[Congressional Record Volume 148, Number 24 (Thursday, March 7, 2002)]
[Senate]
[Pages S1659-S1671]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             JOB CREATION AND WORKER ASSISTANCE ACT OF 2002

  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. DASCHLE. Madam President, I am about to propound a unanimous 
consent request. I have been in consultation with the Republican 
leader, with the distinguished Senator from Iowa, and I know of no 
objections to the request. So at this time I will make it.
  I ask that the Chair now lay before the Senate a message from the 
House on H.R. 3090 and that on Friday, March 8, immediately following 
the usual opening ceremony, the Senate resume consideration of the 
message; that upon disposition of that message, the Senate immediately 
resume consideration of S. 517 and the McCain amendment No. 2979; and 
there be 2 minutes of debate equally divided and controlled, with no 
second-degree amendments in order prior to a vote in relation to the 
McCain amendment.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The Chair laid before the Senate the following message from the House 
of Representatives:

       Resolved, That the House agree to the amendment of the 
     Senate to the bill (H.R. 3090) entitled ``An Act to provide 
     tax incentives for economic recovery'', with the following 
     House amendment to Senate amendment:
       In the amendment of the Senate, strike the matter proposed 
     to be inserted by the Senate and insert the following:

     SECTION 1. SHORT TITLE; ETC.

       (a) Short Title.--This Act may be cited as the ``Job 
     Creation and Worker Assistance Act of 2002''.
       (b) References to Internal Revenue Code of 1986.--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.--

Sec. 1. Short title; etc.

                      TITLE I--BUSINESS PROVISIONS

Sec. 101. Special depreciation allowance for certain property acquired 
              after September 10, 2001, and before September 11, 2004.
Sec. 102. Carryback of certain net operating losses allowed for 5 
              years; temporary suspension of 90 percent AMT limit.

                   TITLE II--UNEMPLOYMENT ASSISTANCE

Sec. 201. Short title.
Sec. 202. Federal-State agreements.
Sec. 203. Temporary extended unemployment compensation account.

[[Page S1660]]

Sec. 204. Payments to States having agreements for the payment of 
              temporary extended unemployment compensation.
Sec. 205. Financing provisions.
Sec. 206. Fraud and overpayments.
Sec. 207. Definitions.
Sec. 208. Applicability.
Sec. 209. Special Reed Act transfer in fiscal year 2002.

    TITLE III--TAX INCENTIVES FOR NEW YORK CITY AND DISTRESSED AREAS

Sec. 301. Tax benefits for area of New York City damaged in terrorist 
              attacks on September 11, 2001.

            TITLE IV--MISCELLANEOUS AND TECHNICAL PROVISIONS

              Subtitle A--General Miscellaneous Provisions

Sec. 401. Allowance of electronic 1099's.
Sec. 402. Excluded cancellation of indebtedness income of S corporation 
              not to result in adjustment to basis of stock of 
              shareholders.
Sec. 403. Limitation on use of nonaccrual experience method of 
              accounting.
Sec. 404. Exclusion for foster care payments to apply to payments by 
              qualified placement agencies.
Sec. 405. Interest rate range for additional funding requirements.
Sec. 406. Adjusted gross income determined by taking into account 
              certain expenses of elementary and secondary school 
              teachers.

                   Subtitle B--Technical Corrections

Sec. 411. Amendments related to Economic Growth and Tax Relief 
              Reconciliation Act of 2001.
Sec. 412. Amendments related to Community Renewal Tax Relief Act of 
              2000.
Sec. 413. Amendments related to the Tax Relief Extension Act of 1999.
Sec. 414. Amendments related to the Taxpayer Relief Act of 1997.
Sec. 415. Amendment related to the Balanced Budget Act of 1997.
Sec. 416. Other technical corrections.
Sec. 417. Clerical amendments.
Sec. 418. Additional corrections.

   TITLE V--SOCIAL SECURITY HELD HARMLESS; BUDGETARY TREATMENT OF ACT

Sec. 501. No impact on social security trust funds.
Sec. 502. Emergency designation.

          TITLE VI--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS

Sec. 601. Allowance of nonrefundable personal credits against regular 
              and minimum tax liability.
Sec. 602. Credit for qualified electric vehicles.
Sec. 603. Credit for electricity produced from certain renewable 
              resources.
Sec. 604. Work opportunity credit.
Sec. 605. Welfare-to-work credit.
Sec. 606. Deduction for clean-fuel vehicles and certain refueling 
              property.
Sec. 607. Taxable income limit on percentage depletion for oil and 
              natural gas produced from marginal properties.
Sec. 608. Qualified zone academy bonds.
Sec. 609. Cover over of tax on distilled spirits.
Sec. 610. Parity in the application of certain limits to mental health 
              benefits.
Sec. 611. Temporary special rules for taxation of life insurance 
              companies.
Sec. 612. Availability of medical savings accounts.
Sec. 613. Incentives for Indian employment and property on Indian 
              reservations.
Sec. 614. Subpart F exemption for active financing.
Sec. 615. Repeal of requirement for approved diesel or kerosene 
              terminals.
Sec. 616. Reauthorization of TANF supplemental grants for population 
              increases for fiscal year 2002.
Sec. 617. 1-year extension of contingency fund under the TANF program.

                      TITLE I--BUSINESS PROVISIONS

     SEC. 101. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN PROPERTY 
                   ACQUIRED AFTER SEPTEMBER 10, 2001, AND BEFORE 
                   SEPTEMBER 11, 2004.

       (a) In General.--Section 168 (relating to accelerated cost 
     recovery system) is amended by adding at the end the 
     following new subsection:
       ``(k) Special Allowance for Certain Property Acquired After 
     September 10, 2001, and Before September 11, 2004.--
       ``(1) Additional allowance.--In the case of any qualified 
     property--
       ``(A) the depreciation deduction provided by section 167(a) 
     for the taxable year in which such property is placed in 
     service shall include an allowance equal to 30 percent of the 
     adjusted basis of the qualified property, and
       ``(B) the adjusted basis of the qualified property shall be 
     reduced by the amount of such deduction before computing the 
     amount otherwise allowable as a depreciation deduction under 
     this chapter for such taxable year and any subsequent taxable 
     year.
       ``(2) Qualified property.--For purposes of this 
     subsection--
       ``(A) In general.--The term `qualified property' means 
     property--
       ``(i)(I) to which this section applies which has a recovery 
     period of 20 years or less,
       ``(II) which is computer software (as defined in section 
     167(f)(1)(B)) for which a deduction is allowable under 
     section 167(a) without regard to this subsection,
       ``(III) which is water utility property, or
       ``(IV) which is qualified leasehold improvement property,
       ``(ii) the original use of which commences with the 
     taxpayer after September 10, 2001,
       ``(iii) which is--

       ``(I) acquired by the taxpayer after September 10, 2001, 
     and before September 11, 2004, but only if no written binding 
     contract for the acquisition was in effect before September 
     11, 2001, or
       ``(II) acquired by the taxpayer pursuant to a written 
     binding contract which was entered into after September 10, 
     2001, and before September 11, 2004, and

       ``(iv) which is placed in service by the taxpayer before 
     January 1, 2005, or, in the case of property described in 
     subparagraph (B), before January 1, 2006.
       ``(B) Certain property having longer production periods 
     treated as qualified property.--
       ``(i) In general.--The term `qualified property' includes 
     property--

       ``(I) which meets the requirements of clauses (i), (ii), 
     and (iii) of subparagraph (A),
       ``(II) which has a recovery period of at least 10 years or 
     is transportation property, and
       ``(III) which is subject to section 263A by reason of 
     clause (ii) or (iii) of subsection (f)(1)(B) thereof.

       ``(ii) Only pre-september 11, 2004, basis eligible for 
     additional allowance.--In the case of property which is 
     qualified property solely by reason of clause (i), paragraph 
     (1) shall apply only to the extent of the adjusted basis 
     thereof attributable to manufacture, construction, or 
     production before September 11, 2004.
       ``(iii) Transportation property.--For purposes of this 
     subparagraph, the term `transportation property' means 
     tangible personal property used in the trade or business of 
     transporting persons or property.
       ``(C) Exceptions.--
       ``(i) Alternative depreciation property.--The term 
     `qualified property' shall not include any property to which 
     the alternative depreciation system under subsection (g) 
     applies, determined--

       ``(I) without regard to paragraph (7) of subsection (g) 
     (relating to election to have system apply), and
       ``(II) after application of section 280F(b) (relating to 
     listed property with limited business use).

       ``(ii) Qualified new york liberty zone leasehold 
     improvement property.--The term `qualified property' shall 
     not include any qualified New York Liberty Zone leasehold 
     improvement property (as defined in section 1400L(c)(2)).
       ``(iii) Election out.--If a taxpayer makes an election 
     under this clause with respect to any class of property for 
     any taxable year, this subsection shall not apply to all 
     property in such class placed in service during such taxable 
     year.
       ``(D) Special rules.--
       ``(i) Self-constructed property.--In the case of a taxpayer 
     manufacturing, constructing, or producing property for the 
     taxpayer's own use, the requirements of clause (iii) of 
     subparagraph (A) shall be treated as met if the taxpayer 
     begins manufacturing, constructing, or producing the property 
     after September 10, 2001, and before September 11, 2004.
       ``(ii) Sale-leasebacks.--For purposes of subparagraph 
     (A)(ii), if property--

       ``(I) is originally placed in service after September 10, 
     2001, by a person, and
       ``(II) sold and leased back by such person within 3 months 
     after the date such property was originally placed in 
     service,

     such property shall be treated as originally placed in 
     service not earlier than the date on which such property is 
     used under the leaseback referred to in subclause (II).
       ``(E) Coordination with section 280f.--For purposes of 
     section 280F--
       ``(i) Automobiles.--In the case of a passenger automobile 
     (as defined in section 280F(d)(5)) which is qualified 
     property, the Secretary shall increase the limitation under 
     section 280F(a)(1)(A)(i) by $4,600.
       ``(ii) Listed property.--The deduction allowable under 
     paragraph (1) shall be taken into account in computing any 
     recapture amount under section 280F(b)(2).
       ``(F) Deduction allowed in computing miniumum tax.--For 
     purposes of determining alternative minimum taxable income 
     under section 55, the deduction under subsection (a) for 
     qualified property shall be determined under this section 
     without regard to any adjustment under section 56.
       ``(3) Qualified leasehold improvement property.--For 
     purposes of this subsection--
       ``(A) In general.--The term `qualified leasehold 
     improvement property' means any improvement to an interior 
     portion of a building which is nonresidential real property 
     if--
       ``(i) such improvement is made under or pursuant to a lease 
     (as defined in subsection (h)(7))--

       ``(I) by the lessee (or any sublessee) of such portion, or
       ``(II) by the lessor of such portion,

       ``(ii) such portion is to be occupied exclusively by the 
     lessee (or any sublessee) of such portion, and
       ``(iii) such improvement is placed in service more than 3 
     years after the date the building was first placed in 
     service.
       ``(B) Certain improvements not included.--Such term shall 
     not include any improvement for which the expenditure is 
     attributable to--
       ``(i) the enlargement of the building,
       ``(ii) any elevator or escalator,
       ``(iii) any structural component benefiting a common area, 
     and
       ``(iv) the internal structural framework of the building.
       ``(C) Definitions and special rules.--For purposes of this 
     paragraph--
       ``(i) Commitment to lease treated as lease.--A commitment 
     to enter into a lease shall be treated as a lease, and the 
     parties to such commitment shall be treated as lessor and 
     lessee, respectively.
       ``(ii) Related persons.--A lease between related persons 
     shall not be considered a lease.

[[Page S1661]]

     For purposes of the preceding sentence, the term `related 
     persons' means--

       ``(I) members of an affiliated group (as defined in section 
     1504), and
       ``(II) persons having a relationship described in 
     subsection (b) of section 267; except that, for purposes of 
     this clause, the phrase `80 percent or more' shall be 
     substituted for the phrase `more than 50 percent' each place 
     it appears in such subsection.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after September 10, 
     2001, in taxable years ending after such date.

     SEC. 102. CARRYBACK OF CERTAIN NET OPERATING LOSSES ALLOWED 
                   FOR 5 YEARS; TEMPORARY SUSPENSION OF 90 PERCENT 
                   AMT LIMIT.

       (a) In General.--Paragraph (1) of section 172(b) (relating 
     to years to which loss may be carried) is amended by adding 
     at the end the following new subparagraph:
       ``(H) In the case of a taxpayer which has a net operating 
     loss for any taxable year ending during 2001 or 2002, 
     subparagraph (A)(i) shall be applied by substituting `5' for 
     `2' and subparagraph (F) shall not apply.''.
       (b) Election To Disregard 5-Year Carryback.--Section 172 
     (relating to net operating loss deduction) is amended by 
     redesignating subsection (j) as subsection (k) and by 
     inserting after subjection (i) the following new subsection:
       ``(j) Election To Disregard 5-Year Carryback for Certain 
     Net Operating Losses.--Any taxpayer entitled to a 5-year 
     carryback under subsection (b)(1)(H) from any loss year may 
     elect to have the carryback period with respect to such loss 
     year determined without regard to subsection (b)(1)(H). Such 
     election shall be made in such manner as may be prescribed by 
     the Secretary and shall be made by the due date (including 
     extensions of time) for filing the taxpayer's return for the 
     taxable year of the net operating loss. Such election, once 
     made for any taxable year, shall be irrevocable for such 
     taxable year.''.
       (c) Temporary Suspension of 90 Percent Limit on Certain NOL 
     Carryovers.--
       (1) In general.--Subparagraph (A) of section 56(d)(1) 
     (relating to general rule defining alternative tax net 
     operating loss deduction) is amended to read as follows:
       ``(A) the amount of such deduction shall not exceed the sum 
     of--
       ``(i) the lesser of--

       ``(I) the amount of such deduction attributable to net 
     operating losses (other than the deduction attributable to 
     carryovers described in clause (ii)(I)), or
       ``(II) 90 percent of alternative minimum taxable income 
     determined without regard to such deduction, plus

       ``(ii) the lesser of--

       ``(I) the amount of such deduction attributable to the sum 
     of carrybacks of net operating losses for taxable years 
     ending during 2001 or 2002 and carryforwards of net operating 
     losses to taxable years ending during 2001 and 2002, or
       ``(II) alternative minimum taxable income determined 
     without regard to such deduction reduced by the amount 
     determined under clause (i), and''.

