
     `December 31, 2007'.

     ``SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.

       ``For purposes of this subchapter, the term `renewal 
     community business' means any entity or proprietorship which 
     would be a qualified business entity or qualified 
     proprietorship under section 1397C if references to renewal 
     communities were substituted for references to empowerment 
     zones in such section.

                   ``PART III--ADDITIONAL INCENTIVES

``Sec. 1400H. Renewal community employment credit.
``Sec. 1400I. Commercial revitalization deduction.
``Sec. 1400J. Increase in expensing under section 179.

     ``SEC. 1400H. RENEWAL COMMUNITY EMPLOYMENT CREDIT.

       ``(a) In General.--Subject to the modification in 
     subsection (b), a renewal community shall be treated as an 
     empowerment zone for purposes of section 1396.
       ``(b) Modification.--In applying section 1396 with respect 
     to renewal communities, the applicable percentage shall be--
       ``(1) 15 percent in the case of calendar years 2001, 2002, 
     2003, or 2004, and
       ``(2) 20 percent in the case of calendar years after 2004 
     and before 2010.

     ``SEC. 1400I. COMMERCIAL REVITALIZATION DEDUCTION.

       ``(a) General Rule.--At the election of the taxpayer, 
     either--
       ``(1) one-half of any qualified revitalization expenditures 
     chargeable to capital account with respect to any qualified 
     revitalization building shall be allowable as a deduction for 
     the taxable year in which the building is placed in service, 
     or
       ``(2) a deduction for all such expenditures shall be 
     allowable ratably over the 120-month period beginning with 
     the month in which the building is placed in service.
       ``(b) Qualified Revitalization Buildings and 
     Expenditures.--For purposes of this section--
       ``(1) Qualified revitalization building.--The term 
     `qualified revitalization building' means any building (and 
     its structural components) if--
       ``(A) such building is located in a renewal community and 
     is placed in service after December 31, 2000,
       ``(B) a commercial revitalization deduction amount is 
     allocated to the building under subsection (d), and
       ``(C) depreciation is allowable with respect to the 
     building (without regard to this section).
       ``(2) Qualified revitalization expenditure.--
       ``(A) In general.--The term `qualified revitalization 
     expenditure' means any amount properly chargeable to capital 
     account--
       ``(i) for property for which depreciation is allowable 
     under section 168 (without regard to this section) and which 
     is--

       ``(I) nonresidential real property, or
       ``(II) an addition or improvement to property described in 
     subclause (I),

       ``(ii) in connection with the construction of any qualified 
     revitalization building which was not previously placed in 
     service or in connection with the substantial rehabilitation 
     (within the meaning of section 47(c)(1)(C)) of a building 
     which was placed in service before the beginning of such 
     rehabilitation, and
       ``(iii) for land (including land which is functionally 
     related to such property and subordinate thereto).
       ``(B) Dollar limitation.--The aggregate amount which may be 
     treated as qualified revitalization expenditures with respect 
     to any qualified revitalization building for any taxable year 
     shall not exceed the excess of--
       ``(i) $10,000,000, reduced by
       ``(ii) any such expenditures with respect to the building 
     taken into account by the taxpayer or any predecessor in 
     determining the amount of the deduction under this section 
     for all preceding taxable years.
       ``(C) Certain expenditures not included.--The term 
     `qualified revitalization expenditure' does not include--
       ``(i) Acquisition costs.--The costs of acquiring any 
     building or interest therein and any land in connection with 
     such building to the extent that such costs exceed 30 percent 
     of the qualified revitalization expenditures determined 
     without regard to this clause.
       ``(ii) Credits.--Any expenditure which the taxpayer may 
     take into account in computing any credit allowable under 
     this title unless the taxpayer elects to take the expenditure 
     into account only for purposes of this section.
       ``(c) Limitation on Aggregate Expenditures Allowable With 
     Respect to Buildings Located in a State.--
       ``(1) In general.--The aggregate qualified revitalization 
     expenditures chargeable to capital account with respect to 
     any building which may be taken into account in determining 
     the deduction under this section with respect to such 
     building shall not exceed the commercial revitalization 
     expenditure amount allocated to such building under this 
     subsection by the commercial revitalization agency. Such 
     allocation shall be made at the same time and in the same 
     manner as under paragraphs (1) and (7) of section 42(h).
       ``(2) Commercial revitalization expenditure amount for 
     agencies.--
       ``(A) In general.--The aggregate commercial revitalization 
     expenditure amount which a commercial revitalization agency 
     may allocate for any calendar year is the amount of the State 
     commercial revitalization expenditure ceiling determined 
     under this paragraph for such calendar year for such agency.
       ``(B) State commercial revitalization expenditure 
     ceiling.--The State commercial revitalization expenditure 
     ceiling applicable to any State--
       ``(i) for each calendar year after 2000 and before 2010 is 
     $12,000,000 for each renewal community in the State, and
       ``(ii) for each calendar year thereafter is zero.

[[Page S6714]]

       ``(C) Commercial revitalization agency.--For purposes of 
     this section, the term `commercial revitalization agency' 
     means any agency authorized by a State to carry out this 
     section.
       ``(d) Responsibilities of Commercial Revitalization 
     Agencies.--
       ``(1) Plans for allocation.--Notwithstanding any other 
     provision of this section, the commercial revitalization 
     deduction amount with respect to any building shall be zero 
     unless--
       ``(A) such amount was allocated pursuant to a qualified 
     allocation plan of the commercial revitalization agency which 
     is approved (in accordance with rules similar to the rules of 
     section 147(f)(2) (other than subparagraph (B)(ii) thereof)) 
     by the governmental unit of which such agency is a part, and
       ``(B) such agency notifies the chief executive officer (or 
     its equivalent) of the local jurisdiction within which the 
     building is located of such allocation and provides such 
     individual a reasonable opportunity to comment on the 
     allocation.
       ``(2) Qualified allocation plan.--For purposes of this 
     subsection, the term `qualified allocation plan' means any 
     plan--
       ``(A) which sets forth selection criteria to be used to 
     determine priorities of the commercial revitalization agency 
     which are appropriate to local conditions,
       ``(B) which considers--
       ``(i) the degree to which a project contributes to the 
     implementation of a strategic plan that is devised for a 
     renewal community through a citizen participation process,
       ``(ii) the amount of any increase in permanent, full-time 
     employment by reason of any project, and
       ``(iii) the active involvement of residents and nonprofit 
     groups within the renewal community, and
       ``(C) which provides a procedure that the agency (or its 
     agent) will follow in monitoring compliance with this 
     section.
       ``(e) Special Rules.--
       ``(1) Deduction in lieu of depreciation.--The deduction 
     provided by this section for qualified revitalization 
     expenditures shall--
       ``(A) with respect to the deduction determined under 
     subsection (a)(1), be in lieu of any depreciation deduction 
     otherwise allowable on account of \1/2\ of such expenditures, 
     and
       ``(B) with respect to the deduction determined under 
     subsection (a)(2), be in lieu of any depreciation deduction 
     otherwise allowable on account of all of such expenditures.
       ``(2) Basis adjustment, etc.--For purposes of sections 1016 
     and 1250, the deduction under this section shall be treated 
     in the same manner as a depreciation deduction.
       ``(3) Substantial rehabilitations treated as separate 
     buildings.--A substantial rehabilitation (within the meaning 
     of section 47(c)(1)(C)) of a building shall be treated as a 
     separate building for purposes of subsection (a).
       ``(4) Clarification of allowance of deduction under minimum 
     tax.--Notwithstanding section 56(a)(1), the deduction under 
     this section shall be allowed in determining alternative 
     minimum taxable income under section 55.
       ``(f) Regulations.--For purposes of this section, the 
     Secretary shall, by regulations, provide for the application 
     of rules similar to the rules of section 49 and subsections 
     (a) and (b) of section 50.
       ``(g) Termination.--This section shall not apply to any 
     building placed in service after December 31, 2009.

     ``SEC. 1400J. INCREASE IN EXPENSING UNDER SECTION 179.

       ``(a) In General.--For purposes of section 1397A--
       ``(1) a renewal community shall be treated as an 
     empowerment zone,
       ``(2) a renewal community business shall be treated as an 
     empowerment zone business, and
       ``(3) qualified renewal property shall be treated as 
     enterprise zone property.
       ``(b) Qualified Renewal Property.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified renewal property' 
     means any property to which section 168 applies (or would 
     apply but for section 179) if--
       ``(A) such property was acquired by the taxpayer by 
     purchase (as defined in section 179(d)(2)) after December 31, 
     2000, and before January 1, 2010, and
       ``(B) such property would be qualified zone property (as 
     defined in section 1397D) if references to renewal 
     communities were substituted for references to empowerment 
     zones in section 1397D.
       ``(2) Certain rules to apply.--The rules of subsections 
     (a)(2) and (b) of section 1397D shall apply for purposes of 
     this section.''.
       (b) Exception for Commercial Revitalization Deduction From 
     Passive Loss Rules.--
       (1) Paragraph (3) of section 469(i) is amended by 
     redesignating subparagraphs (C), (D), and (E) as 
     subparagraphs (D), (E), and (F), respectively, and by 
     inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) Exception for commercial revitalization deduction.--
     Subparagraph (A) shall not apply to any portion of the 
     passive activity loss for any taxable year which is 
     attributable to the commercial revitalization deduction under 
     section 1400I.''.
       (2) Subparagraph (E) of section 469(i)(3), as redesignated 
     by subparagraph (A), is amended to read as follows:
       ``(E) Ordering rules to reflect exceptions and separate 
     phase-outs.--If subparagraph (B), (C), or (D) applies for a 
     taxable year, paragraph (1) shall be applied--
       ``(i) first to the portion of the passive activity loss to 
     which subparagraph (C) does not apply,
       ``(ii) second to the portion of the passive activity credit 
     to which subparagraph (B) or (D) does not apply,
       ``(iii) third to the portion of such credit to which 
     subparagraph (B) applies,
       ``(iv) fourth to the portion of such loss to which 
     subparagraph (C) applies, and
       ``(v) then to the portion of such credit to which 
     subparagraph (D) applies.''.
       (3)(A) Subparagraph (B) of section 469(i)(6) is amended by 
     striking ``or'' at the end of clause (i), by striking the 
     period at the end of clause (ii) and inserting ``, or'', and 
     by adding at the end the following new clause:
       ``(iii) any deduction under section 1400I (relating to 
     commercial revitalization deduction).''.
       (B) The heading for such subparagraph (B) is amended by 
     striking ``or rehabilitation credit'' and inserting ``, 
     rehabilitation credit, or commercial revitalization 
     deduction''.
       (c) Clerical Amendment.--The table of subchapters for 
     chapter 1 is amended by adding at the end the following new 
     item:

                ``Subchapter X. Renewal Communities.''.

     SEC. 102. EXTENSION OF EXPENSING OF ENVIRONMENTAL REMEDIATION 
                   COSTS TO RENEWAL COMMUNITIES; EXTENSION OF 
                   TERMINATION DATE FOR RENEWAL COMMUNITIES AND 
                   EMPOWERMENT ZONES.

       (a) Extension.--
       (1) In general.--Subparagraph (A) of section 198(c)(2) 
     (defining targeted area) is amended by striking ``and'' at 
     the end of clause (iii), by striking the period at the end of 
     clause (iv) and inserting
     ``, and'', and by adding at the end the following new clause:
       ``(v) any renewal community (as defined in section 
     1400E).''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to expenditures paid or incurred after December 
     31, 2000.
       (b) Extension of Termination Date.--Subsection (h) of 
     section 198 is amended by inserting before the period 
     ``(December 31, 2009, in the case of an empowerment zone or 
     renewal community)''.

     SEC. 103. WORK OPPORTUNITY CREDIT FOR HIRING YOUTH RESIDING 
                   IN RENEWAL COMMUNITIES.

       (a) High-Risk Youth.--Subparagraphs (A)(ii) and (B) of 
     section 51(d)(5) are each amended by striking ``empowerment 
     zone or enterprise community'' and inserting ``empowerment 
     zone, enterprise community, or renewal community''.
       (b) Qualified Summer Youth Employee.--Clause (iv) of 
     section 51(d)(7)(A) is amended by striking ``empowerment zone 
     or enterprise community'' and inserting ``empowerment zone, 
     enterprise community, or renewal community''.
       (c) Headings.--Paragraphs (5)(B) and (7)(C) of section 
     51(d) are each amended by inserting ``or community'' in the 
     heading after ``zone''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after December 31, 2000.

     SEC. 104. EVALUATION AND REPORTING REQUIREMENTS.

       Not later than the close of the fourth calendar year after 
     the year in which the Secretary of Housing and Urban 
     Development first designates an area as a renewal community 
     under section 1400E of the Internal Revenue Code of 1986, and 
     at the close of each fourth calendar year thereafter, such 
     Secretary shall prepare and submit to the Congress a report 
     on the effects of such designations in stimulating the 
     creation of new jobs, particularly for disadvantaged workers 
     and long-term unemployed individuals, and promoting the 
     revitalization of economically distressed areas.

     SEC. 105. EXCLUSION OF EFFECTS OF THIS TITLE FROM PAYGO 
                   SCORECARD.

       Upon the enactment of this title, the Director of the 
     Office of Management and Budget shall not make any estimates 
     of changes in receipts under section 252(d) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 resulting 
     from the enactment of this title.

                  TITLE II--NEW MILLENNIUM CLASSROOMS

     SEC. 201. CREDIT FOR COMPUTER DONATIONS TO SCHOOLS, SENIOR 
                   CENTERS, PUBLIC LIBRARIES, AND OTHER TRAINING 
                   CENTERS.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business related credits) is amended 
     by adding at the end the following new section:

     ``SEC. 48D. CREDIT FOR COMPUTER DONATIONS TO SCHOOLS, SENIOR 
                   CENTERS, PUBLIC LIBRARIES, AND OTHER TRAINING 
                   CENTERS.

       ``(a) General Rule.--For purposes of section 38, the 
     computer donation credit determined under this section is an 
     amount equal to 50 percent of the qualified computer 
     contributions made by the taxpayer during the taxable year as 
     determined after the application of section 170(e)(6)(A) to 
     any entity located in--
       ``(1) a renewal community designated under section 1400E,
       ``(2) an empowerment zone or enterprise community 
     designated under section 1391,

[[Page S6715]]

       ``(3) an Indian reservation (as defined in section 
     168(j)(6)), or
       ``(4) a low-income community (as defined in subsection (c).
       ``(b) Qualified Computer Contribution.--For purposes of 
     this section, the term `qualified computer contribution' has 
     the meaning given the term `qualified elementary or secondary 
     educational contribution' by section 170(e)(6)(B), except 
     that--
       ``(1) clause (ii) thereof shall be applied--
       ``(A) by substituting `3 years' for `2 years',
       ``(B) by inserting `or reacquired' after `acquired', and
       ``(C) by inserting `for the taxpayer's own use' after 
     `constructed by the taxpayer',
       ``(2) clause (iii) thereof shall be applied by inserting `, 
     the person from whom the donor reacquires the property,' 
     after `the donor',
       ``(3) such term shall include the contribution of a 
     computer (as defined in section 168(i)(2)(B)(ii)) only if 
     computer software (as defined in section 197(e)(3)(B)) that 
     serves as a computer operating system has been lawfully 
     installed in such computer,
       ``(4) notwithstanding clauses (i) and (iv) of section 
     170(e)(6)(B), such term shall include the contribution of 
     computer technology or equipment to--
       ``(A) multipurpose senior centers (as defined in section 
     102(35) of the Older Americans Act of 1965 (42 U.S.C. 
     3002(35), as in effect on the date of the enactment of the 
     American Community Renewal and New Markets Empowerment Act) 
     described in section 501(c)(3) and exempt from tax under 
     section 501(a) to be used by individuals who have attained 60 
     years of age to improve job skills in computers,
       ``(B) a public library (within the meaning of section 
     213(2)(A) of the Library Services and Technology Act (20 
     U.S.C. 9122(2)(A), as in effect on the date of the enactment 
     of the American Community Renewal and New Markets Empowerment 
     Act) established and maintained by an entity described in 
     section 170(c)(1), or
       ``(C) an organization exempt from tax under section 501(a) 
     which provides employment, vocational, and job-training 
     services to individuals with barriers to employment, 
     including welfare recipients and individuals with 
     disabilities, and
       ``(5) such term shall only include contributions which meet 
     the minimum standards prescribed by the Secretary by 
     regulation, after consultation, at the option of the 
     Secretary, with the National Telecommunications and 
     Information Agency and any other Federal agency with 
     expertise in computer technology.
       ``(c) Low-Income Community.--For purposes of this section--
       ``(1) In general.--The term `low-income community' means 
     any population census tract if--
       ``(A)(i) the poverty rate for such tract is at least 20 
     percent, or
       ``(ii)(I) in the case of a tract not located within a 
     metropolitan area, the median family income for such tract 
     does not exceed 80 percent of statewide median family income, 
     or
       ``(II) in the case of a tract located within a metropolitan 
     area, the median family income for such tract does not exceed 
     80 percent of the greater of statewide median family income 
     or the metropolitan area median family income, and
       ``(B) the unemployment rate for such tract, as determined 
     by the most recent available data, was at least 1\1/2\ times 
     the national unemployment rate for the period to which such 
     data relate.
       ``(2) Areas not within census tracts.--In the case of an 
     area which is not tracted for population census tracts, the 
     equivalent county divisions (as defined by the Bureau of the 
     Census for purposes of defining poverty areas) shall be used 
     for purposes of determining poverty rates, median family 
     income, and unemployment rates.
       ``(d) Certain Rules Made Applicable.--For purposes of this 
     section, rules similar to the rules of paragraphs (1) and (2) 
     of section 41(f) shall apply.
       ``(e) Termination.--This section shall not apply to taxable 
     years beginning after December 31, 2009.''.
       (b) Current Year Business Credit Calculation.--Section 
     38(b) (relating to current year business credit) is amended 
     by striking ``plus'' at the end of paragraph (11), by 
     striking the period at the end of paragraph (12) and 
     inserting ``, plus'', and by adding at the end the following:
       ``(13) the computer donation credit determined under 
     section 45D(a).''.
       (c) Disallowance of Deduction by Amount of Credit.--Section 
     280C (relating to certain expenses for which credits are 
     allowable) is amended by adding at the end the following:
       ``(d) Credit for Computer Donations.--No deduction shall be 
     allowed for that portion of the qualified computer 
     contributions (as defined in section 45D(b)) made during the 
     taxable year that is equal to the amount of credit determined 
     for the taxable year under section 45D(a). In the case of a 
     corporation which is a member of a controlled group of 
     corporations (within the meaning of section 52(a)) or a trade 
     or business which is treated as being under common control 
     with other trades or businesses (within the meaning of 
     section 52(b)), this subsection shall be applied under rules 
     prescribed by the Secretary similar to the rules applicable 
     under subsections (a) and (b) of section 52.''.
       (d) Limitation on Carryback.--Subsection (d) of section 39 
     (relating to carryback and carryforward of unused credits) is 
     amended by adding at the end the following:
       ``(9) No carryback of computer donation credit before 
     effective date.--No amount of unused business credit 
     available under section 45D may be carried back to a taxable 
     year beginning on or before the date of the enactment of this 
     paragraph.''.
       (e) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 is amended by 
     inserting after the item relating to section 45C the 
     following:

``Sec. 45D. Credit for computer donations to schools, senior centers, 
              public libraries, and other training centers.''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2000.

 TITLE III--EXPANSION AND EXTENSION OF EMPOWERMENT ZONE TAX INCENTIVES

     SEC. 301. ADDITIONAL EMPOWERMENT ZONE DESIGNATIONS.

       Section 1391 is amended by adding at the end the following 
     new subsection:
       ``(h) Additional Designations Permitted.--
       ``(1) In general.--In addition to the areas designated 
     under subsections (a) and (g), the appropriate Secretaries 
     may designate in the aggregate an additional 9 nominated 
     areas as empowerment zones under this section, subject to the 
     availability of eligible nominated areas. Of that number, not 
     more than 7 may be designated in urban areas and not more 
     than 2 may be designated in rural areas.
       ``(2) Period designations may be made and take effect.--A 
     designation may be made under this subsection after the date 
     of the enactment of this subsection and before January 1, 
     2001. Subject to subparagraphs (B) and (C) of subsection 
     (d)(1), such designations shall remain in effect during the 
     period beginning on January 1, 2001, and ending on December 
     31, 2009.
       ``(3) Modifications to eligibility criteria, etc.--The 
     rules of subsection (g)(3) shall apply to designations under 
     this subsection.
       ``(4) Empowerment zones which become renewal communities.--
     The number of areas which may be designated as empowerment 
     zones under this subsection shall be increased by 1 for each 
     area which ceases to be an empowerment zone by reason of 
     section 1400E(e). Each additional area designated by reason 
     of the preceding sentence shall have the same urban or rural 
     character as the area it is replacing.''.

     SEC. 302. EXTENSION OF ENTERPRISE ZONE TREATMENT THROUGH 
                   2009.

       Subparagraph (A) of section 1391(d)(1) (relating to period 
     for which designation is in effect) is amended to read as 
     follows:
       ``(A) December 31, 2009,''.

     SEC. 303. 20 PERCENT EMPLOYMENT CREDIT FOR ALL EMPOWERMENT 
                   ZONES.

       (a) 20 Percent Credit.--Subsection (b) of section 1396 
     (relating to empowerment zone employment credit) is amended 
     to read as follows:
       ``(b) Applicable Percentage.--For purposes of this section, 
     the applicable percentage is 20 percent.''.
       (b) All Empowerment Zones Eligible for Credit.--Section 
     1396 is amended by striking subsection (e).
       (c) Conforming Amendment.--Subsection (d) of section 1400 
     is amended to read as follows:
       ``(d) Special Rule for Application of Employment Credit.--
     With respect to the DC Zone, section 1396(d)(1)(B) (relating 
     to empowerment zone employment credit) shall be applied by 
     substituting `the District of Columbia' for `such empowerment 
     zone'.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to wages paid or incurred after December 31, 
     2000.

     SEC. 304. INCREASED EXPENSING UNDER SECTION 179.

       (a) In General.--Subparagraph (A) of section 1397A(a)(1) is 
     amended by striking ``$20,000'' and inserting ``$35,000''.
       (b) Expensing for Property Used in Developable Sites.--
     Section 1397A is amended by striking subsection (c).
       (c) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 305. HIGHER LIMITS ON TAX-EXEMPT EMPOWERMENT ZONE 
                   FACILITY BONDS.

       (a) In General.--Paragraph (3) of section 1394(f) (relating 
     to bonds for empowerment zones designated under section 
     1391(g)) is amended to read as follows:
       ``(3) Empowerment zone facility bond.--For purposes of this 
     subsection, the term `empowerment zone facility bond' means 
     any bond which would be described in subsection (a) if only 
     empowerment zones were taken into account under sections 
     1397C and 1397D.'' .
       (b) Conforming Amendments.--
       (1) Subsection (f) of section 1394 is amended by striking 
     ``new empowerment zone facility bond'' each place it appears 
     and inserting ``empowerment zone facility bond''.
       (2) The heading for such subsection is amended to read as 
     follows:
       ``(f) Bonds for Empowerment Zones.--''.
       (3) Paragraph (1) of section 1394(c) is amended--
       (A) by striking ``empowerment zone or'' in subparagraph 
     (A), and
       (B) by striking ``empowerment zones and'' in subparagraph 
     (B).

[[Page S6716]]

       (c) Effective Date.--The amendments made by this section 
     shall apply to obligations issued after December 31, 2000.

     SEC. 306. NONRECOGNITION OF GAIN ON ROLLOVER OF EMPOWERMENT 
                   ZONE INVESTMENTS.

       (a) In General.--Part III of subchapter U of chapter 1 is 
     amended--
       (1) by redesignating subpart C as subpart D,
       (2) by redesignating sections 1397B and 1397C as sections 
     1397C and 1397D, respectively, and
       (3) by inserting after subpart B the following new subpart:

  ``Subpart C--Nonrecognition of Gain on Rollover of Empowerment Zone 
                              Investments

``Sec. 1397B. Nonrecognition of Gain on Rollover of Empowerment Zone 
              Investments.

     ``SEC. 1397B. NONRECOGNITION OF GAIN ON ROLLOVER OF 
                   EMPOWERMENT ZONE INVESTMENTS.

       ``(a) Nonrecognition of Gain.--In the case of any sale of a 
     qualified empowerment zone asset held by the taxpayer for 
     more than 1 year and with respect to which such taxpayer 
     elects the application of this section, gain from such sale 
     shall be recognized only to the extent that the amount 
     realized on such sale exceeds--
       ``(1) the cost of any qualified empowerment zone asset 
     (with respect to the same zone as the asset sold) purchased 
     by the taxpayer during the 60-day period beginning on the 
     date of such sale, reduced by
       ``(2) any portion of such cost previously taken into 
     account under this section.
     This section shall apply only to gain which is qualified 
     capital gain.
       ``(b) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Qualified empowerment zone asset.--
       ``(A) In general.--The term `qualified empowerment zone 
     asset' means any property which would be a qualified 
     community asset (as defined in section 1400F) if in section 
     1400F--
       ``(i) references to empowerment zones were substituted for 
     references to renewal communities, and
       ``(ii) references to enterprise zone businesses (as defined 
     in section 1397C) were substituted for references to renewal 
     community businesses.
       ``(B) Treatment of dc zone.--

  For termination of rollover with respect to the District of Columbia 
Enterprise Zone for property acquired after December 31, 2002, see 
section 1400(f).
       ``(2) Qualified capital gain.--
       ``(A) In general.--Except as otherwise provided in this 
     paragraph, the term `qualified capital gain` means any gain 
     from the sale or exchange of--
       ``(i) a capital asset, or
       ``(ii) property used in the trade or business (as defined 
     in section 1231(b)).
       ``(B) Certain rules to apply.--Rules similar to the rules 
     of paragraphs (3) and (4) of section 1400B(e) shall apply for 
     purposes of this subsection.
       ``(3) Purchase.--A taxpayer shall be treated as having 
     purchased any property if, but for paragraph (4), the 
     unadjusted basis of such property in the hands of the 
     taxpayer would be its cost (within the meaning of section 
     1012).
       ``(4) Basis adjustments.--If gain from any sale is not 
     recognized by reason of subsection (a), such gain shall be 
     applied to reduce (in the order acquired) the basis for 
     determining gain or loss of any qualified empowerment zone 
     asset which is purchased by the taxpayer during the 60-day 
     period described in subsection (a). This paragraph shall not 
     apply for purposes of section 1202.
       ``(5) Holding period.--For purposes of determining whether 
     the nonrecognition of gain under subsection (a) applies to 
     any qualified empowerment zone asset which is sold--
       ``(A) the taxpayer's holding period for such asset and the 
     asset referred to in subsection (a)(1) shall be determined 
     without regard to section 1223, and
       ``(B) only the first year of the taxpayer's holding period 
     for the asset referred to in subsection (a)(1) shall be taken 
     into account for purposes of paragraphs (2)(A)(iii), (3)(C), 
     and (4)(A)(iii) of section 1400F(b).''
       (b) Conforming Amendments.--
       (1) Paragraph (23) of section 1016(a) is amended--
       (A) by striking ``or 1045'' and inserting ``1045, or 
     1397B'', and
       (B) by striking ``or 1045(b)(4)'' and inserting 
     ``1045(b)(4), or 1397B(b)(4)''.
       (2) Paragraph (15) of section 1223 is amended to read as 
     follows:
       ``(15) Except for purposes of sections 1202(a)(2), 
     1202(c)(2)(A), 1400B(b), and 1400F(b), in determining the 
     period for which the taxpayer has held property the 
     acquisition of which resulted under section 1045 or 1397B in 
     the nonrecognition of any part of the gain realized on the 
     sale of other property, there shall be included the period 
     for which such other property has been held as of the date of 
     such sale.''
       (3) Paragraph (2) of section 1394(b) is amended--
       (A) by striking ``section 1397C'' and inserting ``section 
     1397D'', and
       (B) by striking ``section 1397C(a)(2)'' and inserting 
     ``section 1397D(a)(2)''.
       (4) Paragraph (3) of section 1394(b) is amended--
       (A) by striking ``section 1397B'' each place it appears and 
     inserting ``section 1397C'', and
       (B) by striking ``section 1397B(d)'' and inserting 
     ``section 1397C(d)''.
       (5) Sections 1400(e) and 1400B(c) are each amended by 
     striking ``section 1397B'' each place it appears and 
     inserting ``section 1397C''.
       (6) The table of subparts for part III of subchapter U of 
     chapter 1 is amended by striking the last item and inserting 
     the following new items:

``Subpart C. Nonrecognition of gain on rollover of empowerment zone 
              investments.
``Subpart D. General provisions.''
       (7) The table of sections for subpart D of such part III is 
     amended to read as follows:

``Sec. 1397C. Enterprise zone business defined.
``Sec. 1397D. Qualified zone property defined.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to qualified empowerment zone assets acquired 
     after December 31, 2000.

     SEC. 307. INCREASED EXCLUSION OF GAIN ON SALE OF EMPOWERMENT 
                   ZONE STOCK.

       (a) In General.--Subsection (a) of section 1202 is amended 
     to read as follows:
       ``(a) Exclusion.--
       ``(1) In general.--In the case of a taxpayer other than a 
     corporation, gross income shall not include 50 percent of any 
     gain from the sale or exchange of qualified small business 
     stock held for more than 5 years.
       ``(2) Empowerment zone businesses.--
       ``(A) In general.--In the case of qualified small business 
     stock acquired after the date of the enactment of this 
     paragraph in a corporation which is a qualified business 
     entity (as defined in section 1397C(b)) during substantially 
     all of the taxpayer's holding period for such stock, 
     paragraph (1) shall be applied by substituting `60 percent' 
     for `50 percent'.
       ``(B) Certain rules to apply.--Rules similar to the rules 
     of paragraphs (5) and (7) of section 1400B(b) shall apply for 
     purposes of this paragraph.
       ``(C) Gain after 2014 not qualified.--Subparagraph (A) 
     shall not apply to gain attributable to periods after 
     December 31, 2014.''.
       (b) Conforming Amendment.--Paragraph (8) of section 1(h) is 
     amended by striking ``means'' and all that follows and 
     inserting ``means the excess of--
       ``(A) the gain which would be excluded from gross income 
     under section 1202 but for the percentage limitation in 
     section 1202(a), over
       ``(B) the gain excluded from gross income under section 
     1202.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to stock acquired after December 31, 2000.

     SEC. 308. FUNDING ENTITLEMENT FOR ROUND II EMPOWERMENT ZONES.

       (a) In General.--
       (1) Entitlement.--Section 2007(a)(1) of the Social Security 
     Act (42 U.S.C. 1397f(a)(1)) is amended--
       (A) in subparagraph (A), by striking ``in the State; and'' 
     and inserting ``that is in the State and is designated 
     pursuant to section 1391(b) of the Internal Revenue Code of 
     1986;'';
       (B) by adding after subparagraph (B) the following:
       ``(C)(i) 8 grants under this section for each qualified 
     empowerment zone that is in an urban area in the State and is 
     designated pursuant to section 1391(g) of such Code; and
       ``(ii) 8 grants under this section for each qualified 
     empowerment zone that is in a rural area in the State and is 
     designated pursuant to section 1391(g) of such Code;
       ``(D) 8 grants under this section for each qualified 
     enterprise community that is in the State and is designated 
     pursuant to section 766 of the Agriculture, Rural 
     Development, Food and Drug Administration, and Related 
     Agencies Appropriations Act, 1999; and
       ``(E) 1 grant under this section for each strategic 
     planning community.''.
       (2) Amount of grants.--Section 2007(a)(2) of such Act (42 
     U.S.C. 1397f(a)(2)) is amended--
       (A) in the heading of subparagraph (A), by inserting 
     ``Original'' before ``Empowerment'';
       (B) in subparagraph (A), in the matter preceding clause 
     (i), by inserting ``referred to in paragraph (1)(A)'' after 
     ``empowerment zone'';
       (C) by redesignating subparagraph (C) as subparagraph (F); 
     and
       (D) by inserting after subparagraph (B) the following:
       ``(C) Additional empowerment grants.--The amount of the 
     grant to a State under this section for a qualified 
     empowerment zone referred to in paragraph (1)(C) shall be--
       ``(i) if the zone is in an urban area, $11,675,000 for each 
     of fiscal years 2001 through 2008; or
       ``(ii) if the zone is in a rural area, $4,600,000 for each 
     of fiscal years 2001 through 2008,
     multiplied by the proportion of the population of the zone 
     that resides in the State.
       ``(D) Additional enterprise community grants.--The amount 
     of the grant to a State under this section for a qualified 
     enterprise community referred to in paragraph (1)(D) shall be 
     $2,750,000, multiplied by the proportion of the population of 
     the community that resides in the State.
       ``(E) Strategic planning community grants.--The amount of 
     the grant to a State under this section for a strategic 
     planning community shall be $3,000,000, multiplied by

[[Page S6717]]

     the proportion of the population of the community that 
     resides in the State.''.
       (3) Timing of grants.--Section 2007(a)(3) of such Act (42 
     U.S.C. 1397f(a)(3)) is amended--
       (A) in the heading of subparagraph (A), by inserting 
     ``Original'' before ``Qualified'';
       (B) in subparagraph (A), in the matter preceding clause 
     (i), by inserting ``referred to in paragraph (1)(A)'' after 
     ``empowerment zone''; and
       (C) by adding after subparagraph (B) the following:
       ``(C) Additional qualified empowerment zones.--With respect 
     to each qualified empowerment zone referred to in paragraph 
     (1)(C), the Secretary shall make 1 grant under this section 
     to the State in which the zone lies, on the first day of 
     fiscal year 2001 and of each of the 7 succeeding fiscal 
     years.
       ``(D) Additional qualified enterprise communities.--With 
     respect to each qualified enterprise community referred to in 
     paragraph (1)(D), the Secretary shall make 1 grant under this 
     section to the State in which the community lies on the first 
     day of fiscal year 2001 and of each of the 7 succeeding 
     fiscal years.
       ``(E) Strategic planning communities.--With respect to each 
     strategic planning community, the Secretary shall make 1 
     grant under this section to the State in which the community 
     is located, on October 1, 2001.''.
       (4) Funding.--Section 2007(a)(4) of such Act (42 U.S.C. 
     1397f(a)(4)) is amended--
       (A) by striking ``(4) Funding.--$1,000,000'' and inserting 
     the following:
       ``(4) Funding.--
       ``(A) Original grants.--$1,000,000'';
       (B) by inserting ``for empowerment zones and enterprise 
     communities described in subparagraphs (A) and (B) of 
     paragraph (1)'' before the period; and
       (C) by adding after and below the end the following:
       ``(B) Additional empowerment zone grants.--$1,585,000,000 
     shall be made available to the Secretary for grants under 
     this section for empowerment zones referred to in paragraph 
     (1)(C).
       ``(C) Additional enterprise community grants.--$55,000,000 
     shall be made available to the Secretary for grants under 
     this section for enterprise communities referred to in 
     paragraph (1)(D).
       ``(D) Strategic planning community grants.--$45,000,000 
     shall be made available to the Secretary for grants under 
     this section for strategic planning communities.''.
       (5) Direct funding for indian tribes.--Section 2007(a) of 
     such Act (42 U.S.C. 1397f(a)) is amended by adding at the end 
     the following:
       ``(5) Direct funding for indian tribes.--
       ``(A) In general.--The Secretary may make a grant under 
     this section directly to the governing body of an Indian 
     tribe if--
       ``(i) the tribe is identified in the strategic plan of a 
     qualified empowerment zone or qualified enterprise community 
     as the entity that assumes sole or primary responsibility for 
     carrying out activities and projects under the grant; and
       ``(ii) the grant is to be used for activities and projects 
     that are--

       ``(I) included in the strategic plan of the qualified 
     empowerment zone or qualified enterprise community, 
     consistent with this section; and
       ``(II) approved by the Secretary of Agriculture, in the 
     case of a qualified empowerment zone or qualified enterprise 
     community in a rural area, or the Secretary of Housing and 
     Urban Development, in the case of a qualified empowerment 
     zone or qualified enterprise community in an urban area.

       ``(B) Rules of interpretation.--
       ``(i) If grant under this section is made directly to the 
     governing body of an Indian tribe under subparagraph (A), the 
     tribe shall be considered a State for purposes of this 
     section.
       ``(ii) This subparagraph shall not be construed as making 
     applicable to this section the provisions of the Indian Self-
     Determination and Education Assistance Act.''.
       (6) Definitions.--
       (A) Qualified enterprise community.--Section 2007(f)(2)(A) 
     of such Act (42 U.S.C. 1397f(f)(2)(A)) is amended by 
     inserting ``or pursuant to section 766 of the 
     Agriculture, Rural Development, Food and Drug 
     Administration, and Related Agencies Appropriations Act, 
     1999'' before the semicolon.
       (B) Strategic plan.--Section 2007(f)(3) of such Act (42 
     U.S.C. 1397f(f)(3)) is amended by inserting ``or under 
     section 766 of the Agriculture, Rural Development, Food and 
     Drug Administration, and Related Agencies Appropriations Act, 
     1999'' before the period.
       (C) Strategic planning community.--Section 2007(f) of such 
     Act (42 U.S.C. 1397f(f)) is amended by adding at the end the 
     following:
       ``(7) Strategic planning community.--The term `strategic 
     planning community' means a respondent to the Notice Inviting 
     Applications at 63 Federal Register 19162 (April 16, 1998) 
     whose application was ranked 16th through 30th in the 
     competition that concluded in December 1998.''.
       (D) Indian tribe.--Section 2007(f) of such Act (42 U.S.C. 
     1397f(f)), as amended by subparagraph (C), is amended by 
     adding at the end the following:
       ``(8) Indian tribe.--The term `Indian tribe' means any 
     Indian tribe, band, nation, or other organized group or 
     community, including any Alaska Native village or regional or 
     village corporation as defined in or established pursuant to 
     the Alaska Native Claims Settlement Act, which is recognized 
     as eligible for the special programs and services provided by 
     the United States to Indians because of their status as 
     Indians.''.
       (b) Use of Grant Funds.--
       (1) Revolving loan activities.--Section 2007(b) of the 
     Social Security Act (42 U.S.C. 1397f(b)) is amended by adding 
     at the end the following:
       ``(5) Revolving loan activities.--
       ``(A) In general.--In order to assist disadvantaged adults 
     and youths in achieving and maintaining economic self-
     support, a State may use amounts paid under this section to 
     fund revolving loan funds or similar arrangements for the 
     purpose of making loans to residents, institutions, 
     organizations, or businesses that hire disadvantaged adults 
     and youths.
       ``(B) Rules for disbursement.--Amounts to be used as 
     described in subparagraph (A) shall be disbursed by the 
     Secretary, consistent with the provisions of the Cash 
     Management Improvement Act and its implementing rules, 
     regulations, and procedures issued by the Secretary of the 
     Treasury--
       ``(i) in the case of a grant to a revolving loan fund--

       ``(I) pursuant to a written irrevocable grant commitment; 
     and
       ``(II) at such time or times as the Secretary determines 
     that the funds are needed to meet the purposes of such 
     commitment; or

       ``(ii) in the case of a grant for purposes of capitalizing 
     an insured depository institution (as defined in section 3 of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813)) or an 
     insured credit union (as defined in section 101 of the 
     Federal Credit Union Act (12 U.S.C. 1742)), at such time or 
     times as the Secretary determines that funds are needed for 
     such capitalization.''.
       (2) Use as non-federal share.--Section 2007(b) of such Act 
     (42 U.S.C. 1397f(b)), as amended by paragraph (1), is amended 
     by adding at the end the following:
       ``(6) A State may use amounts received from a grant under 
     this section to pay all or part of the non-Federal share of 
     expenditures under any other Federal grant to a local public 
     or nonprofit private agency or organization for activities 
     consistent with the purposes of this section, unless the 
     statutory authority for such other grant expressly prohibits 
     counting of Federal grant funds as such non-Federal share.''.
       (c) Environmental Review.--Section 2007 of the Social 
     Security Act (42 U.S.C. 1397f) is amended--
       (1) by redesignating subsection (f) as subsection (g); and
       (2) by inserting after subsection (e) the following:
       ``(f) Environmental Review.--
       ``(1) Execution of responsibility by the secretary of 
     housing and urban development and the secretary of 
     agriculture.--
       ``(A) Applicability.--This subsection shall apply to grants 
     under this section in connection with empowerment zones, 
     enterprise communities, and strategic planning communities 
     (as defined in subsection (g)).
       ``(B) Execution of responsibility.--With respect to grants 
     described in subparagraph (A), the Secretary of Housing and 
     Urban Development and the Secretary of Agriculture, as 
     appropriate, shall execute the responsibilities under the 
     National Environmental Policy Act of 1969 and other 
     provisions of law that further the purposes of such Act (as 
     specified in regulations issued by each such Secretary under 
     paragraph (2)(B)) that would otherwise apply to the Secretary 
     of Health and Human Services, and may provide for the 
     assumption of such responsibilities in accordance with 
     paragraphs (2) through (5).
       ``(C) Definition of secretary.--Except as otherwise 
     specified, in this subsection, the term `Secretary' means the 
     Secretary of Housing and Urban Development for purposes of 
     grants under this section with respect to qualified 
     empowerment zones and qualified enterprise communities in 
     urban areas, and strategic planning areas, and the Secretary 
     of Agriculture for purposes of grants under this section with 
     respect to qualified empowerment zones and qualified 
     enterprise communities in rural areas.
       ``(2) Assumption of responsibility by states, units of 
     general local government, and indian tribes.--
       ``(A) Release of funds.--In order to assure that the 
     policies of the National Environmental Policy Act of 1969 and 
     other provisions of law that further the purposes of such Act 
     (as specified in regulations issued by the Secretary under 
     subparagraph (B)) are most effectively implemented in 
     connection with the expenditure of funds under this section, 
     and to assure to the public undiminished protection of the 
     environment, the Secretary may, under such regulations, in 
     lieu of the environmental protection procedures otherwise 
     applicable, provide for the release of funds for particular 
     projects to recipients of assistance under this section if 
     the State, unit of general local government, or Indian tribe, 
     as designated by the Secretary in accordance with regulations 
     issued by the Secretary under subparagraph (B), assumes all 
     of the responsibilities for environmental review, 
     decisionmaking, and action pursuant to such Act, and such 
     other provisions of law as the regulations of the Secretary 
     specify, that would otherwise apply to the Secretary were the 
     Secretary to undertake such projects as Federal projects.
       ``(B) Implementation.--The Secretary of Housing and Urban 
     Development and the Secretary of Agriculture shall each issue 
     regulations to carry out this subsection only after 
     consultation with the Council on Environmental Quality. Such 
     regulations shall--

[[Page S6718]]

       ``(i) specify any other provisions of law that further the 
     purposes of the National Environmental Policy Act of 1969 and 
     to which the assumption of responsibility as provided in this 
     subsection applies;
       ``(ii) provide eligibility criteria and procedures for the 
     designation of a State, unit of general local government, or 
     Indian tribe to assume all of the responsibilities described 
     in subparagraph (A);
       ``(iii) specify the purposes for which funds may be 
     committed without regard to the procedure established under 
     paragraph (3);
       ``(iv) provide for monitoring of the performance of 
     environmental reviews under this subsection;
       ``(v) in the discretion of the Secretary, provide for the 
     provision or facilitation of training for such performance; 
     and
       ``(vi) subject to the discretion of the Secretary, provide 
     for suspension or termination by the Secretary of the 
     assumption under subparagraph (A).
       ``(C) Responsibilities of state, unit of general local 
     government, or indian tribe.--The Secretary's duty under 
     subparagraph (B) shall not be construed to limit any 
     responsibility assumed by a State, unit of general local 
     government, or Indian tribe with respect to any particular 
     release of funds under subparagraph (A).
       ``(3) Procedure.--The Secretary shall approve the release 
     of funds for projects subject to the procedures authorized by 
     this subsection only if, not less than 15 days prior to such 
     approval and prior to any commitment of funds to such 
     projects (except for such purposes specified in the 
     regulations issued under paragraph (2)(B)), the recipient 
     submits to the Secretary a request for such release 
     accompanied by a certification of the State, unit of general 
     local government, or Indian tribe that meets the requirements 
     of paragraph (4). The approval by the Secretary of any such 
     certification shall be deemed to satisfy the Secretary's 
     responsibilities pursuant to paragraph (1) under the National 
     Environmental Policy Act of 1969 and such other provisions of 
     law as the regulations of the Secretary specify insofar as 
     those responsibilities relate to the releases of funds for 
     projects to be carried out pursuant thereto that are covered 
     by such certification.
       ``(4) Certification.--A certification under the procedures 
     authorized by this subsection shall--
       ``(A) be in a form acceptable to the Secretary;
       ``(B) be executed by the chief executive officer or other 
     officer of the State, unit of general local government, or 
     Indian tribe who qualifies under regulations of the 
     Secretary;
       ``(C) specify that the State, unit of general local 
     government, or Indian tribe under this subsection has fully 
     carried out its responsibilities as described under 
     paragraph (2); and
       ``(D) specify that the certifying officer--
       ``(i) consents to assume the status of a responsible 
     Federal official under the National Environmental Policy Act 
     of 1969 and each provision of law specified in regulations 
     issued by the Secretary insofar as the provisions of such Act 
     or other such provisions of law apply pursuant to paragraph 
     (2); and
       ``(ii) is authorized and consents on behalf of the State, 
     unit of general local government, or Indian tribe and himself 
     or herself to accept the jurisdiction of the Federal courts 
     for the purpose of enforcement of the responsibilities as 
     such an official.
       ``(5) Approval by states.--In cases in which a unit of 
     general local government carries out the responsibilities 
     described in paragraph (2), the Secretary may permit the 
     State to perform those actions of the Secretary described in 
     paragraph (3). The performance of such actions by the State, 
     where permitted, shall be deemed to satisfy the 
     responsibilities referred to in the second sentence of 
     paragraph (3).''.

     SEC. 309. RULES REGARDING QUALIFIED ISSUES.

       (a) In General.--In the case of a qualified issue (as 
     defined in subsection (c)), section 1394(c)(1) of the 
     Internal Revenue Code of 1986 shall be applied by 
     substituting ``$200,000,000'' for the dollar amounts 
     contained in such section, and section 1394(a) of such Code 
     shall be applied by treating a qualified facility (as defined 
     in subsection (c)) as an enterprise zone facility without 
     regard to the requirements of subsections (b) and (e) of 
     section 1394 of such Code.
       (b) Special Rules Regarding Qualified Issues.--A qualified 
     issue--
       (1) shall not be treated as an issue of private activity 
     bonds for purposes of sections 57(a)(5) and 146(a) of the 
     Internal Revenue Code of 1986;
       (2) shall be subject to section 147(e) of such Code 
     determined without regard to the phrase ``skybox or other 
     private luxury box'';
       (3) shall not cause the qualified facility to be treated as 
     tax-exempt use property or tax-exempt bond financed property 
     for purposes of section 168(g) of such Code; and
       (4) shall be treated as financing capital expenditures 
     relating to the qualified facility (to the extent such 
     capital expenditures were actually paid in an amount not 
     exceeding the amount of the indebtedness being refinanced) 
     without regard to any regulations pertaining to the 
     allocation of bond proceeds to expenses (including expenses 
     paid prior to the issuance of the bonds).
       (c) Definitions.--For purposes of this section--
       (1) Qualified issue.--The term ``qualified issue'' means an 
     issue of bonds (including an issue in a series of refunding 
     issues) issued to refinance the outstanding indebtedness 
     incurred in connection with a qualified facility.
       (2) Qualified facility.--The term ``qualified facility'' 
     means an enclosed, mixed-use entertainment, conference, and 
     sports complex located in the District of Columbia Enterprise 
     Zone, which held its first professional sports event on 
     December 2, 1997, including all related facilities and costs.

     SEC. 310. CUSTOMS USER FEES.

       Section 13031(j)(3) of the Consolidated Omnibus Budget 
     Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)) is amended 
     by striking ``2003'' and inserting ``2008''.

            TITLE IV--FAITH BASED SUBSTANCE ABUSE TREATMENT

     SEC. 401. PREVENTION AND TREATMENT OF SUBSTANCE ABUSE; 
                   SERVICES PROVIDED THROUGH RELIGIOUS 
                   ORGANIZATIONS.

       Title V of the Public Health Service Act (42 U.S.C. 290aa 
     et seq.) is amended by adding at the end the following part:

      ``Part G--Services Provided Through Religious Organizations

     ``SEC. 581. APPLICABILITY TO DESIGNATED PROGRAMS.

       ``(a) Designated Programs.--Subject to subsection (b), this 
     part applies to discretionary and formula grant programs 
     administered by the Substance Abuse and Mental Health 
     Services Administration that make awards of Federal financial 
     assistance to public or private entities for the purpose of 
     carrying out activities to prevent or treat substance abuse 
     (in this part referred to as a `designated program'). 
     Designated programs include the program under subpart II of 
     part B of title XIX (relating to formula grants to the 
     States).
       ``(b) Limitation.--This part does not apply to any award of 
     Federal financial assistance under a designated program for a 
     purpose other than the purpose specified in subsection (a).
       ``(c) Definitions.--For purposes of this part (and subject 
     to subsection (b)):
       ``(1) The term `designated award recipient' means a public 
     or private entity that has received an award of financial 
     assistance under a designated program (whether the award is a 
     designated direct award or a designated subaward).
       ``(2) The term `designated direct award' means an award of 
     financial assistance under a designated program that is 
     received directly from the Federal Government.
       ``(3) The term `designated subaward' means an award of 
     financial assistance made by a non-Federal entity, which 
     award consists in whole or in part of Federal financial 
     assistance provided through an award under a designated 
     program.
       ``(4) The term `designated program' has the meaning given 
     such term in subsection (a).
       ``(5) The term `financial assistance' means a grant, 
     cooperative agreement, contract, or voucherized assistance.
       ``(6) The term `program beneficiary' means an individual 
     who receives program services.
       ``(7) The term `program participant' has the meaning given 
     such term in section 582(a)(2).
       ``(8) The term `program services' means treatment for 
     substance abuse, or preventive services regarding such abuse, 
     provided pursuant to an award of financial assistance under a 
     designated program.
       ``(9) The term `religious organization' means a nonprofit 
     religious organization.
       ``(10) The term `voucherized assistance' means--
       ``(A) a system of selecting and reimbursing program 
     services in which--
       ``(i) the beneficiary is given a document or other 
     authorization that may be used to pay for program services;
       ``(ii) the beneficiary chooses the organization that will 
     provide services to him or her according to rules specified 
     by the designated award recipient; and
       ``(iii) the organization selected by the beneficiary is 
     reimbursed by the designated award recipient for program 
     services provided; or
       ``(B) any other mode of financial assistance to pay for 
     program services in which the program beneficiary determines 
     the allocation of program funds through his or her selection 
     of one service provider from among alternatives.

     ``SEC. 582. RELIGIOUS ORGANIZATIONS AS PROGRAM PARTICIPANTS.

       ``(a) In General.--
       ``(1) Scope of authority.--Notwithstanding any other 
     provision of law, a religious organization--
       ``(A) may be a designated award recipient;
       ``(B) may make designated subawards to other public or 
     nonprofit private entities (including other religious 
     organizations);
       ``(C) may provide for the provision of program services to 
     program beneficiaries through the use of voucherized 
     assistance; and
       ``(D) may be a provider of services under a designated 
     program, including a provider that accepts voucherized 
     assistance.
       ``(2) Definition of program participant.--For purposes of 
     this part, the term `program participant' means a public or 
     private entity that has received a designated direct award, 
     or a designated subaward, regardless of whether the entity 
     provides program services. Such term includes an entity whose 
     only participation in a designated program is to provide 
     program services pursuant to the acceptance of voucherized 
     assistance.

