[Congressional Record Volume 147, Number 178 (Thursday, December 20, 2001)]
[House]
[Pages H10954-H10959]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                VICTIMS OF TERRORISM RELIEF ACT OF 2001

  Mr. THOMAS. Mr. Speaker, I ask unanimous consent to take from the 
Speaker's table the bill (H.R. 2884) to amend the Internal Revenue Code 
of 1986 to provide tax relief for victims of the terrorist attacks 
against the United States on September 11, 2001, with a Senate 
amendment to the House amendment to the Senate amendments thereto, and 
concur in the Senate amendment to the House amendment.
  The Clerk read the title of the bill.
  The Clerk read the Senate amendment to the House amendment, as 
follows:
       Senate Amendment to House Amendment to Senate Amendments:
     In lieu of the matter proposed to be inserted by the House 
     amendment to the text of the bill, insert:

     SECTION 1. SHORT TITLE; ETC.

       (a) Short Title.--This Act may be cited as the ``Victims of 
     Terrorism Tax Relief Act of 2001''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; etc.

                TITLE I--VICTIMS OF TERRORISM TAX RELIEF

     Subtitle A--Relief Provisions for Victims of Terrorist Attacks

Sec. 101. Income taxes of victims of terrorist attacks.
Sec. 102. Exclusion of certain death benefits.
Sec. 103. Estate tax reduction.
Sec. 104. Payments by charitable organizations treated as exempt 
              payments.
Sec. 105. Exclusion of certain cancellations of indebtedness.

                  Subtitle B--Other Relief Provisions

Sec. 111. Exclusion for disaster relief payments.
Sec. 112. Authority to postpone certain deadlines and required actions.
Sec. 113. Application of certain provisions to terroristic or military 
              actions.
Sec. 114. Clarification of due date for airline excise tax deposits.
Sec. 115. Treatment of certain structured settlement payments.
Sec. 116. Personal exemption deduction for certain disability trusts.

   TITLE II--DISCLOSURE OF TAX INFORMATION IN TERRORISM AND NATIONAL 
                        SECURITY INVESTIGATIONS

Sec. 201. Disclosure of tax information in terrorism and national 
              security investigations.

          TITLE III--NO IMPACT ON SOCIAL SECURITY TRUST FUNDS

Sec. 301. No impact on social security trust funds.

               TITLE I----VICTIMS OF TERRORISM TAX RELIEF

     Subtitle A--Relief Provisions for Victims of Terrorist Attacks

     SEC. 101. INCOME TAXES OF VICTIMS OF TERRORIST ATTACKS.

       (a) In General.--Section 692 (relating to income taxes of 
     members of Armed Forces on death) is amended by adding at the 
     end the following new subsection:
       ``(d) Individuals Dying as a Result of Certain Attacks.--
       ``(1) In general.--In the case of a specified terrorist 
     victim, any tax imposed by this chapter shall not apply--
       ``(A) with respect to the taxable year in which falls the 
     date of death, and
       ``(B) with respect to any prior taxable year in the period 
     beginning with the last taxable year ending before the 
     taxable year in which the wounds, injury, or illness referred 
     to in paragraph (3) were incurred.
       ``(2) $10,000 minimum benefit.--If, but for this paragraph, 
     the amount of tax not imposed by paragraph (1) with respect 
     to a specified terrorist victim is less than $10,000, then 
     such victim shall be treated as having made a payment against 
     the tax imposed by this chapter for such victim's last 
     taxable year in an amount equal to the excess of $10,000 over 
     the amount of tax not so imposed.
       ``(3) Taxation of certain benefits.--Subject to such rules 
     as the Secretary may prescribe, paragraph (1) shall not apply 
     to the amount of any tax imposed by this chapter which would 
     be computed by only taking into account the items of income, 
     gain, or other amounts attributable to--
       ``(A) deferred compensation which would have been payable 
     after death if the individual had died other than as a 
     specified terrorist victim, or
       ``(B) amounts payable in the taxable year which would not 
     have been payable in such taxable year but for an action 
     taken after September 11, 2001.
       ``(4) Specified terrorist victim.--For purposes of this 
     subsection, the term `specified terrorist victim' means any 
     decedent--
       ``(A) who dies as a result of wounds or injury incurred as 
     a result of the terrorist attacks against the United States 
     on April 19, 1995, or September 11, 2001, or
       ``(B) who dies as a result of illness incurred as a result 
     of an attack involving anthrax occurring on or after 
     September 11, 2001, and before January 1, 2002.
     Such term shall not include any individual identified by the 
     Attorney General to have been a participant or conspirator in 
     any such attack or a representative of such an individual.''.
       (b) Conforming Amendments.--
       (1) Section 5(b)(1) is amended by inserting ``and victims 
     of certain terrorist attacks'' before ``on death''.
       (2) Section 6013(f)(2)(B) is amended by inserting ``and 
     victims of certain terrorist attacks'' before ``on death''.
       (c) Clerical Amendments.--
       (1) The heading of section 692 is amended to read as 
     follows:

     ``SEC. 692. INCOME TAXES OF MEMBERS OF ARMED FORCES AND 
                   VICTIMS OF CERTAIN TERRORIST ATTACKS ON 
                   DEATH.''.

       (2) The item relating to section 692 in the table of 
     sections for part II of subchapter J of chapter 1 is amended 
     to read as follows:

``Sec. 692. Income taxes of members of Armed Forces and victims of 
              certain terrorist attacks on death.''.

       (d) Effective Date; Waiver of Limitations.--
       (1) Effective date.--The amendments made by this section 
     shall apply to taxable years ending before, on, or after 
     September 11, 2001.
       (2) Waiver of limitations.--If refund or credit of any 
     overpayment of tax resulting from the amendments made by this 
     section is prevented at any time before the close of the 1-
     year period beginning on the date of the enactment of this 
     Act by the operation of any law or rule of law (including res 
     judicata), such refund or credit may nevertheless be made or 
     allowed if claim therefor is filed before the close of such 
     period.