       (2) Effective date.--The amendment made by this subsection 
     shall apply to taxable years ending before January 1, 2003.
       (d) Effective Date.--Except as provided in subsection (c), 
     the amendments made by this section shall apply to net 
     operating losses for taxable years ending after December 31, 
     2000.

                   TITLE II--UNEMPLOYMENT ASSISTANCE

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Temporary Extended 
     Unemployment Compensation Act of 2002''.

     SEC. 202. FEDERAL-STATE AGREEMENTS.

       (a) In General.--Any State which desires to do so may enter 
     into and participate in an agreement under this title with 
     the Secretary of Labor (in this title referred to as the 
     ``Secretary''). Any State which is a party to an agreement 
     under this title may, upon providing 30 days' written notice 
     to the Secretary, terminate such agreement.
       (b) Provisions of Agreement.--Any agreement under 
     subsection (a) shall provide that the State agency of the 
     State will make payments of temporary extended unemployment 
     compensation to individuals who--
       (1) have exhausted all rights to regular compensation under 
     the State law or under Federal law with respect to a benefit 
     year (excluding any benefit year that ended before March 15, 
     2001);
       (2) have no rights to regular compensation or extended 
     compensation with respect to a week under such law or any 
     other State unemployment compensation law or to compensation 
     under any other Federal law;
       (3) are not receiving compensation with respect to such 
     week under the unemployment compensation law of Canada; and
       (4) filed an initial claim for regular compensation on or 
     after March 15, 2001.
       (c) Exhaustion of Benefits.--For purposes of subsection 
     (b)(1), an individual shall be deemed to have exhausted such 
     individual's rights to regular compensation under a State law 
     when--
       (1) no payments of regular compensation can be made under 
     such law because such individual has received all regular 
     compensation available to such individual based on employment 
     or wages during such individual's base period; or
       (2) such individual's rights to such compensation have been 
     terminated by reason of the expiration of the benefit year 
     with respect to which such rights existed.
       (d) Weekly Benefit Amount, Etc.--For purposes of any 
     agreement under this title--
       (1) the amount of temporary extended unemployment 
     compensation which shall be payable to any individual for any 
     week of total unemployment shall be equal to the amount of 
     the regular compensation (including dependents' allowances) 
     payable to such individual during such individual's benefit 
     year under the State law for a week of total unemployment;
       (2) the terms and conditions of the State law which apply 
     to claims for regular compensation and to the payment thereof 
     shall apply to claims for temporary extended unemployment 
     compensation and the payment thereof, except--
       (A) that an individual shall not be eligible for temporary 
     extended unemployment compensation under this title unless, 
     in the base period with respect to which the individual 
     exhausted all rights to regular compensation under the State 
     law, the individual had 20 weeks of full-time insured 
     employment or the equivalent in insured wages, as determined 
     under the provisions of the State law implementing section 
     202(a)(5) of the Federal-State Extended Unemployment 
     Compensation Act of 1970 (26 U.S.C. 3304 note); and
       (B) where otherwise inconsistent with the provisions of 
     this title or with the regulations or operating instructions 
     of the Secretary promulgated to carry out this title; and
       (3) the maximum amount of temporary extended unemployment 
     compensation payable to any individual for whom a temporary 
     extended unemployment compensation account is established 
     under section 203 shall not exceed the amount established in 
     such account for such individual.
       (e) Election by States.--Notwithstanding any other 
     provision of Federal law (and if State law permits), the 
     Governor of a State that is in an extended benefit period may 
     provide for the payment of temporary extended unemployment 
     compensation in lieu of extended compensation to individuals 
     who otherwise meet the requirements of this section. Such an 
     election shall not require a State to trigger off an extended 
     benefit period.

     SEC. 203. TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION 
                   ACCOUNT.

       (a) In General.--Any agreement under this title shall 
     provide that the State will establish, for each eligible 
     individual who files an application for temporary extended 
     unemployment compensation, a temporary extended unemployment 
     compensation account with respect to such individual's 
     benefit year.
       (b) Amount in Account.--
       (1) In general.--The amount established in an account under 
     subsection (a) shall be equal to the lesser of--
       (A) 50 percent of the total amount of regular compensation 
     (including dependents' allowances) payable to the individual 
     during the individual's benefit year under such law, or
       (B) 13 times the individual's average weekly benefit amount 
     for the benefit year.
       (2) Weekly benefit amount.--For purposes of this 
     subsection, an individual's weekly benefit amount for any 
     week is the amount of regular compensation (including 
     dependents' allowances) under the State law payable to such 
     individual for such week for total unemployment.
       (c) Special Rule.--
       (1) In general.--Notwithstanding any other provision of 
     this section, if, at the time that the individual's account 
     is exhausted, such individual's State is in an extended 
     benefit period (as determined under paragraph (2)), then, 
     such account shall be augmented by an amount equal to the 
     amount originally established in such account (as determined 
     under subsection (b)(1)).
       (2) Extended benefit period.--For purposes of paragraph 
     (1), a State shall be considered to be in an extended benefit 
     period if, at the time of exhaustion (as described in 
     paragraph (1))--
       (A) such a period is then in effect for such State under 
     the Federal-State Extended Unemployment Compensation Act of 
     1970; or
       (B) such a period would then be in effect for such State 
     under such Act if section 203(d) of such Act were applied as 
     if it had been amended by striking ``5'' each place it 
     appears and inserting ``4''.

     SEC. 204. PAYMENTS TO STATES HAVING AGREEMENTS FOR THE 
                   PAYMENT OF TEMPORARY EXTENDED UNEMPLOYMENT 
                   COMPENSATION.

       (a) General Rule.--There shall be paid to each State that 
     has entered into an agreement under this title an amount 
     equal to 100 percent of the temporary extended unemployment 
     compensation paid to individuals by the State pursuant to 
     such agreement.
       (b) Treatment of Reimbursable Compensation.--No payment 
     shall be made to any State under this section in respect of 
     any compensation to the extent the State is entitled to 
     reimbursement in respect of such compensation under the 
     provisions of any Federal law other than this title or 
     chapter 85 of title 5, United States Code. A State shall not 
     be entitled to any reimbursement under such chapter 85 in 
     respect of any compensation to the extent the State is 
     entitled to reimbursement under this title in respect of such 
     compensation.
       (c) Determination of Amount.--Sums payable to any State by 
     reason of such State having an agreement under this title 
     shall be payable, either in advance or by way of 
     reimbursement (as may be determined by the Secretary), in 
     such amounts as the Secretary estimates the State will be 
     entitled to receive under this title for each calendar month, 
     reduced or increased, as the case may be, by any amount by 
     which the Secretary finds that the Secretary's estimates for 
     any prior calendar month were greater or less than the 
     amounts which should have been paid to the State. Such 
     estimates may be made on the basis of such statistical, 
     sampling, or other method as may be agreed upon by the 
     Secretary and the State agency of the State involved.

     SEC. 205. FINANCING PROVISIONS.

       (a) In General.--Funds in the extended unemployment 
     compensation account (as established by section 905(a) of the 
     Social Security

[[Page S1662]]

     Act (42 U.S.C. 1105(a)) of the Unemployment Trust Fund (as 
     established by section 904(a) of such Act (42 U.S.C. 1104(a)) 
     shall be used for the making of payments to States having 
     agreements entered into under this title.
       (b) Certification.--The Secretary shall from time to time 
     certify to the Secretary of the Treasury for payment to each 
     State the sums payable to such State under this title. The 
     Secretary of the Treasury, prior to audit or settlement by 
     the General Accounting Office, shall make payments to the 
     State in accordance with such certification, by transfers 
     from the extended unemployment compensation account (as so 
     established) to the account of such State in the Unemployment 
     Trust Fund (as so established).
       (c) Assistance to States.--There are appropriated out of 
     the employment security administration account (as 
     established by section 901(a) of the Social Security Act (42 
     U.S.C. 1101(a)) of the Unemployment Trust Fund, without 
     fiscal year limitation, such funds as may be necessary for 
     purposes of assisting States (as provided in title III of the 
     Social Security Act (42 U.S.C. 501 et seq.)) in meeting the 
     costs of administration of agreements under this title.
       (d) Appropriations for Certain Payments.--There are 
     appropriated from the general fund of the Treasury, without 
     fiscal year limitation, to the extended unemployment 
     compensation account (as so established) of the Unemployment 
     Trust Fund (as so established) such sums as the Secretary 
     estimates to be necessary to make the payments under this 
     section in respect of--
       (1) compensation payable under chapter 85 of title 5, 
     United States Code; and
       (2) compensation payable on the basis of services to which 
     section 3309(a)(1) of the Internal Revenue Code of 1986 
     applies.

     Amounts appropriated pursuant to the preceding sentence shall 
     not be required to be repaid.

     SEC. 206. FRAUD AND OVERPAYMENTS.

       (a) In General.--If an individual knowingly has made, or 
     caused to be made by another, a false statement or 
     representation of a material fact, or knowingly has failed, 
     or caused another to fail, to disclose a material fact, and 
     as a result of such false statement or representation or of 
     such nondisclosure such individual has received an amount of 
     temporary extended unemployment compensation under this title 
     to which he was not entitled, such individual--
       (1) shall be ineligible for further temporary extended 
     unemployment compensation under this title in accordance with 
     the provisions of the applicable State unemployment 
     compensation law relating to fraud in connection with a claim 
     for unemployment compensation; and
       (2) shall be subject to prosecution under section 1001 of 
     title 18, United States Code.
       (b) Repayment.--In the case of individuals who have 
     received amounts of temporary extended unemployment 
     compensation under this title to which they were not 
     entitled, the State shall require such individuals to repay 
     the amounts of such temporary extended unemployment 
     compensation to the State agency, except that the State 
     agency may waive such repayment if it determines that--
       (1) the payment of such temporary extended unemployment 
     compensation was without fault on the part of any such 
     individual; and
       (2) such repayment would be contrary to equity and good 
     conscience.
       (c) Recovery by State Agency.--
       (1) In general.--The State agency may recover the amount to 
     be repaid, or any part thereof, by deductions from any 
     temporary extended unemployment compensation payable to such 
     individual under this title or from any unemployment 
     compensation payable to such individual under any Federal 
     unemployment compensation law administered by the State 
     agency or under any other Federal law administered by the 
     State agency which provides for the payment of any assistance 
     or allowance with respect to any week of unemployment, during 
     the 3-year period after the date such individuals received 
     the payment of the temporary extended unemployment 
     compensation to which they were not entitled, except that no 
     single deduction may exceed 50 percent of the weekly benefit 
     amount from which such deduction is made.
       (2) Opportunity for hearing.--No repayment shall be 
     required, and no deduction shall be made, until a 
     determination has been made, notice thereof and an 
     opportunity for a fair hearing has been given to the 
     individual, and the determination has become final.
       (d) Review.--Any determination by a State agency under this 
     section shall be subject to review in the same manner and to 
     the same extent as determinations under the State 
     unemployment compensation law, and only in that manner and to 
     that extent.

     SEC. 207. DEFINITIONS.

       In this title, the terms ``compensation'', ``regular 
     compensation'', ``extended compensation'', ``additional 
     compensation'', ``benefit year'', ``base period'', ``State'', 
     ``State agency'', ``State law'', and ``week'' have the 
     respective meanings given such terms under section 205 of the 
     Federal-State Extended Unemployment Compensation Act of 1970 
     (26 U.S.C. 3304 note).

     SEC. 208. APPLICABILITY.

       An agreement entered into under this title shall apply to 
     weeks of unemployment--
       (1) beginning after the date on which such agreement is 
     entered into; and
       (2) ending before January 1, 2003.

     SEC. 209. SPECIAL REED ACT TRANSFER IN FISCAL YEAR 2002.

       (a) Repeal of Certain Provisions Added by the Balanced 
     Budget Act of 1997.--
       (1) In general.--The following provisions of section 903 of 
     the Social Security Act (42 U.S.C. 1103) are repealed:
       (A) Paragraph (3) of subsection (a).
       (B) The last sentence of subsection (c)(2).
       (2) Savings provision.--Any amounts transferred before the 
     date of enactment of this Act under the provision repealed by 
     paragraph (1)(A) shall remain subject to section 903 of the 
     Social Security Act, as last in effect before such date of 
     enactment.
       (b) Special Transfer in Fiscal Year 2002.--Section 903 of 
     the Social Security Act is amended by adding at the end the 
     following:

                 ``Special Transfer in Fiscal Year 2002

       ``(d)(1) The Secretary of the Treasury shall transfer (as 
     of the date determined under paragraph (5)) from the Federal 
     unemployment account to the account of each State in the 
     Unemployment Trust Fund the amount determined with respect to 
     such State under paragraph (2).
       ``(2)(A) The amount to be transferred under this subsection 
     to a State account shall (as determined by the Secretary of 
     Labor and certified by such Secretary to the Secretary of the 
     Treasury) be equal to--
       ``(i) the amount which would have been required to have 
     been transferred under this section to such account at the 
     beginning of fiscal year 2002 if--
       ``(I) section 209(a)(1) of the Temporary Extended 
     Unemployment Compensation Act of 2002 had been enacted before 
     the close of fiscal year 2001, and
       ``(II) section 5402 of Public Law 105-33 (relating to 
     increase in Federal unemployment account ceiling) had not 
     been enacted,

     minus

       ``(ii) the amount which was in fact transferred under this 
     section to such account at the beginning of fiscal year 2002.
       ``(B) Notwithstanding the provisions of subparagraph (A)--
       ``(i) the aggregate amount transferred to the States under 
     this subsection may not exceed a total of $8,000,000,000; and
       ``(ii) all amounts determined under subparagraph (A) shall 
     be reduced ratably, if and to the extent necessary in order 
     to comply with the limitation under clause (i).
       ``(3)(A) Except as provided in paragraph (4), amounts 
     transferred to a State account pursuant to this subsection 
     may be used only in the payment of cash benefits--
       ``(i) to individuals with respect to their unemployment, 
     and
       ``(ii) which are allowable under subparagraph (B) or (C).
       ``(B)(i) At the option of the State, cash benefits under 
     this paragraph may include amounts which shall be payable 
     as--
       ``(I) regular compensation, or
       ``(II) additional compensation, upon the exhaustion of any 
     temporary extended unemployment compensation (if such State 
     has entered into an agreement under the Temporary Extended 
     Unemployment Compensation Act of 2002), for individuals 
     eligible for regular compensation under the unemployment 
     compensation law of such State.
       ``(ii) Any additional compensation under clause (i) may not 
     be taken into account for purposes of any determination 
     relating to the amount of any extended compensation for which 
     an individual might be eligible.
       ``(C)(i) At the option of the State, cash benefits under 
     this paragraph may include amounts which shall be payable to 
     1 or more categories of individuals not otherwise eligible 
     for regular compensation under the unemployment compensation 
     law of such State, including those described in clause (iii).
       ``(ii) The benefits paid under this subparagraph to any 
     individual may not, for any period of unemployment, exceed 
     the maximum amount of regular compensation authorized under 
     the unemployment compensation law of such State for that same 
     period, plus any additional compensation (described in 
     subparagraph (B)(i)) which could have been paid with respect 
     to that amount.
       ``(iii) The categories of individuals described in this 
     clause include the following:
       ``(I) Individuals who are seeking, or available for, only 
     part-time (and not full-time) work.
       ``(II) Individuals who would be eligible for regular 
     compensation under the unemployment compensation law of such 
     State under an alternative base period.
       ``(D) Amounts transferred to a State account under this 
     subsection may be used in the payment of cash benefits to 
     individuals only for weeks of unemployment beginning after 
     the date of enactment of this subsection.
       ``(4) Amounts transferred to a State account under this 
     subsection may be used for the administration of its 
     unemployment compensation law and public employment offices 
     (including in connection with benefits described in paragraph 
     (3) and any recipients thereof), subject to the same 
     conditions as set forth in subsection (c)(2) (excluding 
     subparagraph (B) thereof, and deeming the reference to 
     `subsections (a) and (b)' in subparagraph (D) thereof to 
     include this subsection).
       ``(5) Transfers under this subsection shall be made within 
     10 days after the date of enactment of this paragraph.''.
       (c) Limitations on Transfers.--Section 903(b) of the Social 
     Security Act shall apply to transfers under section 903(d) of 
     such Act (as amended by this section). For purposes of the 
     preceding sentence, such section 903(b) shall be deemed to be 
     amended as follows:
       (1) By substituting ``the transfer date described in 
     subsection (d)(5)'' for ``October 1 of any fiscal year''.
       (2) By substituting ``remain in the Federal unemployment 
     account'' for ``be transferred to the Federal unemployment 
     account as of the beginning of such October 1''.
       (3) By substituting ``fiscal year 2002 (after the transfer 
     date described in subsection (d)(5))'' for ``the fiscal year 
     beginning on such October 1''.

[[Page S1663]]

       (4) By substituting ``under subsection (d)'' for ``as of 
     October 1 of such fiscal year''.
       (5) By substituting ``(as of the close of fiscal year 
     2002)'' for ``(as of the close of such fiscal year)''.
       (d) Technical Amendments.--(1) Sections 3304(a)(4)(B) and 
     3306(f)(2) of the Internal Revenue Code of 1986 are amended 
     by inserting ``or 903(d)(4)'' before ``of the Social Security 
     Act''.
       (2) Section 303(a)(5) of the Social Security Act is amended 
     in the second proviso by inserting ``or 903(d)(4)'' after 
     ``903(c)(2)''.
       (e) Regulations.--The Secretary of Labor may prescribe any 
     operating instructions or regulations necessary to carry out 
     this section and the amendments made by this section.

    TITLE III--TAX INCENTIVES FOR NEW YORK CITY AND DISTRESSED AREAS

     SEC. 301. TAX BENEFITS FOR AREA OF NEW YORK CITY DAMAGED IN 
                   TERRORIST ATTACKS ON SEPTEMBER 11, 2001.

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

             ``Subchapter Y--New York Liberty Zone Benefits

``Sec. 1400L. Tax benefits for New York Liberty Zone.

     ``SEC. 1400L. TAX BENEFITS FOR NEW YORK LIBERTY ZONE.

       ``(a) Expansion of Work Opportunity Tax Credit.--
       ``(1) In general.--For purposes of section 51, a New York 
     Liberty Zone business employee shall be treated as a member 
     of a targeted group.
       ``(2) New york liberty zone business employee.--For 
     purposes of this subsection--
       ``(A) In general.--The term `New York Liberty Zone business 
     employee' means, with respect to any period, any employee of 
     a New York Liberty Zone business if substantially all the 
     services performed during such period by such employee for 
     such business are performed in the New York Liberty Zone.
       ``(B) Inclusion of certain employees outside the new york 
     liberty zone.--
       ``(i) In general.--In the case of a New York Liberty Zone 
     business described in subclause (II) of subparagraph (C)(i), 
     the term `New York Liberty Zone business employee' includes 
     any employee of such business (not described in subparagraph 
     (A)) if substantially all the services performed during such 
     period by such employee for such business are performed in 
     the City of New York, New York.
       ``(ii) Limitation.--The number of employees of such a 
     business that are treated as New York Liberty zone business 
     employees on any day by reason of clause (i) shall not exceed 
     the excess of--

       ``(I) the number of employees of such business on September 
     11, 2001, in the New York Liberty Zone, over
       ``(II) the number of New York Liberty Zone business 
     employees (determined without regard to this subparagraph) of 
     such business on the day to which the limitation is being 
     applied.

     The Secretary may require any trade or business to have the 
     number determined under subclause (I) verified by the New 
     York State Department of Labor.
       ``(C) New york liberty zone business.--
       ``(i) In general.--The term `New York Liberty Zone 
     business' means any trade or business which is--

       ``(I) located in the New York Liberty Zone, or
       ``(II) located in the City of New York, New York, outside 
     the New York Liberty Zone, as a result of the physical 
     destruction or damage of such place of business by the 
     September 11, 2001, terrorist attack.

       ``(ii) Credit not allowed for large businesses.--The term 
     `New York Liberty Zone business' shall not include any trade 
     or business for any taxable year if such trade or business 
     employed an average of more than 200 employees on business 
     days during the taxable year.
       ``(D) Special rules for determining amount of credit.--For 
     purposes of applying subpart F of part IV of subchapter B of 
     this chapter to wages paid or incurred to any New York 
     Liberty Zone business employee--
       ``(i) section 51(a) shall be applied by substituting 
     `qualified wages' for `qualified first-year wages',
       ``(ii) the rules of section 52 shall apply for purposes of 
     determining the number of employees under subparagraph (B),
       ``(iii) subsections (c)(4) and (i)(2) of section 51 shall 
     not apply, and
       ``(iv) in determining qualified wages, the following shall 
     apply in lieu of section 51(b):

       ``(I) Qualified wages.--The term `qualified wages' means 
     wages paid or incurred by the employer to individuals who are 
     New York Liberty Zone business employees of such employer for 
     work performed during calendar year 2002 or 2003.
       ``(II) Only first $6,000 of wages per calendar year taken 
     into account.--The amount of the qualified wages which may be 
     taken into account with respect to any individual shall not 
     exceed $6,000 per calendar year.

       ``(b) Special Allowance for Certain Property Acquired After 
     September 10, 2001.--
       ``(1) Additional allowance.--In the case of any qualified 
     New York Liberty Zone property--
       ``(A) the depreciation deduction provided by section 167(a) 
     for the taxable year in which such property is placed in 
     service shall include an allowance equal to 30 percent of the 
     adjusted basis of such property, and
       ``(B) the adjusted basis of the qualified New York Liberty 
     Zone property shall be reduced by the amount of such 
     deduction before computing the amount otherwise allowable as 
     a depreciation deduction under this chapter for such taxable 
     year and any subsequent taxable year.
       ``(2) Qualified new york liberty zone property.--For 
     purposes of this subsection--
       ``(A) In general.--The term `qualified New York Liberty 
     Zone property' means property--
       ``(i)(I) which is described in section 168(k)(2)(A)(i), or
       ``(II) which is nonresidential real property, or 
     residential rental property, which is described in 
     subparagraph (B),
       ``(ii) substantially all of the use of which is in the New 
     York Liberty Zone and is in the active conduct of a trade or 
     business by the taxpayer in such Zone,
       ``(iii) the original use of which in the New York Liberty 
     Zone commences with the taxpayer after September 10, 2001,
       ``(iv) which is acquired by the taxpayer by purchase (as 
     defined in section 179(d)) after September 10, 2001, but only 
     if no written binding contract for the acquisition was in 
     effect before September 11, 2001, and
       ``(v) which is placed in service by the taxpayer on or 
     before the termination date.
     The term `termination date' means December 31, 2006 (December 
     31, 2009, in the case of nonresidential real property and 
     residential rental property).
       ``(B) Eligible real property.--Nonresidential real property 
     or residential rental property is described in this 
     subparagraph only to the extent it rehabilitates real 
     property damaged, or replaces real property destroyed or 
     condemned, as a result of the September 11, 2001, terrorist 
     attack. For purposes of the preceding sentence, property 
     shall be treated as replacing real property destroyed or 
     condemned if, as part of an integrated plan, such property 
     replaces real property which is included in a continuous area 
     which includes real property destroyed or condemned.
       ``(C) Exceptions.--
       ``(i) 30 percent additional allowance property.--Such term 
     shall not include property to which section 168(k) applies.
       ``(ii) Alternative depreciation property.--The term 
     `qualified New York Liberty Zone property' shall not include 
     any property described in section 168(k)(2)(C)(i).
       ``(iii) Qualified new york liberty zone leasehold 
     improvement property.--Such term shall not include any 
     qualified New York Liberty Zone leasehold improvement 
     property.
       ``(iv) Election out.--For purposes of this subsection, 
     rules similar to the rules of section 168(k)(2)(C)(iii) shall 
     apply.
       ``(D) Special rules.--For purposes of this subsection, 
     rules similar to the rules of section 168(k)(2)(D) shall 
     apply, except that clause (i) thereof shall be applied 
     without regard to `and before September 11, 2004'.
       ``(E) Allowance against alternative minimum tax.--For 
     purposes of this subsection, rules similar to the rules of 
     section 168(k)(2)(F) shall apply.
       ``(c) 5-Year Recovery Period for Depreciation of Certain 
     Leasehold Improvements.--
       ``(1) In general.--For purposes of section 168, the term 
     `5-year property' includes any qualified New York Liberty 
     Zone leasehold improvement property.
       ``(2) Qualified new york liberty zone leasehold improvement 
     property.--For purposes of this section, the term `qualified 
     New York Liberty Zone leasehold improvement property' means 
     qualified leasehold improvement property (as defined in 
     section 168(k)(3)) if--
       ``(A) such building is located in the New York Liberty 
     Zone,
       ``(B) such improvement is placed in service after September 
     10, 2001, and before January 1, 2007, and
       ``(C) no written binding contract for such improvement was 
     in effect before September 11, 2001.
       ``(3) Requirement to use straight line method.--The 
     applicable depreciation method under section 168 shall be the 
     straight line method in the case of qualified New York 
     Liberty Zone leasehold improvement property.
       ``(4) 9-year recovery period under alternative system.--For 
     purposes of section 168(g), the class life of qualified New 
     York Liberty Zone leasehold improvement property shall be 9 
     years.
       ``(d) Tax-Exempt Bond Financing.--
       ``(1) In general.--For purposes of this title, any 
     qualified New York Liberty Bond shall be treated as an exempt 
     facility bond.
       ``(2) Qualified new york liberty bond.--For purposes of 
     this subsection, the term `qualified New York Liberty Bond' 
     means any bond issued as part of an issue if--
       ``(A) 95 percent or more of the net proceeds (as defined in 
     section 150(a)(3)) of such issue are to be used for qualified 
     project costs,
       ``(B) such bond is issued by the State of New York or any 
     political subdivision thereof,
       ``(C) the Governor or the Mayor designates such bond for 
     purposes of this section, and
       ``(D) such bond is issued after the the date of the 
     enactment of this section and before January 1, 2005.
       ``(3) Limitations on amount of bonds.--
       ``(A) Aggregate amount designated.--The maximum aggregate 
     face amount of bonds which may be designated under this 
     subsection shall not exceed $8,000,000,000, of which not to 
     exceed $4,000,000,000 may be designated by the Governor and 
     not to exceed $4,000,000,000 may be designated by the Mayor.
       ``(B) Specific limitations.--The aggregate face amount of 
     bonds issued which are to be used for--
       ``(i) costs for property located outside the New York 
     Liberty Zone shall not exceed $2,000,000,000,
       ``(ii) residential rental property shall not exceed 
     $1,600,000,000, and
       ``(iii) costs with respect to property used for retail 
     sales of tangible property and functionally related and 
     subordinate property shall not exceed $800,000,000.

     The limitations under clauses (i), (ii), and (iii) shall be 
     allocated proportionately between the bonds designated by the 
     Governor and the bonds designated by the Mayor in proportion 
     to the respective amounts of bonds designated by each.

[[Page S1664]]

       ``(C) Movable property.--No bonds shall be issued which are 
     to be used for movable fixtures and equipment.
       ``(4) Qualified project costs.--For purposes of this 
     subsection--
       ``(A) In general.--The term `qualified project costs' means 
     the cost of acquisition, construction, reconstruction, and 
     renovation of--
       ``(i) nonresidential real property and residential rental 
     property (including fixed tenant improvements associated with 
     such property) located in the New York Liberty Zone, and
       ``(ii) public utility property (as defined in section 
     168(i)(10)) located in the New York Liberty Zone.
       ``(B) Costs for certain property outside zone included.--
     Such term includes the cost of acquisition, construction, 
     reconstruction, and renovation of nonresidential real 
     property (including fixed tenant improvements associated with 
     such property) located outside the New York Liberty Zone but 
     within the City of New York, New York, if such property is 
     part of a project which consists of at least 100,000 square 
     feet of usable office or other commercial space located in a 
     single building or multiple adjacent buildings.
       ``(5) Special rules.--In applying this title to any 
     qualified New York Liberty Bond, the following modifications 
     shall apply:
       ``(A) Section 146 (relating to volume cap) shall not apply.
       ``(B) Section 147(d) (relating to acquisition of existing 
     property not permitted) shall be applied by substituting `50 
     percent' for `15 percent' each place it appears.
       ``(C) Section 148(f)(4)(C) (relating to exception from 
     rebate for certain proceeds to be used to finance 
     construction expenditures) shall apply to the available 
     construction proceeds of bonds issued under this section.
       ``(D) Repayments of principal on financing provided by the 
     issue--
       ``(i) may not be used to provide financing, and
       ``(ii) must be used not later than the close of the 1st 
     semiannual period beginning after the date of the repayment 
     to redeem bonds which are part of such issue.