[[Page S6719]]

       ``(b) Religious Organizations.--The purpose of this section 
     is to allow religious organizations to be program 
     participants on the same basis as any other nonprofit private 
     provider without impairing the religious character of such 
     organizations, and without diminishing the religious freedom 
     of program beneficiaries.
       ``(c) Nondiscrimination Against Religious Organizations.--
       ``(1) Eligibility as program participants.--Religious 
     organizations are eligible to be program participants on the 
     same basis as any other nonprofit private organization as 
     long as the programs are implemented consistent with the 
     Establishment Clause of the First Amendment to the United 
     States Constitution. The Federal Government may under the 
     preceding sentence apply to religious organizations the same 
     eligibility conditions in designated programs as are applied 
     to any nonprofit private organization as long as the 
     conditions are consistent with the Free Exercise Clause of 
     the First Amendment.
       ``(2) Nondiscrimination.--Neither the Federal Government 
     nor a State receiving funds under such programs shall 
     discriminate against an organization that is or applies to be 
     a program participant on the basis that the organization has 
     a religious character.
       ``(d) Religious Character and Freedom.--
       ``(1) Religious organizations.--Except as provided in this 
     section, any religious organization that is a program 
     participant shall retain its independence from Federal, 
     State, and local government, including such organization's 
     control over the definition, development, practice, and 
     expression of its religious beliefs.
       ``(2) Additional safeguards.--Neither the Federal 
     Government nor a State shall require a religious organization 
     to--
       ``(A) alter its form of internal governance; or
       ``(B) remove religious art, icons, scripture, or other 
     symbols;
     in order to be a program participant.
       ``(e) Employment Practices.--A religious organization's 
     exemption provided under section 702 of the Civil Rights Act 
     of 1964 regarding employment practices shall not be affected 
     by its participation in, or receipt of funds from, a 
     designated program.
       ``(f) Rights of Program Beneficiaries.--
       ``(1) In general.--With respect to an individual who is a 
     program beneficiary or a prospective program beneficiary, if 
     the individual objects to a program participant on the basis 
     that the participant is a religious organization, the 
     following applies:
       ``(A) If the organization received a designated direct 
     award, the organization shall refer the individual to an 
     alternative entity that provides program services and shall, 
     to the extent practicable, provide appropriate follow-up 
     services.
       ``(B) If the organization received a designated subaward, 
     the non-Federal entity that made the subaward shall refer the 
     individual to an alternative entity that provides program 
     services and shall, to the extent practicable, provide 
     appropriate follow-up services.
       ``(C) If the organization is providing services pursuant to 
     voucherized assistance, the designated award recipient that 
     operates the voucherized assistance program shall refer the 
     individual to an alternative entity that provides program 
     services and shall, to the extent practicable, provide 
     appropriate follow-up services.
       ``(D) If the local government involved makes available a 
     list of entities in the geographic area that provide program 
     services, the program participant with the responsibility for 
     making the referral under subparagraph (A), (B), or (C), as 
     the case may be, shall obtain a copy of such list and 
     consider the list in making the referral (except that this 
     subparagraph does not apply if the program participant is the 
     local government or the State).
       ``(E) Referrals under any of subparagraphs (A) through (C) 
     shall be made to alternative entities that will provide 
     program services the monetary value of which is not less than 
     the monetary value of the program services that the 
     individual would have received from the religious 
     organization involved.
       ``(2) Nondiscrimination.--Except as otherwise provided in 
     law, a religious organization that is a program participant 
     shall not in providing program services discriminate against 
     a program beneficiary on the basis of religion or religious 
     belief.
       ``(g) Fiscal Accountability.--
       ``(1) In general.--Except as provided in paragraph (2), any 
     religious organization that is a program participant shall be 
     subject to the same regulations as other recipients of awards 
     of Federal financial assistance to account, in accordance 
     with generally accepted auditing principles, for the use of 
     the funds provided under such awards.
       ``(2) Limited audit.--With respect to the award involved, 
     if a religious organization that is a program participant 
     maintains the Federal funds in a separate account from non-
     Federal funds, then only the Federal funds shall be subject 
     to audit.
       ``(h) Compliance.--With respect to compliance with this 
     section by an agency, a religious organization may obtain 
     judicial review of agency action in accordance with chapter 7 
     of title 5, United States Code.

     ``SEC. 583. LIMITATIONS ON USE OF FUNDS FOR CERTAIN PURPOSES.

       ``(a) In General.--Except as provided in subsection (b), no 
     funds provided directly to an entity under a designated 
     program shall be expended for sectarian worship or 
     instruction.
       ``(b) Exception.--Subsection (a) shall not apply to 
     assistance provided to or on behalf of a program beneficiary 
     if the beneficiary may choose where such assistance is 
     redeemed or allocated.

     ``SEC. 584. FINANCIAL ASSISTANCE NOT AID TO INSTITUTIONS.

       ``Financial assistance under a designated program is aid to 
     the beneficiary, not to the organization providing program 
     services.

     ``SEC. 585. EDUCATIONAL REQUIREMENTS FOR PERSONNEL IN DRUG 
                   TREATMENT PROGRAMS.

       ``(a) Findings.--The Congress finds that--
       ``(1) establishing formal educational qualification for 
     counselors and other personnel in drug treatment programs may 
     undermine the effectiveness of such programs; and
       ``(2) such formal educational requirements for counselors 
     and other personnel may hinder or prevent the provision of 
     needed drug treatment services.
       ``(b) Limitation on Educational Requirements of 
     Personnel.--
       ``(1) Treatment of religious education.--
       ``(A) In general.--If any State or local government that is 
     a program participant imposes formal educational 
     qualifications on providers of program services, including 
     religious organizations, such State or local government shall 
     treat religious education and training of personnel as having 
     a critical and positive role in the delivery of program 
     services.
       ``(B) Education and training on prevention and treatment of 
     substance abuse.--In applying to religious organizations 
     educational qualifications for personnel of such 
     organizations who provide program services, a State or local 
     government that is a program participant shall, with respect 
     to education and training on preventing and treating 
     substance abuse, give credit for such education and training 
     that is provided by religious organizations equivalent to 
     credit given for secular course work that provides such 
     education and training.
       ``(C) General educational requirements.--In applying to 
     religious organizations educational qualifications for 
     personnel of such organizations who provide program services, 
     a State or local government that is a program participant 
     shall, if such qualifications include course work that does 
     not relate specifically to preventing or treating substance 
     abuse, give credit for religious education equivalent to 
     credit given for secular course work.
       ``(2) Restriction of discrimination requirements..--
       ``(A) In general.--Subject to paragraph (1), a State or 
     local government that is a program participant may establish 
     formal educational qualifications for personnel in 
     organizations providing program services that contribute to 
     success in reducing drug use among program beneficiaries.
       ``(B) Exception.--The Secretary shall waive the application 
     of any educational qualification imposed under subparagraph 
     (A) for an individual religious organization, if the 
     Secretary determines that--
       ``(i) the religious organization has a record of prior 
     successful drug treatment for at least the preceding three 
     years;
       ``(ii) the educational qualifications have effectively 
     barred such religious organization from becoming a program 
     provider;
       ``(iii) the organization has applied to the Secretary to 
     waive the qualifications; and
       ``(iv) the State or local government has failed to 
     demonstrate empirically that the educational qualifications 
     in question are necessary to the successful operation of a 
     drug treatment program.''.

                         TITLE V--HOMEOWNERSHIP

     SEC. 501. TRANSFER OF UNOCCUPIED AND SUBSTANDARD HUD-HELD 
                   HOUSING TO LOCAL GOVERNMENTS AND COMMUNITY 
                   DEVELOPMENT CORPORATIONS.

       Section 204 of the Departments of Veterans Affairs and 
     Housing and Urban Development, and Independent Agencies 
     Appropriations Act, 1997 (12 U.S.C. 1715z-11a) is amended--
       (1) by striking ``Flexible Authority.--'' and inserting 
     ``Disposition of HUD-Owned Properties. (a) Flexible Authority 
     for Multifamily Projects.--''; and
       (2) by adding at the end the following new subsection:
       ``(b) Transfer of Unoccupied and Substandard Housing to 
     Local Governments and Community Development Corporations.--
       ``(1) Transfer authority.--Notwithstanding the authority 
     under subsection (a) and the last sentence of section 204(g) 
     of the National Housing Act (12 U.S.C. 1710(g)), the 
     Secretary of Housing and Urban Development shall transfer 
     ownership of any qualified HUD property, subject to the 
     requirements of this section, to a unit of general local 
     government having jurisdiction for the area in which the 
     property is located or to a community development corporation 
     which operates within such a unit of general local government 
     in accordance with this subsection, but only to the extent 
     that units of general local government and community 
     development corporations consent to transfer and the 
     Secretary determines that such transfer is practicable.
       ``(2) Qualified hud properties.--For purposes of this 
     subsection, the term `qualified HUD property' means any 
     property for which, as of the date that notification of the 
     property is first made under paragraph (3)(B), not less than 
     6 months have elapsed since the later of the date that the 
     property

[[Page S6720]]

     was acquired by the Secretary or the date that the 
     property was determined to be unoccupied or substandard, 
     that is owned by the Secretary and is--
       ``(A) an unoccupied multifamily housing project;
       ``(B) a substandard multifamily housing project; or
       ``(C) an unoccupied single family property that--
       ``(i) has been determined by the Secretary not to be an 
     eligible asset under section 204(h) of the National Housing 
     Act (12 U.S.C. 1710(h)); or
       ``(ii) is an eligible asset under such section 204(h), 
     but--

       ``(I) is not subject to a specific sale agreement under 
     such section; and
       ``(II) has been determined by the Secretary to be 
     inappropriate for continued inclusion in the program under 
     such section 204(h) pursuant to paragraph (10) of such 
     section.

       ``(3) Timing.--The Secretary shall establish procedures 
     that provide for--
       ``(A) time deadlines for transfers under this subsection;
       ``(B) notification to units of general local government and 
     community development corporations of qualified HUD 
     properties in their jurisdictions;
       ``(C) such units and corporations to express interest in 
     the transfer under this subsection of such properties;
       ``(D) a right of first refusal for transfer of qualified 
     HUD properties to units of general local government and 
     community development corporations, under which--
       ``(i) the Secretary shall establish a period during which 
     the Secretary may not transfer such properties except to such 
     units and corporations;
       ``(ii) the Secretary shall offer qualified HUD properties 
     that are single family properties for purchase by units of 
     general local government at a cost of $1 for each property, 
     but only to the extent that the costs to the Federal 
     Government of disposal at such price do not exceed the costs 
     to the Federal Government of disposing of property subject to 
     the procedures for single family property established by the 
     Secretary pursuant to the authority under the last sentence 
     of section 204(g) of the National Housing Act (12 U.S.C. 
     1710(g));
       ``(iii) the Secretary may accept an offer to purchase a 
     property made by a community development corporation only if 
     the offer provides for purchase on a cost recovery basis; and
       ``(iv) the Secretary shall accept an offer to purchase such 
     a property that is made during such period by such a unit or 
     corporation and that complies with the requirements of this 
     paragraph;
       ``(E) a written explanation, to any unit of general local 
     government or community development corporation making an 
     offer to purchase a qualified HUD property under this 
     subsection that is not accepted, of the reason that such 
     offer was not acceptable.
       ``(4) Other disposition.--With respect to any qualified HUD 
     property, if the Secretary does not receive an acceptable 
     offer to purchase the property pursuant to the procedure 
     established under paragraph (3), the Secretary shall dispose 
     of the property to the unit of general local government in 
     which property is located or to community development 
     corporations located in such unit of general local government 
     on a negotiated, competitive bid, or other basis, on such 
     terms as the Secretary deems appropriate.
       ``(5) Satisfaction of indebtedness.--Before transferring 
     ownership of any qualified HUD property pursuant to this 
     subsection, the Secretary shall satisfy any indebtedness 
     incurred in connection with the property to be transferred, 
     by canceling the indebtedness.
       ``(6) Determination of status of properties.--To ensure 
     compliance with the requirements of this subsection, the 
     Secretary shall take the following actions:
       ``(A) Upon enactment.--Upon the enactment of this 
     subsection, the Secretary shall promptly assess each 
     residential property owned by the Secretary to determine 
     whether such property is a qualified HUD property.
       ``(B) Upon acquisition.--Upon acquiring any residential 
     property, the Secretary shall promptly determine whether the 
     property is a qualified HUD property.
       ``(C) Updates.--The Secretary shall periodically reassess 
     the residential properties owned by the Secretary to 
     determine whether any such properties have become qualified 
     HUD properties.
       ``(7) Tenant leases.--This subsection shall not affect the 
     terms or the enforceability of any contract or lease entered 
     into with respect to any residential property before the date 
     that such property becomes a qualified HUD property.
       ``(8) Use of property.--Property transferred under this 
     subsection shall be used only for appropriate neighborhood 
     revitalization efforts, including homeownership, rental 
     units, commercial space, and parks, consistent with local 
     zoning regulations, local building codes, and subdivision 
     regulations and restrictions of record.
       ``(9) Inapplicability to properties made available for 
     homeless.--Notwithstanding any other provision of this 
     subsection, this subsection shall not apply to any properties 
     that the Secretary determines are to be made available for 
     use by the homeless pursuant to subpart E of part 291 of 
     title 24, Code of Federal Regulations, during the period 
     that the properties are so available.
       ``(10) Protection of existing contracts.--This subsection 
     may not be construed to alter, affect, or annul any legally 
     binding obligations entered into with respect to a qualified 
     HUD property before the property becomes a qualified HUD 
     property.
       ``(11) Definitions.--For purposes of this subsection, the 
     following definitions shall apply:
       ``(A) Community development corporation.--The term 
     `community development corporation' means a nonprofit 
     organization whose primary purpose is to promote community 
     development by providing housing opportunities for low-income 
     families.
       ``(B) Cost recovery basis.--The term `cost recovery basis' 
     means, with respect to any sale of a residential property by 
     the Secretary, that the purchase price paid by the purchaser 
     is equal to or greater than the sum of (i) the appraised 
     value of the property, as determined in accordance with such 
     requirements as the Secretary shall establish, and (ii) the 
     costs incurred by the Secretary in connection with such 
     property during the period beginning on the date on which the 
     Secretary acquires title to the property and ending on the 
     date on which the sale is consummated.
       ``(C) Multifamily housing project.--The term `multifamily 
     housing project' has the meaning given the term in section 
     203 of the Housing and Community Development Amendments of 
     1978.
       ``(D) Residential property.--The term `residential 
     property' means a property that is a multifamily housing 
     project or a single family property.
       ``(E) Secretary.--The term `Secretary' means the Secretary 
     of Housing and Urban Development.
       ``(F) Severe physical problems.--The term `severe physical 
     problems' means, with respect to a dwelling unit, that the 
     unit--
       ``(i) lacks hot or cold piped water, a flush toilet, or 
     both a bathtub and a shower in the unit, for the exclusive 
     use of that unit;
       ``(ii) on not less than three separate occasions during the 
     preceding winter months, was uncomfortably cold for a period 
     of more than 6 consecutive hours due to a malfunction of the 
     heating system for the unit;
       ``(iii) has no functioning electrical service, exposed 
     wiring, any room in which there is not a functioning 
     electrical outlet, or has experienced three or more blown 
     fuses or tripped circuit breakers during the preceding 90-day 
     period;
       ``(iv) is accessible through a public hallway in which 
     there are no working light fixtures, loose or missing steps 
     or railings, and no elevator; or
       ``(v) has severe maintenance problems, including water 
     leaks involving the roof, windows, doors, basement, or pipes 
     or plumbing fixtures, holes or open cracks in walls or 
     ceilings, severe paint peeling or broken plaster, and signs 
     of rodent infestation.
       ``(G) Single family property.--The term `single family 
     property' means a 1- to 4-family residence.
       ``(H) Substandard.--The term `substandard' means, with 
     respect to a multifamily housing project, that 25 percent or 
     more of the dwelling units in the project have severe 
     physical problems.
       ``(I) Unit of general local government.--The term `unit of 
     general local government' has the meaning given such term in 
     section 102(a) of the Housing and Community Development Act 
     of 1974.
       ``(J) Unoccupied.--The term `unoccupied' means, with 
     respect to a residential property, that the unit of general 
     local government having jurisdiction over the area in which 
     the project is located has certified in writing that the 
     property is not inhabited.
       ``(12) Regulations.--
       ``(A) Interim.--Not later than 30 days after the date of 
     the enactment of this subsection, the Secretary shall issue 
     such interim regulations as are necessary to carry out this 
     subsection.
       ``(B) Final.--Not later than 60 days after the date of the 
     enactment of this subsection, the Secretary shall issue such 
     final regulations as are necessary to carry out this 
     subsection.''.

     SEC. 502. TRANSFER OF HUD ASSETS IN REVITALIZATION AREAS.

       In carrying out the program under section 204(h) of the 
     National Housing Act (12 U.S.C. 1710(h)), upon the request of 
     the chief executive officer of a county or the government of 
     appropriate jurisdiction and not later than 60 days after 
     such request is made, the Secretary of Housing and Urban 
     Development shall designate as a revitalization area all 
     portions of such county that meet the criteria for such 
     designation under paragraph (3) of such section.

     SEC. 503. RISK-SHARING DEMONSTRATION.

       Section 249 of the National Housing Act (12 U.S.C. 1715z-
     14) is amended--
       (1) by striking the section heading and inserting the 
     following:


                    ``risk-sharing demonstration'';

       (2) by striking ``reinsurance'' each place such term 
     appears and insert ``risk-sharing'';
       (3) in subsection (a)--
       (A) in the first sentence, by inserting ``and insured 
     community development financial institutions'' after 
     ``private mortgage insurers'';
       (B) in the second sentence--
       (i) by striking ``two'' and inserting ``4''; and
       (ii) by striking ``March 15, 1988'' and inserting ``the 
     expiration of the 5-year period beginning on the date of the 
     enactment of the American Community Renewal and New Markets 
     Empowerment Act''; and

[[Page S6721]]

       (C) in the last sentence, by striking ``10 percent'' and 
     inserting ``20 percent'';
       (4) in subsection (b)--
       (A) in the first sentence, by inserting ``and with insured 
     community development financial institutions'' before the 
     period at the end;
       (B) in the first sentence, by striking ``which have been 
     determined to be qualified insurers under section 
     302(b)(2)(C)'';
       (C) in the second sentence, by inserting ``and insured 
     community development financial institutions'' after 
     ``private mortgage insurance companies'';
       (D) by striking paragraph (1) and inserting the following 
     new paragraph:
       ``(1) assume the first loss on any mortgage insured 
     pursuant to section 203(b), 234, or 245 that covers a one- to 
     four-family dwelling and is included in the program under 
     this section, up to the percentage of loss that is set forth 
     in the risk-sharing contract;''; and
       (E) in paragraph (2)--
       (i) by striking ``carry out (under appropriate delegation) 
     such'' and inserting ``delegate underwriting,''; and
       (ii) by striking ``function'' and inserting ``functions'';
       (5) in subsection (c)--
       (A) in the first sentence--
       (i) by striking ``of'' the first place it appears and 
     insert ``for'';
       (ii) by striking ``insurance reserves'' and inserting 
     ``loss reserves''; and
       (iii) by striking ``such insurance'' and inserting ``such 
     reserves''; and
       (B) in the second sentence, by inserting ``or insured 
     community development financial institution'' after ``private 
     mortgage insurance company'';
       (6) in subsection (d), by inserting ``or insured community 
     development financial institution'' after ``private mortgage 
     insurance company''; and
       (7) by adding at the end the following new subsection:
       ``(e) Insured Community Development Financial 
     Institutions.--For purposes of this section, the term 
     `insured community development financial institution' means a 
     community development financial institution, as such term is 
     defined in section 103 of Reigle Community Development and 
     Regulatory Improvement Act of 1994 (12 U.S.C. 4702) that is 
     an insured depository institution (as such term is defined in 
     section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
     1813)) or an insured credit union (as such term is defined in 
     section 101 of the Federal Credit Union Act (12 U.S.C. 
     1752)).''.

            TITLE VI--AMERICA'S PRIVATE INVESTMENT COMPANIES

     SEC. 601. SHORT TITLE.

       This title may be cited as the ``America's Private 
     Investment Companies Act''.

     SEC. 602. FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds that--
       (1) people living in distressed areas, both urban and 
     rural, that are characterized by high levels of joblessness, 
     poverty, and low incomes have not benefited adequately from 
     the economic expansion experienced by the Nation as a whole;
       (2) unequal access to economic opportunities continues to 
     make the social costs of joblessness and poverty to our 
     Nation very high; and
       (3) there are significant untapped markets in our Nation, 
     and many of these are in areas that are underserved by 
     institutions that can make equity and credit investments.
       (b) Purposes.--The purposes of this title are to--
       (1) license private for profit community development 
     entities that will focus on making equity and credit 
     investments for large-scale business developments that 
     benefit low-income communities;
       (2) provide credit enhancement for those entities for use 
     in low-income communities; and
       (3) provide a vehicle under which the economic and social 
     returns on financial investments made pursuant to this title 
     may be available both to the investors in these entities and 
     to the residents of the low-income communities.

     SEC. 603. DEFINITIONS.

       As used in this title:
       (1) Administrator.--The term ``Administrator'' means the 
     Administrator of the Small Business Administration.
       (2) Agency.--The term ``agency'' has the meaning given such 
     term in section 551(1) of title 5, United States Code.
       (3) APIC.--The term ``APIC'' means a business entity that 
     has been licensed under the terms of this title as an 
     America's Private Investment Company, and the license of 
     which has not been revoked.
       (4) Community development entity.--The term ``community 
     development entity'' means an entity the primary mission of 
     which is serving or providing investment capital for low-
     income communities or low-income persons and which maintains 
     accountability to residents of low-income communities.
       (5) HUD.--The term ``HUD'' means the Secretary of Housing 
     and Urban Development or the Department of Housing and Urban 
     Development, as the context requires.
       (6) License.--The term ``license'' means a license issued 
     by HUD as provided in section 604.
       (7) Low-income community.--The term ``low-income 
     community'' means--
       (A) a census tract or tracts that have--
       (i) a poverty rate of 20 percent or greater, based on the 
     most recent census data; or
       (ii) a median family income that does not exceed 80 percent 
     of the greater of (I) the median family income for the 
     metropolitan area in which such census tract or tracts are 
     located, or (II) the median family income for the State in 
     which such census tract or tracts are located; or
       (B) a property that was located on a military installation 
     that was closed or realigned pursuant to title II of the 
     Defense Authorization Amendments and Base Closure and 
     Realignment Act (Public Law 100-526; 10 U.S.C. 2687 note), 
     the Defense Base Closure and Realignment Act of 1990 (part A 
     of title XXIX of Public Law 101-510; 10 U.S.C. 2687 note), 
     section 2687 of title 10, United States Code, or any other 
     similar law enacted after the date of the enactment of this 
     Act that provides for closure or realignment of military 
     installations.
       (8) Low-income person.--The term ``low-income person'' 
     means a person who is a member of a low-income family, as 
     such term is defined in section 104 of the Cranston-Gonzalez 
     National Affordable Housing Act (42 U.S.C. 12704).
       (9) Private equity capital.--
       (A) In general.--The term ``private equity capital''--
       (i) in the case of a corporate entity, the paid-in capital 
     and paid-in surplus of the corporate entity;
       (ii) in the case of a partnership entity, the contributed 
     capital of the partners of the partnership entity;
       (iii) in the case of a limited liability company entity, 
     the equity investment of the members of the limited liability 
     company entity; and
       (iv) earnings from investments of the entity that are not 
     distributed to investors and are available for reinvestment 
     by the entity.
       (B) Exclusions.--Such term does not include any--
       (i) funds borrowed by an entity from any source or obtained 
     through the issuance of leverage; except that this clause may 
     not be construed to exclude amounts evidenced by a legally 
     binding and irrevocable investment commitment in the entity, 
     or the use by an entity of a pledge of such investment 
     commitment to obtain bridge financing from a private lender 
     to fund the entity's activities on an interim basis; or
       (ii) funds obtained directly or indirectly from any 
     Federal, State, or local government or any government agency, 
     except for--

       (I) funds invested by an employee welfare benefit plan or 
     pension plan; and
       (II) credits against any Federal, State, or local taxes.

       (10) Qualified active business.--The term ``qualified 
     active business'' means a business or trade--
       (A) that, at the time that an investment is made in the 
     business or trade, is deriving at least 50 percent of its 
     gross income from the conduct of trade or business activities 
     in low-income communities;
       (B) a substantial portion of the use of the tangible 
     property of which is used within low-income communities;
       (C) a substantial portion of the services that the 
     employees of which perform are performed in low-income 
     communities; and
       (D) less than 5 percent of the aggregate unadjusted bases 
     of the property of which is attributable to certain financial 
     property, as the Secretary shall set forth in regulations, or 
     in collectibles, other than collectibles held primarily for 
     sale to customers.
       (11) Qualified debenture.--The term ``qualified debenture'' 
     means a debt instrument having terms that meet the 
     requirements established pursuant to section 606(c)(1).
       (12) Qualified low-income community investment.--The term 
     ``qualified low-income community investment'' mean an equity 
     investment in, or a loan to, a qualified active business.
       (13) Secretary.--The term ``Secretary'' means the Secretary 
     of Housing and Urban Development, unless otherwise specified 
     in this title.

     SEC. 604. AUTHORIZATION.

       (a) Licenses.--The Secretary is authorized to license 
     community development entities as America's Private 
     Investment Companies, in accordance with the terms of this 
     title.
       (b) Regulations.--The Secretary shall regulate APICs for 
     compliance with sound financial management practices, and the 
     program and procedural goals of this title and other related 
     Acts, and other purposes as required or authorized by this 
     title, or determined by the Secretary. The Secretary shall 
     issue such regulations as are necessary to carry out the 
     licensing and regulatory and other duties under this title, 
     and may issue notices and other guidance or directives as the 
     Secretary determines are appropriate to carry out such 
     duties.
       (c) Use of Credit Subsidy for Licenses.--
       (1) Number of licenses.--The number of APICs licensed at 
     any one time may not exceed--
       (A) the number that may be supported by the amount of 
     budget authority appropriated in accordance with section 
     504(b) of the Federal Credit Reform Act of 1990 (2 U.S.C. 
     661c) for the cost (as such term is defined in section 502 of 
     such Act) of the subsidy and the investment strategies of 
     such APICs; or
       (B) to the extent the limitation under section 605(e)(1) 
     applies, the number authorized under such section.
       (2) Use of additional credit subsidy.--Subject to the 
     limitation under paragraph (1), the Secretary may use any 
     budget authority available after credit subsidy has been 
     allocated for the APICs initially licensed pursuant to 
     section 605 as follows:

[[Page S6722]]

       (A) Additional licenses.--To license additional APICs.
       (B) Credit subsidy increases.--To increase the credit 
     subsidy allocated to an APIC as an award for high performance 
     under this title, except that such increases may be made only 
     in accordance with the following requirements and 
     limitations:
       (i) Timing.--An increase may only be provided for an APIC 
     that has been licensed for a period of not less than 2 years.
       (ii) Competition.--An increase may only be provided for a 
     fiscal year pursuant to a competition for such fiscal year 
     among APICs eligible for, and requesting, such an increase. 
     The competition shall be based upon criteria that the 
     Secretary shall establish, which shall include the financial 
     soundness and performance of the APICs, as measured by 
     achievement of the public performance goals included in the 
     APICs statements required under section 605(a)(6) and audits 
     conducted under section 609(b)(2). Among the criteria 
     established by the Secretary to determine priority for 
     selection under this section, the Secretary shall include 
     making investments in and loans to qualified active 
     businesses in urban or rural areas that have been designated 
     under subchapter U of Chapter 1 of the Internal Revenue Code 
     of 1986 as empowerment zones or enterprise communities.
       (d) Cooperation and Coordination.--
       (1) Program policies.--The Secretary is authorized to 
     coordinate and cooperate, through memoranda of understanding, 
     an APIC liaison committee, or otherwise, with the 
     Administrator, the Secretary of the Treasury, and other 
     agencies in the discretion of the Secretary, on 
     implementation of this title, including regulation, 
     examination, and monitoring of APICs under this title.
       (2) Financial soundness requirements.--The Secretary shall 
     consult with the Administrator and the Secretary of the 
     Treasury, and may consult with such other heads of agencies 
     as the Secretary may consider appropriate, in establishing 
     any regulations, requirements, guidelines, or standards for 
     financial soundness or management practices of APICs or 
     entities applying for licensing as APICs. In implementing and 
     monitoring compliance with any such regulations, 
     requirements, guidelines, and standards, the Secretary shall 
     enter into such agreements and memoranda of understanding 
     with the Administrator and the Secretary of the Treasury as 
     may be appropriate to provide for such officials to provide 
     any assistance that may be agreed to.
       (3) Operations.--The Secretary may carry out this title--
       (A) directly, through agreements with other Federal 
     entities under section 1535 of title 31, United States Code, 
     or otherwise, or
       (B) indirectly, under contracts or agreements, as the 
     Secretary shall determine.
       (e) Fees and Charges for Administrative Costs.--To the 
     extent provided in appropriations Acts, the Secretary is 
     authorized to impose fees and charges for application, 
     review, licensing, and regulation, or other actions under 
     this title, and to pay for the costs of such activities from 
     the fees and charges collected.
       (f) Guarantee Fees.--The Secretary is authorized to set and 
     collect fees for loan guarantee commitments and loan 
     guarantees that the Secretary makes under this title.
       (g) Funding.--
       (1) Authorization of appropriations for loan guarantee 
     commitments.--For each of fiscal years 2000, 2001, 2002, 
     2003, and 2004, there is authorized to be appropriated up to 
     $36,000,000 for the cost (as such term is defined in section 
     502(5) of the Federal Credit Reform Act of 1990) of annual 
     loan guarantee commitments under this title. Amounts 
     appropriated under this paragraph shall remain available 
     until expended.
       (2) Aggregate loan guarantee commitment limitation.--The 
     Secretary may make commitments to guarantee loans only to the 
     extent that the total loan principal, any part of which is 
     guaranteed, will not exceed $1,000,000,000, unless another 
     such amount is specified in appropriation Acts for any fiscal 
     year.
       (3) Authorization of appropriations for administrative 
     expenses.--For each of the fiscal years 2000, 2001, 2002, 
     2003, and 2004, there is authorized to be appropriated 
     $1,000,000 for administrative expenses for carrying out this 
     title. The Secretary may transfer amounts appropriated under 
     this paragraph to any appropriation account of HUD or another 
     agency, to carry out the program under this title. Any agency 
     to which the Secretary may transfer amounts under this title 
     is authorized to accept such transferred amounts in any 
     appropriation account of such agency.

     SEC. 605. SELECTION OF APICS.

       (a) Eligible Applicants.--An entity shall be eligible to be 
     selected for licensing under section 604 as an APIC only if 
     the entity submits an application in compliance with the 
     requirements established pursuant to subsection (b) and the 
     entity meets or complies with the following requirements:
       (1) Organization.--The entity shall be a private, for-
     profit entity that qualifies as a community development 
     entity for the purposes of the New Markets Tax Credits, to 
     the extent such credits are established under Federal law.
       (2) Minimum private equity capital.--The amount of private 
     equity capital reasonably available to the entity, as 
     determined by the Secretary, at the time that a license is 
     approved may not be less than $25,000,000.
       (3) Qualified management.--The management of the entity 
     shall, in the determination of the Secretary, meet such 
     standards as the Secretary shall establish to ensure that the 
     management of the APIC is qualified, and has the financial 
     expertise, knowledge, experience, and capability necessary, 
     to make investments for community and economic development in 
     low-income communities.
       (4) Conflict of interest.--The entity shall demonstrate 
     that, in accordance with sound financial management 
     practices, the entity is structured to preclude financial 
     conflict of interest between the APIC and a manager or 
     investor.
       (5) Investment strategy.--The entity shall prepare and 
     submit to the Secretary an investment strategy that includes 
     benchmarks for evaluation of its progress, that includes an 
     analysis of existing locally owned businesses in the 
     communities in which the investments under the strategy will 
     be made, that prioritizes such businesses for investment 
     opportunities, and that fulfills the specific public 
     purpose goals of the entity.
       (6) Statement of public purpose goals.--The entity shall 
     prepare and submit to the Secretary a statement of the public 
     purpose goals of the entity, which shall--
       (A) set forth goals that shall promote community and 
     economic development, which shall include--
       (i) making investments in low-income communities that 
     further economic development objectives by targeting such 
     investments in businesses or trades that comply with the 
     requirements under subparagraphs (A) through (C) of section 
     603(10) relating to low-income communities in a manner that 
     benefits low-income persons;
       (ii) creating jobs in low-income communities for residents 
     of such communities;
       (iii) involving community-based organizations and residents 
     in community development activities;
       (iv) such other goals as the Secretary shall specify; and
       (v) such elements as the entity may set forth to achieve 
     specific public purpose goals;
       (B) include such other elements as the Secretary shall 
     specify; and
       (C) include proposed measurements and strategies for 
     meeting the goals.
       (7) Compliance with laws.--The entity shall agree to comply 
     with applicable laws, including Federal executive orders, 
     Office of Management and Budget circulars, and requirements 
     of the Department of the Treasury, and such operating and 
     regulatory requirements as the Secretary may impose from time 
     to time.
       (8) Other.--The entity shall satisfy any other application 
     requirements that the Secretary may impose by regulation or 
     Federal Register notice.
       (b) Competitions.--The Secretary shall select eligible 
     entities under subsection (a) to be licensed under section 
     604 as APICs on the basis of competitions. The Secretary 
     shall announce each such competition by causing a notice to 
     be published in the Federal Register that invites 
     applications for licenses and sets forth the requirements for 
     application and such other terms of the competition not 
     otherwise provided for, as determined by the Secretary.
       (c) Selection.--In competitions under subsection (b), the 
     Secretary shall select eligible entities under subsection (a) 
     for licensing as APICs on the basis of--
       (1) the extent to which the entity is expected to achieve 
     the goals of this title by meeting or exceeding criteria 
     established under subsection (d); and
       (2) to the extent practicable and subject to the existence 
     of approvable applications, ensuring geographical diversity 
     among the applicants selected and diversity of APICs 
     investment strategies, so that urban and rural communities 
     are both served, in the determination of the Secretary, by 
     the program under this title.
       (d) Selection Criteria.--The Secretary shall establish 
     selection criteria for competitions under subsection (b), 
     which shall include the following criteria:
       (1) Capacity.--
       (A) Management.--The extent to which the entity's 
     management has the quality, experience, and expertise to make 
     and manage successful investments for community and economic 
     development in low-income communities.
       (B) State and local cooperation.--The extent to which the 
     entity demonstrates a capacity to cooperate with States or 
     units of general local government and with community-based 
     organizations and residents of low-income communities.
       (2) Investment strategy.--The quality of the entity's 
     investment strategy submitted in accordance with subsection 
     (a)(5) and the extent to which the investment strategy 
     furthers the goals of this title pursuant to paragraph (3) of 
     this subsection.
       (3) Public purpose goals.--With respect to the statement of 
     public purpose goals of the entity submitted in accordance 
     with subsection (a)(6), and the strategy and measurements 
     included therein--
       (A) the extent to which such goals promote community and 
     economic development;
       (B) the extent to which such goals provide for making 
     qualified investments in low-income communities that further 
     economic development objectives, such as--
       (i) creating, within 2 years of the completion of the 
     initial such investment, job opportunities, opportunities for 
     ownership, and

[[Page S6723]]

     other economic opportunities within a low-income community, 
     both short-term and of a longer duration;
       (ii) improving the economic vitality of a low-income 
     community, including stimulating other business development;
       (iii) bringing new income into a low-income community and 
     assisting in the revitalization of such community;
       (iv) converting real property for the purpose of creating a 
     site for business incubation and location, or business 
     district revitalization;
       (v) enhancing economic competition, including the 
     advancement of technology;
       (vi) rural development;
       (vii) mitigating, rehabilitating, and reusing real property 
     considered subject to the Solid Waste Disposal Act (42 U.S.C. 
     6901 et seq.; commonly referred to as the Resource 
     Conservation and Recovery Act) or restoring coal mine-scarred 
     land;
       (viii) creation of local wealth through investments in 
     employee stock ownership companies or resident-owned 
     ventures; and
       (ix) any other objective that the Secretary may establish 
     to further the purposes of this title;
       (C) the quality of jobs to be created for residents of low-
     income communities, taking into consideration such factors as 
     the payment of higher wages, job security, employment 
     benefits, opportunity for advancement, and personal asset 
     building;
       (D) the extent to which achievement of such goals will 
     involve community-based organizations and residents in 
     community development activities; and
       (E) the extent to which the investments referred to in 
     subparagraph (B) are likely to benefit existing small 
     business in low-income communities or will encourage the 
     growth of small business in such communities.
       (4) Other.--Any other criteria that the Secretary may 
     establish to carry out the purposes of this title.
       (e) First Year Requirements.--
       (1) Numerical limitation.--The number of APICs may not, at 
     any time during the 1-year period that begins upon the 
     Secretary awarding the first license for an APIC under this 
     title, exceed 15.
       (2) Limitation on allocation of available credit subsidy.--
     Of the amount of budget authority initially made available 
     for allocation under this title for APICs, the amount 
     allocated for any single APIC may not exceed 20 percent.
       (3) Native american private investment company.--Subject 
     only to the absence of an approvable application from an 
     entity, during the 1-year period referred to in paragraph 
     (1), of the entities selected and licensed by the Secretary 
     as APICs, at least one shall be an entity that has as its 
     primary purpose the making of qualified low-income community 
     investments in areas that are within Indian country (as such 
     term is defined in section 1151 of title 18, United States 
     Code) or within lands that have status as Hawaiian home land 
     under section 204 of the Hawaiian Homes Commission Act, 1920 
     (42 Stat. 108) or are acquired pursuant to such Act. The 
     Secretary may establish specific selection criteria for 
     applicants under this paragraph.
       (f) Communications Between HUD and Applicants.--
       (1) In general.--The Secretary shall set forth in 
     regulations the procedures under which HUD and applicants for 
     APIC licenses, and others, may communicate. Such regulations 
     shall--
       (A) specify by position the HUD officers and employees who 
     may communicate with such applicants and others;
       (B) permit HUD officers and employees to request and 
     discuss with the applicant and others (such as banks or other 
     credit or business references, or potential investors, that 
     the applicant specifies in writing) any more detailed 
     information that may be desirable to facilitate HUD's review 
     of the applicant's application;
       (C) restrict HUD officers and employees from revealing to 
     any applicant--
       (i) the fact or chances of award of a license to such 
     applicant, unless there has been a public announcement of the 
     results of the competition; and
       (ii) any information with respect to any other applicant; 
     and
       (D) set forth requirements for making and keeping records 
     of any communications conducted under this subsection, 
     including requirements for making such records available to 
     the public after the award of licenses under an initial or 
     subsequent notice, as appropriate, under subsection (a).
       (2) Timing.--Regulations under this subsection may be 
     issued as interim rules for effect on or before the date of 
     publication of the first notice under subsection (a), and 
     shall apply only with respect to applications under such 
     notice. Regulations to implement this subsection with respect 
     to any notice after the first such notice shall be subject to 
     notice and comment rulemaking.
       (3) Inapplicability of department of hud act provision.--
     Section 12(e)(2) of the Department of Housing and Urban 
     Development Act (42 U.S.C. 3537a(e)(2)) is amended by 
     inserting before the period at the end the following: ``or 
     any license provided under the America's Private Investment 
     Companies Act''.

     SEC. 606. OPERATIONS OF APICS.

       (a) Powers and Authorities.--
       (1) In general.--An APIC shall have any powers or 
     authorities that--
       (A) the APIC derives from the jurisdiction in which it is 
     organized, or that the APIC otherwise has;
       (B) may be conferred by a license under this title; and
       (C) the Secretary may prescribe by regulation.
       (2) New market assistance.--Nothing in this title shall 
     preclude an APIC or its investors from receiving an 
     allocation of New Market Tax Credits (to the extent such 
     credits are established under Federal law) if the APIC 
     satisfies any applicable terms and conditions under the 
     Internal Revenue Code of 1986.
       (b) Investment Limitations.--
       (1) Qualified low-income community investments.--
     Substantially all investments that an APIC makes shall be 
     qualified low-income community investments if the investments 
     are financed with--
       (A) amounts available from the proceeds of the issuance of 
     an APIC's qualified debenture guaranteed under this title;
       (B) proceeds of the sale of obligations described under 
     subsection (c)(3)(C)(iii); or
       (C) the use of private equity capital, as determined by the 
     Secretary, in an amount specified in the APIC's license.
       (2) Single business investments.--An APIC shall not, as a 
     matter of sound financial practice, invest in any one 
     business an amount that exceeds an amount equal to 35 percent 
     of the sum of--
       (A) the APIC's private equity capital; plus
       (B) an amount equal to the percentage limit that the 
     Secretary determines that an APIC may have outstanding at any 
     one time, under subsection (c)(2)(A).
       (c) Borrowing Powers; Qualified Debentures.--
       (1) Issuance.--An APIC may issue qualified debentures. The 
     Secretary shall, by regulation, specify the terms and 
     requirements for debentures to be considered qualified 
     debentures for purposes of this title, except that the term 
     to maturity of any qualified debenture may not exceed 21 
     years and each qualified debenture shall bear interest during 
     all or any part of that time period at a rate or rates 
     approved by the Secretary.
       (2) Leverage limits.--In general, as a matter of sound 
     financial management practices--
       (A) the total amount of qualified debentures that an APIC 
     issues under this title that an APIC may have outstanding at 
     any one time shall not exceed an amount equal to 200 percent 
     of the private equity capital of the APIC, as determined by 
     the Secretary; and
       (B) an APIC shall not have more than $300,000,000 in face 
     value of qualified debentures issued under this title 
     outstanding at any one time.
       (3) Repayment.--
       (A) Condition of business wind-up.--An APIC shall have 
     repaid, or have otherwise been relieved of indebtedness, with 
     respect to any interest or principal amounts of borrowings 
     under this subsection no less than 2 years before the APIC 
     may dissolve or otherwise complete the wind-up of its 
     business.
       (B) Timing.--An APIC may repay any interest or principal 
     amounts of borrowings under this subsection at any time: 
     Provided, That the repayment of such amounts shall not 
     relieve an APIC of any duty otherwise applicable to the APIC 
     under this title, unless the Secretary orders such relief.
       (C) Use of investment proceeds before repayment.--Until an 
     APIC has repaid all interest and principal amounts on APIC 
     borrowings under this subsection, an APIC may use the 
     proceeds of investments, in accordance with regulations 
     issued by the Secretary, only to--
       (i) pay for proper costs and expenses the APIC incurs in 
     connection with such investments;
       (ii) pay for the reasonable administrative expenses of the 
     APIC;
       (iii) purchase Treasury securities;
       (iv) repay interest and principal amounts on APIC 
     borrowings under this subsection;
       (v) make interest, dividend, or other distributions to or 
     on behalf of an investor; or
       (vi) undertake such other purposes as the Secretary may 
     approve.
       (D) Use of investment proceeds after repayment.--After an 
     APIC has repaid all interest and principal amounts on APIC 
     borrowings under this subsection, and subject to continuing 
     compliance with subsection (a), the APIC may use the proceeds 
     from investments to make interest, dividend, or other 
     distributions to or on behalf of investors in the nature of 
     returns on capital, or the withdrawal of private equity 
     capital, without regard to subparagraph (C) but in conformity 
     with the APIC's investment strategy and statement of public 
     purpose goals.
       (d) Reuse of Qualified Debenture Proceeds.--An APIC may use 
     the proceeds of sale of Treasury securities purchased under 
     subsection (c)(3)(C)(iii) to make qualified low-income 
     community investments, subject to the Secretary's approval. 
     In making the request for the Secretary's approval, the APIC 
     shall follow the procedures applicable to an APIC's request 
     for HUD guarantee action, as the Secretary may modify such 
     procedures for implementation of this subsection. Such 
     procedures shall include the description and certifications 
     that an APIC must include in all requests for guarantee 
     action, and the environmental certification applicable to 
     initial expenditures for a project or activity.
       (e) Antipirating.--Notwithstanding any other provision of 
     law, an APIC may not use any private equity capital required 
     to be contributed under this title, or the proceeds

[[Page S6724]]

     from the sale of any qualified debenture under this title, to 
     make an investment, as determined by the Secretary, to assist 
     directly in the relocation of any industrial or commercial 
     plant, facility, or operation, from 1 area to another area, 
     if the relocation is likely to result in a significant loss 
     of employment in the labor market area from which the 
     relocation occurs.
       (f) Exclusion of APIC From Definition of Debtor Under 
     Bankruptcy Provisions.--Section 109(b)(2) of title 11, United 
     States Code, is amended by inserting before ``credit union'' 
     the following: ``America's Private Investment Company 
     licensed under the America's Private Investment Companies 
     Act,''.

     SEC. 607. CREDIT ENHANCEMENT BY THE FEDERAL GOVERNMENT.

       (a) Issuance and Guarantee of Qualified Debentures.--
       (1) Authority.--To the extent consistent with the Federal 
     Credit Reform Act of 1990, the Secretary is authorized to 
     make commitments to guarantee and guarantee the timely 
     payment of all principal and interest as scheduled on 
     qualified debentures issued by APICs. Such commitments and 
     guarantees may only be made in accordance with the terms and 
     conditions established under paragraph (2).
       (2) Terms and conditions.--The Secretary shall establish 
     such terms and conditions as the Secretary determines to be 
     appropriate for commitments and guarantees under this 
     subsection, including terms and conditions relating to 
     amounts, expiration, number, priorities of repayment, 
     security, collateral, amortization, payment of interest 
     (including the timing thereof), and fees and charges. The 
     terms and conditions applicable to any particular commitment 
     or guarantee may be established in documents that the 
     Secretary approves for such commitment or guarantee.
       (3) Seniority.--Notwithstanding any other provision of 
     Federal law or any law or the constitution of any State, 
     qualified debentures guaranteed under this subsection by the 
     Secretary shall be senior to any other debt obligation, 
     equity contribution or earnings, or the distribution of 
     dividends, interest, or other amounts, of an APIC.
       (b) Issuance of Trust Certificates.--The Secretary, or an 
     agent or entity selected by the Secretary, is authorized to 
     issue trust certificates representing ownership of all or 
     a fractional part of guaranteed qualified debentures 
     issued by APICs and held in trust.
       (c) Guarantee of Trust Certificates.--
       (1) In general.--The Secretary is authorized, upon such 
     terms and conditions as the Secretary determines to be 
     appropriate, to guarantee the timely payment of the principal 
     of and interest on trust certificates issued by the 
     Secretary, or an agent or other entity, for purposes of this 
     section. Such guarantee shall be limited to the extent of 
     principal and interest on the guaranteed qualified debentures 
     which compose the trust.
       (2) Substitution option.--The Secretary shall have the 
     option to replace in the corpus of the trust any prepaid or 
     defaulted qualified debenture with a debenture, another full 
     faith and credit instrument, or any obligations of the United 
     States, that may reasonably substitute for such prepaid or 
     defaulted qualified debenture.
       (3) Proportionate reduction option.--In the event that the 
     Secretary elects not to exercise the option under paragraph 
     (2), and a qualified debenture in such trust is prepaid, or 
     in the event of default of a qualified debenture, the 
     guarantee of timely payment of principal and interest on the 
     trust certificate shall be reduced in proportion to the 
     amount of principal and interest that such prepaid qualified 
     debenture represents in the trust. Interest on prepaid or 
     defaulted qualified debentures shall accrue and be guaranteed 
     by the Secretary only through the date of payment of the 
     guarantee. During the term of a trust certificate, it may be 
     called for redemption due to prepayment or default of all 
     qualified debentures that are in the corpus of the trust.
       (d) Full Faith and Credit Backing of Guarantees.--The full 
     faith and credit of the United States is pledged to the 
     timely payment of all amounts which may be required to be 
     paid under any guarantee by the Secretary pursuant to this 
     section.
       (e) Subrogation and Liens.--
       (1) Subrogation.--In the event the Secretary pays a claim 
     under a guarantee issued under this section, the Secretary 
     shall be subrogated fully to the rights satisfied by such 
     payment.
       (2) Priority of liens.--No State or local law, and no 
     Federal law, shall preclude or limit the exercise by the 
     Secretary of its ownership rights in the debentures in the 
     corpus of a trust under this section.
       (f) Registration.--
       (1) In general.--The Secretary shall provide for a central 
     registration of all trust certificates issued pursuant to 
     this section.
       (2) Agents.--The Secretary may contract with an agent or 
     agents to carry out on behalf of the Secretary the pooling 
     and the central registration functions of this section 
     notwithstanding any other provision of law, including 
     maintenance on behalf of and under the direction of the 
     Secretary, such commercial bank accounts or investments in 
     obligations of the United States as may be necessary to 
     facilitate trusts backed by qualified debentures guaranteed 
     under this title and the issuance of trust certificates to 
     facilitate formation of the corpus of the trusts. The 
     Secretary may require such agent or agents to provide a 
     fidelity bond or insurance in such amounts as the Secretary 
     determines to be necessary to protect the interests of the 
     Government.
       (3) Form.--Book-entry or other electronic forms of 
     registration for trust certificates under this title are 
     authorized.
       (g) Timing of Issuance of Guarantees of Qualified 
     Debentures and Trust Certificates.--The Secretary may, from 
     time to time in the Secretary's discretion, exercise the 
     authority to issue guarantees of qualified debentures under 
     this title or trust certificates under this title.

     SEC. 608. APIC REQUESTS FOR GUARANTEE ACTIONS.

       (a) In General.--The Secretary may issue a guarantee under 
     this title for a qualified debenture that an APIC intends to 
     issue only pursuant to a request to the Secretary by the APIC 
     for such guarantee that is made in accordance with 
     regulations governing the content and procedures for such 
     requests, that the Secretary shall prescribe. Such 
     regulations shall provide that each such request shall 
     include--
       (1) a description of the manner in which the APIC intends 
     to use the proceeds from the qualified debenture;
       (2) a certification by the APIC that the APIC is in 
     substantial compliance with--
       (A) this title and other applicable laws, including any 
     requirements established under this title by the Secretary;
       (B) all terms and conditions of its license, any cease-and-
     desist order issued under section 610, and of any penalty or 
     condition that may have arisen from examination or monitoring 
     by the Secretary or otherwise, including the satisfaction of 
     any financial audit exception that may have been outstanding; 
     and
       (C) all requirements relating to the allocation and use of 
     New Markets Tax Credits, to the extent such credits are 
     established under Federal law; and
       (3) any other information or certification that the 
     Secretary considers appropriate.
       (b) Requests for Guarantee of Qualified Debentures That 
     Include Funding for Initial Expenditure for a Project or 
     Activity.--In addition to the description and certification 
     that an APIC is required to supply in all requests for 
     guarantee action under subsection (a), in the case of an 
     APIC's request for a guarantee that includes a qualified 
     debenture, the proceeds of which the APIC expects to be used 
     as its initial expenditure for a project or activity in which 
     the APIC intends to invest, and the expenditure for which 
     would require an environmental assessment under the National 
     Environmental Policy Act of 1969 and other related laws that 
     further the purposes of such Act, such request for guarantee 
     action shall include evidence satisfactory to the Secretary 
     of the certification of the completion of environmental 
     review of the project or activity required of the 
     cognizant State or local government under subsection (c). 
     If the environmental review responsibility for the project 
     or activity has not been assumed by a State or local 
     government under subsection (c), then the Secretary shall 
     be responsible for carrying out the applicable 
     responsibilities under the National Environmental Policy 
     Act of 1969 and other provisions of law that further the 
     purposes of such Act that relate to the project or 
     activity, and the Secretary shall execute such 
     responsibilities before acting on the APIC's request for 
     the guarantee that is covered by this subsection.
       (c) Responsibility for Environmental Reviews.--
       (1) Execution of responsibility by the secretary.--This 
     subsection shall apply to guarantees by the Secretary of 
     qualified debentures under this title, the proceeds of which 
     would be used in connection with qualified low-income 
     community investments of APICs under this title.
       (2) Assumption of responsibility by cognizant unit of 
     general government.--
       (A) Guarantee of qualified debentures.--In order to assure 
     that the policies of the National Environmental Policy Act of 
     1969 and other provisions of law that further the purposes of 
     such Act (as specified in regulations issued by the 
     Secretary) are most effectively implemented in connection 
     with the expenditure of funds under this title, and to assure 
     to the public undiminished protection of the environment, the 
     Secretary may, under such regulations, in lieu of the 
     environmental protection procedures otherwise applicable, 
     provide for the guarantee of qualified debentures, any part 
     of the proceeds of which are to fund particular qualified 
     low-income community investments of APICs under this title, 
     if a State or unit of general local government, as designated 
     by the Secretary in accordance with regulations issued by the 
     Secretary, assumes all of the responsibilities for 
     environmental review, decisionmaking, and action pursuant to 
     the National Environmental Policy Act of 1969 and such other 
     provisions of law that further such Act as the regulations of 
     the Secretary specify, that would otherwise apply to the 
     Secretary were the Secretary to undertake the funding of such 
     investments as a Federal action.
       (B) Implementation.--The Secretary shall issue regulations 
     to carry out this subsection only after consultation with the 
     Council on Environmental Quality. Such regulations shall--
       (i) specify any other provisions of law which further the 
     purposes of the National Environmental Policy Act of 1969 and 
     to which the assumption of responsibility as provided in this 
     subsection applies;
       (ii) provide eligibility criteria and procedures for the 
     designation of a State or unit of general local government to 
     assume all of the responsibilities in this subsection;

[[Page S6725]]

       (iii) specify the purposes for which funds may be committed 
     without regard to the procedure established under paragraph 
     (3);
       (iv) provide for monitoring of the performance of 
     environmental reviews under this subsection;
       (v) in the discretion of the Secretary, provide for the 
     provision or facilitation of training for such performance; 
     and
       (vi) subject to the discretion of the Secretary, provide 
     for suspension or termination by the Secretary of the 
     assumption under subparagraph (A).
       (C) Responsibilities of states and units of general local 
     government.--The Secretary's duty under subparagraph (B) 
     shall not be construed to limit any responsibility assumed by 
     a State or unit of general local government with respect to 
     any particular request for guarantee under subparagraph (A), 
     or the use of funds for a qualified investment.
       (3) Procedure.--Subject to compliance by the APIC with the 
     requirements of this title, the Secretary shall approve the 
     request for guarantee of a qualified debenture, any part of 
     the proceeds of which is to fund particular qualified low-
     income community investments of an APIC under this title, 
     that is subject to the procedures authorized by this 
     subsection only if, not less than 15 days prior to such 
     approval and prior to any commitment of funds to such 
     investment (except for such purposes specified in the 
     regulations issued under paragraph (2)(B)), the APIC submits 
     to the Secretary a request for guarantee of a qualified 
     debenture that is accompanied by evidence of a certification 
     of the State or unit of general local government which meets 
     the requirements of paragraph (4). The approval by the 
     Secretary of any such certification shall be deemed to 
     satisfy the Secretary's responsibilities pursuant to 
     paragraph (1) under the National Environmental Policy Act of 
     1969 and such other provisions of law as the regulations of 
     the Secretary specify insofar as those responsibilities 
     relate to the guarantees of qualified debentures, any parts 
     of the proceeds of which are to fund such investments, which 
     are covered by such certification.
       (4) Certification.--A certification under the procedures 
     authorized by this subsection shall--
       (A) be in a form acceptable to the Secretary;
       (B) be executed by the chief executive officer or other 
     officer of the State or unit of general local government who 
     qualifies under regulations of the Secretary;
       (C) specify that the State or unit of general local 
     government under this subsection has fully carried out its 
     responsibilities as described under paragraph (2); and
       (D) specify that the certifying officer--
       (i) consents to assume the status of a responsible Federal 
     official under the National Environmental Policy Act of 1969 
     and each provision of law specified in regulations issued by 
     the Secretary insofar as the provisions of such Act or other 
     such provision of law apply pursuant to paragraph (2); and
       (ii) is authorized and consents on behalf of the State or 
     unit of general local government and himself or herself to 
     accept the jurisdiction of the Federal courts for the purpose 
     of enforcement of the responsibilities as such an official.