     SEC. 102. EXCLUSION OF CERTAIN DEATH BENEFITS.

       (a) In General.--Section 101 (relating to certain death 
     benefits) is amended by adding at the end the following new 
     subsection:
       ``(i) Certain Employee Death Benefits Payable by Reason of 
     Death of Certain Terrorist Victims.--
       ``(1) In general.--Gross income does not include amounts 
     (whether in a single sum or otherwise) paid by an employer by 
     reason of the death of an employee who is a specified 
     terrorist victim (as defined in section 692(d)(4)).
       ``(2) Limitation.--
       ``(A) In general.--Subject to such rules as the Secretary 
     may prescribe, paragraph (1) shall not apply to amounts which 
     would have been payable after death if the individual had 
     died other than as a specified terrorist victim (as so 
     defined).
       ``(B) Exception.--Subparagraph (A) shall not apply to 
     incidental death benefits paid from a plan described in 
     section 401(a) and exempt from tax under section 501(a).
       ``(3) Treatment of self-employed individuals.--For purposes 
     of paragraph (1), the term `employee' includes a self-
     employed individual (as defined in section 401(c)(1)).''.
       (b) Effective Date; Waiver of Limitations.--
       (1) Effective date.--The amendment made by this section 
     shall apply to taxable years ending before, on, or after 
     September 11, 2001.
       (2) Waiver of limitations.--If refund or credit of any 
     overpayment of tax resulting from the amendments made by this 
     section is prevented at any time before the close of the 1-
     year period beginning on the date of the enactment of this 
     Act by the operation of any law or rule of law (including res 
     judicata), such refund or credit may nevertheless be made or 
     allowed if claim therefor is filed before the close of such 
     period.

     SEC. 103. ESTATE TAX REDUCTION.

       (a) In General.--Section 2201 is amended to read as 
     follows:

     ``SEC. 2201. COMBAT ZONE-RELATED DEATHS OF MEMBERS OF THE 
                   ARMED FORCES AND DEATHS OF VICTIMS OF CERTAIN 
                   TERRORIST ATTACKS.

       ``(a) In General.--Unless the executor elects not to have 
     this section apply, in applying sections 2001 and 2101 to the 
     estate of a qualified decedent, the rate schedule set forth 
     in subsection (c) shall be deemed to be the rate schedule set 
     forth in section 2001(c).
       ``(b) Qualified Decedent.--For purposes of this section, 
     the term `qualified decedent' means--
       ``(1) any citizen or resident of the United States dying 
     while in active service of the Armed Forces of the United 
     States, if such decedent--
       ``(A) was killed in action while serving in a combat zone, 
     as determined under section 112(c), or
       ``(B) died as a result of wounds, disease, or injury 
     suffered while serving in a combat zone (as determined under 
     section 112(c)), and while in the line of duty, by reason of 
     a hazard to which such decedent was subjected as an incident 
     of such service, and
       ``(2) any specified terrorist victim (as defined in section 
     692(d)(4)).

[[Page H10955]]

       ``(c) Rate Schedule.--

``If the amount with respect to which the tentative tax to be computed 
The tentative tax is:
1 percent of the amount by which such amount exceeds $100,000..........
$500 plus 2 percent of the excess over $150,000........................
$1,500 plus 3 percent of the excess over $200,000......................
$4,500 plus 4 percent of the excess over $300,000......................
$12,500 plus 5 percent of the excess over $500,000.....................
$22,500 plus 6 percent of the excess over $700,000.....................
$34,500 plus 7 percent of the excess over $900,000.....................
$48,500 plus 8 percent of the excess over $1,100,000...................
$88,500 plus 9 percent of the excess over $1,600,000...................
$133,500 plus 10 percent of the excess over $2,100,000.................
$183,500 plus 11 percent of the excess over $2,600,000.................
$238,500 plus 12 percent of the excess over $3,100,000.................
$298,500 plus 13 percent of the excess over $3,600,000.................
$363,500 plus 14 percent of the excess over $4,100,000.................
$503,500 plus 15 percent of the excess over $5,100,000.................
$653,500 plus 16 percent of the excess over $6,100,000.................
$813,500 plus 17 percent of the excess over $7,100,000.................
$983,500 plus 18 percent of the excess over $8,100,000.................
$1,163,500 plus 19 percent of the excess over $9,100,000...............
$1,353,500 plus 20 percent of the excess over $10,100,000..............

       ``(d) Determination of Unified Credit.--In the case of an 
     estate to which this section applies, subsection (a) shall 
     not apply in determining the credit under section 2010.''.
       (b) Conforming Amendments.--
       (1) Section 2011 is amended by striking subsection (d) and 
     by redesignating subsections (e), (f), and (g) as subsections 
     (d), (e), and (f), respectively.
       (2) Section 2053(d)(3)(B) is amended by striking ``section 
     2011(e)'' and inserting ``section 2011(d)''.
       (3) Paragraph (9) of section 532(c) of the Economic Growth 
     and Tax Relief Reconciliation Act of 2001 is repealed.
       (c) Clerical Amendment.--The item relating to section 2201 
     in the table of sections for subchapter C of chapter 11 is 
     amended to read as follows:

``Sec. 2201. Combat zone-related deaths of members of the Armed Forces 
              and deaths of victims of certain terrorist attacks.''.

       (d) Effective Date; Waiver of Limitations.--
       (1) Effective date.--The amendments made by this section 
     shall apply to estates of decedents--
       (A) dying on or after September 11, 2001, and
       (B) in the case of individuals dying as a result of the 
     April 19, 1995, terrorist attack, dying on or after April 19, 
     1995.
       (2) Waiver of limitations.--If refund or credit of any 
     overpayment of tax resulting from the amendments made by this 
     section is prevented at any time before the close of the 1-
     year period beginning on the date of the enactment of this 
     Act by the operation of any law or rule of law (including res 
     judicata), such refund or credit may nevertheless be made or 
     allowed if claim therefor is filed before the close of such 
     period.