     The requirement of clause (ii) shall be treated as met with 
     respect to amounts received within 10 years after the date of 
     issuance of the issue (or, in the case of a refunding bond, 
     the date of issuance of the original bond) if such amounts 
     are used by the close of such 10 years to redeem bonds which 
     are part of such issue.
       ``(E) Section 57(a)(5) shall not apply.
       ``(6) Separate issue treatment of portions of an issue.--
     This subsection shall not apply to the portion of an issue 
     which (if issued as a separate issue) would be treated as a 
     qualified bond or as a bond that is not a private activity 
     bond (determined without regard to paragraph (1)), if the 
     issuer elects to so treat such portion.
       ``(e) Advance Refundings of Certain Tax-Exempt Bonds.--
       ``(1) In general.--With respect to a bond described in 
     paragraph (2) issued as part of an issue 90 percent (95 
     percent in the case of a bond described in paragraph (2)(C)) 
     or more of the net proceeds (as defined in section 150(a)(3)) 
     of which were used to finance facilities located within the 
     City of New York, New York (or property which is functionally 
     related and subordinate to facilities located within the City 
     of New York for the furnishing of water), one additional 
     advanced refunding after the date of the enactment of this 
     section and before January 1, 2005, shall be allowed under 
     the applicable rules of section 149(d) if--
       ``(A) the Governor or the Mayor designates the advance 
     refunding bond for purposes of this subsection, and
       ``(B) the requirements of paragraph (4) are met.
       ``(2) Bonds described.--A bond is described in this 
     paragraph if such bond was outstanding on September 11, 2001, 
     and is--
       ``(A) a State or local bond (as defined in section 
     103(c)(1)) which is a general obligation of the City of New 
     York, New York,
       ``(B) a State or local bond (as so defined) other than a 
     private activity bond (as defined in section 141(a)) issued 
     by the New York Municipal Water Finance Authority or the 
     Metropolitan Transportation Authority of the State of New 
     York, or
       ``(C) a qualified 501(c)(3) bond (as defined in section 
     145(a)) which is a qualified hospital bond (as defined in 
     section 145(c)) issued by or on behalf of the State of New 
     York or the City of New York, New York.
       ``(3) Aggregate limit.--For purposes of paragraph (1), the 
     maximum aggregate face amount of bonds which may be 
     designated under this subsection by the Governor shall not 
     exceed $4,500,000,000 and the maximum aggregate face amount 
     of bonds which may be designated under this subsection by the 
     Mayor shall not exceed $4,500,000,000.
       ``(4) Additional requirements.--The requirements of this 
     paragraph are met with respect to any advance refunding of a 
     bond described in paragraph (2) if--
       ``(A) no advance refundings of such bond would be allowed 
     under any provision of law after September 11, 2001,
       ``(B) the advance refunding bond is the only other 
     outstanding bond with respect to the refunded bond, and
       ``(C) the requirements of section 148 are met with respect 
     to all bonds issued under this subsection.
       ``(f) Increase in Expensing Under Section 179.--
       ``(1) In general.--For purposes of section 179--
       ``(A) the limitation under section 179(b)(1) shall be 
     increased by the lesser of--
       ``(i) $35,000, or
       ``(ii) the cost of section 179 property which is qualified 
     New York Liberty Zone property placed in service during the 
     taxable year, and
       ``(B) the amount taken into account under section 179(b)(2) 
     with respect to any section 179 property which is qualified 
     New York Liberty Zone property shall be 50 percent of the 
     cost thereof.
       ``(2) Qualified new york liberty zone property.--For 
     purposes of this subsection, the term `qualified New York 
     Liberty Zone property' has the meaning given such term by 
     subsection (b)(2).
       ``(3) Recapture.--Rules similar to the rules under section 
     179(d)(10) shall apply with respect to any qualified New York 
     Liberty Zone property which ceases to be used in the New York 
     Liberty Zone.
       ``(g) Extension of Replacement Period for Nonrecognition of 
     Gain.--Notwithstanding subsections (g) and (h) of section 
     1033, clause (i) of section 1033(a)(2)(B) shall be applied by 
     substituting `5 years' for `2 years' with respect to property 
     which is compulsorily or involuntarily converted as a result 
     of the terrorist attacks on September 11, 2001, in the New 
     York Liberty Zone but only if substantially all of the use of 
     the replacement property is in the City of New York, New 
     York.
       ``(h) New York Liberty Zone.--For purposes of this section, 
     the term `New York Liberty Zone' means the area located on or 
     south of Canal Street, East Broadway (east of its 
     intersection with Canal Street), or Grand Street (east of its 
     intersection with East Broadway) in the Borough of Manhattan 
     in the City of New York, New York.
       ``(i) References to Governor and Mayor.--For purposes of 
     this section, the terms `Governor' and `Mayor' mean the 
     Governor of the State of New York and the Mayor of the City 
     of New York, New York, respectively.''.
       (b) Credit Allowed Against Regular and Minimum Tax.--
       (1) 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 new york liberty zone business 
     employee credit.--
       ``(A) In general.--In the case of the New York Liberty Zone 
     business employee credit--
       ``(i) this section and section 39 shall be applied 
     separately with respect to such credit, and
       ``(ii) in applying paragraph (1) to such credit--

       ``(I) the tentative minimum tax shall be treated as being 
     zero, 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 New York 
     Liberty Zone business employee credit).

       ``(B) New york liberty zone business employee credit.--For 
     purposes of this subsection, the term `New York Liberty Zone 
     business employee credit' means the portion of work 
     opportunity credit under section 51 determined under section 
     1400L(a).''.
       (2) Conforming amendment.--Subclause (II) of section 
     38(c)(2)(A)(ii) is amended by inserting ``or the New York 
     Liberty Zone business employee credit'' after ``employment 
     credit''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years ending after December 31, 2001.
       (c) Clerical Amendment.--The table of subchapters for 
     chapter 1 is amended by adding at the end the following new 
     item:

``Subchapter Y--New York Liberty Zone Benefits.''.

            TITLE IV--MISCELLANEOUS AND TECHNICAL PROVISIONS

              Subtitle A--General Miscellaneous Provisions

     SEC. 401. ALLOWANCE OF ELECTRONIC 1099'S.

       Any person required to furnish a statement under any 
     section of subpart B of part III of subchapter A of chapter 
     61 of the Internal Revenue Code of 1986 for any taxable year 
     ending after the date of the enactment of this Act, may 
     electronically furnish such statement (without regard to any 
     first class mailing requirement) to any recipient who has 
     consented to the electronic provision of the statement in a 
     manner similar to the one permitted under regulations issued 
     under section 6051 of such Code or in such other manner as 
     provided by the Secretary.

     SEC. 402. EXCLUDED CANCELLATION OF INDEBTEDNESS INCOME OF S 
                   CORPORATION NOT TO RESULT IN ADJUSTMENT TO 
                   BASIS OF STOCK OF SHAREHOLDERS.

       (a) In General.--Subparagraph (A) of section 108(d)(7) 
     (relating to certain provisions to be applied at corporate 
     level) is amended by inserting before the period ``, 
     including by not taking into account under section 1366(a) 
     any amount excluded under subsection (a) of this section''.
       (b) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendment made by this section shall apply to discharges of 
     indebtedness after October 11, 2001, in taxable years ending 
     after such date.
       (2) Exception.--The amendment made by this section shall 
     not apply to any discharge of indebtedness before March 1, 
     2002, pursuant to a plan of reorganization filed with a 
     bankruptcy court on or before October 11, 2001.

     SEC. 403. LIMITATION ON USE OF NONACCRUAL EXPERIENCE METHOD 
                   OF ACCOUNTING.

       (a) In General.--Paragraph (5) of section 448(d) is amended 
     to read as follows:
       ``(5) Special rule for certain services.--
       ``(A) In general.--In the case of any person using an 
     accrual method of accounting with respect to amounts to be 
     received for the performance of services by such person, such 
     person shall not be required to accrue any portion of such 
     amounts which (on the basis of such person's experience) will 
     not be collected if--

[[Page S1665]]

       ``(i) such services are in fields referred to in paragraph 
     (2)(A), or
       ``(ii) such person meets the gross receipts test of 
     subsection (c) for all prior taxable years.
       ``(B) Exception.--This paragraph shall not apply to any 
     amount if interest is required to be paid on such amount or 
     there is any penalty for failure to timely pay such amount.
       ``(C) Regulations.--The Secretary shall prescribe 
     regulations to permit taxpayers to determine amounts referred 
     to in subparagraph (A) using computations or formulas which, 
     based on experience, accurately reflect the amount of income 
     that will not be collected by such person. A taxpayer may 
     adopt, or request consent of the Secretary to change to, a 
     computation or formula that clearly reflects the taxpayer's 
     experience. A request under the preceding sentence shall be 
     approved if such computation or formula clearly reflects the 
     taxpayer's experience.''.
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years ending after the date of the enactment 
     of this Act.
       (2) Change in method of accounting.--In the case of any 
     taxpayer required by the amendments made by this section to 
     change its method of accounting for its first taxable year 
     ending after the date of the enactment of this Act--
       (A) such change shall be treated as initiated by the 
     taxpayer,
       (B) such change shall be treated as made with the consent 
     of the Secretary of the Treasury, and
       (C) the net amount of the adjustments required to be taken 
     into account by the taxpayer under section 481 of the 
     Internal Revenue Code of 1986 shall be taken into account 
     over a period of 4 years (or if less, the number of taxable 
     years that the taxpayer used the method permitted under 
     section 448(d)(5) of such Code as in effect before the date 
     of the enactment of this Act) beginning with such first 
     taxable year.

     SEC. 404. EXCLUSION FOR FOSTER CARE PAYMENTS TO APPLY TO 
                   PAYMENTS BY QUALIFIED PLACEMENT AGENCIES.

       (a) In General.--The matter preceding subparagraph (B) of 
     section 131(b)(1) (defining qualified foster care payment) is 
     amended to read as follows:
       ``(1) In general.--The term `qualified foster care payment' 
     means any payment made pursuant to a foster care program of a 
     State or political subdivision thereof--
       ``(A) which is paid by--
       ``(i) a State or political subdivision thereof, or
       ``(ii) a qualified foster care placement agency, and''.
       (b) Qualified Foster Individuals To Include Individuals 
     Placed by Qualified Placement Agencies.--Subparagraph (B) of 
     section 131(b)(2) (defining qualified foster individual) is 
     amended to read as follows:
       ``(B) a qualified foster care placement agency.''.
       (c) Qualified Foster Care Placement Agency Defined.--
     Subsection (b) of section 131 is amended by redesignating 
     paragraph (3) as paragraph (4) and by inserting after 
     paragraph (2) the following new paragraph:
       ``(3) Qualified foster care placement agency.--The term 
     `qualified foster care placement agency' means any placement 
     agency which is licensed or certified by--
       ``(A) a State or political subdivision thereof, or
       ``(B) an entity designated by a State or political 
     subdivision thereof,
     for the foster care program of such State or political 
     subdivision to make foster care payments to providers of 
     foster care.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 405. INTEREST RATE RANGE FOR ADDITIONAL FUNDING 
                   REQUIREMENTS.

       (a) Amendments to the Internal Revenue Code of 1986.--
       (1) Special rule.--Clause (i) of section 412(l)(7)(C) 
     (relating to interest rate) is amended by adding at the end 
     the following new subclause:

       ``(III) Special rule for 2002 and 2003.--For a plan year 
     beginning in 2002 or 2003, notwithstanding subclause (I), in 
     the case that the rate of interest used under subsection 
     (b)(5) exceeds the highest rate permitted under subclause 
     (I), the rate of interest used to determine current liability 
     under this subsection may exceed the rate of interest 
     otherwise permitted under subclause (I); except that such 
     rate of interest shall not exceed 120 percent of the weighted 
     average referred to in subsection (b)(5)(B)(ii).''.

       (2) Quarterly contributions.--Subsection (m) of section 412 
     is amended by adding at the end the following new paragraph:
       ``(7) Special rules for 2002 and 2004.--In any case in 
     which the interest rate used to determine current liability 
     is determined under subsection (l)(7)(C)(i)(III)--
       ``(A) 2002.--For purposes of applying paragraphs (1) and 
     (4)(B)(ii) for plan years beginning in 2002, the current 
     liability for the preceding plan year shall be redetermined 
     using 120 percent as the specified percentage determined 
     under subsection (l)(7)(C)(i)(II).
       ``(B) 2004.--For purposes of applying paragraphs (1) and 
     (4)(B)(ii) for plan years beginning in 2004, the current 
     liability for the preceding plan year shall be redetermined 
     using 105 percent as the specified percentage determined 
     under subsection (l)(7)(C)(i)(II).''.
       (b) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Special rule.--Clause (i) of section 302(d)(7)(C) of 
     such Act (29 U.S.C. 1082(d)(7)(C)) is amended by adding at 
     the end the following new subclause:

       ``(III) Special rule for 2002 and 2003.--For a plan year 
     beginning in 2002 or 2003, notwithstanding subclause (I), in 
     the case that the rate of interest used under subsection 
     (b)(5) exceeds the highest rate permitted under subclause 
     (I), the rate of interest used to determine current liability 
     under this subsection may exceed the rate of interest 
     otherwise permitted under subclause (I); except that such 
     rate of interest shall not exceed 120 percent of the weighted 
     average referred to in subsection (b)(5)(B)(ii).''.

       (2) Quarterly contributions.--Subsection (e) of section 302 
     of such Act (29 U.S.C. 1082) is amended by adding at the end 
     the following new paragraph:
       ``(7) Special rules for 2002 and 2004.--In any case in 
     which the interest rate used to determine current liability 
     is determined under subsection (d)(7)(C)(i)(III)--
       ``(A) 2002.--For purposes of applying paragraphs (1) and 
     (4)(B)(ii) for plan years beginning in 2002, the current 
     liability for the preceding plan year shall be redetermined 
     using 120 percent as the specified percentage determined 
     under subsection (d)(7)(C)(i)(II).
       ``(B) 2004.--For purposes of applying paragraphs (1) and 
     (4)(B)(ii) for plan years beginning in 2004, the current 
     liability for the preceding plan year shall be redetermined 
     using 105 percent as the specified percentage determined 
     under subsection (d)(7)(C)(i)(II).''.
       (c) PBGC.--Clause (iii) of section 4006(a)(3)(E) 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 subclause:
       ``(IV) In the case of plan years beginning after December 
     31, 2001, and before January 1, 2004, subclause (II) shall be 
     applied by substituting `100 percent' for `85 percent'. 
     Subclause (III) shall be applied for such years without 
     regard to the preceding sentence. Any reference to this 
     clause by any other sections or subsections shall be treated 
     as a reference to this clause without regard to this 
     subclause.''.