     SEC. 609. EXAMINATION AND MONITORING OF APICS.

       (a) In General.--The Secretary shall, under regulations, 
     through audits, performance agreements, license conditions, 
     or otherwise, examine and monitor the operations and 
     activities of APICs for compliance with sound financial 
     management practices, and for satisfaction of the program and 
     procedural goals of this title and other related Acts. The 
     Secretary may undertake any responsibility under this section 
     in cooperation with an APIC liaison committee, or any agency 
     that is a member of such a committee, or other agency.
       (b) Monitoring, Updating, and Program Review.--
       (1) Reporting and updating.--The Secretary shall establish 
     such annual or more frequent reporting requirements for 
     APICs, and such requirements for the updating of the 
     statement of public purpose goals, investment strategy 
     (including the benchmarks in such strategy), and other 
     documents that may have been used in the license application 
     process under this title, as the Secretary determines 
     necessary to assist the Secretary in monitoring the 
     compliance and performance of APICs.
       (2) Annual audits.--The Secretary shall require each APIC 
     to have an independent audit conducted annually of the 
     operations of the APIC. The Secretary, in consultation with 
     the Administrator and the Secretary of the Treasury, shall 
     establish requirements and standards for such audits, 
     including requirements that such audits be conducted in 
     accordance with generally accepted accounting principles, 
     that the APIC submit the results of the audit to Secretary, 
     and that specify the information to be submitted.
       (3) Examinations.--The Secretary shall, no less often than 
     once every 2 years, examine the operations and portfolio of 
     each APIC licensed under this title for compliance with sound 
     financial management practices, and for compliance with this 
     title.
       (4) Examination standards.--
       (A) Sound financial management practices.--The Secretary 
     shall examine each APIC to ensure, as a matter of sound 
     financial management practices, substantial compliance with 
     this and other applicable laws, including Federal executive 
     orders, Department of Treasury and Office of Management and 
     Budget guidance, circulars, and application and licensing 
     requirements on a continuing basis. The Secretary may, by 
     regulation, establish any additional standards for sound 
     financial management practices, including standards that 
     address solvency and financial exposure.
       (B) Performance and other examinations.--The Secretary 
     shall monitor each APIC's progress in meeting the goals in 
     the APIC's statement of public purpose goals, executing the 
     APIC's investment strategy, and other matters.
       (c) Inspector General Responsibility.--In carrying out 
     monitoring of HUD's responsibilities under this title and for 
     purposes of ensuring that the program under this title is 
     operated in accordance with sound financial management 
     practices, the Inspector General of the Department of Housing 
     and Urban Development shall consult with the Inspector 
     General of the Department of the Treasury and the Inspector 
     General of the Small Business Administration, as appropriate, 
     and may enter into such agreements and memoranda of 
     understanding as may be necessary to obtain the cooperation 
     of the Inspectors General of the Department of the Treasury 
     and the Small Business Administration in carrying out such 
     function.
       (d) Annual Report By Secretary.--The Secretary shall submit 
     a report to the Congress annually regarding the operations, 
     activities, financial health, and achievements of the APIC 
     program under this title. The report shall list each 
     investment made by an APIC and include a summary of the 
     examinations conducted under subsection (b)(3), the guarantee 
     actions of HUD, and any regulatory or policy actions taken by 
     HUD. The report shall distinguish recently licensed APICs 
     from APICs that have held licenses for a longer period for 
     purposes of indicating program activities and performance.
       (e) GAO Report.--
       (1) Requirement.--Not later than 2 years after the date of 
     the enactment of this Act, the Comptroller General of the 
     United States shall submit a report to the Congress regarding 
     the operation of the program under this title for licensing 
     and guarantees for APICs.
       (2) Contents.--The report shall include--
       (A) an analysis of the operations and monitoring by HUD of 
     the APIC program under this title;
       (B) the administrative and capacity needs of HUD required 
     to ensure the integrity of the program;
       (C) the extent and adequacy of any credit subsidy 
     appropriated for the program; and
       (D) the management of financial risk and liability of the 
     Federal Government under the program.

     SEC. 610. PENALTIES.

       (a) Violations Subject to Penalty.--The Secretary may 
     impose a penalty under this subsection on any APIC or manager 
     of an APIC that, by any act, practice, or failure to act, 
     engages in fraud, mismanagement, or noncompliance with this 
     title, the regulations under this title, or a condition of 
     the APIC's license under this title. The Secretary shall, by 
     regulation, identify, by generic description of a role or 
     responsibilities, any manager of an APIC that is subject to a 
     penalty under this section.
       (b) Penalties Requiring Notice and an Opportunity to 
     Respond.--If, after notice in writing to an APIC or the 
     manager of an APIC that the APIC or manager has engaged in 
     any action, practice, or failure to act that, under 
     subsection (a), is subject to a penalty, and after an 
     opportunity for the APIC or manager to respond to the notice, 
     the Secretary determines that the APIC or manager engaged in 
     such action or failure to act, the Secretary may, in addition 
     to other penalties imposed--
       (1) assess a civil money penalty, except than any civil 
     money penalty under this subsection shall be in an amount not 
     exceeding $10,000;
       (2) issue an order to cease and desist with respect to such 
     action, practice, or failure to act of the APIC or manager;
       (3) suspend, or condition the use of, the APIC's license, 
     including deferring, for the period of the suspension, any 
     commitment to guarantee any new qualified debenture of the 
     APIC, except that any suspension or condition under this 
     paragraph may not exceed 90 days; and
       (4) impose any other penalty that the Secretary determines 
     to be less burdensome to the APIC than a penalty under 
     subsection (c).
       (c) Penalties Requiring Notice and Hearing.--If, after 
     notice in writing to an APIC or the manager of an APIC that 
     an APIC or manager has engaged in any action, practice, or 
     failure to act that, under subsection (a), is subject to a 
     penalty, and after an opportunity for administrative hearing, 
     the Secretary determines that the APIC or manager engaged in 
     such action or failure to act, the Secretary may--
       (1) assess a civil money penalty against the APIC or a 
     manager in any amount;
       (2) require the APIC to divest any interest in an 
     investment, on such terms and conditions as the Secretary may 
     impose; or
       (3) revoke the APIC's license.
       (d) Effective Date of Penalties.--
       (1) Prior notice requirement.--Except as provided in 
     paragraph (2) of this subsection, a penalty under subsection 
     (b) or (c) shall not be due and payable and shall not 
     otherwise take effect or be subject to enforcement by an 
     order of a court, before notice of the penalty is published 
     in the Federal Register.
       (2) Cease-and-desist orders and suspension or conditioning 
     of license.--In the

[[Page S6726]]

     case of a cease-and-desist order under subsection (b)(2) or 
     the suspension or conditioning of an APIC's license under 
     subsection (b)(3), the following procedures shall apply:
       (A) Action without published notice.--The Secretary may 
     order an APIC or manager to cease and desist from an action, 
     practice, or failure to act or may suspend or condition an 
     APIC's license, for not more than 45 days without prior 
     publication of notice in the Federal Register, but such 
     cease-and-desist order or suspension or conditioning shall 
     take effect only after the Secretary has issued a written 
     notice (which may include a writing in electronic form) of 
     such action to the APIC. Notwithstanding subsection (b), such 
     written notice shall be effective without regard to whether 
     the APIC has been accorded an opportunity to respond. Upon 
     such notice, such cease-and-desist order or suspension or 
     conditioning shall be subject to enforcement by an order of a 
     court.
       (B) Publication of notice of suspension or conditioning of 
     license.--Upon a suspension or conditioning of a license 
     taking effect pursuant to subparagraph (A), the Secretary 
     shall promptly cause a notice of suspension or conditioning 
     of such license for a period of not more than 90 days to be 
     published in the Federal Register. The Secretary shall 
     provide the APIC an opportunity to respond to such notice. 
     For purposes of the determining the duration of the period of 
     any suspension or conditioning under this subparagraph, the 
     first day of such period shall be the day of issuance of the 
     written notice under this paragraph of the suspension or 
     conditioning.
       (C) Revocation of license.--During the period of the 
     suspension or conditioning of an APIC's license, the 
     Secretary may take action under subsection (c)(3) to revoke 
     the license of the APIC, in accordance with the procedures 
     applicable to such subsection. Notwithstanding any other 
     provision of this section, if the Secretary takes such 
     action, the Secretary may extend the suspension or 
     conditioning of the APIC's license, for one or more periods 
     of not more than 90 days each, by causing notice of such 
     action to be published in the Federal Register--
       (i) for the first such extension, before the expiration of 
     the period under subparagraph (B); and
       (ii) for any subsequent extension, before the expiration of 
     the preceding extension period under this subparagraph.
       (D) Term of effectiveness.--A cease-and-desist order or the 
     suspension or conditioning of an APIC's license by the 
     Secretary under this paragraph shall remain in effect in 
     accordance with the terms of the order, suspension, or 
     conditioning until final adjudication in any action 
     undertaken to challenge the order, or the suspension or 
     conditioning, or the revocation, of an APIC's license.

     SEC. 611. EFFECTIVE DATE.

       (a) In General.--Except as provided in subsection (b), this 
     title shall take effect upon the expiration of the 6-month 
     period beginning on the date of the enactment of this Act.
       (b) Issuance of Regulations and Guidelines.--Any authority 
     under this title of the Secretary, the Administrator, and the 
     Secretary of the Treasury to issue regulations, standards, 
     guidelines, or licensing requirements, and any authority of 
     such officials to consult or enter into agreements or 
     memoranda of understanding regarding such issuance, shall 
     take effect on the date of the enactment of this Act.

     SEC. 612. SUNSET.

       After the expiration of the 5-year period beginning upon 
     the date that the Secretary awards the first license for an 
     APIC under this title--
       (1) the Secretary may not license any APIC; and
       (2) no amount may be appropriated for the costs (as such 
     term is defined in section 502 of the Federal Credit Reform 
     Act of 1990 (2 U.S.C. 661c)) of any guarantee under this 
     title for any debenture issued by an APIC.
     This section may not be construed to prohibit, limit, or 
     affect the award, allocation, or use of any budget authority 
     for the costs of such guarantees that is appropriated before 
     the expiration of such period.

                   TITLE VII--NEW MARKETS TAX CREDIT

     SEC. 701. NEW MARKETS TAX CREDIT.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business-related credits), as amended 
     by section 201(a), is amended by adding at the end the 
     following new section:

     ``SEC. 45E. NEW MARKETS TAX CREDIT.

       ``(a) Allowance of Credit.--
       ``(1) In general.--For purposes of section 38, in the case 
     of a taxpayer who holds a qualified equity investment on a 
     credit allowance date of such investment which occurs during 
     the taxable year, the new markets tax credit determined under 
     this section for such taxable year is an amount equal to the 
     applicable percentage of the amount paid to the qualified 
     community development entity for such investment at its 
     original issue.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the applicable percentage is--
       ``(A) 5 percent with respect to the first 3 credit 
     allowance dates, and
       ``(B) 6 percent with respect to the remainder of the credit 
     allowance dates.
       ``(3) Credit allowance date.--For purposes of paragraph 
     (1), the term `credit allowance date' means, with respect to 
     any qualified equity investment--
       ``(A) the date on which such investment is initially made, 
     and
       ``(B) each of the 6 anniversary dates of such date 
     thereafter.
       ``(b) Qualified Equity Investment.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified equity investment' 
     means any equity investment in a qualified community 
     development entity if--
       ``(A) such investment is acquired by the taxpayer at its 
     original issue (directly or through an underwriter) solely in 
     exchange for cash,
       ``(B) substantially all of the proceeds from such 
     investment is used by the qualified community development 
     entity to make qualified low-income community investments, 
     and
       ``(C) such investment is designated for purposes of this 
     section by the qualified community development entity.
     Such term shall not include any equity investment issued by a 
     qualified community development entity more than 5 years 
     after the date that such entity receives an allocation under 
     subsection (f). Any allocation not used within such 5-year 
     period may be reallocated by the Secretary under subsection 
     (f).
       ``(2) Limitation.--The maximum amount of equity investments 
     issued by a qualified community development entity which may 
     be designated under paragraph (1)(C) by such entity shall not 
     exceed the portion of the limitation amount allocated under 
     subsection (f) to such entity.
       ``(3) Safe harbor for determining use of cash.--The 
     requirement of paragraph (1)(B) shall be treated as met if at 
     least 85 percent of the aggregate gross assets of the 
     qualified community development entity are invested in 
     qualified low-income community investments.
       ``(4) Treatment of subsequent purchasers.--The term 
     `qualified equity investment' includes any equity investment 
     which would (but for paragraph (1)(A)) be a qualified equity 
     investment in the hands of the taxpayer if such investment 
     was a qualified equity investment in the hands of a prior 
     holder.
       ``(5) Redemptions.--A rule similar to the rule of section 
     1202(c)(3) shall apply for purposes of this subsection.
       ``(6) Equity investment.--The term `equity investment' 
     means--
       ``(A) any stock in a qualified community development entity 
     which is a corporation, and
       ``(B) any capital interest in a qualified community 
     development entity which is a partnership.
       ``(c) Qualified Community Development Entity.--For purposes 
     of this section--
       ``(1) In general.--The term `qualified community 
     development entity' means any domestic corporation or 
     partnership if--
       ``(A) the primary mission of the entity is serving, or 
     providing investment capital for, low-income communities or 
     low-income persons,
       ``(B) the entity maintains accountability to residents of 
     low-income communities through representation on governing or 
     advisory boards or otherwise, and
       ``(C) the entity is certified by the Secretary for purposes 
     of this section as being a qualified community development 
     entity.
       ``(2) Special rules for certain organizations.--The 
     requirements of paragraph (1) shall be treated as met by--
       ``(A) any specialized small business investment company (as 
     defined in section 1044(c)(3)), and
       ``(B) any community development financial institution (as 
     defined in section 103 of the Community Development Banking 
     and Financial Institutions Act of 1994 (12 U.S.C. 4702)).
       ``(d) Qualified Low-Income Community Investments.--For 
     purposes of this section--
       ``(1) In general.--The term `qualified low-income community 
     investment' means--
       ``(A) any equity investment in, or loan to, any qualified 
     active low-income community business,
       ``(B) the purchase from another community development 
     entity of any loan made by such entity which is a qualified 
     low-income community investment if the amount received by 
     such other entity from such purchase is used by such other 
     entity to make qualified low-income community investments,
       ``(C) financial counseling and other services specified in 
     regulations prescribed by the Secretary to businesses located 
     in, and residents of, low-income communities, and
       ``(D) any equity investment in, or loan to, any qualified 
     community development entity if substantially all of the 
     investment or loan is used by such entity to make qualified 
     low-income community investments described in subparagraphs 
     (A), (B), and (C).
       ``(2) Qualified active low-income community business.--
       ``(A) In general.--For purposes of paragraph (1), the term 
     `qualified active low-income community business' means, with 
     respect to any taxable year, any corporation or partnership 
     if for such year--
       ``(i) at least 50 percent of the total gross income of such 
     entity is derived from the active conduct of a qualified 
     business within any low-income community,
       ``(ii) a substantial portion of the use of the tangible 
     property of such entity (whether owned or leased) is within 
     any low-income community,
       ``(iii) a substantial portion of the services performed for 
     such entity by its employees are performed in any low-income 
     community,

[[Page S6727]]

       ``(iv) less than 5 percent of the average of the aggregate 
     unadjusted bases of the property of such entity is 
     attributable to collectibles (as defined in section 
     408(m)(2)) other than collectibles that are held primarily 
     for sale to customers in the ordinary course of such 
     business, and
       ``(v) less than 5 percent of the average of the aggregate 
     unadjusted bases of the property of such entity is 
     attributable to nonqualified financial property (as defined 
     in section 1397C(e)).
       ``(B) Proprietorship.--Such term shall include any business 
     carried on by an individual as a proprietor if such business 
     would meet the requirements of subparagraph (A) were it 
     incorporated.
       ``(C) Portions of business may be qualified active low-
     income community business.--The term `qualified active low-
     income community business' includes any trades or businesses 
     which would qualify as a qualified active low-income 
     community business if such trades or businesses were 
     separately incorporated.
       ``(3) Qualified business.--For purposes of this subsection, 
     the term `qualified business' has the meaning given to such 
     term by section 1397C(d); except that--
       ``(A) in lieu of applying paragraph (2)(B) thereof, the 
     rental to others of real property located in any low-income 
     community shall be treated as a qualified business if there 
     are substantial improvements located on such property,
       ``(B) paragraph (3) thereof shall not apply, and
       ``(C) such term shall not include any business if a 
     significant portion of the equity interests in such business 
     are held by any person who holds a significant portion of the 
     equity investments in the community development entity.
       ``(e) Low-Income Community.--For purposes of this section--
       ``(1) In general.--The term `low-income community' means 
     any population census tract if--
       ``(A) the poverty rate for such tract is at least 20 
     percent,
       ``(B)(i) in the case of a tract not located within a 
     metropolitan area, the median family income for such tract 
     does not exceed 80 percent of statewide median family income, 
     or
       ``(ii) in the case of a tract located within a metropolitan 
     area, the median family income for such tract does not exceed 
     80 percent of the greater of statewide median family income 
     or the metropolitan area median family income, or
       ``(C) as determined by the Secretary based on objective 
     criteria, a substantial population of low-income individuals 
     reside in such tract, an inadequate access to investment 
     capital exists in such tract, or other indications of 
     economic distress exist in such tract.
       ``(2) Areas not within census tracts.--In the case of an 
     area which is not tracted for population census tracts, the 
     equivalent county divisions (as defined by the Bureau of the 
     Census for purposes of defining poverty areas) shall be used 
     for purposes of determining poverty rates and median family 
     income.
       ``(f) National Limitation on Amount of Investments 
     Designated.--
       ``(1) In general.--There is a new markets tax credit 
     limitation for each calendar year. Such limitation is--
       ``(A) $500,000,000 for 2001,
       ``(B) $1,500,000,000 for 2002 and 2003,
       ``(C) $2,500,000,000 for 2004 and 2005,
       ``(D) $3,000,000,000 for 2006,
       ``(E) $3,500,000,000 for 2007.
       ``(2) Allocation of limitation.--The limitation under 
     paragraph (1) shall be allocated by the Secretary among 
     qualified community development entities selected by the 
     Secretary. In making allocations under the preceding 
     sentence, the Secretary shall give priority to entities with 
     records of having successfully provided capital or technical 
     assistance to disadvantaged businesses or communities.
       ``(3) Carryover of unused limitation.--If the new markets 
     tax credit limitation for any calendar year exceeds the 
     aggregate amount allocated under paragraph (2) for such year, 
     such limitation for the succeeding calendar year shall be 
     increased by the amount of such excess.
       ``(g) Recapture of Credit in Certain Cases.--
       ``(1) In general.--If, at any time during the 7-year period 
     beginning on the date of the original issue of a qualified 
     equity investment in a qualified community development 
     entity, there is a recapture event with respect to such 
     investment, then the tax imposed by this chapter for the 
     taxable year in which such event occurs shall be increased by 
     the credit recapture amount.
       ``(2) Credit recapture amount.--For purposes of paragraph 
     (1), the credit recapture amount is an amount equal to the 
     sum of--
       ``(A) the aggregate decrease in the credits allowed to the 
     taxpayer under section 38 for all prior taxable years which 
     would have resulted if no credit had been determined under 
     this section with respect to such investment, plus
       ``(B) interest at the overpayment rate established under 
     section 6621 on the amount determined under subparagraph (A) 
     for each prior taxable year for the period beginning on the 
     due date for filing the return for the prior taxable year 
     involved.
     No deduction shall be allowed under this chapter for interest 
     described in subparagraph (B).
       ``(3) Recapture event.--For purposes of paragraph (1), 
     there is a recapture event with respect to an equity 
     investment in a qualified community development entity if--
       ``(A) such entity ceases to be a qualified community 
     development entity,
       ``(B) the proceeds of the investment cease to be used as 
     required of subsection (b)(1)(B), or
       ``(C) such investment is redeemed by such entity.
       ``(4) Special rules.--
       ``(A) Tax benefit rule.--The tax for the taxable year shall 
     be increased under paragraph (1) only with respect to credits 
     allowed by reason of this section which were used to reduce 
     tax liability. In the case of credits not so used to reduce 
     tax liability, the carryforwards and carrybacks under section 
     39 shall be appropriately adjusted.
       ``(B) No credits against tax.--Any increase in tax under 
     this subsection shall not be treated as a tax imposed by this 
     chapter for purposes of determining the amount of any credit 
     under this chapter or for purposes of section 55.
       ``(h) Basis Reduction.--The basis of any qualified equity 
     investment shall be reduced by the amount of any credit 
     determined under this section with respect to such 
     investment.
       ``(i) Regulations.--The Secretary shall prescribe such 
     regulations as may be appropriate to carry out this section, 
     including regulations--
       ``(1) which limit the credit for investments which are 
     directly or indirectly subsidized by other Federal benefits 
     (including the credit under section 42 and the exclusion from 
     gross income under section 103),
       ``(2) which prevent the abuse of the provisions of this 
     section through the use of related parties,
       ``(3) which impose appropriate reporting requirements, and
       ``(4) which apply the provisions of this section to newly 
     formed entities.''.
       (b) Credit Made Part of General Business Credit.--
       (1) In general.--Subsection (b) of section 38, as amended 
     by section 201(b), is amended by striking ``plus'' at the end 
     of paragraph (12), by striking the period at the end of 
     paragraph (13) and inserting ``, plus'', and by adding at the 
     end the following new paragraph:
       ``(14) the new markets tax credit determined under section 
     45E(a).''.
       (2) Limitation on carryback.--Subsection (d) of section 39, 
     as amended by section 201(d), is amended by adding at the end 
     the following new paragraph:
       ``(10) No carryback of new markets tax credit before 
     january 1, 2001.--No portion of the unused business credit 
     for any taxable year which is attributable to the credit 
     under section 45E may be carried back to a taxable year 
     ending before January 1, 2001.''.
       (c) Deduction for Unused Credit.--Subsection (c) of section 
     196 is amended by striking ``and'' at the end of paragraph 
     (7), by striking the period at the end of paragraph (8) and 
     inserting ``, and'', and by adding at the end the following 
     new paragraph:
       ``(9) the new markets tax credit determined under section 
     45E(a).''.
       (d) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1, as amended by 
     section 201(e), is amended by adding at the end the following 
     new item:

``Sec. 45E. New markets tax credit.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to investments made after December 31, 2000.
       (f) Regulations on Allocation of National Limitation.--Not 
     later than 90 days after the date of the enactment of this 
     Act, the Secretary of the Treasury or the Secretary's 
     delegate shall prescribe regulations which specify objective 
     criteria to be used in making the allocations under section 
     45E(f)(2) of the Internal Revenue Code of 1986, as added by 
     this section.

         TITLE VIII--COMMUNITY DEVELOPMENT AND VENTURE CAPITAL

     SEC. 800. SHORT TITLE.

       This title may be cited as the ``Community Development and 
     Venture Capital Act of 2000''.

            Subtitle A--New Markets Venture Capital Program

     SEC. 801. NEW MARKETS VENTURE CAPITAL PROGRAM.

       (a) In General.--Title III of the Small Business Investment 
     Act of 1958 (15 U.S.C. 681 et seq.) is amended--
       (1) by striking the title designation and heading and 
     inserting the following:

               ``TITLE III--INVESTMENT DIVISION PROGRAMS

            ``PART A--SMALL BUSINESS INVESTMENT COMPANIES'';

     and
       (2) by adding at the end the following:

             ``PART B--NEW MARKETS VENTURE CAPITAL PROGRAM

     ``SEC. 351. DEFINITIONS.

       ``In this part--
       ``(1) the term `eligible company' means a company that--
       ``(A) is a newly formed for-profit entity, which may be a 
     newly formed for-profit subsidiary of an existing entity; and
       ``(B) has a management team with experience in community 
     development financing or relevant venture capital financing;

[[Page S6728]]

       ``(2) the term `low-income individual' means an individual 
     whose income (adjusted for family size) does not exceed--
       ``(A) for metropolitan areas, 80 percent of the area median 
     income; and
       ``(B) for nonmetropolitan areas, the greater of--
       ``(i) 80 percent of the area median income; or
       ``(ii) 80 percent of the statewide nonmetropolitan area 
     median income;
       ``(3) the term `low- or moderate-income geographic area' 
     means--
       ``(A) any population census tract (or in the case of an 
     area that is not tracted for population census tracts, the 
     equivalent county division, as defined by the Bureau of the 
     Census of the Department of Commerce for purposes of defining 
     poverty areas) if--
       ``(i) the poverty rate for such census tract is not less 
     than 20 percent;
       ``(ii)(I) in the case of a tract located within a 
     metropolitan area, the median family income for such tract 
     does not exceed the greater of 80 percent of the statewide 
     median family income or 80 percent of the metropolitan area 
     median family income; or
       ``(II) in the case of a tract not located within a 
     metropolitan area, the median family income for such tract 
     does not exceed 80 percent of the statewide median family 
     income; or
       ``(iii) as determined by the Administrator based on 
     objective criteria, a substantial population of low-income 
     individuals reside, an inadequate access to investment 
     capital exists, or other indications of economic distress 
     exist; or
       ``(B) any area located within--
       ``(i) a HUBZone (as defined in section 3(p) of the Small 
     Business Act and the implementing regulations issued under 
     that section);
       ``(ii) an urban empowerment zone or urban enterprise 
     community (as designated by the Secretary of Housing and 
     Urban Development); or
       ``(iii) a rural empowerment zone or rural enterprise 
     community (as designated by the Secretary of Agriculture);
       ``(4) the terms `new markets venture capital company' and 
     `NMVC company' mean a company that has been designated as a 
     new markets venture capital company by the Administrator 
     under section 354(d);
       ``(5) the term `participation agreement' means an 
     agreement, between the Administrator and a company granted 
     final approval under section 354(e), that--
       ``(A) details the company's operating plan and investment 
     criteria; and
       ``(B) requires the company to make investments in smaller 
     enterprises at least 80 percent of which are located in low- 
     or moderate-income geographic areas; and
       ``(6) the term `specialized small business investment 
     company' means any small business investment company that--
       ``(A) invests solely in small business concerns that 
     contribute to a well-balanced national economy by 
     facilitating ownership in such concerns by persons whose 
     participation in the free enterprise system is hampered 
     because of social or economic disadvantages;
       ``(B) is organized or chartered under State business or 
     nonprofit corporations statutes, or formed as a limited 
     partnership; and
       ``(C) was licensed under section 301(d), as in effect 
     before September 30, 1996.

     ``SEC. 352. PURPOSES.

       ``The purposes of this part are--
       ``(1) to encourage venture capital investment in smaller 
     enterprises located within urban and rural areas;
       ``(2) to promote the creation of wealth, economic 
     development, and job opportunities in low- and moderate-
     income geographic areas; and
       ``(3) to establish a venture capital program, which shall 
     be administered by the Administrator--
       ``(A) to make grants to NMVC companies for the purpose of 
     providing marketing, management, and technical assistance to 
     smaller enterprises financed, or expected to be financed, by 
     such companies; and
       ``(B) to guarantee debentures issued by NMVC companies to 
     enable such companies to make venture capital investments in 
     smaller enterprises within urban and rural areas.

     ``SEC. 353. PROGRAM ESTABLISHMENT.

       ``There is established a New Markets Venture Capital 
     Program, under which the Administrator is authorized to--
       ``(1) make grants to NMVC companies, as provided in section 
     355; and
       ``(2) guarantee debentures issued by NMVC companies, as 
     provided in section 356.

     ``SEC. 354. SELECTION OF NMVC COMPANIES.

       ``(a) Applications.--In order to be eligible to participate 
     in the program under this part as an NMVC company, an 
     eligible company shall submit to the Administrator an 
     application, within such period of time as the Administrator 
     shall establish, which shall include--
       ``(1) a business plan that describes the manner and 
     geographic areas in which the applicant will make successful 
     venture capital investments in smaller enterprises described 
     in subparagraphs (A) and (B) of section 351(5) and provide 
     marketing, management, and technical assistance to those 
     enterprises;
       ``(2) the qualifications and general business reputation of 
     the management of the applicant, specifically addressing--
       ``(A) the experience of the management in making venture 
     capital investments in smaller enterprises described in 
     subparagraphs (A) and (B) of section 351(5); and
       ``(B) the success of those investments in terms of business 
     growth, jobs created, and such other factors as the 
     Administrator may require; and
       ``(3) a description of the manner in which the applicant 
     will interface with community organizations;
       ``(4) a proposal describing the manner in which grant 
     amounts made available under this part would provide 
     marketing, management, and technical assistance to smaller 
     enterprises expected to be financed by the applicant;
       ``(5) proposed criteria by which to evaluate the 
     performance of the applicant in meeting program objectives;
       ``(6) the management and financial strength of any parent 
     or affiliated firm, or any firm essential to the success of 
     the business plan of the applicant;
       ``(7) with respect to binding commitments to be made to the 
     company under this part, an estimate of the ratio of cash to 
     in-kind contributions; and
       ``(8) such other information as the Administrator may 
     require.
       ``(b) Criteria for Conditional Approval.--
       ``(1) In general.--Upon receipt of an application submitted 
     under subsection (a), the Administrator shall review the 
     application and make a determination regarding whether to 
     grant conditional approval to the applicant to operate as an 
     NMVC company during the time period described in subsection 
     (c), based on--
       ``(A) the geographic area and employment characteristics of 
     the smaller enterprises in which the proposed investments of 
     the NMVC company will be made (in order to promote investment 
     nationwide);
       ``(B) the likelihood that the applicant will meet the goals 
     of the business plan of the applicant;
       ``(C) the experience and background of the company's 
     management team;
       ``(D) the need for equity or equity-type investments within 
     the proposed investment areas;
       ``(E) the extent to which the applicant will concentrate 
     its activities on serving its investment areas;
       ``(F) the likelihood that the applicant will be able to 
     satisfy the requirements of subsection (c);
       ``(G) the extent to which the proposed activities will 
     expand economic opportunities within the investment areas; 
     and
       ``(H) such other factors as the Administrator determines to 
     be appropriate.
       ``(2) Nationwide distribution.--The Administrator shall 
     select companies under paragraph (1) in such a way that 
     promotes investment nationwide.
       ``(c) Requirements for Final Approval.--
       ``(1) In general.--Subject to paragraph (2), each applicant 
     that is granted conditional approval by the Administrator to 
     operate as an NMVC company under subsection (b), shall, 
     before the expiration of a time period established by the 
     Administrator not to exceed 24 months, beginning on the date 
     on which such conditional approval is granted--
       ``(A) raise not less than $5,000,000 of contributed capital 
     or binding capital commitments from 1 or more investors 
     (other than an agency of the Federal Government) that meet 
     criteria established by the Administrator; and
       ``(B) in order to provide marketing, management, and 
     technical assistance, have--
       ``(i) cash or binding commitments for contributions (in 
     cash or in-kind) from 1 or more sources other than the 
     Administration that meet criteria established by the 
     Administrator, payable or available over a multiyear period 
     acceptable to the Administrator (not to exceed 10 years), in 
     an amount equal to 30 percent of the capital and commitments 
     raised under subparagraph (A);
       ``(ii) purchased an annuity from an insurance company 
     acceptable to the Administrator, using amounts (other than 
     the amounts raised to satisfy the requirements of 
     subparagraph (A)) from any source other than the 
     Administration, that would yield cash payments over a 
     multiyear period acceptable to the Administrator (not to 
     exceed 10 years), in an amount equal to 30 percent of the 
     capital and commitments raised under subparagraph (A); or
       ``(iii) cash or binding commitments for contributions (in 
     cash or in-kind) of the type described in clause (i) and have 
     purchased an annuity of the type described in clause (ii), 
     that in the aggregate make available, over a multiyear period 
     acceptable to the Administrator (not to exceed 10 years), an 
     amount equal to 30 percent of the capital and commitments 
     raised under subparagraph (A).
       ``(2) Exception.--The Administrator may, in the discretion 
     of the Administrator and based upon a showing of special 
     circumstances and good cause, consider an applicant to have 
     satisfied the requirements of paragraph (1)(B) if the 
     applicant has--
       ``(A) a viable plan that reasonably projects the capacity 
     of the applicant to raise the amount (in cash or in-kind) 
     required under paragraph (1)(B); and
       ``(B) binding commitments in an amount not less than 20 
     percent of the total amount required under paragraph (1)(B).
       ``(d) Grant of Final Approval; Designation.--The 
     Administrator shall, with respect to each applicant 
     conditionally approved to operate as an NMVC company under 
     subsection (b), either--

[[Page S6729]]

       ``(1) grant final approval to the applicant to operate as 
     an NMVC company under this part and designate the applicant 
     as an NMVC company, if the applicant--
       ``(A) satisfies the requirements of subsection (c) on or 
     before the expiration of the time period described in that 
     subsection; and
       ``(B) enters into a participation agreement with the 
     Administrator; or
       ``(2) if the applicant fails to satisfy the requirements of 
     subsection (c) on or before the expiration of the time period 
     described in that subsection, revoke the conditional approval 
     granted under that subsection.

     ``SEC. 355. TECHNICAL ASSISTANCE GRANTS.

       ``(a) Grants.--
       ``(1) In general.--The Administrator, in accordance with 
     such terms and conditions as the Administrator may require, 
     is authorized to award 1 or more grants to each NMVC company 
     or to any other entity, as authorized by this part, which 
     shall be used to provide marketing, management, and technical 
     assistance for the benefit of smaller enterprises financed, 
     or expected to be financed, by the NMVC company or other 
     authorized entity.
       ``(2) Multiyear grants.--Amounts from a grant awarded under 
     this section shall be paid upon the direction of the 
     Administrator over a multiyear period of not to exceed 10 
     years.
       ``(3) Grants to specialized small business investment 
     companies.--
       ``(A) Authority.--In accordance with this section, the 
     Administrator may make grants to specialized small business 
     investment companies to provide marketing, management, and 
     technical assistance to smaller enterprises financed, or 
     expected to be financed, by such companies after the 
     effective date of the Community Development and Venture 
     Capital Act of 2000.
       ``(B) Use of funds.--The proceeds of a grant made under 
     this paragraph may be used by the company receiving such 
     grant only to provide marketing, management, and technical 
     assistance in connection with an equity or equity-type 
     investment (made with capital raised after the effective date 
     of the Community Development and Venture Capital Act of 2000) 
     in a business located in a low- or moderate-income geographic 
     area.
       ``(C) Submission of plans.--A specialized small business 
     investment company shall be eligible for a grant under this 
     section only if the company submits to the Administrator, in 
     such form and manner as the Administrator may require, a plan 
     for use of the grant.
       ``(4) Grant amount.--
       ``(A) In general.--Subject to subparagraph (B), the amount 
     of a grant awarded to an NMVC company or other authorized 
     entity under this subsection shall be equal to 30 percent of 
     the amount of capital and commitments raised under section 
     354(c)(1)(A).
       ``(B) Matching requirement.--In order to receive funds 
     under a grant awarded under this subsection, an NMVC company 
     or other authorized entity shall provide a matching 
     contribution (in cash or in-kind) from sources other than the 
     Administration, in an amount equal to the funds to received.
       ``(5) Pro rata reductions.--If the amount made available to 
     carry out this section for a fiscal year is insufficient for 
     the Administrator to award grants in the amounts required 
     under paragraph (4), the Administrator shall make pro rata 
     reductions in the amounts otherwise payable to each NMVC 
     company or other authorized entity under that paragraph.
       ``(b) Supplemental Grants.--
       ``(1) In general.--In addition to any grant under 
     subsection (a), the Administrator, in accordance with such 
     terms and conditions as the Administrator may require, may 
     make 1 or more supplemental grants to an NMVC company or 
     other authorized entity, which shall be used to provide 
     additional marketing, management, and technical assistance 
     for the benefit of smaller enterprises financed, or expected 
     to be financed, by the NMVC company or other authorized 
     entity.
       ``(2) Matching requirement.--The Administrator may require, 
     as a condition of any supplemental grant made under this 
     subsection, that the NMVC company provide a matching 
     contribution (in cash or in-kind) from 1 or more sources 
     other than the Administrator in an amount equal to the amount 
     of the supplemental grant.
       ``(c) Limitation.--No part of any grant made available 
     under this section may be used for any purpose other than to 
     provide direct technical and financial assistance to smaller 
     enterprises financed, or expected to be financed, by the NMVC 
     companies or other authorized entities.

     ``SEC. 356. DEBENTURES.

       ``(a) In General.--The Administrator is authorized to 
     guarantee the timely payment of principal and interest as 
     scheduled on debentures issued by NMVC companies, in 
     accordance with such terms and conditions the Administrator 
     determines to be appropriate.
       ``(b) Full Faith and Credit.--The full faith and credit of 
     the United States is pledged to the payment of all amounts 
     that may be required to be paid under any guarantee under 
     this section.
       ``(c) Debenture Requirements.--A debenture guaranteed under 
     this section--
       ``(1) may be issued for a term of not to exceed 15 years;
       ``(2) shall bear interest at a rate approved by the 
     Administrator; and
       ``(3) shall contain such other terms and conditions as the 
     Administrator may require.
       ``(d) Total Face Value.--The total face amount of 
     debentures issued by an NMVC company and guaranteed under 
     this section that may be outstanding at any 1 time shall not 
     exceed 150 percent of the contributed capital of the NMVC 
     company, as determined by the Administrator. For purposes of 
     this subsection, the contributed capital of an NMVC company 
     includes capital that is deemed to be Federal funds 
     contributed by an investor other than an agency of the 
     Federal Government.

     ``SEC. 357. ISSUANCE AND GUARANTEE OF TRUST CERTIFICATES.

       ``(a) In General.--The Administrator (or an agent of the 
     Administrator) is authorized to issue trust certificates 
     representing ownership of all or a fractional part of 
     debentures guaranteed by the Administrator under section 356, 
     if such trust certificates are based on and backed by a trust 
     or pool approved by the Administrator and composed solely of 
     debentures guaranteed under section 356.
       ``(b) Guarantee Authority.--
       ``(1) In general.--The Administrator is authorized to, upon 
     such terms and conditions as the Administrator determines to 
     be appropriate, guarantee the timely payment of the principal 
     of and interest on any trust certificate issued under this 
     section.
       ``(2) Limitation.--A guarantee under this subsection shall 
     be limited to the extent of the principal of and interest on 
     the guaranteed debentures that compose the trust or pool 
     described in subsection (a).
       ``(3) Reduction.--If a debenture in a trust or pool 
     described in subsection (a) is prepaid, or in the event of 
     default of a debenture, the guarantee of timely payment of 
     principal and interest on the related trust certificate 
     issued under this section shall be reduced in proportion to 
     the amount of principal and interest that such prepaid 
     debenture represents in that trust or pool.
       ``(4) Accrual of interest.--Interest on prepaid or 
     defaulted debentures shall accrue and be guaranteed by the 
     Administrator only through the date of payment of the 
     guarantee.
       ``(5) Redemption of trust certificates.--During the term of 
     any trust certificate issued under this subsection, the trust 
     certificate may be called for redemption due to prepayment or 
     default of all debentures in the trust or pool.
       ``(c) Full Faith and Credit.--The full faith and credit of 
     the United States is pledged to the payment of all amounts 
     that may be required to be paid under any guarantee of a 
     trust certificate issued under this section.
       ``(d) Fees.--The Administrator shall not collect a fee for 
     any guarantee of a trust certificate issued under this 
     section, except that nothing in this subsection may be 
     construed to preclude an agent of the Administrator from 
     collecting a fee approved by the Administrator for the 
     functions described in subsection (f)(2).
       ``(e) Subrogation.--
       ``(1) In general.--If the Administrator pays a claim under 
     a guarantee issued under this section, the Administration 
     shall be subrogated fully to the rights satisfied by such 
     payment.
       ``(2) Ownership rights.--No Federal, State, or local law 
     shall preclude or limit the exercise by the Administrator of 
     the ownership rights of the Administrator in the debentures 
     residing in a trust or pool against which trust certificates 
     are issued under this section.
       ``(f) Central Registration.--
       ``(1) In general.--The Administrator may provide for a 
     central registration of all trust certificates issued under 
     this section.
       ``(2) Contracting of functions.--
       ``(A) In general.--The Administrator may contract with an 
     agent or agents to carry out on behalf of the Administrator 
     the pooling and the central registration functions of this 
     section including, notwithstanding any other provision of 
     law--
       ``(i) maintenance on behalf of and under the direction of 
     the Administrator of such commercial bank accounts or 
     investments in obligations of the United States as may be 
     necessary to facilitate trusts or pools backed by debentures 
     guaranteed under this part; and
       ``(ii) the issuance of trust certificates to facilitate 
     such poolings.
       ``(B) Fidelity bond or insurance required.--An agent 
     contracting with the Administrator under this paragraph shall 
     be required to provide a fidelity bond or insurance in such 
     amounts as the Administrator determines to be necessary to 
     fully protect the interests of the Government.
       ``(3) Regulation of brokers and dealers.--Notwithstanding 
     section 3(a)(42) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(42)), the Administrator may regulate brokers 
     and dealers in trust certificates issued under this section.
       ``(4) Electronic registration.--Nothing in this subsection 
     may be construed to prohibit the use of a book-entry or other 
     electronic form of registration for trust certificates issued 
     under this section.

     ``SEC. 358. FEES.

       ``Except as provided under section 357(d), the 
     Administrator may charge such fees as the Administrator 
     determines to be appropriate with respect to any guarantee 
     issued or grant awarded under this part.

[[Page S6730]]

     ``SEC. 359. BANK PARTICIPATION.

       ``Any national bank, or any member bank of the Federal 
     Reserve System or nonmember insured bank to the extent 
     permitted under applicable State law, may invest in any 1 or 
     more NMVC companies, or in any entity established to invest 
     solely in NMVC companies, except that in no event shall the 
     total amount of such investments of any such bank exceed 5 
     percent of the total capital and surplus of the bank.

     ``SEC. 360. FEDERAL FINANCING BANK.

       ``Section 318 shall not apply to any debenture issued by a 
     NMVC company under this part.

     ``SEC. 361. REPORTING REQUIREMENTS.

       ``Each NMVC company shall provide to the Administrator such 
     information as the Administrator may request, including--
       ``(1) information related to the measurement criteria that 
     the NMVC company proposed in the application submitted under 
     section 354(a);
       ``(2) documentation on the use of technical assistance 
     grants under this part; and
       ``(3) in each case in which the company under this part 
     makes an investment in, or a loan or grant to, a business 
     that is not located in a low- or moderate-income 
     geographic area, a report on the number and percentage of 
     employees of the business who reside in such areas.

     ``SEC. 362. EXAMINATIONS.

       ``(a) In General.--Each NMVC company shall be subject to 
     examinations made at the direction of the Investment Division 
     of the Administration, which may be conducted with the 
     assistance of a private sector entity that has both the 
     qualifications to conduct and the expertise in conducting 
     such examinations.
       ``(b) Assessment of Costs.--The cost of such examinations, 
     including the compensation of the examiners, may in the 
     discretion of the Administrator be assessed against the 
     company examined and when so assessed shall be paid by such 
     company.
       ``(c) Deposit of Fees.--Fees collected under this section 
     shall be deposited in the account for salaries and expenses 
     of the Administration.

     ``SEC. 363. INJUNCTIONS AND OTHER ORDERS.

       ``(a) In General.--If, in the judgment of the 
     Administrator, an NMVC company or any other person has 
     engaged or is about to engage in any act or practice that 
     constitutes or will constitute a violation of any provision 
     of this title (or any rule, regulation, or order issued under 
     this title) or of a participation agreement entered into 
     under this part--
       ``(1) the Administrator may make application to the proper 
     district court of the United States or a United States court 
     of any place subject to the jurisdiction of the United States 
     for an order enjoining such act or practice, or for an order 
     enforcing compliance with such provision; and
       ``(2) such court shall--
       ``(A) have jurisdiction over such application and any 
     ensuing proceedings; and
       ``(B) upon a showing by the Administrator that such NMVC 
     company or other person has engaged or is about to engage in 
     any such act or practice, grant without bond a permanent or 
     temporary injunction, restraining order, or other appropriate 
     order.
       ``(b) Powers of Court.--In any proceeding under subsection 
     (a)--
       ``(1) the court as a court of equity may, to such extent as 
     the court determines to be necessary, take exclusive 
     jurisdiction of the NMVC company and the assets thereof, 
     wherever located; and
       ``(2) the court shall have jurisdiction in any such 
     proceeding to appoint a trustee or receiver to hold or 
     administer under the direction of the court the assets so 
     possessed.
       ``(c) Trustee or Receiver.--The Administrator is authorized 
     to act as trustee or receiver of the NMVC company. Upon 
     request by the Administrator, the court may appoint the 
     Administrator to act in such capacity unless the court 
     determines such appointment to be inequitable or otherwise 
     inappropriate based on the special circumstances at issue.

     ``SEC. 364. UNLAWFUL ACTS AND OMISSIONS BY OFFICERS, 
                   DIRECTORS, EMPLOYEES, OR AGENTS; BREACH OF 
                   FIDUCIARY DUTY.

       ``(a) In General.--If an NMVC company violates any 
     provision of this title (or any rule or regulation issued 
     under this title), or of a participation agreement entered 
     into under this part, by failing to comply with the terms 
     thereof or by engaging in any act or practice that 
     constitutes or will constitute a violation thereof, such 
     violation shall be deemed to be also a violation and an 
     unlawful act on the part of any person who, directly or 
     indirectly, authorizes, orders, participates in, or causes, 
     brings about, counsels, aids, or abets in the commission of 
     any act, practice, or transaction that constitutes or will 
     constitute, in whole or in part, such violation.
       ``(b) Breach of Fiduciary Duty.--It shall be unlawful for 
     any officer, director, employee, agent, or other participant 
     in the management or conduct of the affairs of an NMVC 
     company to engage in any act or practice, or to omit any act, 
     in breach of the fiduciary duty of such officer, director, 
     employee, agent, or participant, if, as a result thereof, the 
     NMVC company has suffered or is in imminent danger of 
     suffering financial loss or other damage.
       ``(c) Other Prohibitions.--Except with the written consent 
     of the Administrator, it shall be unlawful--
       ``(1) for any person to take office as an officer, 
     director, or employee of an NMVC company, or to become an 
     agent or participant in the conduct of the affairs or 
     management of an NMVC company, if that person--
       ``(A) has been convicted of a felony, or any other criminal 
     offense involving dishonesty or breach of trust; or
       ``(B) has been found civilly liable in damages, or has been 
     permanently or temporarily enjoined by order, judgment, or 
     decree of a court of competent jurisdiction, by reason of any 
     act or practice involving fraud or breach of trust; or
       ``(2) for any person to continue to serve in any of the 
     above-described capacities, if that person is subsequently--
       ``(A) convicted of a felony, or any other criminal offense 
     involving dishonesty or breach of trust; or
       ``(B) found civilly liable in damages, or is permanently or 
     temporarily enjoined by an order, judgment, or decree of a 
     court of competent jurisdiction, by reason of any act or 
     practice involving fraud or breach of trust.
       ``(d) Notice.--The Administrator may serve upon any 
     officer, director, employee, or other participant in the 
     conduct of the management or other affairs of an NMVC company 
     a written notice of the intention of the Administrator to 
     remove that person from his or her position whenever, in the 
     opinion of the Administrator, that person--
       ``(1) has willfully committed any substantial violation 
     of--
       ``(A) this title (or any rule, regulation, or order issued 
     under this title); or
       ``(B) a participation agreement entered into under this 
     part; or
       ``(C) a cease-and-desist order that has become final; or
       ``(2) has willfully committed or engaged in any act, 
     omission, or practice that constitutes a substantial breach 
     of fiduciary duty, and that such violation or such breach of 
     fiduciary duty is one involving personal dishonesty on the 
     part of such person.
       ``(e) Suspension or Removal.--The Administrator may suspend 
     or remove from office any person upon whom the Administrator 
     has served a notice under subsection (d), in accordance with 
     the procedures set forth in section 313.

     ``SEC. 365. REGULATIONS.

       ``The Administrator may promulgate such regulations as the 
     Administrator determines to be necessary to carry out this 
     part.

     ``SEC. 366. AUTHORIZATIONS.

       ``(a) In General.--For fiscal years 2000 through 2005, the 
     Administration is authorized to be appropriated, to remain 
     available until expended--
       ``(1) such subsidy budget authority as may be necessary to 
     guarantee $150,000,000 of debentures under this part; and
       ``(2) $30,000,000 to make grants under this part.
       ``(b) Funds Collected for Examinations.--Funds deposited 
     under section 362(c) are authorized to be appropriated only 
     for the costs of examinations under section 362 and for the 
     costs of other oversight activities with respect to the 
     program established under this part.''.
       (b) Conforming Amendment.--Section 20(e)(1)(C) of the Small 
     Business Act (15 U.S.C. 631 note) is amended by inserting 
     ``part A of'' before ``title III''.

     SEC. 802. BANKRUPTCY EXEMPTION FOR NMVC COMPANIES.

       Section 109(b)(2) of title 11, United States Code, is 
     amended by inserting after ``homestead association,'' the 
     following: ``a new markets venture capital company (as 
     defined in section 351 of the Small Business Investment Act 
     of 1958),''.

     SEC. 803. FEDERAL SAVINGS ASSOCIATIONS.

       Section 5(c)(4) of the Home Owners' Loan Act (12 U.S.C. 
     1464(c)(4)) is amended by adding at the end the following:
       ``(F) New markets venture capital companies.--A Federal 
     savings association may invest in stock, obligations, or 
     other securities of any new markets venture capital company 
     (as defined in section 351 of the Small Business Investment 
     Act of 1958). A Federal savings association may not make any 
     investment under this subparagraph if its aggregate 
     outstanding investment under this subparagraph would exceed 5 
     percent of the capital and surplus of such savings 
     association.''.

      Subtitle B--Community Development Venture Capital Assistance

     SEC. 811. FINDINGS.

       Congress finds that--
       (1) there is a need for the development and expansion of 
     organizations that provide private equity capital to smaller 
     businesses in areas in which equity-type capital is scarce, 
     such as inner cities and rural areas, in order to create and 
     retain jobs for low-income residents of those areas;
       (2) to invest successfully in smaller businesses, 
     particularly in inner cities and rural areas, requires highly 
     specialized investment and management skills;
       (3) there is a shortage of professionals who possess such 
     skills and there are few training grounds for individuals to 
     obtain those skills;
       (4) providing assistance to organizations that provide 
     specialized technical assistance and training to individuals 
     and organizations seeking to enter or expand in this segment 
     of the market would stimulate small business development and 
     entrepreneurship in economically distressed communities; and
       (5) assistance from the Federal Government could act as a 
     catalyst to attract investment from the private sector and 
     would

[[Page S6731]]

     help to develop a specialized venture capital industry 
     focused on creating jobs, increasing business ownership, and 
     generating wealth in low-income communities.

     SEC. 812. COMMUNITY DEVELOPMENT VENTURE CAPITAL ACTIVITIES.

       (a) In General.--The Small Business Act (15 U.S.C. 631 et 
     seq.) is amended--
       (1) by redesignating section 34 as section 35; and
       (2) by inserting after section 33 the following:

     ``SEC. 34. COMMUNITY DEVELOPMENT VENTURE CAPITAL ACTIVITIES.

       ``(a) Definitions.--In this section:
       ``(1) Community development venture capital organization.--
     The term `community development venture capital organization' 
     means a privately-controlled organization that--
       ``(A) has a primary mission of promoting community 
     development in low-income communities, as defined by the 
     Administrator, through investment in private business 
     enterprises; or
       ``(B) administers or is in the process of establishing a 
     community development venture capital fund for the purpose of 
     making equity investments in private business enterprises in 
     such communities.
       ``(2) Developmental organization.--The term `developmental 
     organization'--
       ``(A) means a public or private entity, including a college 
     or university, that provides technical assistance to 
     community development venture capital organizations or that 
     conducts research or training in community development 
     venture capital investment; and
       ``(B) may include an intermediary organization.
       ``(3) Intermediary organization.--The term `intermediary 
     organization'--
       ``(A) means a private, nonprofit entity that has--
       ``(i) a primary mission of promoting community development 
     through investment in private businesses in low-income 
     communities; and
       ``(ii) significant prior experience in providing technical 
     assistance or financial assistance to community development 
     venture capital organizations;
       ``(B) may include community development venture capital 
     organizations.
       ``(b) Authority.--In order to promote the development of 
     community development venture capital organizations, the 
     Administrator, may--
       ``(1) enter into contracts with 1 or more developmental 
     organizations to carry out training and research activities 
     under subsection (c); and
       ``(2) make grants in accordance with this section--
       ``(A) to developmental organizations to carry out training 
     and research activities under subsection (c); and
       ``(B) to intermediary organizations to provide intensive 
     marketing, management, and technical assistance and training 
     to community development venture capital organizations under 
     subsection (d).
       ``(c) Training and Research Activities.--
       ``(1) In general.--Subject to paragraph (2), a 
     developmental organization that receives a grant under 
     subsection (b) shall use the funds made available through the 
     grant for 1 or more of the following training and research 
     activities:
       ``(A) Strengthening professional skills.--Creating and 
     operating training programs to enhance the professional 
     skills for individuals in community development venture 
     capital organizations or operating private community 
     development venture capital funds.
       ``(B) Increasing interest in community development venture 
     capital.--Creating and operating a program to select and 
     place students and recent graduates from business and related 
     professional schools as interns with community development 
     venture capital organizations and intermediary organizations 
     for a period of up to 1 year, and to provide stipends for 
     such interns during the internship period.
       ``(C) Promoting `best practices'.--Organizing an annual 
     national conference for community development venture capital 
     organizations to discuss and share information on the best 
     practices regarding issues relevant to the creation and 
     operation of community development venture capital 
     organizations.
       ``(D) Mobilizing academic resources.--Encouraging the 
     formation of 1 or more centers for the study of community 
     development venture capital at graduate schools of business 
     and management, providing funding for the development of 
     materials for courses on topics in this area, and providing 
     funding for research on economic, operational, and policy 
     issues relating to community development venture capital.
       ``(2) Limitation.--The Administrator shall ensure that not 
     more than 25 percent of the amount made available to carry 
     out this section is used for activities described in 
     paragraph (1).
       ``(d) Intensive Marketing, Management, and Technical 
     Assistance and Training.--An intermediary organization that 
     receives a grant under subsection (b) shall use the funds 
     made available through the grant to provide intensive 
     marketing, management, and technical assistance and training 
     to promote the development of community development venture 
     capital organizations, which assistance may include grants to 
     community development venture capital organizations for the 
     start up costs and operating support of those organizations.
       ``(e) Matching Contribution Requirement.--The Administrator 
     shall require, as a condition of any grant made to an 
     intermediary organization under this section, that a matching 
     contribution equal to the amount of such grant be provided 
     from sources other than the Federal Government.
       ``(f) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $20,000,000 for 
     fiscal years 2000 through 2003, to remain available until 
     expended.''.
       (b) Requirements.--The Administrator of the Small Business 
     Administration may promulgate such regulations as may be 
     necessary to carry out section 34 of the Small Business Act, 
     as amended by this section, which regulations may take effect 
     upon issuance.