     SEC. 104. PAYMENTS BY CHARITABLE ORGANIZATIONS TREATED AS 
                   EXEMPT PAYMENTS.

       (a) In General.--For purposes of the Internal Revenue Code 
     of 1986--
       (1) payments made by an organization described in section 
     501(c)(3) of such Code by reason of the death, injury, 
     wounding, or illness of an individual incurred as the result 
     of the terrorist attacks against the United States on 
     September 11, 2001, or an attack involving anthrax occurring 
     on or after September 11, 2001, and before January 1, 2002, 
     shall be treated as related to the purpose or function 
     constituting the basis for such organization's exemption 
     under section 501 of such Code if such payments are made in 
     good faith using a reasonable and objective formula which is 
     consistently applied, and
       (2) in the case of a private foundation (as defined in 
     section 509 of such Code), any payment described in paragraph 
     (1) shall not be treated as made to a disqualified person for 
     purposes of section 4941 of such Code.
       (b) Effective Date.--This section shall apply to payments 
     made on or after September 11, 2001.

     SEC. 105. EXCLUSION OF CERTAIN CANCELLATIONS OF INDEBTEDNESS.

       (a) In General.--For purposes of the Internal Revenue Code 
     of 1986--
       (1) gross income shall not include any amount which (but 
     for this section) would be includible in gross income by 
     reason of the discharge (in whole or in part) of indebtedness 
     of any taxpayer if the discharge is by reason of the death of 
     an individual incurred as the result of the terrorist attacks 
     against the United States on September 11, 2001, or as the 
     result of illness incurred as a result of an attack involving 
     anthrax occurring on or after September 11, 2001, and before 
     January 1, 2002, and
       (2) return requirements under section 6050P of such Code 
     shall not apply to any discharge described in paragraph (1).
       (b) Effective Date.--This section shall apply to discharges 
     made on or after September 11, 2001, and before January 1, 
     2002.

                  Subtitle B--Other Relief Provisions

     SEC. 111. EXCLUSION FOR DISASTER RELIEF PAYMENTS.

       (a) In General.--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. DISASTER RELIEF PAYMENTS.

       ``(a) General Rule.--Gross income shall not include any 
     amount received by an individual as a qualified disaster 
     relief payment.
       ``(b) Qualified Disaster Relief Payment Defined.--For 
     purposes of this section, the term `qualified disaster relief 
     payment' means any amount paid to or for the benefit of an 
     individual--
       ``(1) to reimburse or pay reasonable and necessary 
     personal, family, living, or funeral expenses incurred as a 
     result of a qualified disaster,
       ``(2) to reimburse or pay reasonable and necessary expenses 
     incurred for the repair or rehabilitation of a personal 
     residence or repair or replacement of its contents to the 
     extent that the need for such repair, rehabilitation, or 
     replacement is attributable to a qualified disaster,
       ``(3) by a person engaged in the furnishing or sale of 
     transportation as a common carrier by reason of the death or 
     personal physical injuries incurred as a result of a 
     qualified disaster, or
       ``(4) if such amount is paid by a Federal, State, or local 
     government, or agency or instrumentality thereof, in 
     connection with a qualified disaster in order to promote the 
     general welfare,
     but only to the extent any expense compensated by such 
     payment is not otherwise compensated for by insurance or 
     otherwise.
       ``(c) Qualified Disaster Defined.--For purposes of this 
     section, the term `qualified disaster' means--
       ``(1) a disaster which results from a terroristic or 
     military action (as defined in section 692(c)(2)),
       ``(2) a Presidentially declared disaster (as defined in 
     section 1033(h)(3)),
       ``(3) a disaster which results from an accident involving a 
     common carrier, or from any other event, which is determined 
     by the Secretary to be of a catastrophic nature, or
       ``(4) with respect to amounts described in subsection 
     (b)(4), a disaster which is determined by an applicable 
     Federal, State, or local authority (as determined by the 
     Secretary) to warrant assistance from the Federal, State, or 
     local government or agency or instrumentality thereof.
       ``(d) Coordination With Employment Taxes.--For purposes of 
     chapter 2 and subtitle C, a qualified disaster relief payment 
     shall not be treated as net earnings from self-employment, 
     wages, or compensation subject to tax.
       ``(e) No Relief for Certain Individuals.--Subsections (a) 
     and (f) shall not apply with respect to any individual 
     identified by the Attorney General to have been a participant 
     or conspirator in a terroristic action (as so defined), or a 
     representative of such individual.
       ``(f) Exclusion of Certain Additional Payments.--Gross 
     income shall not include any amount received as payment under 
     section 406 of the Air Transportation Safety and System 
     Stabilization Act.''
       (b) Conforming Amendments.--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. Disaster relief payments.
``Sec. 140. Cross references to other Acts.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending on or after September 11, 
     2001.

     SEC. 112. AUTHORITY TO POSTPONE CERTAIN DEADLINES AND 
                   REQUIRED ACTIONS.

       (a) Expansion of Authority Relating to Disasters and 
     Terroristic or Military Actions.--Section 7508A is amended to 
     read as follows:

     ``SEC. 7508A. AUTHORITY TO POSTPONE CERTAIN DEADLINES BY 
                   REASON OF PRESIDENTIALLY DECLARED DISASTER OR 
                   TERRORISTIC OR MILITARY ACTIONS.