     SEC. 406. ADJUSTED GROSS INCOME DETERMINED BY TAKING INTO 
                   ACCOUNT CERTAIN EXPENSES OF ELEMENTARY AND 
                   SECONDARY SCHOOL TEACHERS.

       (a) In General.--Section 62(a)(2) (relating to certain 
     trade and business deductions of employees) is amended by 
     adding at the end the following:
       ``(D) Certain expenses of elementary and secondary school 
     teachers.--In the case of taxable years beginning during 2002 
     or 2003, the deductions allowed by section 162 which consist 
     of expenses, not in excess of $250, paid or incurred by an 
     eligible educator in connection with books, supplies (other 
     than nonathletic supplies for courses of instruction in 
     health or physical education), computer equipment (including 
     related software and services) and other equipment, and 
     supplementary materials used by the eligible educator in the 
     classroom.''.
       (b) Eligible Educator.--Section 62 is amended by adding at 
     the end the following:
       ``(d) Definition; Special Rules.--
       ``(1) Eligible educator.--
       ``(A) In general.--For purposes of subsection (a)(2)(D), 
     the term `eligible educator' means, with respect to any 
     taxable year, an individual who is a kindergarten through 
     grade 12 teacher, instructor, counselor, principal, or aide 
     in a school for at least 900 hours during a school year.
       ``(B) School.--The term `school' means any school which 
     provides elementary education or secondary education 
     (kindergarten through grade 12), as determined under State 
     law.
       ``(2) Coordination with exclusions.--A deduction shall be 
     allowed under subsection (a)(2)(D) for expenses only to the 
     extent the amount of such expenses exceeds the amount 
     excludable under section 135, 529(c)(1), or 530(d)(2) for the 
     taxable year.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

                   Subtitle B--Technical Corrections

     SEC. 411. AMENDMENTS RELATED TO ECONOMIC GROWTH AND TAX 
                   RELIEF RECONCILIATION ACT OF 2001.

       (a) Amendments Related to Section 101 of the Act.--
       (1) In general.--Subsection (b) of section 6428 is amended 
     to read as follows:
       ``(b) Credit Treated as Nonrefundable Personal Credit.--For 
     purposes of this title, the credit allowed under this section 
     shall be treated as a credit allowable under subpart A of 
     part IV of subchapter A of chapter 1.''.
       (2) Conforming amendments.--
       (A) Subsection (d) of section 6428 is amended to read as 
     follows:
       ``(d) Coordination with Advance Refunds of Credit.--
       ``(1) In general.--The amount of credit which would (but 
     for this paragraph) be allowable under this section shall be 
     reduced (but not below zero) by the aggregate refunds and 
     credits made or allowed to the taxpayer under subsection (e). 
     Any failure to so reduce the credit shall be treated as 
     arising out of a mathematical or clerical error and assessed 
     according to section 6213(b)(1).
       ``(2) Joint returns.--In the case of a refund or credit 
     made or allowed under subsection (e) with respect to a joint 
     return, half of such refund or credit shall be treated as 
     having been made or allowed to each individual filing such 
     return.''.
       (B) Paragraph (2) of section 6428(e) is amended to read as 
     follows:
       ``(2) Advance refund amount.--For purposes of paragraph 
     (1), the advance refund amount is the amount that would have 
     been allowed as a credit under this section for such first 
     taxable year if--
       ``(A) this section (other than subsections (b) and (d) and 
     this subsection) had applied to such taxable year, and

[[Page S1666]]

       ``(B) the credit for such taxable year were not allowed to 
     exceed the excess (if any) of--
       ``(i) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(ii) the sum of the credits allowable under part IV of 
     subchapter A of chapter 1 (other than the credits allowable 
     under subpart C thereof, relating to refundable credits).''.
       (b) Amendment Related to Section 201 of the Act.--
     Subparagraph (B) of section 24(d)(1) is amended by striking 
     ``amount of credit allowed by this section'' and inserting 
     ``aggregate amount of credits allowed by this subpart''.
       (c) Amendments Related to Section 202 of the Act.--
       (1) Corrections to credit for adoption expenses.--
       (A) Paragraph (1) of section 23(a) 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 the amount of the qualified adoption expenses paid or 
     incurred by the taxpayer.''.
       (B) Subsection (a) of section 23 is amended by adding at 
     the end the following new paragraph:
       ``(3) $10,000 credit for adoption of child with special 
     needs regardless of expenses.--In the case of an adoption of 
     a child with special needs which becomes final during a 
     taxable year, the taxpayer shall be treated as having paid 
     during such year qualified adoption expenses with respect to 
     such adoption in an amount equal to the excess (if any) of 
     $10,000 over the aggregate qualified adoption expenses 
     actually paid or incurred by the taxpayer with respect to 
     such adoption during such taxable year and all prior taxable 
     years.''.
       (C) Paragraph (2) of section 23(a) is amended by striking 
     the last sentence.
       (D) Paragraph (1) of section 23(b) is amended by striking 
     ``subsection (a)(1)(A)'' and inserting ``subsection (a)''.
       (E) Subsection (i) of section 23 is amended by striking 
     ``the dollar limitation in subsection (b)(1)'' and inserting 
     ``the dollar amounts in subsections (a)(3) and (b)(1)''.
       (F) Expenses paid or incurred during any taxable year 
     beginning before January 1, 2002, may be taken into account 
     in determining the credit under section 23 of the Internal 
     Revenue Code of 1986 only to the extent the aggregate of such 
     expenses does not exceed the applicable limitation under 
     section 23(b)(1) of such Code as in effect on the day before 
     the date of the enactment of the Economic Growth and Tax 
     Relief Reconciliation Act of 2001.
       (2) Corrections to exclusion for employer-provided adoption 
     assistance.--
       (A) Subsection (a) of section 137 is amended to read as 
     follows:
       ``(a) Exclusion.--
       ``(1) In general.--Gross income of an employee does not 
     include amounts paid or expenses incurred by the employer for 
     qualified adoption expenses in connection with the adoption 
     of a child by an employee if such amounts are furnished 
     pursuant to an adoption assistance program.
       ``(2) $10,000 exclusion for adoption of child with special 
     needs regardless of expenses.--In the case of an adoption of 
     a child with special needs which becomes final during a 
     taxable year, the qualified adoption expenses with respect to 
     such adoption for such year shall be increased by an amount 
     equal to the excess (if any) of $10,000 over the actual 
     aggregate qualified adoption expenses with respect to such 
     adoption during such taxable year and all prior taxable 
     years.''.
       (B) Paragraph (2) of section 137(b) is amended by striking 
     ``subsection (a)(1)'' and inserting ``subsection (a)''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2002; except that the amendments made by paragraphs (1)(C), 
     (1)(D), and (2)(B) shall apply to taxable years beginning 
     after December 31, 2001.
       (d) Amendments Related to Section 205 of the Act.--
       (1) Section 45F(d)(4)(B) is amended by striking ``subpart 
     A, B, or D of this part'' and inserting ``this chapter or for 
     purposes of section 55''.
       (2) Section 38(b)(15) is amended by striking ``45F'' and 
     inserting ``45F(a)''.
       (e) Amendments Related to Section 301 of the Act.--
       (1) Section 63(c)(2) is amended--
       (A) in subparagraph (A), by striking ``subparagraph (C)'' 
     and inserting ``subparagraph (D)'',
       (B) by striking ``or'' at the end of subparagraph (B),
       (C) by redesignating subparagraph (C) as subparagraph (D),
       (D) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) one-half of the amount in effect under subparagraph 
     (A) in the case of a married individual filing a separate 
     return, or'', and
       (E) by inserting the following flush sentence at the end:

     ``If any amount determined under subparagraph (A) is not a 
     multiple of $50, such amount shall be rounded to the next 
     lowest multiple of $50.''.
       (2)(A) Section 63(c)(4) is amended by striking ``paragraph 
     (2) or (5)'' and inserting ``paragraph (2)(B), (2)(D), or 
     (5)''.
       (B) Section 63(c)(4)(B)(i) is amended by striking 
     ``paragraph (2)'' and inserting ``paragraph (2)(B), 
     (2)(D),''.
       (C) Section 63(c)(4) is amended by striking the flush 
     sentence at the end (as added by section 301(c)(2) of Public 
     Law 107-17).
       (f) Amendment Related to Section 401 of the Act.--Section 
     530(d)(4)(B)(iv) is amended by striking ``because the 
     taxpayer elected under paragraph (2)(C) to waive the 
     application of paragraph (2)'' and inserting ``by application 
     of paragraph (2)(C)(i)(II)''.
       (g) Amendments Related to Section 511 of the Act.--
       (1) Section 2511(c) is amended by striking ``taxable gift 
     under section 2503,'' and inserting ``transfer of property by 
     gift,''.
       (2) Section 2101(b) is amended by striking the last 
     sentence.
       (h) Amendment Related to Section 532 of the Act.--Section 
     2016 is amended by striking ``any State, any possession of 
     the United States, or the District of Columbia,''.
       (i) Amendments Relating to Section 602 of the Act.--
       (1) Subparagraph (A) of section 408(q)(3) is amended to 
     read as follows:
       ``(A) Qualified employer plan.--The term `qualified 
     employer plan' has the meaning given such term by section 
     72(p)(4)(A)(i); except that such term shall also include an 
     eligible deferred compensation plan (as defined in section 
     457(b)) of an eligible employer described in section 
     457(e)(1)(A).''.
       (2) Section 4(c) of Employee Retirement Income Security Act 
     of 1974 is amended--
       (A) by inserting ``and part 5 (relating to administration 
     and enforcement)'' before the period at the end, and
       (B) by adding at the end the following new sentence: ``Such 
     provisions shall apply to such accounts and annuities in a 
     manner similar to their application to a simplified employee 
     pension under section 408(k) of the Internal Revenue Code of 
     1986.''.
       (j) Amendments Relating to Section 611 of the Act.--
       (1) Section 408(k) is amended--
       (A) in paragraph (2)(C) by striking ``$300'' and inserting 
     ``$450'', and
       (B) in paragraph (8) by striking ``$300'' both places it 
     appears and inserting ``$450''.
       (2) Section 409(o)(1)(C)(ii) is amended--
       (A) by striking ``$500,000'' both places it appears and 
     inserting ``$800,000'', and
       (B) by striking ``$100,000'' and inserting ``$160,000''.
       (3) Section 611(i) of the Economic Growth and Tax Relief 
     Reconciliation Act of 2001 is amended by adding at the end 
     the following new paragraph:
       ``(3) Special rule.--In the case of plan that, on June 7, 
     2001, incorporated by reference the limitation of section 
     415(b)(1)(A) of the Internal Revenue Code of 1986, section 
     411(d)(6) of such Code and section 204(g)(1) of the Employee 
     Retirement Income Security Act of 1974 do not apply to a plan 
     amendment that--
       ``(A) is adopted on or before June 30, 2002,
       ``(B) reduces benefits to the level that would have applied 
     without regard to the amendments made by subsection (a) of 
     this section, and
       ``(C) is effective no earlier than the years described in 
     paragraph (2).''.
       (k) Amendments Relating to Section 613 of the Act.--
       (1) Section 416(c)(1)(C)(iii) is amended by striking 
     ``Exception for frozen plan'' and inserting ``Exception for 
     plan under which no key employee (or former key employee) 
     benefits for plan year''.
       (2) Section 416(g)(3)(B) is amended by striking 
     ``separation from service'' and inserting ``severance from 
     employment''.
       (l) Amendments Relating to Sections 614 and 616 of the 
     Act.--
       (1) Section 404(a)(12) is amended by striking ``(9),'' and 
     inserting ``(9) and subsection (h)(1)(C),''.
       (2) Section 404(n) is amended by striking ``subsection 
     (a),'' and inserting ``subsection (a) or paragraph (1)(C) of 
     subsection (h)''.
       (3) Section 402(h)(2)(A) is amended by striking ``15 
     percent'' and inserting ``25 percent''.
       (4) Section 404(a)(7)(C) is amended to read as follows:
       ``(C) Paragraph not to apply in certain cases.--
       ``(i) Beneficiary test.--This paragraph shall not have the 
     effect of reducing the amount otherwise deductible under 
     paragraphs (1), (2), and (3), if no employee is a beneficiary 
     under more than 1 trust or under a trust and an annuity plan.
       ``(ii) Elective deferrals.--If, in connection with 1 or 
     more defined contribution plans and 1 or more defined benefit 
     plans, no amounts (other than elective deferrals (as defined 
     in section 402(g)(3))) are contributed to any of the defined 
     contribution plans for the taxable year, then subparagraph 
     (A) shall not apply with respect to any of such defined 
     contribution plans and defined benefit plans.''.
       (m) Amendment Relating to Section 618 of the Act.--Section 
     25B(d)(2)(A) is amended to read as follows:
       ``(A) In general.--The qualified retirement savings 
     contributions determined under paragraph (1) shall be reduced 
     (but not below zero) by the aggregate distributions received 
     by the individual during the testing period from any entity 
     of a type to which contributions under paragraph (1) may be 
     made. The preceding sentence shall not apply to the portion 
     of any distribution which is not includible in gross income 
     by reason of a trustee-to-trustee transfer or a rollover 
     distribution.''.
       (n) Amendments Relating to Section 619 of the Act.--
       (1) Section 45E(e)(1) is amended by striking ``(n)'' and 
     inserting ``(m)''.
       (2) Section 619(d) of the Economic Growth and Tax Relief 
     Reconciliation Act of 2001 is amended by striking 
     ``established'' and inserting ``first effective''.
       (o) Amendments Relating to Section 631 of the Act.--
       (1) Section 402(g)(1) is amended by adding at the end the 
     following:
       ``(C) Catch-up contributions.--In addition to subparagraph 
     (A), in the case of an eligible participant (as defined in 
     section 414(v)), gross income shall not include elective 
     deferrals in excess of the applicable dollar amount under 
     subparagraph (B) to the extent that the amount of