                       Subtitle C--Business LINC

     SEC. 821. GRANTS AUTHORIZED.

       Section 8 of the Small Business Act (15 U.S.C. 637) is 
     amended by adding at the end the following:
       ``(m) Business LINC Grants.--
       ``(1) In general.--The Administrator may make grants to and 
     enter into cooperative agreements with any coalition of 
     private or public sector participants that--
       ``(A) expand business-to-business relationships between 
     large and small businesses; and
       ``(B) provide businesses, directly or indirectly, with 
     online information and a database of companies that are 
     interested in mentor-protegee programs or community-based, 
     state-wide, or local business development programs.
       ``(2) Matching requirements.--
       ``(A) In general.--Subject to subparagraph (B), the 
     Administrator may make grants to and enter into cooperative 
     agreements with any coalition of private or public sector 
     participants if the coalition provides a matching amount, 
     either in-kind or in cash, equal to the grant amount.
       ``(B) Waiver.--In the best interests of the program, the 
     Administrator may waive the requirements for matching funds 
     to be provided by the coalition.
       ``(3) Authorization of appropriations.--There is authorized 
     to be appropriated to carry out this subsection $6,600,000 
     for each of fiscal years 2000 through 2003, to remain 
     available until expended.''.

     SEC. 822. REGULATIONS.

       The Administrator of the Small Business Administration may 
     promulgate such regulations as the Administration determines 
     to be necessary to carry out this title and the amendment 
     made by this title.

   TITLE IX--BOND VOLUME CAP AND LOW-INCOME HOUSING CREDIT INCREASES

     SEC. 901. INCREASE IN STATE CEILING ON PRIVATE ACTIVITY 
                   BONDS.

       (a) In General.--Paragraphs (1) and (2) of section 146(d) 
     (relating to State ceiling) are amended to read as follows:
       ``(1) In general.--The State ceiling applicable to any 
     State for any calendar year shall be the greater of--
       ``(A) an amount equal to $75 multiplied by the State 
     population, or
       ``(B) $225,000,000.

     Subparagraph (B) shall not apply to any possession of the 
     United States.
       ``(2) Inflation adjustment.--In the case of a calendar year 
     after 2001, each of the dollar amounts contained in paragraph 
     (1) shall be increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 2000' for `calendar year 1992' in subparagraph 
     (B) thereof.

     If any increase determined under the preceding sentence is 
     not a multiple of $1 ($250 in the case of the dollar amount 
     in paragraph (1)(B), such increase shall be rounded to the 
     nearest multiple thereof.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to calendar years after 2000.

     SEC. 902. INCREASE IN STATE CEILING ON LOW-INCOME HOUSING 
                   CREDIT.

       (a) In General.--Clause (i) of section 42(h)(3)(C) 
     (relating to State housing credit ceiling) is amended by 
     striking ``$1.25'' and inserting ``$1.75''.
       (b) Adjustment of State Ceiling for Increases in Cost-of-
     Living.--Paragraph (3) of section 42(h) (relating to housing 
     credit dollar amount for agencies) is amended by adding at 
     the end the following new subparagraph:
       ``(H) Cost-of-living adjustment.--
       ``(i) In general.--In the case of a calendar year after 
     2001, the dollar amount contained in subparagraph (C)(i) 
     shall be increased by an amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting 
     `calendar year 2000' for `calendar year 1992' in subparagraph 
     (B) thereof.

       ``(ii) Rounding.--If any increase under clause (i) is not a 
     multiple of 5 cents, such increase shall be rounded to the 
     next lowest multiple of 5 cents.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to calendar years after 2000.

                TITLE X--INDIVIDUAL DEVELOPMENT ACCOUNTS

     SEC. 1001. FINDINGS.

       Congress makes the following findings:

[[Page S6732]]

       (1) One-third of all Americans have no assets available for 
     investment, and another 20 percent have only negligible 
     assets. The household savings rate of the United States lags 
     far behind other industrial nations, presenting a barrier to 
     national economic growth and preventing many Americans from 
     entering the economic mainstream by buying a house, obtaining 
     an adequate education, or starting a business.
       (2) By building assets, Americans can improve their 
     economic independence and stability, stimulate the 
     development of human and other capital, and work toward a 
     viable and hopeful future for themselves and their children. 
     Thus, economic well-being does not come solely from income, 
     spending, and consumption, but also requires savings, 
     investment, and accumulation of assets.
       (3) Traditional public assistance programs based on income 
     and consumption have rarely been successful in promoting and 
     supporting the transition to increased economic self-
     sufficiency. Income-based social policies that meet 
     consumption needs (including food, child care, rent, 
     clothing, and health care) should be complemented by asset-
     based policies that can provide the means to achieve long-
     term independence and economic well-being.
       (4) Individual Development Accounts (IDAs) can provide 
     working Americans with strong incentives to build assets, 
     basic financial management training, and access to secure and 
     relatively inexpensive banking services.
       (5) There is reason to believe that Individual Development 
     Accounts would also foster greater participation in electric 
     fund transfers (EFT), generate financial returns, including 
     increased income, tax revenue, and decreased welfare cash 
     assistance, that will far exceed the cost of public 
     investment in the program.

     SEC. 1002. PURPOSES.

       The purposes of this title are to provide for the 
     establishment of individual development account programs that 
     will--
       (1) provide individuals and families with limited means an 
     opportunity to accumulate assets and to enter the financial 
     mainstream;
       (2) promote education, homeownership, and the development 
     of small businesses;
       (3) stabilize families and build communities; and
       (4) support continued United States economic expansion.

     SEC. 1003. DEFINITIONS.

       As used in this title:
       (1) Eligible individual.--
       (A) In general.--The term ``eligible individual'' means an 
     individual who--
       (i) has attained the age of 18 years;
       (ii) is a citizen or legal resident of the United States; 
     and
       (iii) is a member of a household the gross income of which 
     does not exceed 80 percent of the median family income for 
     the area in which such individual resides (as published by 
     the Department of Housing and Urban Affairs).
       (B) Household.--The term ``household'' means all 
     individuals who share use of a dwelling unit as primary 
     quarters for living and eating separate from other 
     individuals.
       (2) Individual development account.--The term ``Individual 
     Development Account'' means an account established for an 
     eligible individual as part of a qualified individual 
     development account program, but only if the written 
     governing instrument creating the account meets the following 
     requirements:
       (A) The sole owner of the account is the eligible 
     individual.
       (B) No contribution will be accepted unless it is in cash, 
     by check, by electronic fund transfer, or by electronic money 
     order.
       (C) The holder of the account is a qualified financial 
     institution, a qualified nonprofit organization, or an Indian 
     tribe.
       (D) The assets of the account will not be commingled with 
     other property except in a common trust fund or common 
     investment fund.
       (E) Except as provided in section 1015(b), any amount in 
     the account may be paid out only for the purpose of paying 
     the qualified expenses of the eligible individual.
       (3) Parallel account.--The term ``parallel account'' means 
     a separate, parallel individual or pooled account for all 
     matching funds and earnings dedicated to an eligible 
     individual as part of a qualified individual account program, 
     the sole owner of which is a qualified financial institution, 
     a qualified nonprofit organization, or an Indian tribe.
       (4) Qualified financial institution.--
       (A) In general.--The term ``qualified financial 
     institution'' means any person authorized to be a trustee of 
     any individual retirement account under section 408(a)(2).
       (B) Rule of construction.--Nothing in this paragraph shall 
     be construed as preventing a person described in subparagraph 
     (A) from collaborating with 1 or more qualified nonprofit 
     organizations or Indian tribes to carry out an individual 
     development account program established under section 1011.
       (5) Qualified nonprofit organization.--The term ``qualified 
     nonprofit organization'' means--
       (A)(i) any organization described in section 501(c)(3) of 
     the Internal Revenue Code of 1986 and exempt from taxation 
     under section 501(a) of such Code;
       (ii) any community development financial institution as 
     certified by the Community Development Financial Institution 
     Fund; or
       (iii) any credit union certified by the National Credit 
     Union Administration,
     that meets standards for financial management and fiduciary 
     responsibility as defined by the Secretary or an organization 
     designated by the Secretary.
       (6) Indian tribe.--The term ``Indian tribe'' means any 
     Indian tribe as defined in section 4(12) of the Native 
     American Housing Assistance and Self-Determination Act of 
     1996 (25 U.S.C. 4103(12), and includes any tribal subsidiary, 
     subdivision, or other wholly owned tribal entity.
       (7) Qualified individual development account program.--The 
     term ``qualified individual development program'' means a 
     program established under section 1011 under which--
       (A) individual development accounts and parallel accounts 
     are held by a qualified financial institution, a qualified 
     nonprofit organization, or an Indian tribe; and
       (B) additional activities determined by the Secretary, or 
     an organization designated by the Secretary, as necessary to 
     responsibly develop and administer accounts, including 
     recruiting, providing financial education and other training 
     to account holders, and regular program monitoring, are 
     carried out by such qualified financial institution, 
     qualified nonprofit organization, or Indian tribe.
       (8) Qualified expense distribution.--
       (A) In general.--The term ``qualified expense 
     distribution'' means any amount paid (including through 
     electronic payments) or distributed out of an Individual 
     Development Account and a parallel account established for an 
     eligible individual if such amount--
       (i) is used exclusively to pay the qualified expenses of 
     such individual or such individual's spouse or dependents,
       (ii) is paid by the qualified financial institution, 
     qualified nonprofit organization, or Indian tribe directly to 
     the person to whom the amount is due or to another Individual 
     Development Account, and
       (iii) is paid after the holder of the Individual 
     Development Account has completed a financial education 
     course as required under section 1012(b).
       (B) Qualified expenses.--
       (i) In general.--The term ``qualified expenses'' means any 
     of the following:

       (I) Qualified higher education expenses.
       (II) Qualified first-time homebuyer costs.
       (III) Qualified business capitalization or expansion costs.
       (IV) Qualified rollovers.

       (ii) Qualified higher education expenses.--

       (I) In general.--The term ``qualified higher education 
     expenses'' has the meaning given such term by section 
     72(t)(7) of the Internal Revenue Code of 1986, determined by 
     treating postsecondary vocational educational schools as 
     eligible educational institutions.
       (II) Postsecondary vocational education school.--The term 
     ``postsecondary vocational educational school'' means an area 
     vocational education school (as defined in subparagraph (C) 
     or (D) of section 521(4) of the Carl D. Perkins Vocational 
     and Applied Technology Education Act (20 U.S.C. 2471(4))) 
     which is in any State (as defined in section 521(33) of such 
     Act), as such sections are in effect on the date of 
     enactment of this Act.

       (III) Coordination with other benefits.--The amount of 
     qualified higher education expenses for any taxable year 
     shall be reduced as provided in section 25A(g)(2) of such 
     Code and by the amount of such expenses for which a credit or 
     exclusion is allowed under chapter 1 of such Code for such 
     taxable year.

       (iii) Qualified first-time homebuyer costs.--The term 
     ``qualified first-time homebuyer costs'' means qualified 
     acquisition costs (as defined in section 72(t)(8) of such 
     Code without regard to subparagraph (B) thereof) with respect 
     to a principal residence (within the meaning of section 121 
     of such Code) for a qualified first-time homebuyer (as 
     defined in section 72(t)(8) of such Code).
       (iv) Qualified business capitalization or expansion 
     costs.--

       (I) In general.--The term ``qualified business 
     capitalization or expansion costs'' means qualified 
     expenditures for the capitalization or expansion of a 
     qualified business pursuant to a qualified business plan.
       (II) Qualified expenditures.--The term ``qualified 
     expenditures'' means expenditures included in a qualified 
     business plan, including capital, plant, equipment, working 
     capital, inventory expenses, attorney and accounting fees, 
     and other costs normally associated with starting or 
     expanding a business.
       (III) Qualified business.--The term ``qualified business'' 
     means any business that does not contravene any law.
       (IV) Qualified business plan.--The term ``qualified 
     business plan'' means a business plan which meets such 
     requirements as the Secretary or an organization designated 
     by the Secretary may specify.

       (v) Qualified rollovers.--The term ``qualified rollover'' 
     means, with respect to any distribution from an Individual 
     Development Account, the payment, within 120 days of such 
     distribution, of all or a portion of such distribution to 
     such account or to another Individual Development Account 
     established in another qualified financial institution, 
     qualified nonprofit organization, or Indian tribe for the 
     benefit of the eligible individual. Rules similar to the 
     rules of section 408(d)(3) of such Code (other than 
     subparagraph (C) thereof) shall apply for purposes of this 
     clause.
       (9) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury.

[[Page S6733]]

   Subtitle A--Individual Development Accounts for Low-Income Workers

     SEC. 1011. STRUCTURE AND ADMINISTRATION OF QUALIFIED 
                   INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAMS.

       (a) Establishment of Qualified Individual Development 
     Account Programs.--Any qualified financial institution, 
     qualified nonprofit organization, or Indian tribe may 
     establish 1 or more qualified individual development account 
     programs which meet the requirements of this title.
       (b) Basic Program Structure.--
       (1) In general.--All qualified individual development 
     account programs shall consist of the following 2 components:
       (A) An Individual Development Account to which an eligible 
     individual may contribute money in accordance with section 
     1013.
       (B) A parallel account to which all matching funds shall be 
     deposited in accordance with section 1014.
       (2) Tailored ida programs.--A qualified financial 
     institution, qualified nonprofit organization, or Indian 
     tribe may tailor its qualified individual development account 
     program to allow matching funds to be spent on 1 or more of 
     the categories of qualified expenses.
       (c) Account Population Distribution Requirement.--An 
     individual development account program shall be treated as 
     qualified under this title only if not less than one third of 
     the Individual Development Accounts under such program are 
     owned by eligible individuals each of whom is a member of a 
     household the gross income of which does not exceed 50 
     percent of the median family income for the area in which 
     such individuals reside (as published by the Department of 
     Housing and Urban Affairs).
       (d) Tax Treatment of Accounts.--Any account described in 
     subparagraph (B) of subsection (b)(1) is exempt from taxation 
     under the Internal Revenue Code of 1986 unless such account 
     has ceased to be such an account by reason of section 1015(c) 
     or the termination of the qualified individual development 
     account program under section 1016(b).

     SEC. 1012. PROCEDURES FOR OPENING AN INDIVIDUAL DEVELOPMENT 
                   ACCOUNT AND QUALIFYING FOR MATCHING FUNDS.

       (a) Opening an Account.--An eligible individual must open 
     an Individual Development Account with a qualified financial 
     institution, qualified nonprofit organization, or Indian 
     tribe and contribute money in accordance with section 1013 to 
     qualify for matching funds in a parallel account.
       (b) Required Completion of Financial Education Course.--
       (1) In general.--Before becoming eligible to withdraw 
     matching funds to pay for qualified expenses, holders of 
     Individual Development Accounts must complete a financial 
     education course offered by a qualified financial 
     institution, a qualified nonprofit organization, an Indian 
     tribe, or a government entity.
       (2) Standard and applicability of course.--The Secretary or 
     an organization designated by the Secretary, in consultation 
     with representatives of qualified individual development 
     account programs and financial educators, shall establish 
     minimum performance standards for financial education courses 
     offered under paragraph (1) and a protocol to exempt eligible 
     individuals from the requirement under paragraph (1) because 
     of hardship or lack of need.

     SEC. 1013. CONTRIBUTIONS TO INDIVIDUAL DEVELOPMENT ACCOUNTS.

       (a) In General.--Except in the case of a qualified 
     rollover, individual contributions to an Individual 
     Development Account will not be accepted for the taxable year 
     in excess of the lesser of--
       (1) $2,000; or
       (2) an amount equal to the sum of--
       (A) the compensation (as defined in section 219(f)(1) of 
     the Internal Revenue Code of 1986) includible in the 
     individual's gross income for such taxable year; and
       (B) in the case of an eligible individual who has attained 
     age 65 or retired on disability (within the meaning of 
     section 22 of the Internal Revenue Code of 1986) before the 
     close of the taxable year, any amount received as a pension 
     or annuity or as a disability benefit and excluded from the 
     individual's gross income for such taxable year.
       (b) Proof of Compensation and Status as an Eligible 
     Individual.--Federal W-2 forms and other forms specified by 
     the Secretary proving the eligible individual's wages and 
     other compensation (including amounts described in subsection 
     (a)(2)(B)) and the status of the individual as an eligible 
     individual shall be presented at the time of the 
     establishment of the Individual Development Account and at 
     least once annually thereafter.
       (c) Time When Contributions Deemed Made.--For purposes of 
     this section, a taxpayer shall be deemed to have made a 
     contribution to an Individual Development Account on the last 
     day of the preceding taxable year if the contribution is made 
     on account of such taxable year and is made not later than 
     the time prescribed by law for filing the Federal income tax 
     return for such taxable year (not including extensions 
     thereof).
       (d) Deemed Withdrawals of Excess Contributions.--If the 
     individual for whose benefit an Individual Development 
     Account is established contributes an amount in excess of the 
     amount allowed under subsection (a) and fails to withdraw the 
     excess contribution plus the amount of net income 
     attributable to such excess contribution on or before the day 
     prescribed by law (including extensions of time) for filing 
     such individual's return of tax for the taxable year, such 
     excess contribution and net income shall be deemed to have 
     been withdrawn on such day by such individual for purposes 
     other than to pay qualified expenses.
       (e) Cross Reference.--

  For designation of earned income tax credit payments for deposit to 
an Individual Development Account, see section 32(o) of the Internal 
Revenue Code of 1986.

     SEC. 1014. DEPOSITS BY QUALIFIED INDIVIDUAL DEVELOPMENT 
                   ACCOUNT PROGRAMS.

       (a) Parallel Accounts.--The qualified financial 
     institution, qualified nonprofit organization, or Indian 
     tribe shall deposit all matching funds for each Individual 
     Development Account into a parallel account at a qualified 
     financial institution, qualified nonprofit organization, or 
     Indian tribe.
       (b) Regular Deposits of Matching Funds.--
       (1) In general.--Subject to paragraph (2), the qualified 
     financial institution, qualified nonprofit organization, or 
     Indian tribe shall not less than annually deposit into the 
     parallel account with respect to each eligible individual the 
     following:
       (A) A dollar-for-dollar match for the first $500 
     contributed by the eligible individual into an Individual 
     Development Account with respect to any taxable year.
       (B) Any matching funds provided by State, local, or private 
     sources in accordance to the matching ratio set by those 
     sources.
       (2) Cross reference.--

  For allowance of tax credit for Individual Development Account 
subsidies, including matching funds, see section 30B of the Internal 
Revenue Code of 1986.

       (c) Forfeiture of Matching Funds.--Matching funds that are 
     forfeited under section 1015(b) shall be used by the 
     qualified financial institution, qualified nonprofit 
     organization, or Indian tribe to pay matches for other 
     Individual Development Account contributions by eligible 
     individuals.
       (d) Uniform Accounting Regulations.--The Secretary shall 
     prescribe regulations with respect to accounting for matching 
     funds from all possible sources in the parallel accounts.
       (e) Regular Reporting of Accounts.--Any qualified financial 
     institution, qualified nonprofit organization, or Indian 
     tribe shall report the balances in any Individual Development 
     Account and parallel account of an eligible individual on not 
     less than an annual basis.

     SEC. 1015. WITHDRAWAL PROCEDURES.

       (a) Withdrawals for Qualified Expenses.--To withdraw money 
     from an eligible individual's Individual Development Account 
     to pay qualified expenses of such individual or such 
     individual's spouse or dependents, the qualified financial 
     institution, qualified nonprofit organization, or Indian 
     tribe shall directly transfer such funds from the Individual 
     Development Account, and, if applicable, from the parallel 
     account electronically to the vendor or other Individual 
     Development Account. If the vendor is not equipped to receive 
     funds electronically, the qualified financial institution, 
     qualified nonprofit organization, or Indian tribe may issue 
     such funds by paper check to the vendor.
       (b) Withdrawals for Nonqualified Expenses.--An Individual 
     Development Account holder may unilaterally withdraw funds 
     from the Individual Development Account for purposes other 
     than to pay qualified expenses, but shall forfeit the 
     corresponding matching funds and interest earned on the 
     matching funds by doing so, unless such withdrawn funds are 
     recontributed to such Account by September 30 following the 
     withdrawal.
       (c) Deemed Withdrawals From Accounts of Noneligible 
     Individuals.--If the individual for whose benefit an 
     Individual Development Account is established ceases to be an 
     eligible individual, such account shall cease to be an 
     Individual Development Account as of the first day of the 
     taxable year of such individual and any balance in such 
     account shall be deemed to have been withdrawn on such first 
     day by such individual for purposes other than to pay 
     qualified expenses.
       (d) Tax Treatment of Matching Funds.--Any amount withdrawn 
     from a parallel account shall not be includible in an 
     eligible individual's gross income.

     SEC. 1016. CERTIFICATION AND TERMINATION OF QUALIFIED 
                   INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAMS.

       (a) Certification Procedures.--Upon establishing a 
     qualified individual development account program under 
     section 1011, a qualified financial institution, qualified 
     nonprofit organization, or Indian tribe shall certify to the 
     Secretary, or an organization designated by the Secretary, on 
     forms prescribed by the Secretary or such organization and 
     accompanied by any documentation required by the Secretary 
     or such organization, that--
       (1) the accounts described in subparagraphs (A) and (B) of 
     section 1011(b)(1) are operating pursuant to all the 
     provisions of this title; and
       (2) the qualified financial institution, qualified 
     nonprofit organization, or Indian tribe agrees to implement 
     an information system necessary to monitor the cost and 
     outcomes of the qualified individual development account 
     program.

[[Page S6734]]

       (b) Authority To Terminate Qualified IDA Program.--If the 
     Secretary, or an organization designated by the Secretary, 
     determines that a qualified financial institution, qualified 
     nonprofit organization, or Indian tribe under this title is 
     not operating a qualified individual development account 
     program in accordance with the requirements of this title 
     (and has not implemented any corrective recommendations 
     directed by the Secretary or such organization), the 
     Secretary or such organization shall terminate such 
     institution's, nonprofit organization's, or Indian tribe's 
     authority to conduct the program. If the Secretary, or an 
     organization designated by the Secretary, is unable to 
     identify a qualified financial institution, qualified 
     nonprofit organization, or Indian tribe to assume the 
     authority to conduct such program, then any account 
     established for the benefit of any eligible individual under 
     such program shall cease to be an Individual Development 
     Account as of the first day of such termination and any 
     balance in such account shall be deemed to have been 
     withdrawn on such first day by such individual for purposes 
     other than to pay qualified expenses.

     SEC. 1017. REPORTING, MONITORING, AND EVALUATION.

       (a) Responsibilities of Qualified Financial Institutions, 
     Qualified Nonprofit Organizations, and Indian Tribes.--Each 
     qualified financial institution, qualified nonprofit 
     organization, or Indian tribe that establishes a qualified 
     individual development account program under section 1011 
     shall report annually to the Secretary, directly or through 
     an organization designated by the Secretary, within 90 days 
     after the end of each calendar year on--
       (1) the number of eligible individuals making contributions 
     into Individual Development Accounts;
       (2) the amounts contributed into Individual Development 
     Accounts and deposited into parallel accounts for matching 
     funds;
       (3) the amounts withdrawn from Individual Development 
     Accounts and parallel accounts, and the purposes for which 
     such amounts were withdrawn;
       (4) the balances remaining in Individual Development 
     Accounts and parallel accounts; and
       (5) such other information needed to help the Secretary, or 
     an organization designated by the Secretary, monitor the cost 
     and outcomes of the qualified individual development account 
     program.
       (b) Responsibilities of the Secretary or Designated 
     Organization.--
       (1) Monitoring protocol.--Not later than 12 months after 
     the date of enactment of this Act, the Secretary, or an 
     organization designated by the Secretary, shall develop and 
     implement a protocol and process to monitor the cost and 
     outcomes of the qualified individual development account 
     programs established under section 1011.
       (2) Annual reports.--In each year after the date of 
     enactment of this Act, the Secretary, or an organization 
     designated by the Secretary, shall issue a progress report on 
     the status of such qualified individual development account 
     programs. Such report shall include from a representative 
     sample of qualified financial institutions, qualified 
     nonprofit organizations, and Indian tribes a report on--
       (A) the characteristics of participants, including age, 
     gender, race or ethnicity, marital status, number of 
     children, employment status, and monthly income;
       (B) individual level data on deposits, withdrawals, 
     balances, uses of Individual Development Accounts, and 
     participant characteristics;
       (C) the characteristics of qualified individual development 
     account programs, including match rate, economic education 
     requirements, permissible uses of accounts, staffing of 
     programs in full time employees, and the total costs of 
     programs; and
       (D) process information on program implementation and 
     administration, especially on problems encountered and how 
     problems were solved.
       (3) Appropriations for monitoring.--There is authorized to 
     be appropriated $5,000,000 for the purposes of monitoring 
     qualified individual development account programs established 
     under section 1011, to remain available until expended.

     SEC. 1018. CERTAIN ACCOUNT FUNDS OF PROGRAM PARTICIPANTS 
                   DISREGARDED FOR PURPOSES OF CERTAIN MEANS-
                   TESTED FEDERAL PROGRAMS.

       Notwithstanding any provision of the Internal Revenue Code 
     of 1986 or the Social Security Act that requires 
     consideration of 1 or more financial circumstances of an 
     individual, for the purposes of determining eligibility to 
     receive, or the amount of, any assistance or benefit 
     authorized by such provision to be provided to or for the 
     benefit of such individual, the sum of--
       (1) the lesser of--
       (A) the sum of all contributions by an eligible individual 
     (including earnings thereon) to any Individual Development 
     Account; or
       (B) $10,000; plus
       (2) the sum of the matching deposits made on behalf of such 
     individual (including earnings thereon) in any parallel 
     account,
     shall be disregarded for such purpose with respect to any 
     period during which the individual participates in a 
     qualified individual development account program established 
     under section 1011.

Subtitle B--Qualified Individual Development Account Program Investment 
                                Credits

     SEC. 1021. QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAM 
                   INVESTMENT CREDITS.

       (a) In General.--Subpart B of part IV of subchapter A of 
     chapter 1 (relating to other credits) is amended by inserting 
     after section 30A the following:

     ``SEC. 30B. QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAM 
                   INVESTMENT CREDIT.

       ``(a) Determination of Amount.--There shall be allowed as a 
     credit against the applicable tax for the taxable year an 
     amount equal to the qualified individual development account 
     program investment provided by a taxpayer during the taxable 
     year under a qualified individual development account program 
     established under section 1011 of the American Community 
     Renewal and New Markets Empowerment Act.
       ``(b) Applicable Tax.--For the purposes of this section, 
     the term `applicable tax' means the excess (if any) of--
       ``(1) the tax imposed under this chapter (other than the 
     taxes imposed under the provisions described in subparagraphs 
     (C) through (Q) of section 26(b)(2)), over
       ``(2) the credits allowable under subpart B (other than 
     this section) and subpart D of this part.
       ``(c) Qualified Individual Development Account Program 
     Investment.--For purposes of this section, the term 
     `qualified individual development account program investment' 
     means an amount equal to--
       ``(1) in the case of a taxpayer which is a qualified 
     financial institution, the sum of--
       ``(A) the lesser of--
       ``(i) 90 percent of the aggregate amount of dollar-for-
     dollar matches under any qualified individual development 
     account program by such taxpayer under section 1014 of the 
     American Community Renewal and New Markets Empowerment Act 
     for such taxable year, or
       ``(ii) $90,000,000, plus
       ``(B) the lesser of--
       ``(i) 50 percent of the aggregate costs paid or incurred 
     under such program by the taxpayer during such taxable year--

       ``(I) to provide financial education courses to Individual 
     Development Account holders under section 1012(b) of such 
     Act, and
       ``(II) to underwrite program activities described in 
     section 503(6)(B) of such Act), or

       ``(ii) $1,500,000, and
       ``(2) in the case of a taxpayer which is not a qualified 
     financial institution and which meets the requirement 
     described in paragraph (2) of subsection (d), the lesser of--
       ``(A) the sum of--
       ``(i) 50 percent of the aggregate amount of such dollar-
     for-dollar matches by such taxpayer for such taxable year, 
     plus
       ``(ii) 50 percent of the aggregate costs described in 
     paragraph (1)(B)(i) paid under such program by the taxpayer 
     during such taxable year, or
       ``(B) $5,000,000.
       ``(d) Definitions and Special Rules.--
       ``(1) In general.--For purposes of this section, the terms 
     `Individual Development Account' , `qualified individual 
     development account program', and `qualified financial 
     institution' have the meanings given such terms by section 
     1003 of the American Community Renewal and New Markets 
     Empowerment Act.
       ``(2) Requirement for taxpayers which are not qualified 
     financial institutions.--The requirement described in this 
     paragraph with respect to any taxpayer which is not a 
     qualified financial institution is the requirement that at 
     least 70 percent of the expenditures by such taxpayer with 
     respect to any qualified individual development account 
     program for any taxable year are described in subsection 
     (c)(2)(A).
       ``(3) Certain rules made applicable.--Rules similar to the 
     rules of paragraphs (1) and (2) of section 41(f) shall apply 
     for purposes of this section.
       ``(4) Denial of Double Benefit.--No deduction or credit 
     under any other provision of this chapter shall be allowed 
     with respect to qualified individual development account 
     program investments taken into account under subsection (a).
       ``(e) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this section, including regulations providing for a reduction 
     of the credit allowed under this section for any taxable year 
     by the amount of any forfeiture under section 1015(b) of the 
     American Community Renewal and New Markets Empowerment Act in 
     such taxable year of any amount which was taken into account 
     in determining the amount of such credit in a preceding 
     taxable year.
       ``(f) Termination.--This section shall not apply to any 
     taxable year beginning after December 31, 2006.''.
       (b) Conforming Amendment.--The table of sections for 
     subpart B of part IV of subchapter A of chapter 1 is amended 
     by inserting after the item relating to section 30A the 
     following:

``Sec. 30B. Qualified individual development account program investment 
              credit.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 1022. CRA CREDIT TREATMENT FOR QUALIFIED INDIVIDUAL 
                   DEVELOPMENT ACCOUNT PROGRAM INVESTMENTS.

       Qualified financial institutions which establish qualified 
     individual development account programs under section 1011 
     shall not

[[Page S6735]]

     receive credit for funding, administration, and education 
     expenses under any test contained in regulations for the 
     Community Reinvestment Act of 1977 for those activities and 
     expenses related to such programs and taken into account for 
     purposes of the tax credit allowed under section 30B of the 
     Internal Revenue Code of 1986.

     SEC. 1023. DESIGNATION OF EARNED INCOME TAX CREDIT PAYMENTS 
                   FOR DEPOSIT TO INDIVIDUAL DEVELOPMENT ACCOUNTS.

       (a) In General.--Section 32 (relating to earned income 
     credit) is amended by adding at the end the following:
       ``(o) Designation of Credit for Deposit to Individual 
     Development Account.--
       ``(1) In general.--With respect to the return of any 
     eligible individual (as defined in section 1003(1) of the 
     American Community Renewal and New Markets Empowerment Act) 
     for the taxable year of the tax imposed by this chapter, such 
     individual may designate that a specified portion (not less 
     than $1) of any overpayment of tax for such taxable year 
     which is attributable to the credit allowed under this 
     section shall be deposited by the Secretary into an 
     Individual Development Account (as defined in section 1003(2) 
     of such Act) of such individual. The Secretary shall so 
     deposit such portion designated under this paragraph.
       ``(2) Manner and time of designation.--A designation under 
     paragraph (1) may be made with respect to any taxable year--
       ``(A) at the time of filing the return of the tax imposed 
     by this chapter for such taxable year, or
       ``(B) at any other time (after the time of filing the 
     return of the tax imposed by this chapter for such taxable 
     year) specified in regulations prescribed by the Secretary.
     Such designation shall be made in such manner as the 
     Secretary prescribes by regulations.
       ``(3) Portion attributable to earned income tax credit.--
     For purposes of paragraph (1), an overpayment for any taxable 
     year shall be treated as attributable to the credit allowed 
     under this section for such taxable year to the extent that 
     such overpayment does not exceed the credit so allowed.
       ``(4) Overpayments treated as refunded.--For purposes of 
     this title, any portion of an overpayment of tax designated 
     under paragraph (1) shall be treated as being refunded to the 
     taxpayer as of the last date prescribed for filing the return 
     of tax imposed by this chapter (determined without regard to 
     extensions) or, if later, the date the return is filed.
       ``(5) Termination.--This subsection shall not apply to any 
     taxable year beginning after December 31, 2006.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

                 TITLE XI--CHARITABLE CHOICE EXPANSION

     SEC. 1101. PROVISION OF ASSISTANCE UNDER GOVERNMENT PROGRAMS 
                   BY RELIGIOUS ORGANIZATIONS.

       Title XXIV of the Revised Statutes is amended by inserting 
     after section 1990 (42 U.S.C. 1994) the following:

     ``SEC. 1994A. CHARITABLE CHOICE.

       ``(a) Short Title.--This section may be cited as the 
     `Charitable Choice Expansion Act of 2000'.
       ``(b) Purpose.--The purposes of this section are--
       ``(1) to prohibit discrimination against nongovernmental 
     organizations and certain individuals on the basis of 
     religion in the distribution of government funds to provide 
     government assistance and distribution of such assistance, 
     under government programs described in subsection (c); and
       ``(2) to allow such organizations to accept such funds to 
     provide such assistance to such individuals without impairing 
     the religious character of such organizations or the 
     religious freedom of such individuals.
       ``(c) Religious Organizations Included as Nongovernmental 
     Providers.--For any program carried out by the Federal 
     Government, or by a State or local government with Federal 
     funds, in which the Federal, State, or local government is 
     authorized to use nongovernmental organizations, through 
     contracts, grants, certificates, vouchers, or other forms of 
     disbursement, to provide assistance to beneficiaries under 
     the program, the government shall consider, on the same basis 
     as other nongovernmental organizations, religious 
     organizations to provide the assistance under the program, so 
     long as the program is implemented in a manner consistent 
     with the Establishment Clause of the first amendment to the 
     Constitution. Neither the Federal Government nor a State or 
     local government receiving funds under such program shall 
     discriminate against an organization that provides assistance 
     under, or applies to provide assistance under, such program, 
     on the basis that the organization has a religious character.
       ``(d) Exclusions.--As used in subsection (c), the term 
     `program' does not include activities carried out under--
       ``(1) Federal programs providing education to children 
     eligible to attend elementary schools or secondary schools, 
     as defined in section 14101 of the Elementary and Secondary 
     Education Act of 1965 (20 U.S.C. 8801) (except for activities 
     to assist students in obtaining the recognized equivalents of 
     secondary school diplomas);
       ``(2) the Higher Education Act of 1965 (20 U.S.C. 1001 et 
     seq.);
       ``(3) the Head Start Act (42 U.S.C. 9831 et seq.); or
       ``(4) the Child Care and Development Block Grant Act of 
     1990 (42 U.S.C. 9858 et seq.).
       ``(e) Religious Character and Independence.--
       ``(1) In general.--A religious organization that provides 
     assistance under a program described in subsection (c) shall 
     retain its independence from Federal, State, and local 
     governments, including such organization's control over the 
     definition, development, practice, and expression of its 
     religious beliefs.
       ``(2) Additional safeguards.--Neither the Federal 
     Government nor a State or local government shall require a 
     religious organization--
       ``(A) to alter its form of internal governance; or
       ``(B) to remove religious art, icons, scripture, or other 
     symbols;
     in order to be eligible to provide assistance under a program 
     described in subsection (c).
       ``(f) Employment Practices.--
       ``(1) Tenets and teachings.--A religious organization that 
     provides assistance under a program described in subsection 
     (c) may require that its employees providing assistance under 
     such program adhere to the religious tenets and teachings of 
     such organization, and such organization may require that 
     those employees adhere to rules forbidding the use of drugs 
     or alcohol.
       ``(2) Title vii exemption.--The exemption of a religious 
     organization provided under section 702 or 703(e)(2) of the 
     Civil Rights Act of 1964 (42 U.S.C. 2000e-1, 2000e-2(e)(2)) 
     regarding employment practices shall not be affected by the 
     religious organization's provision of assistance under, or 
     receipt of funds from, a program described in subsection 
     (c).
       ``(g) Rights of Beneficiaries of Assistance.--
       ``(1) In general.--If an individual described in paragraph 
     (3) has an objection to the religious character of the 
     organization from which the individual receives, or would 
     receive, assistance funded under any program described in 
     subsection (c), the appropriate Federal, State, or local 
     governmental entity shall provide to such individual (if 
     otherwise eligible for such assistance) within a reasonable 
     period of time after the date of such objection, assistance 
     that--
       ``(A) is from an alternative organization that is 
     accessible to the individual; and
       ``(B) has a value that is not less than the value of the 
     assistance that the individual would have received from such 
     organization.
       ``(2) Notice.--The appropriate Federal, State, or local 
     governmental entity shall ensure that notice is provided to 
     individuals described in paragraph (3) of the rights of such 
     individuals under this section.
       ``(3) Individual described.--An individual described in 
     this paragraph is an individual who receives or applies for 
     assistance under a program described in subsection (c).
       ``(h) Nondiscrimination Against Beneficiaries.--
       ``(1) Grants and contracts.--A religious organization 
     providing assistance through a grant or contract under a 
     program described in subsection (c) shall not discriminate, 
     in carrying out the program, against an individual described 
     in subsection (g)(3) on the basis of religion, a religious 
     belief, a refusal to hold a religious belief, or a refusal to 
     actively participate in a religious practice.
       ``(2) Indirect forms of disbursement.--A religious 
     organization providing assistance through a voucher, 
     certificate, or other form of indirect disbursement under a 
     program described in subsection (c) shall not deny an 
     individual described in subsection (g)(3) admission into such 
     program on the basis of religion, a religious belief, or a 
     refusal to hold a religious belief.
       ``(i) Fiscal Accountability.--
       ``(1) In general.--Except as provided in paragraph (2), any 
     religious organization providing assistance under any program 
     described in subsection (c) shall be subject to the same 
     regulations as other nongovernmental organizations to account 
     in accord with generally accepted accounting principles for 
     the use of such funds provided under such program.
       ``(2) Limited audit.--Such organization shall segregate 
     government funds provided under such program into a separate 
     account. Only the government funds shall be subject to audit 
     by the government.
       ``(j) Compliance.--A party alleging that the rights of the 
     party under this section have been violated by a State or 
     local government may bring a civil action pursuant to section 
     1979 against the official or government agency that has 
     allegedly committed such violation. A party alleging that the 
     rights of the party under this section have been violated by 
     the Federal Government may bring a civil action for 
     appropriate relief in an appropriate Federal district court 
     against the official or government agency that has allegedly 
     committed such violation.
       ``(k) Limitations on Use of Funds for Certain Purposes.--No 
     funds provided through a grant or contract to a religious 
     organization to provide assistance under any program 
     described in subsection (c) shall be expended for sectarian 
     worship, instruction, or proselytization.
       ``(l) Effect on State and Local Funds.--If a State or local 
     government contributes State or local funds to carry out a 
     program described in subsection (c), the State or local 
     government may segregate the State or local funds from the 
     Federal funds provided to carry out the program or may 
     commingle the State or local funds with the Federal funds. If 
     the State or local government commingles the State or local 
     funds, the provisions of this section shall apply to the 
     commingled funds in the same manner, and to

[[Page S6736]]

     the same extent, as the provisions apply to the Federal 
     funds.
       ``(m) Treatment of Intermediate Contractors.--If a 
     nongovernmental organization (referred to in this subsection 
     as an `intermediate organization'), acting under a contract 
     or other agreement with the Federal Government or a State or 
     local government, is given the authority under the contract 
     or agreement to select nongovernmental organizations to 
     provide assistance under the programs described in subsection 
     (c), the intermediate organization shall have the same duties 
     under this section as the government but shall retain all 
     other rights of a nongovernmental organization under this 
     section.''.

               TITLE XII--ANTHRACITE REGION REDEVELOPMENT

     SEC. 1201. CREDIT TO HOLDERS OF QUALIFIED ANTHRACITE REGION 
                   REDEVELOPMENT BONDS.

       (a) In General.--Subpart B of part IV of subchapter A of 
     chapter 1, as amended by section 1021(a), is amended by 
     adding at the end the following new section:

     ``SEC. 30C. CREDIT TO HOLDERS OF QUALIFIED ANTHRACITE REGION 
                   REDEVELOPMENT BONDS.

       ``(a) Allowance of Credit.--In the case of a taxpayer who 
     holds a qualified anthracite region redevelopment bond on a 
     credit allowance date of such bond which occurs during the 
     taxable year, there shall be allowed as a credit against the 
     tax imposed by this chapter for such taxable year an amount 
     equal to the sum of the credits determined under subsection 
     (b) with respect to credit allowance dates during such year 
     on which the taxpayer holds such bond.
       ``(b) Amount of Credit.--
       ``(1) In general.--The amount of the credit determined 
     under this subsection with respect to any credit allowance 
     date for a qualified anthracite region redevelopment bond is 
     25 percent of the annual credit determined with respect to 
     such bond.
       ``(2) Annual credit.--The annual credit determined with 
     respect to any qualified anthracite region redevelopment bond 
     is the product of--
       ``(A) the applicable credit rate, multiplied by
       ``(B) the outstanding face amount of the bond.
       ``(3) Applicable credit rate.--For purposes of paragraph 
     (1), the applicable credit rate with respect to an issue is 
     the rate equal to an average market yield (as of the day 
     before the date of issuance of the issue) on outstanding 
     long-term corporate debt obligations (determined under 
     regulations prescribed by the Secretary).
       ``(4) Special rule for issuance and redemption.--In the 
     case of a bond which is issued during the 3-month period 
     ending on a credit allowance date, the amount of the credit 
     determined under this subsection with respect to such credit 
     allowance date shall be a ratable portion of the credit 
     otherwise determined based on the portion of the 3-month 
     period during which the bond is outstanding. A similar rule 
     shall apply when the bond is redeemed.
       ``(c) Qualified Anthracite Region Redevelopment Bond.--For 
     purposes of this section--
       ``(1) In general.--The term `qualified anthracite region 
     redevelopment bond' means any bond issued as part of an issue 
     if--
       ``(A) the issuer is an approved special purpose entity,
       ``(B) all of the net proceeds of the issue are deposited 
     into either--
       ``(i) an approved segregated program fund, or
       ``(ii) a sinking fund for payment of principal on the bonds 
     at maturity,
       ``(C) the issuer designates such bond for purposes of this 
     section, and
       ``(D) the term of each bond which is part of such issue 
     does not exceed 30 years.
     Not more than \1/6\ of the net proceeds of an issue may be 
     deposited into a sinking fund referred to in subparagraph 
     (B)(ii).
       ``(2) Limitation on amount of bonds designated.--The 
     maximum aggregate face amount of bonds which may be 
     designated under paragraph (1) shall not exceed 
     $1,200,000,000.
       ``(3) Approved special purpose entity.--The term `approved 
     special purpose entity' means a State or local governmental 
     entity, or an entity described in section 501(c) and exempt 
     from tax under section 501(a), if--
       ``(A) such entity is established and operated exclusively 
     to carry out qualified purposes,
       ``(B) such entity has a comprehensive plan to restore and 
     redevelop abandoned mine land in an anthracite region, and
       ``(C) such entity and plan are approved by the 
     Administrator of the Environmental Protection Agency.
       ``(4) Approved segregated program fund.--The term `approved 
     segregated program fund' means any segregated fund the 
     amounts in which may be used only for qualified purposes, but 
     only if such fund has safeguards approved by such 
     Administrator to assure that such amounts are only used for 
     such purposes.
       ``(d) Limitation Based on Amount of Tax.--
       ``(1) In general.--The credit allowed under subsection (a) 
     for any taxable year shall not exceed the excess of--
       ``(A) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(B) the sum of the credits allowable under part IV of 
     subchapter A (other than this section and subpart C thereof, 
     relating to refundable credits).
       ``(2) Carryover of unused credit.--If the credit allowable 
     under subsection (a) exceeds the limitation imposed by 
     paragraph (1) for such taxable year, such excess shall be 
     carried to the succeeding taxable year and added to the 
     credit allowable under subsection (a) for such taxable year.
       ``(e) Other Definitions.--For purposes of this section--
       ``(1) Anthracite region.--The term `anthracite region' 
     means any area in the United States with anthracite deposits.
       ``(2) Qualified purpose.--The term `qualified purpose' 
     means, with respect to any qualified anthracite region 
     redevelopment bond--
       ``(A) the purchase, restoration, and redevelopment of 
     abandoned mine land and other real, personal, and mixed 
     property in an anthracite region,
       ``(B) the cleanup of waterways and their tributaries, both 
     surface and subsurface in such region from acid mine drainage 
     and other pollution,
       ``(C) the provision of financial and technical assistance 
     for infrastructure construction and upgrading water and sewer 
     systems in such region,
       ``(D) research and development,
       ``(E) other environmental and economic development purposes 
     in such region, and
       ``(F) such other purposes as are set forth in the 
     comprehensive plan prepared by the issuer and approved by the 
     Administrator of the Environmental Protection Agency.
       ``(3) Credit allowance date.--The term `credit allowance 
     date' means--
       ``(A) March 15,
       ``(B) June 15,
       ``(C) September 15, and
       ``(D) December 15.

     Such term includes the last day on which the bond is 
     outstanding.
       ``(4) Bond.--The term `bond' includes any obligation.
       ``(f) Credit Included in Gross Income.--Gross income 
     includes the amount of the credit allowed to the taxpayer 
     under this section (determined without regard to subsection 
     (d)) and the amount so included shall be treated as interest 
     income.
       ``(g) Bonds Held by Regulated Investment Companies.--If any 
     qualified anthracite region redevelopment bond is held by a 
     regulated investment company, the credit determined under 
     subsection (a) shall be allowed to shareholders of such 
     company under procedures prescribed by the Secretary.
       ``(h) Credits May Be Stripped.--Under regulations 
     prescribed by the Secretary--
       ``(1) In general.--There may be a separation (including at 
     issuance) of the ownership of a qualified anthracite region 
     redevelopment bond and the entitlement to the credit under 
     this section with respect to such bond. In case of any such 
     separation, the credit under this section shall be allowed to 
     the person who on the credit allowance date holds the 
     instrument evidencing the entitlement to the credit and not 
     to the holder of the bond.
       ``(2) Certain rules to apply.--In the case of a separation 
     described in paragraph (1), the rules of section 1286 shall 
     apply to the qualified anthracite region redevelopment bond 
     as if it were a stripped bond and to the credit under this 
     section as if it were a stripped coupon.
       ``(i) Treatment for Estimated Tax Purposes.--Solely for 
     purposes of sections 6654 and 6655, the credit allowed by 
     this section to a taxpayer by reason of holding a qualified 
     anthracite region redevelopment bond on a credit allowance 
     date shall be treated as if it were a payment of estimated 
     tax made by the taxpayer on such date.
       ``(j) Credit May Be Transferred.--Nothing in any law or 
     rule of law shall be construed to limit the transferability 
     of the credit allowed by this section through sale and 
     repurchase agreements.
       ``(k) Reporting.--The issuer shall submit reports similar 
     to the reports required under section 149(e).
       ``(l) Termination.--This section shall not apply to any 
     bond issued more than 10 years after the date that the first 
     qualified anthracite region redevelopment bond is issued.''
       (b) Reporting.--Subsection (d) of section 6049 (relating to 
     returns regarding payments of interest) is amended by adding 
     at the end the following new paragraph:
       ``(8) Reporting of credit on qualified anthracite region 
     redevelopment bonds.--
       ``(A) In general.--For purposes of subsection (a), the term 
     `interest' includes amounts includible in gross income under 
     section 30C(f) and such amounts shall be treated as paid on 
     the credit allowance date (as defined in section 30C(e)(3)).
       ``(B) Reporting to corporations, etc.--Except as otherwise 
     provided in regulations, in the case of any interest 
     described in subparagraph (A) of this paragraph, subsection 
     (b)(4) of this section shall be applied without regard to 
     subparagraphs (A), (H), (I), (J), (K), and (L)(i).
       ``(C) Regulatory authority.--The Secretary may prescribe 
     such regulations as are necessary or appropriate to carry out 
     the purposes of this paragraph, including regulations which 
     require more frequent or more detailed reporting.''
       (c) Conforming Amendment.--The table of sections for 
     subpart B of part IV of subchapter A of chapter 1, as amended 
     by section 1021(b), is amended by adding at the end the 
     following new item:


[[Page S6737]]


``Sec. 30C. Credit to holders of qualified public anthracite region 
              redevelopment bonds.''

       (d) Approval of Bonds, Etc., by Administrator of the 
     Environmental Protection Agency.--The Administrator of the 
     Environmental Protection Agency shall act on any request for 
     an approval required by section 30C of the Internal Revenue 
     Code of 1986 (as added by this section) not later than 30 
     days after the date such request is submitted to such 
     Administrator.
       (e) Effective Date.--The amendments made by this section 
     shall apply to obligations issued after December 31, 2000.



                 KERRY (AND OTHERS) AMENDMENT NO. 3839

  Mr. KERRY (for himself, Mr. Sarbanes, Mr. Inouye, Mr. Dodd, Mr. 
Wellstone, and Mr. Leahy) proposed an amendment to the bill, H.R. 8, 
supra; as follows:

       Strike all after the first word and insert:

              1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Estate Tax 
     Relief Act of 2000''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

                       TITLE I--ESTATE TAX RELIEF

     SEC. 101. INCREASE IN AMOUNT OF UNIFIED CREDIT AGAINST ESTATE 
                   AND GIFT TAXES.

       (a) In General.--The table contained in section 2010(c) 
     (relating to applicable credit amount) is amended to read as 
     follows:

``In the case of estates of decedentThe applicable exclusion amount is:
      2001, 2002, 2003, 2004, and 2005......................$1,000,000 
      2006 and 2007.........................................$1,125,000 
      2008..................................................$1,500,000 
      2009 or thereafter..................................$2,000,000.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

     SEC. 102. INCREASE IN QUALIFIED FAMILY-OWNED BUSINESS 
                   INTEREST DEDUCTION AMOUNT.

       (a) In General.--Paragraph (2) of section 2057(a) (relating 
     to family-owned business interests) is amended to read as 
     follows:
       ``(2) Maximum deduction.--
       ``(A) In general.--The deduction allowed by this section 
     shall not exceed the sum of--
       ``(i) the applicable deduction amount, plus
       ``(ii) in the case of a decedent described in subparagraph 
     (C), the applicable unused spousal deduction amount.
       ``(B) Applicable deduction amount.--For purposes of this 
     subparagraph (A)(i), the applicable deduction amount is 
     determined in accordance with the following table:

``In the case of estates of decedentThe applicable deduction amount is:
      2001, 2002, 2003, 2004, and 2005.......................$1,375,000
      2006 and 2007..........................................$1,625,000
      2008...................................................$2,375,000
      2009 or thereafter....................................$3,375,000.
       ``(C) Applicable unused spousal deduction amount.--With 
     respect to a decedent whose immediately predeceased spouse 
     died after December 31, 2000, and the estate of such 
     immediately predeceased spouse met the requirements of 
     subsection (b)(1), the applicable unused spousal deduction 
     amount for such decedent is equal to the excess of--
       ``(i) the applicable deduction amount allowable under this 
     section to the estate of such immediately predeceased spouse, 
     over
       ``(ii) the sum of--

       ``(I) the applicable deduction amount allowed under this 
     section to the estate of such immediately predeceased spouse, 
     plus
       ``(II) the amount of any increase in such estate's unified 
     credit under paragraph (3)(B) which was allowed to such 
     estate.''

       (b) Conforming Amendments.--Section 2057(a)(3)(B) is 
     amended--
       (1) by striking ``$675,000'' both places it appears and 
     inserting ``the applicable deduction amount'', and
       (2) by striking ``$675,000'' in the heading and inserting 
     ``applicable deduction amount''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

                 TITLE II--NATIONAL AFFORDABLE HOUSING

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``National Affordable 
     Housing Trust Fund Act of 2000''.

     SEC. 202. PURPOSES.

