[Congressional Record Volume 149, Number 90 (Wednesday, June 18, 2003)]
[House]
[Pages H5475-H5491]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROVIDING FOR CONSIDERATION OF H.R. 8, DEATH TAX REPEAL PERMANENCY ACT
OF 2003
Mr. REYNOLDS. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 281 and ask for its immediate consideration.
The Clerk read the resolution, as follows:
H. Res. 281
Resolved, That upon the adoption of this resolution it
shall be in order to consider in the House the bill (H.R. 8)
to make the repeal of the estate tax permanent. The bill
shall be considered as read for amendment. The previous
question shall be considered as ordered on the bill and on
any amendment thereto to final passage without intervening
motion except: (1) one hour of debate on the bill equally
divided and controlled by the chairman and ranking minority
member of the Committee on Ways and Means; (2) the amendment
printed in the report of the Committee on Rules accompanying
this resolution, if offered by Representative Pomeroy of
North Dakota or his designee, which shall be in order without
intervention of any point of order, shall be considered as
read, and shall be separately debatable for one hour equally
divided and controlled by the proponent and an opponent; and
(3) one motion to recommit with or without instructions.
The SPEAKER pro tempore (Mr. Ose). The gentleman from New York (Mr.
Reynolds) is recognized for 1 hour.
Mr. REYNOLDS. Mr. Speaker, for the purpose of debate only, I yield
the customary 30 minutes to the gentlewoman, and my colleague and
neighbor, from New York (Ms. Slaughter), pending which I yield myself
such time as I may consume. During consideration of this resolution,
all time yielded is for the purposes of debate only.
(Mr. REYNOLDS asked and was given permission to revise and extend his
remarks.)
Mr. REYNOLDS. Mr. Speaker, House Resolution 281 is a modified closed
rule providing for the consideration of H.R. 8, the Death Tax Repeal
Permanency Act of 2003, legislation to make the repeal of the estate
tax permanent. The rule makes in order 1 hour of debate, a minority
substitute, and one motion to recommit, with or without instructions.
[[Page H5476]]
Mr. Speaker, the issue before us today is certainly not a new one. In
the 106th session, Congress voted several times in a bipartisan fashion
to eliminate the death tax. In the 107th session, Congress voted on
three separate occasions to eliminate the death tax; but with the death
tax relief set to expire in 2011, we might give Dr. Kevorkian a new
career as a tax and estate planner.
Today, we have the opportunity to bury the death tax once and for
all.
By way of history, this tax was initially imposed to prevent the very
wealthy from passing on their wealth from one generation to the next.
At the time, this well-intentioned tax eased concerns about the growing
concentration of money and power among a small number of wealthy
families. Later, it was used to fund national emergencies, and it
became necessary to maintain these high tax rates in high wartime
levels during the 1930s and the 1940s, but they remained relatively
unchanged until the Tax Reform Act of 1976.
Ironically, the death tax served little of the purpose for which it
was intended. Rather than prevent the concentrated accumulation of vast
wealth, the death tax punished savings and thrift and hard work among
American families. Small businesses and farmers have been unfairly
penalized for their blood, sweat and tears, paying taxes on already-
taxed assets.
Instead of investing money on productive measures such as creating
new jobs or purchasing new equipment, businesses and farms are forced
to divert their earnings to tax accountants and lawyers just to prepare
their estates.
The victims of the death tax are typically hardworking Americans of
medium-sized estates, farmers and small business owners. Their
enterprises create jobs and growth and opportunities for our
communities, but every year those families were literally forced to
sell the family farm or business just to pay off their death taxes.
Equally disturbing is the fact that the death tax actually raises
relatively little revenue for the Federal Government. Some studies have
found that it may cost the government and taxpayers more in
administrative and compliance fees than it actually raises in revenue.
Of course, farmers and ranchers are not the only ones facing an
unfair and unnecessary burden in the death tax. One study conducted by
the Public Policy Institute of New York State found that in a 5-year
period family-owned and -operated businesses on an average spent
$125,000 per company on tax planning alone. These costs are incurred
prior to any actual payment of Federal estate taxes. They reported that
an estimated 14 jobs per business were lost as a result of Federal
estate tax planning. For just the 365 businesses surveyed, the total
number of jobs already lost due to the Federal estate tax is 5,100.
That was just in upstate New York.
My rural and suburban district in New York is laden with small
businesses and farms that are owned by hardworking families who pay
their taxes, create jobs, and contribute not only to the quality of
life in their community but to the Nation's rich heritage. Is it so
much to ask that they be able to pass on their industry and hard work,
their small business or their farm to their children? Why should Uncle
Sam become the Grim Reaper?
The fact is they paid their taxes in life on every acre sown, on
every product sold, and on every dollar earned. They should not be
taxed in death, too.
Mr. Speaker, death tax relief was a good idea in the 107th Congress,
and it is a good idea now. We should not provide this kind of relief
for only a few years. We should provide it permanently. This kind of
permanent tax relief for farmers, ranchers, and small business owners
that will keep the family business growing and growing is just the kind
of relief that is beginning to get this economy moving.
Wall Street has shown modest gains not only since Congress passed its
tax cut plan but even since we began working on the tax cut itself. As
one media report said, ``Economic advisers credit the tax cuts and
positive first quarter earnings for the gains.''
Tax cuts work. They work in helping hardworking families keep more of
what they earn. They work in allowing people to have greater control
over decisions to save and invest, and they work in creating jobs and
creating greater economic opportunity for American families. We are on
the right course. Let us keep moving forward.
Mr. Speaker, I urge my colleagues to bury this unfair tax once and
for all. Vote ``yes'' on the rule and the underlying legislation.
Mr. Speaker, I reserve the balance of my time.
Ms. SLAUGHTER. Mr. Speaker, I yield myself such time as I may
consume.
(Ms. SLAUGHTER asked and was given permission to revise and extend
her remarks.)
Ms. SLAUGHTER. Mr. Speaker, I thank my colleague and neighbor from
New York for yielding me the customary 30 minutes.
Mr. Speaker, at the outset let me say that those of us who oppose
this bill love the family farms and small businesses no less than
anyone else in the Congress. The fact of the matter is that this tax is
paid now by such a small percentage of people, less than 2 percent in
the United States, that we believe almost every family farm and every
small business is covered already by not having to pay estate tax, and
indeed, the 2 percent who pay it, including the Warren Buffetts and the
Bill Gateses and his father, all claim that this is a very bad
direction for us to go in. They do not want to build large kingdoms of
their own wealth. They are asking that we keep this because it has
always been the American policy for taxation that it is based upon the
ability to pay.
We would be wise, I think, to remember our American history.
Republican President Teddy Roosevelt, a hero of mine, who led the
charge to create an inheritance tax, believed that the wealthy had a
special obligation to the government. He said: ``The man of great
wealth owes a peculiar obligation to the State because he derives
special advantages from the mere existence of government.''
{time} 1045
It would also be wise to remember the virtues of responsibility and
accountability, especially now that the deficit has gone from the $5.6
trillion surplus to a $400 billion deficit in a little more than 2
years. The underlying legislation before us today would drain $80
billion more a year from the already empty Federal Treasury. In other
words, the money would have to be borrowed.
Now, what does this say to the American people when we prioritize the
checkbooks of the wealthiest 2 percent of Americans before paying for
the health care for our veterans and fully funding education? I know
that the President pledged to repeal estate tax during his campaign,
and I am sure that he knows some people in the top 2 percent who will
benefit from the complete and permanent elimination of the inheritance
tax.
In fact, he probably mingled with a few of them just last night
during the event that kicked off the largest political fund-raising
drive in our history. But I meet those whose Social Security benefits
are threatened by the drain on the resources of the government, some of
the 9 million unemployed and 12 million children that are still without
the help of the child tax credit. Teddy Roosevelt admonished, and this
is so important because it is so wise, ``The test of our progress is
not whether we add more to the abundance of those who have much; it is
whether we provide enough for those who have too little.''
I hope that in the short time allocated for discussion of this
legislation that we do not frighten the family farmers and small
business owners. As I said, all of them, unless they are among the
wealthiest 2 percent in the United States, are covered already by not
paying this tax. They have worked hard to keep their farms from falling
into bankruptcy, and far too many family farms are going under already.
They fight hard to keep their small businesses going, and we support
them in every way that we can, especially during this continued
economic decline. They are not subject to the estate tax as it
currently exists. I cannot stress that enough.
Indeed, one of my colleagues on the Committee on Rules last night
talked about an event in his home State where the convention hall was
full and the President said he wanted to make permanent the repeal of
the estate tax
[[Page H5477]]
and got a humongous response to that. My colleague on the Committee on
Rules said that he was sure that not more than 40 people in that room,
if that many, would have benefitted from that repeal.
Special estate tax rules for family farms value their farm land at
less than other land, at between 45 percent and 75 percent of its fair
market value, and already allows farm couples to exempt up to $2.6
million from taxes. Family businesses pay less than 1 percent of all
estate taxes. Family business couples can also exempt up to $2.6
million from taxes. The Pomeroy substitute provides even more
protections for them. It excludes from the inheritance tax any estate
owned by a couple worth $6 million.
Almost a decade ago, the gentleman from California, the distinguished
Chair of the Committee on Rules, said on the floor that ``all,'' and in
parentheses the minority members at that time, ``are asking for fair
treatment on both sides of the aisle here.'' And I agree with my
colleague, I want fairness on both sides of the aisle. I would also
like fairness and a little old-fashioned common sense.
Under H. Res. 281, only one amendment has been made in order, a
substitute amendment offered by my friend from, the gentleman from
North Dakota (Mr. Pomeroy). However, instead of choosing his substitute
amendment that paid for itself, in other words, took money from
probably from the tax cut from the very wealthy and paid for what he is
recommending here, where we would have no further drain on the Treasury
because it would not have added a single penny to the Federal deficit,
but instead of making that amendment in order, the Committee on Rules
made a second amendment in order which only partially offsets the cost
of the elimination of taxes on estates larger than $3 million.
Even though H.R. 8 falls short, and fails to offset any of the $80
billion annual losses it creates and adds to our increasing deficit, it
is very important to note, Mr. Speaker, that one of the differences
between H.R. 8 and the Pomeroy substitute amendment is .35 percent.
That's all. H.R. 8 would permanently remove the estate tax on any
estate, even those as large as $3 billion or $4 billion or $5 billion
or larger, and cost the Federal Government more than $800 billion over
10 years. The Pomeroy amendment would exempt every estate in America,
except for the wealthiest of the wealthy. Only one-third of 1 percent
of estates would be so large that they surpassed the generous exclusion
in the Pomeroy substitute.
This bill does a great deal for a very few. It really does, again,
add to the deficit. And the most important thing about it are that the
people who benefit from it the most are the people who most loudly say
not to do this; that we do not need it. We would much prefer a stronger
economy in America.
Mr. Speaker, I reserve the balance of my time.
Mr. REYNOLDS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, my friends from the left always bring up class warfare
every time we have a tax cut discussion in this body. I just would
point to two aspects of my colleague and friend's remarks.
First, Henry Aaron and Alicia Munnell, who are two prominent liberal
economists, concluded in their study of the estate tax the following:
In short, the estate and gift taxes of the United States have failed to
achieve their intended purposes. They raise little revenue, they impose
large excess burdens, and they are unfair.
Alan Binder, a former member of the Federal Reserve Board, appointed
by former President Bill Clinton, found that only about 2 percent of
inequity was attributable to the unequal distribution of inherited
wealth.
Joseph Stiglitz, who served as Chairman of President Clinton's
Council of Economic Advisers, found that the estate tax may ultimately
increase income equality.
Those are the same type of things that Republicans or conservatives
or economists who are right of center have said. So there seems to be
concurrence on that.
I would also say that it is sometimes difficult being a member of the
majority to resolve some of the issues of inside baseball upstairs in
the Committee on Rules. Sometimes we are attacked because we have open
rules, sometimes we are attacked because we have closed rules, modified
rules, or whatever happens. In this instance, we just cannot seem to
win.
The unfortunate aspect of this is that we have today for our
colleagues to consider, in the rule that we now have before us, a
substitute offered by the Democrats. If the gentleman from North Dakota
(Mr. Pomeroy) does not want this substitute, he should withdraw it. He
introduced it, he asked the Committee on Rules to consider it, the
Committee on Rules did just that.
We also have a recommit, as we have in each and every single rule
that we put out on behalf of consideration of legislation since the
majority took its control in 1995.
Mr. McGOVERN. Mr. Speaker, will the gentleman yield?
Mr. REYNOLDS. I yield to the gentleman from Massachusetts, though it
is unfortunate, as a member of the Committee on Rules, the gentleman
cannot get time from his side.
Mr. McGOVERN. Mr. Speaker, I thank the gentleman for yielding. I just
want to assure the gentleman that on our side of the aisle, we will not
complain if we get open rules, and we certainly would not be
complaining as much if the majority allowed the substitute that the
gentleman from North Dakota (Mr. Pomeroy) wanted to offer, with the
offsets, so this Estate Tax Bill would be paid for.
Mr. REYNOLDS. Reclaiming my time, Mr. Speaker, the gentleman from
North Dakota (Mr. Pomeroy) came before the Committee on Rules and he
introduced his legislation. There is no time I am aware of, in talking
to the staff, that the gentleman from North Dakota, from the time he
brought the legislation for our consideration until today, that he has
asked to withdraw the substitute.
So we are moving forward on the Pomeroy substitute. After that is
considered, we will move forward with the motion to recommit and then
we will, hopefully, go to final passage.
Mr. Speaker, I reserve the balance of my time.
Ms. SLAUGHTER. Mr. Speaker, I yield 3 minutes to the gentleman from
Massachusetts (Mr. McGovern).
Mr. McGOVERN. Mr. Speaker, a few weeks ago, President Bush signed a
huge tax cut into law giving billions and billions of dollars in tax
cuts to the very, very wealthy. Of course, in the dead of night, the
Republicans stripped out the child tax credit to help low- and middle-
income American families. But those families do not go to the fund-
raisers at the Hilton, so the leadership does not care about them.
The other body acted quickly and responsibly to fix the child tax
problem. The leadership of this House, however, dragged their feet and
then acted irresponsibly. Finally, last week, after a drumbeat of
public pressure, we saw a child tax credit bill, sort of. What we
actually saw was a sham, a distraction, a way to kill the issue with
one hand while sending out a press release with the other.
Since the House bill is vastly different and vastly more expensive
than the Senate bill, the differences have to be worked out in a
conference committee. Conferees have been appointed, but has the
conference committee met? No.
Now, it is clear that the leadership of the Committee on Ways and
Means is not too busy, since they had time to bring up this week's
installment of Tax Cut Bonanza, a bill to eliminate the sunset on the
estate tax. Mr. Speaker, the current sunset does not even expire until
the year 2010, 7 years from now. Now, the Senate-passed child tax
credit can help working families today, but, clearly, the Republicans
would rather help the very wealthy 7 years early.
This bill would burden our children and our grandchildren with $150
billion in debt over the next 10 years and hundreds of billions of
dollars more after that. So why are we considering this bill today? The
answer is simple: Last night, at the Washington Hilton, all the fat
cats had a fund-raiser for the President's reelection campaign. For
$2,000, the people who will benefit from this Estate Tax Bill got a
hamburger and a handshake from the Republican Party.