[[Page S1667]]

     such elective deferrals does not exceed the applicable dollar 
     amount under section 414(v)(2)(B)(i) for the taxable year 
     (without regard to the treatment of the elective deferrals by 
     an applicable employer plan under section 414(v)).''.
       (2) Section 401(a)(30) is amended by striking ``402(g)(1)'' 
     and inserting ``402(g)(1)(A)''.
       (3) Section 414(v)(2) is amended by adding at the end the 
     following:
       ``(D) Aggregation of plans.--For purposes of this 
     paragraph, plans described in clauses (i), (ii), and (iv) of 
     paragraph (6)(A) that are maintained by the same employer (as 
     determined under subsection (b), (c), (m) or (o)) shall be 
     treated as a single plan, and plans described in clause (iii) 
     of paragraph (6)(A) that are maintained by the same employer 
     shall be treated as a single plan.''.
       (4) Section 414(v)(3)(A)(i) is amended by striking 
     ``section 402(g), 402(h), 403(b), 404(a), 404(h), 408(k), 
     408(p), 415, or 457'' and inserting ``section 401(a)(30), 
     402(h), 403(b), 408, 415(c), and 457(b)(2) (determined 
     without regard to section 457(b)(3))''.
       (5) Section 414(v)(3)(B) is amended by striking ``section 
     401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11), 401(k)(12), 
     403(b)(12), 408(k), 408(p), 408B, 410(b), or 416'' and 
     inserting ``section 401(a)(4), 401(k)(3), 401(k)(11), 
     403(b)(12), 408(k), 410(b), or 416''.
       (6) Section 414(v)(4)(B) is amended by inserting before the 
     period at the end the following: ``, except that a plan 
     described in clause (i) of section 410(b)(6)(C) shall not be 
     treated as a plan of the employer until the expiration of the 
     transition period with respect to such plan (as determined 
     under clause (ii) of such section)''.
       (7) Section 414(v)(5) is amended--
       (A) by striking ``, with respect to any plan year,'' in the 
     matter preceding subparagraph (A),
       (B) by amending subparagraph (A) to read as follows:
       ``(A) who would attain age 50 by the end of the taxable 
     year,'', and
       (C) in subparagraph (B) by striking ``plan year'' and 
     inserting ``plan (or other applicable) year''.
       (8) Section 414(v)(6)(C) is amended to read as follows:
       ``(C) Exception for section 457 plans.--This subsection 
     shall not apply to a participant for any year for which a 
     higher limitation applies to the participant under section 
     457(b)(3).''.
       (9) Section 457(e) is amended by adding at the end the 
     following new paragraph:
       ``(18) Coordination with catch-up contributions for 
     individuals age 50 or older.-- In the case of an individual 
     who is an eligible participant (as defined by section 414(v)) 
     and who is a participant in an eligible deferred compensation 
     plan of an employer described in paragraph (1)(A), 
     subsections (b)(3) and (c) shall be applied by substituting 
     for the amount otherwise determined under the applicable 
     subsection the greater of--
       ``(A) the sum of--
       ``(i) the plan ceiling established for purposes of 
     subsection (b)(2) (without regard to subsection (b)(3)), plus
       ``(ii) the applicable dollar amount for the taxable year 
     determined under section 414(v)(2)(B)(i), or
       ``(B) the amount determined under the applicable subsection 
     (without regard to this paragraph).''.
       (p) Amendments Relating to Section 632 of the Act.--
       (1) Section 403(b)(1) is amended in the matter following 
     subparagraph (E) by striking ``then amounts contributed'' and 
     all that follows and inserting the following:
       ``then contributions and other additions by such employer 
     for such annuity contract shall be excluded from the gross 
     income of the employee for the taxable year to the extent 
     that the aggregate of such contributions and additions (when 
     expressed as an annual addition (within the meaning of 
     section 415(c)(2))) does not exceed the applicable limit 
     under section 415. The amount actually distributed to any 
     distributee under such contract shall be taxable to the 
     distributee (in the year in which so distributed) under 
     section 72 (relating to annuities). For purposes of applying 
     the rules of this subsection to contributions and other 
     additions by an employer for a taxable year, amounts 
     transferred to a contract described in this paragraph by 
     reason of a rollover contribution described in paragraph (8) 
     of this subsection or section 408(d)(3)(A)(ii) shall not be 
     considered contributed by such employer.''.
       (2) Section 403(b) is amended by striking paragraph (6).
       (3) Section 403(b)(3) is amended--
       (A) in the first sentence by inserting the following before 
     the period at the end: ``, and which precedes the taxable 
     year by no more than five years'', and
       (B) in the second sentence by striking ``or any amount 
     received by a former employee after the fifth taxable year 
     following the taxable year in which such employee was 
     terminated''.
       (4) Section 415(c)(7) is amended to read as follows:
       ``(7) Special rules relating to church plans.--
       ``(A) Alternative contribution limitation.--
       ``(i) 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.
       ``(ii) $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.
       ``(B) Number of years of service for duly ordained, 
     commissioned, or licensed ministers or lay employees.--For 
     purposes of this paragraph--
       ``(i) all years of service by--

       ``(I) a duly ordained, commissioned, or licensed minister 
     of a church, or
       ``(II) a lay person,

     as an employee of a church, a convention or association of 
     churches, including an organization described in section 
     414(e)(3)(B)(ii), shall be considered as years of service for 
     1 employer, and
       ``(ii) all amounts contributed for annuity contracts by 
     each such church (or convention or association of churches) 
     or such organization during such years for such minister or 
     lay person shall be considered to have been contributed by 1 
     employer.
       ``(C) Foreign missionaries.--In the case of any individual 
     described in subparagraph (D) performing services outside the 
     United States, contributions and other additions for an 
     annuity contract or retirement income account described in 
     section 403(b) with respect to such employee, when expressed 
     as an annual addition to such employee's account, shall not 
     be treated as exceeding the limitation of paragraph (1) if 
     such annual addition is not in excess of the greater of 
     $3,000 or the employee's includible compensation determined 
     under section 403(b)(3).
       ``(D) Annual addition.--For purposes of this paragraph, the 
     term `annual addition' has the meaning given such term by 
     paragraph (2).
       ``(E) Church, convention or association of churches.--For 
     purposes of this paragraph, the terms `church' and 
     `convention or association of churches' have the same meaning 
     as when used in section 414(e).''.
       (5) Section 457(e)(5) is amended to read as follows:
       ``(5) Includible compensation.--The term `includible 
     compensation' has the meaning given to the term 
     `participant's compensation' by section 415(c)(3).''.
       (6) Section 402(g)(7)(B) is amended by striking ``2001.'' 
     and inserting ``2001).''.
       (q) Amendments Relating to Section 643 of the Act.--
       (1) Section 401(a)(31)(C)(i) is amended by inserting ``is a 
     qualified trust which is part of a plan which is a defined 
     contribution plan and'' before ``agrees''.
       (2) Section 402(c)(2) is amended by adding at the end the 
     following flush sentence:

     ``In the case of a transfer described in subparagraph (A) or 
     (B), the amount transferred shall be treated as consisting 
     first of the portion of such distribution that is includible 
     in gross income (determined without regard to paragraph 
     (1)).''.
       (r) Amendments Relating to Section 648 of the Act.--
       (1) Section 417(e) is amended--
       (A) in paragraph (1) by striking ``exceed the dollar limit 
     under section 411(a)(11)(A)'' and inserting ``exceed the 
     amount that can be distributed without the participant's 
     consent under section 411(a)(11)'', and
       (B) in paragraph (2)(A) by striking ``exceeds the dollar 
     limit under section 411(a)(11)(A)'' and inserting ``exceeds 
     the amount that can be distributed without the participant's 
     consent under section 411(a)(11)''.
       (2) Section 205(g) of the Employee Retirement Income 
     Security Act of 1974 is amended--
       (A) in paragraph (1) by striking ``exceed the dollar limit 
     under section 203(e)(1)'' and inserting ``exceed the amount 
     that can be distributed without the participant's consent 
     under section 203(e)'', and
       (B) in paragraph (2)(A) by striking ``exceeds the dollar 
     limit under section 203(e)(1)'' and inserting ``exceeds the 
     amount that can be distributed without the participant's 
     consent under section 203(e)''.
       (s) Amendment Relating to Section 652 of the Act.--Section 
     404(a)(1)(D)(iv) is amended by striking ``Plans maintained by 
     professional service employers'' and inserting ``Special rule 
     for terminating plans''.
       (t) Amendments Relating to Section 657 of the Act.--Section 
     404(c)(3) of the Employee Retirement Income Security Act of 
     1974 is amended--
       (1) by striking ``the earlier of'' in subparagraph (A) the 
     second place it appears, and
       (2) by striking ``if the transfer'' and inserting ``a 
     transfer that''.
       (u) Amendments Relating to Section 659 of the Act.--
       (1) Section 4980F is amended--
       (A) in subsection (e)(1) by striking ``written notice'' and 
     inserting ``the notice described in paragraph (2)'',
       (B) by amending subsection (f)(2)(A) to read as follows:
       ``(A) any defined benefit plan described in section 401(a) 
     which includes a trust exempt from tax under section 501(a), 
     or'', and
       (C) in subsection (f)(3) by striking ``significantly'' both 
     places it appears.
       (2) Section 204(h)(9) of the Employee Retirement Income 
     Security Act of 1974 is amended by striking ``significantly'' 
     both places it appears.
       (3) Section 659(c)(3)(B) of the Economic Growth and Tax 
     Relief Reconciliation Act of 2001 is amended by striking 
     ``(or'' and inserting ``(and''.
       (v) Amendments Relating to Section 661 of the Act.--
       (1) Section 412(c)(9)(B) is amended--
       (A) in clause (ii) by striking ``125 percent'' and 
     inserting ``100 percent'', and
       (B) by adding at the end the following new clause:

[[Page S1668]]

       ``(iv) Limitation.--A change in funding method to use a 
     prior year valuation, as provided in clause (ii), may not be 
     made unless as of the valuation date within the prior plan 
     year, the value of the assets of the plan are not less than 
     125 percent of the plan's current liability (as defined in 
     paragraph (7)(B)).''.
       (2) Section 302(c)(9)(B) of the Employee Retirement Income 
     Security Act of 1974 is amended--
       (A) in clause (ii) by striking ``125 percent'' and 
     inserting ``100 percent'', and
       (B) by adding at the end the following new clause:
       ``(iv) A change in funding method to use a prior year 
     valuation, as provided in clause (ii), may not be made unless 
     as of the valuation date within the prior plan year, the 
     value of the assets of the plan are not less than 125 percent 
     of the plan's current liability (as defined in paragraph 
     (7)(B)).''.
       (w) Amendments Relating to Section 662 of the Act.--
       (1) Section 404(k) is amended--
       (A) in paragraph (1) by striking ``during the taxable 
     year'',
       (B) in paragraph (2)(B) by striking ``(A)(iii)'' and 
     inserting ``(A)(iv)'',
       (C) in paragraph (4)(B) by striking ``(iii)'' and inserting 
     ``(iv)'', and
       (D) by redesignating subparagraph (B) of paragraph (4) (as 
     amended by subparagraph (C)) as subparagraph (C) of paragraph 
     (4) and by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) Reinvestment dividends.--For purposes of subparagraph 
     (A), an applicable dividend reinvested pursuant to clause 
     (iii)(II) of paragraph (2)(A) shall be treated as paid in the 
     taxable year of the corporation in which such dividend is 
     reinvested in qualifying employer securities or in which the 
     election under clause (iii) of paragraph (2)(A) is made, 
     whichever is later.''.
       (2) Section 404(k) is amended by adding at the end the 
     following new paragraph:
       ``(7) Full vesting.--In accordance with section 411, an 
     applicable dividend described in clause (iii)(II) of 
     paragraph (2)(A) shall be subject to the requirements of 
     section 411(a)(1).''.
       (x) Effective Date.--Except as provided in subsection (c), 
     the amendments made by this section shall take effect as if 
     included in the provisions of the Economic Growth and Tax 
     Relief Reconciliation Act of 2001 to which they relate.

     SEC. 412. AMENDMENTS RELATED TO COMMUNITY RENEWAL TAX RELIEF 
                   ACT OF 2000.

       (a) Amendment Related to Section 101 of the Act.--Section 
     469(i)(3)(E) is amended by striking clauses (ii), (iii), and 
     (iv) and inserting the following:
       ``(ii) second to the portion of such loss to which 
     subparagraph (C) applies,
       ``(iii) third to the portion of the passive activity credit 
     to which subparagraph (B) or (D) does not apply,
       ``(iv) fourth to the portion of such credit to which 
     subparagraph (B) applies, and''.
       (b) Amendment Related to Section 306 of the Act.--Section 
     151(c)(6)(C) is amended--
       (1) by striking ``for earned income credit.--For purposes 
     of section 32, an'' and inserting ``for principal place of 
     abode requirements.--An'', and
       (2) by striking ``requirement of section 32(c)(3)(A)(ii)'' 
     and inserting ``principal place of abode requirements of 
     section 2(a)(1)(B), section 2(b)(1)(A), and section 
     32(c)(3)(A)(ii)''.
       (c) Amendment Related to Section 309 of the Act.--
     Subparagraph (A) of section 358(h)(1) is amended to read as 
     follows:
       ``(A) which is assumed by another person as part of the 
     exchange, and''.
       (d) Amendments Related to Section 401 of the Act.--
       (1)(A) Section 1234A is amended by inserting ``or'' after 
     the comma at the end of paragraph (1), by striking ``or'' at 
     the end of paragraph (2), and by striking paragraph (3).
       (B)(i) Section 1234B is amended in subsection (a)(1) and in 
     subsection (b) by striking ``sale or exchange'' the first 
     place it appears in each subsection and inserting ``sale, 
     exchange, or termination''.
       (ii) Section 1234B is amended by adding at the end the 
     following new subsection:
       ``(f) Cross Reference.--

  ``For special rules relating to dealer securities futures contracts, 
see section 1256.''.
       (2) Section 1091(e) is amended--
       (A) in the heading, by striking ``Securities.--'' and 
     inserting ``Securities and Securities Futures Contracts To 
     Sell.--'',
       (B) by inserting after ``closing of a short sale of'' the 
     following: ``(or the sale, exchange, or termination of a 
     securities futures contract to sell)'',
       (C) in paragraph (2), by inserting after ``short sale of'' 
     the following: ``(or securities futures contracts to sell)'', 
     and
       (D) by adding at the end the following:

     ``For purposes of this subsection, the term `securities 
     futures contract' has the meaning provided by section 
     1234B(c).''.
       (3)(A) Section 1233(e)(2) is amended by striking ``and'' at 
     the end of subparagraph (C), by striking the period and 
     inserting ``; and'' at the end of subparagraph (D), and 
     inserting after subparagraph (D) the following:
       ``(E) entering into a securities futures contract (as so 
     defined) to sell shall be considered to be a short sale, and 
     the settlement of such contract shall be considered to be the 
     closing of such short sale.''.
       (B) Section 1234B(b) is amended by inserting after ``or 
     this section,'' the following: ``or in section 1233,''.
       (e) Effective Date.--The amendments made by this section 
     shall take effect as if included in the provisions of the 
     Community Renewal Tax Relief Act of 2000 to which they 
     relate.