       ``(a) In General.--In the case of a taxpayer determined by 
     the Secretary to be affected by a Presidentially declared 
     disaster (as defined in section 1033(h)(3)) or a terroristic 
     or military action (as defined in section 692(c)(2)), the 
     Secretary may specify a period of up to one year that may be 
     disregarded in determining, under the internal revenue laws, 
     in respect of any tax liability of such taxpayer--
       ``(1) whether any of the acts described in paragraph (1) of 
     section 7508(a) were performed within the time prescribed 
     therefor (determined without regard to extension under any 
     other provision of this subtitle for periods after the date 
     (determined by the Secretary) of such disaster or action),

[[Page H10956]]

       ``(2) the amount of any interest, penalty, additional 
     amount, or addition to the tax for periods after such date, 
     and
       ``(3) the amount of any credit or refund.
       ``(b) Special Rules Regarding Pensions, Etc.--In the case 
     of a pension or other employee benefit plan, or any sponsor, 
     administrator, participant, beneficiary, or other person with 
     respect to such plan, affected by a disaster or action 
     described in subsection (a), the Secretary may specify a 
     period of up to one year which may be disregarded in 
     determining the date by which any action is required or 
     permitted to be completed under this title. No plan shall be 
     treated as failing to be operated in accordance with the 
     terms of the plan solely as the result of disregarding any 
     period by reason of the preceding sentence.
       ``(c) Special Rules for Overpayments.--The rules of section 
     7508(b) shall apply for purposes of this section.''.
       (b) Clarification of Scope of Acts Secretary May 
     Postpone.--Section 7508(a)(1)(K) (relating to time to be 
     disregarded) is amended by striking ``in regulations 
     prescribed under this section''.
       (c) Conforming Amendments to ERISA.--
       (1) Part 5 of subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1131 et 
     seq.) is amended by adding at the end the following new 
     section:

     ``SEC. 518. AUTHORITY TO POSTPONE CERTAIN DEADLINES BY REASON 
                   OF PRESIDENTIALLY DECLARED DISASTER OR 
                   TERRORISTIC OR MILITARY ACTIONS.

       ``In the case of a pension or other employee benefit plan, 
     or any sponsor, administrator, participant, beneficiary, or 
     other person with respect to such plan, affected by a 
     Presidentially declared disaster (as defined in section 
     1033(h)(3) of the Internal Revenue Code of 1986) or a 
     terroristic or military action (as defined in section 
     692(c)(2) of such Code), the Secretary may, notwithstanding 
     any other provision of law, prescribe, by notice or 
     otherwise, a period of up to one year which may be 
     disregarded in determining the date by which any action is 
     required or permitted to be completed under this Act. No plan 
     shall be treated as failing to be operated in accordance with 
     the terms of the plan solely as the result of disregarding 
     any period by reason of the preceding sentence.''.
       (2) Section 4002 of Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1302) is amended by adding at the end the 
     following new subsection:
       ``(i) Special Rules Regarding Disasters, Etc.--In the case 
     of a pension or other employee benefit plan, or any sponsor, 
     administrator, participant, beneficiary, or other person with 
     respect to such plan, affected by a Presidentially declared 
     disaster (as defined in section 1033(h)(3) of the Internal 
     Revenue Code of 1986) or a terroristic or military action (as 
     defined in section 692(c)(2) of such Code), the corporation 
     may, notwithstanding any other provision of law, prescribe, 
     by notice or otherwise, a period of up to one year which may 
     be disregarded in determining the date by which any action is 
     required or permitted to be completed under this Act. No plan 
     shall be treated as failing to be operated in accordance with 
     the terms of the plan solely as the result of disregarding 
     any period by reason of the preceding sentence.''.
       (d) Additional Conforming Amendments.--
       (1) Section 6404 is amended--
       (A) by striking subsection (h),
       (B) by redesignating subsection (i) as subsection (h), and
       (C) by adding at the end the following new subsection:
       ``(i) Cross Reference.--

  ``For authority to suspend running of interest, etc. by reason of 
Presidentially declared disaster or terroristic or military action, see 
section 7508A.''.

       (2) Section 6081(c) is amended to read as follows:
       ``(c) Cross References.--

  ``For time for performing certain acts postponed by reason of war, 
see section 7508, and by reason of Presidentially declared disaster or 
terroristic or military action, see section 7508A.''.

       (3) Section 6161(d) is amended by adding at the end the 
     following new paragraph:
       ``(3) Postponement of certain acts.--

  ``For time for performing certain acts postponed by reason of war, 
see section 7508, and by reason of Presidentially declared disaster or 
terroristic or military action, see section 7508A.''.

       (e) Clerical Amendments.--
       (1) The item relating to section 7508A in the table of 
     sections for chapter 77 is amended to read as follows:

``Sec. 7508A. Authority to postpone certain deadlines by reason of 
              Presidentially declared disaster or terroristic or 
              military actions.''.

       (2) The table of contents for the Employee Retirement 
     Income Security Act of 1974 is amended by inserting after the 
     item relating to section 517 the following new item:

``Sec. 518. Authority to postpone certain deadlines by reason of 
              Presidentially declared disaster or terroristic or 
              military actions.''.

       (f) Effective Date.--The amendments made by this section 
     shall apply to disasters and terroristic or military actions 
     occurring on or after September 11, 2001, with respect to any 
     action of the Secretary of the Treasury, the Secretary of 
     Labor, or the Pension Benefit Guaranty Corporation occurring 
     on or after the date of the enactment of this Act.

     SEC. 113. APPLICATION OF CERTAIN PROVISIONS TO TERRORISTIC OR 
                   MILITARY ACTIONS.

       (a) Disability Income.--Section 104(a)(5) (relating to 
     compensation for injuries or sickness) is amended by striking 
     ``a violent attack'' and all that follows through the period 
     and inserting ``a terroristic or military action (as defined 
     in section 692(c)(2)).''.
       (b) Exemption From Income Tax for Certain Military or 
     Civilian Employees.--Section 692(c) is amended--
       (1) by striking ``outside the United States'' in paragraph 
     (1), and
       (2) by striking ``Sustained Overseas'' in the heading.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending on or after September 11, 
     2001.