Now, last night in the Committee on Rules, the gentleman from North
Dakota (Mr. Pomeroy) offered a substitute that would permanently
exclude estates worth up to $3 million per
[[Page H5478]]
person or $6 million for a married couple, and would exempt 99.65
percent of estates from estate tax liability. He offered a substitute
that would have been paid for. But last night, keeping with tradition,
the Committee on Rules basically disallowed his right to offer that
substitute. And, also keeping with tradition of shutting out the voices
of average working families in this House, they did not allow him to
offer his substitute that had the offsets.
So I guess the problem with the approach of the gentleman from North
Dakota is that the people who were raising all the money last night are
worth more than $6 million. They want more. And they are the people
that this leadership in the House cares most about. For those people,
it is Christmas in June. But the soldier serving our country over in
Iraq, who makes $16,000 a year, gets nothing, because he cannot afford
to pay $2,000 for a hamburger at the Hilton.
Mr. Speaker, I urge my colleagues to defeat the previous question
vote for the responsible Pomeroy substitute.
Mr. REYNOLDS. Mr. Speaker, I yield myself such time as I may consume.
As President Reagan would say, Mr. Speaker, there you go again. Class
warfare. I do not know about my colleagues, but I go home every
weekend, and I see farmers, and I see small businesses that have worked
their hearts out. They have worked hard their whole life on their
family farm or in their Main Street business. They are not rich, but
they have an estate. They want to pass it to whoever they want. In most
instances, that is their children. But to pay the estate tax, they have
to sell the family farm. And that just is not right, because they paid
taxes on every single portion of the products, goods, and services and
then they have to do it again at death tax time.
They are not rich, although this would certainly help them, but as I
cited in earlier debate, liberal economists and conservative economists
all agree the tax does not really do the job. But think about this: The
actuaries and life underwriters and everybody else are saying, if you
want to die, you want to do it between now and 2010, because God
forbid, if it is January 1, 2011. This thing does not work anymore.
It is a reasonable thing to tell America and to show America and
perform for America with permanent death tax relief. This tax relief is
reasonable. I understand my colleagues on the left do not believe in
tax cuts. I accept that. But I also want to remind my colleagues and
friends, as the gentleman from Massachusetts (Mr. McGovern) has
indicated, in the Committee on Rules every single amendment had a
rollcall vote yesterday. They were all heard, they were all debated,
and they all had a vote.
We have, in this modified closed rule, included the Pomeroy
substitute, and we have included a motion to recommit. We will then
have final passage of whatever comes as the result of our colleagues in
the conference on the other side.
Mr. Speaker, I reserve the balance of my time.
{time} 1100
Ms. SLAUGHTER. Mr. Speaker, I yield 3 minutes to the gentlewoman from
Connecticut (Ms. DeLauro).
Ms. DeLAURO. Mr. Speaker, this is not about family farms. In 2001,
only 2 percent of the 2.3 million deaths involved any estate or gift
tax liability at all. Of those deaths, about one-tenth of 1 percent
incurred any liability at all involving family farm assets. How many is
that? What does it translate into? Just 46 family farms incurred any
estate tax liability at all.
This bill helps 46 family farms, yet will cost $160 billion. So let
us not be fooled. This bill is only about protecting those wealthy few,
and the cost of this legislation comes directly out of vital services,
job training, education, health care for working families. Even in the
most robust economy, eliminating the estate tax would be totally
irresponsible, a giveaway to the richest Americans; but at a time when
we are experiencing $400 billion in record deficits, 9 million
Americans are unemployed, eliminating the estate tax is not only
irresponsible, it is immoral.
This bill is an insult to the 6.5 million families left out of the
child tax legislation, 200,000 military families, less than a week
after the majority cynically maneuvered to kill legislation passed
overwhelmingly by the ordinary body which would have corrected this
injustice; and the House majority brings up yet another bill to cut
taxes for only the wealthiest Americans.
And if Members think it is only the Democrats that are saying that
the Republicans are cynical in what they did last week, let me quote a
senior Senate Republican aide. He said that he expected the tax credits
for those working families would die in a dead-locked conference, and
he said further that it appeared that was the intention of the House
Republicans. And today the Republican whip has said our leadership is
committed to the bill we sent to the conference. The majority of our
Members are not going to accept anything else. They wanted to destroy
the opportunity for working people to be able to get a child tax
credit. That is what they did last week.
At a time when there are hard-working, tax-paying minimum-wage-
earning families, families of 12 million children, they have not yet
received a penny of tax relief. The House's consideration of this bill
is irresponsible.
This is a debate about priorities. It is about values. I call on my
colleagues to turn aside this misguided, reckless bill. I call on
President Bush to use his moral leadership, help deliver the child tax
credit to those 6.5 million families, those 12 million children. The
President should urge his Republican leadership to pass a responsible
child credit bill that reflects the principles of this great Nation.
Give those 6.5 million low-income families the tax relief they need.
They pay taxes, property taxes, sales taxes, excise taxes, payroll
taxes, 8 percent of their income. Give them the tax relief that they
need. That is what we should be debating today. Those families have
earned it.
Mr. REYNOLDS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, apparently as I cited in my remarks before, some of that
has not been heard as we get some of the facts out. The left does not
want to cut taxes. I accept that. I understand that. We are going to
have a debate; and this House has repeatedly cut taxes, including the
estate tax in the 106th Congress, the 107th Congress, and now in the
108th Congress. But Henry Aaron and Alicia Munnell, who are two
prominent liberal economists, concluded in their study of the estate
tax, the estate and gift taxes in the United States have failed to
achieve their intended purposes. They raise little revenue, they impose
large excess burdens, and they are unfair.
Alan Binder, a former member of the Federal Reserve Board appointed
by President Clinton, found that 2 percent of the equity was
attributable to the unequal distribution of inherited wealth.
And Joseph Stiglitz, who served as President Clinton's Council of
Economic Advisors, found the estate tax may ultimately increase income
inequality. The reason I have cited that a second time in this debate
is we can keep coming forward and say how bad it is. The liberal
economists, just as we have seen from right-of-center economists, have
concurred that this is not a functional tax.
Mr. Speaker, I yield 4 minutes to the gentleman from Georgia (Mr.
Linder), a member of the Committee on Rules.
Mr. LINDER. Mr. Speaker, first of all I would like to say that this
is a typical rule on a tax bill, and it gives the minority an
opportunity to put all of their eggs in one basket and to vote on a
substitute; and that is fair.
But let me speak to the underlying issue, the bill. I was with
President Bush some months ago at Harrison High School in Cobb County,
Georgia. He spoke for about 30 minutes in a gymnasium that was filled
to the rafters. And at one brief time he said we must make permanent
the repeal of the death tax, and the place exploded in spontaneous
applause and cheering. I turned to the person I was sitting next to,
and I said there are not 40 people in this auditorium who are going to
benefit from that. They are cheering it because they think it is a
moral issue. People should be able to pass on what they earn and keep.
Mr. Speaker, why are we so angry at success in this body? What do
rich people do with their money? They give it away, and they do not
give it away for
[[Page H5479]]
tax reasons. Some of the great fortunes that were given away, the
Fricks, the Carnegies, the Mellons, were given away before we had a Tax
Code. They were given away because they wanted to, and we think they
have a right to decide where their money goes. Bill Gates gives it in
Africa for health reasons; Ted Turner gave $1 billion to the United
Nations. Let them make that choice, rather than take it away from them
and make the choice for them.
I have said this before on this floor, and I want to say it again.
Some years ago and maybe today, if you want to start a business in some
great cities, you are visited by a pretty scruffy guy who says we are
going to let you stay in business, but we want 30 percent of your
profits. And if you sell the business, we are going to take 20 percent
of what you make off it; but even the Mafia does not show up at the
widow's doorstep asking for their share of what is left over. Our
government does. It is immoral, and it ought to end.
Ms. SLAUGHTER. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from Massachusetts (Mr. McGovern) to ask a question.
Mr. McGOVERN. Mr. Speaker, I have a question for either of my
colleagues on the Committee on Rules. The gentleman's party controls
the House and the Senate and the White House. My question is when are
we going to have a child tax credit? When are we going to provide
relief to that soldier in Iraq who is earning $16,000 a year? We are
talking about helping millionaires today, and my question is since the
other side of the aisle controls everything, when are they going to
bring this child tax credit to the floor?
Mr. REYNOLDS. Mr. Speaker, will the gentleman yield?
Mr. McGOVERN. I yield to the gentleman from New York.
Mr. REYNOLDS. Mr. Speaker, I certainly hope that the Senate will
quickly respond to the legislation we passed last week, in a prompt
response to the decision that they wanted to look at the child tax
credit.
Mr. McGOVERN. Mr. Speaker, some of the gentleman's colleagues in the
other body have said quite clearly that they are not going to deal with
the bill sent over there because it was not paid for. I guess since we
have Republicans that control the House and the Senate, I would like to
think that they would get along with each other and resolve some of
these issues; and the issue of the child tax credit is something that
would help low-income and moderate-income families right now. They need
help now, and it seems to me while we are talking about this estate tax
relief bill today, which takes place 7 years from now, why can we not
help the people hurting right now.
Mr. REYNOLDS. If the gentleman would continue to yield, I am a little
confused. Last week the gentleman voted against the child tax credit.
Mr. McGOVERN. Mr. Speaker, reclaiming my time, no, I voted against
the child tax credit that was not paid for.
Mr. REYNOLDS. Mr. Speaker, I yield 2 minutes to the gentlewoman from
Tennessee (Mrs. Blackburn).
Mrs. BLACKBURN. Mr. Speaker, I rise in support of the rule that we
are discussing that would allow us to consider legislation to
permanently repeal the death tax.
Mr. Speaker, I am one of those that truly believes the death tax is a
triple tax. First, Americans pay a tax when they earn this income. Then
they buy an asset and spend it, and they pay the tax then. Then when an
American dies, they have to pay the tax again.
This tax is a tax that affects all Americans, especially our small
business owners. In fact, 70 percent of small businesses never make it
past that first generation because of this tax. It is something that
prohibits people from being able to pass that business on to the next
generation.
In addition, it discourages savings. It discourages investment, and
it is costing our economy hundreds of thousands of jobs.
Mr. Speaker, the Americans get it; 89 percent of the people want us
to permanently eliminate the death tax. Small business owners get it.
Seniors get it. The farmers in my district in Tennessee, they get it.
They want us to do away with death taxes. I hope my colleagues on the
other side of the aisle will also get it and vote in favor of this rule
and in favor of H.R. 8 to rid our country of an unjust tax that
penalizes all Americans.
Ms. SLAUGHTER. Mr. Speaker, I yield 5 minutes to the gentlewoman from
Connecticut (Ms. DeLauro).
Ms. DeLAURO. Mr. Speaker, I think it is important to note that we are
dealing with an issue today that, as has been pointed out, that is
really not in the realm of debate or action for the next 7 years when
in fact what I think bears importance is to recount what has happened
here in the last several weeks about a tax credit for working families,
people who pay payroll taxes, sales taxes, property taxes and excise
taxes, people who make between $10,500 and $26,625, again working
people, who were told that they were part of a tax package, a $350
billion tax package.
Oddly enough, their portion of the $350 billion tax package, $3.5
billion, was stolen out of the bill that the President signed 10 days
ago, 2 weeks ago in the dead of night, and the promise that was made to
these individuals was just pulled back in order that we meet the demand
of those people, 184,000 millionaires in this country, who are going to
get $93,000 a year in a tax cut; but we could not scale back 1 percent
of that $350 billion to adjust for these working families.
So the Senate in a bipartisan way, the other body in a bipartisan
way, because they said that this was just plain wrong, came to the
conclusion on a vote of 94 to 2 that we could address this wrongdoing
and put $3.5 billion into a bill and address this injustice. And they
paid for it.
The President, I might add, or his spokesperson, said we ought to do
what the Senate, the other body, did. It came to the House of
Representatives where the majority leader of the House said we have
more important things to do. What is more important? What is more
important to do, give $93,000 in a tax cut to the wealthiest people in
this country? Or allow corporations to go overseas and not pay taxes at
all? Is that more important than the hardworking American families who
pay taxes, 8 percent of their income in taxes, and they should be
shortchanged on a $400 tax credit for their children?
There is a basic and fundamental values issue here about who we care
about and what we care about in this Nation. We had an opportunity and
what the Republican leadership did, the other side of the aisle did
last week, was to in fact come forward with an $82 billion package to
pay for a $3.5 billion issue, and they did it for one reason; and I
will quote the Senate Republican aide again.
{time} 1115
A senior Senate Republican aide said he expected the tax credits to
die in a deadlocked conference which he said appeared to be the
intention of the House Republicans. It was and is the intention of the
House Republicans to end this tax credit for these hardworking folks.
What people may not know is that everybody else in that tax bill is
going to get their tax relief on July 1. Not the families included
here. Military families are not going to get it. They are going to have
to apply for next year. Two hundred thousand military families fighting
a war, fighting a war on our behalf, they are not going to get it. This
is an outrage. This should not happen. But over and over and over
again, and today what we are talking about is a tax cut, repealing,
permanently, the estate tax which I pointed out earlier, 46 families,
some of the wealthiest families in the country. And we cannot take care
of these families.
I called on the President and the President said he wanted to see
this fixed. The President needs to talk to the Republican House
leadership, take them in hand and say, let's do what's right. Take the
moral leadership, the moral leadership where the President stood up and
he fought for the dividend tax cut, again to benefit the wealthiest
people in this country. I believe he should take on the moral
leadership to fight for these hardworking families.
Mr. REYNOLDS. Mr. Speaker, I yield myself such time as I may consume.
I enjoyed that oratory. I would almost think that she voted for the
child tax credit last week, but the sad fact is that she did not
because she voted the other way. She voted no. We sent a bill over to
the other body. I have listened to the presumptions of the other body,
of what will happen over there. I have
[[Page H5480]]
talked to a few Senators. They give me the hope that they are so
desirous of voting on this that they are looking forward to a
conference and they are looking forward to getting it on the floor.
The fact is we are talking about permanent estate tax repeal now.
That is what is coming on the floor as we pass this rule, if the body
does pass it, and I believe that they will and I believe that we will
get bipartisan, Democrat-Republican, support for a permanent estate
tax, death tax, however, you want to look at the reality, repeal. As we
are listening to the debate shift over to the child tax credit, it is
fine to lecture what that is and how it all happened.
The fact is last week I voted for a child tax credit and other tax
cuts and sent it to the other body. And the fact is the last two
orators on the Democratic side did not vote for it.
So as we move forward today back on the death tax to make a permanent
death tax repeal, Members get to vote up or down on the rule and then
they get to vote on a substitute and then they get to vote on a
recommit and then final passage. I look forward to today, because I
believe that we will get bipartisan support to pass the permanent
repeal of the death tax.
Ms. DeLAURO. Mr. Speaker, will the gentleman yield?
Mr. REYNOLDS. I yield to the gentlewoman from Connecticut.
Ms. DeLAURO. Mr. Speaker, I would just say to the gentleman, he says
I voted against that bill last week. I will tell him my view and he can
dispute this with me. It was a very good feel-good vote on the
Republican side of the aisle, and that may be where his vote was
because, according to Republican Senate people, Senator Grassley
today--I am sorry, a member of the other body--a Senator from the other
body said he does not have time for a conference. The majority whip in
this body said no time for a conference. The gentleman felt good about
voting for that bill because he knew that the Senate was not going to
do it and, therefore, they were going to kill the child tax credit. He
can say it over and over again. I would not vote for a bill that was
instrumental in killing the child tax credit nor was it paid for. The
bill that I voted for was being paid for.