       The purposes of this title are to--
       (1) fill the growing gap in the national ability to build 
     affordable housing by using amounts saved by slowing down the 
     repeal of the Federal estate and gift taxes and profits 
     generated by Federal housing programs to fund additional 
     housing activities, and not supplant existing housing 
     appropriations; and
       (2) enable rental housing to be built for those families 
     with the greatest need in areas with the greatest 
     opportunities in mixed-income settings and to promote 
     homeownership for low-income families.

     SEC. 203. NATIONAL HOUSING TRUST FUND.

       Subchapter A of chapter 98 of the Internal Revenue Code of 
     1986 (relating to trust funds) is amended by adding at the 
     end the following:

     ``SEC. 9511. NATIONAL HOUSING TRUST FUND.

       ``(a) Establishment of Trust Fund.--There is established in 
     the Treasury of the United States a trust fund to be known as 
     the `National Affordable Housing Trust Fund' (referred to in 
     this section as the `Trust Fund') for the purposes of 
     promoting the development of affordable housing.
       ``(b) Transfer to the Trust Fund.--The Secretary shall--
       ``(1) estimate the amount of the increase in funds in the 
     general fund of the Treasury for each fiscal year resulting 
     from the amendments made by the Estate Tax Relief Act of 2000 
     as compared to such increase resulting from the amendments 
     made by H.R. 8 as received by the Senate from the House of 
     Representatives on June 12, 2000; and
       ``(2) transfer, on October 1, 2001, and each October 1 
     thereafter (if necessary) from the general fund of the 
     Treasury to the Trust Fund an amount equivalent to the 
     difference determined in paragraph (1), to the extent the 
     aggregate amount of such transfers does not exceed 
     $5,000,000,000.
       ``(c) Expenditures From the Trust Fund.--Beginning in 
     fiscal year 2002, amounts deposited in or transferred to the 
     Trust Fund shall be available to the Secretary of Housing and 
     Urban Development for use in accordance with section 204 of 
     the National Affordable Housing Trust Fund Act of 2000.''.

     SEC. 204. ADMINISTRATION OF NATIONAL AFFORDABLE HOUSING TRUST 
                   FUND.

       (a) Definitions.--In this section:
       (1) Affordable housing.--The term ``affordable housing'' 
     means housing for rental that bears rents not greater than 
     the lesser of--
       (A) the existing fair market rent for comparable units in 
     the area, as established by the Secretary under section 8 of 
     the United States Housing Act of 1937 (42 U.S.C. 1437f); or
       (B) a rent that does not exceed 30 percent of the adjusted 
     income of a family whose income equals 65 percent of the 
     median income for the area, as determined by the Secretary, 
     with adjustment for number of bedrooms in the unit, except 
     that the Secretary may establish income ceilings higher or 
     lower than 65 percent of the median for the area on the basis 
     of the findings of the Secretary that such variations are 
     necessary because of prevailing levels of construction costs 
     or fair market rents, or unusually high or low family 
     incomes.
       (2) Continued assistance rental subsidy program.--The term 
     ``continued assistance rental subsidy program'' means a 
     program under which--
       (A) project-based assistance is provided for not more than 
     3 years to a family in an affordable housing unit developed 
     with assistance made available under subsection (c) or (d) in 
     a project that partners with a public housing agency, which 
     agency agrees to provide the assisted family with a priority 
     for the receipt of a voucher under section 8(o) of the United 
     States Housing Act of 1937 (42 U.S.C. 1437f(o)) if the family 
     chooses to move after an initial year of occupancy and the 
     public housing agency agrees to refer eligible voucher 
     holders to the property when vacancies occur; and
       (B) after 3 years, subject to appropriations, continued 
     assistance is provided under section 8(o) of the United 
     States Housing Act of 1937 (42 U.S.C. 1437f(o)), 
     notwithstanding any provision to the contrary in that 
     section, if administered to provide families with the option 
     of continued assistance with tenant-based vouchers, if such a 
     family chooses to move after an initial year of occupancy and 
     the public housing agency agrees to refer eligible voucher 
     holders to the property when vacancies occur.
       (3) Eligible activities.--The term ``eligible activities'' 
     means activities relating to the development of affordable 
     housing, including--
       (A) the construction of new housing;
       (B) the acquisition of real property;
       (C) site preparation and improvement, including demolition;
       (D) substantial rehabilitation of existing housing; and
       (E) rental subsidy for not more than 3 years under a 
     continued assistance rental subsidy program.
       (4) Eligible entity.--The term ``eligible entity'' includes 
     any public or private nonprofit or for-profit entity, unit of 
     local government, regional planning entity, and any other 
     entity engaged in the development of affordable housing, as 
     determined by the Secretary.
       (5) Eligible intermediary.--The term ``eligible 
     intermediary'' means--
       (A) a nonprofit community development corporation;
       (B) a community development financial institution (as 
     defined in section 103 of the Community Development Banking 
     and Financial Institutions Act of 1994 (12 U.S.C. 4702));
       (C) a State or local trust fund;
       (D) any entity eligible for assistance under section 4 of 
     the HUD Demonstration Act of 1993 (42 U.S.C. 9816 note);
       (E) a national, regional, or statewide nonprofit 
     organization; and

[[Page S6738]]

       (F) any other appropriate nonprofit entity, as determined 
     by the Secretary.
       (6) Extremely low-income families.--The term ``extremely 
     low-income families'' means very low-income families (as 
     defined in section 3(b) of the United States Housing Act of 
     1937 (42 U.S.C. 1437a(b)) whose incomes do not exceed 30 
     percent of the median family income for the area, as 
     determined by the Secretary with adjustments for smaller and 
     larger families, except that the Secretary may establish 
     income ceilings higher or lower than 30 percent of the median 
     for the area on the basis of the Secretary's findings that 
     such variations are necessary because of unusually high or 
     low family incomes.
       (7) Low-income families.--The term ``low-income families'' 
     has the meaning given the term in section 3(b) of the United 
     States Housing Act of 1937 (42 U.S.C. 1437a(b)).
       (8) Secretary.--The term ``Secretary'' means the Secretary 
     of Housing and Urban Development.
       (9) State.--The term ``State'' has the meaning given the 
     term in section 3(b) of the United States Housing Act of 1937 
     (42 U.S.C. 1437a(b)).
       (10) Trust fund.--The term ``Trust Fund'' means the 
     National Housing Trust Fund established under section 9511 of 
     the Internal Revenue Code of 1986, as added by section 203 of 
     this title.
       (b) Allocation to States and Eligible Intermediaries.--The 
     total amount made available for fiscal year 2002 and each 
     fiscal year thereafter from the Trust Fund shall be allocated 
     by the Secretary as follows:
       (1) 75 percent shall be used to award grants to States in 
     accordance with subsection (c).
       (2) 25 percent shall be used to award grants to eligible 
     intermediaries in accordance with subsection (d).
       (c) Grants to States.--
       (1) In general.--Subject to paragraph (2), from the amount 
     made available for each fiscal year under subsection (b)(1), 
     the Secretary shall award grants to States, in accordance 
     with an allocation formula established by the Secretary, 
     based on the pro rata share of each State of the total need 
     among all States for an increased supply of affordable 
     housing, as determined on the basis of--
       (A) the number and percentage of families in the State that 
     live in substandard housing;
       (B) the number and percentage of families in the State that 
     pay more than 50 percent of their annual income for housing 
     costs;
       (C) the number and percentage of persons living at or below 
     the poverty level in the State;
       (D) the cost of developing or carrying out substantial 
     rehabilitation of housing in the State;
       (E) the age of the multifamily housing stock in the State; 
     and
       (F) such other factors as the Secretary determines to be 
     appropriate.
       (2) Grant amount.--
       (A) In general.--The amount of a grant award to a State 
     under this subsection shall be equal to the lesser of--
       (i) 4 times the amount of assistance provided by the State 
     from non-Federal sources; and
       (ii) the allocation determined in accordance with paragraph 
     (1).
       (B) Non-federal sources.--Fifty percent of funds allocable 
     to tax credits allocated under section 42 of the Internal 
     Revenue Code of 1986, revenue from mortgage revenue bonds 
     issued under section 143 of such Code, or proceeds from the 
     sale of tax exempt bonds shall be considered non-Federal 
     sources for purposes of this section.
       (3) Award of state allocation to certain entities.--
       (A) In general.--If the amount provided by a State from 
     non-Federal sources is less than 25 percent of the amount 
     that would be awarded to the State under this subsection 
     based on the allocation formula described in paragraph (1), 
     not later than 60 days after the date on which the Secretary 
     determines that the State is not eligible for the full 
     allocation determined under paragraph (1), the Secretary 
     shall issue a notice regarding the availability of the funds 
     for which the State is ineligible.
       (B) Applications.--Not later than 9 months after 
     publication of a notice of funding availability under 
     subparagraph (A), a nonprofit or public entity (or a 
     consortium thereof, which may include units of local 
     government working together on a regional basis) may submit 
     to the Secretary an application for the available assistance, 
     which application shall include--
       (i) a certification that the applicant will provide 
     assistance from non-Federal sources in an amount equal to 25 
     percent of the amount of assistance made available to the 
     applicant under this paragraph; and
       (ii) an allocation plan that meets the requirements of 
     paragraph (4)(B) for distribution in the State of any 
     assistance made available to the applicant under this 
     paragraph and the assistance provided by the applicant for 
     purposes of clause (i).
       (C) Award of assistance.--The Secretary shall award the 
     amount that is not awarded to a State by operation of 
     paragraph (2) to 1 or more applicants that meet the 
     requirements of subparagraph (B) of this paragraph that are 
     selected by the Secretary based on selection criteria, which 
     shall be established by the Secretary by regulation.
       (4) Distribution to eligible entities.--
       (A) In general.--Each State that receives a grant award 
     under this subsection shall distribute the amount made 
     available under the grant and the assistance provided by the 
     State from non-Federal sources for purposes of paragraph 
     (2)(A) to eligible entities for the purpose of assisting 
     those entities in carrying out eligible activities in the 
     State as follows:
       (i) 75 percent shall be distributed to eligible entities 
     for eligible activities relating to the development of 
     affordable housing for rental by extremely low-income 
     families in the State.
       (ii) 25 percent shall be distributed to eligible entities 
     for eligible activities relating to the development of 
     affordable housing for rental by low-income families in the 
     State, or for homeownership assistance for low-income 
     families in the State.
       (B) Allocation plan.--Each State shall, after notice to the 
     public, an opportunity for public comment, and consideration 
     of public comments received, establish an allocation plan for 
     the distribution of assistance under this paragraph, which 
     shall be submitted to the Secretary and shall be made 
     available to the public by the State, and which shall 
     include--
       (i) application requirements for eligible entities seeking 
     to receive such assistance, including a requirement that each 
     application include--

       (I) a certification by the applicant that any housing 
     developed with assistance under this paragraph will remain 
     affordable for extremely low-income families or low-income 
     families, as applicable, for not less than 40 years;
       (II) a certification by the applicant that the tenant 
     contribution towards rent for a family residing in a unit 
     developed with assistance under this paragraph will not 
     exceed 30 percent of the adjusted income of that family; and
       (III) a certification by the applicant that the owner of a 
     project in which any housing developed with assistance under 
     this paragraph is located will make a percentage of units in 
     the project available to families assisted under the voucher 
     program under section 8(o) of the United States Housing Act 
     of 1937 (42 U.S.C. 1437f(o)) on the same basis as other 
     families eligible for the housing (except that only the 
     voucher holder's expected share of rent shall be considered), 
     which percentage shall not be less than the percentage of the 
     total cost of developing or rehabilitating the project that 
     is funded with assistance under this paragraph; and

       (ii) factors for consideration in selecting among 
     applicants that meet such application requirements, which 
     shall give preference to applicants based on--

       (I) the amount of assistance for the eligible activities 
     leveraged by the applicant from private and other non-Federal 
     sources;
       (II) the extent of local assistance that will be provided 
     in carrying out the eligible activities, including--

       (aa) financial assistance; and
       (bb) the extent to which the applicant has worked with the 
     unit of local government in which the housing will be located 
     to address issues of siting and exclusionary zoning or other 
     policies that are barriers to affordable housing;

       (III) the degree to which the development in which the 
     housing will be located is mixed-income;
       (IV) whether the housing will be located in a census tract 
     in which the poverty rate is less than 20 percent or in a 
     community undergoing revitalization;
       (V) the extent of employment and other opportunities for 
     low-income families in the area in which the housing will be 
     located; and
       (VI) the extent to which the applicant demonstrates the 
     ability to maintain units as affordable for extremely low-
     income or low-income families, as applicable, through the use 
     of assistance made available under this paragraph, assistance 
     leveraged from non-Federal sources, assistance made available 
     under section 8 of the United States Housing Act of 1937 (42 
     U.S.C. 1437f), State or local assistance, programs to 
     increase tenant income, cross-subsidization, and any other 
     resources.

       (C) Forms of assistance.--
       (i) In general.--Assistance distributed under this 
     paragraph may be in the form of capital grants, non-interest 
     bearing or low-interest loans or advances, deferred payment 
     loans, guarantees, and any other forms of assistance approved 
     by the Secretary.
       (ii) Repayments.--If a State awards assistance under this 
     paragraph in the form of a loan or other mechanism by which 
     funds are later repaid to the State, any repayments received 
     by the State shall be distributed by the State in accordance 
     with the allocation plan described in subparagraph (B) the 
     following fiscal year.
       (D) Coordination with other assistance.--In distributing 
     assistance under this paragraph, each State shall, to the 
     maximum extent practicable, coordinate such distribution with 
     the provision of other affordable housing assistance by the 
     State, including--
       (i) housing credit dollar amounts allocated by the State 
     under section 42(h) of the Internal Revenue Code of 1986;
       (ii) assistance made available under the HOME Investment 
     Partnerships Act or the community development block grant 
     program; and
       (iii) private activity bonds.
       (d) National Competition.--
       (1) In general.--From the amount made available for each 
     fiscal year under subsection (b)(2), the Secretary shall 
     award grants on a competitive basis to eligible

[[Page S6739]]

     intermediaries, which shall be used in accordance with 
     paragraph (3) of this subsection.
       (2) Application requirements and selection criteria.--The 
     Secretary by regulation shall establish application 
     requirements and selection criteria for the award of 
     competitive grants to eligible intermediaries under this 
     subsection, which criteria shall include--
       (A) the ability of the eligible intermediary to meet 
     housing needs of low-income families on a national or 
     regional scope;
       (B) the capacity of the eligible intermediary to use the 
     grant award in accordance with paragraph (3), based on the 
     past performance and management of the applicant; and
       (C) the extent to which the eligible intermediary has 
     leveraged funding from private and other non-Federal sources 
     for the eligible activities.
       (3) Use of grant award.--
       (A) In general.--Each eligible intermediary that receives a 
     grant award under this subsection shall ensure that the 
     amount made available under the grant is used as follows:
       (i) 75 percent shall be used for eligible activities 
     relating to the development of affordable housing for rental 
     by extremely low-income families.
       (ii) 25 percent shall be used for eligible activities 
     relating to the development of affordable housing for rental 
     by low-income families, or for homeownership assistance for 
     low-income families.
       (B) Plan of use.--Each eligible intermediary that receives 
     a grant award under this subsection shall establish a plan 
     for the use or distribution of the amount made available 
     under the grant, which shall be submitted to the Secretary, 
     and which shall include information relating to the manner in 
     which the eligible intermediary will either use or distribute 
     that amount, including--
       (i) a certification that assistance made available under 
     this subsection will be used to supplement assistance 
     leveraged from private and other non-Federal sources;
       (ii) a certification that local assistance will be provided 
     in the carrying out the eligible activities, which may 
     include--

       (I) financial assistance; and
       (II) a good faith effort to work with the unit of local 
     government in which the housing will be located to address 
     issues of siting and exclusionary zoning or other policies 
     that are barriers to affordable housing;

       (iii) a certification that any housing developed with 
     assistance under this subsection will remain affordable for 
     extremely low-income families or low-income families, as 
     applicable, for not less than 40 years;
       (iv) a certification that any housing developed by the 
     applicant with assistance under this subsection will be 
     located--

       (I) in a mixed-income development;
       (II) in a census tract having a poverty rate of not more 
     than 20 percent or in a community undergoing revitalization; 
     and
       (III) near employment and other opportunities for low-
     income families;

       (v) a certification that the tenant contribution towards 
     rent for a family residing in a unit developed with 
     assistance under this paragraph will not exceed 30 percent of 
     the adjusted income of that family; and
       (vi) a certification by the applicant that the owner of a 
     project in which any housing developed with assistance under 
     this subsection is located will make a percentage of units in 
     the project available to families assisted under the voucher 
     program under section 8(o) of the United States Housing Act 
     of 1937 (42 U.S.C. 1437f(o)) on the same basis as other 
     families eligible for the housing (except that only the 
     voucher holder's expected share of rent shall be considered), 
     which percentage shall not be less than the percentage of the 
     total cost of developing or rehabilitating the project that 
     is funded with assistance under this subsection.
       (C) Forms of assistance.--
       (i) In general.--An eligible intermediary may distribute 
     the amount made available under a grant under this subsection 
     in the form of capital grants, non-interest bearing or low-
     interest loans or advances, deferred payment loans, 
     guarantees, and other forms of assistance.
       (ii) Repayments.--If an eligible intermediary awards 
     assistance under this subsection in the form of a loan or 
     other mechanism by which funds are later repaid to the 
     eligible intermediary, any repayments received by the 
     eligible intermediary shall be distributed by the eligible 
     intermediary in accordance with the plan of use described in 
     subparagraph (B) the following fiscal year.

     SEC. 205. REGULATIONS.

       Not later than 6 months after the date of enactment of this 
     Act, the Secretary of Housing and Urban Development shall 
     promulgate regulations to carry out this title and the 
     amendment made by this title.
                                 ______
                                 

                 HARKIN (AND OTHERS) AMENDMENT NO. 3840

  Mr. HARKIN (for himself, Mr. Feingold, Ms. Mikulski, Mr. Leahy, and 
Mrs. Murray) proposed an amendment to the bill, H.R. 8, supra; as 
follows:

       Strike all after the first word and insert:

            TITLE __--SOCIAL SECURITY SOLVENCY AND FAIRNESS

     SEC. __. ADDITIONAL APPROPRIATIONS TO FEDERAL OLD-AGE AND 
                   SURVIVORS INSURANCE TRUST FUND AND FEDERAL 
                   DISABILITY INSURANCE TRUST FUND.

       (a) Purpose.--The purpose of this section is to assure that 
     the interest savings on the debt held by the public achieved 
     as a result of Social Security surpluses from 2001 to 2016 
     are dedicated to Social Security solvency.
       (b) Additional Appropriations to Trust Funds.--Section 201 
     of the Social Security Act is amended by adding at the end 
     the following new subsection:
       ``(n) Additional Appropriation to Trust Funds.--
       ``(1) In addition to the amounts appropriated to the Trust 
     Funds under subsections (a) and (b), there is hereby 
     appropriated to the Trust Funds, out of any moneys in the 
     Treasury not otherwise appropriated--
       ``(A) for the fiscal year ending September 30, 2006, and 
     for each fiscal year thereafter through the fiscal year 
     ending September 30, 2016, an amount equal to the prescribed 
     amount for the fiscal year; and
       ``(B) for the fiscal year ending September 30, 2017, and 
     for each fiscal year thereafter through the fiscal year 
     ending September 30, 2044, an amount equal to the prescribed 
     amount for the fiscal year ending September 30, 2016.
       ``(2) The amount appropriated by paragraph (1) in each 
     fiscal year shall be transferred in equal monthly 
     installments.
       ``(3) The amount appropriated by paragraph (1) in each 
     fiscal year shall be allocated between the Trust Funds in the 
     same proportion as the taxes imposed by chapter 21 (other 
     than sections 3101(b) and 3111(b)) of the Title 26 with 
     respect to wages (as defined in section 3121 of Title 26) 
     reported to the Secretary of the Treasury or his delegate 
     pursuant to subtitle F of Title 26, and the taxes imposed by 
     chapter 2 (other than section 1401(b)) of Title 26 with 
     respect to self-employment income (as defined in section 1402 
     of Title 26) reported to the Secretary of the Treasury or his 
     delegate pursuant to subtitle F of Title 26, are allocated 
     between the Trust Funds in the calendar year that begins in 
     the fiscal year.
       ``(4) For purposes of this subsection, the ``prescribed 
     amount'' for any fiscal year shall be determined by 
     multiplying--
       ``(A) the excess of--
       ``(i) the sum of--

       ``(I) the face amount of all obligations of the United 
     States held by the Trust Funds on the last day of the fiscal 
     year immediately preceding the fiscal year of determination 
     purchased with amounts appropriated or credited to the Trust 
     Funds other than any amount appropriated under paragraph (1); 
     and
       ``(II) the sum of the amounts appropriated under paragraph 
     (1) and transferred under paragraph (2) through the last day 
     of the fiscal year immediately preceding the fiscal year of 
     determination, and an amount equal to the interest that would 
     have been earned thereon had those amounts been invested in 
     obligations of the United States issued directly to the Trust 
     Funds under subsections (d) and (f); over

       ``(ii) the face amount of all obligations of the United 
     States held by the Trust Funds on September 30, 2000,
     times--
       ``(B) a rate of interest determined by the Secretary of the 
     Treasury, at the beginning of the fiscal year of 
     determination, as follows:
       ``(i) if there are any marketable interest-bearing 
     obligations of the United States then forming a part of the 
     public debt, a rate of interest determined by taking into 
     consideration the average market yield (computed on the basis 
     of daily closing market bid quotations or prices during the 
     calendar month immediately preceding the determination of the 
     rate of interest) on such obligations; and
       ``(ii) if there are no marketable interest-bearing 
     obligations of the United States then forming a part of the 
     public debt, a rate of interest determined to be the best 
     approximation of the rate of interest described in clause 
     (i), taking into consideration the average market yield 
     (computed on the basis of daily closing market bid quotations 
     or prices during the calendar month immediately preceding the 
     determination of the rate of interest) on investment grade 
     corporate obligations selected by the Secretary of the 
     Treasury, less an adjustment made by the Secretary of the 
     Treasury to take into account the difference between the 
     yields on corporate obligations comparable to the obligations 
     selected by the Secretary of the Treasury and yields on 
     obligations of comparable maturities issued by risk-free 
     government issuers selected by the Secretary of the 
     Treasury.''.

     SEC. 602. INCREASE IN NUMBER OF YEARS DISREGARDED.

       (a) In General.--Section 215(b)(2) of the Social Security 
     Act (42 U.S.C. 415(b)(2)) is amended--
       (1) by striking the period at the end of clause (ii) of 
     subparagraph (A) and inserting a comma;
       (2) by striking ``Clause (ii), once'' after and below 
     clause (ii) of subparagraph (A) and inserting the following:
       ``and reduced further to the extent provided in 
     subparagraph (B). Clause (ii), once'';
       (3) by striking ``If an individual'' in the matter 
     following clause (ii) of subparagraph (A) and all that 
     follows through the end of subparagraph (A);
       (4) by redesignating subparagraph (B) as subparagraph (F); 
     and
       (5) by inserting after subparagraph (A) the following new 
     subparagraphs:

[[Page S6740]]

       ``(B) Subject to subparagraph (C), in any case in which--
       ``(i) in any calendar year which is included in an 
     individual's computation base years--

       ``(I) such individual is living with a child (of such 
     individual or his or her spouse) under the age of 12; or
       ``(II) such individual is living with a child (of such 
     individual or his or her spouse), a parent (of such 
     individual or his or her spouse), or such individual's spouse 
     while such child, parent, or spouse is a chronically 
     dependent individual;

       ``(ii) such calendar year is not disregarded pursuant to 
     subparagraphs (A) and (E) (in determining such individual's 
     benefit computation years) by reason of the reduction in the 
     number of such individual's elapsed years under subparagraph 
     (A); and
       ``(iii) such individual submits to the Secretary, in such 
     form as the Secretary shall prescribe by regulations, a 
     written statement that the requirements of clause (i) are met 
     with respect to such calendar year,

     then the number by which such elapsed years are reduced under 
     this paragraph pursuant to subparagraph (A) shall be 
     increased by one (up to a combined total not exceeding 5) for 
     each such calendar year.
       ``(C)(i)(I) No calendar year shall be disregarded by reason 
     of subparagraph (B) (in determining such individual's benefit 
     computation years) unless the individual had less than the 
     applicable dollar amount (in effect for such calendar year 
     under subclause (II)) of earnings as described in section 
     203(f)(5) for such year.
       ``(II) Except as otherwise provided in this subclause, the 
     applicable dollar amount in effect under this subclause for 
     any calendar year is $3,000. In each calendar year after 
     2006, the Secretary shall determine and publish in the 
     Federal Register, on or before November 1 of such calendar 
     year, the applicable dollar amount which shall be effective 
     under this subclause for the next calendar year. Such dollar 
     amount shall be equal to the applicable dollar amount which 
     is effective under this subclause for the calendar year in 
     which such determination is made, increased by a percentage 
     equal to the percentage (rounded to the nearest \1/10\ of 1 
     percent) by which the Consumer Price Index (prepared by the 
     Department of Labor and used in determining increases in 
     benefits pursuant to section 215(i)) for the calendar quarter 
     ending on September 30 of such calendar year exceeds such 
     index for the calendar quarter ending on September 30 of the 
     last preceding calendar year in which a cost-of-living 
     increase in benefits became effective under section 215(i).
       ``(ii) No calendar year shall be disregarded by reason of 
     subparagraph (B) (in determining such individual's benefit 
     computation years) in connection with a child referred to in 
     subparagraph (B)(i)(I) (and not referred to in subparagraph 
     (B)(i)(II)) unless the individual was living with the child 
     substantially throughout the period in such year in which the 
     child was alive and under the age of 12 in such year.
       ``(iii) No calendar year shall be disregarded by reason of 
     subparagraph (B) (in determining such individual's benefit 
     computation years) in connection with a child, parent, or 
     spouse referred to in subparagraph (B)(i)(II) unless the 
     individual was living with such child, parent, or spouse 
     substantially throughout a period of 180 consecutive days in 
     such year throughout which such child, parent, or spouse was 
     a chronically dependent individual.
       ``(iv) The particular calendar years to be disregarded 
     under this subparagraph (in determining such benefit 
     computation years) shall be those years (not otherwise 
     disregarded under subparagraph (A)) which, before the 
     application of subsection (f), meet the conditions of the 
     preceding provisions of this clause.
       ``(v) This subparagraph shall apply only to the extent 
     that--
       ``(I) its application would not result in a lower primary 
     insurance amount; and
       ``(II) it does not raise the primary insurance amount to a 
     level greater than the average old-age insurance benefit paid 
     under this title.
       ``(D)(i) For purposes of this paragraph, the term 
     `chronically dependent individual' means an individual who--
       ``(I) is dependent on a daily basis on another person who 
     is living with the individual and is assisting the individual 
     without monetary compensation in the performance of at least 
     2 of the activities of daily living (described in clause 
     (ii)), and
       ``(II) without such assistance could not perform such 
     activities of daily living.
       ``(ii) The `activities of daily living', referred to in 
     clause (i), are the following:
       ``(I) Eating.
       ``(II) Bathing.
       ``(III) Dressing.
       ``(IV) Toileting.
       ``(V) Transferring in and out of a bed or in and out of a 
     chair.
       ``(E) The number of an individual's benefit computation 
     years as determined under this paragraph shall in no case be 
     less than 2.''.
       (b) Effective Date and Related Provisions.--
       (1) In general.--The amendments made by this Act shall 
     apply with respect to computation base years ending before, 
     on, or after the date of enactment of this Act, but only with 
     respect to benefits payable for months after December 2001.
       (2) Notice and procedures.--
       (A) 60-Day filing period after issuance of regulations for 
     calendar years before 2001.--The requirements of clause (iii) 
     of section 215(b)(2)(B) of the Social Security Act (as 
     amended by this section) shall be treated as satisfied, in 
     the case of a statement with respect to any calendar year 
     before 2001, only if such statement is submitted to the 
     Secretary of Health and Human Services not later than 60 days 
     after the date of the first issuance in final form of the 
     regulations required under such clause.
       (B) Notice requirements.--The Secretary of Health and Human 
     Services shall issue, not later than the date of the first 
     issuance in final form of the regulations described in 
     paragraph (1), regulations establishing procedures to ensure 
     that--
       (i) persons who are, as of such date, recipients of monthly 
     benefits under section 202(a) or 223 of the Social Security 
     Act, or applicants for such benefits, are fully informed of 
     the amendments made by this section; and
       (ii) such persons are invited to comply, and given a 
     reasonable opportunity to comply, with the requirements of 
     section 215(b)(2)(B)(iii) of the Social Security Act (as 
     amended by this section), as provided in subparagraph (A).
     Upon receiving from a recipient described in clauses (i) and 
     (ii) a written statement referred to in clause (iii) of 
     section 215(b)(2)(B) of the Social Security Act (as amended 
     by this section) with respect to which the requirements of 
     such clause are satisfied, the Secretary shall redetermine 
     the amount of such benefits to the extent necessary to take 
     into account the amendments made by this section (and if such 
     redetermination results in an increase in such amount the 
     increase shall be effective as provided in paragraph (1)). 
     Such regulations described in subparagraph (A) shall also 
     provide procedures to ensure that applicants for benefits 
     under section 202(a) or 223 of the Social Security Act are 
     given the opportunity, at the time of their application, to 
     indicate and verify any additional years which may be 
     disregarded under section 215(b)(2)(B) of the Social Security 
     Act (as amended by this section).

     SEC. __. INCREASE IN WIDOWS' AND WIDOWERS' INSURANCE 
                   BENEFITS.

       (a) Widow's Benefit.--Section 202(e)(2)(A) of the Social 
     Security Act (42 U.S.C. 402(e)(2)(A)) is amended by striking 
     ``equal to'' and all that follows and inserting ``equal to 
     the greater of--
       ``(i) the primary insurance amount (as determined for 
     purposes of this subsection after application of 
     subparagraphs (B) and (C)) of such deceased individual, or
       ``(ii) the lesser of--
       ``(I) 75 percent of the joint benefit which would have been 
     received by the widow or surviving divorced wife and the 
     deceased individual for such month if such individual had not 
     died, or
       ``(II) the average old-age insurance benefit paid under 
     this title.''.
       (b) Widower's Benefit.--Section 202(f)(3)(A) of the Social 
     Security Act (42 U.S.C. 402(b)(3)(A)) is amended by striking 
     ``equal to'' and all that follows and inserting ``equal to 
     the greater of--
     ``(i) the primary insurance amount (as determined for 
     purposes of this subjection after application of 
     subparagraphs (B) and (C)) of such deceased individual, or
     ``(ii) the lesser of--
     (I) 75 percent of the joint benefit which would have been 
     received by the widow or surviving divorced wife and the 
     deceased individual for such month if such individual had not 
     died, or
     ``(II) the average old-age insurance benefit paid under this 
     title.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to benefits payable for months after December 
     2000.

     SEC__. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Estate Tax 
     Relief Act of 2000''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

     SEC. __. INCREASE IN AMOUNT OF UNIFIED CREDIT AGAINST ESTATE 
                   AND GIFT TAXES.

       (a) In General.--The table contained in section 2010(c) 
     (relating to applicable credit amount) is amended to read as 
     follows:

``In the case of estates of decedentThe applicable exclusion amount is:
      2001, 2002, 2003, 2004, and 2005......................$1,000,000 
      2006 and 2007.........................................$1,125,000 
      2008..................................................$1,500,000 
      2009 or thereafter..................................$2,000,000.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

     SEC. __. INCREASE IN QUALIFIED FAMILY-OWNED BUSINESS INTEREST 
                   DEDUCTION AMOUNT.

       (a) In General.--Paragraph (2) of section 2057(a) (relating 
     to family-owned business interests) is amended to read as 
     follows:
       ``(2) Maximum deduction.--
       ``(A) In general.--The deduction allowed by this section 
     shall not exceed the sum of--
       ``(i) the applicable deduction amount, plus
       ``(ii) in the case of a decedent described in subparagraph 
     (C), the applicable unused spousal deduction amount.

[[Page S6741]]

       ``(B) Applicable deduction amount.--For purposes of this 
     subparagraph (A)(i), the applicable deduction amount is 
     determined in accordance with the following table:

``In the case of estates of decedentThe applicable deduction amount is:
      2001, 2002, 2003, 2004, and 2005.......................$1,375,000
      2006 and 2007..........................................$1,625,000
      2008...................................................$2,375,000
      2009 or thereafter....................................$3,375,000.
       ``(C) Applicable unused spousal deduction amount.--With 
     respect to a decedent whose immediately predeceased spouse 
     died after December 31, 2000, and the estate of such 
     immediately predeceased spouse met the requirements of 
     subsection (b)(1), the applicable unused spousal deduction 
     amount for such decedent is equal to the excess of--
       ``(i) the applicable deduction amount allowable under this 
     section to the estate of such immediately predeceased spouse, 
     over
       ``(ii) the sum of--

       ``(I) the applicable deduction amount allowed under this 
     section to the estate of such immediately predeceased spouse, 
     plus
       ``(II) the amount of any increase in such estate's unified 
     credit under paragraph (3)(B) which was allowed to such 
     estate.''

       (b) Conforming Amendments.--Section 2057(a)(3)(B) is 
     amended--
       (1) by striking ``$675,000'' both places it appears and 
     inserting ``the applicable deduction amount'', and
       (2) by striking ``$675,000'' in the heading and inserting 
     ``applicable deduction amount''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

     SEC. __. SENSE OF SENATE REGARDING SAVINGS.

       It is the sense of the Senate that the reduced cost to the 
     Federal Treasury resulting from the amendments made by this 
     Act as compared to the cost to the Federal Treasury of H.R. 8 
     as received by the Senate from the House of Representatives 
     on June 12, 2000, should be used exclusively to reduce the 
     Federal debt held by the public.
                                 ______
                                 

                        ROTH AMENDMENT NO. 3841

  Mr. ROTH proposed an amendment to the bill, H.R. 8, supra; as 
follows:

       At the end of the bill, add the following:

                   TITLE VI--MISCELLANEOUS PROVISIONS

     SEC. 601. TABLE OF CONTENTS; ETC.

       (a) Section 15 Not To Apply.--No amendment made by this 
     title shall be treated as a change in a rate of tax for 
     purposes of section 15 of the Internal Revenue Code of 1986.
       (b) Table of Contents.--The table of contents for this 
     title is as follows:

                   TITLE VI--MISCELLANEOUS PROVISIONS

Sec. 601. Table of contents; etc.

             Subtitle A--Individual Retirement Arrangements

Sec. 611. Modification of deduction limits for IRA contributions.
Sec. 612. Modification of income limits on contributions and rollovers 
              to Roth IRAs.
Sec. 613. Deemed IRAs under employer plans.

                     Subtitle B--Expanding Coverage

Sec. 621. Option to treat elective deferrals as after-tax 
              contributions.
Sec. 622. Increase in benefit and contribution limits.
Sec. 623. Plan loans for subchapter S owners, partners, and sole 
              proprietors.
Sec. 624. Elective deferrals not taken into account for purposes of 
              deduction limits.
Sec. 625. Reduced PBGC premium for new plans of small employers.
Sec. 626. Reduction of additional PBGC premium for new plans.
Sec. 627. Elimination of user fee for requests to IRS regarding new 
              pension plans.
Sec. 628. Modification of top-heavy rules.
Sec. 629. Repeal of coordination requirements for deferred compensation 
              plans of State and local governments and tax-exempt 
              organizations.

                Subtitle C--Enhancing Fairness for Women

Sec. 631. Catchup contributions for individuals age 50 or over.
Sec. 632. Equitable treatment for contributions of employees to defined 
              contribution plans.
Sec. 633. Clarification of tax treatment of division of section 457 
              plan benefits upon divorce.
Sec. 634. Modification of safe harbor relief for hardship withdrawals 
              from cash or deferred arrangements.
Sec. 635. Faster vesting of certain employer matching contributions.

          Subtitle D--Increasing Portability for Participants

Sec. 641. Rollovers allowed among various types of plans.
Sec. 642. Rollovers of IRAs into workplace retirement plans.
Sec. 643. Rollovers of after-tax contributions.
Sec. 644. Hardship exception to 60-day rule.
Sec. 645. Treatment of forms of distribution.
Sec. 646. Rationalization of restrictions on distributions.
Sec. 647. Purchase of service credit in governmental defined benefit 
              plans.
Sec. 648. Employers may disregard rollovers for purposes of cash-out 
              amounts.
Sec. 649. Inclusion requirements for section 457 plans.

       Subtitle E--Strengthening Pension Security and Enforcement

Sec. 651. Repeal of 150 percent of current liability funding limit.
Sec. 652. Extension of missing participants program to multiemployer 
              plans.
Sec. 653. Excise tax relief for sound pension funding.
Sec. 654. Excise tax on failure to provide notice by defined benefit 
              plans significantly reducing future benefit accruals.
Sec. 655. Protection of investment of employee contributions to 401(k) 
              plans.
Sec. 656. Treatment of multiemployer plans under section 415.
Sec. 657. Maximum contribution deduction rules modified and applied to 
              all defined benefit plans.
Sec. 658. Increase in section 415 early retirement limit for 
              governmental and other plans.

              Subtitle F--Encouraging Retirement Education

Sec. 661. Periodic pension benefits Statements.
Sec. 662. Clarification of treatment of employer-provided retirement 
              advice.

                Subtitle G--Reducing Regulatory Burdens

Sec. 671. Flexibility in nondiscrimination and coverage rules.
Sec. 672. Modification of timing of plan valuations.
Sec. 673. Substantial owner benefits in terminated plans.
Sec. 674. ESOP dividends may be reinvested without loss of dividend 
              deduction.
Sec. 675. Notice and consent period regarding distributions.
Sec. 676. Repeal of transition rule relating to certain highly 
              compensated employees.
Sec. 677. Employees of tax-exempt entities.
Sec. 678. Extension to international organizations of moratorium on 
              application of certain nondiscrimination rules applicable 
              to State and local plans.
Sec. 679. Annual report dissemination.
Sec. 680. Modification of exclusion for employer provided transit 
              passes.
Sec. 681. Reporting simplification.
Sec. 682. Repeal of the multiple use test.

                      Subtitle H--Plan Amendments

Sec. 691. Provisions relating to plan amendments.

             Subtitle A--Individual Retirement Arrangements

     SEC. 611. MODIFICATION OF DEDUCTION LIMITS FOR IRA 
                   CONTRIBUTIONS.

       (a) Increase in Contribution Limit.--
       (1) In general.--Paragraph (1)(A) of section 219(b) 
     (relating to maximum amount of deduction) is amended by 
     striking ``$2,000'' and inserting ``the deductible amount''.
       (2) Deductible amount.--Section 219(b) is amended by adding 
     at the end the following new paragraph:
       ``(5) Deductible amount.--For purposes of paragraph 
     (1)(A)--
       ``(A) In general.--The deductible amount shall be 
     determined in accordance with the following table:

``For taxable years                                      The deductible
beginning in:                                                amount is:
  2001......................................................$3,000 ....

  2002......................................................$4,000 ....

  2003 and thereafter.......................................$5,000.....

       ``(B) Cost-of-living adjustment.--
       ``(i) In general.--In the case of any taxable year 
     beginning in a calendar year after 2003, the $5,000 amount 
     under subparagraph (A) shall be increased by an amount equal 
     to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2002' 
     for `calendar year 1992' in subparagraph (B) thereof.

       ``(ii) Rounding rules.--If any amount after adjustment 
     under clause (i) is not a multiple of $100, such amount shall 
     be rounded to the next lower multiple of $100.''
       (b) Increase in Adjusted Gross Income Limits for Active 
     Participants.--
       (1) In general.--Subparagraph (B) of section 219(g)(3) 
     (relating to applicable dollar amount) is amended to read as 
     follows:
       ``(B) Applicable dollar amount.--The term `applicable 
     dollar amount' means the following:
       ``(i) In the case of a taxpayer filing a joint return:

``For taxable years                                      The applicable
beginning in:                                         dollar amount is:
  2001.....................................................$53,000 ....

  2002.....................................................$54,000 ....

  2003.....................................................$60,000 ....

  2004.....................................................$65,000 ....

  2005.....................................................$70,000 ....

  2006.....................................................$75,000 ....

  2007.....................................................$80,000 ....

  2008.....................................................$84,000 ....

  2009.....................................................$89,000 ....

  2010 and thereafter......................................$94,000.....

       ``(ii) In the case of any other taxpayer (other than a 
     married individual filing a separate return):


[[Page S6742]]


``For taxable years beginning in:      The applicable dollar amount is:
  2001..........................................................$33,000
  2002..........................................................$34,000
  2003..........................................................$40,000
  2004..........................................................$45,000
  2005, 2006, and 2007..........................................$50,000
  2008..........................................................$52,000
  2009..........................................................$54,500
  2010 and thereafter........................................$57,000.''
       (2) Cost-of-living adjustment.--Section 219(g)(3) is 
     amended by adding at the end the following new subparagraph:
       ``(C) Cost-of-living adjustment.--
       ``(i) In general.--In the case of any taxable year 
     beginning in a calendar year after 2010, the $94,000 amount 
     in subparagraph (B)(i) and the $57,000 amount in 
     subparagraph(B)(ii) shall each be increased by an amount 
     equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2009' 
     for `calendar year 1992' in subparagraph (B) thereof.

       ``(ii) Rounding rules.--If any amount after adjustment 
     under clause (i) is not a multiple of $1,000, such amount 
     shall be reduced to the next lowest multiple of $1,000.''
       (c) Conforming Amendments.--
       (1) Section 408(a)(1) is amended by striking ``in excess of 
     $2,000 on behalf of any individual'' and inserting ``on 
     behalf of any individual in excess of the amount in effect 
     for such taxable year under section 219(b)(1)(A)''.
       (2) Section 408(b)(2)(B) is amended by striking ``$2,000'' 
     and inserting ``the dollar amount in effect under section 
     219(b)(1)(A)''.
       (3) Section 408(b) is amended by striking ``$2,000'' in the 
     matter following paragraph (4) and inserting ``the dollar 
     amount in effect under section 219(b)(1)(A)''.
       (4) Section 408(j) is amended by striking ``$2,000''.
       (5) Section 408(p)(8) is amended by striking ``$2,000'' and 
     inserting ``the dollar amount in effect under section 
     219(b)(1)(A)''
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 612. MODIFICATION OF INCOME LIMITS ON CONTRIBUTIONS AND 
                   ROLLOVERS TO ROTH IRAS.

       (a) Repeal of AGI Limit on Contributions.--Section 
     408A(c)(3) (relating to limits based on modified adjusted 
     gross income) is amended by striking subparagraph (A) and by 
     redesignating subparagraphs (B), (C), and (D) as 
     subparagraphs (A), (B), and (C), respectively.
       (b) Increase in AGI Limit for Rollover Contributions.--
     Section 408A(c)(3)(A) (relating to rollover from IRA), as 
     redesignated by subsection (a), is amended to read as 
     follows:
       ``(A) Rollover from ira.--A taxpayer shall not be allowed 
     to make a qualified rollover contribution from an individual 
     retirement plan other than a Roth IRA during any taxable year 
     if, for the taxable year of the distribution to which the 
     contribution relates, the taxpayer's adjusted gross income 
     exceeds $1,000,000.''.
       (c) Conforming Amendments.--
       (1) Subparagraph (B) of section 408A(c)(3), as redesignated 
     by subsection (a) and as in effect before and after the 
     amendments made by the Internal Revenue Service Restructuring 
     and Reform Act of 1998, is amended to read as follows:
       ``(B) Definition of adjusted gross income.--For purposes of 
     subparagraph (A), adjusted gross income shall be determined--
       ``(i) after application of sections 86 and 469, and
       ``(ii) without regard to sections 135, 137, 221, and 911, 
     the deduction allowable under section 219, or any amount 
     included in gross income under subsection (d)(3).''.
       (2) Subparagraph (B) of section 408A(c)(3), as amended by 
     paragraph (1), is amended by inserting ``or by reason of a 
     required distribution under a provision described in 
     paragraph (5)'' before the period at the end.
       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2001.
       (2) Rollovers.--The amendment made by subsection (b) shall 
     apply to taxable years beginning after December 31, 2001.
       (3) Adjusted gross income.--The amendment made by 
     subsection (c)(2) shall apply to taxable years beginning 
     after December 31, 2004.

     SEC. 613. DEEMED IRAS UNDER EMPLOYER PLANS.

       (a) In General.--Section 408 (relating to individual 
     retirement accounts) is amended by redesignating subsection 
     (q) as subsection (r) and by inserting after subsection (p) 
     the following new subsection:
       ``(q) Deemed IRAs Under Qualified Employer Plans.--
       ``(1) General rule.--If--
       ``(A) a qualified employer plan elects to allow employees 
     to make voluntary employee contributions to a separate 
     account or annuity established under the plan, and
       ``(B) under the terms of the qualified employer plan, such 
     account or annuity meets the applicable requirements of this 
     section or section 408A for an individual retirement account 
     or annuity,
     then such account or annuity shall be treated for purposes of 
     this title in the same manner as an individual retirement 
     plan (and contributions to such account or annuity as 
     contributions to an individual retirement plan). For purposes 
     of subparagraph (B), the requirements of subsection (a)(5) 
     shall not apply.
       ``(2) Special rules for qualified employer plans.--For 
     purposes of this title--
       ``(A) a qualified employer plan shall not fail to meet any 
     requirement of this title solely by reason of establishing 
     and maintaining a program described in paragraph (1), and
       ``(B) any account or annuity described in paragraph (1), 
     and any contribution to the account or annuity, shall not be 
     subject to any requirement of this title applicable to a 
     qualified employer plan or taken into account in applying any 
     such requirement to any other contributions under the plan.
       ``(3) Definitions.--For purposes of this subsection--
       ``(A) Qualified employer plan.--The term `qualified 
     employer plan' has the meaning given such term by section 
     72(p)(4).
       ``(B) Voluntary employee contribution.--The term `voluntary 
     employee contribution' means any contribution (other than a 
     mandatory contribution within the meaning of section 
     411(c)(2)(C))--
       ``(i) which is made by an individual as an employee under a 
     qualified employer plan which allows employees to elect to 
     make contributions described in paragraph (1), and
       ``(ii) with respect to which the individual has designated 
     the contribution as a contribution to which this subsection 
     applies.''.
       (b) Amendment of ERISA.--
       (1) In general.--Section 4 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1003) is amended by 
     adding at the end the following new subsection:
       ``(c) If a pension plan allows an employee to elect to make 
     voluntary employee contributions to accounts and annuities as 
     provided in section 408(q) of the Internal Revenue Code of 
     1986, such accounts and annuities (and contributions thereto) 
     shall not be treated as part of such plan (or as a separate 
     pension plan) for purposes of any provision of this title 
     other than section 403(c), 404, or 405 (relating to exclusive 
     benefit, and fiduciary and co-fiduciary responsibilities).''.
       (2) Conforming amendment.--Section 4(a) of such Act (29 
     U.S.C. 1003(a)) is amended by inserting ``or (c)'' after 
     ``subsection (b)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2001.

                     Subtitle B--Expanding Coverage

     SEC. 621. OPTION TO TREAT ELECTIVE DEFERRALS AS AFTER-TAX 
                   CONTRIBUTIONS.

       (a) In General.--Subpart A of part I of subchapter D of 
     chapter 1 (relating to deferred compensation, etc.) is 
     amended by inserting after section 402 the following new 
     section:

     ``SEC. 402A. OPTIONAL TREATMENT OF ELECTIVE DEFERRALS AS PLUS 
                   CONTRIBUTIONS.

       ``(a) General Rule.--If an applicable retirement plan 
     includes a qualified plus contribution program--
       ``(1) any designated plus contribution made by an employee 
     pursuant to the program shall be treated as an elective 
     deferral for purposes of this chapter, except that such 
     contribution shall not be excludable from gross income, and
       ``(2) such plan (and any arrangement which is part of such 
     plan) shall not be treated as failing to meet any requirement 
     of this chapter solely by reason of including such program.
       ``(b) Qualified Plus Contribution Program.--For purposes of 
     this section--
       ``(1) In general.--The term `qualified plus contribution 
     program' means a program under which an employee may elect to 
     make designated plus contributions in lieu of all or a 
     portion of elective deferrals the employee is otherwise 
     eligible to make under the applicable retirement plan.
       ``(2) Separate accounting required.--A program shall not be 
     treated as a qualified plus contribution program unless the 
     applicable retirement plan--
       ``(A) establishes separate accounts (`designated plus 
     accounts') for the designated plus contributions of each 
     employee and any earnings properly allocable to the 
     contributions, and
       ``(B) maintains separate recordkeeping with respect to each 
     account.
       ``(c) Definitions and Rules Relating to Designated Plus 
     Contributions.--For purposes of this section--
       ``(1) Designated plus contribution.--The term `designated 
     plus contribution' means any elective deferral which--
       ``(A) is excludable from gross income of an employee 
     without regard to this section, and
       ``(B) the employee designates (at such time and in such 
     manner as the Secretary may prescribe) as not being so 
     excludable.
       ``(2) Designation limits.--The amount of elective deferrals 
     which an employee may designate under paragraph (1) shall not 
     exceed the excess (if any) of--
       ``(A) the maximum amount of elective deferrals excludable 
     from gross income of the employee for the taxable year 
     (without regard to this section), over
       ``(B) the aggregate amount of elective deferrals of the 
     employee for the taxable year which the employee does not 
     designate under paragraph (1).
       ``(3) Rollover contributions.--

[[Page S6743]]

       ``(A) In general.--A rollover contribution of any payment 
     or distribution from a designated plus account which is 
     otherwise allowable under this chapter may be made only if 
     the contribution is to--
       ``(i) another designated plus account of the individual 
     from whose account the payment or distribution was made, or
       ``(ii) a Roth IRA of such individual.
       ``(B) Coordination with limit.--Any rollover contribution 
     to a designated plus account under subparagraph (A) shall not 
     be taken into account for purposes of paragraph (1).
       ``(d) Distribution Rules.--For purposes of this title--
       ``(1) Exclusion.--Any qualified distribution from a 
     designated plus account shall not be includible in gross 
     income.
       ``(2) Qualified distribution.--For purposes of this 
     subsection--
       ``(A) In general.--The term `qualified distribution' has 
     the meaning given such term by section 408A(d)(2)(A) (without 
     regard to clause (iv) thereof).
       ``(B) Distributions within nonexclusion period.--A payment 
     or distribution from a designated plus account shall not be 
     treated as a qualified distribution if such payment or 
     distribution is made within the 5-taxable-year period 
     beginning with the earlier of--
       ``(i) the 1st taxable year for which the individual made a 
     designated plus contribution to any designated plus account 
     established for such individual under the same applicable 
     retirement plan, or
       ``(ii) if a rollover contribution was made to such 
     designated plus account from a designated plus account 
     previously established for such individual under another 
     applicable retirement plan, the 1st taxable year for which 
     the individual made a designated plus contribution to such 
     previously established account.
       ``(C) Distributions of excess deferrals and earnings.--The 
     term `qualified distribution' shall not include any 
     distribution of any excess deferral under section 402(g)(2) 
     and any income on the excess deferral.
       ``(3) Aggregation rules.--Section 72 shall be applied 
     separately with respect to distributions and payments from a 
     designated plus account and other distributions and payments 
     from the plan.
       ``(e) Other Definitions.--For purposes of this section--
       ``(1) Applicable retirement plan.--The term `applicable 
     retirement plan' means--
       ``(A) an employees' trust described in section 401(a) which 
     is exempt from tax under section 501(a), and
       ``(B) a plan under which amounts are contributed by an 
     individual's employer for an annuity contract described in 
     section 403(b).
       ``(2) Elective deferral.--The term `elective deferral' 
     means any elective deferral described in subparagraph (A) or 
     (C) of section 402(g)(3).''.
       (b) Excess Deferrals.--Section 402(g) (relating to 
     limitation on exclusion for elective deferrals) is amended--
       (1) by adding at the end of paragraph (1) the following new 
     sentence: ``The preceding sentence shall not apply to so much 
     of such excess as does not exceed the designated plus 
     contributions of the individual for the taxable year.'', and
       (2) by inserting ``(or would be included but for the last 
     sentence thereof)'' after ``paragraph (1)'' in paragraph 
     (2)(A).
       (c) Rollovers.--Subparagraph (B) of section 402(c)(8) is 
     amended by adding at the end the following:
     ``If any portion of an eligible rollover distribution is 
     attributable to payments or distributions from a designated 
     plus account (as defined in section 402A), an eligible 
     retirement plan with respect to such portion shall include 
     only another designated plus account and a Roth IRA.''.
       (d) Reporting Requirements.--
       (1) W-2 information.--Section 6051(a)(8) is amended by 
     inserting ``, including the amount of designated plus 
     contributions (as defined in section 402A)'' before the comma 
     at the end.
       (2) Information.--Section 6047 is amended by redesignating 
     subsection (f) as subsection (g) and by inserting after 
     subsection (e) the following new subsection:
       ``(f) Designated Plus Contributions.--The Secretary shall 
     require the plan administrator of each applicable retirement 
     plan (as defined in section 402A) to make such returns and 
     reports regarding designated plus contributions (as so 
     defined) to the Secretary, participants and beneficiaries of 
     the plan, and such other persons as the Secretary may 
     prescribe.''.
       (e) Conforming Amendments.--
       (1) Section 408A(e) is amended by adding after the first 
     sentence the following new sentence: ``Such term includes a 
     rollover contribution described in section 402A(c)(3)(A).''.
       (2) The table of sections for subpart A of part I of 
     subchapter D of chapter 1 is amended by inserting after the 
     item relating to section 402 the following new item:

``Sec. 402A. Optional treatment of elective deferrals as plus 
              contributions.''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 622. INCREASE IN BENEFIT AND CONTRIBUTION LIMITS.