     SEC. 114. CLARIFICATION OF DUE DATE FOR AIRLINE EXCISE TAX 
                   DEPOSITS.

       (a) In General.--Paragraph (3) of section 301(a) of the Air 
     Transportation Safety and System Stabilization Act (Public 
     Law 107-42) is amended to read as follows:
       ``(3) Airline-related deposit.--For purposes of this 
     subsection, the term `airline-related deposit' means any 
     deposit of taxes imposed by subchapter C of chapter 33 of 
     such Code (relating to transportation by air).''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in section 301 of the Air 
     Transportation Safety and System Stabilization Act (Public 
     Law 107-42).

     SEC. 115. TREATMENT OF CERTAIN STRUCTURED SETTLEMENT 
                   PAYMENTS.

       (a) In General.--Subtitle E is amended by adding at the end 
     the following new chapter:

       ``CHAPTER 55--STRUCTURED SETTLEMENT FACTORING TRANSACTIONS

``Sec. 5891. Structured settlement factoring transactions.

     ``SEC. 5891. STRUCTURED SETTLEMENT FACTORING TRANSACTIONS.

       ``(a) Imposition of Tax.--There is hereby imposed on any 
     person who acquires directly or indirectly structured 
     settlement payment rights in a structured settlement 
     factoring transaction a tax equal to 40 percent of the 
     factoring discount as determined under subsection (c)(4) with 
     respect to such factoring transaction.
       ``(b) Exception for Certain Approved Transactions.--
       ``(1) In general.--The tax under subsection (a) shall not 
     apply in the case of a structured settlement factoring 
     transaction in which the transfer of structured settlement 
     payment rights is approved in advance in a qualified order.
       ``(2) Qualified order.--For purposes of this section, the 
     term `qualified order' means a final order, judgment, or 
     decree which--
       ``(A) finds that the transfer described in paragraph (1)--
       ``(i) does not contravene any Federal or State statute or 
     the order of any court or responsible administrative 
     authority, and
       ``(ii) is in the best interest of the payee, taking into 
     account the welfare and support of the payee's dependents, 
     and
       ``(B) is issued--
       ``(i) under the authority of an applicable State statute by 
     an applicable State court, or
       ``(ii) by the responsible administrative authority (if any) 
     which has exclusive jurisdiction over the underlying action 
     or proceeding which was resolved by means of the structured 
     settlement.
       ``(3) Applicable state statute.--For purposes of this 
     section, the term `applicable State statute' means a statute 
     providing for the entry of an order, judgment, or decree 
     described in paragraph (2)(A) which is enacted by--
       ``(A) the State in which the payee of the structured 
     settlement is domiciled, or
       ``(B) if there is no statute described in subparagraph (A), 
     the State in which either the party to the structured 
     settlement (including an assignee under a qualified 
     assignment under section 130) or the person issuing the 
     funding asset for the structured settlement is domiciled or 
     has its principal place of business.
       ``(4) Applicable state court.--For purposes of this 
     section--
       ``(A) In general.--The term `applicable State court' means, 
     with respect to any applicable State statute, a court of the 
     State which enacted such statute.
       ``(B) Special rule.--In the case of an applicable State 
     statute described in paragraph (3)(B), such term also 
     includes a court of the State in which the payee of the 
     structured settlement is domiciled.
       ``(5) Qualified order dispositive.--A qualified order shall 
     be treated as dispositive for purposes of the exception under 
     this subsection.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Structured settlement.--The term `structured 
     settlement' means an arrangement--
       ``(A) which is established by--
       ``(i) suit or agreement for the periodic payment of damages 
     excludable from the gross income of the recipient under 
     section 104(a)(2), or
       ``(ii) agreement for the periodic payment of compensation 
     under any workers' compensation law excludable from the gross 
     income of the recipient under section 104(a)(1), and

[[Page H10957]]

       ``(B) under which the periodic payments are--
       ``(i) of the character described in subparagraphs (A) and 
     (B) of section 130(c)(2), and
       ``(ii) payable by a person who is a party to the suit or 
     agreement or to the workers' compensation claim or by a 
     person who has assumed the liability for such periodic 
     payments under a qualified assignment in accordance with 
     section 130.
       ``(2) Structured settlement payment rights.--The term 
     `structured settlement payment rights' means rights to 
     receive payments under a structured settlement.
       ``(3) Structured settlement factoring transaction.--
       ``(A) In general.--The term `structured settlement 
     factoring transaction' means a transfer of structured 
     settlement payment rights (including portions of structured 
     settlement payments) made for consideration by means of sale, 
     assignment, pledge, or other form of encumbrance or 
     alienation for consideration.
       ``(B) Exception.--Such term shall not include--
       ``(i) the creation or perfection of a security interest in 
     structured settlement payment rights under a blanket security 
     agreement entered into with an insured depository institution 
     in the absence of any action to redirect the structured 
     settlement payments to such institution (or agent or 
     successor thereof) or otherwise to enforce such blanket 
     security interest as against the structured settlement 
     payment rights, or
       ``(ii) a subsequent transfer of structured settlement 
     payment rights acquired in a structured settlement factoring 
     transaction.
       ``(4) Factoring discount.--The term `factoring discount' 
     means an amount equal to the excess of--
       ``(A) the aggregate undiscounted amount of structured 
     settlement payments being acquired in the structured 
     settlement factoring transaction, over
       ``(B) the total amount actually paid by the acquirer to the 
     person from whom such structured settlement payments are 
     acquired.
       ``(5) Responsible administrative authority.--The term 
     `responsible administrative authority' means the 
     administrative authority which had jurisdiction over the 
     underlying action or proceeding which was resolved by means 
     of the structured settlement.
       ``(6) State.--The term `State' includes the Commonwealth of 
     Puerto Rico and any possession of the United States.
       ``(d) Coordination With Other Provisions.--
       ``(1) In general.--If the applicable requirements of 
     sections 72, 104(a)(1), 104(a)(2), 130, and 461(h) were 
     satisfied at the time the structured settlement involving 
     structured settlement payment rights was entered into, the 
     subsequent occurrence of a structured settlement factoring 
     transaction shall not affect the application of the 
     provisions of such sections to the parties to the structured 
     settlement (including an assignee under a qualified 
     assignment under section 130) in any taxable year.
       ``(2) No withholding of tax.--The provisions of section 
     3405 regarding withholding of tax shall not apply to the 
     person making the payments in the event of a structured 
     settlement factoring transaction.''.
       (b) Clerical Amendment.--The table of chapters for subtitle 
     E is amended by adding at the end the following new item:

``Chapter 55. Structured settlement factoring transactions.''.

       (c) Effective Dates.--
       (1) In general.--The amendments made by this section (other 
     than the provisions of section 5891(d) of the Internal 
     Revenue Code of 1986, as added by this section) shall apply 
     to structured settlement factoring transactions (as defined 
     in section 5891(c) of such Code (as so added)) entered into 
     on or after the 30th day following the date of the enactment 
     of this Act.
       (2) Clarification of existing law.--Section 5891(d) of such 
     Code (as so added) shall apply to structured settlement 
     factoring transactions (as defined in section 5891(c) of such 
     Code (as so added)) entered into before, on, or after such 
     30th day.
       (3) Transition rule.--In the case of a structured 
     settlement factoring transaction entered into during the 
     period beginning on the 30th day following the date of the 
     enactment of this Act and ending on July 1, 2002, no tax 
     shall be imposed under section 5891(a) of such Code if--
       (A) the structured settlement payee is domiciled in a State 
     (or possession of the United States) which has not enacted a 
     statute providing that the structured settlement factoring 
     transaction is ineffective unless the transaction has been 
     approved by an order, judgment, or decree of a court (or 
     where applicable, a responsible administrative authority) 
     which finds that such transaction--
       (i) does not contravene any Federal or State statute or the 
     order of any court (or responsible administrative authority), 
     and
       (ii) is in the best interest of the structured settlement 
     payee or is appropriate in light of a hardship faced by the 
     payee, and
       (B) the person acquiring the structured settlement payment 
     rights discloses to the structured settlement payee in 
     advance of the structured settlement factoring transaction 
     the amounts and due dates of the payments to be transferred, 
     the aggregate amount to be transferred, the consideration to 
     be received by the structured settlement payee for the 
     transferred payments, the discounted present value of the 
     transferred payments (including the present value as 
     determined in the manner described in section 7520 of such 
     Code), and the expenses required under the terms of the 
     structured settlement factoring transaction to be paid by the 
     structured settlement payee or deducted from the proceeds of 
     such transaction.

     SEC. 116. PERSONAL EXEMPTION DEDUCTION FOR CERTAIN DISABILITY 
                   TRUSTS.

       (a) In General.--Subsection (b) of section 642 (relating to 
     deduction for personal exemption) is amended to read as 
     follows:
       ``(b) Deduction for Personal Exemption.--
       ``(1) Estates.--An estate shall be allowed a deduction of 
     $600.
       ``(2) Trusts.--
       ``(A) In general.--Except as otherwise provided in this 
     paragraph, a trust shall be allowed a deduction of $100.
       ``(B) Trusts distributing income currently.--A trust which, 
     under its governing instrument, is required to distribute all 
     of its income currently shall be allowed a deduction of $300.
       ``(C) Disability trusts.--
       ``(i) In general.--A qualified disability trust shall be 
     allowed a deduction equal to the exemption amount under 
     section 151(d), determined--

       ``(I) by treating such trust as an individual described in 
     section 151(d)(3)(C)(iii), and
       ``(II) by applying section 67(e) (without the reference to 
     section 642(b)) for purposes of determining the adjusted 
     gross income of the trust.

       ``(ii) Qualified disability trust.--For purposes of clause 
     (i), the term `qualified disability trust' means any trust 
     if--

       ``(I) such trust is a disability trust described in 
     subsection (c)(2)(B)(iv) of section 1917 of the Social 
     Security Act (42 U.S.C. 1396p), and
       ``(II) all of the beneficiaries of the trust as of the 
     close of the taxable year are determined by the Commissioner 
     of Social Security to have been disabled (within the meaning 
     of section 1614(a)(3) of the Social Security Act, 42 U.S.C. 
     1382c(a)(3)) for some portion of such year.

     A trust shall not fail to meet the requirements of subclause 
     (II) merely because the corpus of the trust may revert to a 
     person who is not so disabled after the trust ceases to have 
     any beneficiary who is so disabled.''
       ``(3) Deductions in lieu of personal exemption.--The 
     deductions allowed by this subsection shall be in lieu of the 
     deductions allowed under section 151 (relating to deduction 
     for personal exemption).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years ending on or after September 11, 
     2001.

   TITLE II--DISCLOSURE OF TAX INFORMATION IN TERRORISM AND NATIONAL 
                        SECURITY INVESTIGATIONS

     SEC. 201. DISCLOSURE OF TAX INFORMATION IN TERRORISM AND 
                   NATIONAL SECURITY INVESTIGATIONS.