Mr. REYNOLDS. I guess she did not have a question.
Mr. Speaker, I reserve the balance of my time.
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. Latham). All Members are reminded
against making inappropriate references to the Senate.
Ms. SLAUGHTER. Mr. Speaker, I yield 5 minutes to the gentleman from
Massachusetts (Mr. McGovern).
Mr. McGOVERN. Mr. Speaker, I thank the gentlewoman from New York for
yielding the time, and I certainly want to associate myself with her
remarks and the remarks of the gentlewoman from Connecticut. I think it
is important to kind of set the facts straight here because the
gentleman from New York, for whom I have a great deal of respect, I
think has said some things that I believe are a little bit misleading.
One is those of us on our side of the aisle here, we voted for the
child tax credit six times. They voted against it six times. We voted
for it six times. The difference with what we voted for and what they
ended up voting for is we ended up voting for a child tax credit that
was fully paid for, with offsets, because we are a little concerned
quite frankly with the way Republicans are on this tax cut/spending
spree right now because it is adding to our deficit and adding to our
debt. This year as a result of their policies, CBO tells us that the
deficit this year is $400 billion, the biggest single year deficit ever
recorded in our history. That is what we are worried about over here.
So we feel very strongly that as we support these tax cut measures to
help working families, that they be paid for, that the offsets be
specified.
The other body came forward with a bill to help deal with the child
tax credit that was going to cost $10 billion, which was fully paid
for, with offsets. The majority in the House could not get together
with their counterparts in the other body, even though they are of the
same party, but the leadership in this House, I think, is so out of
touch and so radical when it comes to how they spend the taxpayers'
money in this country that they could not even come up with a bill that
even approached anything near what the other body did.
But what the House leadership did is they came up with a bill that
would cost $82 billion, that was not paid for. In other words, it was
all borrowed money, money being borrowed from our children and our
grandchildren and our great-grandchildren. They all talk about cutting
taxes, but they, in essence, are raising taxes on our kids, something
called a debt tax. We are paying an ever increasing amount on the
interest on the debt that is being accumulated in this country, in
large part because of their fiscally irresponsible policies.
So do not tell us that we voted against a child tax credit. We voted
for it six times. We voted for one that would provide immediate relief
to these families that we have been talking about for these last
several weeks, including our military families, men and women serving
in Iraq right now making a base pay of $16,000 a year. They deserve
help right now. They work hard, they are defending our country, they
deserve this child tax credit. We tried to bring to this floor just
like the majority did in the other body brought to the Senate floor a
responsible child tax credit bill that was fully paid for. They said
no.
We voted for one that was paid for six times and then they came up
with a sham, a public relations ploy, knowing that it will get lost in
conference committee or that there would never be a conference
committee and these low- and medium-income families would get nothing.
And here we are today debating an estate tax relief bill that takes
effect 7 years from now. We are talking about lifting the sunset 7
years from now. There are more important and pressing problems for a
lot of working families, people who will never get to the point where
they are going to have to deal with whether or not they are going to
pay estate tax or not.
I would just respectfully suggest to the gentleman that his facts are
a little bit wrong with regard to what we on this side of the aisle
have tried to do and have been championing.
Mr. REYNOLDS. Mr. Speaker, I yield myself such time as I may consume.
I probably need to put the gentleman from California (Mr. Thomas) and
the gentlewoman from Washington (Ms. Dunn) on notice that when we move
into the bill on the underlying legislation, we will be talking more on
the child tax credit than the permanent death tax. I am just encouraged
to see in the 107th Congress, three votes that occurred on the death
tax. I saw from 41 to 58 Democratic votes along with Republicans and it
reassures me that we are on the path of a bipartisan tax cut to end the
death tax once and for all that is in this country.
We need to see a couple of things. Individuals and families and
partnerships or family corporations own 99 percent of all U.S. farms
and ranches. Think about that. Individuals, family partnerships or
family corporations own 99 percent of all U.S. farms and ranches. I do
not want us to ever forget that every acre, every piece of equipment,
every business has already been taxed in life, so why should they be
taxed in death.
Mr. Speaker, I yield 2 minutes to the gentleman from Oklahoma (Mr.
Sullivan).
Mr. SULLIVAN. Mr. Speaker, today what we are talking about is ending
the death tax. I believe it is morally wrong that we tax people on
their death. They should not have to visit the IRS and the undertaker
on the same day. I know a story of a couple, a man and a woman, who had
two children who owned a small business. They passed away,
unfortunately, and left that business to their children. Their children
thought they would get this business, maybe get a little money. But
instead to pay the death tax, they had to actually borrow money to sell
that business. The Republican Party does not want to tax dead people.
The Democrat Party does. That is the difference here today.
Mr. Speaker, I rise today in support of H.R. 8, the Death Tax Repeal
Permanency Act of 2003. This bill permanently repeals the death tax and
allows families to pass on businesses and farms to their families
without the enormous, intrusive and burdensome
[[Page H5481]]
taxes they are often forced to incur. The IRS imposes rates of up to 60
percent of the value of a family business or farm when the owner passes
away. To pay the tax man, many families are forced to liquidate assets
and sell their businesses and farms though some have been in the family
for generations.
The death tax is un-American, Mr. Speaker. Ask any small business
owner. They know all too well that 70 percent of family businesses do
not survive to the second generation, and 87 percent do not make it to
the third. They will tell you that repealing the death tax would create
jobs and grow our economy. It is good for small business owners, it is
good for our economy and it is good for America.
Join me in voting for H.R. 8, the repeal of this burdensome tax on
family-owned farms and businesses. It is morally wrong.
Ms. SLAUGHTER. Mr. Speaker, I yield myself 5 seconds. Saying that it
will preserve family farms from taxation does not make it true. They
are preserved already from taxation.
Mr. Speaker, I am pleased to yield 1 minute to the gentlewoman from
Connecticut (Ms. DeLauro).
Ms. DeLAURO. Mr. Speaker, on the commentary for my not having voted
for a child tax credit, let me just say we have voted six times on this
issue. Democrats have voted for, Republicans voted against, including a
motion to instruct on which Republicans voted for taking the bill that
the other body passed and bringing it back here. My interest in this
effort is not today, it is not yesterday, it is not in the last week.
On March 12, I introduced the child tax credit in the Committee on
the Budget and it was voted there for the first time. All of the
members on the Democratic side voted yes. All of the members on the
Republican side voted no against the child tax credit. This legislation
we deal with today goes into effect in 7 years. We have an opportunity
to right a wrong, to right an injustice, to pass a child tax credit, to
take the bill, to go to conference and address this issue and allow
these hardworking people to get their benefit on July 1 as every other
American who is going to get the benefit of this tax credit will. It is
wrong to do otherwise.
Mr. REYNOLDS. Mr. Speaker, I yield myself such time as I may consume.
I welcome so many from the left to join me in cutting taxes. I look
forward to that vote when it comes out of conference committee and
maybe she can join us with that.
Mr. Speaker, I reserve the balance of my time.
Ms. SLAUGHTER. Mr. Speaker, I want to remind my colleague from New
York that the gentleman from Texas (Mr. Stenholm) would really hate to
be put in that category of a lefty.
Mr. Speaker, I am pleased to yield 2 minutes to the gentleman from
North Dakota (Mr. Pomeroy).
Mr. POMEROY. I thank the gentlewoman for yielding me this time.
Mr. Speaker, I am going to urge that my colleagues vote against this
rule. On the one hand, they do allow a Democrat substitute that I am
pleased to offer, one that would provide very meaningful estate tax
relief. In fact, it would completely take care of any estate tax
problem of 99.65 percent of the people of this country. It is far more
relief than offered under the majority proposal in each of the next 5
years.
So these family farms and these small businesses we are going to be
hearing so much about, the alligator tears we are going to be seeing
cried on the majority side, we help them and we help them now. On the
other hand, the majority approach is very different. Nobody gets
nothing until the wealthiest three-tenths of 1 percent get everything
that they need. That is why we have the inferior plan on their side
compared to the more generous benefit of ours.
There is another very big difference. Theirs would drive the deficit
higher to the tune of $160 plus billion dollars over 10 years. Why I
want to vote against this rule is that we had a proposal in the
amendment that I proposed to the Committee on Rules that would have
completely paid for the relief we provide. There would have been zero
impact on the deficit. Yet to my surprise, the substitute allowed in
order only provides for the tax relief portion and does not provide the
means by which we avoid any impact on the deficit whatsoever. We wanted
to close the Enron-like tax shelters.
{time} 1130
We also had some customs fees, and yet they have shielded this,
stripped it out of the rule; and so what we are allowed on the floor
will have a deficit impact. I vote against the rule.
Mr. REYNOLDS. Mr. Speaker, I yield myself such time as I may consume.
I have got to tell the Members, I have only been here since 1999, but
it never ceases to amaze me to see something new. Yesterday my
colleague from North Dakota was before the Committee on Rules
advocating this substitute that is contained in this rule and another
one, and he was granted one that he actually spoke for; and today he
wants to bring down the rule.
Mr. POMEROY. Mr. Speaker, will the gentleman yield?
Mr. REYNOLDS. I yield to the gentleman from North Dakota.
Mr. POMEROY. Mr. Speaker, to my friend from New York, we had within
the substitute proposed to the Committee on Rules, on which the
gentleman served so well, a pay-for so we were not going to impact the
deficit. You took out the pay-for provisions of what we submitted to
the committee. You make us impact the deficit, although it is only a
fraction to which the majority proposal impacts the deficit. We know
you do not care about the deficits. In fact, there has been a $9
trillion reversal in the financial fortunes of this country within the
last 2 years. We think enough is enough. We do not want to drive the
deficit deeper and deeper, and that is why I so wish you would have
allowed for the pay-for portion proposed to the Committee on Rules to
be considered.
I thank the gentleman for yielding.
Mr. REYNOLDS. Mr. Speaker, did the gentleman come before the
Committee on Rules and advocate the substitute which is contained in
the rule today? I think he did, did he not? Did he come and advocate
two different amendments before the Committee on Rules, this one being
made that was made as substitute inside the rule? Did he or did he not
come yesterday before the Committee on Rules and submit testimony
before us asking for consideration of this substitute?
Mr. POMEROY. I believe the gentleman was out of the room at the time
I testified, but I would refer him to the transcript.
Mr. REYNOLDS. I am happy to bring the record down and bring it here.
Mr. POMEROY. Does the gentleman want me to answer his question or
does he not?
Mr. REYNOLDS. The gentleman and I both know that he was before the
committee and asked for this amendment to be considered by the
Committee on Rules and now he wants to bring it down. Is that true or
not, sir?
Mr. POMEROY. It is not true.
Mr. REYNOLDS. Is the gentleman saying he was not in the Committee on
Rules or that he did not request this substitute in his presentation
before the Committee on Rules when he spoke on two specific amendments,
this being one?
Mr. POMEROY. Mr. Speaker, is the gentleman going to yield to me to
answer his question?
Mr. REYNOLDS. I will yield to the gentleman from South Dakota.
Mr. POMEROY. Then I will proceed to answer. If the gentleman will
check the transcript of my remarks before the Committee on Rules, I
asked that the proposal I offered be considered that paid for the
provision for the very meaningful estate tax relief we extend by
closing the Enron-type tax loopholes.
I know you probably do not want that considered on the floor of the
House. So what you have made in order does not allow us to incorporate
the pay-fors. I think that is unfortunate. My specific request to the
chairman of the Committee on Rules was to allow the pay-fors.
Mr. REYNOLDS. Mr. Speaker, I reclaim my time.
Mr. Speaker, I must say that in the Committee on Rules, we try to
work with our side of the aisle to advise a Member if they do not want
their amendment made in order, they should not offer it in the
Committee on Rules. Maybe that does not happen to Members on the other
side of the aisle; but on our side, if someone comes up there and asks
for consideration of an amendment, they ought to be prepared that it
might be granted.
[[Page H5482]]
I just want to go back and make sure we do not miss anything on the
death tax inhibiting economic growth because I have listened to my
colleagues on both sides of the aisle talk about creating jobs. The
threat of a resurrected death tax will force American families to make
inefficient investment decisions and to waste resources in an effort to
comply with the death tax. Studies show that repealing the death tax
would create as many as 200,000 extra jobs each year across America.
Jobs are lost when businesses are liquidated to pay death taxes and to
make decisions not to expand because of anticipated death tax
liabilities.
Mr. Speaker, I reserve the balance of my time.
Ms. SLAUGHTER. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I will be calling for a ``no'' vote on the previous
question. And if it is defeated, I will offer an amendment to the rule.
The amendment will make in order the portion of the gentleman from
North Dakota's (Mr. Pomeroy) request that made his amendment budget
neutral and was paid for. The amendment was offered, but was rejected
on a party-line vote. At least that part was taken out.
The Pomeroy substitute will provide substantial tax relief from
estate taxes. In fact, it grants more generous relief to most estates
than the Republican bill and grants it immediately. The Pomeroy
substitute completely exempts all but the largest estates from taxation
and significantly simplifies tax planning for estates of all sizes. It
also exempts virtually all family farms and small businesses from
estate taxes. Furthermore, the Pomeroy substitute will not add one
single penny to the deficit. Unlike the Republican bill, it will be
completely paid for.
Republicans in the House have continued for weeks to block any and
every bill that provides tax relief to the people who need it most in
this Nation. Even on the issue of estate tax, they favor the rich over
the middle- and lower-income working Americans. They continue to take
care of their wealthy friends again today with yet another deficit-
busting bill. Let us take this opportunity to make in order a
substitute that will immediately eliminate estate taxes for all estates
of less than $6 million. That is 99.65 percent of all estates, 99.65;
and it will also do that without costing any additional dollars to the
deficit.
Let me make very clear that a ``no'' vote on the previous question
will not stop consideration of the Death Tax Repeal Permanency Act of
2003, but a ``no'' vote will allow the House to vote on the Pomeroy
substitute which is fully paid for. However, a ``yes'' vote on the
previous question will prevent us from voting on a fiscally responsible
and revenue-neutral tax bill. I urge a ``no'' vote on the previous
question.
Mr. Speaker, I ask unanimous consent that the text of the amendment
be printed in the Record immediately before the vote on the previous
question.
The SPEAKER pro tempore (Mr. Latham). Is there objection to the
request of the gentlewoman from New York?
There was no objection.
Ms. SLAUGHTER. Mr. Speaker, I yield back the balance of my time.
Mr. REYNOLDS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I guess I believe, looking up at the press gallery, that
there is probably a view that it is a fair rule. It is a modified
closed rule that provides a substitute, then a recommit; and then we
move on to final passage. So there is not much controversy on the rule.
And we are in a situation as we move forward on a debate that I believe
once we get through the process, which is the rule vote, we are going
to see in final passage, just looking at the 107th Congress, somewhere
between 41 Democratic colleagues and 58 Democratic colleagues who voted
for death tax in the past Congress that will join us today in a
bipartisan message of passing this legislation out of the House and
having it go to the other body.