       (a) Defined Benefit Plans.--
       (1) Dollar limit.--
       (A) Subparagraph (A) of section 415(b)(1) (relating to 
     limitation for defined benefit plans) is amended by striking 
     ``$90,000'' and inserting ``$160,000''.
       (B) Subparagraphs (C) and (D) of section 415(b)(2) are each 
     amended by striking ``$90,000'' each place it appears in the 
     headings and the text and inserting ``$160,000''.
       (C) Paragraph (7) of section 415(b) (relating to benefits 
     under certain collectively bargained plans) is amended by 
     striking ``the greater of $68,212 or one-half the amount 
     otherwise applicable for such year under paragraph (1)(A) for 
     `$90,000' '' and inserting ``one-half the amount otherwise 
     applicable for such year under paragraph (1)(A) for 
     `$160,000' ''.
       (2) Limit reduced when benefit begins before age 62.--
     Subparagraph (C) of section 415(b)(2) is amended by striking 
     ``the social security retirement age'' each place it appears 
     in the heading and text and inserting ``age 62''.
       (3) Limit increased when benefit begins after age 65.--
     Subparagraph (D) of section 415(b)(2) is amended by striking 
     ``the social security retirement age'' each place it appears 
     in the heading and text and inserting ``age 65''.
       (4) Cost-of-living adjustments.--Subsection (d) of section 
     415 (related to cost-of-living adjustments) is amended--
       (A) by striking ``$90,000'' in paragraph (1)(A) and 
     inserting ``$160,000'', and
       (B) in paragraph (3)(A)--
       (i) by striking ``$90,000'' in the heading and inserting 
     ``$160,000'', and
       (ii) by striking ``October 1, 1986'' and inserting ``July 
     1, 2000''.
       (5) Conforming amendment.--Section 415(b)(2) is amended by 
     striking subparagraph (F).
       (b) Defined Contribution Plans.--
       (1) Dollar limit.--Subparagraph (A) of section 415(c)(1) 
     (relating to limitation for defined contribution plans) is 
     amended by striking ``$30,000'' and inserting ``$40,000''.
       (2) Cost-of-living adjustments.--Subsection (d) of section 
     415 (related to cost-of-living adjustments) is amended--
       (A) by striking ``$30,000'' in paragraph (1)(C) and 
     inserting ``$40,000'', and
       (B) in paragraph (3)(D)--
       (i) by striking ``$30,000'' in the heading and inserting 
     ``$40,000'', and
       (ii) by striking ``October 1, 1993'' and inserting ``July 
     1, 2000''.
       (c) Qualified Trusts.--
       (1) Compensation limit.--Sections 401(a)(17), 404(l), 
     408(k), and 505(b)(7) are each amended by striking 
     ``$150,000'' each place it appears and inserting 
     ``$200,000''.
       (2) Base period and rounding of cost-of-living 
     adjustment.--Subparagraph (B) of section 401(a)(17) is 
     amended--
       (A) by striking ``October 1, 1993'' and inserting ``July 1, 
     2000'', and
       (B) by striking ``$10,000'' both places it appears and 
     inserting ``$5,000''.
       (d) Elective Deferrals.--
       (1) In general.--Paragraph (1) of section 402(g) (relating 
     to limitation on exclusion for elective deferrals) is amended 
     to read as follows:
       ``(1) In general.--
       ``(A) Limitation.--Notwithstanding subsections (e)(3) and 
     (h)(1)(B), the elective deferrals of any individual for any 
     taxable year shall be included in such individual's gross 
     income to the extent the amount of such deferrals for the 
     taxable year exceeds the applicable dollar amount.
       ``(B) Applicable dollar amount.--For purposes of 
     subparagraph (A), the applicable dollar amount shall be the 
     amount determined in accordance with the following table:

    ``For taxable years                                  The applicable
      beginning in                                       dollar amount:
      calendar year:
      2001.....................................................$11,000 
      2002.....................................................$12,000 
      2003.....................................................$13,000 
      2004.....................................................$14,000 
      2005 or thereafter....................................$15,000.''.

       (2) Cost-of-living adjustment.--Paragraph (5) of section 
     402(g) is amended to read as follows:
       ``(5) Cost-of-living adjustment.--In the case of taxable 
     years beginning after December 31, 2005, the Secretary shall 
     adjust the $15,000 amount under paragraph (1)(B) at the same 
     time and in the same manner as under section 415(d), except 
     that the base period shall be the calendar quarter beginning 
     July 1, 2004, and any increase under this paragraph which is 
     not a multiple of $500 shall be rounded to the next lowest 
     multiple of $500.''.
       (3) Conforming amendments.--
       (A) Section 402(g) (relating to limitation on exclusion for 
     elective deferrals), as amended by paragraphs (1) and (2), is 
     further amended by striking paragraph (4) and redesignating 
     paragraphs (5), (6), (7), (8), and (9) as paragraphs (4), 
     (5), (6), (7), and (8), respectively.
       (B) Paragraph (2) of section 457(c) is amended by striking 
     ``402(g)(8)(A)(iii)'' and inserting ``402(g)(7)(A)(iii)''.
       (C) Clause (iii) of section 501(c)(18)(D) is amended by 
     striking ``(other than paragraph (4) thereof)''.
       (e) Deferred Compensation Plans of State and Local 
     Governments and Tax-Exempt Organizations.--
       (1) In general.--Section 457 (relating to deferred 
     compensation plans of State and local governments and tax-
     exempt organizations) is amended--
       (A) in subsections (b)(2)(A) and (c)(1) by striking 
     ``$7,500'' each place it appears and inserting ``the 
     applicable dollar amount'', and

[[Page S6744]]

       (B) in subsection (b)(3)(A) by striking ``$15,000'' and 
     inserting ``twice the dollar amount in effect under 
     subsection (b)(2)(A)''.
       (2) Applicable dollar amount; cost-of-living adjustment.--
     Paragraph (15) of section 457(e) is amended to read as 
     follows:
       ``(15) Applicable dollar amount.--
       ``(A) In general.--The applicable dollar amount shall be 
     the amount determined in accordance with the following table:

    ``For taxable years                                  The applicable
      beginning in                                       dollar amount:
      calendar year:
      2001.....................................................$11,000 
      2002.....................................................$12,000 
      2003.....................................................$13,000 
      2004.....................................................$14,000 
      2005 or thereafter.......................................$15,000.

       ``(B) Cost-of-living adjustments.--In the case of taxable 
     years beginning after December 31, 2005, the Secretary shall 
     adjust the $15,000 amount specified in the table in 
     subparagraph (A) at the same time and in the same manner as 
     under section 415(d), except that the base period shall be 
     the calendar quarter beginning July 1, 2004, and any increase 
     under this paragraph which is not a multiple of $500 shall be 
     rounded to the next lowest multiple of $500.''.
       (f ) Simple Retirement Accounts.--
       (1) Limitation.--Clause (ii) of section 408(p)(2)(A) 
     (relating to general rule for qualified salary reduction 
     arrangement) is amended by striking ``$6,000'' and inserting 
     ``the applicable dollar amount''.
       (2) Applicable dollar amount.--Subparagraph (E) of 
     408(p)(2) is amended to read as follows:
       ``(E) Applicable dollar amount; cost-of-living 
     adjustment.--
       ``(i) In general.--For purposes of subparagraph (A)(ii), 
     the applicable dollar amount shall be the amount determined 
     in accordance with the following table:

    ``For taxable years                                  The applicable
      beginning in                                       dollar amount:
      calendar year:
          2001..................................................$7,000 
          2002..................................................$8,000 
          2003..................................................$9,000 
          2004 or thereafter...................................$10,000.

       ``(ii) Cost-of-living adjustment.--In the case of a year 
     beginning after December 31, 2004, the Secretary shall adjust 
     the $10,000 amount under clause (i) at the same time and in 
     the same manner as under section 415(d), except that the base 
     period taken into account shall be the calendar quarter 
     beginning July 1, 2003, and any increase under this 
     subparagraph which is not a multiple of $500 shall be rounded 
     to the next lower multiple of $500.''.
       (3) Conforming amendments.--
       (A) Clause (I) of section 401(k)(11)(B)(i) is amended by 
     striking ``$6,000'' and inserting ``the amount in effect 
     under section 408(p)(2)(A)(ii)''.
       (B) Section 401(k)(11) is amended by striking subparagraph 
     (E).
       (g) Rounding Rule Relating to Defined Benefit Plans and 
     Defined Contribution Plans.--Paragraph (4) of section 415(d) 
     is amended to read as follows:
       ``(4) Rounding.--
       ``(A) $160,000 amount.--Any increase under subparagraph (A) 
     of paragraph (1) which is not a multiple of $5,000 shall be 
     rounded to the next lowest multiple of $5,000.
       ``(B) $40,000 amount.--Any increase under subparagraph (C) 
     of paragraph (1) which is not a multiple of $1,000 shall be 
     rounded to the next lowest multiple of $1,000.''.
       (h) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2001.

     SEC. 623. PLAN LOANS FOR SUBCHAPTER S OWNERS, PARTNERS, AND 
                   SOLE PROPRIETORS.

       (a) Amendment to 1986 Code.--Subparagraph (B) of section 
     4975(f)(6) (relating to exemptions not to apply to certain 
     transactions) is amended by adding at the end the following 
     new clause:
       ``(iii) Loan exception.--For purposes of subparagraph 
     (A)(i), the term `owner-employee' shall only include a person 
     described in subclause (II) or (III) of clause (i).''.
       (b) Amendment to ERISA.--Section 408(d)(2) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1108(d)(2)) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(C) For purposes of paragraph (1)(A), the term `owner-
     employee' shall only include a person described in clause 
     (ii) or (iii) of subparagraph (A).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to loans made after December 31, 2001.

     SEC. 624. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR 
                   PURPOSES OF DEDUCTION LIMITS.

       (a) In General.--Section 404 (relating to deduction for 
     contributions of an employer to an employees' trust or 
     annuity plan and compensation under a deferred payment plan) 
     is amended by adding at the end the following new subsection:
       ``(n) Elective Deferrals Not Taken Into Account for 
     Purposes of Deduction Limits.--Elective deferrals (as defined 
     in section 402(g)(3)) shall not be subject to any limitation 
     contained in paragraph (3), (7), or (9) of subsection (a), 
     and such elective deferrals shall not be taken into account 
     in applying any such limitation to any other 
     contributions.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 2001.

     SEC. 625. REDUCED PBGC PREMIUM FOR NEW PLANS OF SMALL 
                   EMPLOYERS.

       (a) In General.--Subparagraph (A) of section 4006(a)(3) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1306(a)(3)(A)) is amended--
       (1) in clause (i), by inserting ``other than a new single-
     employer plan (as defined in subparagraph (F)) maintained by 
     a small employer (as so defined),'' after ``single-employer 
     plan,'',
       (2) in clause (iii), by striking the period at the end and 
     inserting ``, and'', and
       (3) by adding at the end the following new clause:
       ``(iv) in the case of a new single-employer plan (as 
     defined in subparagraph (F)) maintained by a small employer 
     (as so defined) for the plan year, $5 for each individual who 
     is a participant in such plan during the plan year.''.
       (b) Definition of New Single-Employer Plan.--Section 
     4006(a)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1306(a)(3)) is amended by adding at the end 
     the following new subparagraph:
       ``(F)(i) For purposes of this paragraph, a single-employer 
     plan maintained by a contributing sponsor shall be treated as 
     a new single-employer plan for each of its first 5 plan years 
     if, during the 36-month period ending on the date of the 
     adoption of such plan, the sponsor or any member of such 
     sponsor's controlled group (or any predecessor of either) had 
     not established or maintained a plan to which this title 
     applies with respect to which benefits were accrued for 
     substantially the same employees as are in the new single-
     employer plan.
       ``(ii)(I) For purposes of this paragraph, the term `small 
     employer' means an employer which on the first day of any 
     plan year has, in aggregation with all members of the 
     controlled group of such employer, 100 or fewer employees.
       ``(II) In the case of a plan maintained by 2 or more 
     contributing sponsors that are not part of the same 
     controlled group, the employees of all contributing sponsors 
     and controlled groups of such sponsors shall be aggregated 
     for purposes of determining whether any contributing sponsor 
     is a small employer.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plans established after December 31, 2001.

     SEC. 626. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR NEW PLANS.

       (a) In General.--Subparagraph (E) of section 4006(a)(3) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1306(a)(3)(E)) is amended by adding at the end the 
     following new clause:
       ``(v) In the case of a new defined benefit plan, the amount 
     determined under clause (ii) for any plan year shall be an 
     amount equal to the product of the amount determined under 
     clause (ii) and the applicable percentage. For purposes of 
     this clause, the term `applicable percentage' means--
       ``(I) 0 percent, for the first plan year.
       ``(II) 20 percent, for the second plan year.
       ``(III) 40 percent, for the third plan year.
       ``(IV) 60 percent, for the fourth plan year.
       ``(V) 80 percent, for the fifth plan year.
     For purposes of this clause, a defined benefit plan (as 
     defined in section 3(35)) maintained by a contributing 
     sponsor shall be treated as a new defined benefit plan for 
     its first 5 plan years if, during the 36-month period ending 
     on the date of the adoption of the plan, the sponsor and each 
     member of any controlled group including the sponsor (or any 
     predecessor of either) did not establish or maintain a plan 
     to which this title applies with respect to which benefits 
     were accrued for substantially the same employees as are in 
     the new plan.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to plans established after December 31, 2001.

     SEC. 627. ELIMINATION OF USER FEE FOR REQUESTS TO IRS 
                   REGARDING NEW PENSION PLANS.

       (a) Elimination of Certain User Fees.--The Secretary of the 
     Treasury or the Secretary's delegate shall not require 
     payment of user fees under the program established under 
     section 7527 of the Internal Revenue Code of 1986 for 
     requests to the Internal Revenue Service for ruling letters, 
     opinion letters, and determination letters or similar 
     requests with respect to the qualified status of a new 
     pension benefit plan or any trust which is part of the plan.
       (b) New Pension Benefit Plan.--For purposes of this 
     section--
       (1) In general.--The term ``new pension benefit plan'' 
     means a pension, profit-sharing, stock bonus, annuity, or 
     employee stock ownership plan which is maintained by one or 
     more eligible employers if such employer (or any predecessor 
     employer) has not made a prior request described in 
     subsection (a) for such plan (or any predecessor plan).
       (2) Eligible employer.--The term ``eligible employer'' 
     means an employer (or any predecessor employer) which has not 
     established or maintained a qualified employer plan with 
     respect to which contributions were made, or benefits were 
     accrued for service, in the 3 most recent taxable years 
     ending prior to the first taxable year in which the request 
     is made.
       (c) Effective Date.--The provisions of this section shall 
     apply with respect to requests made after December 31, 2001.

     SEC. 628. MODIFICATION OF TOP-HEAVY RULES.

       (a) Simplification of Definition of Key Employee.--

[[Page S6745]]

       (1) In general.--Section 416(i)(1)(A) (defining key 
     employee) is amended--
       (A) by striking ``or any of the 4 preceding plan years'' in 
     the matter preceding clause (i),
       (B) by striking clause (i) and inserting the following:
       ``(i) an officer of the employer having an annual 
     compensation greater than $150,000,'',
       (C) by striking clause (ii) and redesignating clauses (iii) 
     and (iv) as clauses (ii) and (iii), respectively, and
       (D) by striking the second sentence in the matter following 
     clause (iii), as redesignated by subparagraph (C).
       (2) Conforming amendment.--Section 416(i)(1)(B)(iii) is 
     amended by striking ``and subparagraph (A)(ii)''.
       (b) Matching Contributions Taken Into Account for Minimum 
     Contribution Requirements.--Section 416(c)(2)(A) (relating to 
     defined contribution plans) is amended by adding at the end 
     the following: ``Employer matching contributions (as defined 
     in section 401(m)(4)(A)) shall be taken into account for 
     purposes of this subparagraph.''.
       (c) Distributions During Last Year Before Determination 
     Date Taken Into Account.--
       (1) In general.--Paragraph (3) of section 416(g) is amended 
     to read as follows:
       ``(3) Distributions during last year before determination 
     date taken into account.--
       ``(A) In general.--For purposes of determining--
       ``(i) the present value of the cumulative accrued benefit 
     for any employee, or
       ``(ii) the amount of the account of any employee,
     such present value or amount shall be increased by the 
     aggregate distributions made with respect to such employee 
     under the plan during the 1-year period ending on the 
     determination date. The preceding sentence shall also apply 
     to distributions under a terminated plan which if it had not 
     been terminated would have been required to be included in an 
     aggregation group.
       ``(B) 5-year period in case of in-service distribution.--In 
     the case of any distribution made for a reason other than 
     separation from service, death, or disability, subparagraph 
     (A) shall be applied by substituting `5-year period' for `1-
     year period'.''.
       (2) Benefits not taken into account.--Subparagraph (E) of 
     section 416(g)(4) is amended--
       (A) by striking ``last 5 years'' in the heading and 
     inserting ``last year before determination date'', and
       (B) by striking ``5-year period'' and inserting ``1-year 
     period''.
       (d) Definition of Top-Heavy Plans.--Paragraph (4) of 
     section 416(g) (relating to other special rules for top-heavy 
     plans) is amended by adding at the end the following new 
     subparagraph:
       ``(H) Cash or deferred arrangements using alternative 
     methods of meeting nondiscrimination requirements.--The term 
     `top-heavy plan' shall not include a plan which consists 
     solely of--
       ``(i) a cash or deferred arrangement which meets the 
     requirements of section 401(k)(12), and
       ``(ii) matching contributions with respect to which the 
     requirements of section 401(m)(11) are met.
     If, but for this subparagraph, a plan would be treated as a 
     top-heavy plan because it is a member of an aggregation group 
     which is a top-heavy group, contributions under the plan may 
     be taken into account in determining whether any other plan 
     in the group meets the requirements of subsection (c)(2).''.
       (e) Frozen Plan Exempt From Minimum Benefit Requirement.--
     Subparagraph (C) of section 416(c)(1) (relating to defined 
     benefit plans) is amended--
       (A) by striking ``clause (ii)'' in clause (i) and inserting 
     ``clause (ii) or (iii)'', and
       (B) by adding at the end the following:
       ``(iii) Exception for frozen plan.--For purposes of 
     determining an employee's years of service with the employer, 
     any service with the employer shall be disregarded to the 
     extent that such service occurs during a plan year when the 
     plan benefits (within the meaning of section 410(b)) no 
     employee or former employee.''.
       (f ) Elimination of Family Attribution.--Section 
     416(i)(1)(B) (defining 5-percent owner) is amended by adding 
     at the end the following new clause:
       ``(iv) Family attribution disregarded.--Solely for purposes 
     of applying this paragraph (and not for purposes of any 
     provision of this title which incorporates by reference the 
     definition of a key employee or 5-percent owner under this 
     paragraph), section 318 shall be applied without regard to 
     subsection (a)(1) thereof in determining whether any person 
     is a 5-percent owner.''.
       (g) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2001.

     SEC. 629. REPEAL OF COORDINATION REQUIREMENTS FOR DEFERRED 
                   COMPENSATION PLANS OF STATE AND LOCAL 
                   GOVERNMENTS AND TAX-EXEMPT ORGANIZATIONS.

       (a) In General.--Subsection (c) of section 457 (relating to 
     deferred compensation plans of State and local governments 
     and tax-exempt organizations), as amended by section 622, is 
     amended to read as follows:
       ``(c) Limitation.--The maximum amount of the compensation 
     of any one individual which may be deferred under subsection 
     (a) during any taxable year shall not exceed the amount in 
     effect under subsection (b)(2)(A) (as modified by any 
     adjustment provided under subsection (b)(3)).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to years beginning after December 31, 2001.

                Subtitle C--Enhancing Fairness for Women

     SEC. 631. CATCHUP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR 
                   OVER.

       (a) Elective Deferrals.--Section 414 (relating to 
     definitions and special rules) is amended by adding at the 
     end the following new subsection:
       ``(v) Catchup Contributions for Individuals Age 50 or 
     Over.--
       ``(1) In general.--An applicable employer plan shall not be 
     treated as failing to meet any requirement of this title 
     solely because the plan permits an eligible participant to 
     make additional elective deferrals in any plan year.
       ``(2) Limitation on amount of additional deferrals.--
       ``(A) In general.--A plan shall not permit additional 
     elective deferrals under paragraph (1) for any year in an 
     amount greater than the lesser of--
       ``(i) the applicable percentage of the applicable dollar 
     amount for such elective deferrals for such year, or
       ``(ii) the excess (if any) of--

       ``(I) the participant's compensation for the year, over
       ``(II) any other elective deferrals of the participant for 
     such year which are made without regard to this subsection.

       ``(B) Applicable percentage.--For purposes of this 
     paragraph, the applicable percentage shall be determined in 
     accordance with the following table:

``For taxable years beginning in:         The applicable percentage is:
  2001..........................................................10 ....

  2002..........................................................20 ....

  2003..........................................................30 ....

  2004..........................................................40 ....

  2005 and thereafter...........................................50.....

       ``(3) Treatment of contributions.--In the case of any 
     contribution to a plan under paragraph (1)--
       ``(A) such contribution shall not, with respect to the year 
     in which the contribution is made--
       ``(i) be subject to any otherwise applicable limitation 
     contained in section 402(g), 402(h), 403(b), 404(a), 404(h), 
     408, 415, or 457, or
       ``(ii) be taken into account in applying such limitations 
     to other contributions or benefits under such plan or any 
     other such plan, and
       ``(B) such plan shall not be treated as failing to meet the 
     requirements of section 401(a)(4), 401(a)(26), 401(k)(3), 
     401(k)(11), 401(k)(12), 401(m), 403(b)(12), 408(k), 408(p), 
     408B, 410(b), or 416 by reason of the making of (or the right 
     to make) such contribution.
       ``(4) Eligible participant.--For purposes of this 
     subsection, the term `eligible participant' means, with 
     respect to any plan year, a participant in a plan--
       ``(A) who has attained the age of 50 before the close of 
     the plan year, and
       ``(B) with respect to whom no other elective deferrals may 
     (without regard to this subsection) be made to the plan for 
     the plan year by reason of the application of any limitation 
     or other restriction described in paragraph (3) or contained 
     in the terms of the plan.
       ``(5) Other definitions and rules.--For purposes of this 
     subsection--
       ``(A) Applicable dollar amount.--The term `applicable 
     dollar amount' means, with respect to any year, the amount in 
     effect under section 402(g)(1)(B), 408(p)(2)(E)(i), or 
     457(e)(15)(A), whichever is applicable to an applicable 
     employer plan, for such year.
       ``(B) Applicable employer plan.--The term `applicable 
     employer plan' means--
       ``(i) an employees' trust described in section 401(a) which 
     is exempt from tax under section 501(a),
       ``(ii) a plan under which amounts are contributed by an 
     individual's employer for an annuity contract described in 
     section 403(b),
       ``(iii) an eligible deferred compensation plan under 
     section 457 of an eligible employer as defined in section 
     457(e)(1)(A), and
       ``(iv) an arrangement meeting the requirements of section 
     408 (k) or (p).
       ``(C) Elective deferral.--The term `elective deferral' has 
     the meaning given such term by subsection (u)(2)(C).
       ``(D) Exception for section 457 plans.--This subsection 
     shall not apply to an applicable employer plan described in 
     paragraph (5)(B)(iii) for any year to which section 457(b)(3) 
     applies.''.
       (b) Individual Retirement Plans.--Section 219(b), as 
     amended by section 611, is amended by adding at the end the 
     following new paragraph:
       ``(6) Catchup contributions.--
       ``(A) In general.--In the case of an individual who has 
     attained the age of 50 before the close of the taxable year, 
     the dollar amount in effect under paragraph (1)(A) for such 
     taxable year shall be equal to the applicable percentage of 
     such amount determined without regard to this paragraph.
       ``(B) Applicable percentage.--For purposes of this 
     paragraph, the applicable percentage shall be determined in 
     accordance with the following table:

``For taxable years beginning in:         The applicable percentage is:
  2001.........................................................110 ....

  2002.........................................................120 ....

[[Page S6746]]

  2003.........................................................130 ....

  2004.........................................................140 ....

  2005 and thereafter.......................................150.''.....

       (c) Effective Date.--The amendment made by this section 
     shall apply to contributions in taxable years beginning after 
     December 31, 2001.

     SEC. 632. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF EMPLOYEES 
                   TO DEFINED CONTRIBUTION PLANS.

       (a) Equitable Treatment.--
       (1) In general.--Subparagraph (B) of section 415(c)(1) 
     (relating to limitation for defined contribution plans) is 
     amended by striking ``25 percent'' and inserting ``100 
     percent''.
       (2) Application to section 403(b).--Section 403(b) is 
     amended--
       (A) by striking ``the exclusion allowance for such taxable 
     year'' in paragraph (1) and inserting ``the applicable limit 
     under section 415'',
       (B) by striking paragraph (2), and
       (C) by inserting ``or any amount received by a former 
     employee after the 5th taxable year following the taxable 
     year in which such employee was terminated'' before the 
     period at the end of the second sentence of paragraph (3).
       (3) Conforming amendments.--
       (A) Subsection (f) of section 72 is amended by striking 
     ``section 403(b)(2)(D)(iii))'' and inserting ``section 
     403(b)(2)(D)(iii), as in effect before the enactment of the 
     Taxpayer Refund Act of 1999)''.
       (B) Section 404(a)(10)(B) is amended by striking ``, the 
     exclusion allowance under section 403(b)(2),''.
       (C) Section 415(a)(2) is amended by striking ``, and the 
     amount of the contribution for such portion shall reduce the 
     exclusion allowance as provided in section 403(b)(2)''.
       (D) Section 415(c)(3) is amended by adding at the end the 
     following new subparagraph:
       ``(E) Annuity contracts.--In the case of an annuity 
     contract described in section 403(b), the term `participant's 
     compensation' means the participant's includible compensation 
     determined under section 403(b)(3).''.
       (E) Section 415(c) is amended by striking paragraph (4).
       (F) Section 415(c)(7) is amended to read as follows:
       ``(7) Certain contributions by church plans not treated as 
     exceeding limit.--
       ``(A) In general.--Notwithstanding any other provision of 
     this subsection, at the election of a participant who is an 
     employee of a church or a convention or association of 
     churches, including an organization described in section 
     414(e)(3)(B)(ii), contributions and other additions for an 
     annuity contract or retirement income account described in 
     section 403(b) with respect to such participant, when 
     expressed as an annual addition to such participant's 
     account, shall be treated as not exceeding the limitation of 
     paragraph (1) if such annual addition is not in excess of 
     $10,000.
       ``(B) $40,000 aggregate limitation.--The total amount of 
     additions with respect to any participant which may be taken 
     into account for purposes of this subparagraph for all years 
     may not exceed $40,000.
       ``(C) Annual addition.--For purposes of this paragraph, the 
     term `annual addition' has the meaning given such term by 
     paragraph (2).''.
       (G) Subparagraph (B) of section 402(g)(7) (as redesignated 
     by section 312(a)) is amended by inserting before the period 
     at the end the following: ``(as in effect before the 
     enactment of the Taxpayer Refund Act of 1999)''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to years beginning after December 31, 2001.
       (b) Special Rules for Sections 403(b) and 408.--
       (1) In general.--Subsection (k) of section 415 is amended 
     by adding at the end the following new paragraph:
       ``(4) Special rules for sections 403(b) and 408.--For 
     purposes of this section, any annuity contract described in 
     section 403(b) for the benefit of a participant shall be 
     treated as a defined contribution plan maintained by each 
     employer with respect to which the participant has the 
     control required under subsection (b) or (c) of section 414 
     (as modified by subsection (h)). For purposes of this 
     section, any contribution by an employer to a simplified 
     employee pension plan for an individual for a taxable year 
     shall be treated as an employer contribution to a defined 
     contribution plan for such individual for such year.''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall apply to limitation years beginning after December 31, 
     2000.
       (c) Deferred Compensation Plans of State and Local 
     Governments and Tax-Exempt Organizations.--
       (1) In general.--Subparagraph (B) of section 457(b)(2) 
     (relating to salary limitation on eligible deferred 
     compensation plans) is amended by striking ``33\1/3\ 
     percent'' and inserting ``100 percent''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to years beginning after December 31, 2001.

     SEC. 633. CLARIFICATION OF TAX TREATMENT OF DIVISION OF 
                   SECTION 457 PLAN BENEFITS UPON DIVORCE.

       (a) In General.--Section 414(p)(11) (relating to 
     application of rules to governmental and church plans) is 
     amended--
       (1) by inserting ``or an eligible deferred compensation 
     plan (within the meaning of section 457(b))'' after 
     ``subsection (e))'', and
       (2) in the heading, by striking ``governmental and church 
     plans'' and inserting ``certain other plans''.
       (b) Waiver of Certain Distribution Requirements.--Paragraph 
     (10) of section 414(p) is amended by striking ``and section 
     409(d)'' and inserting ``section 409(d), and section 
     457(d)''.
       (c) Tax Treatment of Payments From a Section 457 Plan.--
     Subsection (p) of section 414 is amended by redesignating 
     paragraph (12) as paragraph (13) and inserting after 
     paragraph (11) the following new paragraph:
       ``(12) Tax treatment of payments from a section 457 plan.--
     If a distribution or payment from an eligible deferred 
     compensation plan described in section 457(b) is made 
     pursuant to a qualified domestic relations order, rules 
     similar to the rules of section 402(e)(1)(A) shall apply to 
     such distribution or payment.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to transfers, distributions, and payments made 
     after December 31, 2001.

     SEC. 634. MODIFICATION OF SAFE HARBOR RELIEF FOR HARDSHIP 
                   WITHDRAWALS FROM CASH OR DEFERRED ARRANGEMENTS.

       (a) In General.--The Secretary of the Treasury shall revise 
     the regulations relating to hardship distributions under 
     section 401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 
     1986 to provide that the period an employee is prohibited 
     from making elective and employee contributions in order for 
     a distribution to be deemed necessary to satisfy financial 
     need shall be equal to 6 months.
       (b) Effective Date.--The revised regulations under 
     subsection (a) shall apply to years beginning after December 
     31, 2001.

     SEC. 635. FASTER VESTING OF CERTAIN EMPLOYER MATCHING 
                   CONTRIBUTIONS.

       (a) Amendments to 1986 Code.--Section 411(a) (relating to 
     minimum vesting standards) is amended--
       (1) in paragraph (2), by striking ``A plan'' and inserting 
     ``Except as provided in paragraph (12), a plan'', and
       (2) by adding at the end the following:
       ``(12) Faster vesting for matching contributions.--In the 
     case of matching contributions (as defined in section 
     401(m)(4)(A)), paragraph (2) shall be applied--
       ``(A) by substituting `3 years' for `5 years' in 
     subparagraph (A), and
       ``(B) by substituting the following table for the table 
     contained in subparagraph (B):

``Years of service:                   The nonforfeitable percentage is:
  2.............................................................20 ....

  3.............................................................40 ....

  4.............................................................60 ....

  5.............................................................80 ....

  6.........................................................100.''.....

       (b) Amendments to ERISA.--Section 203(a) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)) is 
     amended--
       (1) in paragraph (2), by striking ``A plan'' and inserting 
     ``Except as provided in paragraph (4), a plan'', and
       (2) by adding at the end the following:
       ``(4) Faster vesting for matching contributions.--In the 
     case of matching contributions (as defined in section 
     401(m)(4)(A) of the Internal Revenue Code of 1986), paragraph 
     (2) shall be applied--
       ``(A) by substituting `3 years' for `5 years' in 
     subparagraph (A), and
       ``(B) by substituting the following table for the table 
     contained in subparagraph (B):

``Years of service:                   The nonforfeitable percentage is:
  2.............................................................20 ....

  3.............................................................40 ....

  4.............................................................60 ....

  5.............................................................80 ....

  6.........................................................100.''.....

       (c) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to contributions 
     for plan years beginning after December 31, 2001.
       (2) Collective bargaining agreements.--In the case of a 
     plan maintained pursuant to 1 or more collective bargaining 
     agreements between employee representatives and 1 or more 
     employers ratified by the date of enactment of this Act, the 
     amendments made by this section shall not apply to 
     contributions on behalf of employees covered by any such 
     agreement for plan years beginning before the earlier of--
       (A) the later of--
       (i) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof on or after such date of enactment), 
     or
       (ii) January 1, 2001, or
       (B) January 1, 2005.
       (3) Service required.--With respect to any plan, the 
     amendments made by this section shall not apply to any 
     employee before the date that such employee has 1 hour of 
     service under such plan in any plan year to which the 
     amendments made by this section apply.

          Subtitle D--Increasing Portability for Participants

     SEC. 641. ROLLOVERS ALLOWED AMONG VARIOUS TYPES OF PLANS.

       (a) Rollovers From and to Section 457 Plans.--
       (1) Rollovers from section 457 plans.--
       (A) In general.--Section 457(e) (relating to other 
     definitions and special rules) is amended by adding at the 
     end the following:

[[Page S6747]]

       ``(16) Rollover amounts.--
       ``(A) General rule.--In the case of an eligible deferred 
     compensation plan established and maintained by an employer 
     described in subsection (e)(1)(A), if--
       ``(i) any portion of the balance to the credit of an 
     employee in such plan is paid to such employee in an eligible 
     rollover distribution (within the meaning of section 
     402(c)(4) without regard to subparagraph (C) thereof),
       ``(ii) the employee transfers any portion of the property 
     such employee receives in such distribution to an eligible 
     retirement plan described in section 402(c)(8)(B), and
       ``(iii) in the case of a distribution of property other 
     than money, the amount so transferred consists of the 
     property distributed,
     then such distribution (to the extent so transferred) shall 
     not be includible in gross income for the taxable year in 
     which paid.
       ``(B) Certain rules made applicable.--The rules of 
     paragraphs (2) through (7) (other than paragraph (4)(C)) and 
     (9) of section 402(c) and section 402(f) shall apply for 
     purposes of subparagraph (A).
       ``(C) Reporting.--Rollovers under this paragraph shall be 
     reported to the Secretary in the same manner as rollovers 
     from qualified retirement plans (as defined in section 
     4974(c)).''.
       (B) Deferral limit determined without regard to rollover 
     amounts.--Section 457(b)(2) (defining eligible deferred 
     compensation plan) is amended by inserting ``(other than 
     rollover amounts)'' after ``taxable year''.
       (C) Direct rollover.--Paragraph (1) of section 457(d) is 
     amended by striking ``and'' at the end of subparagraph (A), 
     by striking the period at the end of subparagraph (B) and 
     inserting ``, and'', and by inserting after subparagraph (B) 
     the following:
       ``(C) in the case of a plan maintained by an employer 
     described in subsection (e)(1)(A), the plan meets 
     requirements similar to the requirements of section 
     401(a)(31).
     Any amount transferred in a direct trustee-to-trustee 
     transfer in accordance with section 401(a)(31) shall not be 
     includible in gross income for the taxable year of 
     transfer.''.
       (D) Withholding.--
       (i) Paragraph (12) of section 3401(a) is amended by adding 
     at the end the following:
       ``(E) under or to an eligible deferred compensation plan 
     which, at the time of such payment, is a plan described in 
     section 457(b) maintained by an employer described in section 
     457(e)(1)(A); or''.
       (ii) Paragraph (3) of section 3405(c) is amended to read as 
     follows:
       ``(3) Eligible rollover distribution.--For purposes of this 
     subsection, the term `eligible rollover distribution' has the 
     meaning given such term by section 402(f)(2)(A).''.
       (iii) Liability for withholding.--Subparagraph (B) of 
     section 3405(d)(2) is amended by striking ``or'' at the end 
     of clause (ii), by striking the period at the end of clause 
     (iii) and inserting ``, or'', and by adding at the end the 
     following:
       ``(iv) section 457(b).''.
       (2) Rollovers to section 457 plans.--
       (A) In general.--Section 402(c)(8)(B) (defining eligible 
     retirement plan) is amended by striking ``and'' at the end of 
     clause (iii), by striking the period at the end of clause 
     (iv) and inserting ``, and'', and by inserting after clause 
     (iv) the following new clause:
       ``(v) an eligible deferred compensation plan described in 
     section 457(b) of an employer described in section 
     457(e)(1)(A).''.
       (B) Separate accounting.--Section 402(c) is amended by 
     adding at the end the following new paragraph:
       ``(11) Separate accounting.--Unless a plan described in 
     clause (v) of paragraph (8)(B) agrees to separately account 
     for amounts rolled into such plan from eligible retirement 
     plans not described in such clause, the plan described in 
     such clause may not accept transfers or rollovers from such 
     retirement plans.''.
       (C) 10 percent additional tax.--Subsection (t) of section 
     72 (relating to 10-percent additional tax on early 
     distributions from qualified retirement plans) is amended by 
     adding at the end the following new paragraph:
       ``(9) Special rule for rollovers to section 457 plans.--For 
     purposes of this subsection, a distribution from an eligible 
     deferred compensation plan (as defined in section 457(b)) of 
     an employer described in section 457(e)(1)(A) shall be 
     treated as a distribution from a qualified retirement plan 
     described in 4974(c)(1) to the extent that such distribution 
     is attributable to an amount transferred to an eligible 
     deferred compensation plan from a qualified retirement plan 
     (as defined in section 4974(c)).''.
       (b) Allowance of Rollovers From and to 403(b) Plans.--
       (1) Rollovers from section 403(b) plans.--Section 
     403(b)(8)(A)(ii) (relating to rollover amounts) is amended by 
     striking ``such distribution'' and all that follows and 
     inserting ``such distribution to an eligible retirement plan 
     described in section 402(c)(8)(B), and''.
       (2) Rollovers to section 403(b) plans.--Section 
     402(c)(8)(B) (defining eligible retirement plan), as amended 
     by subsection (a), is amended by striking ``and'' at the end 
     of clause (iv), by striking the period at the end of clause 
     (v) and inserting 
     ``, and'', and by inserting after clause (v) the following 
     new clause:
       ``(vi) an annuity contract described in section 403(b).''.
       (c) Expanded Explanation to Recipients of Rollover 
     Distributions.--Paragraph (1) of section 402(f) (relating to 
     written explanation to recipients of distributions eligible 
     for rollover treatment) is amended by striking ``and'' at the 
     end of subparagraph (C), by striking the period at the end of 
     subparagraph (D) and inserting ``, and'', and by adding at 
     the end the following new subparagraph:
       ``(E) of the provisions under which distributions from the 
     eligible retirement plan receiving the distribution may be 
     subject to restrictions and tax consequences which are 
     different from those applicable to distributions from the 
     plan making such distribution.''.
       (d) Spousal Rollovers.--Section 402(c)(9) (relating to 
     rollover where spouse receives distribution after death of 
     employee) is amended by striking ``; except that'' and all 
     that follows up to the end period.
       (e) Conforming Amendments.--
       (1) Section 72(o)(4) is amended by striking ``and 
     408(d)(3)'' and inserting ``403(b)(8), 408(d)(3), and 
     457(e)(16)''.
       (2) Section 219(d)(2) is amended by striking ``or 
     408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
       (3) Section 401(a)(31)(B) is amended by striking ``and 
     403(a)(4)'' and inserting ``, 403(a)(4), 403(b)(8), and 
     457(e)(16)''.
       (4) Subparagraph (A) of section 402(f)(2) is amended by 
     striking ``or paragraph (4) of section 403(a)'' and inserting 
     ``, paragraph (4) of section 403(a), subparagraph (A) of 
     section 403(b)(8), or subparagraph (A) of section 
     457(e)(16)''.
       (5) Paragraph (1) of section 402(f) is amended by striking 
     ``from an eligible retirement plan''.
       (6) Subparagraphs (A) and (B) of section 402(f)(1) are 
     amended by striking ``another eligible retirement plan'' and 
     inserting ``an eligible retirement plan''.
       (7) Subparagraph (B) of section 403(b)(8) is amended to 
     read as follows:
       ``(B) Certain rules made applicable.--The rules of 
     paragraphs (2) through (7) and (9) of section 402(c) and 
     section 402(f) shall apply for purposes of subparagraph (A), 
     except that section 402(f) shall be applied to the payor in 
     lieu of the plan administrator.''.
       (8) Section 408(a)(1) is amended by striking ``or 
     403(b)(8)'' and inserting ``, 403(b)(8), or 457(e)(16)''.
       (9) Subparagraphs (A) and (B) of section 415(b)(2) are each 
     amended by striking ``and 408(d)(3)'' and inserting 
     ``403(b)(8), 408(d)(3), and 457(e)(16)''.
       (10) Section 415(c)(2) is amended by striking ``and 
     408(d)(3)'' and inserting ``408(d)(3), and 457(e)(16)''.
       (11) Section 4973(b)(1)(A) is amended by striking ``or 
     408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
       (f) Effective Date; Special Rule.--
       (1) Effective date.--The amendments made by this section 
     shall apply to distributions after December 31, 2001.
       (2) Special rule.--Notwithstanding any other provision of 
     law, subsections (h)(3) and (h)(5) of section 1122 of the Tax 
     Reform Act of 1986 shall not apply to any distribution from 
     an eligible retirement plan (as defined in clause (iii) or 
     (iv) of section 402(c)(8)(B) of the Internal Revenue Code of 
     1986) on behalf of an individual if there was a rollover to 
     such plan on behalf of such individual which is permitted 
     solely by reason of any amendment made by this section.

     SEC. 642. ROLLOVERS OF IRAS INTO WORKPLACE RETIREMENT PLANS.

       (a) In General.--Subparagraph (A) of section 408(d)(3) 
     (relating to rollover amounts) is amended by adding ``or'' at 
     the end of clause (i), by striking clauses (ii) and (iii), 
     and by adding at the end the following:
       ``(ii) the entire amount received (including money and any 
     other property) is paid into an eligible retirement plan for 
     the benefit of such individual not later than the 60th day 
     after the date on which the payment or distribution is 
     received, except that the maximum amount which may be paid 
     into such plan may not exceed the portion of the amount 
     received which is includible in gross income (determined 
     without regard to this paragraph).
     For purposes of clause (ii), the term `eligible retirement 
     plan' means an eligible retirement plan described in clause 
     (iii), (iv), (v), or (vi) of section 402(c)(8)(B).''.
       (b) Conforming Amendments.--
       (1) Paragraph (1) of section 403(b) is amended by striking 
     ``section 408(d)(3)(A)(iii)'' and inserting ``section 
     408(d)(3)(A)(ii)''.
       (2) Clause (i) of section 408(d)(3)(D) is amended by 
     striking ``(i), (ii), or (iii)'' and inserting ``(i) or 
     (ii)''.
       (3) Subparagraph (G) of section 408(d)(3) is amended to 
     read as follows:
       ``(G) Simple retirement accounts.--In the case of any 
     payment or distribution out of a simple retirement account 
     (as defined in subsection (p)) to which section 72(t)(6) 
     applies, this paragraph shall not apply unless such payment 
     or distribution is paid into another simple retirement 
     account.''.
       (c) Effective Date; Special Rule.--
       (1) Effective date.--The amendments made by this section 
     shall apply to distributions after December 31, 2001.
       (2) Special rule.--Notwithstanding any other provision of 
     law, subsections (h)(3) and (h)(5) of section 1122 of the Tax 
     Reform Act of 1986 shall not apply to any distribution from 
     an eligible retirement plan (as defined in clause (iii) or 
     (iv) of section 402(c)(8)(B) of the Internal Revenue Code of 
     1986) on behalf of an individual if there was a rollover to 
     such plan on behalf of such individual which is permitted 
     solely by reason of the amendments made by this section.

[[Page S6748]]

     SEC. 643. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.

       (a) Rollovers From Exempt Trusts.--Paragraph (2) of section 
     402(c) (relating to maximum amount which may be rolled over) 
     is amended by adding at the end the following: ``The 
     preceding sentence shall not apply to such distribution to 
     the extent--
       ``(A) such portion is transferred in a direct trustee-to-
     trustee transfer to a qualified trust which is part of a plan 
     which is a defined contribution plan and which agrees to 
     separately account for amounts so transferred, including 
     separately accounting for the portion of such distribution 
     which is includible in gross income and the portion of such 
     distribution which is not so includible, or
       ``(B) such portion is transferred to an eligible retirement 
     plan described in clause (i) or (ii) of paragraph (8)(B).''.
       (b) Optional Direct Transfer of Eligible Rollover 
     Distributions.--Subparagraph (B) of section 401(a)(31) 
     (relating to limitation) is amended by adding at the end the 
     following: ``The preceding sentence shall not apply to such 
     distribution if the plan to which such distribution is 
     transferred--
       ``(i) agrees to separately account for amounts so 
     transferred, including separately accounting for the portion 
     of such distribution which is includible in gross income and 
     the portion of such distribution which is not so includible, 
     or
       ``(ii) is an eligible retirement plan described in clause 
     (i) or (ii) of section 402(c)(8)(B).''.
       (c) Rules for Applying Section 72 to IRAs.--Paragraph (3) 
     of section 408(d) (relating to special rules for applying 
     section 72) is amended by inserting at the end the following:
       ``(H) Application of section 72.--
       ``(i) In general.--If--

       ``(I) a distribution is made from an individual retirement 
     plan, and
       ``(II) a rollover contribution is made to an eligible 
     retirement plan described in section 402(c)(8)(B)(iii), (iv), 
     (v), or (vi) with respect to all or part of such 
     distribution,

     then, notwithstanding paragraph (2), the rules of clause (ii) 
     shall apply for purposes of applying section 72.
       ``(ii) Applicable rules.--In the case of a distribution 
     described in clause (i)--

       ``(I) section 72 shall be applied separately to such 
     distribution,
       ``(II) notwithstanding the pro rata allocation of income 
     on, and investment in the contract, to distributions under 
     section 72, the portion of such distribution rolled over to 
     an eligible retirement plan described in clause (i) shall be 
     treated as from income on the contract (to the extent of the 
     aggregate income on the contract from all individual 
     retirement plans of the distributee), and
       ``(III) appropriate adjustments shall be made in applying 
     section 72 to other distributions in such taxable year and 
     subsequent taxable years.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to distributions made after December 31, 2001.

     SEC. 644. HARDSHIP EXCEPTION TO 60-DAY RULE.

       (a) Exempt Trusts.--Paragraph (3) of section 402(c) 
     (relating to transfer must be made within 60 days of receipt) 
     is amended to read as follows:
       ``(3) Transfer must be made within 60 days of receipt.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     paragraph (1) shall not apply to any transfer of a 
     distribution made after the 60th day following the day on 
     which the distributee received the property distributed.
       ``(B) Hardship exception.--The Secretary may waive the 60-
     day requirement under subparagraph (A) where the failure to 
     waive such requirement would be against equity or good 
     conscience, including casualty, disaster, or other events 
     beyond the reasonable control of the individual subject to 
     such requirement.''.
       (b) IRAs.--Paragraph (3) of section 408(d) (relating to 
     rollover contributions), as amended by section 333, is 
     amended by adding after subparagraph (H) the following new 
     subparagraph:
       ``(I) Waiver of 60-day requirement.--The Secretary may 
     waive the 60-day requirement under subparagraphs (A) and (D) 
     where the failure to waive such requirement would be against 
     equity or good conscience, including casualty, disaster, or 
     other events beyond the reasonable control of the individual 
     subject to such requirement.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2001.

     SEC. 645. TREATMENT OF FORMS OF DISTRIBUTION.

       (a) Plan Transfers.--
       (1) Amendment to internal revenue code of 1986.--Paragraph 
     (6) of section 411(d) (relating to accrued benefit not to be 
     decreased by amendment) is amended by adding at the end the 
     following:
       ``(D) Plan transfers.--
       ``(i) A defined contribution plan (in this subparagraph 
     referred to as the `transferee plan') shall not be treated as 
     failing to meet the requirements of this subsection merely 
     because the transferee plan does not provide some or all of 
     the forms of distribution previously available under another 
     defined contribution plan (in this subparagraph referred to 
     as the `transferor plan') to the extent that--

       ``(I) the forms of distribution previously available under 
     the transferor plan applied to the account of a participant 
     or beneficiary under the transferor plan that was transferred 
     from the transferor plan to the transferee plan pursuant to a 
     direct transfer rather than pursuant to a distribution from 
     the transferor plan,
       ``(II) the terms of both the transferor plan and the 
     transferee plan authorize the transfer described in subclause 
     (I),
       ``(III) the transfer described in subclause (I) was made 
     pursuant to a voluntary election by the participant or 
     beneficiary whose account was transferred to the transferee 
     plan,
       ``(IV) the election described in subclause (III) was made 
     after the participant or beneficiary received a notice 
     describing the consequences of making the election,
       ``(V) if the transferor plan provides for an annuity as the 
     normal form of distribution under the plan in accordance with 
     section 417, the transfer is made with the consent of the 
     participant's spouse (if any), and such consent meets 
     requirements similar to the requirements imposed by section 
     417(a)(2), and
       ``(VI) the transferee plan allows the participant or 
     beneficiary described in subclause (III) to receive any 
     distribution to which the participant or beneficiary is 
     entitled under the transferee plan in the form of a single 
     sum distribution.

       ``(ii) Clause (i) shall apply to plan mergers and other 
     transactions having the effect of a direct transfer, 
     including consolidations of benefits attributable to 
     different employers within a multiple employer plan.
       ``(E) Elimination of form of distribution.--Except to the 
     extent provided in regulations, a defined contribution plan 
     shall not be treated as failing to meet the requirements of 
     this section merely because of the elimination of a form of 
     distribution previously available thereunder. This 
     subparagraph shall not apply to the elimination of a form of 
     distribution with respect to any participant unless--
       ``(i) a single sum payment is available to such participant 
     at the same time or times as the form of distribution being 
     eliminated, and
       ``(ii) such single sum payment is based on the same or 
     greater portion of the participant's account as the form of 
     distribution being eliminated.''.
       (2) Amendment to erisa.--Section 204(g) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is 
     amended by adding at the end the following:
       ``(4)(A) A defined contribution plan (in this subparagraph 
     referred to as the `transferee plan') shall not be treated as 
     failing to meet the requirements of this subsection merely 
     because the transferee plan does not provide some or all of 
     the forms of distribution previously available under another 
     defined contribution plan (in this paragraph referred to as 
     the `transferor plan') to the extent that--
       ``(i) the forms of distribution previously available under 
     the transferor plan applied to the account of a participant 
     or beneficiary under the transferor plan that was transferred 
     from the transferor plan to the transferee plan pursuant to a 
     direct transfer rather than pursuant to a distribution from 
     the transferor plan;
       ``(ii) the terms of both the transferor plan and the 
     transferee plan authorize the transfer described in clause 
     (i);
       ``(iii) the transfer described in clause (i) was made 
     pursuant to a voluntary election by the participant or 
     beneficiary whose account was transferred to the transferee 
     plan;
       ``(iv) the election described in clause (iii) was made 
     after the participant or beneficiary received a notice 
     describing the consequences of making the election;
       ``(v) if the transferor plan provides for an annuity as the 
     normal form of distribution under the plan in accordance with 
     section 417, the transfer is made with the consent of the 
     participant's spouse (if any), and such consent meets 
     requirements similar to the requirements imposed by section 
     417(a)(2); and
       ``(vi) the transferee plan allows the participant or 
     beneficiary described in subclause (III) to receive any 
     distribution to which the participant or beneficiary is 
     entitled under the transferee plan in the form of a single 
     sum distribution.
       ``(B) Subparagraph (A) shall apply to plan mergers and 
     other transactions having the effect of a direct transfer, 
     including consolidations of benefits attributable to 
     different employers within a multiple employer plan.
       ``(5) Elimination of form of distribution.--Except to the 
     extent provided in regulations, a defined contribution plan 
     shall not be treated as failing to meet the requirements of 
     this section merely because of the elimination of a form of 
     distribution previously available thereunder. This paragraph 
     shall not apply to the elimination of a form of distribution 
     with respect to any participant unless--
       ``(A) a single sum payment is available to such participant 
     at the same time or times as the form of distribution being 
     eliminated; and
       ``(B) such single sum payment is based on the same or 
     greater portion of the participant's account as the form of 
     distribution being eliminated.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to years beginning after December 31, 2001.
       (b) Regulations.--
       (1) Amendment to internal revenue code of 1986.--The last 
     sentence of paragraph (6)(B) of section 411(d) (relating to 
     accrued benefit not to be decreased by amendment) is amended 
     to read as follows: ``The Secretary

[[Page S6749]]

     may by regulations provide that this subparagraph shall not 
     apply to any plan amendment that does not adversely affect 
     the rights of participants in a material manner.''.
       (2) Amendment to erisa.--The last sentence of section 
     204(g)(2) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1054(g)(2)) is amended to read as follows: 
     ``The Secretary of the Treasury may by regulations provide 
     that this paragraph shall not apply to any plan amendment 
     that does not adversely affect the rights of participants in 
     a material manner.''.
       (3) Secretary directed.--Not later than December 31, 2001, 
     the Secretary of the Treasury is directed to issue final 
     regulations under section 411(d)(6) of the Internal Revenue 
     Code of 1986 and section 204(g)(2) of the Employee Retirement 
     Income Security Act of 1974. Such regulations shall apply to 
     plan years beginning after December 31, 2001, or such earlier 
     date as is specified by the Secretary of the Treasury.

     SEC. 646. RATIONALIZATION OF RESTRICTIONS ON DISTRIBUTIONS.

       (a) Modification of Same Desk Exception.--
       (1) Section 401(k).--
       (A) Section 401(k)(2)(B)(i)(I) (relating to qualified cash 
     or deferred arrangements) is amended by striking ``separation 
     from service'' and inserting ``severance from employment''.
       (B) Subparagraph (A) of section 401(k)(10) (relating to 
     distributions upon termination of plan or disposition of 
     assets or subsidiary) is amended to read as follows:
       ``(A) In general.--An event described in this subparagraph 
     is the termination of the plan without establishment or 
     maintenance of another defined contribution plan (other than 
     an employee stock ownership plan as defined in section 
     4975(e)(7)).''.
       (C) Section 401(k)(10) is amended--
       (i) in subparagraph (B)--

       (I) by striking ``An event'' in clause (i) and inserting 
     ``A termination'', and
       (II) by striking ``the event'' in clause (i) and inserting 
     ``the termination'',

       (ii) by striking subparagraph (C), and
       (iii) by striking ``or disposition of assets or 
     subsidiary'' in the heading.
       (2) Section 403(b).--
       (A) Paragraphs (7)(A)(ii) and (11)(A) of section 403(b) are 
     each amended by striking ``separates from service'' and 
     inserting ``has a severance from employment''.
       (B) The heading for paragraph (11) of section 403(b) is 
     amended by striking ``separation from service'' and inserting 
     ``severance from employment''.
       (3) Section 457.--Clause (ii) of section 457(d)(1)(A) is 
     amended by striking ``is separated from service'' and 
     inserting ``has a severance from employment''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2001.