       (a) Disclosure Without a Request of Information Relating to 
     Terrorist Activities, Etc.--Paragraph (3) of section 6103(i) 
     (relating to disclosure of return information to apprise 
     appropriate officials of criminal activities or emergency 
     circumstances) is amended by adding at the end the following 
     new subparagraph:
       ``(C) Terrorist activities, etc.--
       ``(i) In general.--Except as provided in paragraph (6), the 
     Secretary may disclose in writing return information (other 
     than taxpayer return information) that may be related to a 
     terrorist incident, threat, or activity to the extent 
     necessary to apprise the head of the appropriate Federal law 
     enforcement agency responsible for investigating or 
     responding to such terrorist incident, threat, or activity. 
     The head of the agency may disclose such return information 
     to officers and employees of such agency to the extent 
     necessary to investigate or respond to such terrorist 
     incident, threat, or activity.
       ``(ii) Disclosure to the department of justice.--Returns 
     and taxpayer return information may also be disclosed to the 
     Attorney General under clause (i) to the extent necessary 
     for, and solely for use in preparing, an application under 
     paragraph (7)(D).
       ``(iii) Taxpayer identity.--For purposes of this 
     subparagraph, a taxpayer's identity shall not be treated as 
     taxpayer return information.
       ``(iv) Termination.--No disclosure may be made under this 
     subparagraph after December 31, 2003.''.
       (b) Disclosure Upon Request of Information Relating to 
     Terrorist Activities, Etc.--Subsection (i) of section 6103 
     (relating to disclosure to Federal officers or employees for 
     administration of Federal laws not relating to tax 
     administration) is amended by redesignating paragraph (7) as 
     paragraph (8) and by inserting after paragraph (6) the 
     following new paragraph:
       ``(7) Disclosure upon request of information relating to 
     terrorist activities, etc.--
       ``(A) Disclosure to law enforcement agencies.--
       ``(i) In general.--Except as provided in paragraph (6), 
     upon receipt by the Secretary of a written request which 
     meets the requirements of clause (iii), the Secretary may 
     disclose return information (other than taxpayer return 
     information) to officers and employees of any Federal law 
     enforcement

[[Page H10958]]

     agency who are personally and directly engaged in the 
     response to or investigation of any terrorist incident, 
     threat, or activity.
       ``(ii) Disclosure to state and local law enforcement 
     agencies.--The head of any Federal law enforcement agency may 
     disclose return information obtained under clause (i) to 
     officers and employees of any State or local law enforcement 
     agency but only if such agency is part of a team with the 
     Federal law enforcement agency in such response or 
     investigation and such information is disclosed only to 
     officers and employees who are personally and directly 
     engaged in such response or investigation.
       ``(iii) Requirements.--A request meets the requirements of 
     this clause if--

       ``(I) the request is made by the head of any Federal law 
     enforcement agency (or his delegate) involved in the response 
     to or investigation of any terrorist incident, threat, or 
     activity, and
       ``(II) the request sets forth the specific reason or 
     reasons why such disclosure may be relevant to a terrorist 
     incident, threat, or activity.

       ``(iv) Limitation on use of information.--Information 
     disclosed under this subparagraph shall be solely for the use 
     of the officers and employees to whom such information is 
     disclosed in such response or investigation.
       ``(B) Disclosure to intelligence agencies.--
       ``(i) In general.--Except as provided in paragraph (6), 
     upon receipt by the Secretary of a written request which 
     meets the requirements of clause (ii), the Secretary may 
     disclose return information (other than taxpayer return 
     information) to those officers and employees of the 
     Department of Justice, the Department of the Treasury, and 
     other Federal intelligence agencies who are personally and 
     directly engaged in the collection or analysis of 
     intelligence and counterintelligence information or 
     investigation concerning any terrorist incident, threat, or 
     activity. For purposes of the preceding sentence, the 
     information disclosed under the preceding sentence shall be 
     solely for the use of such officers and employees in such 
     investigation, collection, or analysis.
       ``(ii) Requirements.--A request meets the requirements of 
     this subparagraph if the request--

       ``(I) is made by an individual described in clause (iii), 
     and
       ``(II) sets forth the specific reason or reasons why such 
     disclosure may be relevant to a terrorist incident, threat, 
     or activity.

       ``(iii) Requesting individuals.--An individual described in 
     this subparagraph is an individual--

       ``(I) who is an officer or employee of the Department of 
     Justice or the Department of the Treasury who is appointed by 
     the President with the advice and consent of the Senate or 
     who is the Director of the United States Secret Service, and
       ``(II) who is responsible for the collection and analysis 
     of intelligence and counterintelligence information 
     concerning any terrorist incident, threat, or activity.

       ``(iv) Taxpayer identity.--For purposes of this 
     subparagraph, a taxpayer's identity shall not be treated as 
     taxpayer return information.
       ``(C) Disclosure under ex parte orders.--
       ``(i) In general.--Except as provided in paragraph (6), any 
     return or return information with respect to any specified 
     taxable period or periods shall, pursuant to and upon the 
     grant of an ex parte order by a Federal district court judge 
     or magistrate under clause (ii), be open (but only to the 
     extent necessary as provided in such order) to inspection by, 
     or disclosure to, officers and employees of any Federal law 
     enforcement agency or Federal intelligence agency who are 
     personally and directly engaged in any investigation, 
     response to, or analysis of intelligence and 
     counterintelligence information concerning any terrorist 
     incident, threat, or activity. Return or return information 
     opened to inspection or disclosure pursuant to the preceding 
     sentence shall be solely for the use of such officers and 
     employees in the investigation, response, or analysis, and in 
     any judicial, administrative, or grand jury proceedings, 
     pertaining to such terrorist incident, threat, or activity.
       ``(ii) Application for order.--The Attorney General, the 
     Deputy Attorney General, the Associate Attorney General, any 
     Assistant Attorney General, or any United States attorney may 
     authorize an application to a Federal district court judge or 
     magistrate for the order referred to in clause (i). Upon such 
     application, such judge or magistrate may grant such order if 
     he determines on the basis of the facts submitted by the 
     applicant that--

       ``(I) there is reasonable cause to believe, based upon 
     information believed to be reliable, that the return or 
     return information may be relevant to a matter relating to 
     such terrorist incident, threat, or activity, and
       ``(II) the return or return information is sought 
     exclusively for use in a Federal investigation, analysis, or 
     proceeding concerning any terrorist incident, threat, or 
     activity.