Mr. Speaker, Benjamin Franklin once noted in this world nothing can
be said to be certain except death and taxes. But while death may be
certain, taxes are immortal. That is because our current tax system
plays a cruel joke on farmers and small business owners. Simply put,
the death tax stifles growth, discourages savings, stymies job
creation, drains resources, and ruins family businesses. It is time we
permanently repeal this unfair tax and allow the American Dream to be
passed on to our children and future generations.
The material previously referred to by Ms. Slaughter is as follows:
Previous Question for H. Res. 281--Rule on H.R. 8: The Death Tax Repeal
Permanency Act of 2003
Strike all after the resolving clause and insert in lieu
thereof the following:
That upon the adoption of this resolution it shall be in
order to consider in the House the bill (H.R. 8) to make the
repeal of the estate tax permanent. The bill shall be
considered as read for amendment. The previous question shall
be considered as ordered on the bill and on any amendment
thereto to final passage without intervening motion except:
(1) one hour of debate on the bill equally divided and
controlled by the chairman and ranking minority member of the
Committee on Ways and Means; (2) the amendment specified in
section 2 of this resolution if offered by Representative
Pomeroy of North Dakota or his designee, which shall be in
order without intervention of any point of order, shall be
considered as read, and shall be separately debatable for one
hour equally divided and controlled by the proponent and an
opponent; and (3) one motion to recommit with our without
instructions.
Sec. 2. The amendment referred to in the first section of
this resolution is as follows:
Amendment in the Nature of a Substitute to H.R. 28
Offered by Mr. Pomeroy
Strike all after the enacting clause and insert the
following:
SECTION 1. AMENDMENT OF 1986 CODE.
(a) References.--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.
(b) Table of Contents.--
Sec. 1. Amendment of 1986 code.
TITLE I--RESTORATION OF ESTATE TAX; REPEAL OF CARRYOVER BASIS
Sec. 101. Restoration of estate tax; repeal of carryover basis.
Sec. 102. Modifications to estate tax.
Sec. 103. Valuation rules for certain transfers of nonbusiness assets;
limitation on minority discounts.
TITLE II--PROVISIONS DESIGNED TO CURTAIL TAX SHELTERS
Sec. 201. Clarification of economic substance doctrine.
Sec. 202. Penalty for failing to disclose reportable transaction.
Sec. 203. Accuracy-related penalty for listed transactions and other
reportable transactions having a significant tax
avoidance purpose.
Sec. 204. Penalty for understatements attributable to transactions
lacking economic substance, etc.
Sec. 205. Modifications of substantial understatement penalty for
nonreportable transactions.
Sec. 206. Tax shelter exception to confidentiality privileges relating
to taxpayer communications.
Sec. 207. Disclosure of reportable transactions.
Sec. 208. Modifications to penalty for failure to register tax
shelters.
Sec. 209. Modification of penalty for failure to maintain lists of
investors.
Sec. 210. Modification of actions to enjoin certain conduct related to
tax shelters and reportable transactions.
Sec. 211. Understatement of taxpayer's liability by income tax return
preparer.
Sec. 212. Penalty on failure to report interests in foreign financial
accounts.
Sec. 213. Frivolous tax submissions.
Sec. 214. Regulation of individuals practicing before the department of
treasury.
Sec. 215. Penalty on promoters of tax shelters.
Sec. 216. Statute of limitations for taxable years for which listed
transactions not reported.
Sec. 217. Denial of deduction for interest on underpayments
attributable to nondisclosed reportable and noneconomic
substance transactions.
TITLE III--OTHER PROVISIONS
Sec. 301. Limitation on transfer or importation of built-in losses.
Sec. 302. Disallowance of certain partnership loss transfers.
Sec. 303. No reduction of basis under section 734 in stock held by
partnership in corporate partner.
Sec. 304. Repeal of special rules for FASITs.
Sec. 305. Expanded disallowance of deduction for interest on
convertible debt.
Sec. 306. Expanded authority to disallow tax benefits under section
269.
Sec. 307. Modifications of certain rules relating to controlled foreign
corporations.
Sec. 308. Basis for determining loss always reduced by nontaxed portion
of dividends.
[[Page H5483]]
Sec. 309. Affirmation of consolidated return regulation authority.
Sec. 310. Extension of customs user fees.
TITLE I--RESTORATION OF ESTATE TAX; REPEAL OF CARRYOVER BASIS
SEC. 101. RESTORATION OF ESTATE TAX; REPEAL OF CARRYOVER
BASIS.
(a) In General.--Subtitles A and E of title V of the
Economic Growth and Tax Relief Reconciliation Act of 2001,
and the amendments made by such subtitles, are hereby
repealed; and the Internal Revenue Code of 1986 shall be
applied as if such subtitles, and amendments, had never been
enacted.
(b) Sunset Not To Apply.--
(1) Subsection (a) of section 901 of the Economic Growth
and Tax Relief Reconciliation Act of 2001 is amended by
striking ``this Act'' and all that follows and inserting
``this Act (other than title V) shall not apply to taxable,
plan, or limitation years beginning after December 31,
2010.''.
(2) Subsection (b) of such section 901 is amended by
striking ``, estates, gifts, and transfers''.
(c) Conforming Amendments.--Subsections (d) and (e) of
section 511 of the Economic Growth and Tax Relief
Reconciliation Act of 2001, and the amendments made by such
subsections, are hereby repealed; and the Internal Revenue
Code of 1986 shall be applied as if such subsections, and
amendments, had never been enacted.
SEC. 102. MODIFICATIONS TO ESTATE TAX.
(a) Increase in Exclusion Equivalent of Unified Credit to
$3,000,000.--Subsection (c) of section 2010 (relating to
applicable credit amount) is amended by striking all that
follows ``the applicable exclusion amount'' and inserting ``.
For purposes of the preceding sentence, the applicable
exclusion amount is $3,000,000.''.
(b) Maximum Estate Tax Rate To Remain at 49 Percent;
Restoration of Phaseout of Graduated Rates and Unified
Credit.--
(1) Paragraph (1) of section 2001(c) is amended by striking
the last 2 items in the table and inserting the following new
item:
$780,800, plus 49% of the excess over $2,000,000.''....................
(2) Paragraph (2) of section 2001(c) is amended to read as
follows:
``(2) Phaseout of graduated rates and unified credit.--The
tentative tax determined under paragraph (1) shall be
increased by an amount equal to 5 percent of so much of the
amount (with respect to which the tentative tax is to be
computed) as exceeds $10,000,000. The amount of the increase
under the preceding sentence shall not exceed the sum of the
applicable credit amount under section 2010(c) and
$199,200.''
(c) Effective Date.--The amendments made by this section
shall apply to estates of decedents dying, and gifts made,
after December 31, 2003.
SEC. 103. VALUATION RULES FOR CERTAIN TRANSFERS OF
NONBUSINESS ASSETS; LIMITATION ON MINORITY
DISCOUNTS.
(a) In General.--Section 2031 (relating to definition of
gross estate) is amended by redesignating subsection (d) as
subsection (f) and by inserting after subsection (c) the
following new subsections:
``(d) Valuation Rules for Certain Transfers of Nonbusiness
Assets.--For purposes of this chapter and chapter 12--
``(1) In general.--In the case of the transfer of any
interest in an entity other than an interest which is
actively traded (within the meaning of section 1092)--
``(A) the value of any nonbusiness assets held by the
entity shall be determined as if the transferor had
transferred such assets directly to the transferee (and no
valuation discount shall be allowed with respect to such
nonbusiness assets), and
``(B) the nonbusiness assets shall not be taken into
account in determining the value of the interest in the
entity.
``(2) Nonbusiness assets.--For purposes of this
subsection--
``(A) In general.--The term `nonbusiness asset' means any
asset which is not used in the active conduct of 1 or more
trades or businesses.
``(B) Exception for certain passive assets.--Except as
provided in subparagraph (C), a passive asset shall not be
treated for purposes of subparagraph (A) as used in the
active conduct of a trade or business unless--
``(i) the asset is property described in paragraph (1) or
(4) of section 1221(a) or is a hedge with respect to such
property, or
``(ii) the asset is real property used in the active
conduct of 1 or more real property trades or businesses
(within the meaning of section 469(c)(7)(C)) in which the
transferor materially participates and with respect to which
the transferor meets the requirements of section
469(c)(7)(B)(ii).
For purposes of clause (ii), material participation shall be
determined under the rules of section 469(h), except that
section 469(h)(3) shall be applied without regard to the
limitation to farming activity.
``(C) Exception for working capital.--Any asset (including
a passive asset) which is held as a part of the reasonably
required working capital needs of a trade or business shall
be treated as used in the active conduct of a trade or
business.
``(3) Passive asset.--For purposes of this subsection, the
term `passive asset' means any--
``(A) cash or cash equivalents,
``(B) except to the extent provided by the Secretary, stock
in a corporation or any other equity, profits, or capital
interest in any entity,
``(C) evidence of indebtedness, option, forward or futures
contract, notional principal contract, or derivative,
``(D) asset described in clause (iii), (iv), or (v) of
section 351(e)(1)(B),
``(E) annuity,
``(F) real property used in 1 or more real property trades
or businesses (as defined in section 469(c)(7)(C)),
``(G) asset (other than a patent, trademark, or copyright)
which produces royalty income,
``(H) commodity,
``(I) collectible (within the meaning of section 401(m)),
or
``(J) any other asset specified in regulations prescribed
by the Secretary.
``(4) Look-thru rules.--
``(A) In general.--If a nonbusiness asset of an entity
consists of a 10-percent interest in any other entity, this
subsection shall be applied by disregarding the 10-percent
interest and by treating the entity as holding directly its
ratable share of the assets of the other entity. This
subparagraph shall be applied successively to any 10-percent
interest of such other entity in any other entity.
``(B) 10-percent interest.--The term `10-percent interest'
means--
``(i) in the case of an interest in a corporation,
ownership of at least 10 percent (by vote or value) of the
stock in such corporation,
``(ii) in the case of an interest in a partnership,
ownership of at least 10 percent of the capital or profits
interest in the partnership, and
``(iii) in any other case, ownership of at least 10 percent
of the beneficial interests in the entity.
``(5) Coordination with subsection (b).--Subsection (b)
shall apply after the application of this subsection.
``(e) Limitation on Minority Discounts.--For purposes of
this chapter and chapter 12, in the case of the transfer of
any interest in an entity other than an interest which is
actively traded (within the meaning of section 1092), no
discount shall be allowed by reason of the fact that the
transferee does not have control of such entity if the
transferee and members of the family (as defined in section
2032A(e)(2)) of the transferee have control of such entity.''
(b) Effective Date.--The amendments made by this section
shall apply to transfers after the date of the enactment of
this Act.
TITLE II--PROVISIONS DESIGNED TO CURTAIL TAX SHELTERS
SEC. 201. CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.
(a) In General.--Section 7701 is amended by redesignating
subsection (m) as subsection (n) and by inserting after
subsection (l) the following new subsection:
``(m) Clarification of Economic Substance Doctrine; Etc.--
``(1) General rules.--
``(A) In general.--In applying the economic substance
doctrine, the determination of whether a transaction has
economic substance shall be made as provided in this
paragraph.
``(B) Definition of economic substance.--For purposes of
subparagraph (A)--
``(i) In general.--A transaction has economic substance
only if--
``(I) the transaction changes in a meaningful way (apart
from Federal tax effects and, if there are any Federal tax
effects, also apart from any foreign, State, or local tax
effects) the taxpayer's economic position, and
``(II) the taxpayer has a substantial nontax purpose for
entering into such transaction and the transaction is a
reasonable means of accomplishing such purpose.
``(ii) Special rule where taxpayer relies on profit
potential.--A transaction shall not be treated as having
economic substance by reason of having a potential for profit
unless--
``(I) the present value of the reasonably expected pre-tax
profit from the transaction is substantial in relation to the
present value of the expected net tax benefits that would be
allowed if the transaction were respected, and
``(II) the reasonably expected pre-tax profit from the
transaction exceeds a risk-free rate of return.
``(C) Treatment of fees and foreign taxes.--Fees and other
transaction expenses and foreign taxes shall be taken into
account as expenses in determining pre-tax profit under
subparagraph (B)(ii).
``(2) Special rules for transactions with tax-indifferent
parties.--
``(A) Special rules for financing transactions.--The form
of a transaction which is in substance the borrowing of money
or the acquisition of financial capital directly or
indirectly from a tax-indifferent party shall not be
respected if the present value of the deductions to be
claimed with respect to the transaction is substantially in
excess of the present value of the anticipated economic
returns of the person lending the money or providing the
financial capital. A public offering shall be treated as a
borrowing, or an acquisition of financial capital, from a
tax-indifferent party if it is reasonably expected that at
least 50 percent of the offering will be placed with tax-
indifferent parties.
``(B) Artificial income shifting and basis adjustments.--
The form of a transaction with a tax-indifferent party shall
not be respected if--
``(i) it results in an allocation of income or gain to the
tax-indifferent party in excess of such party's economic
income or gain, or
``(ii) it results in a basis adjustment or shifting of
basis on account of overstating
[[Page H5484]]
the income or gain of the tax-indifferent party.
``(3) Definitions and special rules.--For purposes of this
subsection--
``(A) Economic substance doctrine.--The term `economic
substance doctrine' means the common law doctrine under which
tax benefits under subtitle A with respect to a transaction
are not allowable if the transaction does not have economic
substance or lacks a business purpose.
``(B) Tax-indifferent party.--The term `tax-indifferent
party' means any person or entity not subject to tax imposed
by subtitle A. A person shall be treated as a tax-indifferent
party with respect to a transaction if the items taken into
account with respect to the transaction have no substantial
impact on such person's liability under subtitle A.
``(C) Substantial nontax purpose.--In applying subclause
(II) of paragraph (1)(B)(i), a purpose of achieving a
financial accounting benefit shall not be taken into account
in determining whether a transaction has a substantial nontax
purpose if the origin of such financial accounting benefit is
a reduction of income tax.
``(D) Exception for personal transactions of individuals.--
In the case of an individual, this subsection shall apply
only to transactions entered into in connection with a trade
or business or an activity engaged in for the production of
income.
``(E) Treatment of lessors.--In applying subclause (I) of
paragraph (1)(B)(ii) to the lessor of tangible property
subject to a lease, the expected net tax benefits shall not
include the benefits of depreciation, or any tax credit, with
respect to the leased property and subclause (II) of
paragraph (1)(B)(ii) shall be disregarded in determining
whether any of such benefits are allowable.
``(4) Other common law doctrines not affected.--Except as
specifically provided in this subsection, the provisions of
this subsection shall not be construed as altering or
supplanting any other rule of law, and the requirements of
this subsection shall be construed as being in addition to
any such other rule of law.
``(5) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
the purposes of this subsection. Such regulations may include
exemptions from the application of this subsection.''
(b) Effective Date.--The amendments made by this section
shall apply to transactions entered into after February 13,
2003.
SEC. 202. PENALTY FOR FAILING TO DISCLOSE REPORTABLE
TRANSACTION.
(a) In General.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6707 the following new section:
``SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE REPORTABLE
TRANSACTION INFORMATION WITH RETURN OR
STATEMENT.
``(a) Imposition of Penalty.--Any person who fails to
include on any return or statement any information with
respect to a reportable transaction which is required under
section 6011 to be included with such return or statement
shall pay a penalty in the amount determined under subsection
(b).