     SEC. 647. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED 
                   BENEFIT PLANS.

       (a) 403(b) Plans.--Subsection (b) of section 403 is amended 
     by adding at the end the following new paragraph:
       ``(13) Trustee-to-trustee transfers to purchase permissive 
     service credit.--No amount shall be includible in gross 
     income by reason of a direct trustee-to-trustee transfer to a 
     defined benefit governmental plan (as defined in section 
     414(d)) if such transfer is--
       ``(A) for the purchase of permissive service credit (as 
     defined in section 415(n)(3)(A)) under such plan, or
       ``(B) a repayment to which section 415 does not apply by 
     reason of subsection (k)(3) thereof.''.
       (b) 457 Plans.--
       (1) Subsection (e) of section 457 is amended by adding 
     after paragraph (17) the following new paragraph:
       ``(18) Trustee-to-trustee transfers to purchase permissive 
     service credit.--No amount shall be includible in gross 
     income by reason of a direct trustee-to-trustee transfer to a 
     defined benefit governmental plan (as defined in section 
     414(d)) if such transfer is--
       ``(A) for the purchase of permissive service credit (as 
     defined in section 415(n)(3)(A)) under such plan, or
       ``(B) a repayment to which section 415 does not apply by 
     reason of subsection (k)(3) thereof.''.
       (2) Section 457(b)(2) is amended by striking ``(other than 
     rollover amounts)'' and inserting ``(other than rollover 
     amounts and amounts received in a transfer referred to in 
     subsection (e)(16))''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to trustee-to-trustee transfers after December 
     31, 2001.

     SEC. 648. EMPLOYERS MAY DISREGARD ROLLOVERS FOR PURPOSES OF 
                   CASH-OUT AMOUNTS.

       (a) Qualified Plans.--
       (1) Amendment to internal revenue code of 1986.--Section 
     411(a)(11) (relating to restrictions on certain mandatory 
     distributions) is amended by adding at the end the following:
       ``(D) Special rule for rollover contributions.--A plan 
     shall not fail to meet the requirements of this paragraph if, 
     under the terms of the plan, the present value of the 
     nonforfeitable accrued benefit is determined without regard 
     to that portion of such benefit which is attributable to 
     rollover contributions (and earnings allocable thereto). For 
     purposes of this subparagraph, the term `rollover 
     contributions' means any rollover contribution under sections 
     402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 
     457(e)(16).''.
       (2) Amendment to erisa.--Section 203(e) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1053(c)) is 
     amended by adding at the end the following:
       ``(4) A plan shall not fail to meet the requirements of 
     this subsection if, under the terms of the plan, the present 
     value of the nonforfeitable accrued benefit is determined 
     without regard to that portion of such benefit which is 
     attributable to rollover contributions (and earnings 
     allocable thereto). For purposes of this subparagraph, the 
     term `rollover contributions' means any rollover contribution 
     under sections 402(c), 403(a)(4), 403(b)(8), 
     408(d)(3)(A)(ii), and 457(e)(16) of the Internal Revenue Code 
     of 1986.''.
       (b) Eligible Deferred Compensation Plans.--Clause (i) of 
     section 457(e)(9)(A) is amended by striking ``such amount'' 
     and inserting ``the portion of such amount which is not 
     attributable to rollover contributions (as defined in section 
     411(a)(11)(D))''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2001.

     SEC. 649. INCLUSION REQUIREMENTS FOR SECTION 457 PLANS.

       (a) Year of Inclusion.--Subsection (a) of section 457 
     (relating to year of inclusion in gross income) is amended to 
     read as follows:
       ``(a) Year of Inclusion in Gross Income.--
       ``(1) In general.--Any amount of compensation deferred 
     under an eligible deferred compensation plan, and any income 
     attributable to the amounts so deferred, shall be includible 
     in gross income only for the taxable year in which such 
     compensation or other income--
       ``(A) is paid to the participant or other beneficiary, in 
     the case of a plan of an eligible employer described in 
     subsection (e)(1)(A), and
       ``(B) is paid or otherwise made available to the 
     participant or other beneficiary, in the case of a plan of an 
     eligible employer described in subsection (e)(1)(B).
       ``(2) Special rule for rollover amounts.--To the extent 
     provided in section 72(t)(9), section 72(t) shall apply to 
     any amount includible in gross income under this 
     subsection.''.
       (b) Conforming Amendment.--So much of paragraph (9) of 
     section 457(e) as precedes subparagraph (A) is amended to 
     read as follows:
       ``(9) Benefits of tax exempt organization plans not treated 
     as made available by reason of certain elections, etc.--In 
     the case of an eligible deferred compensation plan of an 
     employer described in paragraph (1)(B)--''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2001.

       Subtitle E--Strengthening Pension Security and Enforcement

     SEC. 651. REPEAL OF 150 PERCENT OF CURRENT LIABILITY FUNDING 
                   LIMIT.

       (a) Amendment to Internal Revenue Code of 1986.--Section 
     412(c)(7) (relating to full-funding limitation) is amended--
       (1) by striking ``the applicable percentage'' in 
     subparagraph (A)(i)(I) and inserting ``in the case of plan 
     years beginning before January 1, 2004, the applicable 
     percentage'', and
       (2) by amending subparagraph (F) to read as follows:
       ``(F) Applicable percentage.--For purposes of subparagraph 
     (A)(i)(I), the applicable percentage shall be determined in 
     accordance with the following table:

``In the case of any plan year beginning The applicable percentage is--
      2001.........................................................160 
      2002.........................................................165 
      2003......................................................170.''.
       (b) Amendment to ERISA.--Section 302(c)(7) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)(7)) 
     is amended--
       (1) by striking ``the applicable percentage'' in 
     subparagraph (A)(i)(I) and inserting ``in the case of plan 
     years beginning before January 1, 2004, the applicable 
     percentage'', and
       (2) by amending subparagraph (F) to read as follows:
       ``(F) Applicable percentage.--For purposes of subparagraph 
     (A)(i)(I), the applicable percentage shall be determined in 
     accordance with the following table:

``In the case of any plan year beginning The applicable percentage is--
      2001.........................................................160 
      2002.........................................................165 
      2003......................................................170.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2001.

     SEC. 652. EXTENSION OF MISSING PARTICIPANTS PROGRAM TO 
                   MULTIEMPLOYER PLANS.

       (a) In General.--Section 4050 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1350) is amended by 
     redesignating subsection (c) as subsection (d) and by 
     inserting after subsection (b) the following:
       ``(c) Multiemployer Plans.--The corporation shall prescribe 
     rules similar to the rules in subsection (a) for 
     multiemployer plans covered by this title that terminate 
     under section 4041A.''.
       (b) Conforming Amendment.--Section 206(f) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1056(f)) is 
     amended by striking ``the plan shall provide that,''.

[[Page S6750]]

       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions made after final regulations 
     implementing subsection (c) of section 4050 of the Employee 
     Retirement Income Security Act of 1974 (as added by 
     subsection (a)) are prescribed.

     SEC. 653. EXCISE TAX RELIEF FOR SOUND PENSION FUNDING.

       (a) In General.--Subsection (c) of section 4972 (relating 
     to nondeductible contributions) is amended by adding at the 
     end the following new paragraph:
       ``(7) Defined benefit plan exception.--In determining the 
     amount of nondeductible contributions for any taxable year, 
     an employer may elect for such year not to take into account 
     any contributions to a defined benefit plan except to the 
     extent that such contributions exceed the full-funding 
     limitation (as defined in section 412(c)(7), determined 
     without regard to subparagraph (A)(i)(I) thereof). For 
     purposes of this paragraph, the deductible limits under 
     section 404(a)(7) shall first be applied to amounts 
     contributed to defined contribution plans and then to amounts 
     described in this paragraph. If an employer makes an election 
     under this paragraph for a taxable year, paragraph (6) shall 
     not apply to such employer for such taxable year.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2001.

     SEC. 654. EXCISE TAX ON FAILURE TO PROVIDE NOTICE BY DEFINED 
                   BENEFIT PLANS SIGNIFICANTLY REDUCING FUTURE 
                   BENEFIT ACCRUALS.

       (a) Amendment to 1986 Code.--Chapter 43 of subtitle D 
     (relating to qualified pension, etc., plans) is amended by 
     adding at the end the following new section:

     ``SEC. 4980F. FAILURE OF APPLICABLE PLANS REDUCING BENEFIT 
                   ACCRUALS TO SATISFY NOTICE REQUIREMENTS.

       ``(a) Imposition of Tax.--There is hereby imposed a tax on 
     the failure of any applicable pension plan to meet the 
     requirements of subsection (e) with respect to any applicable 
     individual.
       ``(b) Amount of Tax.--
       ``(1) In general.--The amount of the tax imposed by 
     subsection (a) on any failure with respect to any applicable 
     individual shall be $100 for each day in the noncompliance 
     period with respect to such failure.
       ``(2) Noncompliance period.--For purposes of this section, 
     the term `noncompliance period' means, with respect to any 
     failure, the period beginning on the date the failure first 
     occurs and ending on the date the failure is corrected.
       ``(c) Limitations on Amount of Tax.--
       ``(1) Overall limitation for unintentional failures.--In 
     the case of failures that are due to reasonable cause and not 
     to willful neglect, the tax imposed by subsection (a) for 
     failures during the taxable year of the employer (or, in the 
     case of a multiemployer plan, the taxable year of the trust 
     forming part of the plan) shall not exceed $500,000. For 
     purposes of the preceding sentence, all multiemployer plans 
     of which the same trust forms a part shall be treated as one 
     plan. For purposes of this paragraph, if not all persons who 
     are treated as a single employer for purposes of this section 
     have the same taxable year, the taxable years taken into 
     account shall be determined under principles similar to the 
     principles of section 1561.
       ``(2) Waiver by secretary.--In the case of a failure which 
     is due to reasonable cause and not to willful neglect, the 
     Secretary may waive part or all of the tax imposed by 
     subsection (a) to the extent that the payment of such tax 
     would be excessive relative to the failure involved.
       ``(d) Liability for Tax.--The following shall be liable for 
     the tax imposed by subsection (a):
       ``(1) In the case of a plan other than a multiemployer 
     plan, the employer.
       ``(2) In the case of a multiemployer plan, the plan.
       ``(e) Notice Requirements for Plans Significantly Reducing 
     Benefit Accruals.--
       ``(1) In general.--If an applicable pension plan is amended 
     to provide for a significant reduction in the rate of future 
     benefit accrual, the plan administrator shall provide written 
     notice to each applicable individual (and to each employee 
     organization representing applicable individuals).
       ``(2) Notice.--The notice required by paragraph (1) shall 
     be written in a manner calculated to be understood by the 
     average plan participant and shall provide sufficient 
     information (as determined in accordance with regulations 
     prescribed by the Secretary) to allow applicable individuals 
     to understand the effect of the plan amendment.
       ``(3) Timing of notice.--Except as provided in regulations, 
     the notice required by paragraph (1) shall be provided within 
     a reasonable time before the effective date of the plan 
     amendment.
       ``(4) Designees.--Any notice under paragraph (1) may be 
     provided to a person designated, in writing, by the person to 
     which it would otherwise be provided.
       ``(5) Notice before adoption of amendment.--A plan shall 
     not be treated as failing to meet the requirements of 
     paragraph (1) merely because notice is provided before the 
     adoption of the plan amendment if no material modification of 
     the amendment occurs before the amendment is adopted.
       ``(f ) Applicable Individual; Applicable Pension Plan.--For 
     purposes of this section--
       ``(1) Applicable individual.--The term `applicable 
     individual' means, with respect to any plan amendment--
       ``(A) any participant in the plan, and
       ``(B) any beneficiary who is an alternate payee (within the 
     meaning of section 414(p)(8)) under an applicable qualified 
     domestic relations order (within the meaning of section 
     414(p)(1)(A)),
     who may reasonably be expected to be affected by such plan 
     amendment.
       ``(2) Applicable pension plan.--The term `applicable 
     pension plan' means--
       ``(A) any defined benefit plan, or
       ``(B) an individual account plan which is subject to the 
     funding standards of section 412,
     which had 100 or more participants who had accrued a benefit, 
     or with respect to whom contributions were made, under the 
     plan (whether or not vested) as of the last day of the plan 
     year preceding the plan year in which the plan amendment 
     becomes effective. Such term shall not include a governmental 
     plan (within the meaning of section 414(d)) or a church plan 
     (within the meaning of section 414(e)) with respect to which 
     the election provided by section 410(d) has not been made.''.
       (b) Amendment to ERISA.--Section 204(h) of the Employee 
     Retirement Income Security Act or 1974 (29 U.S.C. 1054(h)) is 
     amended by adding at the end the following new paragraph:
       ``(3)(A) A plan to which paragraph (1) applies shall not be 
     treated as meeting the requirements of such paragraph unless, 
     in addition to any notice required to be provided to an 
     individual or organization under such paragraph, the plan 
     administrator provides the notice described in subparagraph 
     (B).
       ``(B) The notice required by subparagraph (A) shall be 
     written in a manner calculated to be understood by the 
     average plan participant and shall provide sufficient 
     information (as determined in accordance with regulations 
     prescribed by the Secretary of the Treasury) to allow 
     individuals to understand the effect of the plan amendment.
       ``(C) Except as provided in regulations prescribed by the 
     Secretary of the Treasury, the notice required by 
     subparagraph (A) shall be provided within a reasonable time 
     before the effective date of the plan amendment.
       ``(D) A plan shall not be treated as failing to meet the 
     requirements of subparagraph (A) merely because notice is 
     provided before the adoption of the plan amendment if no 
     material modification of the amendment occurs before the 
     amendment is adopted.''.
       (c) Clerical Amendment.--The table of sections for chapter 
     43 of subtitle D is amended by adding at the end the 
     following new item:

 ``Sec. 4980F. Failure of applicable plans reducing benefit accruals to 
              satisfy notice requirements.''.

       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to plan amendments taking effect on or after the date 
     of the enactment of this Act.
       (2) Transition.--Until such time as the Secretary of the 
     Treasury issues regulations under sections 4980F(e)(2) and 
     (3) of the Internal Revenue Code of 1986 and section 
     204(h)(3) of the Employee Retirement Income Security Act of 
     1974 (as added by the amendments made by this section), a 
     plan shall be treated as meeting the requirements of such 
     sections if it makes a good faith effort to comply with such 
     requirements.
       (3) Special rule.--The period for providing any notice 
     required by the amendments made by this section shall not end 
     before the date which is 3 months after the date of the 
     enactment of this Act.

     SEC. 655. PROTECTION OF INVESTMENT OF EMPLOYEE CONTRIBUTIONS 
                   TO 401(K) PLANS.

       (a) In General.--Section 1524(b) of the Taxpayer Relief Act 
     of 1997 is amended to read as follows:
       ``(b) Effective Date.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to elective 
     deferrals for plan years beginning after December 31, 2001.
       ``(2) Nonapplication to previously acquired property.--The 
     amendments made by this section shall not apply to any 
     elective deferral used to acquire an interest in the income 
     or gain from employer securities or employer real property 
     acquired--
       ``(A) before January 1, 2002, or
       ``(B) after such date pursuant to a written contract which 
     was binding on such date and at all times thereafter on such 
     plan.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply as if included in the provision of the Taxpayer 
     Relief Act of 1997 to which it relates.

     SEC. 656. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.

       (a) Compensation Limit.--Paragraph (11) of section 415(b) 
     (relating to limitation for defined benefit plans) is amended 
     to read as follows:
       ``(11) Special limitation rule for governmental and 
     multiemployer plans.--In the case of a governmental plan (as 
     defined in section 414(d)) or a multiemployer plan (as 
     defined in section 414(f)), subparagraph (B) of paragraph (1) 
     shall not apply.''.
       (b) Combining and Aggregation of Plans.--
       (1) Combining of plans.--Subsection (f) of section 415 
     (relating to combining of plans) is amended by adding at the 
     end the following:
       ``(3) Exception for multiemployer plans.--Notwithstanding 
     paragraph (1) and subsection (g), a multiemployer plan (as 
     defined in section 414(f)) shall not be combined

[[Page S6751]]

     or aggregated with any other plan maintained by an employer 
     for purposes of applying the limitations established in this 
     section. The preceding sentence shall not apply for purposes 
     of applying subsection (b)(1)(A) to a plan which is not a 
     multiemployer plan.''.
       (2) Conforming amendment for aggregation of plans.--
     Subsection (g) of section 415 (relating to aggregation of 
     plans) is amended by striking ``The Secretary'' and inserting 
     ``Except as provided in subsection (f)(3), the Secretary''.
       (c) Application of Special Early Retirement Rules.--Section 
     415(b)(2)(F) (relating to plans maintained by governments and 
     tax-exempt organizations) is amended--
       (1) by inserting ``a multiemployer plan (within the meaning 
     of section 414(f)),'' after ``section 414(d)),'', and
       (2) by striking the heading and inserting:
       ``(F) Special early retirement rules for certain plans.--
     ''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2001.

     SEC. 657. MAXIMUM CONTRIBUTION DEDUCTION RULES MODIFIED AND 
                   APPLIED TO ALL DEFINED BENEFIT PLANS.

       (a) In General.--Subparagraph (D) of section 404(a)(1) 
     (relating to special rule in case of certain plans) is 
     amended to read as follows:
       ``(D) Special rule in case of certain plans.--
       ``(i) In general.--In the case of any defined benefit plan, 
     except as provided in regulations, the maximum amount 
     deductible under the limitations of this paragraph shall not 
     be less than the unfunded termination liability (determined 
     as if the proposed termination date referred to in section 
     4041(b)(2)(A)(i)(II) of the Employee Retirement Income 
     Security Act of 1974 were the last day of the plan year).
       ``(ii) Plans with less than 100 participants.--For purposes 
     of this subparagraph, in the case of a plan which has less 
     than 100 participants for the plan year, termination 
     liability shall not include the liability attributable to 
     benefit increases for highly compensated employees (as 
     defined in section 414(q)) resulting from a plan amendment 
     which is made or becomes effective, whichever is later, 
     within the last 2 years before the termination date.
       ``(iii) Rule for determining number of participants.--For 
     purposes of determining whether a plan has more than 100 
     participants, all defined benefit plans maintained by the 
     same employer (or any member of such employer's controlled 
     group (within the meaning of section 412(l)(8)(C))) shall be 
     treated as 1 plan, but only employees of such member or 
     employer shall be taken into account.
       ``(iv) Plans established and maintain by professional 
     service employers.--Clause (i) shall not apply to a plan 
     described in section 4021(b)(13) of the Employee Retirement 
     Income Security Act of 1974.''.
       (b) Conforming Amendment.--Paragraph (6) of section 4972(c) 
     is amended to read as follows:
       ``(6) Exceptions.--In determining the amount of 
     nondeductible contributions for any taxable year, there shall 
     not be taken into account so much of the contributions to 1 
     or more defined contribution plans which are not deductible 
     when contributed solely because of section 404(a)(7) as does 
     not exceed the greater of--
       ``(A) the amount of contributions not in excess of 6 
     percent of compensation (within the meaning of section 
     404(a)) paid or accrued (during the taxable year for which 
     the contributions were made) to beneficiaries under the 
     plans, or
       ``(B) the sum of--
       ``(i) the amount of contributions described in section 
     401(m)(4)(A), plus
       ``(ii) the amount of contributions described in section 
     402(g)(3)(A).
     For purposes of this paragraph, the deductible limits under 
     section 404(a)(7) shall first be applied to amounts 
     contributed to a defined benefit plan and then to amounts 
     described in subparagraph (B).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2001.

     SEC. 658. INCREASE IN SECTION 415 EARLY RETIREMENT LIMIT FOR 
                   GOVERNMENTAL AND OTHER PLANS.

       (a) In General.--Subclause (II) of section 415(b)(2)(F)(i), 
     as amended by section 346(c), is amended--
       (1) by striking ``$75,000'' and inserting ``80 percent of 
     the dollar amount in effect under paragraph (1)(A)'', and
       (2) by striking ``the $75,000 limitation'' and inserting 
     ``80 percent of such dollar amount''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2001.

              Subtitle F--Encouraging Retirement Education

     SEC. 661. PERIODIC PENSION BENEFITS STATEMENTS.

       (a) In General.--Section 105(a) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1025 (a)) is amended 
     to read as follows:
       ``(a)(1) Except as provided in paragraph (2)--
       ``(A) the administrator of an individual account plan shall 
     furnish a pension benefit statement--
       ``(i) to a plan participant at least once annually, and
       ``(ii) to a plan beneficiary upon written request, and
       ``(B) the administrator of a defined benefit plan shall 
     furnish a pension benefit statement--
       ``(i) at least once every 3 years to each participant with 
     a nonforfeitable accrued benefit who is employed by the 
     employer maintaining the plan at the time the statement is 
     furnished to participants, and
       ``(ii) to a participant or beneficiary of the plan upon 
     written request.
       ``(2) Notwithstanding paragraph (1), the administrator of a 
     plan to which more than 1 unaffiliated employer is required 
     to contribute shall only be required to furnish a pension 
     benefit statement under paragraph (1) upon the written 
     request of a participant or beneficiary of the plan.
       ``(3) A pension benefit statement under paragraph (1)--
       ``(A) shall indicate, on the basis of the latest available 
     information--
       ``(i) the total benefits accrued, and
       ``(ii) the nonforfeitable pension benefits, if any, which 
     have accrued, or the earliest date on which benefits will 
     become nonforfeitable,
       ``(B) shall be written in a manner calculated to be 
     understood by the average plan participant, and
       ``(C) may be provided in written, electronic, telephonic, 
     or other appropriate form.
       ``(4) In the case of a defined benefit plan, the 
     requirements of paragraph (1)(B)(i) shall be treated as met 
     with respect to a participant if the administrator provides 
     the participant at least once each year with notice of the 
     availability of the pension benefit statement and the ways in 
     which the participant may obtain such statement. Such notice 
     shall be provided in written, electronic, telephonic, or 
     other appropriate form, and may be included with other 
     communications to the participant if done in a manner 
     reasonably designed to attract the attention of the 
     participant.''.
       (b) Conforming Amendments.--
       (1) Section 105 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1025) is amended by striking 
     subsection (d).
       (2) Section 105(b) of such Act (29 U.S.C. 1025(b)) is 
     amended to read as follows:
       ``(b) In no case shall a participant or beneficiary of a 
     plan be entitled to more than one statement described in 
     subsection (a)(1)(A) or (a)(1)(B)(ii), whichever is 
     applicable, in any 12-month period.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2001.

     SEC. 662. CLARIFICATION OF TREATMENT OF EMPLOYER-PROVIDED 
                   RETIREMENT ADVICE.

       (a) In General.--Subsection (a) of section 132 (relating to 
     exclusion from gross income) is amended by striking ``or'' at 
     the end of paragraph (5), by striking the period at the end 
     of paragraph (6) and inserting ``, or'', and by adding at the 
     end the following new paragraph:
       ``(7) qualified retirement planning services.''.
       (b) Qualified Retirement Planning Services Defined.--
     Section 132 is amended by redesignating subsection (m) as 
     subsection (n) and by inserting after subsection (l) the 
     following:
       ``(m) Qualified Retirement Planning Services.--
       ``(1) In general.--For purposes of this section, the term 
     `qualified retirement planning services' means any retirement 
     planning service provided to an employee and his spouse by an 
     employer maintaining a qualified employer plan.
       ``(2) Nondiscrimination rule.--Subsection (a)(7) shall 
     apply in the case of highly compensated employees only if 
     such services are available on substantially the same terms 
     to each member of the group of employees normally provided 
     education and information regarding the employer's qualified 
     employer plan.
       ``(3) Qualified employer plan.--For purposes of this 
     subsection, the term `qualified employer plan' means a plan, 
     contract, pension, or account described in section 
     219(g)(5).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2001.

                Subtitle G--Reducing Regulatory Burdens

     SEC. 671. FLEXIBILITY IN NONDISCRIMINATION AND COVERAGE 
                   RULES.

       (a) Nondiscrimination.--
       (1) In general.--The Secretary of the Treasury shall, by 
     regulation, provide that a plan shall be deemed to satisfy 
     the requirements of section 401(a)(4) of the Internal Revenue 
     Code of 1986 if such plan satisfies the facts and 
     circumstances test under section 401(a)(4) of such Code, as 
     in effect before January 1, 1994, but only if--
       (A) the plan satisfies conditions prescribed by the 
     Secretary to appropriately limit the availability of such 
     test, and
       (B) the plan is submitted to the Secretary for a 
     determination of whether it satisfies such test.
     Subparagraph (B) shall only apply to the extent provided by 
     the Secretary.
       (2) Effective dates.--
       (A) Regulations.--The regulation required by subsection (a) 
     shall apply to years beginning after December 31, 2001.
       (B) Conditions of availability.--Any condition of 
     availability prescribed by the Secretary under paragraph 
     (1)(A) shall not apply before the first year beginning not 
     less than

[[Page S6752]]

     120 days after the date on which such condition is 
     prescribed.
       (b) Coverage Test.--
       (1) In general.--Section 410(b)(1) (relating to minimum 
     coverage requirements) is amended by adding at the end the 
     following:
       ``(D) In the case that the plan fails to meet the 
     requirements of subparagraphs (A), (B) and (C), the plan--
       ``(i) satisfies subparagraph (B), as in effect immediately 
     before the enactment of the Tax Reform Act of 1986,
       ``(ii) is submitted to the Secretary for a determination of 
     whether it satisfies the requirement described in clause (i), 
     and
       ``(iii) satisfies conditions prescribed by the Secretary by 
     regulation that appropriately limit the availability of this 
     subparagraph.
     Clause (ii) shall apply only to the extent provided by the 
     Secretary.''.
       (2) Effective dates.--
       (A) In general.--The amendment made by subsection (a) shall 
     apply to years beginning after December 31, 2001.
       (B) Conditions of availability.--Any condition of 
     availability prescribed by the Secretary under regulations 
     prescribed by the Secretary under section 410(b)(1)(D) of the 
     Internal Revenue Code of 1986 shall not apply before the 
     first year beginning not less than 120 days after the date on 
     which such condition is prescribed.

     SEC. 672. MODIFICATION OF TIMING OF PLAN VALUATIONS.

       (a) In General.--Section 412(c)(9) (relating to annual 
     valuation) is amended--
       (1) by striking ``For purposes'' and inserting the 
     following:
       ``(A) In general.--For purposes'', and
       (2) by adding at the end the following:
       ``(B) Election to use prior year valuation.--
       ``(i) In general.--Except as provided in clause (ii), if, 
     for any plan year--

       ``(I) an election is in effect under this subparagraph with 
     respect to a plan, and
       ``(II) the assets of the plan are not less than 125 percent 
     of the plan's current liability (as defined in paragraph 
     (7)(B)), determined as of the valuation date for the 
     preceding plan year,

     then this section shall be applied using the information 
     available as of such valuation date.
       ``(ii) Exceptions.--

       ``(I) Actual valuation every 3 years.--Clause (i) shall not 
     apply for more than 2 consecutive plan years and valuation 
     shall be under subparagraph (A) with respect to any plan year 
     to which clause (i) does not apply by reason of this 
     subclause.
       ``(II) Regulations.--Clause (i) shall not apply to the 
     extent that more frequent valuations are required under the 
     regulations under subparagraph (A).

       ``(iii) Adjustments.--Information under clause (i) shall, 
     in accordance with regulations, be actuarially adjusted to 
     reflect significant differences in participants.
       ``(iv) Election.--An election under this subparagraph, once 
     made, shall be irrevocable without the consent of the 
     Secretary.''.
       (b) Amendments to ERISA.--Paragraph (9) of section 302(c) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1053(c)) is amended--
       (1) by inserting ``(A)'' after ``(9)'', and
       (2) by adding at the end the following:
       ``(B)(i) Except as provided in clause (ii), if, for any 
     plan year--
       ``(I) an election is in effect under this subparagraph with 
     respect to a plan, and
       ``(II) the assets of the plan are not less than 125 percent 
     of the plan's current liability (as defined in paragraph 
     (7)(B)), determined as of the valuation date for the 
     preceding plan year,
     then this section shall be applied using the information 
     available as of such valuation date.
       ``(ii)(I) Clause (i) shall not apply for more than 2 
     consecutive plan years and valuation shall be under 
     subparagraph (A) with respect to any plan year to which 
     clause (i) does not apply by reason of this subclause.
       ``(II) Clause (i) shall not apply to the extent that more 
     frequent valuations are required under the regulations under 
     subparagraph (A).
       ``(iii) Information under clause (i) shall, in accordance 
     with regulations, be actuarially adjusted to reflect 
     significant differences in participants.
       ``(iv) An election under this subparagraph, once made, 
     shall be irrevocable without the consent of the Secretary of 
     the Treasury.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2001.

     SEC. 673. SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.

       (a) Modification of Phase-In of Guarantee.--Section 
     4022(b)(5) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1322(b)(5)) is amended to read as follows:
       ``(5)(A) For purposes of this paragraph, the term `majority 
     owner' means an individual who, at any time during the 60-
     month period ending on the date the determination is being 
     made--
       ``(i) owns the entire interest in an unincorporated trade 
     or business,
       ``(ii) in the case of a partnership, is a partner who owns, 
     directly or indirectly, 50 percent or more of either the 
     capital interest or the profits interest in such partnership, 
     or
       ``(iii) in the case of a corporation, owns, directly or 
     indirectly, 50 percent or more in value of either the voting 
     stock of that corporation or all the stock of that 
     corporation.
     For purposes of clause (iii), the constructive ownership 
     rules of section 1563(e) of the Internal Revenue Code of 1986 
     shall apply (determined without regard to section 
     1563(e)(3)(C)).
       ``(B) In the case of a participant who is a majority owner, 
     the amount of benefits guaranteed under this section shall 
     equal the product of--
       ``(i) a fraction (not to exceed 1) the numerator of which 
     is the number of years from the later of the effective date 
     or the adoption date of the plan to the termination date, and 
     the denominator of which is 10, and
       ``(ii) the amount of benefits that would be guaranteed 
     under this section if the participant were not a majority 
     owner.''.
       (b) Modification of Allocation of Assets.--
       (1) Section 4044(a)(4)(B) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by 
     striking ``section 4022(b)(5)'' and inserting ``section 
     4022(b)(5)(B)''.
       (2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is 
     amended--
       (A) by striking ``(5)'' in paragraph (2) and inserting 
     ``(4), (5),'', and
       (B) by redesignating paragraphs (3) through (6) as 
     paragraphs (4) through (7), respectively, and by inserting 
     after paragraph (2) the following:
       ``(3) If assets available for allocation under paragraph 
     (4) of subsection (a) are insufficient to satisfy in full the 
     benefits of all individuals who are described in that 
     paragraph, the assets shall be allocated first to benefits 
     described in subparagraph (A) of that paragraph. Any 
     remaining assets shall then be allocated to benefits 
     described in subparagraph (B) of that paragraph. If assets 
     allocated to such subparagraph (B) are insufficient to 
     satisfy in full the benefits described in that subparagraph, 
     the assets shall be allocated pro rata among individuals on 
     the basis of the present value (as of the termination date) 
     of their respective benefits described in that 
     subparagraph.''.
       (c) Conforming Amendments.--
       (1) Section 4021 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1321) is amended--
       (A) in subsection (b)(9), by striking ``as defined in 
     section 4022(b)(6)'', and
       (B) by adding at the end the following:
       ``(d) For purposes of subsection (b)(9), the term 
     `substantial owner' means an individual who, at any time 
     during the 60-month period ending on the date the 
     determination is being made--
       ``(1) owns the entire interest in an unincorporated trade 
     or business,
       ``(2) in the case of a partnership, is a partner who owns, 
     directly or indirectly, more than 10 percent of either the 
     capital interest or the profits interest in such partnership, 
     or
       ``(3) in the case of a corporation, owns, directly or 
     indirectly, more than 10 percent in value of either the 
     voting stock of that corporation or all the stock of that 
     corporation.
     For purposes of paragraph (3), the constructive ownership 
     rules of section 1563(e) of the Internal Revenue Code of 1986 
     shall apply (determined without regard to section 
     1563(e)(3)(C)).''.
       (2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7)) 
     is amended by striking ``section 4022(b)(6)'' and inserting 
     ``section 4021(d)''.
       (d) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to plan 
     terminations--
       (A) under section 4041(c) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1341(c)) with respect to 
     which notices of intent to terminate are provided under 
     section 4041(a)(2) of such Act (29 U.S.C. 1341(a)(2)) after 
     December 31, 2001, and
       (B) under section 4042 of such Act (29 U.S.C. 1342) with 
     respect to which proceedings are instituted by the 
     corporation after such date.
       (2) Conforming amendments.--The amendments made by 
     subsection (c) shall take effect on the date of enactment of 
     this Act.

     SEC. 674. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT LOSS OF 
                   DIVIDEND DEDUCTION.

       (a) In General.--Section 404(k)(2)(A) (defining applicable 
     dividends) is amended by striking ``or'' at the end of clause 
     (ii), by redesignating clause (iii) as clause (iv), and by 
     inserting after clause (ii) the following new clause:
       ``(iii) is, at the election of such participants or their 
     beneficiaries--

       ``(I) payable as provided in clause (i) or (ii), or
       ``(II) paid to the plan and reinvested in qualifying 
     employer securities, or''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 675. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

       (a) Expansion of Period.--
       (1) In general.--
       (A) Amendment of internal revenue code of 1986.--
     Subparagraph (A) of section 417(a)(6) is amended by striking 
     ``90-day'' and inserting ``1-year''.
       (B) Amendment to erisa.--Subparagraph (A) of section 
     205(c)(7) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1055(c)(7)) is amended by striking ``90-day'' 
     and inserting ``1-year''.
       (2) Modification of regulations.--The Secretary of the 
     Treasury shall modify the regulations under sections 402(f), 
     411(a)(11), and 417 of the Internal Revenue Code of 1986 to 
     substitute ``1-year'' for ``90 days'' each

[[Page S6753]]

     place it appears in Treasury Regulations sections 1.402(f)-1, 
     1.411(a)-11(c), and 1.417(e)-1(b).
       (3) Effective date.--The amendments made by paragraph (1) 
     and the modifications required by paragraph (2) shall apply 
     to years beginning after December 31, 2001.
       (b) Consent Regulation Inapplicable to Certain 
     Distributions.--
       (1) In general.--The Secretary of the Treasury shall modify 
     the regulations under section 411(a)(11) of the Internal 
     Revenue Code of 1986 to provide that the description of a 
     participant's right, if any, to defer receipt of a 
     distribution shall also describe the consequences of failing 
     to defer such receipt.
       (2) Effective date.--The modifications required by 
     paragraph (1) shall apply to years beginning after December 
     31, 2001.

     SEC. 676. REPEAL OF TRANSITION RULE RELATING TO CERTAIN 
                   HIGHLY COMPENSATED EMPLOYEES.

       (a) In General.--Paragraph (4) of section 1114(c) of the 
     Tax Reform Act of 1986 is hereby repealed.
       (b) Effective Date.--The repeal made by subsection (a) 
     shall apply to plan years beginning after December 31, 1999.

     SEC. 677. EMPLOYEES OF TAX-EXEMPT ENTITIES.

       (a) In General.--The Secretary of the Treasury shall modify 
     Treasury Regulations section 1.410(b)-6(g) to provide that 
     employees of an organization described in section 
     403(b)(1)(A)(i) of the Internal Revenue Code of 1986 who are 
     eligible to make contributions under section 403(b) of such 
     Code pursuant to a salary reduction agreement may be treated 
     as excludable with respect to a plan under section 401 (k) or 
     (m) of such Code that is provided under the same general 
     arrangement as a plan under such section 401(k), if--
       (1) no employee of an organization described in section 
     403(b)(1)(A)(i) of such Code is eligible to participate in 
     such section 401(k) plan or section 401(m) plan, and
       (2) 95 percent of the employees who are not employees of an 
     organization described in section 403(b)(1)(A)(i) of such 
     Code are eligible to participate in such plan under such 
     section 401 (k) or (m).
       (b) Effective Date.--The modification required by 
     subsection (a) shall apply as of the same date set forth in 
     section 1426(b) of the Small Business Job Protection Act of 
     1996.

     SEC. 678. EXTENSION TO INTERNATIONAL ORGANIZATIONS OF 
                   MORATORIUM ON APPLICATION OF CERTAIN 
                   NONDISCRIMINATION RULES APPLICABLE TO STATE AND 
                   LOCAL PLANS.

       (a) In General.--Subparagraph (G) of section 401(a)(5), 
     subparagraph (H) of section 401(a)(26), subparagraph (G) of 
     section 401(k)(3), and paragraph (2) of section 1505(d) of 
     the Taxpayer Relief Act of 1997 are each amended by inserting 
     ``or by an international organization which is described in 
     section 414(d)'' after ``or instrumentality thereof)''.
       (b) Conforming Amendments.--
       (1) The headings for subparagraph (G) of section 401(a)(5) 
     and subparagraph (H) of section 401(a)(26) are each amended 
     by inserting ``and international organization'' after 
     ``governmental''.
       (2) Subparagraph (G) of section 401(k)(3) is amended by 
     inserting ``State and local governmental and international 
     organization plans.--'' after ``(G)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2001.

     SEC. 679. ANNUAL REPORT DISSEMINATION.

       (a) In General.--Section 104(b)(3) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1024(b)(3)) 
     is amended by striking ``shall furnish'' and inserting 
     ``shall make available for examination (and, upon request, 
     shall furnish)''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to reports for years beginning after December 31, 
     2001.

     SEC. 681. REPORTING SIMPLIFICATION.

       (a) Simplified Annual Filing Requirement for Owners and 
     Their Spouses.--
       (1) In general.--The Secretary of the Treasury shall modify 
     the requirements for filing annual returns with respect to 
     one-participant retirement plans to ensure that such plans 
     with assets of $500,000 or less as of the close of the plan 
     year need not file a return for that year.
       (2) One-participant retirement plan defined.--For purposes 
     of this subsection, the term ``one-participant retirement 
     plan'' means a retirement plan that--
       (A) on the first day of the plan year--
       (i) covered only the employer (and the employer's spouse) 
     and the employer owned the entire business (whether or not 
     incorporated), or
       (ii) covered only one or more partners (and their spouses) 
     in a business partnership (including partners in an S or C 
     corporation),
       (B) meets the minimum coverage requirements of section 
     410(b) of the Internal Revenue Code of 1986 without being 
     combined with any other plan of the business that covers the 
     employees of the business,
       (C) does not provide benefits to anyone except the employer 
     (and the employer's spouse) or the partners (and their 
     spouses),
       (D) does not cover a business that is a member of an 
     affiliated service group, a controlled group of corporations, 
     or a group of businesses under common control, and
       (E) does not cover a business that leases employees.
       (3) Other definitions.--Terms used in paragraph (2) which 
     are also used in section 414 of the Internal Revenue Code of 
     1986 shall have the respective meanings given such terms by 
     such section.
       (b) Simplified Annual Filing Requirement for Plans With 
     Fewer Than 25 Employees.--In the case of a retirement plan 
     which covers less than 25 employees on the 1st day of the 
     plan year and meets the requirements described in 
     subparagraphs (B), (D), and (E) of subsection (a)(2), the 
     Secretary of the Treasury shall provide for the filing of a 
     simplified annual return that is substantially similar to the 
     annual return required to be filed by a one-participant 
     retirement plan.
       (c) Effective Date.--The provisions of this section shall 
     take effect on January 1, 2001.

     SEC. 682. REPEAL OF THE MULTIPLE USE TEST.

       (a) In General.--Paragraph (9) of section 401(m) is amended 
     to read as follows:
       ``(9) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this subsection and subsection (k), including regulations 
     permitting appropriate aggregation of plans and 
     contributions.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 2001.

                      Subtitle H--Plan Amendments

     SEC. 691. PROVISIONS RELATING TO PLAN AMENDMENTS.

       (a) In General.--If this section applies to any plan or 
     contract amendment--
       (1) such plan or contract shall be treated as being 
     operated in accordance with the terms of the plan during the 
     period described in subsection (b)(2)(A), and
       (2) such plan shall not fail to meet the requirements of 
     section 411(d)(6) of the Internal Revenue Code of 1986 by 
     reason of such amendment.
       (b) Amendments to Which Section Applies.--
       (1) In general.--This section shall apply to any amendment 
     to any plan or annuity contract which is made--
       (A) pursuant to any amendment made by this title, or 
     pursuant to any regulation issued under this title, and
       (B) on or before the last day of the first plan year 
     beginning on or after January 1, 2003.
     In the case of a government plan (as defined in section 
     414(d) of the Internal Revenue Code of 1986), this paragraph 
     shall be applied by substituting ``2005'' for ``2003''.
       (2) Conditions.--This section shall not apply to any 
     amendment unless--
       (A) during the period--
       (i) beginning on the date the legislative or regulatory 
     amendment described in paragraph (1)(A) takes effect (or in 
     the case of a plan or contract amendment not required by such 
     legislative or regulatory amendment, the effective date 
     specified by the plan), and
       (ii) ending on the date described in paragraph (1)(B) (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
       (B) such plan or contract amendment applies retroactively 
     for such period.
                                 ______
                                 

                        LOTT AMENDMENT NO. 3842

  Mr. GRAMM (for Mr. Lott) proposed an amendment to the bill, H.R. 8, 
supra; as follows:

       At the end of the bill, add the following:

                   TITLE VI--MISCELLANEOUS PROVISIONS

     SEC. 601. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT 
                   ACCOUNTS.

       (a) Maximum Annual Contributions.--
       (1) In general.--Section 530(b)(1)(A)(iii) (defining 
     education individual retirement account) is amended by 
     striking ``$500'' and inserting ``the contribution limit for 
     such taxable year''.
       (2) Contribution limit.--Section 530(b) (relating to 
     definitions and special rules) is amended by adding at the 
     end the following new paragraph:
       ``(4) Contribution limit.--The term `contribution limit' 
     means $500 ($2,000 in the case of any taxable year beginning 
     after December 31, 1999, and ending before January 1, 
     2004).''
       (3) Conforming amendment.--Section 4973(e)(1)(A) is amended 
     by striking ``$500'' and inserting ``the contribution limit 
     (as defined in section 530(b)(4)) for such taxable year''.
       (b) Tax-Free Expenditures for Elementary and Secondary 
     School Expenses.--
       (1) In general.--Section 530(b)(2) (defining qualified 
     higher education expenses) is amended to read as follows:
       ``(2) Qualified education expenses.--
       ``(A) In general.--The term `qualified education expenses' 
     means--
       ``(i) qualified higher education expenses (as defined in 
     section 529(e)(3)), and
       ``(ii) qualified elementary and secondary education 
     expenses (as defined in paragraph (5)).
     Such expenses shall be reduced as provided in section 
     25A(g)(2).
       ``(B) Qualified state tuition programs.--Such term shall 
     include any contribution to a qualified State tuition program 
     (as defined in section 529(b)) on behalf of the designated 
     beneficiary (as defined in section 529(e)(1)); but there 
     shall be no increase in the investment in the contract for 
     purposes of applying section 72 by reason of any portion of 
     such contribution which is not includible in gross income by 
     reason of subsection (d)(2).''
       (2) Qualified elementary and secondary education 
     expenses.--Section 530(b) (relating to definitions and 
     special rules), as

[[Page S6754]]

     amended by subsection (a)(2), is amended by adding at the end 
     the following new paragraph:
       ``(5) Qualified elementary and secondary education 
     expenses.--
       ``(A) In general.--The term `qualified elementary and 
     secondary education expenses' means--
       ``(i) expenses for tuition, fees, academic tutoring, 
     special needs services, books, supplies, computer equipment 
     (including related software and services), and other 
     equipment which are incurred in connection with the 
     enrollment or attendance of the designated beneficiary of the 
     trust as an elementary or secondary school student at a 
     public, private, or religious school, and
       ``(ii) expenses for room and board, uniforms, 
     transportation, and supplementary items and services 
     (including extended day programs) which are required or 
     provided by a public, private, or religious school in 
     connection with such enrollment or attendance.
       ``(B) Special rule for homeschooling.--Such term shall 
     include expenses described in subparagraph (A)(i) in 
     connection with education provided by homeschooling if the 
     requirements of any applicable State or local law are met 
     with respect to such education.
       ``(C) School.--The term `school' means any school which 
     provides elementary education or secondary education 
     (kindergarten through grade 12), as determined under State 
     law.''
       (3) Special rules for applying exclusion to elementary and 
     secondary expenses.--Section 530(d)(2) (relating to 
     distributions for qualified higher education expenses) is 
     amended by adding at the end the following new subparagraph:
       ``(E) Special rules for elementary and secondary 
     expenses.--
       ``(i) In general.--The aggregate amount of qualified 
     elementary and secondary education expenses taken into 
     account for purposes of this paragraph with respect to any 
     education individual retirement account for all taxable years 
     shall not exceed the sum of the aggregate contributions to 
     such account for taxable years beginning after December 31, 
     1999, and before January 1, 2004, and earnings on such 
     contributions.
       ``(ii) Special operating rules.--For purposes of clause 
     (i)--

       ``(I) the trustee of an education individual retirement 
     account shall keep separate accounts with respect to 
     contributions and earnings described in clause (i), and
       ``(II) if there are distributions in excess of qualified 
     elementary and secondary education expenses for any taxable 
     year, such excess distributions shall be allocated first to 
     contributions and earnings not described in clause (i).''

       (4) Conforming amendments.--Section 530 is amended--
       (A) by striking ``higher'' each place it appears in 
     subsections (b)(1) and (d)(2), and
       (B) by striking ``higher'' in the heading for subsection 
     (d)(2).
       (c) Waiver of Age Limitations for Children With Special 
     Needs.--Section 530(b)(1) (defining education individual 
     retirement account) is amended by adding at the end the 
     following flush sentence:
     ``The age limitations in the preceding sentence and 
     paragraphs (5) and (6) of subsection (d) shall not apply to 
     any designated beneficiary with special needs (as determined 
     under regulations prescribed by the Secretary).''
       (d) Entities Permitted To Contribute to Accounts.--Section 
     530(c)(1) (relating to reduction in permitted contributions 
     based on adjusted gross income) is amended by striking ``The 
     maximum amount which a contributor'' and inserting ``In the 
     case of a contributor who is an individual, the maximum 
     amount the contributor''.
       (e) Time When Contributions Deemed Made.--
       (1) In general.--Section 530(b) (relating to definitions 
     and special rules), as amended by subsection (b)(2), is 
     amended by adding at the end the following new paragraph:
       ``(6) Time when contributions deemed made.--An individual 
     shall be deemed to have made a contribution to an education 
     individual retirement account on the last day of the 
     preceding taxable year if the contribution is made on account 
     of such taxable year and is made not later than the time 
     prescribed by law for filing the return for such taxable year 
     (not including extensions thereof).''
       (2) Extension of time to return excess contributions.--
     Subparagraph (C) of section 530(d)(4) (relating to additional 
     tax for distributions not used for educational expenses) is 
     amended--
       (A) by striking clause (i) and inserting the following new 
     clause:
       ``(i) such distribution is made before the 1st day of the 
     6th month of the taxable year following the taxable year, 
     and'', and
       (B) by striking ``due date of return'' in the heading and 
     inserting ``june''.
       (f) Coordination With Hope and Lifetime Learning Credits 
     and Qualified Tuition Programs.--
       (1) In general.--Section 530(d)(2)(C) is amended to read as 
     follows:
       ``(C) Coordination with hope and lifetime learning credits 
     and qualified tuition programs.--
       ``(i) Credit coordination.--

       ``(I) In general.--Except as provided in subclause (II), 
     subparagraph (A) shall not apply for any taxable year to any 
     qualified higher education expenses with respect to any 
     individual if a credit is allowed under section 25A with 
     respect to such expenses for such taxable year.
       ``(II) Special coordination rule.--In the case of any 
     taxable year beginning after December 31, 1999, and before 
     January 1, 2004, subclause (I) shall not apply, but the total 
     amount of qualified higher education expenses otherwise taken 
     into account under subparagraph (A) with respect to an 
     individual for such taxable year shall be reduced (after the 
     application of the reduction provided in section 25A(g)(2)) 
     by the amount of such expenses which were taken into account 
     in determining the credit allowed to the taxpayer or any 
     other person under section 25A with respect to such expenses.

       ``(ii) Coordination with qualified tuition programs.--If 
     the aggregate distributions to which subparagraph (A) and 
     section 529(c)(3)(B) apply exceed the total amount of 
     qualified higher education expenses otherwise taken into 
     account under subparagraph (A) (after the application of 
     clause (i)) with respect to an individual for any taxable 
     year, the taxpayer shall allocate such expenses among such 
     distributions for purposes of determining the amount of the 
     exclusion under subparagraph (A) and section 529(c)(3)(B).''
       (2) Conforming amendments.--
       (A) Subsection (e) of section 25A is amended to read as 
     follows:
       ``(e) Election Not To Have Section Apply.--A taxpayer may 
     elect not to have this section apply with respect to the 
     qualified tuition and related expenses of an individual for 
     any taxable year.''
       (B) Section 135(d)(2)(A) is amended by striking 
     ``allowable'' and inserting ``allowed''.
       (C) Section 530(b)(2)(A) is amended by striking ``, reduced 
     as provided in section 25A(g)(2)''.
       (D) Section 530(d)(2)(D) is amended--
       (i) by striking ``or credit'', and
       (ii) by striking ``credit or'' in the heading.
       (E) Section 4973(e)(1) is amended by adding ``and'' at the 
     end of subparagraph (A), by striking subparagraph (B), and by 
     redesignating subparagraph (C) as subparagraph (B).
       (g) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 602. DEDUCTION FOR HIGHER EDUCATION EXPENSES.

       (a) Deduction Allowed.--Part VII of subchapter B of chapter 
     1 (relating to additional itemized deductions for 
     individuals) is amended by redesignating section 222 as 
     section 223 and by inserting after section 221 the following:

     ``SEC. 222. HIGHER EDUCATION EXPENSES.

       ``(a) Allowance of Deduction.--
       ``(1) In general.--In the case of an individual, there 
     shall be allowed as a deduction an amount equal to the 
     applicable dollar amount of the qualified higher education 
     expenses paid by the taxpayer during the taxable year.
       ``(2) Applicable dollar amount.--The applicable dollar 
     amount for any taxable year shall be determined as follows:

                                              Applicable dollar amount:
``Taxable year:
  2002......................................................$4,000 ....

  2003......................................................$8,000 ....

  2004 and thereafter......................................$12,000.....