     SEC. 413. AMENDMENTS RELATED TO THE TAX RELIEF EXTENSION ACT 
                   OF 1999.

       (a) Amendments Related to Section 545 of the Act.--Section 
     857(b)(7) is amended--
       (1) in clause (i) of subparagraph (B), by striking ``the 
     amount of which'' and inserting ``to the extent the amount of 
     the rents'', and
       (2) in subparagraph (C), by striking ``if the amount'' and 
     inserting ``to the extent the amount''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect as if included in section 545 of the Tax 
     Relief Extension Act of 1999.

     SEC. 414. AMENDMENTS RELATED TO THE TAXPAYER RELIEF ACT OF 
                   1997.

       (a) Amendments Related to Section 311 of the Act.--Section 
     311(e) of the Taxpayer Relief Act of 1997 (Public Law 105-34; 
     111 Stat. 836) is amended--
       (1) in paragraph (2)(A), by striking ``recognized'' and 
     inserting ``included in gross income'', and
       (2) by adding at the end the following new paragraph:
       ``(5) Disposition of interest in passive activity.--Section 
     469(g)(1)(A) of the Internal Revenue Code of 1986 shall not 
     apply by reason of an election made under paragraph (1).''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect as if included in section 311 of the 
     Taxpayer Relief Act of 1997.

     SEC. 415. AMENDMENT RELATED TO THE BALANCED BUDGET ACT OF 
                   1997.

       (a) Amendment Related to Section 4006 of the Act.--Section 
     26(b)(2) is amended by striking ``and'' at the end of 
     subparagraph (P), by striking the period and inserting ``, 
     and'' at the end of subparagraph (Q), and by adding at the 
     end the following new subparagraph:
       ``(R) section 138(c)(2) (relating to penalty for 
     distributions from Medicare+Choice MSA not used for qualified 
     medical expenses if minimum balance not maintained).''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in section 4006 of the 
     Balanced Budget Act of 1997.

     SEC. 416. OTHER TECHNICAL CORRECTIONS.

       (a) Coordination of Advanced Payments of Earned Income 
     Credit.--
       (1) Section 32(g)(2) is amended by striking ``subpart'' and 
     inserting ``part''.
       (2) The amendment made by this subsection shall take effect 
     as if included in section 474 of the Tax Reform Act of 1984.
       (b) Special Rule Related to Wash Sale Losses.--
       (1) Section 1256(f) is amended by adding at the end the 
     following new paragraph:
       ``(5) Special rule related to losses.--Section 1091 
     (relating to loss from wash sales of stock or securities) 
     shall not apply to any loss taken into account by reason of 
     paragraph (1) of subsection (a).''.
       (2) The amendment made by this subsection shall take effect 
     as if included in section 5075 of the Technical and 
     Miscellaneous Revenue Act of 1988.
       (c) Disclosure by Social Security Administration to Federal 
     Child Support Agencies.--
       (1) Section 6103(l)(8) is amended--
       (A) in the heading, by striking ``state and local'' and 
     inserting ``federal, state, and local'', and
       (B) in subparagraph (A), by inserting ``Federal or'' before 
     ``State or local''.
       (2) The amendments made by this subsection shall take 
     effect on the date of the enactment of this Act.
       (d) Treatment of Settlements Under Partnership Audit 
     Rules.--
       (1) The following provisions are each amended by inserting 
     ``or the Attorney General (or his delegate)'' after 
     ``Secretary'' each place it appears:
       (A) Paragraphs (1) and (2) of section 6224(c).
       (B) Section 6229(f)(2).
       (C) Section 6231(b)(1)(C).
       (D) Section 6234(g)(4)(A).
       (2) The amendments made by this subsection shall apply with 
     respect to settlement agreements entered into after the date 
     of the enactment of this Act.
       (e) Amendment Related to Procedure and Administration.--
       (1) Section 6331(k)(3) (relating to no levy while certain 
     offers pending or installment agreement pending or in effect) 
     is amended to read as follows:
       ``(3) Certain rules to apply.--Rules similar to the rules 
     of--
       ``(A) paragraphs (3) and (4) of subsection (i), and
       ``(B) except in the case of paragraph (2)(C), paragraph (5) 
     of subsection (i),
     shall apply for purposes of this subsection.''.
       (2) The amendment made by this subsection shall take effect 
     on the date of the enactment of this Act.
       (f) Modified Endowment Contracts.--Paragraph (2) of section 
     318(a) of the Community Renewal Tax Relief Act of 2000 (114 
     Stat. 2763A-645) is repealed, and clause (ii) of section 
     7702A(c)(3)(A) shall read and be applied as if the amendment 
     made by such paragraph had not been enacted.

     SEC. 417. CLERICAL AMENDMENTS.

       (1) The subsection (g) of section 25B that relates to 
     termination is redesignated as subsection (h).
       (2) The second sentence of section 42(h)(3)(C) is amended 
     by striking ``the amounts described in'' and all that follows 
     through the period and inserting ``the amounts described in 
     clauses (ii) through (iv) over the aggregate housing credit 
     dollar amount allocated for such year.''.
       (3) Clause (ii) of section 42(m)(1)(B) is amended by 
     striking the second ``and'' at the end of subclause (II) and 
     by inserting ``and'' at the end of subclause (III).

[[Page S1669]]

       (4) Section 51A(c)(1) is amended by striking ``51(d)(10)'' 
     and inserting ``51(d)(11)''.
       (5) The flush sentence at the end of clause (ii) of section 
     56(a)(1)(A) is amended by striking ``such 1250'' and 
     inserting ``such section 1250''.
       (6) Section 151(c)(6)(B)(iii) is amended by inserting 
     ``as'' before ``such terms''.
       (7) Section 170(e)(6)(B)(i)(III) is amended by striking 
     ``2000,'' and inserting ``2000),''.
       (8) Section 172(b)(1)(F)(i) is amended--
       (A) by striking ``3 years'' and inserting ``3 taxable 
     years'', and
       (B) by striking ``2 years'' and inserting ``2 taxable 
     years''.
       (9) Section 351(h)(1) is amended by inserting a comma after 
     ``liability''.
       (10) Section 475(g)(3) is amended by striking ``sections'' 
     and inserting ``section''.
       (11) Section 529(e)(3)(B)(i) is amended by striking 
     ``subsection (b)(7)'' and inserting ``subsection (b)(6)''.
       (12) Section 741 is amended by striking ``which have 
     appreciated substantially in value''.
       (13) Section 857(b)(7)(B)(i) is amended by striking 
     ``subsection 856(d)'' and inserting ``section 856(d)''.
       (14) Subparagraph (B) of section 943(e)(4) is amended by 
     aligning the left margin of the flush language with 
     subparagraph (A).
       (15) Subparagraph (B) of section 995(b)(3) is amended by 
     striking ``International Security Assistance and Arms Export 
     Control Act of 1976'' and inserting ``Arms Export Control 
     Act''.
       (16) Section 1394(c)(2) is amended by striking 
     ``subparagraph (A)'' and inserting ``paragraph (1)''.
       (17)(A) The section heading for section 4980E is amended to 
     read as follows:

     ``SEC. 4980E. FAILURE OF EMPLOYER TO MAKE COMPARABLE ARCHER 
                   MSA CONTRIBUTIONS.''.

       (B) The item relating to section 4980E in the table of 
     sections for chapter 43 is amended to read as follows:

``Sec. 4980E. Failure of employer to make comparable Archer MSA 
              contributions.''.

       (18) Section 6105(c)(1) is amended by striking ``any'' in 
     subparagraphs (C) and (E).
       (19)(A) Section 6227(d) is amended by striking ``subsection 
     (b)'' and inserting ``subsection (c)''.
       (B) Section 6228 is amended--
       (i) in subsection (a)(1), by striking ``subsection (b) of 
     section 6227'' and inserting ``subsection (c) of section 
     6227'',
       (ii) in subsection (a)(3)(A), by striking ``subsection (b) 
     of'', and
       (iii) in subsections (b)(1) and (b)(2)(A), by striking 
     ``subsection (c) of section 6227'' and inserting ``subsection 
     (d) of section 6227''.
       (C) Section 6231(b)(2)(B)(i) is amended by striking 
     ``section 6227(c)'' and inserting ``section 6227(d)''.
       (20) Section 1221(b)(1)(B)(i) is amended by striking 
     ``1256(b))'' and inserting ``1256(b)))''.
       (21) Section 159 of the Community Renewal Tax Relief Act of 
     2000 (114 Stat. 2763A-624) is amended by striking 
     ``fuctions'' and inserting ``functions''.
       (22) The amendment to section 170(e)(6)(B)(iv) made by 
     section 165(b)(1) of the Community Renewal Tax Relief Act of 
     2000 (114 Stat. 2763A-626) shall be applied as if it struck 
     ``in any of the grades K-12''.
       (23) Section 618(b)(2) of the Economic Growth and Tax 
     Relief Reconciliation Act of 2001 (Public Law 107-16; 115 
     Stat. 108) is amended--
       (A) in subparagraph (A) by striking ``203(d)'' and 
     inserting ``202(f)'', and
       (B) in subparagraphs (C), (D), and (E) by striking ``203'' 
     and inserting ``202(f)''.
       (24)(A) Section 525 of the Ticket to Work and Work 
     Incentives Improvement Act of 1999 (Public Law 106-170; 113 
     Stat. 1928) is amended by striking ``7200'' and inserting 
     ``7201''.
       (B) Section 532(c)(2) of such Act (113 Stat. 1930) is 
     amended--
       (i) in subparagraph (D), by striking ``341(d)(3)'' and 
     inserting ``341(d)'', and
       (ii) in subparagraph (Q), by striking ``954(c)(1)(B)(iii) 
     and inserting ``954(c)(1)(B)''.

     SEC. 418. ADDITIONAL CORRECTIONS.

       (a) Amendments Related to Section 202 of the Economic 
     Growth and Tax Relief Reconciliation Act of 2001.--
       (1) Subsection (h) of section 23 is amended--
       (A) by striking ``subsection (a)(1)(B)'' and inserting 
     ``subsection (a)(3)'', and
       (B) by adding at the end the following new flush sentence:

     ``If any amount as increased under the preceding sentence is 
     not a multiple of $10, such amount shall be rounded to the 
     nearest multiple of $10.''.
       (2) Subsection (f) of section 137 is amended by adding at 
     the end the following new flush sentence:

     ``If any amount as increased under the preceding sentence is 
     not a multiple of $10, such amount shall be rounded to the 
     nearest multiple of $10.''.
       (b) Amendments Related to Section 204 of the Economic 
     Growth and Tax Relief Reconciliation Act of 2001.--Section 
     21(d)(2) is amended--
       (1) in subparagraph (A) by striking ``$200'' and inserting 
     ``$250'', and
       (2) in subparagraph (B) by striking ``$400'' and inserting 
     ``$500''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if included in the provisions of the 
     Economic Growth and Tax Relief Reconciliation Act of 2001 to 
     which they relate.

   TITLE V--SOCIAL SECURITY HELD HARMLESS; BUDGETARY TREATMENT OF ACT

     SEC. 501. NO IMPACT ON SOCIAL SECURITY TRUST FUNDS.

       (a) In General.--Nothing in this Act (or an amendment made 
     by this Act) shall be construed to alter or amend title II of 
     the Social Security Act (or any regulation promulgated under 
     that Act).
       (b) Transfers.--
       (1) Estimate of secretary.--The Secretary of the Treasury 
     shall annually estimate the impact that the enactment of this 
     Act has on the income and balances of the trust funds 
     established under section 201 of the Social Security Act (42 
     U.S.C. 401).
       (2) Transfer of funds.--If, under paragraph (1), the 
     Secretary of the Treasury estimates that the enactment of 
     this Act has a negative impact on the income and balances of 
     the trust funds established under section 201 of the Social 
     Security Act (42 U.S.C. 401), the Secretary shall transfer, 
     not less frequently than quarterly, from the general revenues 
     of the Federal Government an amount sufficient so as to 
     ensure that the income and balances of such trust funds are 
     not reduced as a result of the enactment of this Act.

     SEC. 502. EMERGENCY DESIGNATION.

       Congress designates as emergency requirements pursuant to 
     section 252(e) of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 the following amounts:
       (1) An amount equal to the amount by which revenues are 
     reduced by this Act below the recommended levels of Federal 
     revenues for fiscal year 2002, the total of fiscal years 2002 
     through 2006, and the total of fiscal years 2002 through 
     2011, provided in the conference report accompanying H. Con. 
     Res. 83, the concurrent resolution on the budget for fiscal 
     year 2002.
       (2) Amounts equal to the amounts of new budget authority 
     and outlays provided in this Act in excess of the allocations 
     under section 302(a) of the Congressional Budget Act of 1974 
     to the Committee on Finance of the Senate for fiscal year 
     2002, the total of fiscal years 2002 through 2006, and the 
     total of fiscal years 2002 through 2011.

          TITLE VI--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS

     SEC. 601. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS AGAINST 
                   REGULAR AND MINIMUM TAX LIABILITY.