``(b) Amount of Penalty.--
``(1) In general.--Except as provided in paragraphs (2) and
(3), the amount of the penalty under subsection (a) shall be
$50,000.
``(2) Listed transaction.--The amount of the penalty under
subsection (a) with respect to a listed transaction shall be
$100,000.
``(3) Increase in penalty for large entities and high net
worth individuals.--
``(A) In general.--In the case of a failure under
subsection (a) by--
``(i) a large entity, or
``(ii) a high net worth individual,
the penalty under paragraph (1) or (2) shall be twice the
amount determined without regard to this paragraph.
``(B) Large entity.--For purposes of subparagraph (A), the
term `large entity' means, with respect to any taxable year,
a person (other than a natural person) with gross receipts in
excess of $10,000,000 for the taxable year in which the
reportable transaction occurs or the preceding taxable year.
Rules similar to the rules of paragraph (2) and subparagraphs
(B), (C), and (D) of paragraph (3) of section 448(c) shall
apply for purposes of this subparagraph.
``(C) High net worth individual.--For purposes of
subparagraph (A), the term `high net worth individual' means,
with respect to a reportable transaction, a natural person
whose net worth exceeds $2,000,000 immediately before the
transaction.
``(c) Definitions.--For purposes of this section--
``(1) Reportable transaction.--The term `reportable
transaction' means any transaction with respect to which
information is required to be included with a return or
statement because, as determined under regulations prescribed
under section 6011, such transaction is of a type which the
Secretary determines as having a potential for tax avoidance
or evasion.
``(2) Listed transaction.--Except as provided in
regulations, the term `listed transaction' means a reportable
transaction which is the same as, or substantially similar
to, a transaction specifically identified by the Secretary as
a tax avoidance transaction for purposes of section 6011.
``(d) Authority To Rescind Penalty.--
``(1) In general.--The Commissioner of Internal Revenue may
rescind all or any portion of any penalty imposed by this
section with respect to any violation if--
``(A) the violation is with respect to a reportable
transaction other than a listed transaction,
``(B) the person on whom the penalty is imposed has a
history of complying with the requirements of this title,
``(C) it is shown that the violation is due to an
unintentional mistake of fact;
``(D) imposing the penalty would be against equity and good
conscience, and
``(E) rescinding the penalty would promote compliance with
the requirements of this title and effective tax
administration.
``(2) Discretion.--The exercise of authority under
paragraph (1) shall be at the sole discretion of the
Commissioner and may be delegated only to the head of the
Office of Tax Shelter Analysis. The Commissioner, in the
Commissioner's sole discretion, may establish a procedure to
determine if a penalty should be referred to the Commissioner
or the head of such Office for a determination under
paragraph (1).
``(3) No appeal.--Notwithstanding any other provision of
law, any determination under this subsection may not be
reviewed in any administrative or judicial proceeding.
``(4) Records.--If a penalty is rescinded under paragraph
(1), the Commissioner shall place in the file in the Office
of the Commissioner the opinion of the Commissioner or the
head of the Office of Tax Shelter Analysis with respect to
the determination, including--
``(A) the facts and circumstances of the transaction,
``(B) the reasons for the rescission, and
``(C) the amount of the penalty rescinded.
``(5) Report.--The Commissioner shall each year report to
the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate--
``(A) a summary of the total number and aggregate amount of
penalties imposed, and rescinded, under this section, and
``(B) a description of each penalty rescinded under this
subsection and the reasons therefor.
``(e) Penalty Reported to SEC.--In the case of a person--
``(1) which is required to file periodic reports under
section 13 or 15(d) of the Securities Exchange Act of 1934 or
is required to be consolidated with another person for
purposes of such reports, and
``(2) which--
``(A) is required to pay a penalty under this section with
respect to a listed transaction,
``(B) is required to pay a penalty under section 6662A with
respect to any reportable transaction at a rate prescribed
under section 6662A(c), or
``(C) is required to pay a penalty under section 6662B with
respect to any noneconomic substance transaction,
the requirement to pay such penalty shall be disclosed in
such reports filed by such person for such periods as the
Secretary shall specify. Failure to make a disclosure in
accordance with the preceding sentence shall be treated as a
failure to which the penalty under subsection (b)(2) applies.
``(f) Coordination With Other Penalties.--The penalty
imposed by this section is in addition to any penalty imposed
under this title.''.
(b) Conforming Amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by inserting after
the item relating to section 6707 the following:
``Sec. 6707A. Penalty for failure to include reportable transaction
information with return or statement.''.
(c) Effective Date.--The amendments made by this section
shall apply to returns and statements the due date for which
is after the date of the enactment of this Act.
SEC. 203. ACCURACY-RELATED PENALTY FOR LISTED TRANSACTIONS
AND OTHER REPORTABLE TRANSACTIONS HAVING A
SIGNIFICANT TAX AVOIDANCE PURPOSE.
(a) In General.--Subchapter A of chapter 68 is amended by
inserting after section 6662 the following new section:
``SEC. 6662A. IMPOSITION OF ACCURACY-RELATED PENALTY ON
UNDERSTATEMENTS WITH RESPECT TO REPORTABLE
TRANSACTIONS.
``(a) Imposition of Penalty.--If a taxpayer has a
reportable transaction understatement for any taxable year,
there shall be added to the tax an amount equal to 20 percent
of the amount of such understatement.
``(b) Reportable Transaction Understatement.--For purposes
of this section--
``(1) In general.--The term `reportable transaction
understatement' means the sum of--
``(A) the product of--
``(i) the amount of the increase (if any) in taxable income
which results from a difference between the proper tax
treatment of an item to which this section applies and the
taxpayer's treatment of such item (as shown on the taxpayer's
return of tax), and
``(ii) the highest rate of tax imposed by section 1
(section 11 in the case of a taxpayer which is a
corporation), and
``(B) the amount of the decrease (if any) in the aggregate
amount of credits determined under subtitle A which results
from a difference between the taxpayer's treatment of an item
to which this section applies (as shown on the taxpayer's
return of tax) and the proper tax treatment of such item.
For purposes of subparagraph (A), any reduction of the excess
of deductions allowed for
[[Page H5485]]
the taxable year over gross income for such year, and any
reduction in the amount of capital losses which would
(without regard to section 1211) be allowed for such year,
shall be treated as an increase in taxable income.
``(2) Items to which section applies.--This section shall
apply to any item which is attributable to--
``(A) any listed transaction, and
``(B) any reportable transaction (other than a listed
transaction) if a significant purpose of such transaction is
the avoidance or evasion of Federal income tax.
``(c) Higher Penalty for Nondisclosed Listed and Other
Avoidance Transactions.--
``(1) In general.--Subsection (a) shall be applied by
substituting `30 percent' for `20 percent' with respect to
the portion of any reportable transaction understatement with
respect to which the requirement of section 6664(d)(2)(A) is
not met.
``(2) Rules applicable to compromise of penalty.--
``(A) In general.--If the 1st letter of proposed deficiency
which allows the taxpayer an opportunity for administrative
review in the Internal Revenue Service Office of Appeals has
been sent with respect to a penalty to which paragraph (1)
applies, only the Commissioner of Internal Revenue may
compromise all or any portion of such penalty.
``(B) Applicable rules.--The rules of paragraphs (3), (4),
and (5) of section 6707A(d) shall apply for purposes of
subparagraph (A).
``(d) Definitions of Reportable and Listed Transactions.--
For purposes of this section, the terms `reportable
transaction' and `listed transaction' have the respective
meanings given to such terms by section 6707A(c).
``(e) Special Rules.--
``(1) Coordination with penalties, etc., on other
understatements.--In the case of an understatement (as
defined in section 6662(d)(2))--
``(A) the amount of such understatement (determined without
regard to this paragraph) shall be increased by the aggregate
amount of reportable transaction understatements and
noneconomic substance transaction understatements for
purposes of determining whether such understatement is a
substantial understatement under section 6662(d)(1), and
``(B) the addition to tax under section 6662(a) shall apply
only to the excess of the amount of the substantial
understatement (if any) after the application of subparagraph
(A) over the aggregate amount of reportable transaction
understatements and noneconomic substance transaction
understatements.
``(2) Coordination with other penalties.--
``(A) Application of fraud penalty.--References to an
underpayment in section 6663 shall be treated as including
references to a reportable transaction understatement and a
noneconomic substance transaction understatement.
``(B) No double penalty.--This section shall not apply to
any portion of an understatement on which a penalty is
imposed under section 6662B or 6663.
``(3) Special rule for amended returns.--Except as provided
in regulations, in no event shall any tax treatment included
with an amendment or supplement to a return of tax be taken
into account in determining the amount of any reportable
transaction understatement or noneconomic substance
transaction understatement if the amendment or supplement is
filed after the earlier of the date the taxpayer is first
contacted by the Secretary regarding the examination of the
return or such other date as is specified by the Secretary.
``(4) Noneconomic substance transaction understatement.--
For purposes of this subsection, the term `noneconomic
substance transaction understatement' has the meaning given
such term by section 6662B(c).
``(5) Cross reference.--
``For reporting of section 6662A(c) penalty to the Securities and
Exchange Commission, see section 6707A(e).''
(b) Determination of Other Understatements.--Subparagraph
(A) of section 6662(d)(2) is amended by adding at the end the
following flush sentence:
``The excess under the preceding sentence shall be determined
without regard to items to which section 6662A applies and
without regard to items with respect to which a penalty is
imposed by section 6662B.''
(c) Reasonable Cause Exception.--
(1) In general.--Section 6664 is amended by adding at the
end the following new subsection:
``(d) Reasonable Cause Exception for Reportable Transaction
Understatements.--
``(1) In general.--No penalty shall be imposed under
section 6662A with respect to any portion of a reportable
transaction understatement if it is shown that there was a
reasonable cause for such portion and that the taxpayer acted
in good faith with respect to such portion.
``(2) Special rules.--Paragraph (1) shall not apply to any
reportable transaction understatement unless--
``(A) the relevant facts affecting the tax treatment of the
item are adequately disclosed in accordance with the
regulations prescribed under section 6011,
``(B) there is or was substantial authority for such
treatment, and
``(C) the taxpayer reasonably believed that such treatment
was more likely than not the proper treatment.
A taxpayer failing to adequately disclose in accordance with
section 6011 shall be treated as meeting the requirements of
subparagraph (A) if the penalty for such failure was
rescinded under section 6707A(d).
``(3) Rules relating to reasonable belief.--For purposes of
paragraph (2)(C)--
``(A) In general.--A taxpayer shall be treated as having a
reasonable belief with respect to the tax treatment of an
item only if such belief--
``(i) is based on the facts and law that exist at the time
the return of tax which includes such tax treatment is filed,
and
``(ii) relates solely to the taxpayer's chances of success
on the merits of such treatment and does not take into
account the possibility that a return will not be audited,
such treatment will not be raised on audit, or such treatment
will be resolved through settlement if it is raised.
``(B) Certain opinions may not be relied upon.--
``(i) In general.--An opinion of a tax advisor may not be
relied upon to establish the reasonable belief of a taxpayer
if--
``(I) the tax advisor is described in clause (ii), or
``(II) the opinion is described in clause (iii).
``(ii) Disqualified tax advisors.--A tax advisor is
described in this clause if the tax advisor--
``(I) is a material advisor (within the meaning of section
6111(b)(1)) who participates in the organization, management,
promotion, or sale of the transaction or who is related
(within the meaning of section 267(b) or 707(b)(1)) to any
person who so participates,
``(II) is compensated directly or indirectly by a material
advisor with respect to the transaction,
``(III) has a fee arrangement with respect to the
transaction which is contingent on all or part of the
intended tax benefits from the transaction being sustained,
or
``(IV) as determined under regulations prescribed by the
Secretary, has a continuing financial interest with respect
to the transaction.
``(iii) Disqualified opinions.--For purposes of clause (i),
an opinion is disqualified if the opinion--
``(I) is based on unreasonable factual or legal assumptions
(including assumptions as to future events),
``(II) unreasonably relies on representations, statements,
findings, or agreements of the taxpayer or any other person,
``(III) does not identify and consider all relevant facts,
or
``(IV) fails to meet any other requirement as the Secretary
may prescribe.''
(2) Conforming amendment.--The heading for subsection (c)
of section 6664 is amended by inserting ``for Underpayments''
after ``Exception''.
(d) Conforming Amendments.--
(1) Subparagraph (C) of section 461(i)(3) is amended by
striking ``section 6662(d)(2)(C)(iii)'' and inserting
``section 1274(b)(3)(C)''.
(2) Paragraph (3) of section 1274(b) is amended--
(A) by striking ``(as defined in section
6662(d)(2)(C)(iii))'' in subparagraph (B)(i), and
(B) by adding at the end the following new subparagraph:
``(C) Tax shelter.--For purposes of subparagraph (B), the
term `tax shelter' means--
``(i) a partnership or other entity,
``(ii) any investment plan or arrangement, or
``(iii) any other plan or arrangement,
if a significant purpose of such partnership, entity, plan,
or arrangement is the avoidance or evasion of Federal income
tax.''
(3) Section 6662(d)(2) is amended by striking subparagraphs
(C) and (D).
(4) Section 6664(c)(1) is amended by striking ``this part''
and inserting ``section 6662 or 6663''.
(5) Subsection (b) of section 7525 is amended by striking
``section 6662(d)(2)(C)(iii)'' and inserting ``section
1274(b)(3)(C)''.
(6)(A) The heading for section 6662 is amended to read as
follows:
``SEC. 6662. IMPOSITION OF ACCURACY-RELATED PENALTY ON
UNDERPAYMENTS.''
(B) The table of sections for part II of subchapter A of
chapter 68 is amended by striking the item relating to
section 6662 and inserting the following new items:
``Sec. 6662. Imposition of accuracy-related penalty on underpayments.
``Sec. 6662A. Imposition of accuracy-related penalty on understatements
with respect to reportable transactions.''
(e) Effective Date.--The amendments made by this section
shall apply to taxable years ending after the date of the
enactment of this Act.
SEC. 204. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO
TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.
(a) In General.--Subchapter A of chapter 68 is amended by
inserting after section 6662A the following new section:
``SEC. 6662B. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO
TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.
``(a) Imposition of Penalty.--If a taxpayer has an
noneconomic substance transaction understatement for any
taxable year, there shall be added to the tax an amount equal
to 40 percent of the amount of such understatement.
[[Page H5486]]
``(b) Reduction of Penalty for Disclosed Transactions.--
Subsection (a) shall be applied by substituting `20 percent'
for `40 percent' with respect to the portion of any
noneconomic substance transaction understatement with respect
to which the relevant facts affecting the tax treatment of
the item are adequately disclosed in the return or a
statement attached to the return.
``(c) Noneconomic Substance Transaction Understatement.--
For purposes of this section--
``(1) In general.--The term `noneconomic substance
transaction understatement' means any amount which would be
an understatement under section 6662A(b)(1) if section 6662A
were applied by taking into account items attributable to
noneconomic substance transactions rather than items to which
section 6662A would apply without regard to this paragraph.
``(2) Noneconomic substance transaction.--The term
`noneconomic substance transaction' means any transaction
if--
``(A) there is a lack of economic substance (within the
meaning of section 7701(m)(1)) for the transaction giving
rise to the claimed tax benefit or the transaction was not
respected under section 7701(m)(2), or
``(B) the transaction fails to meet the requirements of any
similar rule of law.