       ``(D) Special rule for ex parte disclosure by the irs.--
       ``(i) In general.--Except as provided in paragraph (6), the 
     Secretary may authorize an application to a Federal district 
     court judge or magistrate for the order referred to in 
     subparagraph (C)(i). Upon such application, such judge or 
     magistrate may grant such order if he determines on the basis 
     of the facts submitted by the applicant that the requirements 
     of subparagraph (C)(ii)(I) are met.
       ``(ii) Limitation on use of information.--Information 
     disclosed under clause (i)--

       ``(I) may be disclosed only to the extent necessary to 
     apprise the head of the appropriate Federal law enforcement 
     agency responsible for investigating or responding to a 
     terrorist incident, threat, or activity, and
       ``(II) shall be solely for use in a Federal investigation, 
     analysis, or proceeding concerning any terrorist incident, 
     threat, or activity.

     The head of such Federal agency may disclose such information 
     to officers and employees of such agency to the extent 
     necessary to investigate or respond to such terrorist 
     incident, threat, or activity.
       ``(E) Termination.--No disclosure may be made under this 
     paragraph after December 31, 2003.''.
       (c) Conforming Amendments.--
       (1) Section 6103(a)(2) is amended by inserting ``any local 
     law enforcement agency receiving information under subsection 
     (i)(7)(A),'' after ``State,''.
       (2) Section 6103(b) is amended by adding at the end the 
     following new paragraph:
       ``(11) Terrorist incident, threat, or activity.--The term 
     `terrorist incident, threat, or activity' means an incident, 
     threat, or activity involving an act of domestic terrorism 
     (as defined in section 2331(5) of title 18, United States 
     Code) or international terrorism (as defined in section 
     2331(1) of such title).''.
       (3) The heading of section 6103(i)(3) is amended by 
     inserting ``or terrorist'' after ``criminal''.
       (4) Paragraph (4) of section 6103(i) is amended--
       (A) in subparagraph (A) by inserting ``or (7)(C)'' after 
     ``paragraph (1)'', and
       (B) in subparagraph (B) by striking ``or (3)(A)'' and 
     inserting ``(3)(A) or (C), or (7)''.
       (5) Paragraph (6) of section 6103(i) is amended--
       (A) by striking ``(3)(A)'' and inserting ``(3)(A) or (C)'', 
     and
       (B) by striking ``or (7)'' and inserting ``(7), or (8)''.
       (6) Section 6103(p)(3) is amended--
       (A) in subparagraph (A) by striking ``(7)(A)(ii)'' and 
     inserting ``(8)(A)(ii)'', and
       (B) in subparagraph (C) by striking ``(i)(3)(B)(i)'' and 
     inserting ``(i)(3)(B)(i) or (7)(A)(ii)''.
       (7) Section 6103(p)(4) is amended--
       (A) in the matter preceding subparagraph (A)--
       (i) by striking ``or (5),'' the first place it appears and 
     inserting ``(5), or (7),'', and
       (ii) by striking ``(i)(3)(B)(i),'' and inserting 
     ``(i)(3)(B)(i) or (7)(A)(ii),'', and
       (B) in subparagraph (F)(ii) by striking ``or (5),'' the 
     first place it appears and inserting ``(5) or (7),''.
       (8) Section 6103(p)(6)(B)(i) is amended by striking 
     ``(i)(7)(A)(ii)'' and inserting ``(i)(8)(A)(ii)''.
       (9) Section 6105(b) is amended--
       (A) by striking ``or'' at the end of paragraph (2),
       (B) by striking ``paragraphs (1) or (2)'' in paragraph (3) 
     and inserting ``paragraph (1), (2), or (3)'',
       (C) by redesignating paragraph (3) as paragraph (4), and
       (D) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) to the disclosure of tax convention information on 
     the same terms as return information may be disclosed under 
     paragraph (3)(C) or (7) of section 6103(i), except that in 
     the case of tax convention information provided by a foreign 
     government, no disclosure may be made under this paragraph 
     without the written consent of the foreign government, or''.

  Mr. THOMAS (during the reading). Mr. Speaker, I ask unanimous consent 
that the Senate amendment to the House amendment to the Senate 
amendments be considered as read and printed in the Record.
  The SPEAKER. Is there objection to the request of the gentleman from 
California?
  There was no objection.
  The SPEAKER. Is there objection to the initial request of the 
gentleman from California?
  There was no objection.
  The SPEAKER. The gentleman from California (Mr. Thomas) is recognized 
for 1 hour.
  Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
  I do want to note that the final act of the Senate in this year of 
2001 and the final act of the House in this year of 2001 was in fact a 
very feeble gesture to those victims of terrorism that fundamentally 
changed our lives on September 11. And notwithstanding the difficulties 
of a democratic government, in which decisions are made quantitatively, 
as we close for this holiday season, the House and the Senate want this 
to be a gesture, small though it may be, to the victims of September 
11.
  Finally, Mr. Speaker, on behalf of all the Members of the House of 
Representatives, I wish to extend to the constitutional head of the 
House of Representatives, the Speaker of the

[[Page H10959]]

House of Representatives, and his family, a very merry holiday, happy 
Christmas, and a good new year.
  The SPEAKER. Thank you.
  Without objection, the Senate amendment to the House amendment is 
concurred in.
  There was no objection.
  A motion to reconsider was laid on the table.
  The SPEAKER. Under a previous order of the House, the gentleman from 
Maryland (Mr. Hoyer) is recognized for 5 minutes.

                          ____________________