       (a) In General.--Paragraph (2) of section 26(a) is 
     amended--
       (1) by striking ``rule for 2000 and 2001.--'' and inserting 
     ``rule for 2000, 2001, 2002, and 2003.--'', and
       (2) by striking ``during 2000 or 2001,'' and inserting 
     ``during 2000, 2001, 2002, or 2003,''.
       (b) Conforming Amendments.--
       (1) Section 904(h) is amended by striking ``during 2000 or 
     2001'' and inserting ``during 2000, 2001, 2002, or 2003''.
       (2) The amendments made by sections 201(b), 202(f), and 
     618(b) of the Economic Growth and Tax Relief Reconciliation 
     Act of 2001 shall not apply to taxable years beginning during 
     2002 and 2003.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 602. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

       (a) In General.--Section 30 is amended--
       (1) in subsection (b)(2)--
       (A) by striking ``December 31, 2001,'' and inserting 
     ``December 31, 2003,'', and
       (B) in subparagraphs (A), (B), and (C), by striking 
     ``2002'', ``2003'', and ``2004'', respectively, and inserting 
     ``2004'', ``2005'', and ``2006'', respectively, and
       (2) in subsection (e), by striking ``December 31, 2004'' 
     and inserting ``December 31, 2006''.
       (b) Conforming Amendments.--
       (1) Subparagraph (C) of section 280F(a)(1) is amended by 
     adding at the end the following new clause:
       ``(iii) Application of subparagraph.--This subparagraph 
     shall apply to property placed in service after August 5, 
     1997, and before January 1, 2007.''.
       (2) Subsection (b) of section 971 of the Taxpayer Relief 
     Act of 1997 is amended by striking ``and before January 1, 
     2005''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2001.

     SEC. 603. CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN 
                   RENEWABLE RESOURCES.

       (a) In General.--Subparagraphs (A), (B), and (C) of section 
     45(c)(3) are both amended by striking ``2002'' and inserting 
     ``2004''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to facilities placed in service after December 
     31, 2001.

     SEC. 604. WORK OPPORTUNITY CREDIT.

       (a) In General.--Subparagraph (B) of section 51(c)(4) is 
     amended by striking ``2001'' and inserting ``2003''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to individuals who begin work for the employer 
     after December 31, 2001.

     SEC. 605. WELFARE-TO-WORK CREDIT.

       (a) In General.--Subsection (f) of section 51A is amended 
     by striking ``2001'' and inserting ``2003''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to individuals who begin work for the employer 
     after December 31, 2001.

     SEC. 606. DEDUCTION FOR CLEAN-FUEL VEHICLES AND CERTAIN 
                   REFUELING PROPERTY.

       (a) In General.--Section 179A is amended--
       (1) in subsection (b)(1)(B)--
       (A) by striking ``December 31, 2001,'' and inserting 
     ``December 31, 2003,'', and
       (B) in clauses (i), (ii), and (iii), by striking ``2002'', 
     ``2003'', and ``2004'', respectively, and inserting ``2004'', 
     ``2005'', and ``2006'', respectively, and
       (2) in subsection (f), by striking ``December 31, 2004'' 
     and inserting ``December 31, 2006''.

[[Page S1670]]

       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to property placed in service after December 31, 
     2001.

     SEC. 607. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR 
                   OIL AND NATURAL GAS PRODUCED FROM MARGINAL 
                   PROPERTIES.

       (a) In General.--Subparagraph (H) of section 613A(c)(6) is 
     amended by striking ``2002'' and inserting ``2004''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 608. QUALIFIED ZONE ACADEMY BONDS.

       (a) In General.--Paragraph (1) of section 1397E(e) is 
     amended by striking ``2000, and 2001'' and inserting ``2000, 
     2001, 2002, and 2003''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to obligations issued after the date of the 
     enactment of this Act.

     SEC. 609. COVER OVER OF TAX ON DISTILLED SPIRITS.

       (a) In General.--Paragraph (1) of section 7652(f) is 
     amended by striking ``January 1, 2002'' and inserting 
     ``January 1, 2004''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to articles brought into the United States after 
     December 31, 2001.

     SEC. 610. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO 
                   MENTAL HEALTH BENEFITS.

       (a) In General.--Subsection (f) of section 9812, as amended 
     by the Departments of Labor, Health and Human Services, and 
     Education, and Related Agencies Appropriations Act, 2002, is 
     amended to read as follows:
       ``(f) Application of Section.--This section shall not apply 
     to benefits for services furnished--
       ``(1) on or after September 30, 2001, and before January 
     10, 2002, and
       ``(2) after December 31, 2003.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to plan years beginning after December 31, 2000.

     SEC. 611. TEMPORARY SPECIAL RULES FOR TAXATION OF LIFE 
                   INSURANCE COMPANIES.

       (a) Reduction in Mutual Life Insurance Company Deductions 
     Not To Apply in Certain Years.--Section 809 (relating to 
     reduction in certain deductions of material life insurance 
     companies) is amended by adding at the end the following:
       ``(j) Differential Earnings Rate Treated as Zero for 
     Certain Years.--Notwithstanding subsection (c) or (f), the 
     differential earnings rate shall be treated as zero for 
     purposes of computing both the differential earnings amount 
     and the recomputed differential earnings amount for a mutual 
     life insurance company's taxable years beginning in 2001, 
     2002, or 2003.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 612. AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.

       (a) In General.--Paragraphs (2) and (3)(B) of section 
     220(i) (defining cut-off year) are each amended by striking 
     ``2002'' each place it appears and inserting ``2003''.
       (b) Conforming Amendments.--
       (1) Paragraph (2) of section 220(j) is amended by striking 
     ``1998, 1999, or 2001'' each place it appears and inserting 
     ``1998, 1999, 2001, or 2002''.
       (2) Subparagraph (A) of section 220(j)(4) is amended by 
     striking ``and 2001'' and inserting ``2001, and 2002''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2002.

     SEC. 613. INCENTIVES FOR INDIAN EMPLOYMENT AND PROPERTY ON 
                   INDIAN RESERVATIONS.

       (a) Employment.--Subsection (f) of section 45A is amended 
     by striking ``December 31, 2003'' and inserting ``December 
     31, 2004''.
       (b) Property.--Paragraph (8) of section 168(j) is amended 
     by striking ``December 31, 2003'' and inserting ``December 
     31, 2004''.

     SEC. 614. SUBPART F EXEMPTION FOR ACTIVE FINANCING.

       (a) In General.--
       (1) Section 953(e)(10) is amended--
       (A) by striking ``January 1, 2002'' and inserting ``January 
     1, 2007'', and
       (B) by striking ``December 31, 2001'' and inserting 
     ``December 31, 2006''.
       (2) Section 954(h)(9) is amended by striking ``January 1, 
     2002'' and inserting ``January 1, 2007''.
       (b) Life Insurance and Annuity Contracts.--
       (1) In general.--Subparagraph (B) of section 954(i)(4) is 
     amended to read as follows:
       ``(B) Life insurance and annuity contracts.--
       ``(i) In general.--Except as provided in clause (ii), the 
     amount of the reserve of a qualifying insurance company or 
     qualifying insurance company branch for any life insurance or 
     annuity contract shall be equal to the greater of--

       ``(I) the net surrender value of such contract (as defined 
     in section 807(e)(1)(A)), or
       ``(II) the reserve determined under paragraph (5).

       ``(ii) Ruling request, etc.--The amount of the reserve 
     under clause (i) shall be the foreign statement reserve for 
     the contract (less any catastrophe, deficiency, equalization, 
     or similar reserves), if, pursuant to a ruling request 
     submitted by the taxpayer or as provided in published 
     guidance, the Secretary determines that the factors taken 
     into account in determining the foreign statement reserve 
     provide an appropriate means of measuring income.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 615. REPEAL OF REQUIREMENT FOR APPROVED DIESEL OR 
                   KEROSENE TERMINALS.

       (a) In General.--Subsection (e) of section 4101 is hereby 
     repealed.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on January 1, 2002.

     SEC. 616. REAUTHORIZATION OF TANF SUPPLEMENTAL GRANTS FOR 
                   POPULATION INCREASES FOR FISCAL YEAR 2002.

       Section 403(a)(3) of the Social Security Act (42 U.S.C. 
     603(a)(3)) is amended by adding at the end the following:
       ``(H) Reauthorization of grants for fiscal year 2002.--
     Notwithstanding any other provision of this paragraph--
       ``(i) any State that was a qualifying State under this 
     paragraph for fiscal year 2001 or any prior fiscal year shall 
     be entitled to receive from the Secretary for fiscal year 
     2002 a grant in an amount equal to the amount required to be 
     paid to the State under this paragraph for the most recent 
     fiscal year in which the State was a qualifying State;
       ``(ii) subparagraph (G) shall be applied as if `2002' were 
     substituted for `2001'; and
       ``(iii) out of any money in the Treasury of the United 
     States not otherwise appropriated, there are appropriated for 
     fiscal year 2002 such sums as are necessary for grants under 
     this subparagraph.''.

     SEC. 617. 1-YEAR EXTENSION OF CONTINGENCY FUND UNDER THE TANF 
                   PROGRAM.

       Section 403(b) of the Social Security Act (42 U.S.C. 
     603(b)) is amended--
       (1) in paragraph (2), by striking ``and 2001'' and 
     inserting ``2001, and 2002''; and
       (2) in paragraph (3)(C)(ii), by striking ``2001'' and 
     inserting ``2002''.

  Mr. DASCHLE. Madam President, this unanimous consent is required in 
order for us to finish our work on the economic stimulus package that 
was just sent to us this afternoon from the House. Senator Lott and I 
have discussed this matter throughout the day. As I said, I had an 
earlier conversation with the distinguished ranking member of the 
Finance Committee, as well as the chairman of the Finance Committee, 
and we are now in a position to proceed to a vote on the stimulus 
package tomorrow morning.
  We haven't set a time, but I expect the votes will be taken at 
approximately 9:30. So there will be two votes at 9:30--one on the 
unanimous consent that we have just now agreed to, the so-called 
economic stimulus unemployment insurance extension legislation, and one 
on the McCain amendment.
  I thank my colleagues for their participation and cooperation.
  The PRESIDING OFFICER. The Senator from Virginia is recognized.
  Mr. WARNER. Madam President, I have worked closely with Senator 
Collins for some time now on legislation to provide much needed tax 
relief for our educators. Tonight, I am pleased to report that the 
Senate should soon pass H.R. 3090, the Job Creation and Worker 
Assistance Act of 2002, as previously passed by the House of 
Representatives. With passage of this legislation, Senator Collins and 
I will have finally achieved our shared goal of providing much needed 
tax relief for our Nation's teachers.
  The Collins/Warner provision that is in this legislation, was crafted 
by Senator Collins and myself after months of consultations with 
Senator Grassley, Senator Baucus, Senator Allen, and House Ways and 
Means Chairman Thomas.
  Simply put, the provision provides a $250 above the line deduction 
for educators who incur out of pocket expenses for supplies they bring 
into the classroom to better the education of their students. The 
National Education Association played a key role and its many members 
should look with pride and satisfaction on their constructive advice to 
the Congress. The President of the Virginia Education Association, Jean 
Bankos also helped lead this superb effort. Our teachers in this 
country are overworked, underpaid, and all too often, under-
appreciated. In addition to these factors, our teachers expend 
significant money out of their own pocket to better the education of 
our children. Most typically, our teachers are spending significant 
amounts of money out of their own pocket on classroom expenses--such as 
books, supplies, pens, paper, and computer equipment. These out of 
pocket costs place lasting financial burdens on our teachers. This is 
one reason our teachers are leaving the profession. Little wonder that 
our country is in the midst of a teacher shortage.
  Estimates are that 2.4 million new teachers will be needed by 2009 
because of teacher attrition, teacher retirement and increased student 
enrollment. While the primary responsibility rests with the states, I 
believe the Federal Government can and should play a

[[Page S1671]]

role in helping to alleviate the Nation's teaching shortage. On a 
federal level, we can encourage individuals to enter the teaching 
profession and remain in the profession by providing tax relief to 
teachers for the costs that they incur as part of the profession.
  Madam President, our teachers have made a personal commitment to 
educate the next generation and to strengthen America. While many 
people spend their lives building careers, our teachers spend their 
careers building lives. The Teacher Tax Relief provisions in this bill 
go a long way towards providing our teachers with the recognition they 
deserve by providing teachers with important and much needed tax 
relief.
  I am proud to have had the opportunity to work with Senator Collins 
and so many others to eventually make our goal a reality.
  I commend the leadership of the majority and the minority for their 
efforts. I have long supported the concept of having the stimulus 
package. While it may not be what each of us wanted, it is essential, 
particularly the unemployment provisions and the provisions about 
teachers, with which I have long been associated. I thank the 
leadership.
  Madam President, I commend the President of the United States for his 
commitment, along with his several Cabinet officers who have fought so 
strongly for passage of a stimulus package. The American economy is, I 
believe, showing some signs of recovery, but I believe that this is an 
additional step to shore up the confidence of the people of this 
country in the economy.
  Within the stimulus package we will vote on tomorrow are provisions 
that I worked on with Senator Collins and others for some time that 
relate to teachers. In my visits to educational institutions throughout 
the Commonwealth of Virginia, I have often learned--inadvertently, not 
because teachers come up to me and tell me about it, because they are 
rather modest--but, in fact, so many of our teachers, particularly 
those in the lower grades and those in schools which, for whatever 
reason, might not be as well financed as other institutions in our 
State, have taken from their own pockets, funds to buy school supplies 
which are needed to help their particular students in their classroom 
perform their educational responsibilities. Sometimes it is paper. 
Sometimes it is crayons, occasionally books. I find this extraordinary. 
As I say, they have not come to me and asked: Oh, we want this, we want 
that. They are very humble about it.

  Senator Collins and I, and my colleague, Senator Allen, who has been 
very active in the entire area of education with me--I happen to serve 
on the committee for education in the Senate--but we have as a team, 
together with other Senators, have been working on this concept for 
some time.
  The National Education Association took a pivotal role in seeing that 
this legislation was incorporated in the House bill. Now at long last, 
we do have a measure of success, and it is owed to the teachers and the 
National Education Association and other colleagues here who have 
worked on it with me.
  I am delighted over the whole prospect of this being passed. It is 
only a $250 above the line deduction. But at long last teachers can 
point to something--``this is our's; we helped make it happen, and we 
are proud of it.''
  I thank the Chair. I yield the floor and suggest the absence of a 
quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________