``(d) Rules Applicable To Compromise of Penalty.--
``(1) In general.--If the 1st letter of proposed deficiency
which allows the taxpayer an opportunity for administrative
review in the Internal Revenue Service Office of Appeals has
been sent with respect to a penalty to which this section
applies, only the Commissioner of Internal Revenue may
compromise all or any portion of such penalty.
``(2) Applicable rules.--The rules of paragraphs (3), (4),
and (5) of section 6707A(d) shall apply for purposes of
paragraph (1).
``(e) Coordination With Other Penalties.--Except as
otherwise provided in this part, the penalty imposed by this
section shall be in addition to any other penalty imposed by
this title.
``(f) Cross References.--
``(1) For coordination of penalty with understatements under section
6662 and other special rules, see section 6662A(e).
``(2) For reporting of penalty imposed under this section to the
Securities and Exchange Commission, see section 6707A(e).''
(b) Clerical Amendment.--The table of sections for part II
of subchapter A of chapter 68 is amended by inserting after
the item relating to section 6662A the following new item:
``Sec. 6662B. Penalty for understatements attributable to transactions
lacking economic substance, etc.''
(c) Effective Date.--The amendments made by this section
shall apply to transactions entered into after February 13,
2003.
SEC. 205. MODIFICATIONS OF SUBSTANTIAL UNDERSTATEMENT PENALTY
FOR NONREPORTABLE TRANSACTIONS.
(a) Substantial Understatement of Corporations.--Section
6662(d)(1)(B) (relating to special rule for corporations) is
amended to read as follows:
``(B) Special rule for corporations.--In the case of a
corporation other than an S corporation or a personal holding
company (as defined in section 542), there is a substantial
understatement of income tax for any taxable year if the
amount of the understatement for the taxable year exceeds the
lesser of--
``(i) 10 percent of the tax required to be shown on the
return for the taxable year (or, if greater, $10,000), or
``(ii) $10,000,000.''
(b) Reduction for Understatement of Taxpayer Due to
Position of Taxpayer or Disclosed Item.--
(1) In general.--Section 6662(d)(2)(B)(i) (relating to
substantial authority) is amended to read as follows:
``(i) the tax treatment of any item by the taxpayer if the
taxpayer had reasonable belief that the tax treatment was
more likely than not the proper treatment, or''.
(2) Conforming amendment.--Section 6662(d) is amended by
adding at the end the following new paragraph:
``(3) Secretarial list.--For purposes of this subsection,
section 6664(d)(2), and section 6694(a)(1), the Secretary may
prescribe a list of positions for which the Secretary
believes there is not substantial authority or there is no
reasonable belief that the tax treatment is more likely than
not the proper tax treatment. Such list (and any revisions
thereof) shall be published in the Federal Register or the
Internal Revenue Bulletin.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 206. TAX SHELTER EXCEPTION TO CONFIDENTIALITY PRIVILEGES
RELATING TO TAXPAYER COMMUNICATIONS.
(a) In General.--Section 7525(b) (relating to section not
to apply to communications regarding corporate tax shelters)
is amended to read as follows:
``(b) Section Not To Apply to Communications Regarding Tax
Shelters.--The privilege under subsection (a) shall not apply
to any written communication which is--
``(1) between a federally authorized tax practitioner and--
``(A) any person,
``(B) any director, officer, employee, agent, or
representative of the person, or
``(C) any other person holding a capital or profits
interest in the person, and
``(2) in connection with the promotion of the direct or
indirect participation of the person in any tax shelter (as
defined in section 1274(b)(3)(C)).''
(b) Effective Date.--The amendment made by this section
shall apply to communications made on or after the date of
the enactment of this Act.
SEC. 207. DISCLOSURE OF REPORTABLE TRANSACTIONS.
(a) In General.--Section 6111 (relating to registration of
tax shelters) is amended to read as follows:
``SEC. 6111. DISCLOSURE OF REPORTABLE TRANSACTIONS.
``(a) In General.--Each material advisor with respect to
any reportable transaction shall make a return (in such form
as the Secretary may prescribe) setting forth--
``(1) information identifying and describing the
transaction,
``(2) information describing any potential tax benefits
expected to result from the transaction, and
``(3) such other information as the Secretary may
prescribe.
Such return shall be filed not later than the date specified
by the Secretary.
``(b) Definitions.--For purposes of this section--
``(1) Material advisor.--
``(A) In general.--The term `material advisor' means any
person--
``(i) who provides any material aid, assistance, or advice
with respect to organizing, promoting, selling, implementing,
or carrying out any reportable transaction, and
``(ii) who directly or indirectly derives gross income in
excess of the threshold amount for such aid, assistance, or
advice.
``(B) Threshold amount.--For purposes of subparagraph (A),
the threshold amount is--
``(i) $50,000 in the case of a reportable transaction
substantially all of the tax benefits from which are provided
to natural persons, and
``(ii) $250,000 in any other case.
``(2) Reportable transaction.--The term `reportable
transaction' has the meaning given to such term by section
6707A(c).
``(c) Regulations.--The Secretary may prescribe regulations
which provide--
``(1) that only 1 person shall be required to meet the
requirements of subsection (a) in cases in which 2 or more
persons would otherwise be required to meet such
requirements,
``(2) exemptions from the requirements of this section, and
``(3) such rules as may be necessary or appropriate to
carry out the purposes of this section.''
(b) Conforming Amendments.--
(1) The item relating to section 6111 in the table of
sections for subchapter B of chapter 61 is amended to read as
follows:
``Sec. 6111. Disclosure of reportable transactions.''
(2)(A) So much of section 6112 as precedes subsection (c)
thereof is amended to read as follows:
``SEC. 6112. MATERIAL ADVISORS OF REPORTABLE TRANSACTIONS
MUST KEEP LISTS OF ADVISEES.
``(a) In General.--Each material advisor (as defined in
section 6111) with respect to any reportable transaction (as
defined in section 6707A(c)) shall maintain, in such manner
as the Secretary may by regulations prescribe, a list--
``(1) identifying each person with respect to whom such
advisor acted as such a material advisor with respect to such
transaction, and
``(2) containing such other information as the Secretary
may by regulations require.
This section shall apply without regard to whether a material
advisor is required to file a return under section 6111 with
respect to such transaction.''
(B) Section 6112 is amended by redesignating subsection (c)
as subsection (b).
(C) Section 6112(b), as redesignated by subparagraph (B),
is amended--
(i) by inserting ``written'' before ``request'' in
paragraph (1)(A), and
(ii) by striking ``shall prescribe'' in paragraph (2) and
inserting ``may prescribe''.
(D) The item relating to section 6112 in the table of
sections for subchapter B of chapter 61 is amended to read as
follows:
``Sec. 6112. Material advisors of reportable transactions must keep
lists of advisees.''
(3)(A) The heading for section 6708 is amended to read as
follows:
``SEC. 6708. FAILURE TO MAINTAIN LISTS OF ADVISEES WITH
RESPECT TO REPORTABLE TRANSACTIONS.''
(B) The item relating to section 6708 in the table of
sections for part I of subchapter B of chapter 68 is amended
to read as follows:
``Sec. 6708. Failure to maintain lists of advisees with respect to
reportable transactions.''
(c) Effective Date.--The amendments made by this section
shall apply to transactions with respect to which material
aid, assistance, or advice referred to in section
6111(b)(1)(A)(i) of the Internal Revenue Code of 1986 (as
added by this section) is provided after the date of the
enactment of this Act.
SEC. 208. MODIFICATIONS TO PENALTY FOR FAILURE TO REGISTER
TAX SHELTERS.
(a) In General.--Section 6707 (relating to failure to
furnish information regarding tax shelters) is amended to
read as follows:
[[Page H5487]]
``SEC. 6707. FAILURE TO FURNISH INFORMATION REGARDING
REPORTABLE TRANSACTIONS.
``(a) In General.--If a person who is required to file a
return under section 6111(a) with respect to any reportable
transaction--
``(1) fails to file such return on or before the date
prescribed therefor, or
``(2) files false or incomplete information with the
Secretary with respect to such transaction,
such person shall pay a penalty with respect to such return
in the amount determined under subsection (b).
``(b) Amount of Penalty.--
``(1) In general.--Except as provided in paragraph (2), the
penalty imposed under subsection (a) with respect to any
failure shall be $50,000.
``(2) Listed transactions.--The penalty imposed under
subsection (a) with respect to any listed transaction shall
be an amount equal to the greater of--
``(A) $200,000, or
``(B) 50 percent of the gross income derived by such person
with respect to aid, assistance, or advice which is provided
with respect to the reportable transaction before the date
the return including the transaction is filed under section
6111.
Subparagraph (B) shall be applied by substituting `75
percent' for `50 percent' in the case of an intentional
failure or act described in subsection (a).
``(c) Rescission Authority.--The provisions of section
6707A(d) (relating to authority of Commissioner to rescind
penalty) shall apply to any penalty imposed under this
section.
``(d) Reportable and Listed Transactions.--The terms
`reportable transaction' and `listed transaction' have the
respective meanings given to such terms by section
6707A(c).''.
(b) Clerical Amendment.--The item relating to section 6707
in the table of sections for part I of subchapter B of
chapter 68 is amended by striking ``tax shelters'' and
inserting ``reportable transactions''.
(c) Effective Date.--The amendments made by this section
shall apply to returns the due date for which is after the
date of the enactment of this Act.
SEC. 209. MODIFICATION OF PENALTY FOR FAILURE TO MAINTAIN
LISTS OF INVESTORS.
(a) In General.--Subsection (a) of section 6708 is amended
to read as follows:
``(a) Imposition of Penalty.--
``(1) In general.--If any person who is required to
maintain a list under section 6112(a) fails to make such list
available upon written request to the Secretary in accordance
with section 6112(b)(1)(A) within 20 business days after the
date of the Secretary's request, such person shall pay a
penalty of $10,000 for each day of such failure after such
20th day.
``(2) Reasonable cause exception.--No penalty shall be
imposed by paragraph (1) with respect to the failure on any
day if such failure is due to reasonable cause.''
(b) Effective Date.--The amendment made by this section
shall apply to requests made after the date of the enactment
of this Act.
SEC. 210. MODIFICATION OF ACTIONS TO ENJOIN CERTAIN CONDUCT
RELATED TO TAX SHELTERS AND REPORTABLE
TRANSACTIONS.
(a) In General.--Section 7408 (relating to action to enjoin
promoters of abusive tax shelters, etc.) is amended by
redesignating subsection (c) as subsection (d) and by
striking subsections (a) and (b) and inserting the following
new subsections:
``(a) Authority To Seek Injunction.--A civil action in the
name of the United States to enjoin any person from further
engaging in specified conduct may be commenced at the request
of the Secretary. Any action under this section shall be
brought in the district court of the United States for the
district in which such person resides, has his principal
place of business, or has engaged in specified conduct. The
court may exercise its jurisdiction over such action (as
provided in section 7402(a)) separate and apart from any
other action brought by the United States against such
person.
``(b) Adjudication and Decree.--In any action under
subsection (a), if the court finds--
``(1) that the person has engaged in any specified conduct,
and
``(2) that injunctive relief is appropriate to prevent
recurrence of such conduct,
the court may enjoin such person from engaging in such
conduct or in any other activity subject to penalty under
this title.
``(c) Specified Conduct.--For purposes of this section, the
term `specified conduct' means any action, or failure to take
action, subject to penalty under section 6700, 6701, 6707, or
6708.''
(b) Conforming Amendments.--
(1) The heading for section 7408 is amended to read as
follows:
``SEC. 7408. ACTIONS TO ENJOIN SPECIFIED CONDUCT RELATED TO
TAX SHELTERS AND REPORTABLE TRANSACTIONS.''
(2) The table of sections for subchapter A of chapter 67 is
amended by striking the item relating to section 7408 and
inserting the following new item:
``Sec. 7408. Actions to enjoin specified conduct related to tax
shelters and reportable transactions.''
(c) Effective Date.--The amendment made by this section
shall take effect on the day after the date of the enactment
of this Act.
SEC. 211. UNDERSTATEMENT OF TAXPAYER'S LIABILITY BY INCOME
TAX RETURN PREPARER.
(a) Standards Conformed to Taxpayer Standards.--Section
6694(a) (relating to understatements due to unrealistic
positions) is amended--
(1) by striking ``realistic possibility of being sustained
on its merits'' in paragraph (1) and inserting ``reasonable
belief that the tax treatment in such position was more
likely than not the proper treatment'',
(2) by striking ``or was frivolous'' in paragraph (3) and
inserting ``or there was no reasonable basis for the tax
treatment of such position'', and
(3) by striking ``Unrealistic'' in the heading and
inserting ``Improper''.
(b) Amount of Penalty.--Section 6694 is amended--
(1) by striking ``$250'' in subsection (a) and inserting
``$1,000'', and
(2) by striking ``$1,000'' in subsection (b) and inserting
``$5,000''.
(c) Effective Date.--The amendments made by this section
shall apply to documents prepared after the date of the
enactment of this Act.
SEC. 212. PENALTY ON FAILURE TO REPORT INTERESTS IN FOREIGN
FINANCIAL ACCOUNTS.
(a) In General.--Section 5321(a)(5) of title 31, United
States Code, is amended to read as follows:
``(5) Foreign financial agency transaction violation.--
``(A) Penalty authorized.--The Secretary of the Treasury
may impose a civil money penalty on any person who violates,
or causes any violation of, any provision of section 5314.
``(B) Amount of penalty.--
``(i) In general.--Except as provided in subparagraph (C),
the amount of any civil penalty imposed under subparagraph
(A) shall not exceed $5,000.
``(ii) Reasonable cause exception.--No penalty shall be
imposed under subparagraph (A) with respect to any violation
if--
``(I) such violation was due to reasonable cause, and
``(II) the amount of the transaction or the balance in the
account at the time of the transaction was properly reported.
``(C) Willful violations.--In the case of any person
willfully violating, or willfully causing any violation of,
any provision of section 5314--
``(i) the maximum penalty under subparagraph (B)(i) shall
be increased to the greater of--
``(I) $25,000, or
``(II) the amount (not exceeding $100,000) determined under
subparagraph (D), and
``(ii) subparagraph (B)(ii) shall not apply.
``(D) Amount.--The amount determined under this
subparagraph is--
``(i) in the case of a violation involving a transaction,
the amount of the transaction, or
``(ii) in the case of a violation involving a failure to
report the existence of an account or any identifying
information required to be provided with respect to an
account, the balance in the account at the time of the
violation.''
(b) Effective Date.--The amendment made by this section
shall apply to violations occurring after the date of the
enactment of this Act.
SEC. 213. FRIVOLOUS TAX SUBMISSIONS.
(a) Civil Penalties.--Section 6702 is amended to read as
follows:
``SEC. 6702. FRIVOLOUS TAX SUBMISSIONS.
``(a) Civil Penalty for Frivolous Tax Returns.--A person
shall pay a penalty of $5,000 if--
``(1) such person files what purports to be a return of a
tax imposed by this title but which--
``(A) does not contain information on which the substantial
correctness of the self-assessment may be judged, or
``(B) contains information that on its face indicates that
the self-assessment is substantially incorrect; and
``(2) the conduct referred to in paragraph (1)--
``(A) is based on a position which the Secretary has
identified as frivolous under subsection (c), or
``(B) reflects a desire to delay or impede the
administration of Federal tax laws.