       ``(b) Limitation Based on Modified Adjusted Gross Income.--
       ``(1) In general.--The amount which would (but for this 
     subsection) be taken into account under subsection (a) shall 
     be reduced (but not below zero) by the amount determined 
     under paragraph (2).
       ``(2) Amount of reduction.--The amount determined under 
     this paragraph equals the amount which bears the same ratio 
     to the amount which would be so taken into account as--
       ``(A) the excess of--
       ``(i) the taxpayer's modified adjusted gross income for 
     such taxable year, over
       ``(ii) $62,450 ($104,050 in the case of a joint return, 
     $89,150 in the case of a return filed by a head of household, 
     and $52,025 in the case of a return by a married individual 
     filing separately), bears to
       ``(B) $15,000.
       ``(3) Modified adjusted gross income.--For purposes of this 
     subsection, the term `modified adjusted gross income' means 
     the adjusted gross income of the taxpayer for the taxable 
     year determined--
       ``(A) without regard to this section and sections 911, 931, 
     and 933, and
       ``(B) after the application of sections 86, 135, 219, 220, 
     and 469.
     For purposes of the sections referred to in subparagraph (B), 
     adjusted gross income shall be determined without regard to 
     the deduction allowed under this section.
       ``(c) Qualified Higher Education Expenses.--For purposes of 
     this section--
       ``(1) Qualified higher education expenses.--
       ``(A) In general.--The term `qualified higher education 
     expenses' means tuition and fees charged by an educational 
     institution and required for the enrollment or attendance 
     of--
       ``(i) the taxpayer,
       ``(ii) the taxpayer's spouse,
       ``(iii) any dependent of the taxpayer with respect to whom 
     the taxpayer is allowed a deduction under section 151, or
       ``(iv) any grandchild of the taxpayer,
     as an eligible student at an institution of higher education.
       ``(B) Eligible courses.--Amounts paid for qualified higher 
     education expenses of any individual shall be taken into 
     account under subsection (a) only to the extent such 
     expenses--

[[Page S6755]]

       ``(i) are attributable to courses of instruction for which 
     credit is allowed toward a baccalaureate degree by an 
     institution of higher education or toward a certificate of 
     required course work at a vocational school, and
       ``(ii) are not attributable to any graduate program of such 
     individual.
       ``(C) Exception for nonacademic fees.--Such term does not 
     include any student activity fees, athletic fees, insurance 
     expenses, or other expenses unrelated to a student's academic 
     course of instruction.
       ``(D) Eligible student.--For purposes of subparagraph (A), 
     the term `eligible student' means a student who--
       ``(i) meets the requirements of section 484(a)(1) of the 
     Higher Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in 
     effect on the date of the enactment of this section, and
       ``(ii) is carrying at least one-half the normal full-time 
     work load for the course of study the student is pursuing, as 
     determined by the institution of higher education.
       ``(E) Identification requirement.--No deduction shall be 
     allowed under subsection (a) to a taxpayer with respect to an 
     eligible student unless the taxpayer includes the name, age, 
     and taxpayer identification number of such eligible student 
     on the return of tax for the taxable year.
       ``(2) Institution of higher education.--The term 
     `institution of higher education' means an institution 
     which--
       ``(A) is described in section 481 of the Higher Education 
     Act of 1965 (20 U.S.C. 1088), as in effect on the date of the 
     enactment of this section, and
       ``(B) is eligible to participate in programs under title IV 
     of such Act.
       ``(d) Special Rules.--
       ``(1) No double benefit.--
       ``(A) In general.--No deduction shall be allowed under 
     subsection (a) for any expense for which a deduction is 
     allowable to the taxpayer under any other provision of this 
     chapter unless the taxpayer irrevocably waives his right to 
     the deduction of such expense under such other provision.
       ``(B) Denial of deduction if credit elected.--No deduction 
     shall be allowed under subsection (a) for a taxable year with 
     respect to the qualified higher education expenses of an 
     individual if the taxpayer elects to have section 25A apply 
     with respect to such individual for such year.
       ``(C) Dependents.--No deduction shall be allowed under 
     subsection (a) to any individual with respect to whom a 
     deduction under section 151 is allowable to another taxpayer 
     for a taxable year beginning in the calendar year in which 
     such individual's taxable year begins.
       ``(D) Coordination with exclusions.--A deduction shall be 
     allowed under subsection (a) for qualified higher education 
     expenses only to the extent the amount of such expenses 
     exceeds the amount excludable under section 135 or 530(d)(2) 
     for the taxable year.
       ``(2) Limitation on taxable year of deduction.--
       ``(A) In general.--A deduction shall be allowed under 
     subsection (a) for qualified higher education expenses for 
     any taxable year only to the extent such expenses are in 
     connection with enrollment at an institution of higher 
     education during the taxable year.
       ``(B) Certain prepayments allowed.--Subparagraph (A) shall 
     not apply to qualified higher education expenses paid during 
     a taxable year if such expenses are in connection with an 
     academic term beginning during such taxable year or during 
     the first 3 months of the next taxable year.
       ``(3) Adjustment for certain scholarships and veterans 
     benefits.--The amount of qualified higher education expenses 
     otherwise taken into account under subsection (a) with 
     respect to the education of an individual shall be reduced 
     (before the application of subsection (b)) by the sum of the 
     amounts received with respect to such individual for the 
     taxable year as--
       ``(A) a qualified scholarship which under section 117 is 
     not includable in gross income,
       ``(B) an educational assistance allowance under chapter 30, 
     31, 32, 34, or 35 of title 38, United States Code, or
       ``(C) a payment (other than a gift, bequest, devise, or 
     inheritance within the meaning of section 102(a)) for 
     educational expenses, or attributable to enrollment at an 
     eligible educational institution, which is exempt from income 
     taxation by any law of the United States.
       ``(4) No deduction for married individuals filing separate 
     returns.--If the taxpayer is a married individual (within the 
     meaning of section 7703), this section shall apply only if 
     the taxpayer and the taxpayer's spouse file a joint return 
     for the taxable year.
       ``(5) Nonresident aliens.--If the taxpayer is a nonresident 
     alien individual for any portion of the taxable year, this 
     section shall apply only if such individual is treated as a 
     resident alien of the United States for purposes of this 
     chapter by reason of an election under subsection (g) or (h) 
     of section 6013.
       ``(6) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this section, including regulations requiring recordkeeping 
     and information reporting.''
       (b) Deduction Allowed in Computing Adjusted Gross Income.--
     Section 62(a) is amended by inserting after paragraph (17) 
     the following:
       ``(18) Higher education expenses.--The deduction allowed by 
     section 222.''
       (c) Conforming Amendment.--The table of sections for part 
     VII of subchapter B of chapter 1 is amended by striking the 
     item relating to section 222 and inserting the following:

``Sec. 222. Higher education expenses.
``Sec. 223. Cross reference.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to payments made in taxable years beginning after 
     December 31, 2001.

     SEC. 603. CREDIT FOR INTEREST ON HIGHER EDUCATION LOANS.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 (relating to nonrefundable personal credits) is 
     amended by inserting after section 25A the following new 
     section:

     ``SEC. 25B. INTEREST ON HIGHER EDUCATION LOANS.

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this chapter for the taxable year an amount equal to the 
     interest paid by the taxpayer during the taxable year on any 
     qualified education loan.
       ``(b) Maximum Credit.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     credit allowed by subsection (a) for the taxable year shall 
     not exceed $1,500.
       ``(2) Limitation based on modified adjusted gross income.--
       ``(A) In general.--If the modified adjusted gross income of 
     the taxpayer for the taxable year exceeds $50,000 ($80,000 in 
     the case of a joint return), the amount which would (but for 
     this paragraph) be allowable as a credit under this section 
     shall be reduced (but not below zero) by the amount which 
     bears the same ratio to the amount which would be so 
     allowable as such excess bears to $20,000.
       ``(B) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means adjusted gross income determined 
     without regard to sections 911, 931, and 933.
       ``(C) Inflation adjustment.--In the case of any taxable 
     year beginning after 2003, the $50,000 and $80,000 amounts 
     referred to in subparagraph (A) shall be increased by an 
     amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section (1)(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `2002' for `1992'.
       ``(D) Rounding.--If any amount as adjusted under 
     subparagraph (C) is not a multiple of $50, such amount shall 
     be rounded to the nearest multiple of $50.
       ``(c) Dependents Not Eligible for Credit.--No credit shall 
     be allowed by this section to an individual for the taxable 
     year if a deduction under section 151 with respect to such 
     individual is allowed to another taxpayer for the taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins.
       ``(d) Limit on Period Credit Allowed.--A credit shall be 
     allowed under this section only with respect to interest paid 
     on any qualified education loan during the first 60 months 
     (whether or not consecutive) in which interest payments are 
     required. For purposes of this paragraph, any loan and all 
     refinancings of such loan shall be treated as 1 loan.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Qualified education loan.--The term `qualified 
     education loan' has the meaning given such term by section 
     221(e)(1).
       ``(2) Dependent.--The term `dependent' has the meaning 
     given such term by section 152.
       ``(f) Special Rules.--
       ``(1) Denial of double benefit.--No credit shall be allowed 
     under this section for any amount taken into account for any 
     deduction under any other provision of this chapter.
       ``(2) Married couples must file joint return.--If the 
     taxpayer is married at the close of the taxable year, the 
     credit shall be allowed under subsection (a) only if the 
     taxpayer and the taxpayer's spouse file a joint return for 
     the taxable year.
       ``(3) Marital status.--Marital status shall be determined 
     in accordance with section 7703.''
       (b) Conforming Amendment.--The table of sections for 
     subpart A of part IV of subchapter A of chapter 1 is amended 
     by inserting after the item relating to section 25A the 
     following new item:

``Sec. 25B. Interest on higher education loans.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to any qualified education loan (as defined in 
     section 25B(e)(1) of the Internal Revenue Code of 1986, as 
     added by this section) incurred on, before, or after the date 
     of the enactment of this Act, but only with respect to any 
     loan interest payment due after December 31, 2001.

     SEC. 604. CERTIFIED TEACHER CREDIT.

       (a) Findings.--Congress makes the following findings:
       (1) Studies have shown that the greatest single in-school 
     factor affecting student achievement is teacher quality.
       (2) Most accomplished teachers do not get the rewards they 
     deserve.
       (3) After adjusting amounts for inflation, the average 
     teacher salary for 1997-1998 of $39,347 is just $2 above what 
     it was in 1993. Such salary is also just $1,924 more than the 
     average salary recorded in 1972, a real increase of only $75 
     per year.
       (4) While K-12 enrollments are steadily increasing, the 
     teacher population is aging. There is a need, now more than 
     ever, to attract competent, capable, and bright college

[[Page S6756]]

     graduates or mid-career professionals to the teaching 
     profession.
       (5) The Department of Education projects that 2,000,000 new 
     teachers will have to be hired in the next decade. Shortages, 
     if they occur, will most likely be felt in urban or rural 
     regions of the country where working conditions may be 
     difficult or compensation low.
       (6) If students are to receive a high quality education and 
     remain competitive in the global market the United States 
     must attract talented and motivated people to the teaching 
     profession in large numbers.
       (b) Allowance of Credit.--Subpart C of part IV of 
     subchapter A of chapter 1 (relating to refundable credits) is 
     amended by redesignating section 35 as section 36 and by 
     inserting after section 34 the following new section:

     ``SEC. 35. CERTIFIED TEACHER CREDIT.

       ``(a) Allowance of Credit.--
       ``(1) In general.--In the case of an eligible teacher, 
     there shall be allowed as a credit against the tax imposed by 
     this chapter for the taxable year $5,000.
       ``(2) Year credit allowed.--The credit under paragraph (1) 
     shall be allowed in the taxable year in which the taxpayer 
     becomes a certified individual.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Eligible teacher.--
       ``(A) In general.--The term `eligible teacher' means a 
     certified individual who is a pre-kindergarten or early 
     childhood educator, or a kindergarten through grade 12 
     classroom teacher, instructor, counselor, aide, or principal 
     in an elementary or secondary school on a full-time basis for 
     an academic year ending during a taxable year.
       ``(B) Certified individual.--The term `certified 
     individual' means an individual who has successfully 
     completed the requirements for advanced certification 
     provided by the National Board for Professional Teaching 
     Standards.
       ``(2) Elementary or secondary school.--The term `elementary 
     or secondary school' means a public elementary or secondary 
     school which--
       ``(A) is located in a school district of a local 
     educational agency which is eligible, during the taxable 
     year, for assistance under part A of title I of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6311 et seq.), and
       ``(B) during the taxable year, the Secretary of Education 
     determines to have an enrollment of children counted under 
     section 1124(c) of such Act (20 U.S.C. 6333(c)) in an amount 
     in excess of an amount equal to 40 percent of the total 
     enrollment of such school.
       ``(c) Verification.--The credit allowed under subsection 
     (a) shall be allowed with respect to any certified individual 
     only if the certification is verified in such manner as the 
     Secretary shall prescribe by regulation.
       ``(d) Election To Have Credit Not Apply.--A taxpayer may 
     elect to have this section not apply for any taxable year.''.
       (c) Exclusion From Income For Certain Amounts.--Part III of 
     subchapter B of chapter 1 (relating to items specifically 
     excluded from gross income) is amended by redesignating 
     section 139 as section 140 and inserting after section 138 
     the following new section:

     ``SEC. 139. CERTAIN AMOUNTS RECEIVED BY CERTIFIED TEACHERS.

       ``(a) In General.--In the case of a certified teacher, 
     gross income shall not include the value of anything received 
     during the taxable year solely by reason of such teacher 
     having successfully completed the requirements for advanced 
     certification provided by the National Board for Professional 
     Teaching Standards (such as an incentive payment).
       ``(b) Certified Teacher.--For purposes of this section, the 
     term `certified teacher' has the meaning given the term 
     `eligible teacher' under section 35(b)(1).
       ``(c) Verification.--The exclusion under subsection (a) 
     shall be allowed with respect to any certified teacher only 
     if the certification is verified in such manner as the 
     Secretary shall prescribe by regulation.
       ``(d) Amounts Must be Reasonable.--Amounts excluded under 
     subsection (a) shall include only amounts which are 
     reasonable.''.
       (d) Conforming Amendments.--
       (1) Section 1324(b)(2) of title 31, United States Code, is 
     amended by striking ``or'' before ``enacted'' and by 
     inserting before the period at the end ``, or from section 35 
     of such Code''.
       (2) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 is amended by striking the item 
     relating to section 35 and inserting the following:

``Sec. 35. Certified teacher credit.
``Sec. 36. Overpayments of tax.''

       (3) The table of sections for part III of subchapter B of 
     chapter 1 is amended by striking the item relating to section 
     139 and inserting the following new items:

``Sec. 139. Certain amounts received by certified teachers.
``Sec. 140. Cross references to other Acts.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 605. SENSE OF THE SENATE REGARDING COVERAGE OF 
                   PRESCRIPTION DRUGS UNDER THE MEDICARE PROGRAM.

       (a) Findings.--The Senate makes the following findings:
       (1) Projected on-budget surpluses for the next 10 years 
     total $1,900,000,000,000, according to the President's mid-
     session review.
       (2) Eliminating the death tax would reduce revenues by 
     $104,000,000,000 over 10 years, leaving on-budget surpluses 
     of $1,800,000,000,000.
       (3) The medicare program established under title XVIII of 
     the Social Security Act (42 U.S.C. 1395 et seq.) faces the 
     dual problem of inadequate coverage of prescription drugs and 
     rapid escalation of program costs with the retirement of the 
     baby boom generation.
       (4) The concurrent resolution on the budget for fiscal year 
     2001 provides $40,000,000,000 for prescription drug coverage 
     in the context of a reform plan that improves the long-term 
     outlook for the medicare program.
       (5) The Committee on Finance of the Senate currently is 
     working in a bipartisan manner on reporting legislation that 
     will reform the medicare program and provide a prescription 
     drug benefit.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) on-budget surpluses are sufficient to both repeal the 
     death tax and improve coverage of prescription drugs under 
     the medicare program and Congress should do both this year; 
     and
       (2) the Senate should pass adequately funded legislation 
     that can effectively--
       (A) expand access to outpatient prescription drugs;
       (B) modernize the medicare benefit package;
       (C) make structural improvements to improve the long term 
     solvency of the medicare program;
       (D) reduce medicare beneficiaries' out-of-pocket 
     prescription drug costs, placing the highest priority on 
     helping the elderly with the greatest need; and
       (E) give the elderly access to the same discounted rates on 
     prescription drugs as those available to Americans enrolled 
     in private insurance plans.

     SEC. 606. DEDUCTION FOR PREMIUMS FOR LONG-TERM CARE 
                   INSURANCE.

       (a) In General.--Part VII of subchapter B of chapter 1 
     (relating to additional itemized deductions) is amended by 
     redesignating section 222 as section 223 and by inserting 
     after section 221 the following:

     ``SEC. 222. PREMIUMS FOR LONG-TERM CARE INSURANCE.

       ``(a) In General.--In the case of an eligible individual, 
     there shall be allowed as a deduction an amount equal to 100 
     percent of the amount paid during the taxable year for any 
     coverage for qualified long-term care services (as defined in 
     section 7702B(c)) or any qualified long-term care insurance 
     contract (as defined in section 7702B(b)) which constitutes 
     medical care for the taxpayer, his spouse, and dependents.
       ``(b) Limitations.--
       ``(1) Deduction not available to individuals eligible for 
     employer-subsidized coverage.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     subsection (a) shall not apply to any taxpayer for any 
     calendar month for which the taxpayer is eligible to 
     participate in any plan which includes coverage for qualified 
     long-term care services (as so defined) or is a qualified 
     long-term care insurance contract (as so defined) maintained 
     by any employer (or former employer) of the taxpayer or of 
     the spouse of the taxpayer.
       ``(B) Continuation coverage.--Coverage shall not be treated 
     as subsidized for purposes of this paragraph if--
       ``(i) such coverage is continuation coverage (within the 
     meaning of section 4980B(f)) required to be provided by the 
     employer, and
       ``(ii) the taxpayer or the taxpayer's spouse is required to 
     pay a premium for such coverage in an amount not less than 
     100 percent of the applicable premium (within the meaning of 
     section 4980B(f)(4)) for the period of such coverage.
       ``(2) Limitation on long-term care premiums.--In the case 
     of a qualified long-term care insurance contract (as so 
     defined), only eligible long-term care premiums (as defined 
     in section 213(d)(10)) shall be taken into account under 
     subsection (a)(2).
       ``(c) Special Rules.--For purposes of this section--
       ``(1) Coordination with medical deduction, etc.--Any amount 
     paid by a taxpayer for insurance to which subsection (a) 
     applies shall not be taken into account in computing the 
     amount allowable to the taxpayer as a deduction under section 
     213(a).
       ``(2) Deduction not allowed for self-employment tax 
     purposes.--The deduction allowable by reason of this section 
     shall not be taken into account in determining an 
     individual's net earnings from self-employment (within the 
     meaning of section 1402(a)) for purposes of chapter 2.''.
       (b) Conforming Amendments.--
       (1) Subsection (a) of section 62 is amended by inserting 
     after paragraph (17) the following:
       ``(18) Long-term care insurance costs of certain 
     individuals.--The deduction allowed by section 222.''.
       (2) The table of sections for part VII of subchapter B of 
     chapter 1 is amended by striking the last item and inserting 
     the following:

``Sec. 222. Premiums for long-term care insurance.
``Sec. 223. Cross reference.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

[[Page S6757]]

     SEC. 607. FULL AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.

       (a) Availability Not Limited To Accounts for Employees of 
     Small Employers and Self-Employed Individuals.--
       (1) In general.--Section 220(c)(1)(A) (relating to eligible 
     individual) is amended to read as follows:
       ``(A) In general.--The term `eligible individual' means, 
     with respect to any month, any individual if--
       ``(i) such individual is covered under a high deductible 
     health plan as of the 1st day of such month, and
       ``(ii) such individual is not, while covered under a high 
     deductible health plan, covered under any health plan--

       ``(I) which is not a high deductible health plan, and
       ``(II) which provides coverage for any benefit which is 
     covered under the high deductible health plan.''.

       (2) Conforming amendments.--
       (A) Section 220(c)(1) is amended by striking subparagraphs 
     (C) and (D).
       (B) Section 220(c) is amended by striking paragraph (4) 
     (defining small employer) and by redesignating paragraph (5) 
     as paragraph (4).
       (C) Section 220(b) is amended by striking paragraph (4) 
     (relating to deduction limited by compensation) and by 
     redesignating paragraphs (5), (6), and (7) as paragraphs (4), 
     (5), and (6), respectively.
       (b) Removal of Limitation on Number of Taxpayers Having 
     Medical Savings Accounts.--
       (1) In general.--Section 220 (relating to medical savings 
     accounts) is amended by striking subsections (i) and (j).
       (2) Medicare+choice.--Section 138 (relating to 
     Medicare+Choice MSA) is amended by striking subsection (f).
       (c) Reduction in High Deductible Plan Minimum Annual 
     Deductible.--
       (1) In general.--Subparagraph (A) of section 220(c)(2) 
     (defining high deductible health plan) is amended--
       (A) by striking ``$1,500'' and inserting ``$1,000'', and
       (B) by striking ``$3,000'' in clause (ii) and inserting 
     ``$2,000''.
       (2) Conforming amendment.--Subsection (g) of section 220 is 
     amended--
       (A) by striking ``1998'' and inserting ``1999''; and
       (B) by striking ``1997'' and inserting ``1998''.
       (d) Increase in Contribution Limit to 100 Percent of Annual 
     Deductible.--
       (1) In general.--Section 220(b)(2) (relating to monthly 
     limitation) is amended to read as follows:
       ``(2) Monthly limitation.--The monthly limitation for any 
     month is the amount equal to \1/12\ of the annual deductible 
     of the high deductible health plan of the individual.''.
       (2) Conforming amendment.--Section 220(d)(1)(A) is amended 
     by striking ``75 percent of''.
       (e) Limitation on Additional Tax on Distributions Not Used 
     for Qualified Medical Expenses.--Section 220(f)(4) (relating 
     to additional tax on distributions not used for qualified 
     medical expenses) is amended by adding at the end the 
     following:
       ``(D) Exception in case of sufficient account balance.--
     Subparagraph (A) shall not apply to any payment or 
     distribution in any taxable year, but only to the extent such 
     payment or distribution does not reduce the fair market value 
     of the assets of the medical savings account to an amount 
     less than the annual deductible for the high deductible 
     health plan of the account holder (determined as of January 1 
     of the calendar year in which the taxable year begins).''.
       (f) Treatment of Network-Based Managed Care Plans.--Section 
     220(c)(2)(B) (relating to special rules for high deductible 
     health plans) is amended by adding at the end the following:
       ``(iii) Treatment of network-based managed care plans.--A 
     plan that provides health care services through a network of 
     contracted or affiliated health care providers, if the 
     benefits provided when services are obtained through network 
     providers meet the requirements of subparagraph (A), shall 
     not fail to be treated as a high deductible health plan by 
     reason of providing benefits for services rendered by 
     providers who are not members of the network, so long as the 
     annual deductible and annual limit on out-of-pocket expenses 
     applicable to services received from non-network providers 
     are not lower than those applicable to services received from 
     the network providers.''.
       (g) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 609. INCREASE IN NUMBER OF YEARS DISREGARDED.

       (a) In General.--Section 215(b)(2) of the Social Security 
     Act (42 U.S.C. 415(b)(2)) is amended--
       (1) by striking the period at the end of clause (ii) of 
     subparagraph (A) and inserting a comma;
       (2) by striking ``Clause (ii), once'' after and below 
     clause (ii) of subparagraph (A) and inserting the following: 
     ``and reduced further to the extent provided in subparagraph 
     (B). Clause (ii), once'';
       (3) by striking ``If an individual'' in the matter 
     following clause (ii) of subparagraph (A) and all that 
     follows through the end of subparagraph (A);
       (4) by redesignating subparagraph (B) as subparagraph (F); 
     and
       (5) by inserting after subparagraph (A) the following new 
     subparagraphs:
       ``(B) Subject to subparagraph (C), in any case in which--
       ``(i) in any calendar year which is included in an 
     individual's computation base years--

       ``(I) such individual is living with a child (of such 
     individual or his or her spouse) under the age of 12; or
       ``(II) such individual is living with a child (of such 
     individual or his or her spouse), a parent (of such 
     individual or his or her spouse), or such individual's spouse 
     while such child, parent, or spouse is a chronically 
     dependent individual;

       ``(ii) such calendar year is not disregarded pursuant to 
     subparagraphs (A) and (E) (in determining such individual's 
     benefit computation years) by reason of the reduction in the 
     number of such individual's elapsed years under subparagraph 
     (A); and
       ``(iii) such individual submits to the Secretary, in such 
     form as the Secretary shall prescribe by regulations, a 
     written statement that the requirements of clause (i) are met 
     with respect to such calendar year,
     then the number by which such elapsed years are reduced under 
     this paragraph pursuant to subparagraph (A) shall be 
     increased by one (up to a combined total not exceeding 5) for 
     each such calendar year.
       ``(C)(i)(I) No calendar year shall be disregarded by reason 
     of subparagraph (B) (in determining such individual's benefit 
     computation years) unless the individual had less than the 
     applicable dollar amount (in effect for such calendar year 
     under subclause (II)) of earnings as described in section 
     203(f)(5) for such year.
       ``(II) Except as otherwise provided in this subclause, the 
     applicable dollar amount in effect under this subclause for 
     any calendar year is $3,000. In each calendar year after 
     2006, the Secretary shall determine and publish in the 
     Federal Register, on or before November 1 of such calendar 
     year, the applicable dollar amount which shall be effective 
     under this subclause for the next calendar year. Such dollar 
     amount shall be equal to the applicable dollar amount which 
     is effective under this subclause for the calendar year in 
     which such determination is made, increased by a percentage 
     equal to the percentage (rounded to the nearest \1/10\ of 1 
     percent) by which the Consumer Price Index (prepared by the 
     Department of Labor and used in determining increases in 
     benefits pursuant to section 215(i)) for the calendar quarter 
     ending on September 30 of such calendar year exceeds such 
     index for the calendar quarter ending on September 30 of the 
     last preceding calendar year in which a cost-of-living 
     increase in benefits became effective under section 215(i).
       ``(ii) No calendar year shall be disregarded by reason of 
     subparagraph (B) (in determining such individual's benefit 
     computation years) in connection with a child referred to in 
     subparagraph (B)(i)(I) (and not referred to in subparagraph 
     (B)(i)(II)) unless the individual was living with the child 
     substantially throughout the period in such year in which the 
     child was alive and under the age of 12 in such year.
       ``(iii) No calendar year shall be disregarded by reason of 
     subparagraph (B) (in determining such individual's benefit 
     computation years) in connection with a child, parent, or 
     spouse referred to in subparagraph (B)(i)(II) unless the 
     individual was living with such child, parent, or spouse 
     substantially throughout a period of 180 consecutive days in 
     such year throughout which such child, parent, or spouse was 
     a chronically dependent individual.
       ``(iv) The particular calendar years to be disregarded 
     under this subparagraph (in determining such benefit 
     computation years) shall be those years (not otherwise 
     disregarded under subparagraph (A)) which, before the 
     application of subsection (f), meet the conditions of the 
     preceding provisions of this clause.
       ``(v) This subparagraph shall apply only to the extent 
     that--
       ``(I) its application would not result in a lower primary 
     insurance amount; and
       ``(II) it does not raise the primary insurance amount to a 
     level greater than the average old-age insurance benefit paid 
     under this title.
       ``(D)(i) For purposes of this paragraph, the term 
     `chronically dependent individual' means an individual who--
       ``(I) is dependent on a daily basis on another person who 
     is living with the individual and is assisting the individual 
     without monetary compensation in the performance of at least 
     2 of the activities of daily living (described in clause 
     (ii)), and
       ``(II) without such assistance could not perform such 
     activities of daily living.
       ``(ii) The `activities of daily living', referred to in 
     clause (i), are the following:
       ``(I) Eating.
       ``(II) Bathing.
       ``(III) Dressing.
       ``(IV) Toileting.
       ``(V) Transferring in and out of a bed or in and out of a 
     chair.
       ``(E) The number of an individual's benefit computation 
     years as determined under this paragraph shall in no case be 
     less than 2.''.
       (b) Effective Date and Related Provisions.--
       (1) In general.--The amendments made by this Act shall 
     apply with respect to computation base years ending before, 
     on, or after the date of enactment of this Act, but only with 
     respect to benefits payable for months after December 2005.
       (2) Notice and procedures.--
       (A) 60-Day filing period after issuance of regulations for 
     calendar years before

[[Page S6758]]

     2001.--The requirements of clause (iii) of section 
     215(b)(2)(B) of the Social Security Act (as amended by this 
     section) shall be treated as satisfied, in the case of a 
     statement with respect to any calendar year before 2001, only 
     if such statement is submitted to the Secretary of Health and 
     Human Services not later than 60 days after the date of the 
     first issuance in final form of the regulations required 
     under such clause.
       (B) Notice requirements.--The Secretary of Health and Human 
     Services shall issue, not later than the date of the first 
     issuance in final form of the regulations described in 
     paragraph (1), regulations establishing procedures to ensure 
     that--
       (i) persons who are, as of such date, recipients of monthly 
     benefits under section 202(a) or 223 of the Social Security 
     Act, or applicants for such benefits, are fully informed of 
     the amendments made by this section; and
       (ii) such persons are invited to comply, and given a 
     reasonable opportunity to comply, with the requirements of 
     section 215(b)(2)(B)(iii) of the Social Security Act (as 
     amended by this section), as provided in subparagraph (A).

     Upon receiving from a recipient described in clauses (i) and 
     (ii) a written statement referred to in clause (iii) of 
     section 215(b)(2)(B) of the Social Security Act (as amended 
     by this section) with respect to which the requirements of 
     such clause are satisfied, the Secretary shall redetermine 
     the amount of such benefits to the extent necessary to take 
     into account the amendments made by this section (and if such 
     redetermination results in an increase in such amount the 
     increase shall be effective as provided in paragraph (1)). 
     Such regulations described in subparagraph (A) shall also 
     provide procedures to ensure that applicants for benefits 
     under section 202(a) or 223 of the Social Security Act are 
     given the opportunity, at the time of their application, to 
     indicate and verify any additional years which may be 
     disregarded under section 215(b)(2)(B) of the Social Security 
     Act (as amended by this section).

     SEC. 610. INCREASE IN WIDOWS' AND WIDOWERS' INSURANCE 
                   BENEFITS.

       (a) Widow's Benefit.--Section 202(e)(2)(A) of the Social 
     Security Act (42 U.S.C. 402(e)(2)(A)) is amended by striking 
     ``equal to'' and all that follows and inserting ``equal to 
     the greater of--
       ``(i) the primary insurance amount (as determined for 
     purposes of this subsection after application of 
     subparagraphs (B) and (C)) of such deceased individual, or
       ``(ii) the lesser of--
       ``(I) 75 percent of the joint benefit which would have been 
     received by the widow or surviving divorced wife and the 
     deceased individual for such month if such individual had not 
     died, or
       ``(II) the average old-age insurance benefit paid under 
     this title.''.
       (b) Widower's Benefit.--Section 202(f)(3)(A) of the Social 
     Security Act (42 U.S.C. 402(b)(3)(A)) is amended by striking 
     ``equal to'' and all that follows and inserting ``equal to 
     the greater of--
       ``(i) the primary insurance amount (as determined for 
     purposes of this subsection after application of 
     subparagraphs (B) and (C)) of such deceased individual, or
       ``(ii) the lesser of--
       ``(I) 75 percent of the joint benefit which would have been 
     received by the widow or surviving divorced wife and the 
     deceased individual for such month if such individual had not 
     died, or
       ``(II) the average old-age insurance benefit paid under 
     this title.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply individuals entitled to benefits after the date 
     of enactment of this Act.

     SEC. 611. MODIFICATION OF DEPENDENT CARE CREDIT.

       (a) Increase in Percentage of Employment-Related Expenses 
     Taken Into Account.--Subsection (a)(2) of section 21 
     (relating to expenses for household and dependent care 
     services necessary for gainful employment) is amended--
       (1) by striking ``30 percent'' and inserting ``40 
     percent'',
       (2) by striking ``$2,000'' and inserting ``$1,000'', and
       (3) by striking ``$10,000'' and inserting ``$30,000''.
       (b) Indexing of Limit on Employment-Related Expenses.--
     Section 21(c) (relating to dollar limit on amount creditable) 
     is amended to read as follows:
       ``(c) Dollar Limit on Amount Creditable.--
       ``(1) In general.--The amount of the employment-related 
     expenses incurred during any taxable year which may be taken 
     into account under subsection (a) shall not exceed--
       ``(A) an amount equal to 50 percent of the amount 
     determined under subparagraph (B) if there is 1 qualifying 
     individual with respect to the taxpayer for such taxable 
     year, or
       ``(B) $4,800 if there are 2 or more qualifying individuals 
     with respect to the taxpayer for such taxable year.
     The amount determined under subparagraph (A) or (B) 
     (whichever is applicable) shall be reduced by the aggregate 
     amount excludable from gross income under section 129 for the 
     taxable year.
       ``(2) Cost-of-living adjustment.--
       ``(A) In general.--In the case of a taxable year beginning 
     after 2000, the $4,800 amount under paragraph (1)(B) shall be 
     increased by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 1999' 
     for `calendar year 1992' in subparagraph (B) thereof.
       ``(B) Rounding rules.--If any amount after adjustment under 
     subparagraph (A) is not a multiple of $50, such amount shall 
     be rounded to the next lower multiple of $50.''.
       (c) Minimum Dependent Care Credit Allowed for Stay-at-Home 
     Parents.--Section 21(e) (relating to special rules) is 
     amended by adding at the end the following:
       ``(11) Minimum credit allowed for stay-at-home parents.--
       ``(A) In general.--Notwithstanding subsection (d), in the 
     case of any taxpayer with 1 or more qualifying individuals 
     described in subsection (b)(1)(A) under the age of 1, such 
     taxpayer shall be deemed to have employment-related expenses 
     for the taxable year with respect to each such qualifying 
     individual in an amount equal to the sum of--
       ``(i) $200 for each month in such taxable year during which 
     such qualifying individual is under the age of 1, and
       ``(ii) the amount of employment-related expenses otherwise 
     incurred for such qualifying individual for the taxable year 
     (determined under this section without regard to this 
     paragraph).
       ``(B) Election to not apply this paragraph.--This paragraph 
     shall not apply with respect to any qualifying individual for 
     any taxable year if the taxpayer elects to not have this 
     paragraph apply to such qualifying individual for such 
     taxable year.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 612. ALLOWANCE OF CREDIT FOR EMPLOYER EXPENSES FOR CHILD 
                   CARE ASSISTANCE.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business related credits) is amended 
     by adding at the end the following new section:

     ``SEC. 45D. EMPLOYER-PROVIDED CHILD CARE CREDIT.

       ``(a) Allowance of Credit.--For purposes of section 38, the 
     employer-provided child care credit determined under this 
     section for the taxable year is an amount equal to the sum 
     of--
       ``(1) 25 percent of the qualified child care expenditures, 
     and
       ``(2) 10 percent of the qualified child care resource and 
     referral expenditures,
     of the taxpayer for such taxable year.
       ``(b) Dollar Limitation.--The credit allowable under 
     subsection (a) for any taxable year shall not exceed 
     $150,000.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Qualified child care expenditure.--
       ``(A) In general.--The term `qualified child care 
     expenditure' means any amount paid or incurred--
       ``(i) to acquire, construct, rehabilitate, or expand 
     property--

       ``(I) which is to be used as part of an eligible qualified 
     child care facility of the taxpayer,
       ``(II) with respect to which a deduction for depreciation 
     (or amortization in lieu of depreciation) is allowable, and
       ``(III) which does not constitute part of the principal 
     residence (within the meaning of section 121) of the taxpayer 
     or any employee of the taxpayer,

       ``(ii) for the operating costs of an eligible qualified 
     child care facility of the taxpayer, including costs related 
     to the training of employees of the child care facility, to 
     scholarship programs, to the providing of differential 
     compensation to employees based on level of child care 
     training, and to expenses associated with achieving 
     accreditation, or
       ``(iii) under a contract with a qualified child care 
     facility to provide child care services to employees of the 
     taxpayer.
       ``(B) Exclusion for amounts funded by grants, etc.--The 
     term `qualified child care expenditure' shall not include any 
     amount to the extent such amount is funded by any grant, 
     contract, or otherwise by another person (or any governmental 
     entity).
       ``(C) Nondiscrimination.--The term `qualified child care 
     expenditure' shall not include any amount expended in 
     relation to any child care services unless the providing of 
     such services to employees of the taxpayer does not 
     discriminate in favor of highly compensated employees (within 
     the meaning of section 404(q)).
       ``(2) Qualified child care facility.--
       ``(A) In general.--The term `qualified child care facility' 
     means a facility--
       ``(i) the principal use of which is to provide child care 
     assistance, and
       ``(ii) which meets the requirements of all applicable laws 
     and regulations of the State or local government in which it 
     is located, including, but not limited to, the licensing of 
     the facility as a child care facility.
     Clause (i) shall not apply to a facility which is the 
     principal residence (within the meaning of section 121) of 
     the operator of the facility.
       ``(B) Eligible qualified child care facility.--A qualified 
     child care facility shall be treated as an eligible qualified 
     child care facility with respect to the taxpayer if--
       ``(i) enrollment in the facility is open to employees of 
     the taxpayer during the taxable year,
       ``(ii) the facility is not the principal trade or business 
     of the taxpayer, and

[[Page S6759]]

       ``(iii) at least 30 percent of the enrollees of such 
     facility are dependents of employees of the taxpayer.
       ``(C) Application of subparagraph (b).--In the case of a 
     new facility, the facility shall be treated as meeting the 
     requirement of subparagraph (B)(iii) if not later than 2 
     years after placing such facility in service at least 30 
     percent of the enrollees of such facility are dependents of 
     employees of the taxpayer.
       ``(3) Qualified child care resource and referral 
     expenditure.--
       ``(A) In general.--The term `qualified child care resource 
     and referral expenditure' means any amount paid or incurred 
     under a contract to provide child care resource and referral 
     services to employees of the taxpayer.
       ``(B) Exclusion for amounts funded by grants, etc.--The 
     term `qualified child care resource and referral expenditure' 
     shall not include any amount to the extent such amount is 
     funded by any grant, contract, or otherwise by another person 
     (or any governmental entity).
       ``(C) Nondiscrimination.--The term `qualified child care 
     resource and referral expenditure' shall not include any 
     amount expended in relation to any child care resource and 
     referral services unless the providing of such services to 
     employees of the taxpayer does not discriminate in favor of 
     highly compensated employees (within the meaning of section 
     404(q)).
       ``(d) Recapture of Acquisition and Construction Credit.--
       ``(1) In general.--If, as of the close of any taxable year, 
     there is a recapture event with respect to any eligible 
     qualified child care facility of the taxpayer, then the tax 
     of the taxpayer under this chapter for such taxable year 
     shall be increased by an amount equal to the product of--
       ``(A) the applicable recapture percentage, and
       ``(B) the aggregate decrease in the credits allowed under 
     section 38 for all prior taxable years which would have 
     resulted if the qualified child care expenditures of the 
     taxpayer described in subsection (c)(1)(A) with respect to 
     such facility had been zero.
       ``(2) Applicable recapture percentage.--
       ``(A) In general.--For purposes of this subsection, the 
     applicable recapture percentage shall be determined from the 
     following table:

``If the recapture event occurs The applicable recapture percentage is:
    Year 1.......................................................100   
    Year 2........................................................80   
    Year 3........................................................60   
    Year 4........................................................40   
    Year 5........................................................20   
    Years 6 and thereafter.........................................0.  

       ``(B) Years.--For purposes of subparagraph (A), year 1 
     shall begin on the first day of the taxable year in which the 
     eligible qualified child care facility is placed in service 
     by the taxpayer.
       ``(3) Recapture event defined.--For purposes of this 
     subsection, the term `recapture event' means--
       ``(A) Cessation of operation.--The cessation of the 
     operation of the facility as an eligible qualified child care 
     facility.
       ``(B) Change in ownership.--
       ``(i) In general.--Except as provided in clause (ii), the 
     disposition of a taxpayer's interest in an eligible qualified 
     child care facility with respect to which the credit 
     described in subsection (a) was allowable.
       ``(ii) Agreement to assume recapture liability.--Clause (i) 
     shall not apply if the person acquiring such interest in the 
     facility agrees in writing to assume the recapture liability 
     of the person disposing of such interest in effect 
     immediately before such disposition. In the event of such an 
     assumption, the person acquiring the interest in the facility 
     shall be treated as the taxpayer for purposes of assessing 
     any recapture liability (computed as if there had been no 
     change in ownership).
       ``(4) Special rules.--
       ``(A) Tax benefit rule.--The tax for the taxable year shall 
     be increased under paragraph (1) only with respect to credits 
     allowed by reason of this section which were used to reduce 
     tax liability. In the case of credits not so used to reduce 
     tax liability, the carryforwards and carrybacks under section 
     39 shall be appropriately adjusted.
       ``(B) No credits against tax.--Any increase in tax under 
     this subsection shall not be treated as a tax imposed by this 
     chapter for purposes of determining the amount of any credit 
     under subpart A, B, or D of this part.
       ``(C) No recapture by reason of casualty loss.--The 
     increase in tax under this subsection shall not apply to a 
     cessation of operation of the facility as a qualified child 
     care facility by reason of a casualty loss to the extent such 
     loss is restored by reconstruction or replacement within a 
     reasonable period established by the Secretary.
       ``(e) Special Rules.--For purposes of this section--
       ``(1) Aggregation rules.--All persons which are treated as 
     a single employer under subsections (a) and (b) of section 52 
     shall be treated as a single taxpayer.
       ``(2) Pass-thru in the case of estates and trusts.--Under 
     regulations prescribed by the Secretary, rules similar to the 
     rules of subsection (d) of section 52 shall apply.
       ``(3) Allocation in the case of partnerships.--In the case 
     of partnerships, the credit shall be allocated among partners 
     under regulations prescribed by the Secretary.
       ``(f) No Double Benefit.--
       ``(1) Reduction in basis.--For purposes of this subtitle--
       ``(A) In general.--If a credit is determined under this 
     section with respect to any property by reason of 
     expenditures described in subsection (c)(1)(A), the basis of 
     such property shall be reduced by the amount of the credit so 
     determined.
       ``(B) Certain dispositions.--If during any taxable year 
     there is a recapture amount determined with respect to any 
     property the basis of which was reduced under subparagraph 
     (A), the basis of such property (immediately before the event 
     resulting in such recapture) shall be increased by an amount 
     equal to such recapture amount. For purposes of the preceding 
     sentence, the term `recapture amount' means any increase in 
     tax (or adjustment in carrybacks or carryovers) determined 
     under subsection (d).
       ``(2) Other deductions and credits.--No deduction or credit 
     shall be allowed under any other provision of this chapter 
     with respect to the amount of the credit determined under 
     this section.''.
       (b) Conforming Amendments.--
       (1) Section 38(b) is amended--
       (A) by striking out ``plus'' at the end of paragraph (11),
       (B) by striking out the period at the end of paragraph 
     (12), and inserting a comma and ``plus'', and
       (C) by adding at the end the following new paragraph:
       ``(13) the employer-provided child care credit determined 
     under section 45D.''.
       (2) 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:

``Sec. 45D. Employer-provided child care credit.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 613. MARRIAGE PENALTY RELIEF FOR EARNED INCOME CREDIT.

       (a) In General.--Paragraph (2) of section 32(b) (relating 
     to percentages and amounts) is amended--
       (1) by striking ``Amounts.--The earned'' and inserting 
     ``Amounts.--
       ``(A) In general.--Subject to subparagraph (B), the 
     earned''; and
       (2) by adding at the end the following new subparagraph:
       ``(B) Joint returns.--In the case of a joint return, the 
     phaseout amount determined under subparagraph (A) shall be 
     increased by $2,500.''.
       (b) Inflation Adjustment.--Paragraph (1)(B) of section 32( 
     j) (relating to inflation adjustments) is amended to read as 
     follows:
       ``(B) the cost-of-living adjustment determined under 
     section 1(f )(3) for the calendar year in which the taxable 
     year begins, determined--
       ``(i) in the case of amounts in subsections (b)(2)(A) and 
     (i)(1), by substituting `calendar year 1995' for `calendar 
     year 1992' in subparagraph (B) thereof, and
       ``(ii) in the case of the $2,500 amount in subsection 
     (b)(2)(B), by substituting `calendar year 2000' for `calendar 
     year 1992' in subparagraph (B) of such section 1.''.
       (c) Rounding.--Section 32( j)(2)(A) (relating to rounding) 
     is amended by striking ``subsection (b)(2)'' and inserting 
     ``subsection (b)(2)(A) (after being increased under 
     subparagraph (B) thereof)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.
                                 ______
                                 

                  BAYH (AND OTHERS) AMENDMENT NO. 3843

  Mr. BAYH (for himself, Mr. Durbin, Ms. Mikulski, Mr. Feingold, Mr. 
Kohl, Mr. Biden, and Mr. Graham) proposed an amendment to the bill, 
H.R. 8, supra; as follows:
       Strike all after the first word and insert:

              1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Estate Tax 
     Relief Act of 2000''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

                       TITLE I--ESTATE TAX RELIEF

     SEC. 101. INCREASE IN AMOUNT OF UNIFIED CREDIT AGAINST ESTATE 
                   AND GIFT TAXES.

       (a) In General.--The table contained in section 2010(c) 
     (relating to applicable credit amount) is amended to read as 
     follows:

``In the case of estates of decedentThe applicable exclusion amount is:
      2001, 2002, 2003, 2004, and 2005......................$1,000,000 
      2006 and 2007.........................................$1,125,000 
      2008..................................................$1,500,000 
      2009 or thereafter..................................$2,000,000.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

[[Page S6760]]

     SEC. 102. INCREASE IN QUALIFIED FAMILY-OWNED BUSINESS 
                   INTEREST DEDUCTION AMOUNT.

       (a) In General.--Paragraph (2) of section 2057(a) (relating 
     to family-owned business interests) is amended to read as 
     follows:
       ``(2) Maximum deduction.--
       ``(A) In general.--The deduction allowed by this section 
     shall not exceed the sum of--
       ``(i) the applicable deduction amount, plus
       ``(ii) in the case of a decedent described in subparagraph 
     (C), the applicable unused spousal deduction amount.
       ``(B) Applicable deduction amount.--For purposes of this 
     subparagraph (A)(i), the applicable deduction amount is 
     determined in accordance with the following table:

``In the case of estates of decedentThe applicable deduction amount is:
      2001, 2002, 2003, 2004, and 2005.......................$1,375,000
      2006 and 2007..........................................$1,625,000
      2008...................................................$2,375,000
      2009 or thereafter....................................$3,375,000.
       ``(C) Applicable unused spousal deduction amount.--With 
     respect to a decedent whose immediately predeceased spouse 
     died after December 31, 2000, and the estate of such 
     immediately predeceased spouse met the requirements of 
     subsection (b)(1), the applicable unused spousal deduction 
     amount for such decedent is equal to the excess of--
       ``(i) the applicable deduction amount allowable under this 
     section to the estate of such immediately predeceased spouse, 
     over
       ``(ii) the sum of--

       ``(I) the applicable deduction amount allowed under this 
     section to the estate of such immediately predeceased spouse, 
     plus
       ``(II) the amount of any increase in such estate's unified 
     credit under paragraph (3)(B) which was allowed to such 
     estate.''

       (b) Conforming Amendments.--Section 2057(a)(3)(B) is 
     amended--
       (1) by striking ``$675,000'' both places it appears and 
     inserting ``the applicable deduction amount'', and
       (2) by striking ``$675,000'' in the heading and inserting 
     ``applicable deduction amount''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 2000.

                      TITLE II--HEALTH PROVISIONS

     SEC. 201. LONG-TERM CARE TAX CREDIT.

       (a) Allowance of Credit.--
       (1) In general.--Section 24(a) (relating to allowance of 
     child tax credit) is amended to read as follows:
       ``(a) Allowance of Credit.--
       ``(1) In general.--There shall be allowed as a credit 
     against the tax imposed by this chapter for the taxable year 
     an amount equal to the sum of--
       ``(A) $500 multiplied by the number of qualifying children 
     of the taxpayer, plus
       ``(B) the applicable dollar amount multiplied by the number 
     of applicable individuals with respect to whom the taxpayer 
     is an eligible caregiver for the taxable year.
       ``(2) Applicable dollar amount.--For purposes of paragraph 
     (1)(B), the applicable dollar amount for taxable years 
     beginning in any calendar year shall be determined in 
     accordance with the following table:

                                                             Applicable
``Calendar year:                                         dollar amount:
  2001......................................................$1,000 ....

  2002......................................................$1,500 ....

  2003......................................................$2,000 ....

  2004......................................................$2,500 ....

  2005 and thereafter.....................................$3,000.''....

       (2) Additional credit for taxpayer with 3 or more separate 
     credit amounts.--So much of section 24(d) as precedes 
     paragraph (1)(A) thereof is amended to read as follows:
       ``(d) Additional Credit for Taxpayers With 3 or More 
     Separate Credit Amounts.--
       ``(1) In general.--If the sum of the number of qualifying 
     children of the taxpayer and the number of applicable 
     individuals with respect to which the taxpayer is an eligible 
     caregiver is 3 or more for any taxable year, the aggregate 
     credits allowed under subpart C shall be increased by the 
     lesser of--''.
       (3) Conforming amendments.--
       (A) The heading for section 32(n) is amended by striking 
     ``Child'' and inserting ``Family Care''.
       (B) The heading for section 24 is amended to read as 
     follows:

     ``SEC. 24. FAMILY CARE CREDIT.''

       (C) The table of sections for subpart A of part IV of 
     subchapter A of chapter 1 is amended by striking the item 
     relating to section 24 and inserting the following new item:

``Sec. 24. Family care credit.''
       (b) Definitions.--Section 24(c) (defining qualifying child) 
     is amended to read as follows:
       ``(c) Definitions.--For purposes of this section--
       ``(1) Qualifying child.--
       ``(A) In general.--The term `qualifying child' means any 
     individual if--
       ``(i) the taxpayer is allowed a deduction under section 151 
     with respect to such individual for the taxable year,
       ``(ii) such individual has not attained the age of 17 as of 
     the close of the calendar year in which the taxable year of 
     the taxpayer begins, and
       ``(iii) such individual bears a relationship to the 
     taxpayer described in section 32(c)(3)(B).
       ``(B) Exception for certain noncitizens.--The term 
     `qualifying child' shall not include any individual who would 
     not be a dependent if the first sentence of section 152(b)(3) 
     were applied without regard to all that follows `resident of 
     the United States'.
       ``(2) Applicable individual.--
       ``(A) In general.--The term `applicable individual' means, 
     with respect to any taxable year, any individual who has been 
     certified, before the due date for filing the return of tax 
     for the taxable year (without extensions), by a physician (as 
     defined in section 1861(r)(1) of the Social Security Act) as 
     being an individual with long-term care needs described in 
     subparagraph (B) for a period--
       ``(i) which is at least 180 consecutive days, and
       ``(ii) a portion of which occurs within the taxable year.
     Such term shall not include any individual otherwise meeting 
     the requirements of the preceding sentence unless within the 
     39\1/2\ month period ending on such due date (or such other 
     period as the Secretary prescribes) a physician (as so 
     defined) has certified that such individual meets such 
     requirements.
       ``(B) Individuals with long-term care needs.--An individual 
     is described in this subparagraph if the individual meets any 
     of the following requirements:
       ``(i) The individual is at least 6 years of age and--

       ``(I) is unable to perform (without substantial assistance 
     from another individual) at least 3 activities of daily 
     living (as defined in section 7702B(c)(2)(B)) due to a loss 
     of functional capacity, or
       ``(II) requires substantial supervision to protect such 
     individual from threats to health and safety due to severe 
     cognitive impairment and is unable to perform at least 1 
     activity of daily living (as so defined) or to the extent 
     provided in regulations prescribed by the Secretary (in 
     consultation with the Secretary of Health and Human 
     Services), is unable to engage in age appropriate activities.

       ``(ii) The individual is at least 2 but not 6 years of age 
     and is unable due to a loss of functional capacity to perform 
     (without substantial assistance from another individual) at 
     least 2 of the following activities: eating, transferring, or 
     mobility.
       ``(iii) The individual is under 2 years of age and requires 
     specific durable medical equipment by reason of a severe 
     health condition or requires a skilled practitioner trained 
     to address the individual's condition to be available if the 
     individual's parents or guardians are absent.
       ``(3) Eligible caregiver.--
       ``(A) In general.--A taxpayer shall be treated as an 
     eligible caregiver for any taxable year with respect to the 
     following individuals:
       ``(i) The taxpayer.
       ``(ii) The taxpayer's spouse.
       ``(iii) An individual with respect to whom the taxpayer is 
     allowed a deduction under section 151 for the taxable year.
       ``(iv) An individual who would be described in clause (iii) 
     for the taxable year if section 151(c)(1)(A) were applied by 
     substituting for the exemption amount an amount equal to the 
     sum of the exemption amount, the standard deduction under 
     section 63(c)(2)(C), and any additional standard deduction 
     under section 63(c)(3) which would be applicable to the 
     individual if clause (iii) applied.
       ``(v) An individual who would be described in clause (iii) 
     for the taxable year if--

       ``(I) the requirements of clause (iv) are met with respect 
     to the individual, and
       ``(II) the requirements of subparagraph (B) are met with 
     respect to the individual in lieu of the support test of 
     section 152(a).

       ``(B) Residency test.--The requirements of this 
     subparagraph are met if an individual has as his principal 
     place of abode the home of the taxpayer and--
       ``(i) in the case of an individual who is an ancestor or 
     descendant of the taxpayer or the taxpayer's spouse, is a 
     member of the taxpayer's household for over half the taxable 
     year, or
       ``(ii) in the case of any other individual, is a member of 
     the taxpayer's household for the entire taxable year.
       ``(C) Special rules where more than 1 eligible caregiver.--
       ``(i) In general.--If more than 1 individual is an eligible 
     caregiver with respect to the same applicable individual for 
     taxable years ending with or within the same calendar year, a 
     taxpayer shall be treated as the eligible caregiver if each 
     such individual (other than the taxpayer) files a written 
     declaration (in such form and manner as the Secretary may 
     prescribe) that such individual will not claim such 
     applicable individual for the credit under this section.
       ``(ii) No agreement.--If each individual required under 
     clause (i) to file a written declaration under clause (i) 
     does not do so, the individual with the highest modified 
     adjusted gross income (as defined in section 32(c)(5)) shall 
     be treated as the eligible caregiver.
       ``(iii) Married individuals filing separately.--In the case 
     of married individuals filing separately, the determination 
     under this subparagraph as to whether the husband or wife is 
     the eligible caregiver shall be made under the rules of 
     clause (ii) (whether or not one of them has filed a written 
     declaration under clause (i)).''
       (c) Identification Requirements.--
       (1) In general.--Section 24(e) is amended by adding at the 
     end the following new sentence: ``No credit shall be allowed 
     under this

[[Page S6761]]

     section to a taxpayer with respect to any applicable 
     individual unless the taxpayer includes the name and taxpayer 
     identification number of such individual, and the 
     identification number of the physician certifying such 
     individual, on the return of tax for the taxable year.''
       (2) Assessment.--Section 6213(g)(2)(I) of such Code is 
     amended--
       (A) by inserting ``or physician identification'' after 
     ``correct TIN'', and
       (B) by striking ``child'' and inserting ``family care''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SECTION 202. FULL DEDUCTION FOR HEALTH INSURANCE COSTS OF 
                   SELF-EMPLOYED INDIVIDUALS.

       (a) In General.--Section 162(l)(1) (relating to special 
     rules for health insurance costs of self-employed 
     individuals) is amended to read as follows:
       ``(1) Allowance of deduction.--In the case of an individual 
     who is an employee within the meaning of section 401(c)(1), 
     there shall be allowed as a deduction under this section an 
     amount equal to the amount paid during the taxable year for 
     insurance which constitutes medical care for the taxpayer, 
     the taxpayer's spouse, and dependents.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.
                                 ______
                                 

                      FEINGOLD AMENDMENT NO. 3844

  Mr. FEINGOLD proposed an amendment to the bill, H.R. 8, supra; as 
follows:

       On page 2, line 16, after ``is hereby repealed'', insert 
     the following: ``for estates up to $100,000,000 in size''.

                          ____________________