``(b) Civil Penalty for Specified Frivolous Submissions.--
``(1) Imposition of penalty.--Except as provided in
paragraph (3), any person who submits a specified frivolous
submission shall pay a penalty of $5,000.
``(2) Specified frivolous submission.--For purposes of this
section--
``(A) Specified frivolous submission.--The term `specified
frivolous submission' means a specified submission if any
portion of such submission--
``(i) is based on a position which the Secretary has
identified as frivolous under subsection (c), or
``(ii) reflects a desire to delay or impede the
administration of Federal tax laws.
``(B) Specified submission.--The term `specified
submission' means--
``(i) a request for a hearing under--
``(I) section 6320 (relating to notice and opportunity for
hearing upon filing of notice of lien), or
``(II) section 6330 (relating to notice and opportunity for
hearing before levy), and
``(ii) an application under--
``(I) section 6159 (relating to agreements for payment of
tax liability in installments),
[[Page H5488]]
``(II) section 7122 (relating to compromises), or
``(III) section 7811 (relating to taxpayer assistance
orders).
``(3) Opportunity to withdraw submission.--If the Secretary
provides a person with notice that a submission is a
specified frivolous submission and such person withdraws such
submission within 30 days after such notice, the penalty
imposed under paragraph (1) shall not apply with respect to
such submission.
``(c) Listing of Frivolous Positions.--The Secretary shall
prescribe (and periodically revise) a list of positions which
the Secretary has identified as being frivolous for purposes
of this subsection. The Secretary shall not include in such
list any position that the Secretary determines meets the
requirement of section 6662(d)(2)(B)(ii)(II).
``(d) Reduction of Penalty.--The Secretary may reduce the
amount of any penalty imposed under this section if the
Secretary determines that such reduction would promote
compliance with and administration of the Federal tax laws.
``(e) Penalties in Addition to Other Penalties.--The
penalties imposed by this section shall be in addition to any
other penalty provided by law.''
(b) Treatment of Frivolous Requests for Hearings Before
Levy.--
(1) Frivolous requests disregarded.--Section 6330 (relating
to notice and opportunity for hearing before levy) is amended
by adding at the end the following new subsection:
``(g) Frivolous Requests for Hearing, etc.--Notwithstanding
any other provision of this section, if the Secretary
determines that any portion of a request for a hearing under
this section or section 6320 meets the requirement of clause
(i) or (ii) of section 6702(b)(2)(A), then the Secretary may
treat such portion as if it were never submitted and such
portion shall not be subject to any further administrative or
judicial review.''
(2) Preclusion from raising frivolous issues at hearing.--
Section 6330(c)(4) is amended--
(A) by striking ``(A)'' and inserting ``(A)(i)'';
(B) by striking ``(B)'' and inserting ``(ii)'';
(C) by striking the period at the end of the first sentence
and inserting ``; or''; and
(D) by inserting after subparagraph (A)(ii) (as so
redesignated) the following:
``(B) the issue meets the requirement of clause (i) or (ii)
of section 6702(b)(2)(A).''
(3) Statement of grounds.--Section 6330(b)(1) is amended by
striking ``under subsection (a)(3)(B)'' and inserting ``in
writing under subsection (a)(3)(B) and states the grounds for
the requested hearing''.
(c) Treatment of Frivolous Requests for Hearings Upon
Filing of Notice of Lien.--Section 6320 is amended--
(1) in subsection (b)(1), by striking ``under subsection
(a)(3)(B)'' and inserting ``in writing under subsection
(a)(3)(B) and states the grounds for the requested hearing'',
and
(2) in subsection (c), by striking ``and (e)'' and
inserting ``(e), and (g)''.
(d) Treatment of Frivolous Applications for Offers-in-
Compromise and Installment Agreements.--Section 7122 is
amended by adding at the end the following new subsection:
``(e) Frivolous Submissions, etc.--Notwithstanding any
other provision of this section, if the Secretary determines
that any portion of an application for an offer-in-compromise
or installment agreement submitted under this section or
section 6159 meets the requirement of clause (i) or (ii) of
section 6702(b)(2)(A), then the Secretary may treat such
portion as if it were never submitted and such portion shall
not be subject to any further administrative or judicial
review.''
(e) Clerical Amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by striking the item
relating to section 6702 and inserting the following new
item:
``Sec. 6702. Frivolous tax submissions.''
(f) Effective Date.--The amendments made by this section
shall apply to submissions made and issues raised after the
date on which the Secretary first prescribes a list under
section 6702(c) of the Internal Revenue Code of 1986, as
amended by subsection (a).
SEC. 214. REGULATION OF INDIVIDUALS PRACTICING BEFORE THE
DEPARTMENT OF TREASURY.
(a) Censure; Imposition of Penalty.--
(1) In general.--Section 330(b) of title 31, United States
Code, is amended--
(A) by inserting ``, or censure,'' after ``Department'',
and
(B) by adding at the end the following new flush sentence:
``The Secretary may impose a monetary penalty on any
representative described in the preceding sentence. If the
representative was acting on behalf of an employer or any
firm or other entity in connection with the conduct giving
rise to such penalty, the Secretary may impose a monetary
penalty on such employer, firm, or entity if it knew, or
reasonably should have known, of such conduct. Such penalty
shall not exceed the gross income derived (or to be derived)
from the conduct giving rise to the penalty and may be in
addition to, or in lieu of, any suspension, disbarment, or
censure.''
(2) Effective date.--The amendments made by this subsection
shall apply to actions taken after the date of the enactment
of this Act.
(b) Tax Shelter Opinions, etc.--Section 330 of such title
31 is amended by adding at the end the following new
subsection:
``(d) Nothing in this section or in any other provision of
law shall be construed to limit the authority of the
Secretary of the Treasury to impose standards applicable to
the rendering of written advice with respect to any entity,
transaction plan or arrangement, or other plan or
arrangement, which is of a type which the Secretary
determines as having a potential for tax avoidance or
evasion.''
SEC. 215. PENALTY ON PROMOTERS OF TAX SHELTERS.
(a) Penalty on Promoting Abusive Tax Shelters.--Section
6700(a) is amended by adding at the end the following new
sentence: ``Notwithstanding the first sentence, if an
activity with respect to which a penalty imposed under this
subsection involves a statement described in paragraph
(2)(A), the amount of the penalty shall be equal to 50
percent of the gross income derived (or to be derived) from
such activity by the person on which the penalty is
imposed.''
(b) Effective Date.--The amendment made by this section
shall apply to activities after the date of the enactment of
this Act.
SEC. 216. STATUTE OF LIMITATIONS FOR TAXABLE YEARS FOR WHICH
LISTED TRANSACTIONS NOT REPORTED.
(a) In General.--Section 6501(e)(1) (relating to
substantial omission of items for income taxes) is amended by
adding at the end the following new subparagraph:
``(C) Listed transactions.--If a taxpayer fails to include
on any return or statement for any taxable year any
information with respect to a listed transaction (as defined
in section 6707A(c)(2)) which is required under section 6011
to be included with such return or statement, the tax for
such taxable year may be assessed, or a proceeding in court
for collection of such tax may be begun without assessment,
at any time within 6 years after the time the return is
filed. This subparagraph shall not apply to any taxable year
if the time for assessment or beginning the proceeding in
court has expired before the time a transaction is treated as
a listed transaction under section 6011.''
(b) Effective Date.--The amendment made by this section
shall apply to transactions after the date of the enactment
of this Act in taxable years ending after such date.
SEC. 217. DENIAL OF DEDUCTION FOR INTEREST ON UNDERPAYMENTS
ATTRIBUTABLE TO NONDISCLOSED REPORTABLE AND
NONECONOMIC SUBSTANCE TRANSACTIONS.
(a) In General.--Section 163 (relating to deduction for
interest) is amended by redesignating subsection (m) as
subsection (n) and by inserting after subsection (l) the
following new subsection:
``(m) Interest on Unpaid Taxes Attributable to Nondisclosed
Reportable Transactions and Noneconomic Substance
Transactions.--No deduction shall be allowed under this
chapter for any interest paid or accrued under section 6601
on any underpayment of tax which is attributable to--
``(1) the portion of any reportable transaction
understatement (as defined in section 6662A(b)) with respect
to which the requirement of section 6664(d)(2)(A) is not met,
or
``(2) any noneconomic substance transaction understatement
(as defined in section 6662B(c)).''
(b) Effective Date.--The amendments made by this section
shall apply to transactions after the date of the enactment
of this Act in taxable years ending after such date.
TITLE III--OTHER PROVISIONS
SEC. 301. LIMITATION ON TRANSFER OR IMPORTATION OF BUILT-IN
LOSSES.
(a) In General.--Section 362 (relating to basis to
corporations) is amended by adding at the end the following
new subsection:
``(e) Limitations on Built-In Losses.--
``(1) Limitation on importation of built-in losses.--
``(A) In general.--If in any transaction described in
subsection (a) or (b) there would (but for this subsection)
be an importation of a net built-in loss, the basis of each
property described in subparagraph (B) which is acquired in
such transaction shall (notwithstanding subsections (a) and
(b)) be its fair market value immediately after such
transaction.
``(B) Property described.--For purposes of subparagraph
(A), property is described in this paragraph if--
``(i) gain or loss with respect to such property is not
subject to tax under this subtitle in the hands of the
transferor immediately before the transfer, and
``(ii) gain or loss with respect to such property is
subject to such tax in the hands of the transferee
immediately after such transfer.
In any case in which the transferor is a partnership, the
preceding sentence shall be applied by treating each partner
in such partnership as holding such partner's proportionate
share of the property of such partnership.
``(C) Importation of net built-in loss.--For purposes of
subparagraph (A), there is an importation of a net built-in
loss in a transaction if the transferee's aggregate adjusted
bases of property described in subparagraph (B) which is
transferred in such transaction would (but for this
paragraph) exceed the fair market value of such property
immediately after such transaction.''
``(2) Limitation on transfer of built-in losses in section
351 transactions.--
``(A) In general.--If--
[[Page H5489]]
``(i) property is transferred in any transaction which is
described in subsection (a) and which is not described in
paragraph (1) of this subsection, and
``(ii) the transferee's aggregate adjusted bases of the
property so transferred would (but for this paragraph) exceed
the fair market value of such property immediately after such
transaction,
then, notwithstanding subsection (a), the transferee's
aggregate adjusted bases of the property so transferred shall
not exceed the fair market value of such property immediately
after such transaction.
``(B) Allocation of basis reduction.--The aggregate
reduction in basis by reason of subparagraph (A) shall be
allocated among the property so transferred in proportion to
their respective built-in losses immediately before the
transaction.
``(C) Exception for transfers within affiliated group.--
Subparagraph (A) shall not apply to any transaction if the
transferor owns stock in the transferee meeting the
requirements of section 1504(a)(2). In the case of property
to which subparagraph (A) does not apply by reason of the
preceding sentence, the transferor's basis in the stock
received for such property shall not exceed its fair market
value immediately after the transfer.''
(b) Comparable Treatment Where Liquidation.--Paragraph (1)
of section 334(b) (relating to liquidation of subsidiary) is
amended to read as follows:
``(1) In general.--If property is received by a corporate
distributee in a distribution in a complete liquidation to
which section 332 applies (or in a transfer described in
section 337(b)(1)), the basis of such property in the hands
of such distributee shall be the same as it would be in the
hands of the transferor; except that the basis of such
property in the hands of such distributee shall be the fair
market value of the property at the time of the
distribution--
``(A) in any case in which gain or loss is recognized by
the liquidating corporation with respect to such property, or
``(B) in any case in which the liquidating corporation is a
foreign corporation, the corporate distributee is a domestic
corporation, and the corporate distributee's aggregate
adjusted bases of property described in section 362(e)(1)(B)
which is distributed in such liquidation would (but for this
subparagraph) exceed the fair market value of such property
immediately after such liquidation.''
(c) Effective Date.--The amendments made by this section
shall apply to transactions after the date of the enactment
of this Act.
SEC. 302. DISALLOWANCE OF CERTAIN PARTNERSHIP LOSS TRANSFERS.
(a) Treatment of Contributed Property With Built-In Loss.--
Paragraph (1) of section 704(c) is amended by striking
``and'' at the end of subparagraph (A), by striking the
period at the end of subparagraph (B) and inserting ``,
and'', and by adding at the end the following:
``(C) if any property so contributed has a built-in loss--
``(i) such built-in loss shall be taken into account only
in determining the amount of items allocated to the
contributing partner, and
``(ii) except as provided in regulations, in determining
the amount of items allocated to other partners, the basis of
the contributed property in the hands of the partnership
shall be treated as being equal to its fair market value
immediately after the contribution.
For purposes of subparagraph (C), the term `built-in loss'
means the excess of the adjusted basis of the property
(determined without regard to subparagraph (C)(ii)) over its
fair market value immediately after the contribution.''
(b) Adjustment to Basis of Partnership Property on Transfer
of Partnership Interest if There Is Substantial Built-In
Loss.--
(1) Adjustment required.--Subsection (a) of section 743
(relating to optional adjustment to basis of partnership
property) is amended by inserting before the period ``or
unless the partnership has a substantial built-in loss
immediately after such transfer''.
(2) Adjustment.--Subsection (b) of section 743 is amended
by inserting ``or with respect to which there is a
substantial built-in loss immediately after such transfer''
after ``section 754 is in effect''.
(3) Substantial built-in loss.--Section 743 is amended by
adding at the end the following new subsection:
``(d) Substantial Built-In Loss.--
``(1) In general.--For purposes of this section, a
partnership has a substantial built-in loss with respect to a
transfer of an interest in a partnership if the transferee
partner's proportionate share of the adjusted basis of the
partnership property exceeds by more than $250,000 the basis
of such partner's interest in the partnership.
``(2) Regulations.--The Secretary shall prescribe such
regulations as may be appropriate to carry out the purposes
of paragraph (1) and section 734(d), including regulations
aggregating related partnerships and disregarding property
acquired by the partnership in an attempt to avoid such
purposes.''
(4) Clerical amendments.--
(A) The section heading for section 743 is amended to read
as follows:
``SEC. 743. ADJUSTMENT TO BASIS OF PARTNERSHIP PROPERTY WHERE
SECTION 754 ELECTION OR SUBSTANTIAL BUILT-IN
LOSS.''
(B) The table of sections for subpart C of part II of
subchapter K of chapter 1 is amended by striking the item
relating to section 743 and inserting the following new item:
``Sec. 743. Adjustment to basis of partnership property where section
754 election or substantial built-in loss.''
(c) Adjustment to Basis of Undistributed Partnership
Property if There Is Substantial Basis Reduction.--
(1) Adjustment required.--Subsection (a) of section 734
(relating to optional adjustment to basis of undistributed
partnership property) is amended by inserting before the
period ``or unless there is a substantial basis reduction''.
(2) Adjustment.--Subsection (b) of section 734 is amended
by inserting ``or unless there is a substantial basis
reduction'' after ``section 754 is in effect''.
(3) Substantial basis reduction.--Section 734 is amended by
adding at the end the following new subsection:
``(d) Substantial Basis Reduction.--
``(1) In general.--For purposes of this section, there is a
substantial basis reduction with respect to a distribution if
the sum of the amounts described in subparagraphs (A) and (B)
of subsection (b)(2) exceeds $250,000.
``(2) Regulations.--
``For regulations to carry out this subsection, see section
743(d)(2).''
(4) Clerical amendments.--
(A) The section heading for section 734 is amended to read
as follows:
``SEC. 734. ADJUSTMENT TO BASIS OF UNDISTRIBUTED PARTNERSHIP
PROPERTY WHERE SECTION 754 ELECTION OR
SUBSTANTIAL BASIS REDUCTION.''
(B) The table of sections for subpart B of part II of
subchapter K of chapter 1 is amended by striking the item
relating to section 734 and inserting the following new item:
``Sec. 734. Adjustment to basis of undistributed partnership property
where section 754 election or substantial basis
reduction.''
(d) Effective Dates.--
(1) Subsection (a).--The amendment made by subsection (a)
shall apply to contributions made after the date of the
enactment of this Act.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to transfers after the date of the enactment of
this Act.
(3) Subsection (c).--The amendments made by subsection (c)
shall apply to distributions after the date of the enactment
of this Act.
SEC. 303. NO REDUCTION OF BASIS UNDER SECTION 734 IN STOCK
HELD BY PARTNERSHIP IN CORPORATE PARTNER.
(a) In General.--Section 755 is amended by adding at the
end the following new subsection:
``(c) No Allocation of Basis Decrease to Stock of Corporate
Partner.--In making an allocation under subsection (a) of any
decrease in the adjusted basis of partnership property under
section 734(b)--
``(1) no allocation may be made to stock in a corporation
which is a partner in the partnership, and
``(2) any amount not allocable to stock by reason of
paragraph (1) shall be allocated under subsection (a) to
other partnership property.
Gain shall be recognized to the partnership to the extent
that the amount required to be allocated under paragraph (2)
to other partnership property exceeds the aggregate adjusted
basis of such other property immediately before the
allocation required by paragraph (2).''
(b) Effective Date.--The amendment made by this section
shall apply to distributions after the date of the enactment
of this Act.
SEC. 304. REPEAL OF SPECIAL RULES FOR FASITS.
(a) In General.--Part V of subchapter M of chapter 1
(relating to financial asset securitization investment
trusts) is hereby repealed.
(b) Conforming Amendments.--
(1) Paragraph (6) of section 56(g) is amended by striking
``REMIC, or FASIT'' and inserting ``or REMIC''.
(2) Clause (ii) of section 382(l)(4)(B) is amended by
striking ``a REMIC to which part IV of subchapter M applies,
or a FASIT to which part V of subchapter M applies,'' and
inserting ``or a REMIC to which part IV of subchapter M
applies,''.
(3) Paragraph (1) of section 582(c) is amended by striking
``, and any regular interest in a FASIT,''.
(4) Subparagraph (E) of section 856(c)(5) is amended by
striking the last sentence.
(5) Paragraph (5) of section 860G(a) is amended by adding
``and'' at the end of subparagraph (B), by striking ``, and''
at the end of subparagraph (C) and inserting a period, and by
striking subparagraph (D).
(6) Subparagraph (C) of section 1202(e)(4) is amended by
striking ``REMIC, or FASIT'' and inserting ``or REMIC''.
(7) Subparagraph (C) of section 7701(a)(19) is amended by
adding ``and'' at the end of clause (ix), by striking ``,
and'' at the end of clause (x) and inserting a period, and by
striking clause (xi).
(8) The table of parts for subchapter M of chapter 1 is
amended by striking the item relating to part V.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this
[[Page H5490]]
section shall apply to taxable years beginning after December
31, 2003.
(2) Exception for existing fasits.--
(A) In general.--Paragraph (1) shall not apply to any FASIT
in existence on the date of the enactment of this Act.
(B) Transfer of additional assets not permitted.--Except as
provided in regulations prescribed by the Secretary of the
Treasury or the Secretary's delegate, subparagraph (A) shall
cease to apply as of the earliest date after the date of the
enactment of this Act that any property is transferred to the
FASIT.
SEC. 305. EXPANDED DISALLOWANCE OF DEDUCTION FOR INTEREST ON
CONVERTIBLE DEBT.
(a) In General.--Paragraph (2) of section 163(l) is amended
by striking ``or a related party'' and inserting ``or equity
held by the issuer (or any related party) in any other
person''.
(b) Conforming Amendment.--Paragraph (3) of section 163(l)
is amended by striking ``or a related party'' in the material
preceding subparagraph (A) and inserting ``or any other
person''.
(c) Effective Date.--The amendments made by this section
shall apply to debt instruments issued after the date of the
enactment of this Act.
SEC. 306. EXPANDED AUTHORITY TO DISALLOW TAX BENEFITS UNDER
SECTION 269.
(a) In General.--Subsection (a) of section 269 (relating to
acquisitions made to evade or avoid income tax) is amended to
read as follows:
``(a) In General.--If--
``(1)(A) any person acquires stock in a corporation, or
``(B) any corporation acquires, directly or indirectly,
property of another corporation and the basis of such
property, in the hands of the acquiring corporation, is
determined by reference to the basis in the hands of the
transferor corporation, and
``(2) the principal purpose for which such acquisition was
made is evasion or avoidance of Federal income tax by
securing the benefit of a deduction, credit, or other
allowance,
then the Secretary may disallow such deduction, credit, or
other allowance.''
(b) Effective Date.--The amendment made by this section
shall apply to stock and property acquired after February 13,
2003.
SEC. 307. MODIFICATIONS OF CERTAIN RULES RELATING TO
CONTROLLED FOREIGN CORPORATIONS.
(a) Limitation on Exception From PFIC Rules for United
States Shareholders of Controlled Foreign Corporations.--
Paragraph (2) of section 1297(e) (relating to passive
investment company) is amended by adding at the end the
following flush sentence:
``Such term shall not include any period if there is only a
remote likelihood of an inclusion in gross income under
section 951(a)(1)(A)(i) of subpart F income of such
corporation for such period.''
(b) Determination of Pro Rata Share of Subpart F Income.--
Subsection (a) of section 951 (relating to amounts included
in gross income of United States shareholders) is amended by
adding at the end the following new paragraph:
``(4) Special rules for determining pro rata share of
subpart f income.--The pro rata share under paragraph (2)
shall be determined by disregarding--
``(A) any rights lacking substantial economic effect, and
``(B) stock owned by a shareholder who is a tax-indifferent
party (as defined in section 7701(m)(3)) if the amount which
would (but for this paragraph) be allocated to such
shareholder does not reflect such shareholder's economic
share of the earnings and profits of the corporation.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years on controlled foreign
corporation beginning after February 13, 2003, and to taxable
years of United States shareholder in which or with which
such taxable years of controlled foreign corporations end.
SEC. 308. BASIS FOR DETERMINING LOSS ALWAYS REDUCED BY
NONTAXED PORTION OF DIVIDENDS.
(a) In General.--Section 1059 (relating to corporate
shareholder's basis in stock reduced by nontaxed portion of
extraordinary dividends) is amended by redesignating
subsection (g) as subsection (h) and by inserting after
subsection (f) the following new subsection:
``(g) Basis for Determining Loss Always Reduced by Nontaxed
Portion of Dividends.--The basis of stock in a corporation
(for purposes of determining loss) shall be reduced by the
nontaxed portion of any dividend received with respect to
such stock if this section does not otherwise apply to such
dividend.''
(b) Effective Date.--The amendment made by this section
shall apply to dividends received after the date of the
enactment of this Act.
SEC. 309. AFFIRMATION OF CONSOLIDATED RETURN REGULATION
AUTHORITY.
(a) In General.--Section 1502 (relating to consolidated
return regulations) is amended by adding at the end the
following new sentence: ``In prescribing such regulations,
the Secretary may prescribe rules applicable to corporations
filing consolidated returns under section 1501 that are
different from other provisions of this title that would
apply if such corporations filed separate returns.''
(b) Result Not Overturned.--Notwithstanding subsection (a),
the Internal Revenue Code of 1986 shall be construed by
treating Treasury regulation Sec. 1.1502-20(c)(1)(iii) (as in
effect on January 1, 2001) as being inapplicable to the type
of factual situation in 255 F.3d 1357 (Fed. Cir. 2001).
(c) Effective Date.--The provisions of this section shall
apply to taxable years beginning before, on, or after the
date of the enactment of this Act.
SEC. 310. EXTENSION OF CUSTOMS USER FEES.
Section 13031(j)(3) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)) is amended
by striking September 30, 2003' and inserting September 30,
2013'.
Amend the title so as to read: ``A bill to amend the
Internal Revenue Code of 1986 to restore the estate tax, to
limit its applicability to estates of over $3,000,000, to
curb abusive tax shelters, and for other purposes.''
Mr. REYNOLDS. Mr. Speaker, I yield back the balance of my time, and I
move the previous question on the resolution.
The SPEAKER pro tempore. The question is on ordering the previous
question.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Ms. SLAUGHTER. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
Pursuant to clauses 8 and 9 of rule XX, the Chair will reduce to 5
minutes the minimum time for electronic voting, if ordered, on the
question of adoption of the resolution and then on the question of the
Speaker's approval of the Journal, if ordered.
The vote was taken by electronic device, and there were--yeas 227,
nays 200, not voting 7, as follows:
[Roll No. 284]
YEAS--227
Aderholt
Akin
Bachus
Baker
Ballenger
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Beauprez
Bereuter
Biggert
Bilirakis
Bishop (UT)
Blackburn
Blunt
Boehlert
Boehner
Bonilla
Bonner
Bono
Boozman
Bradley (NH)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burns
Burr
Burton (IN)
Buyer
Calvert
Camp
Cannon
Cantor
Capito
Carter
Castle
Chabot
Chocola
Coble
Cole
Collins
Cox
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeLay
DeMint
Diaz-Balart, L.
Diaz-Balart, M.
Doolittle
Dreier
Duncan
Dunn
Ehlers
Emerson
English
Everett
Feeney
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Goode
Goodlatte
Goss
Granger
Graves
Green (WI)
Greenwood
Gutknecht
Harris
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hobson
Hoekstra
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Janklow
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (OK)
Manzullo
McCotter
McCrery
McHugh
McInnis
McKeon
Mica
Miller (FL)
Miller (MI)
Miller, Gary
Moran (KS)
Murphy
Musgrave
Myrick
Nethercutt
Neugebauer
Ney
Northup
Norwood
Nunes
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pearce
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Porter
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Sullivan
Sweeney
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Tiahrt
Tiberi
Toomey
Turner (OH)
Upton
Vitter
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NAYS--200
Abercrombie
Ackerman
Alexander
Allen
Andrews
Baca
Baird
Baldwin
Ballance
Becerra
Bell
Berkley
Berman
Berry
Bishop (GA)
[[Page H5491]]
Bishop (NY)
Blumenauer
Boswell
Boucher
Boyd
Brady (PA)
Brown (OH)
Brown, Corrine
Capps
Capuano
Cardin
Cardoza
Carson (OK)
Case
Clay
Clyburn
Cooper
Costello
Cramer
Crowley
Cummings
Davis (AL)
Davis (CA)
Davis (FL)
Davis (IL)
Davis (TN)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley (CA)
Doyle
Edwards
Emanuel
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank (MA)
Frost
Gonzalez
Gordon
Green (TX)
Grijalva
Gutierrez
Hall
Harman
Hastings (FL)
Hill
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley (OR)
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind
Kleczka
Kucinich
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lowey
Lucas (KY)
Lynch
Majette
Maloney
Markey
Marshall
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Michaud
Millender-McDonald
Miller (NC)
Miller, George
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rodriguez
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Sandlin
Schakowsky
Schiff
Scott (GA)
Scott (VA)
Serrano
Sherman
Skelton
Slaughter
Snyder
Solis
Spratt
Stark
Stenholm
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Tierney
Towns
Turner (TX)
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Waters
Watson
Watt
Waxman
Wexler
Woolsey
Wu
Wynn
NOT VOTING--7
Brady (TX)
Carson (IN)
Conyers
Gephardt
Lofgren
Smith (WA)
Weiner
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. Latham) (during the vote). Members are
reminded there are 2 minutes remaining on this vote.
{time} 1201
Messrs. PASCRELL, OBEY, BELL, and Ms. BERKLEY changed their vote from
``yea'' to ``nay.''
So the previous question was ordered.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore. The question is on the resolution.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Recorded Vote
Ms. SLAUGHTER. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The SPEAKER pro tempore. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--ayes 230,
noes 199, not voting 5, as follows:
[Roll No. 285]
AYES--230
Aderholt
Akin
Bachus
Baker
Ballenger
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Beauprez
Biggert
Bilirakis
Bishop (UT)
Blackburn
Blunt
Boehlert
Boehner
Bonilla
Bonner
Bono
Boozman
Boucher
Bradley (NH)
Brady (TX)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burns
Burr
Burton (IN)
Buyer
Calvert
Camp
Cannon
Cantor
Capito
Carter
Castle
Chabot
Chocola
Coble
Cole
Collins
Cox
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal (GA)
DeLay
DeMint
Diaz-Balart, L.
Diaz-Balart, M.
Doolittle
Dreier
Duncan
Dunn
Ehlers
Emerson
English
Everett
Feeney
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Goode
Goodlatte
Goss
Granger
Graves
Green (WI)
Greenwood
Gutknecht
Harris
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hobson
Hoekstra
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Janklow
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
McCotter
McCrery
McHugh
McInnis
McKeon
Mica
Miller (FL)
Miller (MI)
Miller, Gary
Moran (KS)
Murphy
Musgrave
Myrick
Nethercutt
Neugebauer
Ney
Northup
Norwood
Nunes
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pearce
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Porter
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Sandlin
Saxton
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Sullivan
Sweeney
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Tiahrt
Tiberi
Toomey
Turner (OH)
Upton
Vitter
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NOES--199
Abercrombie
Ackerman
Alexander
Allen
Andrews
Baca
Baird
Baldwin
Ballance
Becerra
Bell
Bereuter
Berkley
Berman
Berry
Bishop (GA)
Bishop (NY)
Blumenauer
Boswell
Boyd
Brady (PA)
Brown (OH)
Brown, Corrine
Capps
Capuano
Cardin
Cardoza
Carson (OK)
Case
Clay
Clyburn
Conyers
Cooper
Costello
Cramer
Crowley
Cummings
Davis (AL)
Davis (CA)
Davis (FL)
Davis (IL)
Davis (TN)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley (CA)
Doyle
Edwards
Emanuel
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank (MA)
Frost
Gonzalez
Gordon
Green (TX)
Grijalva
Gutierrez
Hall
Harman
Hastings (FL)
Hill
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley (OR)
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind
Kleczka
Kucinich
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lowey
Lynch
Majette
Maloney
Markey
Marshall
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Michaud
Millender-McDonald
Miller (NC)
Miller, George
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal (MA)
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rodriguez
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Schakowsky
Schiff
Scott (GA)
Scott (VA)
Serrano
Sherman
Skelton
Slaughter
Snyder
Solis
Spratt
Stark
Stenholm
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Tierney
Towns
Turner (TX)
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Waters
Watson
Watt
Waxman
Wexler
Woolsey
Wu
Wynn
NOT VOTING--5
Carson (IN)
Gephardt
Lofgren
Smith (WA)
Weiner
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (during the vote). Members are reminded there
are 2 minutes remaining on this vote.
{time} 1208
So the resolution was agreed to.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
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